Document:

<PAGE>
                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                    Depositor

                                       and

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
                                     Trustee

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

                                 TRUST AGREEMENT

                            Dated as of July 1, 2003

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

                     MERRILL LYNCH MORTGAGE INVESTORS TRUST
                               SERIES MLCC 2003-D
<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                             Page
<S>                                                                                                          <C>
ARTICLE I DEFINITIONS ....................................................................................     15

           Section 1.01    Definitions ...................................................................     15

           Section 1.02    Calculations Respecting Mortgage Loans ........................................     45

ARTICLE II DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES ................................................     45

           Section 2.01    Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans ..........     45

           Section 2.02    Acceptance of Trust Fund by Trustee; Review of Documentation for Trust Fund ...     47

           Section 2.03    Representations and Warranties of the Depositor ...............................     48

           Section 2.04    Discovery of Breach; Repurchase or Substitution of Mortgage Loans .............     50

           Section 2.05    Grant Clause ..................................................................     53

           Section 2.06    Representation and Warranty of the Seller .....................................     54

ARTICLE III THE CERTIFICATES .............................................................................     54

           Section 3.01    The Certificates ..............................................................     54

           Section 3.02    Registration ..................................................................     55

           Section 3.03    Transfer and Exchange of Certificates .........................................     56

           Section 3.04    Cancellation of Certificates ..................................................     59

           Section 3.05    Replacement of Certificates ...................................................     59

           Section 3.06    Persons Deemed Owners .........................................................     60

           Section 3.07    Temporary Certificates ........................................................     60

           Section 3.08    Appointment of Paying Agent ...................................................     60

           Section 3.09    Book-Entry Certificates .......................................................     61

ARTICLE IV ADMINISTRATION OF THE TRUST FUND ..............................................................     62

           Section 4.01    Custodial Accounts; Distribution Account ......................................     62

           Section 4.02    Reports to Trustee and Certificateholders .....................................     63

ARTICLE V DISTRIBUTIONS TO HOLDERS OF CERTIFICATES .......................................................     66

           Section 5.01    Distributions Generally .......................................................     66

           Section 5.02    Distributions from the Certificate Account ....................................     66

           Section 5.03    Allocation of Losses ..........................................................     69
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                          <C>
           Section 5.04    Advances ......................................................................     70

ARTICLE VI CONCERNING THE TRUSTEE; EVENTS OF DEFAULT .....................................................     70

           Section 6.01    Duties of Trustee .............................................................     70

           Section 6.02    Certain Matters Affecting the Trustee .........................................     72

           Section 6.03    Trustee Not Liable for Certificates ...........................................     74

           Section 6.04    Trustee May Own Certificates ..................................................     74

           Section 6.05    Eligibility Requirements for Trustee ..........................................     74

           Section 6.06    Resignation and Removal of Trustee ............................................     75

           Section 6.07    Successor Trustee .............................................................     76

           Section 6.08    Merger or Consolidation of Trustee ............................................     76

           Section 6.09    Appointment of Co-Trustee, Separate Trustee or Custodian ......................     76

           Section 6.10    Authenticating Agents .........................................................     78

           Section 6.11    Indemnification of Trustee ....................................................     79

           Section 6.12    Fees and Expenses of the Trustee ..............................................     79

           Section 6.13    Collection of Monies ..........................................................     80

           Section 6.14    Events of Default; Trustee To Act; Appointment of Successor ...................     80

           Section 6.15    Additional Remedies of Trustee Upon Event of Default ..........................     81

           Section 6.16    Waiver of Defaults ............................................................     82

           Section 6.17    Notification to Holders .......................................................     82

           Section 6.18    Directions by Certificateholders and Duties of Trustee During Event of Default      82

           Section 6.19    Preparation of Tax Returns and Other Reports ..................................     83

           Section 6.20    Annual Certificate by Trustee .................................................     83

ARTICLE VII PURCHASE OF MORTGAGE LOANS AND TERMINATION OF THE TRUST FUND .................................     84

           Section 7.01    Purchase of Mortgage Loans; Termination of Trust Fund Upon Purchase
                           or Liquidation of All Mortgage Loans ..........................................     84

           Section 7.02    Procedure Upon Redemption or Termination of Trust Fund ........................     85

           Section 7.03    Additional Trust Fund Termination Requirements ................................     86

           Section 7.04    [RESERVED] ....................................................................     86

ARTICLE VIII RIGHTS OF CERTIFICATEHOLDERS ................................................................     87

           Section 8.01    Limitation on Rights of Holders ...............................................     87

           Section 8.02    Access to List of Holders .....................................................     87
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                          <C>
           Section 8.03    Acts of Holders of Certificates ...............................................     88

ARTICLE IX [RESERVED] ....................................................................................     89

ARTICLE X REMIC ADMINISTRATION ...........................................................................     89

           Section 10.01   REMIC Administration ..........................................................     89

           Section 10.02   Prohibited Transactions and Activities ........................................     92

           Section 10.03   Indemnification with Respect to Prohibited Transactions or Loss of REMIC Status     92

           Section 10.04   REO Property ..................................................................     93

ARTICLE XI MISCELLANEOUS PROVISIONS ......................................................................     93

           Section 11.01   Binding Nature of Agreement; Assignment .......................................     93

           Section 11.02   Entire Agreement ..............................................................     93

           Section 11.03   Amendment .....................................................................     94

           Section 11.04   Voting Rights .................................................................     95

           Section 11.05   Provision of Information ......................................................     95

           Section 11.06   Governing Law .................................................................     96

           Section 11.07   Notices .......................................................................     96

           Section 11.08   Severability of Provisions ....................................................     96

           Section 11.09   Indulgences; No Waivers .......................................................     96

           Section 11.10   Headings Not To Affect Interpretation .........................................     97

           Section 11.11   Benefits of Agreement .........................................................     97

           Section 11.12   Special Notices to the Rating Agencies ........................................     97

           Section 11.13   Conflicts .....................................................................     98

           Section 11.14   Counterparts ..................................................................     98

           Section 11.15   No Petitions ..................................................................     98
</TABLE>

                                      iii
<PAGE>

EXHIBITS

Exhibit A  Forms of Certificates
Exhibit B  Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit C  Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit D  Mortgage Loan Servicing Agreement
Exhibit E  Master Mortgage Loan Purchase Agreement
Exhibit F  List of Limited Purpose Surety Bonds
Exhibit G  Form of Rule 144A Transfer Certificate
Exhibit H  Form of Purchaser's Letter for Institutional Accredited Investors
Exhibit I  Form of ERISA Transfer Affidavit
Exhibit J  Form of Letter of Representations with the Depository Trust Company
Exhibit K  Form of Initial Certification
Exhibit L  Form of Final Certification
Exhibit M  List of Servicing Officers
Exhibit N  Form of Request for Release
Exhibit O  Custody Agreement (without Exhibits)
Exhibit P  Amendment No. 1 to Custodial Agreement (without Exhibits)
Exhibit Q  Officer's Certificate - Trustee

SCHEDULES

Schedule A Mortgage Loan Schedule
Schedule B Mortgage Loan Representations and Warranties of the Originator
Schedule C Class X-A-1 Notional Amount Schedule

                                       iv
<PAGE>

      This TRUST AGREEMENT, dated as of July 1, 2003 (the "Agreement"), by and
among MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as
depositor (the "Depositor"), and WELLS FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee (the "Trustee"), and acknowledged by MERRILL LYNCH
CREDIT CORPORATION, a Delaware corporation, as originator (the "Originator"),
for purposes of Section 2.04.

                              PRELIMINARY STATEMENT

      The Depositor has acquired the Mortgage Loans originated by the Originator
from Sequoia Residential Funding Inc., which acquired the Mortgage Loans from
the Seller and at the Closing Date is the owner of the Mortgage Loans and the
other property being conveyed by the Depositor to the Trustee hereunder for
inclusion in the Trust Fund. On the Closing Date, the Depositor will acquire the
Certificates from the Trustee as consideration for the Depositor's transfer to
the Trust Fund of the Mortgage Loans and the other property constituting the
Trust Fund. The Depositor has duly authorized the execution and delivery of this
Agreement to provide for the conveyance to the Trustee of the Mortgage Loans and
the other property constituting the Trust Fund. All covenants and agreements
made by the Originator in the Mortgage Loan Purchase and Sale Agreement and in
this Agreement and by the Depositor and the Trustee herein with respect to the
Mortgage Loans and the other property constituting the Trust Fund are for the
benefit of the Holders from time to time of the Certificates. The Depositor and
the Trustee are entering into this Agreement, and the Trustee is accepting the
Trust Fund created hereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.

      As provided herein, the Trustee shall elect that the Trust Fund be treated
for federal income tax purposes as comprising four real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, "REMIC 1," "REMIC
2," "REMIC 3" and the "Upper Tier REMIC," respectively) in a tiered structure.
The Certificates, other than the Class A-R Certificate, shall represent
ownership of regular interests in the Upper Tier REMIC. For federal income tax
purposes, in addition to representing ownership of a REMIC regular interest, (i)
each of the Class A Certificates represents the right to receive payments in
respect of interest accruals on the Class A Certificates at rates in excess of
the Adjusted Net WAC, including all payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls, (ii) each of the Class B-1, Class B-2 and
Class B-3 Certificates represents the right to receive payments in respect of
Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls as provided in Section
5.06, (iii) the Class X-A-1 Certificates will represent the obligation to make
certain payments to the Class A Certificates and the right to receive certain
payments from the Class X-A-2 Certificates and (iv) the Class X-A-2 Certificates
will represent the obligation to make certain payments to the Class A
Certificates and the Class X-A-1 Certificates. The Class A-R Certificate
represents the sole class of residual interest in each of REMIC 1, REMIC 2,
REMIC 3 and the Upper Tier REMIC.

      The Upper Tier REMIC shall hold as its assets the several classes of
uncertificated REMIC 3 Regular Interests and the uncertificated REMIC 2 IO
Classes. REMIC 3 shall hold as its assets the several classes of uncertificated
REMIC 2 Regular Interests other than the REMIC 2 IO Classes. REMIC 2 shall hold
as its assets the several classes of uncertificated REMIC 1
<PAGE>

Regular Interests. REMIC 1 shall hold as its assets the property of the Trust
Fund other than the REMIC 1 Interests, the REMIC 2 Interests and the REMIC 3
Interests.

      Each Upper Tier REMIC Regular Interest is hereby designated as a regular
interest in the Upper Tier REMIC for purposes of the REMIC Provisions. Each
REMIC 3 Regular Interest is hereby designated as a regular interest in REMIC 3
for purposes of the REMIC provisions. Each REMIC 2 Regular Interest is hereby
designated as a regular interest in REMIC 2 for purposes of the REMIC
provisions. Each REMIC 1 Regular Interest is hereby designated as a regular
interest in REMIC 1 for purposes of the REMIC Provisions.

      The Class LT1-R Interest is hereby designated as the sole class of
residual interest in REMIC 1 for purposes of the REMIC Provisions. The Class
LT2-R Interest is hereby designated as the sole class of residual interest in
REMIC 2 for purposes of the REMIC provisions. The Class LT3-R Interest is hereby
designated as the sole class of residual interest in REMIC 3 for purposes of the
REMIC Provisions. The Class A-R Certificate, other than the portion thereof
representing the right to receive payments in respect of the Class LT1-R
Interest, the Class LT2-R Interest or the Class LT3-R Interest, is hereby
designated as the sole class of residual interest in the Upper Tier REMIC for
purposes of the REMIC provisions and will also represent the Class LT1-R
Interest, the LT2-R Interest and the Class LT3-R Interest.

THE REMIC 1 INTERESTS

      The following table sets forth (or describes) the class designation,
interest rate, and initial principal amount for each class of REMIC 1 Interests:

<TABLE>
<CAPTION>
                                                            Interest
Class Designation               Principal Amount              Rate
-----------------               ----------------            ---------
<S>                             <C>                         <C>
LT1A1                            $36,129,168.90               (2)
LT1A2                            $34,855,187.05               (2)
LT1A3                            $33,626,128.17               (2)
LT1A4                            $32,440,408.22               (2)
LT1A5                            $31,296,498.94               (2)
LT1A6                            $30,192,926.04               (2)
LT1A7                            $29,128,267.19               (2)
LT1A8                            $28,101,150.19               (2)
LT1A9                            $27,110,251.24               (2)
LT1A10                           $26,154,293.25               (2)
LT1A11                           $25,232,044.11               (2)
LT1A12                           $24,342,315.19               (2)
LT1A13                           $23,483,959.79               (2)
LT1A14                           $22,655,871.58               (2)
LT1A15                           $21,856,983.31               (2)
LT1A16                           $21,086,265.34               (2)
LT1A17                           $20,342,724.31               (2)
</TABLE>

                                       2
<PAGE>

<TABLE>
<S>                              <C>                          <C>
LT1A18                           $19,625,401.93               (2)
LT1A19                           $18,933,373.68               (2)
LT1A20                           $18,265,747.62               (2)
LT1A21                           $17,061,651.89               (2)
LT1A22                           $16,450,152.71               (2)
LT1A23                           $15,860,390.22               (2)
LT1A24                           $15,291,594.85               (2)
LT1A25                           $14,743,024.27               (2)
LT1A26                           $14,213,962.34               (2)
LT1A27                           $13,703,718.25               (2)
LT1A28                           $13,211,625.58               (2)
LT1A29                           $12,737,041.46               (2)
LT1A30                           $12,279,345.78               (2)
LT1A31                           $11,837,940.28               (2)
LT1A32                           $11,412,247.89               (2)
LT1A33                           $11,001,711.92               (2)
LT1A34                           $10,605,795.35               (2)
LT1A35                           $10,223,980.16               (2)
LT1A36                            $9,855,766.62               (2)
LT1A37                            $9,079,372.37               (2)
LT1A38                            $8,759,216.77               (2)
LT1A39                            $8,450,350.46               (2)
LT1A40                            $8,152,375.35               (2)
LT1A41                            $7,864,907.40               (2)
LT1A42                            $7,587,576.10               (2)
LT1A43                            $7,320,024.03               (2)
LT1A44                            $7,061,906.32               (2)
LT1A45                            $6,812,890.35               (2)
LT1A46                            $6,572,655.14               (2)
LT1A47                            $6,340,891.06               (2)
LT1A48                          $173,481,919.03               (2)
LT1X                             $31,763,109.98               (2)
LT1-R                           (1)                           (1)
</TABLE>

----------

(1)   The Class LT1-R interest represents the sole class of residual interest in
      REMIC 1 and has neither a principal amount nor an interest rate. The Class
      LT1-R Interest shall be represented by the Class A-R Certificate.

(2)   The interest rate for each of the Class LT1A1 Interest through the Class
      LT1A48 Interest and the Class LT1X Interest for any Distribution Date (and
      the related Accrual Period) is a per annum rate equal to the Net WAC.

                                       3
<PAGE>

      On each Distribution Date principal payments will be deemed made and
Realized Losses with respect to principal will be allocated among the REMIC 1
Regular Interests as follows: (i) an amount equal to the total principal
distributed in respect of the Class A-R, Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates will be treated as having been
distributed in respect of the Class LT1X Interest in reduction of its principal
amount (treating the initial Class Principal Amount of the Class B-6
Certificates, for purposes of this clause (i), as being $3,587,009.98 and
treating the first $.98 distributed to the A-R under Section 5.02(a)(vi) from
principal payments on the Mortgage Loans as distributed to the Class B-6
Certificates), (ii) the amount of all Realized Losses in respect of principal
allocated to the Class A-R, Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates will be allocated to the Class LT1X Interest in
reduction of its principal amount (treating the initial Class Principal Amount
of the Class B-6 Certificates, for purposes of this clause (ii), as being
$3,587,009.98 and disregarding Section 5.03(c) hereof), (iii) an amount equal to
the total principal distributed in respect of the Class A Certificates will be
treated as having been distributed in the aggregate in respect of the Class
LT1A1 Interest through the Class LT1A48 Interest in reduction of their principal
amount and (iv) the amount of all Realized Losses in respect of principal
allocated to the Class A Certificates will be allocated in the aggregate to the
Class LT1A1 Interest through the Class LT1A48 Interest in reduction of their
principal amounts. All principal deemed paid and Realized Losses allocated to
the Class LT1A1 Interest through the Class LT1A48 Interest shall be deemed paid
or allocated first to the Class LT1A1 Interest until its principal balance has
been reduced to zero and to such other REMIC 1 Regular Interests in numerical
order until the principal balance of each in turn has been reduced to zero.

THE REMIC 2 INTERESTS

      The following table sets forth (or describes) the class designation,
interest rate and initial principal amount for each class of REMIC 2 Interests:

<TABLE>
<CAPTION>
                                                                        Interest
Class Designation                    Principal Amount                     Rate
-----------------                    ----------------                   --------
<S>                                  <C>                                <C>
LT2A1                                 $36,129,168.90                       (3)
LT2A2                                 $34,855,187.05                       (3)
LT2A3                                 $33,626,128.17                       (3)
LT2A4                                 $32,440,408.22                       (3)
LT2A5                                 $31,296,498.94                       (3)
LT2A6                                 $30,192,926.04                       (3)
LT2A7                                 $29,128,267.19                       (3)
LT2A8                                 $28,101,150.19                       (3)
LT2A9                                 $27,110,251.24                       (3)
LT2A10                                $26,154,293.25                       (3)
LT2A11                                $25,232,044.11                       (3)
LT2A12                                $24,342,315.19                       (3)
LT2A13                                $23,483,959.79                       (3)
LT2A14                                $22,655,871.58                       (3)
</TABLE>

                                       4
<PAGE>

<TABLE>
<S>                                   <C>                                  <C>
LT2A15                                $21,856,983.31                       (3)
LT2A16                                $21,086,265.34                       (3)
LT2A17                                $20,342,724.31                       (3)
LT2A18                                $19,625,401.93                       (3)
LT2A19                                $18,933,373.68                       (3)
LT2A20                                $18,265,747.62                       (3)
LT2A21                                $17,061,651.89                       (3)
LT2A22                                $16,450,152.71                       (3)
LT2A23                                $15,860,390.22                       (3)
LT2A24                                $15,291,594.85                       (3)
LT2A25                                $14,743,024.27                       (3)
LT2A26                                $14,213,962.34                       (3)
LT2A27                                $13,703,718.25                       (3)
LT2A28                                $13,211,625.58                       (3)
LT2A29                                $12,737,041.46                       (3)
LT2A30                                $12,279,345.78                       (3)
LT2A31                                $11,837,940.28                       (3)
LT2A32                                $11,412,247.89                       (3)
LT2A33                                $11,001,711.92                       (3)
LT2A34                                $10,605,795.35                       (3)
LT2A35                                $10,223,980.16                       (3)
LT2A36                                 $9,855,766.62                       (3)
LT2A37                                 $9,079,372.37                       (3)
LT2A38                                 $8,759,216.77                       (3)
LT2A39                                 $8,450,350.46                       (3)
LT2A40                                 $8,152,375.35                       (3)
LT2A41                                 $7,864,907.40                       (3)
LT2A42                                 $7,587,576.10                       (3)
LT2A43                                 $7,320,024.03                       (3)
LT2A44                                 $7,061,906.32                       (3)
LT2A45                                 $6,812,890.35                       (3)
LT2A46                                 $6,572,655.14                       (3)
LT2A47                                 $6,340,891.06                       (3)
LT2A48                               $173,481,919.03                       (3)
LT2IO1                               (1)                                   (4)
LT2IO2                               (1)                                   (4)
LT2IO3                               (1)                                   (4)
LT2IO4                               (1)                                   (4)
LT2IO5                               (1)                                   (4)
LT2IO6                               (1)                                   (4)
</TABLE>

                                       5
<PAGE>

<TABLE>
<S>                                  <C>                                   <C>
LT2IO7                               (1)                                   (4)
LT2IO8                               (1)                                   (4)
LT2IO9                               (1)                                   (4)
LT2IO10                              (1)                                   (4)
LT2IO11                              (1)                                   (4)
LT2IO12                              (1)                                   (4)
LT2IO13                              (1)                                   (4)
LT2IO14                              (1)                                   (4)
LT2IO15                              (1)                                   (4)
LT2IO16                              (1)                                   (4)
LT2IO17                              (1)                                   (4)
LT2IO18                              (1)                                   (4)
LT2IO19                              (1)                                   (4)
LT2IO20                              (1)                                   (4)
LT2IO21                              (1)                                   (4)
LT2IO22                              (1)                                   (4)
LT2IO23                              (1)                                   (4)
LT2IO24                              (1)                                   (4)
LT2IO25                              (1)                                   (4)
LT2IO26                              (1)                                   (4)
LT2IO27                              (1)                                   (4)
LT2IO28                              (1)                                   (4)
LT2IO29                              (1)                                   (4)
LT2IO30                              (1)                                   (4)
LT2IO31                              (1)                                   (4)
LT2IO32                              (1)                                   (4)
LT2IO33                              (1)                                   (4)
LT2IO34                              (1)                                   (4)
LT2IO35                              (1)                                   (4)
LT2IO36                              (1)                                   (4)
LT2IO37                              (1)                                   (4)
LT2IO38                              (1)                                   (4)
LT2IO39                              (1)                                   (4)
LT2IO40                              (1)                                   (4)
LT2IO41                              (1)                                   (4)
LT2IO42                              (1)                                   (4)
LT2IO43                              (1)                                   (4)
LT2IO44                              (1)                                   (4)
LT2IO45                              (1)                                   (4)
LT2IO46                              (1)                                   (4)
</TABLE>

                                       6
<PAGE>
<TABLE>
<S>                                  <C>                                   <C>
LT2IO47                              (1)                                   (4)
LT2IO48                              (1)                                   (4)
LT2X                                 $31,763,109.98                        (5)
LT2-R                                (2)                                   (2)
</TABLE>

----------

      (1)   Each of the REMIC 2 IO Classes shall be an "interest-only" interest
            that has no principal balance. The notional balance of the Class
            LT2IO1 Interest as of any Distribution Date on or prior to the
            Distribution Date in August, 2003 shall equal the principal balance
            of the Class LT1A1 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO2 Interest as of any Distribution
            Date on or prior to the Distribution Date in September, 2003 shall
            equal the principal balance of the Class LT1A2 Interest immediately
            prior to such Distribution Date and for subsequent Distribution
            Dates shall equal $0. The notional balance of the Class LT2IO3
            Interest as of any Distribution Date on or prior to the Distribution
            Date in October, 2003 shall equal the principal balance of the Class
            LT1A3 Interest immediately prior to such Distribution Date and for
            subsequent Distribution Dates shall equal $0. The notional balance
            of the Class LT2IO4 Interest as of any Distribution Date on or prior
            to the Distribution Date in November, 2003 shall equal the principal
            balance of the Class LT1A4 Interest immediately prior to such
            Distribution Date and for subsequent Distribution Dates shall equal
            $0. The notional balance of the Class LT2IO5 Interest as of any
            Distribution Date on or prior to the Distribution Date in December,
            2003 shall equal the principal balance of the Class LT1A5 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO6 Interest as of any Distribution Date on or prior to the
            Distribution Date in January, 2004 shall equal the principal balance
            of the Class LT1A6 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO7 Interest as of any Distribution
            Date on or prior to the Distribution Date in February, 2004 shall
            equal the principal balance of the Class LT1A7 Interest immediately
            prior to such Distribution Date and for subsequent Distribution
            Dates shall equal $0. The notional balance of the Class LT2IO8
            Interest as of any Distribution Date on or prior to the Distribution
            Date in March, 2004 shall equal the principal balance of the Class
            LT1A8 Interest immediately prior to such Distribution Date and for
            subsequent Distribution Dates shall equal $0. The notional balance
            of the Class LT2IO9 Interest as of any Distribution Date on or prior
            to the Distribution Date in April, 2004 shall equal the principal
            balance of the Class LT1A9 Interest immediately prior to such
            Distribution Date and for subsequent Distribution Dates shall equal
            $0. The notional balance of the Class LT2IO10 Interest as of any
            Distribution Date on or prior to the Distribution Date in May, 2004
            shall equal the principal balance of the Class LT1A10 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO11 Interest as of any Distribution Date on or prior to the
            Distribution Date in June, 2004 shall equal the principal balance of
            the Class LT1A11 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO12 Interest as of any
            Distribution Date on or prior to the Distribution Date in July, 2004
            shall equal the principal balance of the Class LT1A12 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO13 Interest as of any Distribution Date on or prior to the
            Distribution Date in August, 2004 shall equal the principal balance
            of the Class LT1A13 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO14 Interest as of any
            Distribution Date on or prior to the Distribution Date in September,
            2004 shall equal the principal balance of the Class LT1A14 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO15 Interest as of any Distribution Date on or prior to the
            Distribution Date in October, 2004 shall equal the principal balance
            of the Class LT1A15 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO16 Interest as of any
            Distribution Date on or prior to the Distribution Date in November,
            2004 shall equal the principal balance of the Class LT1A16 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO17 Interest as of any Distribution Date on or prior to the
            Distribution Date in December, 2004 shall equal the principal
            balance of the Class LT1A17 Interest immediately prior to such
            Distribution Date

                                       7
<PAGE>

            and for subsequent Distribution Dates shall equal $0. The notional
            balance of the Class LT2IO18 Interest as of any Distribution Date on
            or prior to the Distribution Date in January, 2005 shall equal the
            principal balance of the Class LT1A18 Interest immediately prior to
            such Distribution Date and for subsequent Distribution Dates shall
            equal $0. The notional balance of the Class LT2IO19 Interest as of
            any Distribution Date on or prior to the Distribution Date in
            February, 2005 shall equal the principal balance of the Class LT1A19
            Interest immediately prior to such Distribution Date and for
            subsequent Distribution Dates shall equal $0. The notional balance
            of the Class LT2IO20 Interest as of any Distribution Date on or
            prior to the Distribution Date in March, 2005 shall equal the
            principal balance of the Class LT1A20 Interest immediately prior to
            such Distribution Date and for subsequent Distribution Dates shall
            equal $0. The notional balance of the Class LT2IO21 Interest as of
            any Distribution Date on or prior to the Distribution Date in April,
            2005 shall equal the principal balance of the Class LT1A21 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO22 Interest as of any Distribution Date on or prior to the
            Distribution Date in May, 2005 shall equal the principal balance of
            the Class LT1A22 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO23 Interest as of any
            Distribution Date on or prior to the Distribution Date in June, 2005
            shall equal the principal balance of the Class LT1A23 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO24 Interest as of any Distribution Date on or prior to the
            Distribution Date in July, 2005 shall equal the principal balance of
            the Class LT1A24 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO25 Interest as of any
            Distribution Date on or prior to the Distribution Date in August,
            2005 shall equal the principal balance of the Class LT1A25 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO26 Interest as of any Distribution Date on or prior to the
            Distribution Date in September, 2005 shall equal the principal
            balance of the Class LT1A26 Interest immediately prior to such
            Distribution Date and for subsequent Distribution Dates shall equal
            $0. The notional balance of the Class LT2IO27 Interest as of any
            Distribution Date on or prior to the Distribution Date in October,
            2005 shall equal the principal balance of the Class LT1A27 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO28 Interest as of any Distribution Date on or prior to the
            Distribution Date in November, 2005 shall equal the principal
            balance of the Class LT1A28 Interest immediately prior to such
            Distribution Date and for subsequent Distribution Dates shall equal
            $0. The notional balance of the Class LT2IO29 Interest as of any
            Distribution Date on or prior to the Distribution Date in December,
            2005 shall equal the principal balance of the Class LT1A29 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO30 Interest as of any Distribution Date on or prior to the
            Distribution Date in January, 2006 shall equal the principal balance
            of the Class LT1A30 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO31 Interest as of any
            Distribution Date on or prior to the Distribution Date in February,
            2006 shall equal the principal balance of the Class LT1A31 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO32 Interest as of any Distribution Date on or prior to the
            Distribution Date in March, 2006 shall equal the principal balance
            of the Class LT1A32 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO33 Interest as of any
            Distribution Date on or prior to the Distribution Date in April,
            2006 shall equal the principal balance of the Class LT1A33 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO34 Interest as of any Distribution Date on or prior to the
            Distribution Date in May, 2006 shall equal the principal balance of
            the Class LT1A34 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO35 Interest as of any
            Distribution Date on or prior to the Distribution Date in June, 2006
            shall equal the principal balance of the Class LT1A35 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO36 Interest as of any Distribution Date on or prior to the
            Distribution Date in July, 2006 shall equal the principal balance of
            the Class LT1A36 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO37 Interest as of any
            Distribution Date on or prior to the Distribution Date in August,
            2006 shall equal the principal balance of the Class LT1A37 Interest
            immediately prior to such Distribution Date and

                                       8
<PAGE>

            for subsequent Distribution Dates shall equal $0. The notional
            balance of the Class LT2IO38 Interest as of any Distribution Date on
            or prior to the Distribution Date in September, 2006 shall equal the
            principal balance of the Class LT1A38 Interest immediately prior to
            such Distribution Date and for subsequent Distribution Dates shall
            equal $0. The notional balance of the Class LT2IO39 Interest as of
            any Distribution Date on or prior to the Distribution Date in
            October, 2006 shall equal the principal balance of the Class LT1A39
            Interest immediately prior to such Distribution Date and for
            subsequent Distribution Dates shall equal $0. The notional balance
            of the Class LT2IO40 Interest as of any Distribution Date on or
            prior to the Distribution Date in November, 2006 shall equal the
            principal balance of the Class LT1A40 Interest immediately prior to
            such Distribution Date and for subsequent Distribution Dates shall
            equal $0. The notional balance of the Class LT2IO41 Interest as of
            any Distribution Date on or prior to the Distribution Date in
            December, 2006 shall equal the principal balance of the Class LT1A41
            Interest immediately prior to such Distribution Date and for
            subsequent Distribution Dates shall equal $0. The notional balance
            of the Class LT2IO42 Interest as of any Distribution Date on or
            prior to the Distribution Date in January, 2007 shall equal the
            principal balance of the Class LT1A42 Interest immediately prior to
            such Distribution Date and for subsequent Distribution Dates shall
            equal $0. The notional balance of the Class LT2IO43 Interest as of
            any Distribution Date on or prior to the Distribution Date in
            February, 2007 shall equal the principal balance of the Class LT1A43
            Interest immediately prior to such Distribution Date and for
            subsequent Distribution Dates shall equal $0. The notional balance
            of the Class LT2IO44 Interest as of any Distribution Date on or
            prior to the Distribution Date in March, 2007 shall equal the
            principal balance of the Class LT1A44 Interest immediately prior to
            such Distribution Date and for subsequent Distribution Dates shall
            equal $0. The notional balance of the Class LT2IO45 Interest as of
            any Distribution Date on or prior to the Distribution Date in April,
            2007 shall equal the principal balance of the Class LT1A45 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO46 Interest as of any Distribution Date on or prior to the
            Distribution Date in May, 2007 shall equal the principal balance of
            the Class LT1A46 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0. The
            notional balance of the Class LT2IO47 Interest as of any
            Distribution Date on or prior to the Distribution Date in June, 2007
            shall equal the principal balance of the Class LT1A47 Interest
            immediately prior to such Distribution Date and for subsequent
            Distribution Dates shall equal $0. The notional balance of the Class
            LT2IO48 Interest as of any Distribution Date on or prior to the
            Distribution Date in July, 2007 shall equal the principal balance of
            the Class LT21A48 Interest immediately prior to such Distribution
            Date and for subsequent Distribution Dates shall equal $0.

      (2)   The Class LT2-R interest represents the sole class of residual
            interest in REMIC 2 and has neither a principal amount nor an
            interest rate. The Class LT2-R Interest shall be represented by the
            Class A-R Certificate.

      (3)   For Distribution Dates on or prior to the Distribution Date in
            August of 2003, the interest rate on the Class LT2A1 Interest shall
            be the Net WAC minus 100 basis points and for subsequent
            Distribution Dates shall be the Net WAC. For Distribution Dates on
            or prior to the Distribution Date in September of 2003, the interest
            rate on the Class LT2A2 Interest shall be the Net WAC minus 100
            basis points and for subsequent Distribution Dates shall be the Net
            WAC. For Distribution Dates on or prior to the Distribution Date in
            October of 2003, the interest rate on the Class LT2A3 Interest shall
            be the Net WAC minus 100 basis points and for subsequent
            Distribution Dates shall be the Net WAC. For Distribution Dates on
            or prior to the Distribution Date in November of 2003, the interest
            rate on the Class LT2A4 Interest shall be the Net WAC minus 100
            basis points and for subsequent Distribution Dates shall be the Net
            WAC. For Distribution Dates on or prior to the Distribution Date in
            December of 2003, the interest rate on the Class LT2A5 Interest
            shall be the Net WAC minus 100 basis points and for subsequent
            Distribution Dates shall be the Net WAC. For Distribution Dates on
            or prior to the Distribution Date in January of 2004, the interest
            rate on the Class LT2A6 Interest shall be the Net WAC minus 100
            basis points and for subsequent Distribution Dates shall be the Net
            WAC. For Distribution Dates on or prior to the Distribution Date in
            February of 2004, the interest rate on the Class LT2A7 Interest
            shall be the Net WAC minus 100 basis points and for subsequent
            Distribution Dates shall be the Net WAC. For Distribution Dates on
            or prior to the Distribution Date in March of 2004, the interest
            rate on the Class LT2A8 Interest shall be the Net WAC minus 100
            basis points and for subsequent Distribution Dates shall be the Net
            WAC. For Distribution Dates on or prior to

                                       9
<PAGE>

            the Distribution Date in April of 2004, the interest rate on the
            Class LT2A9 Interest shall be the Net WAC minus 100 basis points and
            for subsequent Distribution Dates shall be the Net WAC. For
            Distribution Dates on or prior to the Distribution Date in May of
            2004, the interest rate on the Class LT2A10 Interest shall be the
            Net WAC minus 100 basis points and for subsequent Distribution Dates
            shall be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in June of 2004, the interest rate on the Class
            LT2A11 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in July of 2004, the
            interest rate on the Class LT2A12 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in August of 2004, the interest rate on the Class
            LT2A13 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in September of 2004, the
            interest rate on the Class LT2A14 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in October of 2004, the interest rate on the Class
            LT2A15 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in November of 2004, the
            interest rate on the Class LT2A16 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in December of 2004, the interest rate on the
            Class LT2A17 Interest shall be the Net WAC minus 100 basis points
            and for subsequent Distribution Dates shall be the Net WAC. For
            Distribution Dates on or prior to the Distribution Date in January
            of 2005, the interest rate on the Class LT2A18 Interest shall be the
            Net WAC minus 100 basis points and for subsequent Distribution Dates
            shall be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in February of 2005, the interest rate on the
            Class LT2A19 Interest shall be the Net WAC minus 100 basis points
            and for subsequent Distribution Dates shall be the Net WAC. For
            Distribution Dates on or prior to the Distribution Date in March of
            2005, the interest rate on the Class LT2A20 Interest shall be the
            Net WAC minus 100 basis points and for subsequent Distribution Dates
            shall be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in April of 2005, the interest rate on the Class
            LT2A21 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in May of 2005, the
            interest rate on the Class LT2A22 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in June of 2005, the interest rate on the Class
            LT2A23 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in July of 2005, the
            interest rate on the Class LT2A24 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in August of 2005, the interest rate on the Class
            LT2A25 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in September of 2005, the
            interest rate on the Class LT2A26 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in October of 2005, the interest rate on the Class
            LT2A27 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in November of 2005, the
            interest rate on the Class LT2A28 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in December of 2005, the interest rate on the
            Class LT2A29 Interest shall be the Net WAC minus 100 basis points
            and for subsequent Distribution Dates shall be the Net WAC. For
            Distribution Dates on or prior to the Distribution Date in January
            of 2006, the interest rate on the Class LT2A30 Interest shall be the
            Net WAC minus 100 basis points and for subsequent Distribution Dates
            shall be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in February of 2006, the interest rate on the
            Class LT2A31 Interest shall be the Net WAC minus 100 basis points
            and for subsequent Distribution Dates shall be the Net WAC. For
            Distribution Dates on or prior to the Distribution Date in March of
            2006, the interest rate on the Class LT2A32 Interest shall be the
            Net WAC minus 100 basis points and for subsequent Distribution Dates
            shall be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in April of 2006, the interest rate on the Class
            LT2A33 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in May of 2006, the
            interest rate on the Class

                                       10
<PAGE>

            LT2A34 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in June of 2006, the
            interest rate on the Class LT2A35 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in July of 2006, the interest rate on the Class
            LT2A36 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in August of 2006, the
            interest rate on the Class LT2A37 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in September of 2006, the interest rate on the
            Class LT2A38 Interest shall be the Net WAC minus 100 basis points
            and for subsequent Distribution Dates shall be the Net WAC. For
            Distribution Dates on or prior to the Distribution Date in October
            of 2006, the interest rate on the Class LT2A39 Interest shall be the
            Net WAC minus 100 basis points and for subsequent Distribution Dates
            shall be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in November of 2006, the interest rate on the
            Class LT2A40 Interest shall be the Net WAC minus 100 basis points
            and for subsequent Distribution Dates shall be the Net WAC. For
            Distribution Dates on or prior to the Distribution Date in December
            of 2006, the interest rate on the Class LT2A41 Interest shall be the
            Net WAC minus 100 basis points and for subsequent Distribution Dates
            shall be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in January of 2007, the interest rate on the Class
            LT2A42 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in February of 2007, the
            interest rate on the Class LT2A43 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in March of 2007, the interest rate on the Class
            LT2A44 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in April of 2007, the
            interest rate on the Class LT2A45 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in May of 2007, the interest rate on the Class
            LT2A46 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. For Distribution
            Dates on or prior to the Distribution Date in June of 2007, the
            interest rate on the Class LT2A47 Interest shall be the Net WAC
            minus 100 basis points and for subsequent Distribution Dates shall
            be the Net WAC. For Distribution Dates on or prior to the
            Distribution Date in July of 2007, the interest rate on the Class
            LT2A48 Interest shall be the Net WAC minus 100 basis points and for
            subsequent Distribution Dates shall be the Net WAC. The interest
            rates on each of the Class LT2A1 through Class LT2A48 Interests
            shall be subject to a floor of 0.00%.

      (4)   For each Distribution Date, the interest rate on the REMIC 2 IO
            Interests shall equal the lesser of (A) 1.00% and (B) the Net WAC.

      (5)   For each Distribution Date, the interest rate on the Class LT2X
            Interest shall equal the Net WAC.

      On each Distribution Date principal payments will be deemed made and
Realized Losses with respect to principal will be allocated among the REMIC 2
Regular Interests as follows: (i) an amount equal to the principal distributed
in respect of the Class A-R Certificates, Class B-1 Certificates, Class B-2
Certificates, Class B-3 Certificates, Class B-4 Certificates, Class B-5
Certificates and Class B-6 Certificates will be treated as having been
distributed in respect of the Class LT2X in reduction of its principal amount
(treating the initial Class Principal Amount of the Class B-6 Certificates, for
purposes of this clause (i), as being $3,587,009.98 and treating the first $.98
distributed to the A-R under Section 5.02(a)(vi) from principal payments on the
Mortgage Loans as distributed to the Class B-6 Certificates), (ii) the amount of
all Realized Losses in respect of principal allocated to the Class A-R
Certificates, Class B-1 Certificates, Class B-2 Certificates, Class B-3
Certificates, Class B-4 Certificates, Class B-5 Certificates and Class B-6
Certificates will be allocated to the Class LT2X Interest in reduction of its
principal amount (treating the initial Class Principal Amount of the Class B-6
Certificates,

                                       11
<PAGE>

for purposes of this clause (ii), as being $3,587,009.98 and disregarding
Section 5.03(c) hereof), (iii) an amount equal to the total principal
distributed in respect of the Class A Certificates will be treated as having
been distributed in the aggregate in respect of the Class LT2A1 Interest through
the Class LT2A48 Interest in reduction of their principal amount, (iv) the
amount of all Realized Losses in respect of principal allocated to the Class A
Certificates will be allocated in the aggregate to the Class LT2A1 Interest
through the Class LT2A48 Interest in reduction of their principal amount. All
principal deemed paid and Realized Losses allocated to the Class LT2A1 Interest
through the Class LT2A48 Interest shall be deemed paid or allocated first to the
Class LT2A1 Interest until its principal balance has been reduced to zero and to
such other REMIC 1 Regular Interests in numerical order until the principal
balance of each in turn has been reduced to zero.

THE REMIC 3 INTERESTS

      The following table sets forth (or describes) the class designation,
interest rate, initial principal amount, and corresponding class of certificates
or components for each class of REMIC 3 Interests:

<TABLE>
<CAPTION>
                                                    Interest        Corresponding Class
Class Designation           Principal Amount          Rate            of Certificates
-----------------           ----------------          ----          -------------------
<S>                         <C>                     <C>             <C>
LT3A                         $992,883,000.00           (2)               Class A
LT3B1                         $10,758,000.00           (3)               Class B-1
LT3B2                          $8,197,000.00           (3)               Class B-2
LT3B3                          $4,611,000.00           (3)               Class B-3
LT3B4                          $2,561,000.00           (3)               Class B-4
LT3B5                          $2,049,000.00           (3)               Class B-5
LT3B6                          $3,587,009.98           (3)               Class B-6
LT3AR                                $100.00           (4)               Class A-R
LT3-R                        (1)                       (1)               N/A
</TABLE>

----------
      (1)   The Class LT3-R Interest represents the sole class of residual
            interest in REMIC 3 and has neither a principal amount nor an
            interest rate. The Class LT3-R Interest shall be represented by the
            Class A-R Certificate.

      (2)   The Class LT3A Interest shall have an interest rate for each
            Distribution Date (and the related accrual period) equal to the
            weighted average of the interest rates on the Class LT2A1 Interest,
            the Class LT2A2 Interest, the Class LT2A3 Interest, the Class LT2A4
            Interest, the Class LT2A5 Interest, the Class LT2A6 Interest, the
            Class LT2A7 Interest, the Class LT2A8 Interest, the Class LT2A9
            Interest, the Class LT2A10 Interest, the Class LT2A11 Interest, the
            Class LT2A12 Interest, the Class LT2A13 Interest, the Class LT2A14
            Interest, the Class LT2A15 Interest, the Class LT2A16 Interest, the
            Class LT2A17 Interest, the Class LT2A18 Interest, the Class LT2A19
            Interest, the Class LT2A20 Interest, the Class LT2A21 Interest, the
            Class LT2A22 Interest, the Class LT2A23 Interest, the Class LT2A24
            Interest, the Class LT2A25 Interest, the Class LT2A26 Interest, the
            Class LT2A27 Interest, the Class LT2A28 Interest, the Class LT2A29
            Interest, the Class LT2A30 Interest, the Class LT2A31 Interest, the
            Class LT2A32 Interest, the Class LT2A33 Interest, the Class LT2A34
            Interest, the Class LT2A35 Interest, the Class LT2A36 Interest, the
            Class LT2A37 Interest, the Class LT2A38 Interest, the Class LT2A39
            Interest, the Class LT2A40 Interest, the Class LT2A41 Interest, the
            Class LT2A42 Interest, the Class LT2A43 Interest, the Class

                                       12
<PAGE>

            LT2A44 Interest, the Class LT2A45 Interest, the Class LT2A46
            Interest, the Class LT2A47 Interest and the Class LT2A48 Interest,
            weighted on the basis of their principal amounts immediately prior
            to such Distribution Date.

      (3)   Each of the Class LT3B1 Interest, the Class LT3B2 Interest, the
            Class LT3B3 Interest, the Class LT3B4 Interest, the Class LT3B5
            Interest and the Class LT3B6 Interest shall have an interest rate
            for each Distribution Date (and the related accrual period) equal to
            the Net WAC.

      (4)   The Class LT3AR Interest shall have an interest rate for each
            Distribution Date (and the related accrual period) equal to the Net
            WAC.

      Principal payments shall be deemed made and Realized Losses with respect
to principal shall be allocated among the REMIC 3 Interests in the same manner
as such payments are made or such Realized Losses are allocated among the
Corresponding Classes of Certificates (treating the initial Class Principal
Amount of the Class B-6 Certificates, for purposes of this sentence, as being
$3,587,009.98, treating the first $.98 of distributions to the Class A-R
Certificate under Section 5.02(a)(vi) from principal payments on the Mortgage
Loans as distributed to the Class B-6 Certificates and disregarding Section
5.03(c)).

THE UPPER TIER REMIC AND CERTIFICATES

      The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Principal Amount (or initial Class
Notional Amount), and minimum denomination for each Class of Certificates
comprising interests in the Trust Fund created hereunder.

<TABLE>
<CAPTION>
                                                                                  Initial Class                  Minimum
          Class        Related Class of Upper Tier REMIC      Certificate       Principal Amount or    Denominations or Percentage
       Designation                 Interests                 Interest Rate     Class Notional Amount             Interest
       -----------     ---------------------------------      -----------       -------------------    ---------------------------
<S>                    <C>                                   <C>               <C>                     <C>
      Class A            Upper Tier REMIC Class A Interest       (1)                 $992,833,000               $25,000.00
      Class X-A-1      Upper Tier REMIC Class X-A-1 Interest     (2)                (3)                         $25,000.00
      Class X-A-2      Upper Tier REMIC Class X-A-2 Interest     (4)                (5)                         $25,000.00
      Class X-B                the REMIC Components              (6)                (6)                         $25,000.00
      Class A-R                  Residual Interest               (7)                         $100                100%
      Class B-1         Upper Tier REMIC Class B-1 Interest      (8)                  $10,758,000               $25,000.00
      Class B-2         Upper Tier REMIC Class B-2 Interest      (9)                   $8,197,000               $25,000.00
      Class B-3         Upper Tier REMIC Class B-3 Interest      (10)                  $4,611,000               $25,000.00
      Class B-4                      Class B-4                   (11)                  $2,561,000               $25,000.00
      Class B-5                      Class B-5                   (11)                  $2,049,000               $25,000.00
      Class B-6                      Class B-6                   (11)                  $3,587,000               $25,000.00
</TABLE>

                                       13
<PAGE>

----------
      (1)   The Certificate Interest Rate with respect to any Distribution Date
            (and the related Accrual Period) for the Class A-1 Certificates will
            be the least of (i) LIBOR plus 0.31%; (ii) the Net WAC and (iii)
            11.75%; provided, however, if the Mortgage Loans and related
            property are not purchased pursuant to Section 7.01(b) on the
            Initial Optional Purchase Date, then with respect to each subsequent
            Distribution Date the per annum rate calculated pursuant to clause
            (i) above with respect to the Class A Certificates will be LIBOR
            plus 0.62%.

      (2)   The Certificate Interest Rate for the Class X-A-1 Certificates for
            any Distribution Date shall be the lesser of (x) 1.00% per annum and
            (y) the Net WAC.

      (3)   The Class X-A-1 Certificates on any Distribution Date will have a
            Class Notional Amount equal to the lesser of (x) the amount for such
            Distribution Date set out on the Class X-A-1 Notional Amount
            Schedule attached hereto as Exhibit C and (y) the Class A
            Certificate Principal Amount immediately prior to such Distribution
            Date. Distributions on the Class X-A-1 Certificates will be subject
            to certain limitations with respect to Basis Risk Shortfalls and the
            Class X-A Current Interest Restriction as provided in Sections
            5.02(a)(i) and 5.02(b). No principal will be distributed on the
            Class X-A-1 Certificates.

      (4)   The Certificate Interest Rate for the Class X-A-2 Certificates for
            any Distribution Date, is the excess, if any, of the Adjusted Net
            WAC over the Certificate Interest Rate of the Class A Certificates
            for such Distribution Date.

      (5)   The Class X-A-2 Certificates on any Distribution Date will have a
            Class Notional Amount equal to the Class A Certificate Principal
            Balance immediately prior to such Distribution Date. Distributions
            on the Class X-A-2 Certificates will be subject to certain
            limitations with respect to Basis Risk Shortfalls and the Class X-A
            Current Interest Restriction as provided in Section 5.02(a)(I) and
            5.02(b). No principal will be distributed on the Class X-A-2
            Certificates.

      (6)   The Class X-B Certificates will represent a 100% interest in each of
            Component XB1, Component XB2 and Component XB3. See the definitions
            of "Component XB1," "Component XB2" and "Component XB3" for interest
            rates and notional balances of the Components.

      (7)   The Certificate Interest Rate with respect to any Distribution Date
            (and the related Accrual Period) for the Class A-R Certificate will
            equal the Net WAC.

      (8)   The Certificate Interest Rate with respect to any Distribution Date
            (and the related Accrual Period) for the Class B-1 Certificates will
            be the least of (i) LIBOR plus 0.63%; (ii) the Net WAC and (iii)
            11.75%; provided, however, if the Mortgage Loans and related
            property are not purchased pursuant to Section 7.01(b) on the
            Initial Optional Purchase Date, then with respect to each subsequent
            Distribution Date the per annum rate calculated pursuant to clause
            (i) above with respect to the Class B-1 Certificates will be LIBOR
            plus 0.945%.

      (9)   The Certificate Interest Rate with respect to any Distribution Date
            (and the related Accrual Period) for the Class B-2 Certificates will
            be the least of (i) LIBOR plus 1.50%; (ii) the Net WAC and (iii)
            11.75%; provided, however, if the Mortgage Loans and related
            property are not purchased pursuant to Section 7.01(b) on the
            Initial Optional Purchase Date, then with respect to each subsequent
            Distribution Date the per annum rate calculated pursuant to clause
            (i) above with respect to the Class B-2 Certificates will be LIBOR
            plus 2.25%.

      (10)  The Certificate Interest Rate with respect to any Distribution Date
            (and the related Accrual Period) for the Class B-3 Certificates will
            be the least of (i) LIBOR plus 1.50%; (ii) the Net WAC and (iii)
            11.75%; provided, however, if the Mortgage Loans and related
            property are not purchased pursuant to Section 7.01(b) on the
            Initial Optional Purchase Date, then with respect to each subsequent
            Distribution Date the per annum rate calculated pursuant to clause
            (i) above with respect to the Class B-3 Certificates will be LIBOR
            plus 2.25%.

                                       14
<PAGE>

      (11)  The Certificate Interest Rates with respect to any Distribution Date
            (and the related Accrual Period) for the, Class B-4, Class B-5 and
            Class B-6 Certificates will be equal to the Net WAC.

      As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $1,024,596,109.98.

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

                                   ARTICLE I

                                   DEFINITIONS

      Section 1.01 Definitions.

      The following words and phrases, unless the context otherwise requires,
shall have the following meanings:

      Accountant: A Person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.

      Accrual Period: With respect to any Distribution Date and any Class of
LIBOR Certificates and each Component the period commencing on the 25th day of
the month preceding the month in which the Distribution Date occurs and ending
on the 24th day of the month in which the Distribution Date occurs; provided,
however, that the first Accrual Period with respect to the LIBOR Certificates
and each Component shall be the period beginning on the Closing Date and ending
on August 24, 2003. The Accrual Period applicable to all other Certificates, and
each Class of Lower Tier REMIC Interests shall be the calendar month immediately
preceding the month in which the related Distribution Date occurs. Interest
shall accrue on all Classes of Certificates, all Components and on all Lower
Tier REMIC Interests on the basis of a 360-day year consisting of twelve 30-day
months.

      Acknowledgements: The Assignment, Assumption and Recognition Agreements,
each dated July 29, 2003, among the Seller, Sequoia Residential Funding, Inc.,
the Depositor, the Trustee and the Originator or the Servicer assigning rights
under the Purchase Agreement and the Servicing Agreements from the Seller to
Sequoia Residential Funding, Inc., and from Sequoia Residential Funding, Inc. to
the Depositor, and from the Depositor to the Trustee for the benefit of the
Certificateholders.

      Act: The Securities Act of 1933, as amended.

      Additional Collateral: With respect to any Additional Collateral Mortgage
Loan, the meaning assigned thereto in the Master Mortgage Loan Purchase
Agreement.

      Additional Collateral Mortgage Loan: Each Mortgage Loan identified as such
in the Mortgage Loan Schedule.

                                       15
<PAGE>

      Additional Collateral Servicing Agreement: The Additional Collateral
Servicing Agreement, dated as of August 1, 2002, among Cendant, the Seller and
Redwood Trust, Inc., as amended to date and modified by the related
Acknowledgements, a copy of which is attached as Exhibit D.

      Adjusted Net WAC: For any Distribution Date, a per annum rate equal to the
product of (i) 12 and (ii) a fraction, the numerator of which is the excess of
(x) what the Current Interest on the Class A Certificates would have been for
such Distribution Date had the Certificate Interest Rate on the Class A
Certificates been the Net WAC over (y) the Current Interest on the Class X-A-1
Certificates for such Distribution Date (as determined without regard to the
Class X-A Current Interest Restriction) and the denominator of which is the
Class Principal amount of the Class A Certificates immediately prior to such
Distribution Date.

      Adjustment Date: As to any Mortgage Loan, the date on which the related
Mortgage Rate adjusts in accordance with the terms of the related Mortgage Note.

      Advance: With respect to a Mortgage Loan, the payments required to be made
by the Trustee solely in its capacity as successor Servicer or the Servicer with
respect to any Distribution Date pursuant to this Agreement or the Portfolio
Servicing Agreement, as applicable, the amount of any such payment being equal
to the aggregate of the payments of principal and interest (net of the
applicable Servicing Fee and net of any net income in the case of any REO
Property) on the Mortgage Loans that were due on the related Due Date and not
received as of the close of business on the related Determination Date, less the
aggregate amount of any such delinquent payment that either the Trustee or the
Servicer has determined would constitute Nonrecoverable Advances if advanced.

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

      Aggregate Senior Percentage: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate of the Class
Principal Amounts of the Class A and Class A-R Certificates and the denominator
of which is the Aggregate Stated Principal Balance, but in no event greater than
100%.

      Aggregate Subordinate Percentage: As to any Distribution Date, the
difference between 100% and the Aggregate Senior Percentage for such
Distribution Date, but in no event less than zero.

      Aggregate Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances for all Mortgage Loans which were
outstanding on the Due Date in the month preceding the month of such
Distribution Date.

                                       16
<PAGE>

      Aggregate Voting Interests: The aggregate of the Voting Interests of all
the Certificates under this Agreement.

      Agreement: This Trust Agreement and all amendments and supplements hereto.

      Allocable Share: With respect to each Class of Subordinate Certificates
and any Distribution Date, the percentage equivalent of a fraction, the
numerator of which is the Class Principal Amount of such Class and the
denominator of which is the aggregate of the Class Principal Amounts of each
Class of Subordinate Certificates.

      Applicable Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Subordination
Percentages of such Class and the aggregate Class Subordination Percentage of
all other Classes of Subordinate Certificates having higher numerical Class
designations than such Class.

      Appraised Value: With respect to any Mortgage Loan, the Appraised Value of
the related Mortgaged Property shall be: (i) with respect to a Mortgage Loan
other than a Refinancing Mortgage Loan, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the
time of the origination of such Mortgage Loan; and (ii) with respect to a
Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the
appraisal made at the time of the origination of such Refinancing Mortgage Loan.

      Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.

      Authenticating Agent: The Trustee or any authenticating agent appointed by
the Trustee pursuant to Section 6.10 until any successor authenticating agent
for the Certificates is named, and thereafter "Authenticating Agent" shall mean
any such successor.

      Authorized Officer: Any Person who may execute an Officer's Certificate on
behalf of the Depositor.

      Available Distribution Amount: With respect to any Distribution Date, the
total amount of all cash received by the Trustee on the Mortgage Loans from the
Servicer or otherwise through the Distribution Account Deposit Date for deposit
into the Distribution Account in respect of such Distribution Date, including
(1) all scheduled installments of interest (net of the related Servicing Fee)
and principal collected on the related Mortgage Loans and due during the Due
Period related to such Distribution Date, together with any Advances in respect
thereof, (2) all Insurance Proceeds, Liquidation Proceeds and the proceeds of
any Additional Collateral from the related Mortgage Loans, in each case for such
Distribution Date, (3) all partial or full Principal Prepayments, together with
any accrued interest thereon, identified as having been

                                       17
<PAGE>

received from the related Mortgage Loans during the related Prepayment Period,
(4) any amounts received from the Servicer in respect of Prepayment Interest
Shortfalls with respect to the related Mortgage Loans; and (5) the aggregate
Purchase Price of all Defective Mortgage Loans and Converted Mortgage Loans (if
any) purchased from the Trust Fund during the related Prepayment Period, minus:

            (A) all related fees, charges and amounts payable or reimbursable to
            the Trustee under this Agreement, to the extent that, if paid by the
            Trust Fund, such fees, charges or other amounts would constitute
            "unanticipated expenses" (within the meaning of Treasury Regulations
            Section 1.860G-1(b)(3)(ii)) of any of the REMICs provided for herein
            and up to an aggregate maximum amount equal to $300,000 annually
            such aggregate maximum amount not to include any Servicing Transfer
            Costs, or to the Servicer under the Servicing Agreement;

            (B) in the case of (2), (3), (4) and (5) above, any related
            unreimbursed expenses incurred by the Servicer in connection with a
            liquidation or foreclosure and any unreimbursed Advances or
            Servicing Advances due to the Servicer (or, pursuant to Section
            5.04, the Trustee);

            (C) any related unreimbursed Nonrecoverable Advances due to the
            Servicer (or, pursuant to Section 5.04, the Trustee); and

            (D) in the case of (1) through (4) above, any related amounts
            collected which are determined to be attributable to a subsequent
            Due Period or Prepayment Period.

      Bankruptcy: As to any Person, the making of an assignment for the benefit
of creditors, the filing of a voluntary petition in bankruptcy, adjudication as
a bankrupt or insolvent, the entry of an order for relief in a bankruptcy or
insolvency proceeding, the seeking of reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief, or seeking, consenting
to or acquiescing in the appointment of a trustee, receiver or liquidator,
dissolution, or termination, as the case may be, of such Person pursuant to the
provisions of either the Bankruptcy Code or any other similar state laws.

      Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.

      Bankruptcy Loss: With respect to any Mortgage Loan, losses that are
incurred as a result of a Deficient Valuation or Debt Service Reduction as
reported by the Servicer to the Trustee.

      Bankruptcy Loss Coverage Amount: As of any Distribution Date, the Initial
Bankruptcy Loss Coverage Amount as reduced by the aggregate amount of Bankruptcy
Losses allocated to the Certificates since the Cut-off Date; provided, however,
that the Bankruptcy Loss Coverage Amount may also be reduced pursuant to a
letter from each Rating Agency to the Trustee to the effect that any such
reduction shall not result in a downgrading of the then current ratings assigned
by such Rating Agency to the Class A Certificates.

                                       18
<PAGE>

      Bankruptcy Loss Coverage Termination Date: The date on which the
Bankruptcy Loss Coverage Amount is reduced to zero.

      Basis Risk Shortfall: With respect to any Distribution Date and any Class
of LIBOR Certificates, the excess, if any, of (i) the amount of Current Interest
that would have been payable on such Class for such Distribution Date if the
Certificate Interest Rate for such Class as set forth in the Preliminary
Statement hereto were determined without regard to clause (ii) in the definition
thereof, over (ii) the actual Current Interest payable on such Class for such
Distribution Date.

      BBA: The British Banker's Association.

      Book-Entry Certificates: Beneficial interests in Certificates designated
as "Book-Entry Certificates" in this Agreement, ownership and transfers of which
shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a Book-Entry
Termination whereupon book-entry registration and transfer are no longer
permitted and Definitive Certificates are to be issued to Certificate Owners,
such Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of
the Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: the Class A, Class X-A-1, Class X-A-2, Class B-1, Class B-2, Class
B-3 and Class X-B.

      Book-Entry Termination: The occurrence of any of the following events: (i)
the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book Entry Certificates, and the Depositor
is unable to locate a qualified successor; or (ii) the Depositor at its option
advises the Trustee and the Certificate Registrar in writing that it elects to
terminate the book-entry system through the Clearing Agency.

      Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in New York, New York or, if other than New York,
the city in which the Corporate Trust Office of the Trustee is located, or the
States of Maryland or Minnesota, are authorized or obligated by law or executive
order to be closed.

      Cendant: Cendant Mortgage Corporation or its successors in interest.

      Certificate: Any one of the certificates signed by the Trustee and
authenticated by the Authenticating Agent in substantially the forms attached
hereto as Exhibit A.

      Certificate Interest Rate: With respect to each Class of Certificates and
any Distribution Date, the applicable per annum rate described in the
Preliminary Statement hereto.

      Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the owner of such Book-Entry Certificate, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).

      Certificate Principal Amount: With respect to any Certificate (other than
a Class X-A-1, Class X-A-2 or Class X-B Certificate), at the time of
determination, the maximum specified

                                       19
<PAGE>

dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the initial principal amount set forth on
the face of such Certificate, less (i) the amount of all principal distributions
previously made with respect to such Certificate; (ii) all Realized Losses
allocated to such Certificate; and (iii) in the case of a Subordinate
Certificate, any Subordinate Certificate Writedown Amount allocated to such
Certificates. For purposes of Article V hereof, unless specifically provided to
the contrary, Certificate Principal Amounts shall be determined as of the close
of business of the immediately preceding Distribution Date, after giving effect
to all distributions made on such date.

      Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02.

      Certificateholder: The meaning provided in the definition of "Holder."

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

      Class: Collectively, Certificates bearing the same class designation. In
the case of the REMIC 1, REMIC 2, REMIC 3 and the Upper Tier REMIC, the term
"Class" refers to all interests having the same alphanumeric designation.

      Class Notional Amount: With respect to the Class X-A-1 and Class X-A-2
Certificates, the applicable class notional amount calculated as provided in the
Preliminary Statement hereto.

      Class Principal Amount: With respect to each Class of Certificates (other
than a Class X-A-1, Class X-A-2 or Class X-B Certificate) the aggregate of the
Certificate Principal Amounts of all Certificates of such Class at the date of
determination.

      Class Subordination Percentage: With respect to each Class of Subordinate
Certificates, for each Distribution Date, the percentage obtained by dividing
the Class Principal Amount of such Class immediately prior to such Distribution
Date by the sum of the Class Principal Amounts of all Classes of Certificates
immediately prior to such Distribution Date.

      Class A-R Certificate: The Class A-R Certificate executed by the Trustee,
and authenticated and delivered by the Authenticating Agent, substantially in
the form annexed hereto as Exhibit A, and evidencing the ownership of the
residual interest in the Upper Tier REMIC, the Class LT1-R Interest, the Class
LT2-R Interest and the Class LT3-R Interest.

      Class X-A Current Interest Restriction: As to any Distribution Date, the
aggregate Current Interest for the Class X-A-1 and Class X-A-2 Certificates for
such Distribution Date cannot exceed the excess of (i) the Current Interest that
would have accrued on the Class A Certificates for such Distribution Date had
the Certificate Interest Rate for the Class A Certificates been equal to the Net
WAC over (ii) the actual Current Interest on the Class A Certificates for such
Distribution Date.

      Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust Company.

                                       20
<PAGE>

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

      Closing Date: July 29, 2003.

      Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

      Compensating Interest Payment: As to any Distribution Date, the lesser of
(1) the Servicing Fee for such date and (2) any Prepayment Interest Shortfall
for such date.

      Component Interest Rate: With respect to Component XB1 and any
Distribution Date, the interest rate specified in the definition of Component
XB1. With respect to Component XB2 and any Distribution Date, the interest rate
specified in the definition of Component XB2. With respect to Component XB3 and
any Distribution Date, the interest rate specified in the definition of
Component XB3.

      Component Notional Amount: With respect to Component XB1 and any
Distribution Date, the notional amount specified in the definition of Component
XB1. With respect to Component XB2 and any Distribution Date, the notional
amount specified in the definition of Component XB2. With respect to Component
XB3 and any Distribution Date, the notional amount specified in the definition
of Component XB3.

      Component XB1: A regular interest in the Upper Tier REMIC having a
notional amount equal to the Class Principal Amount of the Class B-1
Certificates immediately before the related Distribution Date and having an
interest rate with respect to any Distribution Date (and the related Accrual
Period) equal to the excess of the Net WAC over the Certificate Interest Rate on
the Class B-1 Certificates.

      Component XB2: A regular interest in the Upper Tier REMIC having a
notional amount equal to the Class Principal Amount of the Class B-2
Certificates immediately before the related Distribution Date and having an
interest rate with respect to any Distribution Date (and the related Accrual
Period) equal to the excess of the Net WAC over the Certificate Interest Rate on
the Class B-2 Certificates.

      Component XB3: A regular interest in the Upper Tier REMIC having a
notional amount equal to the Class Principal Amount of the Class B-3
Certificates immediately before the related Distribution Date and having an
interest rate with respect to any Distribution Date (and the related Accrual
Period) equal to the excess of the Net WAC over the Certificate Interest Rate on
the Class B-3 Certificates.

      Components: Each of Component XB1, Component XB2 and Component XB3.

      Cooperative Corporation: The entity that holds title (fee or an acceptable
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which

                                       21
<PAGE>

governs the Cooperative Property, which Cooperative Corporation must qualify as
a Cooperative Housing Corporation under Section 216 of the Code.

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

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

      Cooperative Shares: Shares issued by a Cooperative Corporation.

      Corporate Trust Office: With respect to the presentment of Certificates
for registration of transfer, exchange or final payment, Wells Fargo Bank
Minnesota, National Association, 6th Street and Marquette Avenue, Minneapolis,
Minnesota 55479, Attention: Merrill Lynch Mortgage Investors Trust Series MLCC
2003-D and for all other purposes, Wells Fargo Bank Minnesota, National
Association, 9062 Old Annapolis Road, Columbia, Maryland 21045, or such other
address as the Trustee may designate from time to time by notice to the
Certificateholders.

      Corresponding Classes of Certificates or Components: With respect to each
Lower Tier REMIC Interest, the Class or Classes of Certificates or Components
appearing opposite such Lower Tier REMIC Interest as described in the
Preliminary Statement.

      Credit Support Depletion Date: The first Distribution Date, if any, on
which the aggregate Certificate Principal Amounts of the Subordinate
Certificates have been reduced to zero.

      Current Interest: With respect to each Class of Certificates and each
Component on each Distribution Date, the aggregate amount of interest accrued at
the applicable Certificate Interest Rate or Component Interest Rate during the
related Accrual Period on the Class Principal Amount, Class Notional Amount or
Component Notional Amount of such Class or Component; provided, however, that
the aggregate Current Interest for the Class X-A-1 and Class X-A-2 Certificates
on any Distribution Date is subject to the Class X-A Current Interest
Restriction.

      Custodial Accounts: Each custodial account (other than an Escrow Account)
established and maintained by the Servicer pursuant to the Servicing Agreement.

      Custody Agreement: The Custodial Agreement, dated as of December 15, 2000,
between Merrill Lynch Credit Corporation and Wells Fargo Bank Minnesota, N.A.,
as custodian, as amended by Amendment No. 1, dated as of January 16, 2002 a copy
of which (excluding all exhibits thereto) is attached hereto as Exhibit O.

      Cut-off Date: July 1, 2003.

      Cut-off Date Balance: With respect to the Mortgage Loans in the Trust Fund
on the Closing Date, the Aggregate Stated Principal Balance as of the Cut-off
Date.

                                       22
<PAGE>

      Debt Service Reduction: With respect to any Mortgage Loan, a reduction by
a court of competent jurisdiction in a proceeding under the Bankruptcy Code in
the Scheduled Payment for such Mortgage Loan which became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any reduction that results in a permanent forgiveness of principal.

      Defective Mortgage Loan: The meaning specified in Section 2.04(a).

      Deficient Valuation: With respect to any Mortgage Loan, a valuation of the
related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court which is final and non-appealable
in a proceeding under the Bankruptcy Code.

      Definitive Certificate: A Certificate of any Class issued in definitive,
fully registered, certificated form.

      Deleted Mortgage Loan: As defined in Section 2.04(a).

      Delinquent: Any Mortgage Loan with respect to which the Scheduled Payment
due on a Due Date is not received.

      Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
having its principal place of business at 250 Vesey Street, 4 World Financial
Center, 10th Floor, New York, New York 10080, or its successors in interest.

      Determination Date: With respect to each Distribution Date, the 15th day
of the month in which such Distribution Date occurs, or, if such 15th day is not
a Business Day, the next succeeding Business Day.

      Disqualified Organization: A "disqualified organization" as defined in
Section 860E(e)(5) of the Code.

      Distribution Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.01 in the name of the Trustee for the
benefit of the Certificateholders and designated "Wells Fargo Bank Minnesota,
National Association, in trust for registered holders of Merrill Lynch Mortgage
Investors Trust Series MLCC 2003-D, Mortgage Pass-Through Certificates." Funds
in the Distribution Account (exclusive of any earnings on investments made with
funds deposited in the Distribution Account) shall be held in trust for the
Trustee and the Certificateholders for the uses and purposes set forth in this
Agreement.

      Distribution Account Deposit Date: The 18th day of each calendar month
after the initial issuance of the Certificates or, if such 18th day is not a
Business Day, the immediately preceding Business Day, commencing in August 2003.

      Distribution Date: The 25th day of each month or, if such 25th day is not
a Business Day, the next succeeding Business Day, commencing in August 2003.

                                       23
<PAGE>

      Due Date: With respect to any Mortgage Loan, the date on which a Scheduled
Payment is due under the related Mortgage Note as indicated in the Mortgage
Note.

      Due Period: As to any Distribution Date, the period beginning on the
second day of the month preceding the month of such Distribution Date, and
ending on the first day of the month of such Distribution Date.

      Effective Loan-to-Value Ratio: A fraction, expressed as a percentage, the
numerator of which is the original Stated Principal Balance of the Mortgage
Loan, less the amount of Additional Collateral required to secure such Mortgage
Loan at the time of origination, if any, and the denominator of which is the
Appraised Value of the related Mortgage Property at such date.

      Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each Rating Agency, the Certificateholders have
a claim with respect to the funds in such account or a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the trust department of a federal or state chartered depository institution or
trust company, acting in its fiduciary capacity or (iv) any other account
acceptable to each Rating Agency. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee, any Paying Agent, or the Servicer.

      ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and as it may be further amended from time to time, any successor statutes
thereto, and applicable U.S. Department of Labor regulations issued pursuant
thereto in temporary or final form.

      ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of an
Underwriter's Exemption.

      ERISA-Restricted Certificate: The Class A-R, Class B-4, Class B-5 or Class
B-6 Certificates.

      Escrow Account: As defined in the Servicing Agreement.

      Event of Default: The failure of the Servicer to perform any of its
obligations under the Servicing Agreement.

                                       24
<PAGE>

      Excess Loss: With respect to any Mortgage Loan, the amount of any (i)
Fraud Loss realized after the Fraud Loss Coverage Termination Date, (ii) Special
Hazard Loss realized after the Special Hazard Loss Coverage Termination Date or
(iii) Bankruptcy Loss realized after the Bankruptcy Loss Coverage Termination
Date.

      Fannie Mae: The entity formerly known as the Federal National Mortgage
Association, a federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.

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

      FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

      Final Certification: As referred to in Section 2.02(c), the form of which
is set forth at Exhibit L.

      Fitch Ratings: Fitch, Inc., or any successor in interest.

      Fraud Loss Coverage Amount: As of the Closing Date, $20,491,922, subject
to reduction from time to time by the amount of any Fraud Losses allocated to
the Certificates. In addition, on each anniversary of the Cut-Off Date
(beginning with the second anniversary), the Fraud Loss Coverage Amount shall be
reduced as follows: (a) on the second, third and fourth anniversaries of the
Cut-Off Date, to an amount equal to the lesser of (i) 1.00% of the then current
Aggregate Stated Principal Balance and (ii) the excess of the Fraud Loss
Coverage Amount as of the immediately preceding anniversary of the Cut-Off Date,
over the cumulative amount of Fraud Losses allocated to the Certificates since
such preceding anniversary; and (b) on the fifth anniversary of the Cut-Off
Date, to zero; provided, however, that the Fraud Loss Coverage Amount may also
be reduced pursuant to a letter from each Rating Agency to the Trustee to the
effect that any such reduction shall not result in the downgrading of the then
current ratings assigned by such Rating Agency to the Classes of Senior
Certificates.

      Fraud Loss Coverage Termination Date: The date on which the Fraud Loss
Coverage Amount is reduced to zero.

      Fraud Losses: Realized Losses on any Mortgage Loan sustained by reason of
a default arising from fraud, dishonesty or misrepresentation on the part of the
Mortgagor in connection with that Mortgage Loan, as reported by the Servicer to
the Trustee.

      Global Securities: The global certificates representing the Book-Entry
Certificates.

      Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Trustee or the
Servicer, or any Affiliate thereof shall be deemed not to be outstanding in
determining whether the requisite percentage necessary to effect any such
consent

                                       25
<PAGE>

has been obtained, except that, in determining whether the Trustee shall be
protected in relying upon any such consent, only Certificates which a
Responsible Officer of the Trustee knows to be so owned shall be disregarded.
The Trustee may request and conclusively rely on certifications by the Depositor
and the Servicer in determining whether any Certificates are registered to an
Affiliate of the Depositor or the Servicer.

      HUD: The United States Department of Housing and Urban Development, or any
successor thereto.

      Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission's Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.

      Index: As to each Mortgage Loan, the index from time to time in effect for
adjustment of the Mortgage Rate as set forth as such on the related Mortgage
Note.

      Initial Bankruptcy Loss Coverage Amount: $100,000.

      Initial Certification: As referred to Section 2.02(a), the form of which
is set forth at Exhibit K.

      Initial LIBOR Rate: 1.1000% with respect to the LIBOR Certificates.

      Initial Optional Purchase Date: The first Distribution Date following the
date on which the Aggregate Stated Principal Balance is less than 10.00% of the
Cut-off Date Balance.

      Insurance Policy: With respect to any Mortgage Loan, any insurance policy,
including all names and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.

      Insurance Proceeds: Proceeds paid by any Insurance Policy (excluding
proceeds required to be applied to the restoration and repair of the related
Mortgaged Property or released to the Mortgagor), in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses and
(i) the proceeds from any Limited Purpose Surety Bond.

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

      Interest Distribution Amount: For each Class of Certificates or Component,
on any Distribution Date, the Current Interest for such Class or Component, as
reduced by such Class's or Component's share of Net Prepayment Interest
Shortfalls, Relief Act Reductions and the interest portion of Excess Losses. Any
such shortfalls and losses shall be allocated among all Classes of Certificates
proportionately on the basis of (1) in the case of the Senior Certificates,

                                       26
<PAGE>

Current Interest otherwise distributable thereon on such Distribution Date; and
(2) in the case of Subordinate Certificates, interest accrued at the Net WAC
before taking into account any reductions in such amounts from Net Interest
Shortfalls for that Distribution Date.

      Interest-Only Certificates: Any of the Class X-A-1, Class X-A-2, and Class
X-B Certificates.

      Interest Shortfall: As to any Class of Certificates or Component and any
Distribution Date, (i) the amount by which the Interest Distribution Amount
(exclusive of any payments to such Class in respect of Basis Risk Shortfalls or
Unpaid Basis Risk Shortfalls) for such Class or Component on such Distribution
Date and all prior Distribution Dates exceeds (ii) amounts distributed in
respect thereof to such Class or Component on prior Distribution Dates (as
determined without reduction for amounts not paid to such Class or in respect of
such Component as a result of the provisos set forth in Sections 5.02(a)(i) and
5.02(b) hereof.

      Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.

      Latest Possible Maturity Date: The Distribution Date in August 2028.

      LIBOR: With respect to the first Accrual Period, the Initial LIBOR Rate.
With respect to each subsequent Accrual Period, a per annum rate determined on
the LIBOR Determination Date in the following manner by the Trustee on the basis
of the "Interest Settlement Rate" set by the BBA for one-month United States
dollar deposits, as such rates appear on the Telerate Page 3750, as of 11:00
a.m. (London time) on such LIBOR Determination Date.

      (a) If on such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time),
or if the Telerate Page 3750 is not available on such date, the Trustee will
obtain such rate from Reuters' "page LIBOR 01" or Bloomberg's page "BBAM." If
such rate is not published for such LIBOR Determination Date, LIBOR for such
date will be the most recently published Interest Settlement Rate. In the event
that the BBA no longer sets an Interest Settlement Rate, the Trustee will
designate an alternative index that has performed, or that the Trustee expects
to perform, in a manner substantially similar to the BBA's Interest Settlement
Rate. The Trustee will select a particular index as the alternative index only
if it receives an Opinion of Counsel, which opinion shall be an expense
reimbursed from the Distribution Account, that the selection of such index will
not cause any of the REMICs to lose their classification as REMICs for federal
income tax purposes.

      (b) The establishment of LIBOR by the Trustee and the Trustee's subsequent
calculation of the Certificate Interest Rate applicable to the LIBOR
Certificates for the relevant Accrual Period, in the absence of manifest error,
will be final and binding.

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

      LIBOR Certificate: Any Class A, Class B-1, Class B-2 and Class B-3
Certificate.

                                       27
<PAGE>

      LIBOR Determination Date: With respect to any LIBOR Certificates the
second LIBOR Business Day immediately preceding the commencement of each Accrual
Period.

      Limited Purpose Surety Bond: Any Limited Purpose Surety Bond listed in
Exhibit F.

      Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (in accordance with the Servicing Agreement) that it has
received all amounts it expects to receive in connection with the liquidation of
such Mortgage Loan including the final disposition of an REO Property.

      Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of defaulted Mortgage Loans,
whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property.

      Loan-To-Value Ratio: With respect to any Mortgage Loan and as to any date
of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at such date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.

      Lower Tier REMIC Interests: Any of the REMIC 1 Interests, the REMIC 2
Interests or the REMIC 3 Interests.

      Lower Tier Regular Interests: Any of the REMIC 1 Regular Interests, the
REMIC 2 Regular Interests or the REMIC 3 Regular Interests.

      Margin: As to each Mortgage Loan, the percentage amount set forth on the
related Mortgage Note added to the Index in calculating the Mortgage Rate
thereon.

      Master Mortgage Loan Purchase Agreement: The Master Mortgage Loan Purchase
Agreement, dated as of April 1, 1998, between RWT Holdings, Inc. and Merrill
Lynch Credit Corporation, as amended to date and modified by the related
Acknowledgements, a copy of which is attached hereto as Exhibit E.

      Material Defect: As defined in Section 2.02(b).

      Maximum Rate: As to any Mortgage Loan, the maximum rate set forth on the
related Mortgage Note at which interest can accrue on such Mortgage Loan.

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

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

                                       28
<PAGE>

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

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

      Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.02.

      Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
simple interest in real property securing a Mortgage Note, together with
improvements thereto.

      Mortgage Documents: With respect to each Mortgage Loan, the mortgage
documents required to be delivered to the Trustee pursuant to the Trust
Agreement.

      Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 (including any
Replacement Loan and REO Property), including without limitation, each Mortgage
Loan listed on the Mortgage Loan Schedule, as amended from time to time.

      Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which
shall identify each Mortgage Loan, as such schedule may be amended by the
Depositor or the Servicer from time to time to reflect the addition of
Replacement Mortgage Loans to, or the deletion of Deleted Mortgage Loans from,
the Trust Fund. Such schedule shall, among other things separately identify
One-Month LIBOR Loans, Six-Month LIBOR Loans and Additional Collateral Mortgage
Loans.

      Mortgage Loan Servicing Agreement: The Mortgage Loan Flow Purchase, Sale
and Servicing Agreement, dated as of August 1, 2002, between the Seller,
Cendant, Bishop's Gate Residential Mortgage Trust and Redwood Trust, Inc., as
amended to date and modified by the related Acknowledgements, a copy of which is
attached as Exhibit D.

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

      Mortgaged Property: The underlying property, including any Additional
Collateral, securing a Mortgage Loan which, with respect to a Cooperative Loan,
is the related Cooperative Shares and Property Lease.

      Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement,
dated as of August 1, 2003, by and among the Seller, Sequoia Residential Trust,
Inc. and the Depositor with respect to the sale and purchase of the Mortgage
Loans.

      Mortgage Rate: As to any Mortgage Loan, the annual rate of interest borne
by the related Mortgage Notes.

      Mortgagor: The obligor on a Mortgage Note.

                                       29
<PAGE>

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

      Net Mortgage Rate: With respect to any Mortgage Loan and any Distribution
Date, the related Mortgage Rate as of the Due Date in the month preceding the
month of such Distribution Date reduced by the Servicing Fee Rate for such
Mortgage Loan.

      Net Prepayment Interest Shortfall: With respect to any Mortgage Loan and
any Distribution Date, the amount by which any Prepayment Interest Shortfall for
such date exceeds the amount payable by the Servicer in respect of such
shortfall.

      Net WAC: As to any Distribution Date, the weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the Due Date of the month preceding
the month of such Distribution Date, weighted on the basis of their outstanding
Stated Principal Balances (after giving effect to the Scheduled Payments due on
or before such Due Date and Principal Prepayments received prior to such Due
Date) at such time. When the term "Net WAC" is used herein with reference to
only the One-Month LIBOR Loans or only the Six-Month LIBOR Loans, such weighted
average shall be computed with reference solely to the Mortgage Loans in the
relevant group.

      Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.

      Non-permitted Foreign Holder: As defined in Section 3.03(f).

      Nonrecoverable Advance: Any portion of an Advance or Servicer Advance
previously made or proposed to be made by the Servicer (as certified in an
Officer's Certificate of the Servicer) or by the Trustee pursuant to Section
5.04, which in the good faith judgment of such party, shall not be ultimately
recoverable by such party from the related Mortgagor, related Liquidation
Proceeds or otherwise.

      Non-U.S. Person: Any person other than a "United States person" within the
meaning of Section 7701(a)(30) of the Code.

      Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Class Notional
Amount of such Class of Certificates for such Distribution Date.

      Notional Certificate: Any Class X-A-1 or Class X-A-2 Certificate.

      Offering Document: The Prospectus.

      Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries (or any other officer
customarily performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter, such
matter is referred because of such officer's knowledge of and familiarity with a
particular subject) of the

                                       30
<PAGE>

Depositor or the Trustee, as the case may be, and delivered to the Depositor or
the Trustee, as the case may be, as required by this Agreement

      Officer's Certificate of the Servicer: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Servicer, or (ii) if provided for herein, signed by a
Servicing Officer, as the case may be, and delivered to the Trustee.

      One-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for one-month U.S. dollar deposits.

      Opinion of Counsel: A written opinion of counsel, reasonably acceptable in
form and substance to the Trustee and who may be in-house or outside counsel to
the Depositor or the Trustee but which must be Independent outside counsel with
respect to any such opinion of counsel concerning the transfer of any Residual
Certificate or concerning certain matters with respect to ERISA, or the
taxation, or the federal income tax status, of each REMIC.

      Original Applicable Credit Support Percentage: With respect to each Class
of Subordinate Certificates, the corresponding percentage set forth opposite its
Class designation: Class B-1 - 3.10%; Class B-2 - 2.05%; Class B-3 - 1.25%;
Class B-4 - 0.80%; Class B-5 - 0.55%; and Class B-6 - 0.35%.

      Original Subordinate Principal Amount: The aggregate of the initial Class
Principal Amounts of the Classes of Subordinated Certificates.

      Originator: Merrill Lynch Credit Corporation, a Delaware corporation.

      Parent Power(R) Guaranty and Security Agreement: With respect to any
Additional Collateral Loan, as defined in the Master Mortgage Loan Purchase
Agreement.

      Paying Agent: Any paying agent appointed by the Trustee pursuant to
Section 3.08.

      Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than a Notional Certificate, a Class X-B
Certificate or the Class A-R Certificate, the Percentage Interest evidenced
thereby shall equal the initial Certificate Principal Amount thereof divided by
the initial Class Principal Amount of all Certificates of the same Class. With
respect to the Class A-R Certificate, the Percentage Interest evidenced thereby
shall be as specified on the face thereof, or otherwise, be equal to 100%. With
respect to any Notional Certificate, the Percentage Interest evidenced thereby
shall equal its initial Notional Amount as set forth on the face thereof divided
by the initial Class Notional Amount of such Class. With respect to any Class
X-B Certificate, the Percentage Interest represented thereby shall equal the
initial aggregate Component Notional Amount of its Components divided by the
initial aggregate Component Notional Amount of all of the Components.

                                       31
<PAGE>

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

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

            (ii) general obligations of or obligations guaranteed by any state
      of the United States or the District of Columbia receiving the highest
      long-term debt rating of each Rating Agency, or such lower rating as shall
      not result in the downgrading or withdrawal of the ratings then assigned
      to the Certificates by the Rating Agencies, as evidenced by a signed
      writing delivered by each Rating Agency;

            (iii) commercial or finance company paper which is then receiving
      the highest commercial or finance company paper rating of each Rating
      Agency rating such paper, or such lower rating as shall not result in the
      downgrading or withdrawal of the ratings then assigned to the Certificates
      by the Rating Agencies, as evidenced by a signed writing delivered by each
      Rating Agency;

            (iv) certificates of deposit, demand or time deposits, or bankers'
      acceptances issued by any depository institution or trust company
      incorporated under the laws of the United States or of any state thereof
      and subject to supervision and examination by federal and/or state banking
      authorities, provided that the commercial paper and/or long-term unsecured
      debt obligations of such depository institution or trust company (or in
      the case of the principal depository institution in a holding company
      system, the commercial paper or long-term unsecured debt obligations of
      such holding company, but only if Moody's is not the applicable Rating
      Agency) are then rated one of the two highest long-term and the highest
      short-term ratings of each Rating Agency for such securities, or such
      lower ratings as shall not result in the downgrading or withdrawal of the
      ratings then assigned to the Certificates by the Rating Agencies, as
      evidenced by a signed writing delivered by each Rating Agency;

            (v) guaranteed reinvestment agreements issued by any bank, insurance
      company or other corporation acceptable to the Rating Agencies at the time
      of the issuance of such agreements, as evidenced by a signed writing
      delivered by each Rating Agency;

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

            (vii) securities (other than stripped bonds, stripped coupons or
      instruments sold at a purchase price in excess of 115% of the face amount
      thereof) bearing interest or sold at a discount issued by any corporation
      incorporated under the laws of the United States or any state thereof
      which, at the time of such investment, have one of the two highest ratings
      of each Rating Agency (except if the Rating Agency is Moody's, such rating
      shall be the highest commercial paper rating of Moody's for any such
      series), or such lower rating as shall not result in the downgrading or
      withdrawal of the ratings then assigned to

                                       32
<PAGE>

      the Certificates by the Rating Agencies, as evidenced by a signed writing
      delivered by each Rating Agency;

            (viii) interests in any money market fund which at the date of
      acquisition of the interests in such fund and throughout the time such
      interests are held in such fund has the highest applicable rating by each
      Rating Agency rating such fund or such lower rating as shall not result in
      a change in the rating then assigned to the Certificates by each Rating
      Agency including funds for which the Trustee or any of its Affiliates is
      investment manager or adviser;

            (ix) short-term investment funds sponsored by any trust company or
      national banking association incorporated under the laws of the United
      States or any state thereof which on the date of acquisition has been
      rated by each applicable Rating Agency in their respective highest
      applicable rating category or such lower rating as shall not result in a
      change in the rating then specified stated maturity and bearing interest
      or sold at a discount acceptable to each Rating Agency as shall not result
      in the downgrading or withdrawal of the ratings then assigned to the
      Certificates by the Rating Agencies; and

            (x) such other investments having a specified stated maturity and
      bearing interest or sold at a discount acceptable to the Rating Agencies
      as shall not result in the downgrading or withdrawal of the ratings then
      assigned to the Certificates by the Rating Agencies;

provided, that no such instrument shall be a Permitted Investment if (i) such
instrument evidences the right to receive interest only payments with respect to
the obligations underlying such instrument, (ii) such instrument would require
the Depositor to register as an investment company under the Investment Company
Act of 1940, as amended, or (iii) such instrument would not be a "permitted
investment" within the meaning of such term as provided for in Section
860G(a)(5) of the Code and the Treasury Regulations thereunder.

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

      Plan Asset Regulations: The U.S. Department of Labor regulations set forth
in 29 C.F.R. 2510.3-101.

      Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full
month's interest at the applicable Mortgage Rate on the outstanding principal
balance of such Mortgage Loan immediately prior to such Principal Prepayment
over (ii) the amount of interest actually received with respect to such Mortgage
Loan in connection with such Principal Prepayment.

      Prepayment Period: With respect to each Distribution Date, the calendar
month immediately preceding the month in which the Distribution Date occurs.

                                       33
<PAGE>

      Primary Mortgage Insurance Policy: Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with respect to any
Mortgage Loan.

      Principal Distribution Amount: With respect to any Distribution Date, the
sum of (a) each Scheduled Payment of principal collected or advanced on the
related Mortgage Loans (before taking into account any Deficient Valuations or
Debt Service Reductions) and due during the related Due Period, (b) that portion
of the Purchase Price representing principal of any Mortgage Loans purchased in
accordance with Section 2.04 hereof and received during the related Prepayment
Period, (c) the principal portion of any related Substitution Amount received
during the related Prepayment Period, (d) the principal portion of all Insurance
Proceeds received during the related Prepayment Period with respect to Mortgage
Loans that are not yet Liquidated Mortgage Loans, (e) the principal portion of
all Net Liquidation Proceeds received during the related Prepayment Period with
respect to Liquidated Mortgage Loans, (f) the principal portion of the proceeds
of any Additional Collateral with respect to the Mortgage Loans, (g) the
principal portion of all partial and full principal prepayments of Mortgage
Loans applied by the Servicer during the related Prepayment Period and (h) on
the Distribution Date on which the Trust Fund is to be terminated pursuant to
Article X hereof, that portion of the Redemption Price in respect of principal.

      Principal Prepayment: Any Mortgagor payment of principal or other recovery
of principal on a Mortgage Loan that is recognized as having been received or
recovered in advance of its scheduled Due Date and applied to reduce the
principal balance of the Mortgage Loan in accordance with the terms of the
Mortgage Note or the Servicing Agreement.

      Principal Prepayment In Full: Any Principal Prepayment of the entire
principal balance of the Mortgage Loans.

      Pro Rata Senior Percentage: With respect to each Distribution Date, the
percentage equivalent of a fraction the numerator of which is the aggregate
Class Principal Amount of the Class A and Class A-R Certificates immediately
prior to such Distribution Date and the denominator of which is the Aggregate
Stated Principal Balance for such Distribution Date.

      Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.

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

      Prospectus: The prospectus supplement dated July 24, 2003, together with
the accompanying prospectus dated June 3, 2003, relating to the initial sale of
the Class A, Class A-R, Class X-A-1, Class X-A-2, Class X-B, Class B-1, Class
B-2 and Class B-3 Certificates.

      Purchase Price: With respect to any Mortgage Loan required or permitted to
be purchased by the Depositor pursuant to this Agreement, by the Servicer
pursuant to the Servicing Agreement, or by the Seller pursuant to the Master
Mortgage Loan Purchase Agreement, an amount equal to the sum of (i) 100% of the
unpaid principal balance of the Mortgage Loan on the date of such purchase, (ii)
accrued interest thereon at the applicable Net Mortgage Rate from

                                       34
<PAGE>

the date through which interest was last paid by the Mortgagor to the Due Date
in the month in which the Purchase Price is to be distributed to
Certificateholders and (iii) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund in connection with any violation relating to such
Mortgage Loan of any predatory or abusive lending law.

      Rating Agency: Each of Moody's, S&P and Fitch Ratings.

      Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Net Mortgage Rate from the Due Date as to which interest
was last paid or advanced (and not reimbursed) to Certificateholders up to the
Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Net Liquidation Proceeds and the proceeds of
any Additional Collateral, if any, received during the month in which such
liquidation occurred, to the extent applied as recoveries of interest at the Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect to
each Mortgage Loan which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation.

      Record Date: As to any Distribution Date (i) with respect to the LIBOR
Certificates, the last Business Day preceding such Distribution Date (or the
Closing Date, in the case of the first Distribution Date) unless such
Certificates shall no longer be Book-Entry Certificates, in which case the
Record Date shall be the last Business Day of the month preceding the month of
such Distribution Date and (ii) in the case of all other Certificates (including
LIBOR Certificates that are subsequently reissued as Definitive Certificates),
the last Business Day of the month preceding the month of each Distribution
Date.

      Redemption Date: Any Distribution Date on which Certificates may be
redeemed.

      Redemption Price: An amount equal to the sum of (i) 100% of the Class
Principal Amount of the outstanding Certificates; (ii) interest on such amount
at the applicable Certificate Interest Rate through the related Accrual Period
(as increased by any Interest Shortfalls but excluding any Unpaid Basis Risk
Shortfalls); (iii) any cost and damages incurred by the Trust Fund (or the
Trustee on behalf of the Trust Fund) in connection with the violation of any
anti-predatory or anti-abusive lending laws and (iv) the payment of all amounts
(including, without limitation, all previously unreimbursed Advances and
Servicing Advances and accrued and unpaid Servicing Fees) payable or
reimbursable to the Servicer or Trustee.

      Refinancing Mortgage Loan: Any Mortgage Loan originated in connection with
the refinancing of an existing mortgage loan.

      Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Civil Relief Act, the amount,

                                       35
<PAGE>

if any, by which (i) interest collectible on such Mortgage Loan for the most
recently ended calendar month is less than (ii) interest accrued thereon for
such month pursuant to the Mortgage Note.

      REMIC: Each pool of assets in the Trust Fund designated as a REMIC as
described in the Preliminary Statement.

      REMIC Components: Each of Component XB1, Component XB2 and Component XB3.

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

      REMIC 1: As described in the Preliminary Statement.

      REMIC 1 Interest: Each class of interest in REMIC 1 as described in the
Preliminary Statement.

      REMIC 1 Regular Interest: Each of the REMIC 1 Interests other than the
Class LT1-R Interest.

      REMIC 2: As described in the Preliminary Statement.

      REMIC 2 Interest: Each class of interest in REMIC 2 as described in the
Preliminary Statement.

      REMIC 2 IO Interests: Each class of interest in REMIC 2 that has the
letters "IO" in its class designation.

      REMIC 2 Regular Interest: Each of the REMIC 2 Interests other than the
Class LT2-R Interest.

      REMIC 3: As described in the Preliminary Statement.

      REMIC 3 Interest: Each class of interest in REMIC 3 as described in the
Preliminary Statement.

      REMIC 3 Regular Interest: Each of the REMIC 3 Interests other than the
Class LT3-R Interest.

      REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.

      Replacement Mortgage Loan: A mortgage loan substituted by the Seller for a
Deleted Mortgage Loan which must, on the date of such substitution, as confirmed
in a Request for

                                       36
<PAGE>

Release, substantially in the form attached to the Trust Agreement, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than, the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) have a Maximum Rate not less than (and not more than two percentage
points greater than) the Maximum Rate of the Deleted Mortgage Loan; (iii) have a
gross margin not less than that of the Deleted Mortgage Loan and, if Mortgage
Loans equal to 1% or more of the balance of the Mortgage Loans as of the Cut-off
Date have become Deleted Mortgage Loans, not more than two percentage points
more than that of the Deleted Mortgage Loan; (iv) have an Effective
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (v) have
Adjustment Dates that are no more or less frequent than the Deleted Mortgage
Loan; (vi) have a remaining term to maturity no greater than (and not more than
one year less than that of) the Deleted Mortgage Loan; (vii) not permit
conversion of the related Mortgage Rate to a permanent fixed Mortgage Rate;
(viii) not be a Cooperative Loan unless the Deleted Mortgage Loan was a
Cooperative Loan; (ix) have the same or better FICO credit score; (x) have an
initial interest adjustment date no earlier than five months before (and no
later than five months after) the initial adjustment date of the Deleted
Mortgage Loan, (xi) comply with each representation and warranty set forth in
Schedule B of this Agreement; and (xii) shall be accompanied by an Opinion of
Counsel that such Replacement Mortgage Loan would not adversely affect the REMIC
status of the Trust Estate or would not otherwise be prohibited by this
Indenture.

      Request for Release: A request for release, substantially in the form of
Exhibit N attached hereto, properly completed and signed by a Servicing Officer
(or, if delivered on behalf of the Seller or Depositor, an Authorized Officer
thereof).

      Residual Certificate: The Class A-R Certificate.

      Residual Interest: The Residual Certificate, other than the portion
thereof representing the right to payments in respect of the Class LT1-R
Interest, the Class LT2-R Interest and the Class LT3-R Interest.

      Responsible Officer: With respect to the Trustee, any officer in the
corporate trust department or similar group of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.

      Restricted Certificate: Any Class B-4, Class B-5 or Class B-6 Certificate.

      Restricted Global Security: As defined in Section 3.01(c).

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

      SAIF: The Saving's Association Insurance Fund, or any successor thereto.

      Schedule of Exceptions: As defined in Section 2.02(a) of the Trust
Agreement.

                                       37
<PAGE>

      Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan which,
unless otherwise specified in the Servicing Agreement, shall give effect to any
related Debt Service Reduction and any Deficient Valuation that affects the
amount of the monthly payment due on such Mortgage Loan.

      Seller: RWT Holdings, Inc., a Delaware corporation.

      Senior Certificate: Any one of the Class A, Class X-A-1, Class X-A-2,
Class X-B or Class A-R Certificates.

      Senior Percentage: Except as provided in this definition, with respect to
any Distribution Date before August 2013, 100%. The Senior Percentage for any
Distribution Date occurring (i) before the Distribution Date in August 2013 but
in or after August 2006 on which the Two Times Test is satisfied, or (ii) in or
after August 2013, is the Pro Rata Senior Percentage. If the Two Times Test is
satisfied with respect to any Distribution Date prior to the Distribution Date
in August 2006, the Senior Percentage is the Pro Rata Senior Percentage plus 50%
of an amount equal to 100% minus the Pro Rata Senior Percentage. With respect to
any Distribution Date after the Senior Termination Date, the Senior Percentage
will equal zero. If on any Distribution Date the allocation to the Senior
Certificates then entitled to distributions of principal of full and partial
principal prepayments and other amounts in the percentage required above would
reduce the sum of the Class Principal Amounts of those Certificates to below
zero, the Senior Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce such Class Principal Amounts to zero.

      Senior Prepayment Percentage: With respect to any Distribution Date,
during the ten years beginning on the first Distribution Date, 100%. Except as
provided herein, the Senior Prepayment Percentage for any Distribution Date
occurring on or after the tenth anniversary of the first Distribution Date shall
be as follows: (i) from August 2013 through July 2014, the Senior Percentage
plus 70% of the Subordinate Percentage for that Distribution Date; (ii) from
August 2014 through July 2015, the Senior Percentage plus 60% of the Subordinate
Percentage for that Distribution Date; (iii) from August 2015 through July 2016,
the Senior Percentage plus 40% of the Subordinate Percentage for that
Distribution Date; (iv) from August 2016 through July 2017, the related Senior
Percentage plus 20% of the Subordinate Percentage for that Distribution Date;
and (v) from and after August 2017, the Senior Percentage for that Distribution
Date; provided, however, that there shall be no reduction in the Senior
Prepayment Percentage unless both Step Down Conditions are satisfied; and
provided, further, that if on any such Distribution Date the Pro Rata Senior
Percentage exceeds the initial Pro Rata Senior Percentage, the Senior Prepayment
Percentage for that Distribution Date shall again equal 100%.

      Notwithstanding the above, if on any Distribution Date the Two Times Test
is satisfied, the Senior Prepayment Percentage shall equal the Senior Percentage
for such Distribution Date. In addition, if on any Distribution Date the
allocation to the Senior Certificates then entitled to distributions of
principal of full and partial principal prepayments and other amounts in the
percentage required above would reduce the sum of the Class Principal Amounts of
those Certificates to below zero, the Senior Prepayment Percentage for such
Distribution Date shall be limited to the percentage necessary to reduce the
Class Principal Amount to zero.

                                       38
<PAGE>

      Senior Principal Distribution Amount: With respect to any Distribution
Date, the sum of:

            (1) the Senior Percentage of all amounts described in clauses (a)
      through (d) of the definition of "Principal Distribution Amount" for that
      Distribution Date;

            (2) with respect to each Mortgage Loan which became a Liquidated
      Mortgage Loan during the related Prepayment Period, the lesser of

                  (x) the Senior Percentage of the Stated Principal Balance of
            that Mortgage Loan and

                  (y) the Senior Prepayment Percentage of the amount of the Net
            Liquidation Proceeds allocable to principal received with respect to
            that Mortgage Loan; and

            (3) the Senior Prepayment Percentage of the amounts described in
      clause (g) of the definition of "Principal Distribution Amount";

provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
with respect to any Mortgage Loan that is not a Liquidated Mortgage Loan, such
Senior Principal Distribution Amount shall be reduced on such Distribution Date
by the related Senior Percentage of the principal portion of such Bankruptcy
Loss.

      Senior Termination Date: The Distribution Date when the aggregate of the
Certificate Principal Balances of the Class A and Class A-R Certificates has
been reduced to zero.

      Servicer: Cendant and its successors and assigns.

      Servicer Advance: A "Servicing Advance" as defined in the Servicing
Agreement.

      Servicing Agreement: Collectively, the Mortgage Loan Servicing Agreement
and the Additional Collateral Servicing Agreement.

      Servicing Fee: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b)
the outstanding principal balance of such Mortgage Loan as of the first day of
the related Due Period.

      Servicing Fee Rate: With respect to each Mortgage Loan and any
Distribution Date, 0.25% per annum.

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

      Servicing Transfer Costs: As defined in Section 6.14(b).

                                       39
<PAGE>

      Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for six-month U.S. dollar deposits.

      Special Hazard Loss: Any Realized Loss suffered by a Mortgaged Property on
account of direct physical loss, as reported by the Servicer to the Trustee, but
not including (i) any loss of a type covered by a hazard insurance policy or a
flood insurance policy required to be maintained with respect to such Mortgaged
Property to the extent of the amount of such loss covered thereby, or (ii) any
loss caused by or resulting from:

      (a)   normal wear and tear;

      (b)   fraud, conversion or other dishonest act on the part of the Trustee,
            the Servicer or any of their agents or employees (without regard to
            any portion of the loss not covered by any errors and omissions
            policy);

      (c)   errors in design, faulty workmanship or faulty materials, unless the
            collapse of the property or a part thereof ensues and then only for
            the ensuing loss;

      (d)   nuclear or chemical reaction or nuclear radiation or radioactive or
            chemical contamination, all whether controlled or uncontrolled, and
            whether such loss be direct or indirect, proximate or remote or be
            in whole or in part caused by, contributed to or aggravated by a
            peril covered by the definition of the term "Special Hazard Loss";

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

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

            2.    by military, naval or air forces; or

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

      (f)   any weapon of war employing nuclear fission, fusion or other
            radioactive force, whether in time of peace or war;

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

      (h)   acts of terrorism.

      Special Hazard Loss Coverage Amount: With respect to the first
Distribution Date, $10,563,713. With respect to any Distribution Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1.00% of the
Aggregate Stated Principal Balance, (ii) twice the Stated

                                       40
<PAGE>

Principal Balance of the largest Mortgage Loan and (iii) the aggregate of the
Stated Principal Balances of the Mortgage Loans secured by Mortgaged Properties
located in the single five-digit ZIP code area in the State of California having
the highest aggregate Stated Principal Balance of any such ZIP code area and (b)
the Special Hazard Loss Coverage Amount as of the Closing Date less the amount,
if any, of Special Hazard Losses allocated to the Certificates since the Closing
Date; provided, however, that the Special Hazard Loss Coverage Amount may also
be reduced pursuant to a letter from each Rating Agency to the Trustee to the
effect that any such reduction shall not result in the downgrading of the then
current ratings assigned by such Rating Agency to the Classes of Senior
Certificates. All Stated Principal Balances for the purpose of the definition
will be calculated as of the first day of the calendar month preceding the month
of such Distribution Date after giving effect to Scheduled Payments on the
Mortgage Loans then due, whether paid or not.

      Special Hazard Loss Coverage Termination Date: The date on which the
Special Hazard Loss Coverage Amount is reduced to zero.

      Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.

      Stated Principal Balance: As to any Mortgage Loan and Due Date, the unpaid
principal balance of such Mortgage Loan as of such Due Date as specified in the
amortization schedule at the time relating thereto (before any adjustment to
such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous partial Principal Prepayments
and Liquidation Proceeds allocable to principal (other than with respect to any
Liquidated Mortgage Loan) and to the payment of principal due on such Due Date
and irrespective of any delinquency in payment by the related Mortgagor.

      Step Down Conditions: As of the first Distribution Date as to which any
decrease in any Senior Prepayment Percentage applies, (i) the outstanding Stated
Principal Balance of all Mortgage Loans 60 days or more Delinquent (including
Mortgage Loans in REO and foreclosure) (averaged over the preceding six month
period), as a percentage of the aggregate of the Class Principal Amounts of the
Classes of Subordinate Certificates on such Distribution Date, does not equal or
exceed 50% and (ii) cumulative Realized Losses with respect to the Mortgage
Loans do not exceed (a) with respect to each Distribution Date from August 2013
through July 2014, 30% of the Original Subordinate Principal Amount, (b) with
respect to each Distribution Date from August 2014 through July 2015, 35% of the
Original Subordinate Principal Amount, (c) with respect to each Distribution
Date from August 2015 through July 2016, 40% of the Original Subordinate
Principal Amount, (d) with respect to each Distribution Date from August 2016
through July 2017, 45% of the Original Subordinate Principal Amount and (e) with
respect to each Distribution Date from and after August 2017, 50% of the
Original Subordinate Principal Amount.

      Subordinate Certificate: Any of the Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 or Class B-6 Certificates.

      Subordinate Certificate Writedown Amount: The amount described in Section
5.03(b)(iii).

                                       41
<PAGE>

      Subordinate Class Percentage: As to any Distribution Date and any Class of
Subordinate Certificates, a fraction, expressed as a percentage, the numerator
of which is the Class Principal Amount of such Class on such date, and the
denominator of which is the aggregate Class Principal Amount of all Classes of
Subordinate Certificates on such date.

      Subordinate Percentage: With respect to any Distribution Date, the
difference between 100% and the Senior Percentage for such Distribution Date.

      Subordinate Prepayment Percentage: With respect to any Distribution Date
and for any Mortgage Pool, the difference between 100% and the Senior Prepayment
Percentage for that Distribution Date.

      Subordinate Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to the sum of:

                  (1) the Subordinate Percentage of all amounts described in
            clauses (a) through (d) of the definition of "Principal Distribution
            Amount" for that Distribution Date;

                  (2) with respect to each Mortgage Loan that became a
            Liquidated Mortgage Loan during the related Prepayment Period the
            amount of the Net Liquidation Proceeds allocated to principal
            received with respect thereto remaining after application thereof
            pursuant to clause (2) of the definition of "Senior Principal
            Distribution Amount" for that Distribution Date, up to the
            Subordinate Percentage of the Stated Principal Balance of such
            Mortgage Loan; and

                  (3) the Subordinate Prepayment Percentage of all amounts
            described in clause (g) of the definition of "Principal Distribution
            Amount" for that Distribution Date;

provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
with respect to any Mortgage Loan that is not a Liquidated Mortgage Loan
Payment, such Subordinate Principal Distribution Amount shall be reduced on such
Distribution Date by the Subordinate Percentage of the principal portion of such
Bankruptcy Loss.

      Substitution Amount: As defined in the second paragraph of Section
2.04(b).

      Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions which shall initially be the Holder of the Class A-R Certificate.

      Telerate Page 3750: The display currently so designated as "Page 3750" on
the Bridge Telerate Service (or such other page selected by the Trustee as may
replace Page 3750 on that service for the purpose of displaying daily comparable
rates on prices).

      Terminator: As defined in Section 7.01(a) hereof.

                                       42
<PAGE>

      Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of (i) the Mortgage Loans, including the right to all payments of
principal and interest received on or with respect to the Mortgage Loans on and
after the Cut-off Date (other than Scheduled Payments due on or before such
date), and all such payments due after such date but received prior to such date
and intended by the related Mortgagors to be applied after such date; (ii) all
of the Depositor's right, title and interest in and to all amounts from time to
time credited to and the proceeds of the Distribution Account, any Custodial
Accounts or any Escrow Accounts established with respect to the Mortgage Loans;
(iii) all of the Depositor's rights under the Servicing Agreement, the Master
Mortgage Loan Purchase Agreement and the Mortgage Loan Purchase Agreement; (iv)
all of the Depositor's right, title or interest in REO Property and the proceeds
thereof; (v) all of the Depositor's rights under any Insurance Policies relating
to the Mortgage Loans; (vi) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid assets, including
without limitation, all Insurance Proceeds, Liquidation Proceeds and
condemnation awards; and(vii) the Depositor's security interest in any
collateral pledged to secure the Mortgage Loans, including the Mortgaged
Properties and any Additional Collateral relating to the Additional Collateral
Mortgage Loans, including, but not limited to, any pledge, control and guaranty
agreements and the Limited Purpose Surety Bond and any proceeds of the
foregoing.

      Trustee: Wells Fargo Bank Minnesota, National Association and any Person
succeeding the Trustee hereunder, or if any successor trustee or any co-trustee
shall be appointed as herein provided, then such successor trustee and such
co-trustee, as the case may be.

      Trustee Mortgage Files: With respect to each Mortgage Loan, the Mortgage
Documents to be retained in the custody and possession of the Trustee.

      Two Times Test: As to any Distribution Date, (i) the Aggregate Subordinate
Percentage is at least two times the Aggregate Subordinate Percentage as of the
Closing Date; (ii) the aggregate of the Stated Principal Balances of all
Mortgage Loans Delinquent 60 days or more (including Mortgage Loans in REO and
foreclosure) (averaged over the preceding six-month period), as a percentage of
the aggregate of the Class Principal Amount of the Subordinate Certificates on
such Distribution Date, does not equal or exceed 50%; and (iii) cumulative
Realized Losses with respect to the Mortgage Loans do not exceed 20% of the
Original Subordinate Principal Amount.

      UCC: The Uniform Commercial Code as enacted in the relevant jurisdiction.

      Underwriter: Merrill Lynch, Pierce, Fenner & Smith Incorporated.

      Underwriter's Exemption: Prohibited Transaction Exemption ("PTE") 90-29
(Exemption Application No. D-8019, 55 Fed. Reg. 21459 (1990)) as amended, or any
substantially similar administrative exemption granted by the U.S. Department of
Labor to an Underwriter.

      Underwriting Agreement: The underwriting agreement, dated February 28,
2003 and the terms agreement, dated July 23, 2003, each between the Depositor
and the Underwriter, referred to collectively.

                                       43
<PAGE>

      Uniform Commercial Code: The Uniform Commercial Code as in effect in any
applicable jurisdiction from time to time.

      Unpaid Basis Risk Shortfall: With respect to any Distribution Date and any
Class of LIBOR Certificates, the aggregate of all Basis Risk Shortfalls with
respect to such Certificate remaining unpaid from previous Distribution Dates,
plus interest accrued thereon at the applicable Certificate Interest Rate
determined without regard to clause (ii) of the definition therefor to the
extent not paid on prior Distribution Dates.

      Upper Tier REMIC: As described in the Preliminary Statement.

      Upper Tier REMIC Class A Interest: An uncertificated interest in the Upper
Tier REMIC having the same characteristics as the Class A Certificates, but
without the right to receive payments in respect of Basis Risk Shortfalls and
Unpaid Basis Risk Shortfalls and with an interest rate cap equal to the Adjusted
Net WAC.

      Upper Tier REMIC Class B-1 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class B-1 Certificates,
but without the right to receive payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls.

      Upper Tier REMIC Class B-2 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class B-2 Certificates,
but without the right to receive payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls.

      Upper Tier REMIC Class B-3 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class B-3 Certificates,
but without the right to receive payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls.

      Upper Tier REMIC Class X-A-1 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class X-A-1
Certificates, except that (i) Current Interest thereon is not subject to the
Class X-A Current Interest Restriction and (ii) the Upper Tier REMIC Class X-A-1
Interest has no obligation to make payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls and no right to receive payments from amounts
otherwise distributable to the Class X-A-2 Certificates.

      Upper Tier REMIC Class X-A-2 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class X-A-2
Certificates, but without the obligation to make payments to the Class A
Certificates in respect of Basis Risk Shortfalls and Unpaid Basis Risk
Shortfalls and the obligation to make payments to the Class X-A-1 Certificates.

      Upper Tier REMIC Regular Interest: Each of the REMIC Components, the Upper
Tier REMIC Class A Interest, the Upper Tier REMIC Class X-A-1 Interest, the
Upper Tier REMIC Class X-A-2 Interest, the Upper-Tier REMIC Class B-1 Interest,
the Upper-Tier Class B-2 Interest, the Upper Tier REMIC Class B-3 Interest, the
Class B-4 Certificates, the Class B-5 Certificates and the Class B-6
Certificates.

                                       44
<PAGE>

      Voting Interests: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions of
this Agreement. At all times during the term of this Agreement, 97.00% of all
Voting Interests shall be allocated to the Class A, Class A-R, Class B-1, Class
B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates. Voting
Interests shall be allocated among such Certificates (other than the Class A-R
Certificates) based on the product of (i) 98.00% and (ii) the fraction,
expressed as a percentage, the numerator of which is the aggregate Class
Principal Amounts for each Class then outstanding and the denominator of which
is the Aggregate Stated Principal Balance outstanding, and the remainder of such
percentage of Voting Interests shall be allocated to the Class A-R Certificates.
At all times during the term of this Agreement, 3.00% of all Voting Interests
shall be allocated among the Class X-A-1, Class X-A-2, and Class X-B
Certificates, while they remain outstanding, in proportion to their relative
Class Notional Amounts. Voting Interests shall be allocated among the
Certificates within each such Class in proportion to their Certificate Principal
Amounts or Percentage Interests.

      Section 1.02 Calculations Respecting Mortgage Loans.

      Calculations required to be made pursuant to this Agreement with respect
to any Mortgage Loan in the Trust Fund shall be made based upon current
information as to the terms of the Mortgage Loans and reports of payments
received from the Mortgagor on such Mortgage Loans and payments to be made to
the Trustee as provided by the Servicer. The Trustee shall not be required to
recompute, verify or recalculate the information supplied to it by the Servicer.

                                   ARTICLE II

                              DECLARATION OF TRUST;
                            ISSUANCE OF CERTIFICATES

      Section 2.01 Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans.

      (a) Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby establish the Trust Fund and transfer, assign, set over,
deposit with and otherwise convey to the Trustee, without recourse, subject to
Sections 2.02 and 2.04, in trust, all the right, title and interest of the
Depositor in and to the Trust Fund. Such conveyance includes, without
limitation, (i) the Mortgage Loans, including the right to all payments of
principal and interest received on or with respect to the Mortgage Loans on and
after the Cut-off Date (other than Scheduled Payments due on or before such
date), and all such payments due after such date but received prior to such date
and intended by the related Mortgagors to be applied after such date; (ii) all
of the Depositor's right, title and interest in and to all amounts from time to
time credited to and the proceeds of the Distribution Account, any Custodial
Accounts or any Escrow Account established with respect to the Mortgage Loans;
(iii) all of the Depositor's rights under the Servicing Agreement, the Master
Mortgage Loan Purchase Agreement and the Mortgage Loan Purchase Agreement; (iv)
all of the Depositor's right, title or interest in REO Property and the proceeds
thereof; (v) all of the Depositor's rights under any Insurance Policies relating
to the Mortgage Loans; (vi) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid assets,
including, without limitation, all Insurance Proceeds,

                                       45
<PAGE>

Liquidation Proceeds and condemnation awards; and(vii) the Depositor's security
interest in any collateral pledged to secure the Mortgage Loans, including the
Mortgaged Properties and any Additional Collateral relating to the Additional
Collateral Mortgage Loans, including, but not limited to, any pledge, control
and guaranty agreements and the Limited Purpose Surety Bond and any proceeds of
the foregoing, to have and to hold, in trust; and the Trustee declares that,
subject to the review provided for in Section 2.02, it has received and shall
hold the Trust Fund, as trustee, in trust, for the benefit and use of the
Holders of the Certificates and for the purposes and subject to the terms and
conditions set forth in this Agreement, and, concurrently with such receipt, has
caused to be executed, authenticated and delivered to or upon the order of the
Depositor, in exchange for the Trust Fund, Certificates in the authorized
denominations evidencing the entire ownership of the Trust Fund. Notwithstanding
anything to the contrary in this Agreement, the Trust Fund shall not obtain
title to or beneficial ownership of any Additional Collateral as a result of or
in lieu of the disposition thereof or otherwise.

      The foregoing sale, transfer, assignment, set-over, deposit and conveyance
does not and is not intended to result in the creation or assumption by the
Trustee of any obligation of the Depositor, the Originator, the Seller or any
other Person in connection with the Mortgage Loans or any other agreement or
instrument relating thereto except as specifically set forth therein.

      In connection with such transfer and assignment of the Mortgage Loans, the
Depositor shall deliver to, and deposit with, or cause to be delivered to and
deposited with, the Trustee, the documents or instruments described in Section 2
of the Custody Agreement with respect to each Mortgage Loan; provided that in
Section 2a thereof, a lost note affidavit (including a copy of the original
Mortgage Note) may be delivered in lieu of the original Mortgage Note (each a
"Trustee Mortgage File") (the Custody Agreement to be deemed modified by the
foregoing) so transferred and assigned.

      (b) The Depositor shall cause the Mortgage Notes with respect to each
Mortgage Loan to be completed either (A) in blank, without recourse, or (B)
endorsed to "Wells Fargo Bank Minnesota, National Association, as Trustee of the
Merrill Lynch Mortgage Investors Trust Series MLCC 2003-D, Mortgage Pass-Through
Certificates, without recourse" and the Depositor shall cause Assignments of
Mortgage with respect to each Mortgage Loan other than a Cooperative Mortgage
Loan to be completed either (A) in blank or (B) to "Wells Fargo Bank Minnesota,
National Association, as Trustee of the Merrill Lynch Mortgage Investors Trust
Series MLCC 2003-D, Mortgage Pass-Through Certificates," within 30 days of the
Closing Date for purpose of their recording; provided, however, that such
Assignments of Mortgage need not be recorded unless required in writing by the
Rating Agencies; provided, further, that with respect to each MERS Mortgage Loan
where MERS is not the Mortgagee of record, the original Assignment of Mortgage
showing MERS as the assignee of the Mortgage, with the evidence of recording
thereon or copies thereof certified by an officer of the Depositor to have been
submitted for recordation, shall be delivered to the Trustee.

      If any Mortgage has been recorded in the name of MERS or its designee, no
Assignment of Mortgage in favor of the Trustee will be required to be prepared
or delivered and instead, the Servicer shall take all actions as are necessary
to cause the Trustee to be shown as the owner of the related Mortgage Loan on
the records of MERS for the purpose of the system of recording transfer of
beneficial ownership of mortgages maintained by MERS.

                                       46
<PAGE>

      (c) In instances where a title insurance policy is required to be
delivered to the Trustee and is not so delivered, the Depositor will provide a
copy of such title insurance policy to the Trustee, as promptly as practicable
after the execution and delivery hereof, but in any case within 270 days of the
Closing Date.

      (d) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of delivering
the above Trustee Mortgage File, shall deliver to the Trustee an Officer's
Certificate which shall include a statement to the effect that all amounts
received in connection with such prepayment that are required to be deposited in
the Distribution Account pursuant to Section 4.01 have been so deposited. All
original documents that are not delivered to the Trustee shall be held by the
Servicer in trust for the benefit of the Trustee and the Certificateholders.

      Section 2.02 Acceptance of Trust Fund by Trustee; Review of Documentation
                   for Trust Fund.

      (a) The Trustee, by execution and delivery hereof, acknowledges receipt by
it of the Trustee Mortgage Files pertaining to the Mortgage Loans listed on the
Mortgage Loan Schedule, subject to review thereof as provided herein. Upon
receipt by the Trustee of each Trustee Mortgage File, the Trustee shall review
each Trustee Mortgage File in accordance with the review procedures set forth in
Section 2 of Amendment No. 1 to the Custody Agreement.

      In making such verifications, the Trustee may rely conclusively on the
Mortgage Loan Schedule and the documents constituting the Trustee Mortgage File,
and the Trustee shall have no obligation to independently verify the validity,
enforceability, recordability, sufficiency, due authorization or genuineness of
any document in any Trustee Mortgage File or any Mortgage Loan hereunder, nor
the collectibility, insurability, effectiveness or suitability of any Mortgage
Loan hereunder. The Trustee shall prepare an initial certification to be
delivered to the Depositor, the Seller and the Servicer on the Closing Date in
the form annexed hereto as Exhibit K (the "Initial Certification") with respect
to the Mortgage Loans (other than any Mortgage Loan paid in full or any Mortgage
Loan specifically identified on the Schedule of Exceptions attached to the
Initial Certification (the "Schedule of Exceptions") as not covered by such
Initial Certification) listed on the Mortgage Loan Schedule. If the Trustee
determines from such verification that any discrepancy or deficiency exists with
respect to a Trustee Mortgage File, the Trustee shall note such omission,
discrepancy or deficiency on the Schedule of Exceptions attached to the Initial
Certification, and shall deliver a copy (which shall be electronic, if
requested) of the Schedule of Exceptions to the Depositor on the Closing Date.
During the life of the Mortgage Loans (while subject to this Agreement), in the
event the Trustee discovers any defect with respect to any Trustee Mortgage
File, the Trustee shall give written specification of such defect to the
Depositor. Except as specifically provided above, the Trustee shall be under no
duty to review, inspect or examine such documents to determine that any of them
are enforceable or appropriate for their prescribed purpose.

      (b) If in the course of the review described in paragraph (a) of this
Section 2.02 the Trustee discovers any document or documents constituting a part
of a Trustee Mortgage File that is missing, does not appear regular on its face
(i.e., is mutilated, damaged, defaced, torn or otherwise physically altered) or
appears to be unrelated to the Mortgage Loans identified in the

                                       47
<PAGE>

Mortgage Loan Schedule (each, a "Material Defect"), the Trustee, upon
discovering such Material Defect shall promptly identify the Mortgage Loan to
which such Material Defect relates to the Depositor, the Seller and the
Servicer. Within 90 days of its receipt of such notice (but in no case prior to
the 270th day following the Closing Date), the Depositor shall be required to
cure such Material Defect (and, in such event, the Depositor shall provide the
Trustee with an Officer's Certificate confirming that such cure has been
effected). If the Servicer notifies the Depositor and the Trustee in writing
that (i) a loss has occurred and (ii) such loss relates to a Mortgage Loan for
which the Trustee previously identified a Material Defect or for which the
Servicer has identified a Material Defect and the Depositor has not cured such
Material Defect, then the Depositor shall repurchase such Mortgage Loan at the
Purchase Price therefore in the event that such loss would, if such Mortgage
Loan is not repurchased by the Depositor, constitute a Realized Loss and such
loss is attributable to the failure of the Depositor to have cured such Material
Defect. A loss shall be deemed to be attributable to the failure of the
Depositor to cure a Material Defect if, as determined by the Depositor, upon
mutual agreement with the Trustee each acting in good faith, absent such
Material Defect, such loss would not have been incurred. Within the two-year
period following the Closing Date, the Depositor may, in lieu of repurchasing a
Mortgage Loan pursuant to this Section 2.02(b), substitute for such Mortgage
Loan a Replacement Mortgage Loan subject to the provisions of Section 2.04.

      (c) Within 270 days following the Closing Date, the Trustee shall deliver
to the Depositor, the Seller and the Servicer, a final certification
substantially in the form attached as Exhibit L (the "Final Certification")
evidencing the completeness of the Trustee Mortgage Files in its possession or
control, with any exceptions noted on the Scheduled of Exceptions attached to
the Final Certification.

      (d) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.

      (e) Upon execution of this Agreement, the Depositor hereby delivers to the
Trustee and the Trustee acknowledges receipt of the Servicing Agreement and the
Master Mortgage Loan Purchase Agreement.

      Section 2.03 Representations and Warranties of the Depositor.

      The Depositor hereby represents and warrants to the Trustee, for the
benefit of the Certificateholders as of the Closing Date or such other date as
is specified, that:

            (i) the Depositor is a corporation duly organized, validly existing
      and in good standing under the laws governing its creation and existence
      and has full corporate power and authority to own its property, to carry
      on its business as presently conducted, to enter into and perform its
      obligations under this Agreement, and to create the trust pursuant hereto;

            (ii) 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; neither the execution and delivery of this Agreement, nor
      the consummation of the transactions

                                       48
<PAGE>

      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
      certificate of incorporation or bylaws of the Depositor;

            (iii) 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 such
      as has been obtained, given, effected or taken prior to the date hereof;

            (iv) this Agreement has been duly executed and delivered by the
      Depositor and, assuming due authorization, execution and delivery by the
      Trustee, constitutes a valid and binding obligation of the Depositor
      enforceable against it in accordance with its terms except as such
      enforceability may be subject to (A) applicable bankruptcy and insolvency
      laws and other similar laws affecting the enforcement of the rights of
      creditors generally and (B) general principles of equity regardless of
      whether such enforcement is considered in a proceeding in equity or at
      law;

            (v) there are no actions, suits or proceedings pending or, to the
      knowledge of the Depositor, threatened or likely to be asserted against or
      affecting the Depositor, before or by any court, administrative agency,
      arbitrator or governmental body (A) with respect to any of the
      transactions contemplated by this Agreement or (B) 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 it or its business, assets,
      operations or condition, financial or otherwise, or adversely affect its
      ability to perform its obligations under this Agreement;

            (vi) immediately prior to the transfer and assignment of the
      Mortgage Loans to the Trustee, the Depositor was the sole owner of record
      and holder of each Mortgage Loan, and the Depositor had good and
      marketable title thereto, and had full right to transfer and sell each
      Mortgage Loan to the Trustee free and clear, subject only to (1) liens of
      current real property taxes and assessments not yet due and payable and,
      if the related Mortgaged Property is a condominium unit, any lien for
      common charges permitted by statute, (2) covenants, conditions and
      restrictions, rights of way, easements and other matters of public record
      as of the date of recording of such Mortgage acceptable to mortgage
      lending institutions in the area in which the related Mortgaged Property
      is located and specifically referred to in the lender's title insurance
      policy or attorney's opinion of title and abstract of title delivered to
      the originator of such Mortgage Loan, and (3) such other matters to which
      like properties are commonly subject which do not, individually or in the
      aggregate, materially interfere with the benefits of the security intended
      to be provided by the Mortgage, of any encumbrance, equity, participation
      interest, lien, pledge, charge, claim or security interest, and had full
      right and authority, subject to no interest or participation of, or
      agreement with, any other party, to sell and assign each Mortgage Loan
      pursuant to this Agreement;

                                       49
<PAGE>

            (vii) This Agreement creates a valid and continuing security
      interest (as defined in the applicable Uniform Commercial Code (the
      "UCC"), in the Mortgage Loans in favor of the Trustee, which security
      interest is prior to all other liens, and is enforceable as such against
      creditors of and purchasers from the Depositor;

            (viii) The Mortgage Loans constitute "instruments" within the
      meaning of the applicable UCC;

            (ix) Other than the security interest granted to the Trustee
      pursuant to this Agreement, the Depositor has not pledged, assigned, sold,
      granted a security interest in, or otherwise conveyed any of the Mortgage
      Loans. The Depositor has not authorized the filing of and is not aware of
      any financing statement against the Depositor that includes a description
      of the collateral covering the Mortgage Loans other than a financing
      statement relating to the security interest granted to the Trustee
      hereunder or that has been terminated. The Depositor is not aware of any
      judgment or tax lien filings against the Depositor;

            (x) None of the Mortgage Loans have any marks or notations
      indicating that such Mortgage Loans have been pledged, assigned or
      otherwise conveyed to any Person other than the Trustee; and

            (xi) The Depositor has received all consents and approvals required
      by the terms of the Mortgage Loans to convey the Mortgage Loans hereunder
      to the Trustee;

            (xii) Each Mortgage Loan is a "qualified mortgage" within the
      meaning of Section 860G(a)(3) of the Code (without regard to Treasury
      Regulations Section 1.860G-2(f)) or any similar rule that provides that a
      defective obligation is a qualified mortgage for a temporary period;

            (xiii) No Mortgage Loan provides for interest other than at either
      (x) a single fixed rate in effect throughout the term of the Mortgage Loan
      or (y) a single "variable rate" (within the meaning of Treasury
      Regulations Section 1.860G-1(a)(3)) in effect throughout the term of the
      Mortgage Loan;

            (xiv) No Mortgage is the subject of pending or final foreclosure
      proceedings; and

            (xv) As of the Closing Date, the Depositor would not initiate
      foreclosure proceedings with respect to any Mortgage Loan based on such
      Mortgage Loan's delinquency status prior to the next scheduled payment
      date for such Mortgage Loan.

      The foregoing representations made in this Section 2.03 shall survive the
termination of this Agreement and shall not be waived by any party hereto.

                                       50
<PAGE>

      Section 2.04 Discovery of Breach; Repurchase or Substitution of Mortgage
Loans.

      (a) Pursuant to Sections 5(a) and 5(b) of the Master Mortgage Loan
Purchase Agreement, the Originator has made certain representations and
warranties as to the characteristics of the Mortgage Loans (such representations
and warranties are set out in full in Schedule B of this Agreement) as of the
Closing Date and the conveyance thereof from the Originator to the Seller and
then to the Depositor, for the benefit of the Trustee and the
Certificateholders, and the Originator has agreed to comply with the provisions
of this Section 2.04 in respect of a breach of any of such representations and
warranties.

      It is understood and agreed that (i) the representations and warranties of
the Depositor set forth in Section 2.03 and (ii) the representations and
warranties of the Originator set forth in Sections 5(a) and 5(b) of the Master
Mortgage Loan Purchase Agreement shall survive delivery of the Trustee Mortgage
Files and the Assignment of Mortgage of each Mortgage Loan to the Trustee and
shall continue throughout the term of this Agreement. Upon discovery (i) by the
Depositor, the Seller, the Originator or the Trustee of a breach of any
representation or warranty made by Depositor under Section 2.03 which materially
adversely affects the value of a Mortgage Loan or the interest therein of the
Certificateholder (a "Defective Mortgage Loan") or (ii) by the Depositor, the
Originator or the Seller of the breach by the Originator of any representation
or warranty under the Master Mortgage Loan Purchase Agreement in respect of any
Mortgage Loan, which breach results in the Mortgage Loan being a "Defective
Mortgage Loan" (each of such parties hereby agreeing to give written notice of
such breach to the Trustee and the other of such parties), the Trustee, or its
designee, shall promptly notify the Depositor in writing of such breach and
request that the Depositor cure or cause the cure of such breach within 90 days
from the date that the Depositor discovered or was notified of such breach, and
if the Depositor does not cure such breach in all material respects during such
period, the Trustee shall (i) in the case of an uncured breach under Section
2.03, cause the Depositor to repurchase such Defective Mortgage Loan at the
Purchase Price and (ii) in the case of an uncured breach by the Originator under
the Master Mortgage Loan Purchase Agreement, cause the Depositor to enforce the
Originator's obligation under the Master Mortgage Loan Purchase Agreement and
cause the Originator to repurchase that Defective Mortgage Loan from the Trust
Fund at the Purchase Price, in each case on or prior to the Determination Date
following the expiration of such 90-day period (subject to Section 2.04(b)
below); provided, however, that, in connection with any such breach under clause
(ii) above that could not reasonably have been cured within such 90-day period,
if the Originator shall have commenced to cure such breach within such 90-day
period, the Originator shall be permitted to proceed thereafter diligently and
expeditiously to cure the same within an additional 90-day period. The Purchase
Price for the repurchased Defective Mortgage Loan shall be deposited in the
related Distribution Account, and the Trustee, or its designee, upon receipt of
such deposit and two copies of a Request for Release with respect to such
Defective Mortgage Loan, shall release to the Originator, the related Trustee
Mortgage File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranties, as
either party shall furnish to it and as shall be necessary to vest in such party
any Defective Mortgage Loan released pursuant hereto and the Trustee, or its
designee, shall have no further responsibility with regard to such Trustee
Mortgage File (it being understood that the Trustee shall have no responsibility
for determining the sufficiency of such assignment for its intended purpose). In
lieu of repurchasing any such

                                       51
<PAGE>

Defective Mortgage Loan as provided above, the Originator may cause such
Defective Mortgage Loan to be removed from the Trust Fund (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more Replacement
Mortgage Loans in the manner and subject to the limitations set forth in Section
2.04(b) below. It is understood and agreed that the obligation of the Originator
to cure or to repurchase (or to substitute for) any Mortgage Loan as to which a
breach has occurred and is continuing shall constitute the sole remedy against
the Originator respecting such breach available to the Trustee on behalf of the
Certificateholders. With respect to the representations and warranties described
in Schedule B which are made to the best of the Originator's knowledge, if it is
discovered by any of the Depositor, the Originator or the Trustee that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the relate Mortgage Loan, then
notwithstanding the Originator's lack of knowledge with respect to the substance
of such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation or warranty.

      (b) Any substitution of Replacement Mortgage Loans for Deleted Mortgage
Loans made pursuant to Section 2.04(a) above must be effected prior to the last
Business Day that is within two years after the Closing Date. As to any Deleted
Mortgage Loan for which the Originator substitutes a Replacement Mortgage Loan
or Loans, such substitution shall be effected by delivering to the Trustee for
such Replacement Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the
Assignment to the Trustee, and such other documents and agreements, with all
necessary endorsements thereon, together with an Officers' Certificate stating
that each such Replacement Mortgage Loan satisfies the definition thereof and
specifying the Substitution Amount (as described below), if any, in connection
with such substitution. The Trustee shall acknowledge receipt for such
Replacement Mortgage Loan and, within 45 days thereafter, shall review such
Mortgage Documents as specified in this Agreement under Section 2.02(a) and
deliver to the Depositor, with respect to such Replacement Mortgage Loans, a
certification substantially in the form of a revised Initial Certification, with
any exceptions noted thereon. Within one year of the date of substitution, the
Trustee shall deliver to the Depositor a certification substantially in the form
of a revised Final Certification, with respect to such Replacement Mortgage
Loans, with any exceptions noted thereon. Monthly Payments due with respect to
Replacement Mortgage Loans in the month of substitution shall not be included as
part of the Trust Fund and shall be retained by the Originator. For the month of
substitution, distributions to Certificateholders shall reflect the collections
and recoveries in respect of such Deleted Mortgage in the Due Period preceding
the month of substitution and the Originator shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Mortgage
Loan. Upon such substitution, such Replacement Mortgage Loan shall constitute
part of the Trust Fund and shall be subject in all respects to the terms of this
Agreement and the Master Mortgage Loan Purchase Agreement, including all
representations and warranties thereof included in the Master Mortgage Loan
Purchase Agreement, in each case as of the date of substitution.

      For any month in which the Originator substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Trustee, based upon
information provided by the Servicer, shall determine the excess (each, a
"Substitution Amount"), if any, by which the aggregate Purchase Price of all
such Deleted Mortgage Loans exceeds the aggregate Stated Principal Balance of
the Replacement Mortgage Loans replacing such Deleted Mortgage Loans,

                                       52
<PAGE>

together with one month's interest on such excess amount at the applicable Net
Mortgage Rate. On the date of such substitution, the Originator shall deliver or
cause to be delivered to the Servicer for deposit in the Custodial Account an
amount equal to the related Substitution Amount, if any, and the Trustee, upon
receipt of the related Replacement Mortgage Loan or Loans and two copies of a
Request for Release with respect to the Deleted Mortgage Loan or Loans, shall
release to the Originator the related Trustee Mortgage File or Files and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Originator shall deliver to it and as shall be
necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.

      In addition, the Originator shall obtain at its own expense and deliver to
the Trustee an Opinion of Counsel to the effect that such substitution (either
specifically or as a class of transactions) shall not cause (a) any federal tax
to be imposed on the Trust Fund, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(l) of the Code or on
"contributions after the startup date" under Section 860G(d)(l) of the Code, or
(b) any REMIC created hereunder to fail to qualify as a REMIC at any time that
any Certificate is outstanding. If such Opinion of Counsel can not be delivered,
then such substitution may only be effected at such time as the required Opinion
of Counsel can be given.

      (c) Upon discovery by the Originator, the Seller, the Depositor or the
Trustee that any Mortgage Loan does not constitute a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code, the party discovering such fact
shall within two Business Days give written notice thereof to the other parties.
In connection therewith, the Originator or Depositor, as applicable, shall
repurchase or, subject to the limitations set forth in Section 2.04(b),
substitute one or more Replacement Mortgage Loans for the affected Mortgage Loan
within 90 days of the earlier of discovery or receipt of such notice with
respect to such affected Mortgage Loan. Any such repurchase or substitution
shall be made in the same manner as set forth in Section 2.04(a) above, if made
by the Originator. The Trustee shall re-convey to the Originator the Mortgage
Loan to be released pursuant hereto in the same manner, and on the same terms
and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.

      (d) The Originator indemnifies and holds the Trust Fund, the Trustee, the
Depositor and each Certificateholder harmless against any and all taxes, claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trust Fund, the
Trustee, the Depositor and any Certificateholder may sustain in connection with
any actions of such party relating to a repurchase of a Mortgage Loan other than
in compliance with the terms of this Section 2.04 and the Master Mortgage Loan
Purchase Agreement, to the extent that any such action causes (i) any federal or
state tax to be imposed on the Trust Fund, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the startup date" under Section 860G(d)(1) of
the Code, or (ii) any REMIC formed hereby to fail to qualify as a REMIC at any
time that any Certificate is outstanding.

      Section 2.05 Grant Clause.

      (a) It is intended that the conveyance of the Depositor's right, title and
interest in and to property constituting the Trust Fund pursuant to this
Agreement shall constitute, and shall be

                                       53
<PAGE>

construed as, a sale of such property and not a grant of a security interest to
secure a loan. However, if such conveyance is deemed to be in respect of a loan,
it is intended that: (1) the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement; (2) the Depositor hereby
grants to the Trustee for the benefit of the Holders of the Certificates a first
priority security interest in all of the Depositor's right, title and interest
in, to and under, whether now owned or hereafter acquired, the Trust Fund and
all proceeds of any and all property constituting the Trust Fund to secure
payment of the Certificates; and (3) this Agreement shall constitute a security
agreement under applicable law. If such conveyance is deemed to be in respect of
a loan and the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person holding any Certificate, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person, and
all proceeds shall be distributed as herein provided.

      (b) The Depositor shall, to the extent consistent with this Agreement,
take such reasonable actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans and
the other property described above, 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 this Agreement. The Depositor will, at
its own expense, make all initial filings on or about the Closing Date and shall
forward a copy of such filing or filings to the Trustee. Without limiting the
generality of the foregoing, the Depositor shall prepare and forward for filing,
or shall cause to be forwarded for filing, at the expense of the Depositor, all
filings necessary to maintain the effectiveness of any original filings
necessary under the relevant UCC to perfect the Trustee's security interest in
or lien on the Mortgage Loans and the other property described above, including
without limitation (x) continuation statements, and (y) such other statements as
may be occasioned by (1) any change of name of Seller, the Depositor or the
Trustee, (2) any change of location of the place of business or the chief
executive office of the Seller or the Depositor, (3) any transfer of any
interest of the Depositor in any Mortgage Loan or (4) any change under the
relevant UCC or other applicable laws. The Depositor shall not organize under
the law of any jurisdiction other than the State under which each is organized
as of the Closing Date (whether changing its jurisdiction of organization or
organizing under an additional jurisdiction) without giving 30 days prior
written notice of such action to its immediate and intermediate transferee,
including the Trustee. Before effecting such change, the Depositor proposing to
change its jurisdiction of organization shall prepare and file in the
appropriate filing office any financing statements or other statements necessary
to continue the perfection of the interests of its immediate and mediate
transferees, including the Trustee, in the Mortgage Loans and the other property
described above. In connection with the transactions contemplated by this
Agreement, the Depositor authorizes its immediate or mediate transferee to file
in any filing office any initial financing statements, any amendments to
financing statements, any continuation statements, or any other statements or
filings described in this paragraph (b).

      Section 2.06 Representation and Warranty of the Seller. The Seller hereby
represents and warrants to the Trustee, for the benefit of the
Certificateholders as of the Closing Date that:

            (i) it purchased the Mortgage Loans from the Originator pursuant to
      the Master Mortgage Loan Purchase Agreement and it is the owner, as of the
      Closing Date, of all right, title and interest in and to the Mortgage
      Loans; and

                                       54
<PAGE>

            (ii) on the Closing Date, it has sold the Mortgage Loans and has
      assigned its rights under the Master Mortgage Loan Purchase Agreement to
      Sequoia Residential Funding Inc.

                                  ARTICLE III

                                THE CERTIFICATES

      Section 3.01 The Certificates.

      (a) The Certificates shall be issuable in registered form only and shall
be securities governed by Article 8 of the New York Uniform Commercial Code. The
Book-Entry Certificates will be evidenced by one or more certificates,
beneficial ownership of which will be held in the dollar denominations in
Certificate Principal Amount, or Notional Amount, as applicable, or in the
Percentage Interests, specified herein. Each Class of Book-Entry Certificates
will be issued in the minimum denominations in Certificate Principal Amount (or
Class Notional Amount) specified in the Preliminary Statement hereto and in
integral multiples of $1 in excess thereof. Each Class of Non-Book-Entry
Certificates other than the Residual Certificates shall be issued in definitive,
fully registered form in the minimum denominations in Certificate Principal
Amount specified in the Preliminary Statement hereto and in integral multiples
of $1 in excess thereof. The Residual Certificates shall be issued as single
Certificates and maintained in definitive, fully registered form in a
denomination equal to 100% of the Percentage Interest of each such Class. The
Class X-A-1, Class X-A-2, and Class X-B Certificates shall each be issued as
single Certificates in a denomination equal to 100% of the Percentage Interest
of each such Class.

      (b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee or an Authenticating Agent upon
the order of the Depositor upon receipt by the Trustee of the Trustee Mortgage
Files described in Section 2.01. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Trustee or of an
Authenticating Agent, by manual signature, and such certification upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. At any time and
from time to time after the execution and delivery of this Agreement, the
Depositor may deliver Certificates executed by the Trustee to the Trustee or the
Authenticating Agent for authentication and the Trustee or the Authenticating
Agent shall authenticate and deliver such Certificates as in this Agreement
provided and not otherwise.

      (c) The Class B-4, Class B-5 and Class B-6 Certificates offered and sold
in reliance on the exemption from registration under Rule 144A under the Act
shall be issued initially in the form of one or more permanent global
Certificates in definitive, fully registered form without interest coupons with
the applicable legends set forth in Exhibit A added to the forms of such
Certificates (each, a "Restricted Global Security").

                                       55
<PAGE>

      Section 3.02 Registration.

      The Trustee is hereby appointed, and the Trustee hereby accepts its
appointment as, initial Certificate Registrar in respect of the Certificates and
shall maintain books for the registration and for the transfer of Certificates
(the "Certificate Register"). The Trustee may appoint a bank or trust company to
act as successor Certificate Registrar. A registration book shall be maintained
for the Certificates collectively. The Certificate Registrar may resign or be
discharged or removed and a new successor may be appointed in accordance with
the procedures and requirements set forth in Sections 6.06 and 6.07 hereof with
respect to the resignation, discharge or removal of the Trustee and the
appointment of a successor Trustee. The Certificate Registrar may appoint, by a
written instrument delivered to the Holders, any bank or trust company to act as
co-registrar under such conditions as the Certificate Registrar may prescribe;
provided, however, that the Certificate Registrar shall not be relieved of any
of its duties or responsibilities hereunder by reason of such appointment.

      Section 3.03 Transfer and Exchange of Certificates.

      (a) A Certificate (other than Book-Entry Certificates which shall be
subject to Section 3.09 hereof) may be transferred by the Holder thereof only
upon presentation and surrender of such Certificate at the office of the
Certificate Registrar duly endorsed or accompanied by an assignment duly
executed by such Holder or his duly authorized attorney in such form as shall be
satisfactory to the Certificate Registrar. Upon the transfer of any Certificate
in accordance with the preceding sentence, the Trustee shall execute, and the
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount (or Notional Amount) as the
Certificate being transferred. No service charge shall be made to a
Certificateholder for any registration of transfer of Certificates, but the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any registration
of transfer of Certificates.

      (b) A Certificate may be exchanged by the Holder thereof for any number of
new Certificates of the same Class, in authorized denominations, representing in
the aggregate the same Certificate Principal Amount (or Notional Amount) as the
Certificate surrendered, upon surrender of the Certificate to be exchanged at
the office of the Certificate Registrar duly endorsed or accompanied by a
written instrument of transfer duly executed by such Holder or his duly
authorized attorney in such form as is satisfactory to the Certificate
Registrar. Certificates delivered upon any such exchange will evidence the same
obligations, and will be entitled to the same rights and privileges, as the
Certificates surrendered. No service charge shall be made to a Certificateholder
for any exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any exchange of Certificates. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute, and the
Authenticating Agent shall authenticate, date and deliver the Certificates which
the Certificateholder making the exchange is entitled to receive.

      (c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the

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transfer of such Certificate set forth thereon and agrees that it will transfer
such a Certificate only as provided herein.

      The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:

            (i) The Certificate Registrar shall register the transfer of a
      Restricted Certificate if the requested transfer is (x) to the Depositor
      or an affiliate (as defined in Rule 405 under the 1933 Act) of the
      Depositor or (y) being made to a "qualified institutional buyer" (a "QIB")
      as defined in Rule 144A under the Securities Act of 1933, as amended (the
      "Act") by a transferor that has provided the Certificate Registrar with a
      certificate in the form of Exhibit G hereto; and

            (ii) The Certificate Registrar shall register the transfer of a
      Restricted Certificate if the requested transfer is being made to an
      "accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the Act,
      or to any Person all of the equity owners in which are such accredited
      investors, by a transferor who furnishes to the Certificate Registrar a
      letter of the transferee substantially in the form of Exhibit H hereto.

      (d) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Certificate
Registrar has received (A) a certificate substantially in the form of Exhibit I
hereto from such transferee or (B) an Opinion of Counsel satisfactory to the
Certificate Registrar to the effect that the purchase and holding of such a
Certificate will not constitute or result in the assets of the Trust Fund being
deemed to be "plan assets" subject to the prohibited transactions provisions of
ERISA, Section 4975 of the Code, or any provisions of applicable federal, state
or local law substantially similar to the foregoing provisions of ERISA or the
Code ("Similar Law"), and will not subject the Trustee, the Certificate
Registrar or the Depositor to any obligation in addition to those undertaken in
the Agreement; provided, however, that the Certificate Registrar will not
require such certificate or opinion in the event that, as a result of a change
of law or otherwise, counsel satisfactory to the Certificate Registrar has
rendered an opinion to the effect that the purchase and holding of an
ERISA-Restricted Certificate by a Plan or a Person that is purchasing or holding
such a Certificate with the assets of a Plan will not constitute or result in a
prohibited transaction under ERISA, Section 4975 of the Code or Similar Law. The
preparation and delivery of the certificates and opinions referred to above
shall not be an expense of the Trust Fund, the Trustee, the Certificate
Registrar or the Depositor.

      Notwithstanding the foregoing, no Opinion of Counsel or certificate shall
be required for the initial issuance of the ERISA-Restricted Certificates.
Notwithstanding anything to the contrary herein, any purported transfer of an
ERISA-Restricted Certificate to or on behalf of an employee benefit plan subject
to Title I of ERISA or a plan subject to Section 4975 of the Code or a plan
subject to Similar Law without the delivery to the Certificate Registrar of a
certificate substantially in the form of Exhibit I hereto or an Opinion of
Counsel satisfactory to the Certificate Registrar as described above shall be
void and of no effect. The Trustee, the Certificate Registrar and the Depositor
shall be under no liability to any Person for any registration of transfer of
any ERISA-Restricted Certificate that is in fact not permitted by this

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Section 3.03(d) or for the Paying Agent making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Certificate Registrar in accordance with the foregoing
requirements. The last preceding Holder of such Certificate that is not a plan
or a Person acting on behalf of a plan shall be entitled to recover from any
purported Holder of any ERISA-Restricted Certificate that was in fact an
employee benefit plan subject to Title I of ERISA or a plan subject to Section
4975 of the Code or a plan subject to Similar Law or a Person acting on behalf
of any such plan at the time it became a Holder or, at such subsequent time as
it became such a plan or Person acting on behalf of such a plan, all payments
made on such ERISA-Restricted Certificate at and after either such time;
provided that none of the Depositor, the Certificate Registrar or the Trustee
shall be responsible for such recovery if they otherwise made a good faith
effort to comply with this Section 3.03(d).

      (e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of a Certificate.

      (f) Notwithstanding anything to the contrary contained herein, no Residual
Certificate or beneficial interest therein may be owned, pledged or transferred,
directly or indirectly, by or to (i) a Disqualified Organization or (ii) an
individual, corporation or partnership or other person unless, in the case of
clause (ii), such person is (A) not a Non-U.S. Person or (B) is a Non-U.S.
Person that holds a Residual Certificate in connection with the conduct of a
trade or business within the United States and has furnished the transferor and
the Certificate Registrar with an effective Internal Revenue Service Form W-8ECI
or successor form at the time and in the manner required by the Code (any such
person who is not covered by clause (A) or (B) above is referred to herein as a
"Non-permitted Foreign Holder").

      Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate or a beneficial interest therein,
the proposed transferee shall deliver to the Trustee and the Certificate
Registrar an affidavit in substantially the form attached hereto as Exhibit B
representing and warranting, among other things, that such transferee is neither
a Disqualified Organization, an agent or nominee acting on behalf of a
Disqualified Organization, nor a Non-permitted Foreign Holder (any such
transferee, a "Permitted Transferee"), and the proposed transferor shall deliver
to the Trustee and the Certificate Registrar an affidavit in substantially the
form attached hereto as Exhibit C. In addition, the Trustee or the Certificate
Registrar may (but shall have no obligation to) require, prior to and as a
condition of any such transfer, the delivery by the proposed transferee of an
Opinion of Counsel, addressed to the Trustee and the Certificate Registrar, that
such proposed transferee or, if the proposed transferee is an agent or nominee,
the proposed beneficial owner, is not a Disqualified Organization, agent or
nominee thereof, or a Non-permitted Foreign Holder. Notwithstanding the
registration in the Certificate Register of any transfer, sale, or other
disposition of a Residual Certificate to a Disqualified Organization, an agent
or nominee thereof, or Non-permitted Foreign Holder, such registration shall be
deemed to be of no legal force or effect whatsoever and such Disqualified

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Organization, agent or nominee thereof, or Non-permitted Foreign Holder shall
not be deemed to be a Certificateholder for any purpose hereunder, including,
but not limited to, the receipt of distributions on such Residual Certificate.
The Depositor, the Certificate Registrar and the Trustee shall be under no
liability to any Person for any registration or transfer of a Residual
Certificate to a Disqualified Organization, agent or nominee thereof or
Non-permitted Foreign Holder or for the Paying Agent making any payments due on
such Residual Certificate to the Holder thereof or for taking any other action
with respect to such Holder under the provisions of the Agreement, so long as
the transfer was effected in accordance with this Section 3.03(f), unless the
Certificate Registrar shall have actual knowledge at the time of such transfer
or the time of such payment or other action that the transferee is a
Disqualified Organization, or an agent or nominee thereof, or Non-permitted
Foreign Holder. The Certificate Registrar shall be entitled to recover from any
Holder of a Residual Certificate that was a Disqualified Organization, agent or
nominee thereof, or Non-permitted Foreign Holder at the time it became a Holder
or any subsequent time it became a Disqualified Organization, agent or nominee
thereof, or Non-permitted Foreign Holder, all payments made on such Residual
Certificate at and after either such times (and all costs and expenses,
including but not limited to attorneys' fees, incurred in connection therewith).
Any payment (not including any such costs and expenses) so recovered by the
Certificate Registrar shall be paid and delivered to the last preceding Holder
of such Residual Certificate.

      If any purported transferee shall become a registered Holder of a Residual
Certificate in violation of the provisions of this Section 3.03(f), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Residual Certificate was not in fact permitted by this Section 3.03(f),
such transfer shall be absolutely null and void and shall vest no rights in the
purported transferee and the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of such
registration of transfer of such Residual Certificate. The Depositor, the
Certificate Registrar and the Trustee shall be under no liability to any Person
for any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 3.03(f), or for the Paying Agent making any payment
due on such Certificate to the registered Holder thereof or for taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered upon receipt of the affidavit described in
the preceding paragraph of this Section 3.03(f).

      (g) Each Holder or Certificate Owner of a Restricted Certificate,
ERISA-Restricted Certificate or Residual Certificate, or an interest therein, by
such Holder's or Owner's acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this section.

      Section 3.04 Cancellation of Certificates.

      Any Certificate surrendered for registration of transfer or exchange shall
be cancelled and retained in accordance with normal retention policies with
respect to cancelled certificates maintained by the Trustee or the Certificate
Registrar.

      Section 3.05 Replacement of Certificates.

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      If (i) any Certificate is mutilated and is surrendered to the Trustee or
the Certificate Registrar or (ii) the Trustee or the Certificate Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and there is delivered to the Trustee and the Certificate Registrar
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Depositor, the Trustee or the
Certificate Registrar that such destroyed, lost or stolen Certificate has been
acquired by a protected purchaser, the Trustee shall execute and the
Authenticating Agent shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like tenor and Certificate Principal Amount. Upon the issuance of any new
Certificate under this Section 3.05, the Trustee, the Depositor or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee, the Depositor or
the Certificate Registrar) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the applicable Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.

      If after the delivery of such new Certificate, a protected purchaser of
the original Certificate in lieu of which such new Certificate was issued
presents for payment such original Certificate, the Depositor, the Certificate
Registrar and the Trustee or any agent shall be entitled to recover such new
Certificate from the Person to whom it was delivered or any Person taking
therefrom, except a protected purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage,
cost or expenses incurred by the Depositor, the Certificate Registrar, the
Trustee or any agent in connection therewith.

      Section 3.06 Persons Deemed Owners.

      Subject to the provisions of Section 3.09 with respect to Book-Entry
Certificates, the Depositor, the Trustee, the Certificate Registrar, the Paying
Agent and any agent of any of them shall treat the Person in whose name any
Certificate is registered upon the books of the Certificate Registrar as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Sections 5.01 and 5.02 and for all other purposes whatsoever, and neither the
Depositor, the Trustee, the Certificate Registrar, the Paying Agent nor any
agent of any of them shall be affected by notice to the contrary.

      Section 3.07 Temporary Certificates.

      (a) Pending the preparation of definitive Certificates, upon the order of
the Depositor, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver temporary Certificates that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such variations as the authorized officers executing such
Certificates may determine, as evidenced by their execution of such
Certificates.

      (b) 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

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surrender of the temporary Certificates at the office or agency of the
Certificate Registrar without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Certificates, the Trustee shall
execute and the Authenticating Agent shall authenticate and deliver in exchange
therefor a like aggregate Certificate Principal Amount (or Notional Amount) of
definitive Certificates of the same Class in the authorized denominations. Until
so exchanged, the temporary Certificates shall in all respects be entitled to
the same benefits under this Agreement as definitive Certificates of the same
Class.

      Section 3.08 Appointment of Paying Agent.

      The Trustee may appoint a Paying Agent (which may be the Trustee) for the
purpose of making distributions to Certificateholders hereunder. The Trustee
shall cause any Paying Agent to execute and deliver to the Trustee an instrument
in which such Paying Agent shall agree with the Trustee that such Paying Agent
will hold all sums held by it for the payment to Certificateholders in an
Eligible Account (which shall be the Distribution Account) in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to the Certificateholders. All funds remitted by the Trustee to any such Paying
Agent for the purpose of making distributions shall be paid to
Certificateholders on each Distribution Date and any amounts not so paid shall
be returned on such Distribution Date to the Trustee. If the Paying Agent is not
the Trustee, the Trustee shall cause to be remitted to the Paying Agent on or
before the Business Day prior to each Distribution Date, by wire transfer in
immediately available funds, the funds to be distributed on such Distribution
Date. Any Paying Agent shall be either a bank or trust company or otherwise
authorized under law to exercise corporate trust powers.

      Section 3.09 Book-Entry Certificates.

      (a) Each Class of Book-Entry Certificates, upon original issuance, shall
be issued in the form of one or more typewritten Certificates representing the
Book-Entry Certificates. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Book-Entry Certificates,
except as provided in Section 3.09(c). Unless Definitive Certificates have been
issued to Certificate Owners of Book-Entry Certificates pursuant to Section
3.09(c):

            (i) the provisions of this Section 3.09 shall be in full force and
      effect;

            (ii) the Certificate Registrar, the Paying Agent and the Trustee
      shall deal with the Clearing Agency for all purposes (including the making
      of distributions on the Book-Entry Certificates) as the authorized
      representatives of the Certificate Owners and the Clearing Agency and
      shall be responsible for crediting the amount of such distributions to the
      accounts of such Persons entitled thereto, in accordance with the Clearing
      Agency's normal procedures;

            (iii) to the extent that the provisions of this Section 3.09
      conflict with any other provisions of this Agreement, the provisions of
      this Section 3.09 shall control; and

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<PAGE>

            (iv) the rights of Certificate Owners shall be exercised only
      through the Clearing Agency and the Clearing Agency Participants and shall
      be limited to those established by law and agreements between such
      Certificate Owners and the Clearing Agency and/or the Clearing Agency
      Participants. Unless and until Definitive Certificates are issued pursuant
      to Section 3.09(c), the initial Clearing Agency will make book-entry
      transfers among the Clearing Agency Participants and receive and transmit
      distributions of principal of and interest on the Book-Entry Certificates
      to such Clearing Agency Participants.

      (b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Book-Entry Certificates to the Clearing Agency.

      (c) If (i) (A) the Clearing Agency or the Depositor advises the Paying
Agent in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities with respect to the Book-Entry
Certificates, and (B) the Depositor is unable to locate a qualified successor
satisfactory to the Depositor and the Paying Agent, (ii) the Depositor, at its
option, advises the Paying Agent in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, Certificate Owners representing beneficial interests
aggregating not less than 50% of the Class Principal Amount (or Class Notional
Amount) of a Class of Book-Entry Certificates advise the Paying Agent and the
Clearing Agency through the Clearing Agency Participants in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Certificate Owners of a Class of Book-Entry
Certificates, the Certificate Registrar shall notify the Clearing Agency to
effect notification to all Certificate Owners, through the Clearing Agency, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Certificate Registrar of the Book-Entry Certificates by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency for
registration, the Certificate Registrar shall issue the Definitive Certificates.
Neither the Depositor, the Certificate Registrar nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Certificate Registrar, to the extent applicable, with respect
to such Definitive Certificates and the Certificate Registrar shall recognize
the holders of the Definitive Certificates as Certificateholders hereunder.
Notwithstanding the foregoing, the Certificate Registrar, upon the instruction
of the Depositor, shall have the right to issue Definitive Certificates on the
Closing Date in connection with credit enhancement programs.

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                                   ARTICLE IV

                        ADMINISTRATION OF THE TRUST FUND

      Section 4.01 Custodial Accounts; Distribution Account.

      (a) On or prior to the Closing Date, the Servicer shall establish and
maintain one or more Custodial Accounts, as provided in the Servicing Agreement,
into which all Scheduled Payments and unscheduled payments with respect to the
Mortgage Loans, net of any deductions or reimbursements permitted under the
Servicing Agreement, shall be deposited. Prior to 1:00 p.m. New York City time
on each Distribution Account Deposit Date, the Servicer shall remit to the
Trustee for deposit into the Distribution Account, all amounts so required to be
deposited into such account in accordance with the terms of the Servicing
Agreement.

      (b) The Trustee, shall establish and maintain an Eligible Account entitled
"Distribution Account of Wells Fargo Bank Minnesota, National Association, as
Trustee, for the benefit of Merrill Lynch Mortgage Investors Trust Series MLCC
2003-D Holders of Mortgage Pass-Through Certificates." The Trustee shall,
promptly upon receipt from the Servicer on each Distribution Account Deposit
Date, deposit into the Distribution Account and retain on deposit until the
related Distribution Date the following amounts:

            (i) the aggregate of collections with respect to the Mortgage Loans
      remitted by the Servicer from the Custodial Accounts in accordance with
      the Servicing Agreement, including the amount of any Advances or
      Compensating Interest Payments with respect to the Mortgage Loans required
      to be paid by the Servicer; and

            (ii) any other amounts so required to be deposited in the
      Distribution Account in the related Due Period pursuant to this Agreement.

      (c) In the event Servicer has remitted in error to the Distribution
Account any amount not required to be remitted in accordance with the definition
of Available Distribution Amount, it may at any time direct the Trustee to
withdraw such amount from the Distribution Account for repayment to the
Servicer, as applicable, by delivery of an Officer's Certificate of the Servicer
to the Trustee which describes the amount deposited in error.

      (d) On each Distribution Date and Redemption Date, the Trustee shall
distribute the Available Distribution Amount to the Certificateholders and any
other parties entitled thereto in the amounts and priorities set forth in
Section 5.02. The Trustee may from time to time withdraw from the Distribution
Account and pay itself or the Servicer any amounts permitted to be paid or
reimbursed to such Person from funds in the Distribution Account pursuant to the
clauses (A) through (D) of the definition of Available Distribution Amount.

      (e) Funds in the Distribution Account may be invested in Permitted
Investments selected by the Trustee, which shall mature not later than one
Business Day prior to the Distribution Date (except that if such Permitted
Investment is an obligation of the Trustee or is managed or advised by the
Trustee or its affiliates, then such Permitted Investment shall mature not later
than such applicable Distribution Date) and any such Permitted Investment shall
not be

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sold or disposed of prior to its maturity. All such Permitted Investments shall
be made in the name of the Trustee (in its capacity as such) or its nominee. All
income and gain realized from any Permitted Investment shall be for the benefit
of the Trustee and shall be subject to its withdrawal or order from time to
time, and shall not be part of the Trust Fund. The amount of any losses incurred
in respect of any such investments shall be deposited in such Distribution
Account by the Trustee out of its own funds, without any right of reimbursement
therefor, immediately as realized.

      Section 4.02 Reports to Trustee and Certificateholders.

      On each Distribution Date, the Trustee shall have prepared and shall make
available to each Certificateholder and other interested parties a written
report setting forth the following information (on the basis of Mortgage Loan
level information obtained from the Servicer).

      (a) the amount of the distributions, separately identified, with respect
to each Class of Certificates;

      (b) the amount of the distributions set forth in the clause (a) allocable
to principal, separately identifying the aggregate amount of any Principal
Prepayments or other unscheduled recoveries of principal included in that
amount;

      (c) the amount of the distributions set forth in the clause (a) allocable
to interest and how it was calculated;

      (d) the amount of any unpaid Interest Shortfall, Basis Risk Shortfall or
Unpaid Basis Risk Shortfall (if applicable) and the related accrued interest
thereon, with respect to each Class of Certificates;

      (e) the Class Principal Amount of each Class of Certificates after giving
effect to the distribution of principal on that Distribution Date;

      (f) the Aggregated Stated Principal Balance of the Mortgage Loans and the
Net WAC of the Mortgage Loans at the end of the related Prepayment Period;

      (g) the Stated Principal Balance of the Mortgage Loans whose Mortgage
Rates adjust on the basis of the One-Month LIBOR index and the Six-Month LIBOR
index at the end of the related Prepayment Period;

      (h) the Pro Rata Senior Percentage, Senior Percentage and the Subordinate
Percentage for the following Distribution Date;

      (i) the Senior Prepayment Percentage and Subordinate Prepayment Percentage
for the following Distribution Date;

      (j) in the aggregate, the amount of Servicing Fee paid to or retained by
the Servicer;

      (k) in the aggregate, the amount of Advances for the related Due Period;

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<PAGE>

      (l) in the aggregate, the number and Stated Principal Balance of the
Mortgage Loans that were (A) Delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days, (B)
in foreclosure and Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or
more days and (C) in bankruptcy as of the close of business on the last day of
the calendar month preceding that Distribution Date;

      (m) in the aggregate, for any Mortgage Loan as to which the related
Mortgaged Property was an REO property during the preceding calendar month, the
principal balance of that Mortgage Loan as of the close of business on the last
day of the related Due Period;

      (n) in the aggregate, the total number and principal balance of any REO
properties as of the close of business on the last day of the preceding Due
Period;

      (o) in the aggregate, the amount of Realized Losses incurred during the
preceding calendar month;

      (p) in the aggregate, the cumulative amount of Realized Losses incurred
since the Closing Date;

      (q) the aggregate amount of Special Hazard Losses, Bankruptcy Losses and
Fraud Losses incurred during the preceding calendar month;

      (r) the cumulative amount of Special Hazard Losses, Bankruptcy Losses and
Fraud Losses incurred since the Closing Date;

      (s) the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage
Amount and the Bankruptcy Loss Coverage Amount, in each case as of the related
Determination Date;

      (t) the Realized Losses and Excess Losses, if any, allocated to each Class
of Certificates on that Distribution Date;

      (u) the Certificate Interest Rate for each Class of Certificates for that
Distribution Date; and

      (v) for each Class of Certificates, the amounts accrued and paid in
respect of each deemed interest rate cap agreement under which such Class of
Certificates is deemed entitled to receive or deemed obligated to make payments
as provided for in Section 10.01 hereof.

      The Trustee shall make such reports available each month via its website
at http://www.ctslink.com. Assistance in using the website may be obtained by
calling the Trustee's customer service desk at (301) 815-6600.
Certificateholders and other parties that are unable to use the website are
entitled to have a paper copy mailed to them via first class mail by contacting
the Trustee and indicating such. In preparing or furnishing the foregoing
information, the Trustee shall be entitled to rely conclusively on the accuracy
of the information or data regarding the Mortgage Loans and the related REO
Properties that has been provided to the Trustee by the Servicer, and the
Trustee shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.

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      Upon receipt by the Trustee of the reasonable advance written request of
any Certificateholder that is a savings and loan, bank or insurance company, the
Trustee, shall provide, or cause to be provided, (or, to the extent that such
information or documentation is not required to be provided by a Servicer under
the Servicing Agreement, shall use reasonable efforts to obtain such information
and documentation from the Servicer, and provide) to such Certificateholders
such reports and access to information and documentation regarding the Mortgage
Loans as such Certificateholders may reasonably deem necessary to comply with
applicable regulations of the Office of Thrift Supervision or its successor or
other regulatory authorities with respect to an investment in the Certificates;
provided, however, that the Trustee shall be entitled to be reimbursed by such
Certificateholders for the Trustee's actual expenses incurred in providing such
reports and access.

      The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of the Trust Fund, an application for an employer
identification number on IRS Form SS-4 or by any other acceptable method. The
Trustee shall also file a Form 8811 as required. The Trustee, upon receipt from
the IRS of the Notice of Taxpayer Identification Number Assigned, shall upon
request promptly forward a copy of such notice to the Trustee and the Depositor.
The Trustee shall furnish any other information that is required by the Code and
regulations thereunder to be made available to Certificateholders. The Depositor
shall cause the Servicer to provide the Trustee with such information as is
necessary for the Trustee to prepare such reports.

                                    ARTICLE V

                    DISTRIBUTIONS TO HOLDERS OF CERTIFICATES

      Section 5.01 Distributions Generally.

      (a) Subject to Section 7.01 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee or the Paying Agent shall
make distributions in accordance with this Article V. Such distributions shall
be made by check mailed to each Certificateholder's address as it appears on the
Certificate Register of the Certificate Registrar or, upon written request made
to the Trustee at least five Business Days prior to the related Record Date by
any Certificateholder owning an aggregate initial Certificate Principal Amount
of at least $1,000,000, or in the case of a Class of Interest-Only Certificates
or Residual Certificate, a Percentage Interest of not less than 100%, by wire
transfer in immediately available funds to an account specified in the request
and at the expense of such Certificateholder; provided, however, that the final
distribution in respect of any Certificate shall be made only upon presentation
and surrender of such Certificate at the Certificate Registrar's Corporate Trust
Office; provided, further, that the foregoing provisions shall not apply to any
Class of Certificates as long as such Certificate remains a Book-Entry
Certificate in which case all payments made shall be made through the Clearing
Agency and its Clearing Agency Participants. Wire transfers will be made at the
expense of the Holder requesting such wire transfer by deducting a wire transfer
fee from the related distribution. Notwithstanding such final payment of
principal of any of the Certificates, each Residual Certificate will remain
outstanding until the termination of each REMIC and the payment in full of all
other amounts due with respect to the Residual Certificates and at such time
such final payment in retirement of any Residual Certificate will be made only
upon

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presentation and surrender of such Certificate at the Certificate Registrar's
Corporate Trust Office. If any payment required to be made on the Certificates
is to be made on a day that is not a Business Day, then such payment will be
made on the next succeeding Business Day.

      (b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Class Principal Amounts or initial Class Notional
Amounts (or Percentage Interests).

      Section 5.02 Distributions from the Certificate Account.

      (a) On each Distribution Date, the Available Distribution Amount shall be
withdrawn by the Trustee from the Distribution Account and allocated among the
classes of Senior Certificates and Subordinate Certificates in the following
order of priority:

            (i) Concurrently, to the payment of the Interest Distribution Amount
      and any accrued but unpaid Interest Shortfalls with respect to each class
      of Senior Certificates and the Components, with, subject to the proviso
      set forth below, (x) all amounts payable in respect of Component XB1,
      Component XB2 and Component XB3 being payable to the Class X-B
      Certificates; provided, however, that on each Distribution Date, amounts
      that would otherwise be payable to the Class X-A-1, Class X-A-2, or Class
      X-B Certificates under this clause (a)(i) will (A) in the case of amounts
      otherwise payable to the Class X-A-1 and Class X-A-2 Certificates, be paid
      to the Class A Certificates to the extent of any Basis Risk Shortfalls and
      Unpaid Basis Risk Shortfalls for the Class A Certificates as of such
      Distribution Date, (B) in the case of amounts otherwise payable to the
      Class X-A-2 Certificates be paid to the Class A-X-1 Certificates to the
      extent necessary to reimburse the Class X-A-1 Certificates for prior
      amounts not distributed to the Class X-A-1 Certificates as a result of
      clause (A) above and any limitations on the Current Interest of the Class
      X-A-1 Certificates resulting from the Class X-A Current Interest
      Restriction and (C) in the case of amounts otherwise payable to the Class
      X-B Certificates, be paid to the Class B-1, Class B-2 and Class B-3
      Certificates to the extent of any Basis Risk Shortfalls and Unpaid Basis
      Risk Shortfalls for the Class B-1, Class B-2 and Class B-3 Certificates,
      respectively, as of such Distribution Date;

            (ii) Concurrently, to the Class A and Class A-R Certificates from
      the Available Distribution Amount remaining after application of amounts
      pursuant to clause (i) above, sequentially to the Class A-R and Class A
      Certificates, in that order, the Senior Principal Distribution Amount
      until their respective Class Principal Amounts have been reduced to zero.

            (iii) From the Available Distribution Amount remaining after the
      application of amounts pursuant to clauses (i) and (ii) above, to the
      Class B-1, Class B-2 and Class B-3 Certificates, sequentially, in that
      order, the Interest Distribution Amount and any Interest Shortfalls, in
      each case, for such Class on such date;

            (iv) From the Available Distribution Amount remaining after
      application of amounts pursuant to clauses (i) through (iii) above, to the
      Class B-1, Class B-2 and Class

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      B-3 Certificates, sequentially, in that order, such Class' Subordinate
      Class Percentage of the Subordinate Principal Distribution Amount, until
      its Class Principal Amount has been reduced to zero;

            (v) From the remaining Available Distribution Amount remaining after
      application of amounts pursuant to clauses (i) through (iv) in the
      following order of priority:

            (A) to the Class B-4 Certificates, the payment of its Interest
      Distribution Amount and any outstanding Interest Shortfalls;

            (B) to the Class B-4 Certificates, such Class' Subordinate Class
      Percentage of the Subordinate Principal Distribution Amount, until its
      Class Principal Amount has been reduced to zero;

            (C) to the Class B-5 Certificates, the payment of its Interest
      Distribution Amount and any outstanding Interest Shortfalls;

            (D) to the Class B-5 Certificates, such Class' Subordinate Class
      Percentage of the Subordinate Principal Distribution Amount, until its
      Class Principal Amount has been reduced to zero;

            (E) to the Class B-6 Certificates, the payment of its Interest
      Distribution Amount and any outstanding Interest Shortfalls; and

            (F) to the Class B-6 Certificates, such Class' Subordinate Class
      Percentage of the Subordinate Principal Distribution Amount, until its
      Class Principal Amount has been reduced to zero;

            (vi) To the Class A-R Certificate, any remaining amount of the
      Available Distribution Amount allocated as provided in Section 5.02(d).

Amounts paid to the Class A Certificates on any Distribution Date pursuant to
the proviso in clause (a)(i) above shall reduce amounts otherwise payable on
such Distribution Date in respect of the Class X-A-2 Certificates before
reducing any amounts otherwise payable to the Class X-A-1 Certificates. Amounts
that would have been distributed in respect of the Class X-A-1, Class X-A-2 and
Class X-B Certificates, but for the proviso set forth in clause (a)(i) above
shall be treated as having been distributed to the Class X-A-1, Class X-A-2 and
Class X-B Certificates, as applicable, for purposes of determining subsequent
Interest Shortfalls with respect to the Class X-A-1, Class X-A-2 and Class X-B
Certificates.

      (b) On each Distribution Date on and after the Credit Support Depletion
Date, the Available Distribution Amount shall be distributed to the remaining
Classes of Certificates on a pro rata basis, first, to pay the Interest
Distribution Amount and any accrued but unpaid Interest Shortfalls; provided,
however, that (i) on each such Distribution Date, amounts that would otherwise
be payable to the Class X-A-1 and Class X-A-2 Certificates under this clause (b)
will be paid to the Class A Certificates to the extent of any Basis Risk
Shortfalls and Unpaid Basis

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Risk Shortfalls for the Class A Certificates as of such Distribution Date and
(ii) on each such Distribution Date, amounts that would otherwise be payable to
the Class X-A-2 Certificates under this clause (b) will be paid to the Class
X-A-1 Certificates to the extent necessary to reimburse the Class X-A-1
Certificates for prior amounts not distributed to the Class X-A-1 Certificates
as a result of clause (i) above or clause (A) of Section 5.02(a)(i) and any
limitations on the Current Interest of the Class X-A-1 Certificates resulting
from the Class X-A Current Interest Restriction; second, to pay the Senior
Principal Distribution Amount; and third, to the Class A-R Certificate, any
remaining Available Distribution Amount.

Amounts paid to the Class A Certificates on any Distribution Date pursuant to
the proviso in this clause (b) shall reduce amounts otherwise payable on such
Distribution Date in respect of the Class X-A-2 Certificates before reducing any
amounts otherwise payable to the Class X-A-1 Certificates. Amounts that would
have been distributed in respect of the Class X-A-1 Certificates or the Class
X-A-2 Certificates but for the proviso set forth in this Section 5.02(b) shall
be treated as having been distributed to the Class X-A-1 Certificates or the
Class X-A-2 Certificates, as the case may be, for purposes of determining
subsequent Interest Shortfalls with respect to the Class X-A-1 Certificates and
the Class X-A-2 Certificates.

      (c) Notwithstanding the priority and allocation set forth in Section
5.02(a)(iv) and Section 5.02(a)(v) above, if with respect to any Class of
Subordinate Certificates on any Distribution Date the sum of the related Class
Subordination Percentages of such Class and of all other Classes of Subordinate
Certificates which have a higher numerical Class designation than such Class is
less than the Original Applicable Credit Support Percentage for such Class, no
distribution of Principal Prepayments shall be made to any such Classes and the
amount of such Principal Prepayment otherwise distributable to such Classes
shall be distributed to any Classes of Subordinate Certificates having lower
numerical Class designations than such Class, pro rata, based on the Class
Principal Amounts of the respective Classes immediately prior to such
Distribution Date and shall be distributed in the sequential order provided in
Section 5.02(a)(iv) and Section 5.02(a)(v) above.

      (d) Amounts distributed to the Residual Certificates pursuant to
subparagraph (a)(vi) of this Section 5.02 on any Distribution Date shall be
allocated among the REMIC residual interests represented thereby such that each
such interest is allocated the excess of funds available to the related REMIC
over required distributions to the regular interests in such REMIC on such
Distribution Date.

      (e) For purposes of distributions of interest in paragraph (a) of this
Section 5.02 such distributions to a Class of Certificates on any Distribution
Date shall be made first, in respect of Current Interest; and second, in respect
of Interest Shortfalls.

      Section 5.03 Allocation of Losses.

      (a) On or prior to each Distribution Date, the Trustee shall aggregate the
information provided by each Servicer with respect to the total amount of
Realized Losses, including Excess Losses, with respect to the Mortgage Loans for
the related Distribution Date.

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<PAGE>

      (b) On each Distribution Date, the principal portion of Realized Losses,
Bankruptcy Losses, Fraud Losses and Special Hazard Losses with respect to such
Distribution Date shall be allocated as follows:

            (i) Realized Losses, Bankruptcy Losses, Fraud Losses and Special
      Hazard Losses (other than Excess Losses) shall be allocated in the
      following order:

                  first, to the Classes of Subordinate Certificates in reverse
            order of their respective numerical Class designations (beginning
            with the Class of Subordinate Certificates with the highest
            numerical Class designation) until the Class Principal Amount of
            each such Class is reduced to zero; and

                  second, to the Class A and Class A-R Certificates, until the
            Class Principal Amount of each such Class of Certificates is reduced
            to zero;

            (ii) the principal portion of any Excess Losses shall be allocated
      proportionately on a pro rata basis to the Certificates on the basis of
      their Class Certificate Principal Amounts.

            (iii) The Class Principal Amount of the Class of Subordinate
      Certificates then outstanding with the highest numerical Class designation
      shall be reduced on each Distribution Date by the amount, if any, by which
      the aggregate of the Class Principal Amounts of all outstanding Classes of
      Certificates (after giving effect to the distribution of principal and the
      allocation of Realized Losses, Bankruptcy Losses, Fraud Losses and Special
      Hazard Losses and Excess Losses on such Distribution Date) exceeds the
      Aggregate Stated Principal Balance for the following Distribution Date.

            (iv) Any allocation of a loss pursuant to this section to a Class of
      Certificates shall be achieved by reducing the Class Principal Amount
      thereof by the amount of such loss.

      (c) Notwithstanding the other provisions of Section 5.03, the first $.98
of Realized Losses shall not be allocated to any Class of Certificates.

      Section 5.04 Advances.

      If the Servicer fails to remit any Advance required to be made under the
Servicing Agreement, the Trustee solely in its capacity as successor Servicer
shall itself make, or shall cause the successor Servicer to make, such Advance.
If the Trustee solely in its capacity as successor Servicer determines that an
Advance is required, it shall on the Business Day preceding the related
Distribution Date immediately following such Determination Date remit from its
own funds (or funds advanced by the Servicer) for deposit in the Distribution
Account immediately available funds in an amount equal to such Advance. The
Trustee and the Servicer shall be entitled to be reimbursed for all Advances
made by it. Notwithstanding anything to the contrary herein, in the event the
Trustee (or successor servicer) determines in its reasonable judgment that an
Advance is non-recoverable, the Trustee (or successor servicer) shall be under
no obligation to make such Advance.

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                                   ARTICLE VI

                    CONCERNING THE TRUSTEE; EVENTS OF DEFAULT

      Section 6.01 Duties of Trustee.

      (a) The Trustee, except during the continuance of an Event of Default
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. Any permissive right of the Trustee provided for in
this Agreement shall not be construed as a duty of the Trustee. If an Event of
Default has occurred and has not otherwise been cured or waived, the Trustee
shall exercise such of the rights and powers vested in it by this Agreement and
use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of such Person's
own affairs.

      (b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer to the Trustee pursuant to this Agreement or the
Servicing Agreement, and shall not be required to recalculate or verify any
numerical information furnished to the Trustee pursuant to this Agreement.
Subject to the immediately preceding sentence, if any such resolution,
certificate, statement, opinion, report, document, order or other instrument is
found not to conform to the form required by this Agreement in a material manner
the Trustee shall take such action as it deems appropriate to cause the
instrument to be corrected, and if the instrument is not corrected to the
Trustee's satisfaction, the Trustee will provide notice thereof to the
Certificateholders and will, at the expense of the Trust Fund, which expense
shall be reasonable given the scope and nature of the required action, take such
further action as directed by the Certificateholders.

      (c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful misconduct.
Notwithstanding anything in this Agreement to the contrary, the Trustee shall
not be liable for special, indirect or consequential losses or damages of any
kind whatsoever (including, but not limited to, lost profits). No provision of
this Agreement shall be construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:

            (i) The Trustee shall not be personally liable with respect to any
      action taken, suffered or omitted to be taken by it in good faith in
      accordance with the direction of Holders of Certificates as provided in
      Section 6.18 hereof;

            (ii) For all purposes under this Agreement, the Trustee shall not be
      deemed to have notice of any Event of Default (other than resulting from a
      failure by the Servicer (i) to remit funds (or to make Advances) or (ii)
      to furnish information to the Trustee when required to do so) unless a
      Responsible Officer of the Trustee has actual knowledge thereof or unless
      written notice of any event which is in fact such a default is received by

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<PAGE>

      the Trustee at the Corporate Trust Office of the Trustee, and such notice
      references the Holders of the Certificates and this Agreement;

            (iii) No provision of this Agreement shall require the Trustee to
      expend or risk its own funds or otherwise incur any financial liability in
      the performance of any of its duties hereunder, or in the exercise of any
      of its rights or powers, if it shall have reasonable grounds for believing
      that repayment of such funds or adequate indemnity against such risk or
      liability is not reasonably assured to it; and none of the provisions
      contained in this Agreement shall in any event require the Trustee to
      perform, or be responsible for the manner of performance of, any of the
      obligations of the Servicer under the Servicing Agreement;

            (iv) The Trustee shall not be responsible for any act or omission of
      the Servicer, the Depositor, the Originator or the Seller.

      (d) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided, however,
that the Trustee shall promptly remit to the Servicer upon receipt any such
complaint, claim, demand, notice or other document (i) which is delivered to the
Corporate Trust Office of the Trustee, (ii) of which a Responsible Officer has
actual knowledge, and (iii) which contains information sufficient to permit the
Trustee to make a determination that the real property to which such document
relates is a Mortgaged Property.

      (e) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Certificateholders of any Class holding Certificates which
evidence, as to such Class, Percentage Interests aggregating not less than 25%
as to the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee under this Agreement.

      (f) The Trustee shall not be required to perform services under this
Agreement, or to expend or risk its own funds or otherwise incur financial
liability for the performance of any of its duties hereunder or the exercise of
any of its rights or powers if there is reasonable ground for believing that the
timely payment of its fees and expenses or the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under 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 Servicer in
accordance with the terms of the Servicing Agreement.

      (g) The Trustee shall not be held liable by reason of any insufficiency in
the Distribution Account resulting from any investment loss on any Permitted
Investment included therein (except to the extent that the Trustee is the
obligor and has defaulted thereon).

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<PAGE>

      (h) Except as otherwise provided herein, the Trustee shall not have any
duty (A) to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Fund other than from funds available in the
Distribution Account, or (D) to confirm or verify the contents of any reports or
certificates of the Servicer delivered to the Trustee pursuant to the Servicing
Agreement believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties.

      (i) The Trustee shall not be liable in its individual capacity for an
error of judgment made in good faith by a Responsible Officer or other officers
of the Trustee, unless it shall be proved that the Trustee, was negligent in
ascertaining the pertinent facts.

      (j) Notwithstanding anything in this Agreement to the contrary, Trustee
shall not be liable for special, indirect or consequential losses or damages of
any kind whatsoever (including, but not limited to, lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.

      Section 6.02 Certain Matters Affecting the Trustee.

      Except as otherwise provided in Section 6.01:

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

            (ii) The Trustee may consult with counsel and any advice of its
      counsel or Opinion of Counsel shall be full and complete authorization and
      protection in respect of any action taken or suffered or omitted by it
      hereunder in good faith and in accordance with such advice or Opinion of
      Counsel;

            (iii) The Trustee shall not be personally liable for any action
      taken, suffered or omitted by it in good faith and reasonably believed by
      it to be authorized or within the discretion or rights or powers conferred
      upon it by this Agreement;

            (iv) Unless an Event of Default shall have occurred and be
      continuing, the Trustee shall not be bound to make any investigation into
      the facts or matters stated in any resolution, certificate, statement,
      instrument, opinion, report, notice, request, consent, order, approval,
      bond or other paper or document (provided the same appears regular on its
      face), unless requested in writing to do so by the Holders of at least a
      majority in Class Principal Amount (or Percentage Interest) of each Class
      of Certificates; provided, however, that, if the payment within a
      reasonable time to the Trustee of the costs, expenses or liabilities
      likely to be incurred by it in the making of such investigation is, in

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<PAGE>

      the opinion of the Trustee, not reasonably assured to the Trustee by the
      security afforded to it by the terms of this Agreement, the Trustee may
      require reasonable indemnity against such expense or liability or payment
      of such estimated expenses from the Certificateholders as a condition to
      proceeding. The reasonable expense thereof shall be paid by the party
      requesting such investigation and if not reimbursed by the requesting
      party shall be reimbursed to the Trustee by the Trust Fund;

            (v) The Trustee may execute any of the trusts or powers hereunder or
      perform any duties hereunder either directly or by or through agents,
      custodians or attorneys, which agents, custodians or attorneys shall have
      any and all of the rights, powers, duties and obligations of the Trustee
      conferred on it by such appointment, provided that the Trustee shall
      continue to be responsible for its duties and obligations hereunder to the
      extent provided herein, and provided further that the Trustee shall not be
      responsible for any misconduct or negligence on the part of any such agent
      or attorney appointed with due care by the Trustee;

            (vi) The Trustee shall not be under any obligation to exercise any
      of the trusts or powers vested in it by this Agreement or to institute,
      conduct or defend any litigation hereunder or in relation hereto, in each
      case 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;

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

            (viii) The Trustee shall not be required to give any bond or surety
      in respect of the execution of the Trust Fund created hereby or the powers
      granted hereunder.

      Section 6.03 Trustee Not Liable for Certificates.

      The Trustee make no representations as to the validity or sufficiency of
this Agreement or of the Certificates (other than the certificate of
authentication on the Certificates) or of any Mortgage Loan, or related document
save that the Trustee represents that, assuming due execution and delivery by
the other parties hereto, this Agreement has been duly authorized, executed and
delivered by it and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms except that such enforceability may be
subject to (A) applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally, and (B) general
principles of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law. The Trustee shall not be accountable for the use
or application by the Depositor of funds paid to the Depositor in consideration
of the assignment of the Mortgage Loans to the Trust Fund by the Depositor or
for the use or application of any funds deposited into the Distribution Account
or any other fund or account maintained with respect to the Certificates. The
Trustee shall not be responsible for the legality or validity of this Agreement
or the validity, priority, perfection or sufficiency of the security for the
Certificates issued or intended to be issued hereunder. Except as otherwise
provided herein,

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<PAGE>

the Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.

      Section 6.04 Trustee May Own Certificates.

      The Trustee and any Affiliate or agent of the Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates and may
transact banking and trust business with the other parties hereto and their
Affiliates with the same rights it would have if it were not Trustee or such
agent.

      Section 6.05 Eligibility Requirements for Trustee.

      The Trustee hereunder shall at all times (i) be an institution insured by
the FDIC, (ii) a corporation or national banking association, organized and
doing business under the laws of any State or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by federal or state authority and (iii) not be an Affiliate of the
Servicer. If such corporation or national banking association publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then, for the purposes of this
Section, the combined capital and surplus of such corporation or national
banking association shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 6.06.

      Section 6.06 Resignation and Removal of Trustee.

      (a) The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Depositor and the
Servicer. Upon receiving such notice of resignation, the Depositor will promptly
appoint a successor trustee by written instrument, one copy of which instrument
shall be delivered to the resigning Trustee, one copy to the successor trustee
and one copy to the Servicer. If no successor trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.

      (b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.05 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of either of their property or affairs
for the purpose of rehabilitation, conservation or liquidation, (iii) a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee is located, or (iv) the continued
use of the Trustee would result in a downgrading of the rating by any Rating
Agency of any Class of Certificates with a rating, then the Depositor shall
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument, one copy of which instrument

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<PAGE>

shall be delivered to the Trustee so removed, one copy each to the successor
trustee and one copy to the Servicer.

      (c) The Holders of more than 50% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates may at any time upon 30 days'
written notice to the Trustee and to the Depositor remove the Trustee by such
written instrument, signed by such Holders or their attorney-in-fact duly
authorized, one copy of which instrument shall be delivered to the Depositor and
one copy to the Trustee; the Depositor shall thereupon appoint a successor
trustee in accordance with this Section.

      (d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee, as provided
in Section 6.07.

      Section 6.07 Successor Trustee.

      (a) Any successor trustee appointed as provided in Section 6.06 shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as trustee. The
predecessor trustee shall deliver to the successor trustee all Trustee Mortgage
Files and documents and statements related to each Trustee Mortgage File held by
it hereunder, and shall duly assign, transfer, deliver and pay over to the
successor trustee the entire Trust Fund, together with all necessary instruments
of transfer and assignment or other documents properly executed necessary to
effect such transfer and such of the records or copies thereof maintained by the
predecessor trustee in the administration hereof as may be requested by the
successor trustee and shall thereupon be discharged from all duties and
responsibilities under this Agreement. In addition, the Depositor and the
predecessor trustee shall execute and deliver such other instruments and do such
other things as may reasonably be required to more fully and certainly vest and
confirm in the successor trustee all such rights, powers, duties and
obligations.

      (b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.

      (c) Upon acceptance of appointment by a successor trustee as provided in
this Section, the predecessor trustee shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to any Rating Agency. The expenses of such
mailing shall be borne by the Depositor.

      Section 6.08 Merger or Consolidation of Trustee.

      Any Person into which the Trustee may be merged or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Persons succeeding
to the business of the Trustee shall be the successor to the

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Trustee hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding, provided that, in the case of the Trustee, such Person shall be
eligible under the provisions of Section 6.05.

      Section 6.09 Appointment of Co-Trustee, Separate Trustee or Custodian.

      (a) Notwithstanding any other provisions hereof, at any time, the Trustee,
the Depositor or the Certificateholders evidencing more than 50% of the Class
Principal Amount (or Percentage Interest) of every Class of Certificates shall
have the power from time to time to appoint one or more Persons, approved by the
Trustee, to act either as co-trustees jointly with the Trustee, or as separate
trustees, or as custodians, for the purpose of holding title to, foreclosing or
otherwise taking action with respect to any Mortgage Loan outside the state
where the Trustee has its principal place of business where such separate
trustee or co-trustee is necessary or advisable (or the Trustee has been advised
by the Servicer that such separate trustee or co-trustee is necessary or
advisable) under the laws of any state in which a property securing a Mortgage
Loan is located or for the purpose of otherwise conforming to any legal
requirement, restriction or condition in any state in which a property securing
a Mortgage Loan is located or in any state in which any portion of the Trust
Fund is located. The separate Trustees, co-trustees, or custodians so appointed
shall be trustees or custodians for the benefit of all the Certificateholders
and shall have such powers, rights and remedies as shall be specified in the
instrument of appointment; provided, however, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee. The
obligation of the Trustee to make Advances pursuant to Section 5.04 hereof shall
not be affected or assigned by the appointment of a co-trustee.

      (b) Every separate trustee, co-trustee, and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:

            (i) all powers, duties, obligations and rights conferred upon the
      Trustee in respect of the receipt, custody and payment of moneys shall be
      exercised solely by the Trustee;

            (ii) all other rights, powers, duties and obligations conferred or
      imposed upon the Trustee shall be conferred or imposed upon and exercised
      or performed by the Trustee and such separate trustee, co-trustee, or
      custodian jointly, except to the extent that under any law of any
      jurisdiction in which any particular act or acts are to be performed the
      Trustee shall be incompetent or unqualified to perform such act or acts,
      in which event such rights, powers, duties and obligations, including the
      holding of title to the Trust Fund or any portion thereof in any such
      jurisdiction, shall be exercised and performed by such separate trustee,
      co-trustee, or custodian;

            (iii) no trustee or custodian hereunder shall be personally liable
      by reason of any act or omission of any other trustee or custodian
      hereunder; and

            (iv) the Trustee may at any time, by an instrument in writing
      executed by it, with the concurrence of the Depositor, accept the
      resignation of or remove any separate

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      trustee, co-trustee or custodian, so appointed by it or them, if such
      resignation or removal does not violate the other terms of this Agreement.

      (c) 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, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy given
to the Servicer.

      (d) Any separate trustee, co-trustee or custodian may, at any time,
constitute the Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate
trustee, co-trustee or custodian 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.

      (e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.

      (f) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.

      (g) The Trust shall pay the reasonable compensation of the co-trustees
(which compensation shall not reduce any compensation payable to the Trustee
under such Section).

      Section 6.10 Authenticating Agents.

      (a) The Trustee may appoint one or more Authenticating Agents which shall
be authorized to act on behalf of the Trustee in authenticating Certificates. If
such an agent is so appointed by the Trustee, wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.

      (b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the

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corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

      (c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor authenticating agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor authenticating agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor authenticating agent
shall be appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee.

      Section 6.11 Indemnification of Trustee.

      The Trustee and its respective directors, officers, employees and agents
shall be entitled to indemnification from the Depositor and the Trust Fund
(provided that the Trust Fund's indemnification under this Section 6.11 is
limited by Section 4.01(d) for any loss, liability or expense (including,
without limitation, reasonable attorneys' fees and disbursements (and, in
connection with any custody agreement the Trustee may enter pursuant to this
Agreement, including the reasonable compensation and the expenses and
disbursements of its agents or counsel), incurred without negligence or willful
misconduct on its part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder or in connection with the
performance of their duties hereunder including the costs and expenses of
defending themselves against any claim in connection with the exercise or
performance of any of their powers or duties hereunder, provided that:

            (i) with respect to any such claim, the Trustee shall have given the
      Depositor written notice thereof promptly after the Trustee shall have
      knowledge thereof;

            (ii) while maintaining control over its own defense, the Trustee
      shall cooperate and consult fully with the Depositor in preparing such
      defense;

            (iii) notwithstanding anything to the contrary in this Section 6.11,
      the Trust Fund shall not be liable for settlement of any such claim by the
      Trustee entered into without the prior consent of the Depositor, which
      consent shall not be unreasonably withheld; and

            (iv) the Trust's Fund's indemnification obligations hereunder shall
      be limited to losses, liability, costs or expenses, payments in respect of
      which by the Trust Fund would constitute "unanticipated expenses" within
      the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii)).

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      The provisions of this Section 6.11 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.

      Section 6.12 Fees and Expenses of the Trustee.

      As compensation for its services hereunder, the Trustee shall be entitled
to retain any and all investment earnings on amounts on deposit in the
Distribution Account pending the distribution of such funds to
Certificateholders on each Distribution Date (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). Any expenses incurred by the Trustee shall be reimbursed in
accordance with Section 6.11.

      Section 6.13 Collection of Monies.

      Except as otherwise expressly provided in this Agreement, the Trustee may
demand payment or delivery of, and shall receive and collect, all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement. The Trustee shall hold all such money and property received by it as
part of the Trust Fund and shall distribute it as provided in this Agreement.

      Section 6.14 Events of Default; Trustee To Act; Appointment of Successor.

      (a) If an Event of Default described in the Servicing Agreement shall
occur and be continuing, then, in each and every case, subject to applicable
law, so long as any such Event of Default shall not have been remedied within
any period of time prescribed by the Servicing Agreement, the Trustee, by notice
in writing to the Servicer may, and shall, if so directed by Certificateholders
evidencing more than 50% of the Class Principal Amount (or Class Notional
Amount) of each Class of Certificates, terminate all of the rights and
obligations of the Servicer under the Servicing Agreement in accordance with the
terms of the Servicing Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee; and the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the defaulting 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.

      If any Event of Default shall occur, the Trustee, upon becoming aware of
the occurrence thereof, shall promptly notify the Depositor and each Rating
Agency of the nature and extent of such Event of Default.

      (b) Within 90 days of the time the Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a), the Trustee, unless
another Servicer shall have been appointed, shall be the successor in all
respects to the Servicer in its capacity as such under the Servicing Agreement
and the transactions set forth or provided for therein and shall have all the
rights and powers and be subject to all the responsibilities, duties and
liabilities relating thereto

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and arising thereafter placed on the Servicer thereunder, including the
obligation to make Advances; provided, however, that any failure to perform such
duties or responsibilities caused by the Servicer's failure to provide
information required by this Agreement or the Servicing Agreement shall not be
considered a default by the Trustee hereunder. In addition, the Trustee shall
have no responsibility for any act or omission of the Servicer prior to the
issuance of any notice of termination. The Trustee shall have no liability
relating to any representations and warranties of the Servicer set forth in the
Servicing Agreement. In the Trustee's capacity as such successor, the Trustee
shall have the same limitations on liability provided to the Servicer in the
Servicing Agreement. As compensation therefor, the Trustee shall be entitled to
receive all compensation payable to the Servicer under the Servicing Agreement.

      The Trustee shall be entitled to be reimbursed by the Depositor and the
Trust Fund (pursuant to Section 6.11 but without regard to any annual limitation
thereunder), in the event that the Servicer does not reimburse the Trustee under
the Servicing Agreement, for all costs associated with the transfer of servicing
from the predecessor Servicer, including, without limitation, any costs or
expenses associated with the termination of the predecessor Servicer, the
appointment of a successor servicer, the complete transfer of all servicing data
and the completion, correction or manipulation of such servicing data as may be
required by the Trustee or any successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans property and effectively (such
costs, "Servicing Transfer Costs").

      (c) Notwithstanding the above, the Trustee may, if it shall be unwilling
to continue to so act, or shall, if it is unable to so act, petition a court of
competent jurisdiction to appoint, or, with the consent of the Depositor,
appoint on its own behalf any established housing and home finance institution
servicer, or servicing or mortgage servicing institution having a net worth of
not less than $15,000,000 and meeting such other standards for a successor
servicer as are set forth in the Servicing Agreement and reasonably satisfactory
to the Depositor, as the successor to the Servicer in the assumption of all of
the responsibilities, duties or liabilities of a servicer, like the Servicer.
Any entity designated by the Trustee as a successor servicer may be an Affiliate
of the Trustee; provided, however, that, unless such Affiliate meets the net
worth requirements and other standards set forth herein for a successor
servicer, the Trustee, in its individual capacity shall agree, at the time of
such designation, to be and remain liable to the Trust Fund for such Affiliate's
actions and omissions in performing its duties under the Servicing Agreement. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted to the Servicer under the
Servicing Agreement. The Trustee and such successor shall take such actions,
consistent with this Agreement and the Servicing Agreement, as shall be
necessary to effectuate any such succession and may make other arrangements with
respect to the servicing to be conducted hereunder which are not inconsistent
herewith and therewith. Neither the Trustee nor any other successor servicer
shall be deemed to be in default hereunder by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof caused by
(i) the failure of the Servicer to deliver, or any delay in delivering, cash,
documents or records to it, (ii) the failure of the Servicer to cooperate as
required by the Servicing Agreement, (iii) the failure of the Servicer to
deliver the Mortgage Loan data to the Trustee as required by the

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Servicing Agreement or (iv) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer.

      Section 6.15 Additional Remedies of Trustee Upon Event of Default.

      During the continuance of any Event of Default, so long as such Event of
Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as trustee
of the Trust Fund, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement or the Servicing Agreement shall be exclusive of
any other remedy, and each and every remedy shall be cumulative and in addition
to any other remedy, and no delay or omission to exercise any right or remedy
shall impair any such right or remedy or shall be deemed to be a waiver of any
Event of Default.

      Section 6.16 Waiver of Defaults.

      More than 50% of the Aggregate Voting Interests of Certificateholders may
waive any default or Event of Default by the Servicer in the performance of its
obligations hereunder, except that a default in the making of any required
deposit to the Distribution Account that would result in a failure of the
Trustee to make any required payment of principal of or interest on the
Certificates may only be waived with the consent of 100% of the affected
Certificateholders. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.

      Section 6.17 Notification to Holders.

      Upon termination of the Servicer or appointment of a successor to the
Servicer, in each case as provided herein, the Trustee shall promptly mail
notice thereof by first class mail to the Certificateholders at their respective
addresses appearing on the Certificate Register. The Trustee shall also, within
45 days after the occurrence of any Event of Default known to the Trustee, give
written notice thereof to the Certificateholders, unless such Event of Default
shall have been cured or waived prior to the issuance of such notice and within
such 45-day period.

      Section 6.18 Directions by Certificateholders and Duties of Trustee During
                   Event of Default.

      Subject to the provisions of Section 8.01 hereof, during the continuance
of any Event of Default, Holders of Certificates evidencing not less than 25% of
the Class Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Agreement or the
Servicing Agreement; provided, however, that the Trustee shall be under no
obligation to pursue any such

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remedy, or to exercise any of the trusts or powers vested in it by this
Agreement or the Servicing Agreement (including, without limitation, (i) the
conducting or defending of any administrative action or litigation hereunder or
in relation hereto and (ii) the terminating of the Servicer or any successor
servicer from its rights and duties as servicer) at the request, order or
direction of any of the Certificateholders, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the cost,
expenses and liabilities which may be incurred therein or thereby; and, provided
further, that, subject to the provisions of Section 8.01, the Trustee shall have
the right to decline to follow any such direction if the Trustee, in accordance
with an Opinion of Counsel, determines that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith determines that the
action or proceeding so directed would involve it in personal liability for
which it is not indemnified to its satisfaction or be unjustly prejudicial to
the non-assenting Certificateholders.

      Section 6.19 Preparation of Tax Returns and Other Reports.

      (a) The Trustee shall prepare or cause to be prepared on behalf of the
Trust Fund, based upon information calculated in accordance with this Agreement
pursuant to instructions given by the Depositor, and the Trustee shall file
federal tax returns, all in accordance with Article X hereof. The Trustee shall
prepare and file such state income tax returns and such other returns as may be
required by applicable law relating to the Trust Fund, and, if required by state
law, and shall file any other documents to the extent required by applicable
state tax law (to the extent such documents are in the Trustee's possession).
The Trustee shall forward copies to the Depositor of all such returns and Form
1099 supplemental tax information and such other information within the control
of the Trustee as the Depositor may reasonably request in writing, and shall
distribute to each Certificateholder such forms and furnish such information
within the control of the Trustee as are required by the Code and the REMIC
Provisions to be furnished to them, and will prepare and distribute to
Certificateholders Form 1099 (supplemental tax information) (or otherwise
furnish information within the control of the Trustee) to the extent required by
applicable law. The Trustee shall prepare and provide to such Persons as may be
required by applicable law all information returns required with respect to
payments made from the Basis Risk Reserve Fund.

      (b) The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of each of REMIC 1, REMIC 2, REMIC 3 and the Upper Tier
REMIC, an application on IRS Form SS-4 or shall obtain a Taxpayer Identification
Number for each of REMIC 1, REMIC 2, REMIC 3 and the Upper Tier REMIC using
another reasonable method. If the application is filed on Form SS-4, the
Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned for each REMIC, shall promptly forward copies of such notices to
the Depositor, upon request. The Trustee will file an IRS Form 8811.

      (c) The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K. Thereafter, within 15 days after each Distribution
Date, the Trustee shall, in accordance with industry standards, file with the
Securities and Exchange Commission (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 31, 2004, the Trustee shall, in accordance with industry
standards, file a Form 15 Suspension Notification with respect to the Trust
Fund, if applicable. Prior to March

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31, 2004, the Trustee shall file a Form 10-K executed by the Depositor, in
substance conforming to industry standards, with respect to the Trust Fund. The
Depositor shall be responsible for preparing all filings and certificates
required by the Sarbanes-Oxley Act of 2002. The Trustee agrees to promptly
furnish to the Depositor, 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 Depositor reasonably deems
appropriate to prepare and file all necessary reports with the Commission.

      Section 6.20 Annual Certificate by Trustee.

      (a) By March 15th of each year for which a Form 10-K is to be filed with a
certification by the Depositor, an officer of the Trustee shall execute and
deliver an Officer's Certificate, signed by the senior officer in charge of the
Trustee or any officer to whom that officer reports, to the Depositor for the
benefit of such Depositor and its officers, directors and affiliates, certifying
as to the matters described in the Officer's Certificate attached hereto as
Exhibit P.

      (b) The Trustee shall indemnify and hold harmless the Depositor and its
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 6.20 any material misstatement or omission in the
Officer's Certificate required under this Section or the negligence, bad faith
or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee agrees that it shall contribute to the
amount paid or payable by the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Trustee on the one had and the Depositor on
the other in connection with a breach of the Trustee's obligations under this
Section 6.20, any material misstatement or omission in the Officer's Certificate
required under this Section or the Trustee's negligence, bad faith or willful
misconduct in connection therewith.

                                  ARTICLE VII

                         PURCHASE OF MORTGAGE LOANS AND
                          TERMINATION OF THE TRUST FUND

      Section 7.01 Purchase of Mortgage Loans; Termination of Trust Fund Upon
                   Purchase or Liquidation of All Mortgage Loans.

      (a) The respective obligations and responsibilities of the Trustee created
hereby (other than the obligation of the Trustee to make payments to
Certificateholders as set forth in Section 7.02), shall terminate on the
earliest of (i) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust Fund and the disposition of all REO Property, (ii) the
sale of the property held by the Trust Fund in accordance with Section 7.01(b)
and (iii) the Latest Possible Maturity Date; provided, however, that in no event
shall the Trust Fund created hereby

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continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late Ambassador of the United
States to the Court of St. James's, living on the date hereof. Any termination
of the Trust Fund shall be carried out in such a manner so that the termination
of each REMIC included therein shall qualify as a "qualified liquidation" under
the REMIC Provisions.

      (b) On any Distribution Date occurring on or after the Initial Optional
Purchase Date, the majority Holder of the most subordinate Class of Subordinate
Certificates then outstanding (the "Terminator") has the option to cause the
Trust Fund to adopt a plan of complete liquidation pursuant to Section
7.03(a)(i) hereof to sell all of its property. If the Terminator elects to
exercise such option, it shall no later than 30 days prior to the Distribution
Date selected for purchase of the assets of the Trust Fund (the "Purchase Date")
deliver notices to the Trustee and the Depositor and either (i) deposit in the
Distribution Account the Redemption Price or (ii) state in such notice that the
Redemption Price shall be deposited in the Distribution Account not later than
10:00 a.m., New York City time on the applicable Purchase Date. Upon exercise of
such option, the property of the Trust Fund shall be sold to the Terminator at a
price equal to the Redemption Price.

      (c) The Servicer and the Trustee shall be reimbursed from the Redemption
Price for any Advances, Servicer Advances, accrual and unpaid Servicing Fees or
other amounts with respect to the Mortgage Loans that are reimbursable to such
parties under this Agreement or the Servicing Agreement.

      Section 7.02 Procedure Upon Redemption or Termination of Trust Fund.

      (a) Notice of any redemption termination pursuant to the provisions of
Section 7.01(b), specifying the Distribution Date upon which the final
distribution shall be made or the Redemption Date of the Certificates, shall be
given promptly by the Trustee by first class mail to Certificateholders mailed
in the case of a redemption of the Certificates, no less than the first day of
the month in which the Distribution Date selected for redemption of the
Certificates occurs or upon (x) the sale of all of the property of the Trust
Fund by the Trustee or in the case of a sale of assets of the Trust Fund, or (y)
upon the final payment or other liquidation of the last Mortgage Loan or REO
Property in the Trust Fund. Such notice shall specify (A) the Redemption Date,
Distribution Date upon which final distribution on the Certificates of all
amounts required to be distributed to Certificateholders pursuant to Section
5.02 will be made upon presentation and surrender of the Certificates at the
Certificate Registrar's Corporate Trust Office, and (B) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distribution
being made only upon presentation and surrender of the Certificates at the
office or agency of the Trustee therein specified. The Trustee shall give such
notice to the Certificate Registrar at the time such notice is given to Holders
of the Certificates. Upon any such termination, the duties of the Trustee and
the Certificate Registrar with respect to the Certificates shall terminate and
the Trustee shall terminate the Distribution Account and any other account or
fund maintained with respect to the Certificates, subject to the Trustee's
obligation hereunder to hold all amounts payable to Certificateholders in trust
without interest pending such payment.

      (b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice,

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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 one year after the second
notice any Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps to contact the remaining Certificateholders
concerning surrender of such Certificates, and the cost thereof shall be paid
out of the amounts distributable to such Holders. If within two years after the
second notice any Certificates shall not have been surrendered for cancellation,
the Trustee shall, subject to applicable state law relating to escheatment, hold
all amounts distributable to such Holders for the benefit of such Holders. No
interest shall accrue on any amount held by the Trustee and not distributed to a
Certificateholder due to such Certificateholder's failure to surrender its
Certificate(s) for payment of the final distribution thereon in accordance with
this Section.

      (c) Any reasonable expenses incurred by the Trustee, to the extent that
such expenses, if paid or reimbursed by the Trust Fund, would constitute
"unanticipated expenses" within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii), in connection with any redemption or termination or
liquidation of the Trust Fund shall be reimbursed from proceeds received from
the liquidation of the Trust Fund.

      Section 7.03 Additional Trust Fund Termination Requirements.

      (a) Any termination of the Trust Fund shall be effected in accordance with
the following additional requirements, unless the Trustee seeks (at the request
of the party exercising the option to purchase all of the Mortgage Loans
pursuant to Section 7.01(b)), and subsequently receives, an Opinion of Counsel
(at the expense of such requesting party), addressed to the Trustee to the
effect that the failure of the Trust Fund to comply with the requirements of
this Section 7.03 will not (I) result in the imposition of taxes on any REMIC
under the REMIC Provisions or (II) cause any REMIC established hereunder to fail
to qualify as a REMIC at any time that any Certificates are outstanding:

            (i) Within 89 days prior to the time of the making of the final
      payment on the Certificates, upon notification by the Depositor that it
      intends to exercise its option to cause the termination of the Trust Fund,
      the Trustee shall adopt a plan of complete liquidation of the Trust Fund
      on behalf of each REMIC, meeting the requirements of a qualified
      liquidation under the REMIC Provisions;

            (ii) Any sale of the assets of the Trust Fund pursuant to Section
      7.02 shall be a sale for cash and shall occur at or after the time of
      adoption of such a plan of complete liquidation and prior to the time of
      making of the final payment on the Certificates;

            (iii) On the date specified for final payment of the Certificates,
      the Trustee shall make final distributions of principal and interest on
      the Certificates in accordance with Section 5.02 and, after payment of, or
      provision for any outstanding expenses, distribute or credit, or cause to
      be distributed or credited, to the Holders of the Residual Certificates
      all cash on hand after such final payment (other than cash retained to
      meet claims), and the Trust Fund (and each REMIC) shall terminate at that
      time; and

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            (iv) In no event may the final payment on the Certificates or the
      final distribution or credit to the Holders of the Residual Certificates
      be made after the 89th day from the date on which the plan of complete
      liquidation is adopted.

      (b) By its acceptance of a Residual Certificate, each Holder thereof
hereby agrees to accept the plan of complete liquidation adopted by the Trustee
under this Section and to take such other action in connection therewith as may
be reasonably requested by the Trustee.

      Section 7.04 [RESERVED].

                                  ARTICLE VIII

                          RIGHTS OF CERTIFICATEHOLDERS

      Section 8.01 Limitation on Rights of Holders.

      (a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or this Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
take any action or proceeding in any court for a partition or winding up of this
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them. Except as otherwise expressly provided herein, no
Certificateholder, solely by virtue of its status as a Certificateholder, shall
have any right to vote or in any manner otherwise control the Trustee or the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

      (b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Class
Principal Amount or Class Notional Amount (or Percentage Interest) of
Certificates of each Class affected thereby 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 cost, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for sixty 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 and no direction inconsistent
with such written request has been given such Trustee during such sixty-day
period by such Certificateholders; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such

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Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.

      Section 8.02 Access to List of Holders.

      (a) If the Trustee is not acting as Certificate Registrar, the Certificate
Registrar will furnish or cause to be furnished to the Trustee, within fifteen
days after receipt by the Certificate Registrar of a request by the Trustee in
writing, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Certificateholders of each Class as of the most
recent Record Date.

      (b) If three or more Holders or Certificate Owners (hereinafter referred
to as "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Holders with respect to
their rights under this Agreement or under the Certificates and is accompanied
by a copy of the communication which such Applicants propose to transmit, then
the Trustee shall, within five Business Days after the receipt of such
application, afford such Applicants reasonable access during the normal business
hours of the Trustee to the most recent list of Certificateholders held by the
Trustee or shall, as an alternative, send, at the Applicants' expense, the
written communication proffered by the Applicants to all Certificateholders at
their addresses as they appear in the Certificate Register.

      (c) Every Holder or Certificate Owner, if the Holder is a Clearing Agency,
by receiving and holding a Certificate, agrees with the Depositor, the
Certificate Registrar and the Trustee that neither the Depositor, the
Certificate Registrar nor the Trustee shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.

      Section 8.03 Acts of Holders of Certificates.

      (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders or
Certificate Owners, if the Holder is a Clearing Agency, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee. Such instrument or
instruments (as the action embodies therein and evidenced thereby) are herein
sometimes referred to as an "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agents shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee, if made in the manner provided in this
Section.

      (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments or deeds, certifying

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that the individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation or
a member of a partnership on behalf of such corporation or partnership, such
certificate or affidavit shall also constitute sufficient proof of his
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 (whether or not such Certificates shall
be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee nor the Depositor shall be
affected by any notice to the contrary.

      (d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by 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 thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee in
reliance thereon, whether or not notation of such action is made upon such
Certificate.

                                   ARTICLE IX

                                   [RESERVED]

                                   ARTICLE X

                              REMIC ADMINISTRATION

      Section 10.01 REMIC Administration.

      (a) REMIC elections as set forth in the Preliminary Statement shall be
made on Forms 1066 or other appropriate federal tax or information return for
the taxable year ending on the last day of the calendar year in which the
Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement and Section 1.01.

      (b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 860G(a)(9) of the Code. The latest possible
maturity date for purposes of Treasury Regulation 1.860G-1(a)(4) will be the
Latest Possible Maturity Date.

      (c) The Trustee shall represent the Trust Fund in any administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The Trustee shall pay any and all tax
related expenses (not including taxes) of each REMIC, including but not limited
to any professional fees or expenses related to audits or any administrative or
judicial proceedings with respect to such REMIC that involve the Internal
Revenue Service or state tax authorities, but only to the extent that (i) such
expenses are ordinary or routine expenses, including expenses of a routine audit
but not expenses of litigation (except

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as described in (ii)); or (ii) such expenses or liabilities (including taxes and
penalties) are attributable to the negligence or willful misconduct of the
Trustee in fulfilling its duties hereunder (including its duties as tax return
preparer). The Trustee shall be entitled to reimbursement of expenses to the
extent provided in clause (i) above from the Distribution Account, provided,
however, the Trustee shall not be entitled to reimbursement for expenses
incurred in connection with the preparation of tax returns and other reports as
required by Section 6.19 and this Section.

      (d) The Trustee shall prepare, sign and file all of each REMIC's federal
and appropriate state tax and information returns as such REMIC's direct
representative. The expenses of preparing and filing such returns shall be borne
by the Trustee.

      (e) The Trustee or its designee shall perform on behalf of each REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions, or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, if required by the Code, the REMIC Provisions, or other such
guidance, the Trustee shall provide, upon receipt of additional reasonable
compensation, to the Treasury or other governmental authority such information
as is necessary for the application of any tax relating to the transfer of a
Residual Certificate to any disqualified person or organization pursuant to
Treasury Regulation 1.860E-2(a)(5) and any person designated in Section
860E(e)(3) of the Code.

      (f) The Trustee and the Holders of Certificates shall take any action or
cause any REMIC to take any action necessary to create or maintain the status of
any REMIC as a REMIC under the REMIC Provisions and shall assist each other as
necessary to create or maintain such status. Neither the Trustee nor the Holder
of any Residual Certificate shall knowingly take any action, cause any REMIC to
take any action or fail to take (or fail to cause to be taken) any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of any REMIC as a REMIC or (ii) result in the imposition of
a tax upon any REMIC (including but not limited to the tax on prohibited
transactions as defined in Code Section 860F(a)(2) and the tax on prohibited
contributions set forth on Section 860G(d) of the Code) (either such event, an
"Adverse REMIC Event") unless the Trustee has received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status or result in the imposition of
such a tax. In addition, prior to taking any action with respect to any REMIC or
the assets therein, or causing any REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee, in writing, with respect to whether
such action could cause an Adverse REMIC Event to occur with respect to any
REMIC, and no such Person shall take any such action or cause any REMIC to take
any such action as to which the Trustee has advised it in writing that an
Adverse REMIC Event could occur; provided, however, that if no Adverse REMIC
Event would occur but such action could result in the imposition of additional
taxes on the Residual Certificateholders, no such Person shall take any such
action, or cause any REMIC to take any such action without the written consent
of the Residual Certificateholders.

      (g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental authorities.
To the extent that

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such taxes are not paid by a Residual Certificateholder, the Trustee or the
Paying Agent shall pay any remaining REMIC taxes out of current or future
amounts otherwise distributable to the Holder of the Residual Certificate in any
such REMIC or, if no such amounts are available, out of other amounts held in
the Collection Account, and shall reduce amounts otherwise payable to holders of
regular interests in any such REMIC, as the case may be.

      (h) The Trustee shall, for federal income tax purposes, maintain books and
records with respect to each REMIC on a calendar year and on an accrual basis.

      (i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement.

      (j) The Trustee shall not enter into any arrangement by which any REMIC
will receive a fee or other compensation for services.

      (k) (i) The Trustee shall treat the Class A Certificates as representing
ownership, through a grantor trust, of the Upper Tier REMIC Class A Interest.
The Trustee shall treat the rights of the Holders of the Class A Certificates to
receive distributions attributable to accruals of interest at rates in excess of
the Adjusted Net WAC, including all payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls, as interests in interest rate cap contracts
written by the Holders of each of the Class X-A-1 and Class X-A-2 Certificates
(as holders of interests in the Upper Tier REMIC Class X-A-1 Interest and the
Upper Tier REMIC Class X-A-2 Interest, respectively) in favor of the Holders of
the Class A Certificates. Thus, each Class A Certificate shall be treated as
representing not only ownership of a regular interest in the Upper Tier REMIC,
but also ownership, through a grantor trust, of an interest in (I) an interest
rate cap contract written by the holders of the Class X-A-1 Certificates (as
holders of interests in the Upper Tier REMIC Class X-A-1 Interest) and (II) an
interest rate cap contract written by the holders of the Class X-A-2
Certificates (as holders of interests in the Upper Tier REMIC Class X-A-2
Interest). Amounts otherwise payable with respect to the Upper Tier REMIC Class
X-A-2 Interest will be treated as used to make payments in respect of the
interest rate cap contracts written in favor of the holders of the Class A
Certificates before amounts payable with respect to the Upper Tier REMIC Class
X-A-1 Interest are so treated. (ii) The Trustee shall treat the Class X-A-1
Certificates as representing, through a grantor trust, the Upper Tier REMIC
Class X-A-1 Interest. (iii) The Trustee shall treat the Class X-A-2 Certificates
as representing, through a grantor trust, the Upper Tier REMIC Class X-A-2
Interest. (iv) The Trustee will treat all amounts distributed in respect of the
Class X-A-1 Certificates under the provisos of Section 5.02(a)(i) or 5.02(b)
from amounts otherwise distributable to the Class X-A-2 Certificates as amounts
paid under an interest rate cap agreement written by the holders of the Class
X-A-2 Certificates in favor of the holders of the Class X-A-1 Certificates. (v)
The Trustee shall treat each of the Class B-1, B-2 and Class B-3 Certificates as
representing ownership, through grantor trusts, of the Upper Tier REMIC Class
B-1 Interest, Upper Tier REMIC Class B-2 Interest and Upper Tier REMIC Class B-3
Interest, respectively. The Trustee shall treat the rights of the Holders of the
Class B-1, Class B-2 and Class B-3 Certificates to receive payments in respect
of Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls as interests in cap
contracts written by the Holders of the Class X-B Certificate in favor of the
Holders of the Class B-1, Class B-2 and Class B-3 Certificates. (vi) For
purposes of determining the issue prices of the REMIC regular interests or
portions thereof represented by the Certificates, the interest rate cap
contracts

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described in this Section 10.01(k) shall be assumed to have a zero value unless
and until required otherwise by an applicable taxing authority. (vii) Each
Holder or beneficial owner of a Class A, Class X-A-1, Class X-A-2, Class X-B,
Class B-1, Class B-2 or Class B-3 Certificate agrees, by its acceptance of such
Certificate or a beneficial interest therein, to treat, for tax purposes, such
Certificate in a manner consistent with the treatment described in this Section
10.01(k). (viii) For federal income tax purposes, the Trustee shall treat
distributions from the Trust Fund as occurring as required by the terms of the
Upper-Tier REMIC Interests, with any difference between such and actual
distributions being treated as resulting from payments in respect of the
interest rate cap agreements described in this Section 10.01(k).

      (l) The Class A-R Holder shall act as "tax matters person" with respect to
each REMIC and irrevocably appoints the Trustee to act as its agent in such
roles.

      (m) Neither the Trustee nor the Depositor, as assignees under the
Servicing Agreement, shall provide any consent pursuant to the Servicing
Agreement or knowingly take any action under such Servicing Agreement that would
conflict with or violate the provisions of this Article X.

      Section 10.02 Prohibited Transactions and Activities.

      Neither the Depositor nor the Trustee shall sell, dispose of, or
substitute for any of the Mortgage Loans, except in a disposition pursuant to
(i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of each REMIC pursuant to Article VII of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a repurchase
of Mortgage Loans pursuant to Article II of this Agreement, nor acquire any
assets for any REMIC, nor sell or dispose of any investments in the Distribution
Account for gain, nor accept any contributions to any REMIC after the Closing
Date, unless it has received an Opinion of Counsel (at the expense of the party
causing such sale, disposition, or substitution) that such disposition,
acquisition, substitution, or acceptance will not (a) affect adversely the
status of any such REMIC as a REMIC or of the interests therein other than the
Residual Certificate as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause any such REMIC to be
subject to any tax including a tax on prohibited transactions or prohibited
contributions pursuant to the REMIC Provisions.

      Section 10.03 Indemnification with Respect to Prohibited Transactions or
                    Loss of REMIC Status.

      In the event that a REMIC fails to qualify as a REMIC, loses its status as
a REMIC, or incurs federal, state or local taxes as a result of a prohibited
transaction or prohibited contribution under the REMIC Provisions due to the
negligent performance by the Trustee of its duties and obligations set forth
herein, the Trustee shall indemnify the Certificateholders of the related
Residual Certificate against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the
Trustee shall not be liable for any such Losses attributable to the action or
inaction of the Depositor or the Holder of the Residual Certificate, nor for any
such Losses resulting from misinformation provided by any of the foregoing
parties on which the Trustee has relied. Notwithstanding the foregoing, however,

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in no event shall the Trustee have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, the Master
Mortgage Loan Purchase Agreement or the Servicing Agreement, (2) for any Losses
other than arising out of malfeasance, willful misconduct or negligent
performance by the Trustee of its duties and obligations set forth herein, and
(3) for any special or consequential damages to Certificateholders of the
related Residual Certificate (in addition to payment of principal and interest
on the Certificates).

      Section 10.04 REO Property.

      (a) Notwithstanding any other provision of this Agreement, the Trustee,
shall not, except to the extent provided in the Servicing Agreement, knowingly
permit any Servicer to, rent, lease, or otherwise earn income on behalf of any
REMIC with respect to any REO Property which might cause such REO Property to
fail to qualify as "foreclosure property" within the meaning of section
860G(a)(8) of the Code or result in the receipt by any REMIC of any "income from
non-permitted assets" within the meaning of section 860F(a)(2) of the Code or
any "net income from foreclosure property" which is subject to tax under the
REMIC Provisions unless the Servicer has provided to the Trustee an Opinion of
Counsel concluding that, under the REMIC Provisions, such action would not
adversely affect the status of any REMIC as a REMIC and any income generated for
any REMIC by the REO Property would not result in the imposition of a tax upon
such REMIC.

      (b) The Depositor shall cause the Servicer (to the extent provided in the
Servicing Agreement) to make reasonable efforts to sell any REO Property for its
fair market value. In any event, however, the Depositor shall, or shall cause
the Servicer (to the extent provided in the Servicing Agreement) to, dispose of
any REO Property within three years of its acquisition by the Trust Fund unless
the Depositor or the Servicer (on behalf of the Trust Fund) has received a grant
of extension from the Internal Revenue Service to the effect that, under the
REMIC Provisions and any relevant proposed legislation and under applicable
state law, the REMIC may hold REO Property for a longer period without adversely
affecting the REMIC status of such REMIC or causing the imposition of a Federal
or state tax upon such REMIC. If such an extension has been received, then the
Depositor, acting on behalf of the Trustee hereunder, shall, or shall cause the
Servicer to, continue to attempt to sell the REO Property for its fair market
value for such period longer than three years as such extension permits (the
"Extended Period"). If such an extension has not been received and the Depositor
or the Servicer, acting on behalf of the Trust Fund hereunder, is unable to sell
the REO Property within 33 months after its acquisition by the Trust Fund or if
such an extension, has been received and the Depositor or the Servicer is unable
to sell the REO Property within the period ending three months before the close
of the Extended Period, the Depositor shall cause the Servicer, before the end
of the three year period or the Extended Period, as applicable, to (i) purchase
such REO Property at a price equal to the REO Property's fair market value or
(ii) auction the REO Property to the highest bidder (which may be the Servicer)
in an auction reasonably designed to produce a fair price prior to the
expiration of the three-year period or the Extended Period, as the case may be.

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                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

      Section 11.01 Binding Nature of Agreement; Assignment.

      This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

      Section 11.02 Entire Agreement.

      This Agreement contains the entire agreement and understanding among the
parties hereto 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. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.

      Section 11.03 Amendment.

      (a) This Agreement may be amended from time to time by the Depositor and
the Trustee, without notice to or the consent of any of the Holders, (i) to cure
any ambiguity or mistake, (ii) to cause the provisions herein to conform to or
be consistent with or in furtherance of the statements made with respect to the
Certificates, the Trust Fund or this Agreement in any Offering Document, or to
correct or supplement any provision herein which may be inconsistent with any
other provisions herein or with the provisions of the Servicing Agreement, (iii)
to add any other provisions with respect to matters or questions arising under
this Agreement, (iv) to modify alter, amend, add to or rescind any of the terms
or provisions contained in this Agreement or (v) to add, delete, or amend any
provisions to the extent necessary or desirable to comply with any requirements
imposed by the Code and the REMIC Provisions. No such amendment effected
pursuant to the preceding sentence shall, as evidenced by an Opinion of Counsel,
adversely affect the status of any REMIC created pursuant to this Agreement, nor
shall such amendment effected pursuant to clauses (iii) or (iv) of such sentence
adversely affect in any material respect the interests of any Holder unless such
Holder has consented thereto. Prior to entering into any amendment without the
consent of Holders pursuant to this paragraph, the Trustee shall be provided
with an Opinion of Counsel (at the expense of the party requesting such
amendment) to the effect that such amendment is permitted under this Section.
Any such amendment shall be deemed not to adversely affect in any material
respect any Holder, if the Trustee receives written confirmation from each
Rating Agency that such amendment will not cause such Rating Agency to reduce
the then current rating assigned to the Certificates.

      (b) This Agreement may also be amended from time to time by the Depositor
and the Trustee, with the consent of the Holders of not less than 66-2/3% of the
Class Principal Amount (or Percentage Interest) of each Class of Certificates
affected thereby for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders; provided, however, that no such amendment
shall be made unless the Trustee receives an Opinion of Counsel, at the expense

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of the party requesting the change, that such change will not adversely affect
the status of any REMIC as a REMIC or cause a tax to be imposed on such REMIC;
and provided further, that no such amendment may (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 or (ii) reduce the aforesaid percentages of Class Principal
Amount or Class Notional Amount (or Percentage Interest) of Certificates of each
Class, the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of the Class Principal Amount or
Class Notional Amount (or Percentage Interest) of each Class of Certificates
affected thereby. For purposes of this paragraph, references to "Holder" or
"Holders" shall be deemed to include, in the case of any Class of Book-Entry
Certificates, the related Certificate Owners.

      (c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Holder,
the Depositor and the Rating Agencies.

      (d) It shall not be necessary for the consent of Holders under this
Section 11.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.

      (e) Notwithstanding anything to the contrary in the Servicing Agreement,
the Trustee shall not consent to any amendment of the Servicing Agreement except
pursuant to the standards provided in this Section with respect to amendment of
this Agreement.

      (f) Neither the Seller not the Trustee shall consent to the assignment by
the Servicer of the Servicer's rights and obligations under the Servicing
Agreement without the prior written consent of the Depositor, which consent
shall not be unreasonably withheld.

      Section 11.04 Voting Rights.

      Except to the extent that the consent of all affected Certificateholders
is required pursuant to this Agreement, with respect to any provision of this
Agreement requiring the consent of Certificateholders representing specified
percentages of aggregate outstanding Certificate Principal Amount or Class
Notional Amount (or Percentage Interest), Certificates owned by the Depositor,
the Trustee, the Servicer or any Affiliates thereof are not to be counted so
long as such Certificates are owned by the Depositor, the Trustee, the Servicer
or any Affiliate thereof.

      Section 11.05 Provision of Information.

      (a) For so long as any of the Certificates of any Series or Class are
"restricted securities" within the meaning of Rule 144(a)(3) under the Act, each
of the Depositor and the Trustee agree to cooperate with each other to provide
to any Certificateholders and to any prospective purchaser of Certificates
designated by such holder, upon the request of such holder or prospective
purchaser, any information required to be provided to such holder or prospective
purchaser to satisfy the condition set forth in Rule 144A(d)(4) under the Act.
Any reasonable,

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out-of-pocket expenses incurred by the Trustee in providing such information
shall be reimbursed by the Depositor.

      (b) The Trustee shall provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or documents
requested, (i) a copy (excluding exhibits) of any report on Form 8-K or Form
10-K filed with the Securities and Exchange Commission pursuant to Section
9.23(b) and (ii) a copy of any other document incorporated by reference in the
Prospectus. Any reasonable out-of-pocket expenses incurred by the Trustee in
providing copies of such documents shall be reimbursed by the Depositor.

      (c) On each Distribution Date, the Trustee shall deliver or cause to be
delivered by first class mail or make available on its website to the Depositor,
Attention: Contract Finance, a copy of the report delivered to
Certificateholders pursuant to Section 4.02.

      Section 11.06 Governing Law.

      THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES APPLIED IN NEW YORK.

      Section 11.07 Notices.

      All requests, demands, notices, authorizations, directions, consents,
waivers and communications hereunder shall be in writing and shall be deemed to
have been duly given when received by (a) in the case of the Depositor, Merrill
Lynch Mortgage Investors, Inc., 250 Vesey Street, 4 World Financial Center, 10th
Floor, New York, New York, 10080, telecopy number (212) 449-9015, Attention:
Merrill Lynch Mortgage Investors Trust Series MLCC 2003-D, (b) in the case of
the Originator, Merrill Lynch Credit Corporation, 250 Vesey Street, 4 World
Financial Center, 10th Floor, New York, New York, 10080, telecopy number (212)
449-9015, Attention: Merrill Lynch Mortgage Investors Trust Series MLCC 2003-D,
(c) in the case of the Seller, Redwood Holdings Inc. 591 Redwood Highway, Suite
3100, Mill Valley, CA 94941 and (d) with respect to the Trustee or the
Certificate Registrar, P.O. Box 98, Columbia, Maryland 21046, Attention: Client
Manager - MLMI Trust Series MLCC 2003-D, with a copy to it at its respective
Corporate Trust Office, or as to each party such other address as may hereafter
be furnished by such party to the other parties in writing. All demands, notices
and communications to a party hereunder shall be in writing and shall be deemed
to have been duly given when delivered to such party at the relevant address,
facsimile number or electronic mail address set forth above or at such other
address, facsimile number or electronic mail address as such party may designate
from time to time by written notice in accordance with this Section 11.07.

      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 severable from the
remaining covenants, agreements, provisions or

                                       96
<PAGE>

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 Indulgences; No Waivers.

      Neither the failure nor any delay on the part of a party to exercise any
right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.

      Section 11.10 Headings Not To Affect Interpretation.

      The headings contained in this Agreement are for convenience of reference
only, and they shall not be used in the interpretation hereof.

      Section 11.11 Benefits of Agreement.

      Nothing in this Agreement or in the Certificates, express or implied,
shall give to any Person, other than the parties to this Agreement and their
successors hereunder and the Holders of the Certificates, any benefit or any
legal or equitable right, power, remedy or claim under this Agreement, except to
the extent specified in Section 11.15.

      Section 11.12 Special Notices to the Rating Agencies.

      (a) The Depositor shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has notice:

            (i) any amendment to this Agreement pursuant to Section 11.03;

            (ii) the occurrence of any Event of Default;

            (iii) any notice of termination given to the Servicer pursuant to
      Section 6.14 or any resignation of the Servicer pursuant to the Servicing
      Agreement;

            (iv) the appointment of any successor to the Servicer pursuant to
      Section 6.14; and

            (v) the making of a final payment pursuant to Section 7.02.

      (b) All notices to the Rating Agencies provided for this Section shall be
in writing and sent by first class mail, telecopy or overnight courier, as
follows:

                                       97
<PAGE>

         If to Moody's, to:

         Moody's Investors Service, Inc.
         99 Church Street
         New York, New York 10007
         Attention:  ABS Monitoring

         If to S&P, to:

         Standard & Poor's Ratings Service,
           a Division of The McGraw-Hill
           Companies, Inc.
         55 Water Street
         New York, New York 10041
         Attention:  Residential Mortgages

         If to Fitch Ratings, to:

         Fitch, Inc.
         One State Street Plaza
         New York, New York 10004
         Attention:  Residential Mortgages

      (c) The Trustee shall provide or make available to the Rating Agencies
reports prepared pursuant to Section 4.02. In addition, the Trustee shall, at
the expense of the Trust Fund, make available to each Rating Agency such
information as such Rating Agency may reasonably request regarding the
Certificates or the Trust Fund, to the extent that such information is
reasonably available to the Trustee.

      Section 11.13 Conflicts.

      To the extent that the terms of this Agreement conflict with the terms of
the Servicing Agreement, the Servicing Agreement shall govern.

      Section 11.14 Counterparts.

      This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, and all of which together shall constitute
one and the same instrument.

      Section 11.15 No Petitions.

      The Trustee, by entering into this Agreement, hereby covenants and agrees
that it shall not at any time institute against the Depositor, or join in any
institution against the Depositor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to this Agreement or any of the documents entered into
by the Depositor in connection with the transactions contemplated by this
Agreement.

                                       98
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers hereunto duly authorized as of the
day and year first above written.

                          MERRILL LYNCH MORTGAGE INVESTORS, INC., as Depositor

                          By:_________________________________
                               Name:        Matthew Whalen
                               Title:       President

                          WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                          as Trustee

                          By:_________________________________
                               Name:        Amy Doyle
                               Title:       Vice President

<PAGE>

Solely for purposes of Section 2.04,
accepted and agreed to by:

MERRILL LYNCH CREDIT CORPORATION

By:____________________________
      Name:       Kathy Ciaffa
      Title:      Vice President

<PAGE>

Solely for purposes of Section 2.06,
accepted and agreed to by:

RWT HOLDINGS, INC.

By:____________________________
      Name:
      Title:

<PAGE>
                                    EXHIBIT A

                              FORMS OF CERTIFICATES

                             [INTENTIONALLY OMITTED]

<PAGE>

                                    EXHIBIT B

          FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)

STATE OF                   )
                           )       ss.:
COUNTY OF                  )

      [NAME OF OFFICER], _________________ being first duly sworn, deposes and
      says:

      1.    That he [she] is [title of officer] ________________________ of
            [name of Purchaser] _________________________________________ (the
            "Purchaser"), a _______________________ [description of type of
            entity] duly organized and existing under the laws of the [State of
            __________] [United States], on behalf of which he [she] makes this
            affidavit.

      2.    That the Purchaser's Taxpayer Identification Number is [ ].

      3.    That the Purchaser is not a "disqualified organization" within the
            meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986,
            as amended (the "Code") and will not be a "disqualified
            organization" as of [date of transfer], and that the Purchaser is
            not acquiring a Residual Certificate (as defined in the Agreement)
            for the account of, or as agent (including a broker, nominee, or
            other middleman) for, any person or entity from which it has not
            received an affidavit substantially in the form of this affidavit.
            For these purposes, a "disqualified organization" means the United
            States, any state or political subdivision thereof, any foreign
            government, any international organization, any agency or
            instrumentality of any of the foregoing (other than an
            instrumentality if all of its activities are subject to tax and a
            majority of its board of directors is not selected by such
            governmental entity), any cooperative organization furnishing
            electric energy or providing telephone service to persons in rural
            areas as described in Code Section 1381(a)(2)(C), any "electing
            large partnership" within the meaning of Section 775 of the Code, or
            any organization (other than a farmers' cooperative described in
            Code Section 521) that is exempt from federal income tax unless such
            organization is subject to the tax on unrelated business income
            imposed by Code Section 511.

      4.    That the Purchaser either (x) is not, and on __________________
            [date of transfer] will not be, an employee benefit plan subject to
            Title I of the Employee Retirement Income Security Act of 1974, as
            amended ("ERISA"), or Section 4975 of the Code or any provisions of
            federal, state or local law substantially similar to the foregoing
            provisions of ERISA or the Code ("Similar Law"), the trustee of any
            such plan or a person acting on behalf of any such plan or investing
            the assets of any such plan to acquire a Residual Certificate; or
            (y) herewith

                                      B-1
<PAGE>

            delivers to the Certificate Registrar an opinion of counsel
            satisfactory to the Certificate Registrar, and upon which the
            Certificate Registrar shall be entitled to rely, to the effect that
            the purchase and holding of such Residual Certificate by the
            Investor will not result in the assets of the Trust Fund being
            deemed to be plan assets and subject to the prohibited transaction
            provisions of ERISA or the Code or Similar Law, and will not subject
            the Trustee or the Depositor to any obligation in addition to those
            undertaken by such entities in the Trust Agreement, which opinion of
            counsel shall not be an expense of the Trust Fund, the Trustee, the
            Certificate Registrar or the Depositor.

      5.    That the Purchaser hereby acknowledges that under the terms of the
            Trust Agreement dated as of July 1, 2003 (the "Agreement"), by and
            between Merrill Lynch Mortgage Investors, Inc., as Depositor and
            Wells Fargo Bank Minnesota, National Association, as Trustee with
            respect to Merrill Lynch Mortgage Investors Trust Series MLCC 2003-D
            Mortgage Pass-Through Certificates, no transfer of the Residual
            Certificates shall be permitted to be made to any person unless the
            Certificate Registrar and Trustee have received a certificate from
            such transferee containing the representations in paragraphs 3 and 4
            hereof.

      6.    That the Purchaser does not hold REMIC residual securities as
            nominee to facilitate the clearance and settlement of such
            securities through electronic book-entry changes in accounts of
            participating organizations (such entity, a "Book-Entry Nominee").

      7.    That the Purchaser does not have the intention to impede the
            assessment or collection of any federal, state or local taxes
            legally required to be paid with respect to such Residual
            Certificate.

      8.    That the Purchaser will not transfer a Residual Certificate to any
            person or entity (i) as to which the Purchaser has actual knowledge
            that the requirements set forth in paragraph 3, paragraph 6 or
            paragraph 10 hereof are not satisfied or that the Purchaser has
            reason to believe does not satisfy the requirements set forth in
            paragraph 7 hereof, and (ii) without obtaining from the prospective
            Purchaser an affidavit substantially in this form and providing to
            the Trustee and the Certificate Registrar a written statement
            substantially in the form of Exhibit C to the Agreement.

      9.    That the Purchaser understands that, as the holder of a Residual
            Certificate, the Purchaser may incur tax liabilities in excess of
            any cash flows generated by the interest and that it intends to pay
            taxes associated with holding such Residual Certificate as they
            become due.

      10.   That the Purchaser (i) is not a Non-U.S. Person or (ii) is a
            Non-U.S. Person that holds a Residual Certificate in connection with
            the conduct of a trade or business within the United States and has
            furnished the transferor, the Trustee and the Certificate Registrar
            with an effective Internal Revenue Service Form W-8ECI (Certificate
            of Foreign Person's Claim for Exemption From Withholding on

                                      B-2
<PAGE>

            Income Effectively Connected With the Conduct of a Trade or Business
            in the United States) or successor form at the time and in the
            manner required by the Code. "Non-U.S. Person" means an individual,
            corporation, partnership or other person other than (i) a citizen or
            resident of the United States; (ii) a corporation, partnership or
            other entity created or organized in or under the laws of the United
            States or any state thereof, including for this purpose, the
            District of Columbia; (iii) an estate that is subject to U.S.
            federal income tax regardless of the source of its income; (iv) a
            trust if a court within the United States is able to exercise
            primary supervision over the administration of the trust and one or
            more United States trustees have authority to control all
            substantial decisions of the trust; and, (v) to the extent provided
            in Treasury regulations, certain trusts in existence on June August
            20, 1996 that are treated as United States persons prior to such
            date and elect to continue to be treated as United States persons.

      11.   The Purchaser will not cause income from the Residual Certificate to
            be attributable to a foreign permanent establishment or fixed base
            (within the meaning of an applicable income tax treaty) of the
            Purchaser or another U.S. taxpayer.

      12.   That the Purchaser agrees to such amendments of the Trust Agreement
            as may be required to further effectuate the restrictions on
            transfer of any Residual Certificate to such a "disqualified
            organization," an agent thereof, a Book-Entry Nominee, or a person
            that does not satisfy the requirements of paragraph 7 and paragraph
            10 hereof.

      13.   That the Purchaser consents to the designation of the Trustee to act
            as agent for the "tax matters person" of each REMIC created by the
            Trust Fund pursuant to the Trust Agreement.

      14.   That the Purchaser agrees to be bound by Section 3.03(f) of the
            Agreement.

                                      B-3
<PAGE>

      IN WITNESS WHEREOF, the Purchaser 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 Purchaser]

                                   By:______________________________
                                        Name:
                                        Title:

      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
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.

      Subscribed and sworn before me this _____ day of __________ 20__.

NOTARY PUBLIC

______________________________

COUNTY OF_____________________

STATE OF______________________

My commission expires the _____ day of __________ 20__.

                                      B-4
<PAGE>

                                    EXHIBIT C

              RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)

                                                    ____________________________
                                                              Date

Re:   Merrill Lynch Mortgage Investors Trust Series MLCC 2003-D
      Mortgage Pass-Through Certificates

      _______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.

                                                    Very truly yours,

                                                    ____________________________
                                                    Name:
                                                    Title:

                                      C-1
<PAGE>

                                    EXHIBIT D

                        MORTGAGE LOAN SERVICING AGREEMENT

                        See Exhibit 99.10, filed herewith

                                      D-1
<PAGE>

                                    EXHIBIT E

                     MASTER MORTGAGE LOAN PURCHASE AGREEMENT

                        See Exhibit 99.1, filed herewith

                                      E-1
<PAGE>

                                    EXHIBIT F

                      LIST OF LIMITED PURPOSE SURETY BONDS

      Ambac Assurance Corporation Surety Bond No. AB0039BE, issued February 26,
1996, for Merrill Lynch Credit Corporation.

                                      F-1
<PAGE>

                                    EXHIBIT G

                     FORM OF RULE 144A TRANSFER CERTIFICATE

Re:   Merrill Lynch Mortgage Investors Trust Series MLCC 2003-D
      Mortgage Pass-Through Certificates

      Reference is hereby made to the Trust Agreement, dated as of July 1, 2003
(the "Trust Agreement"), by and between Merrill Lynch Mortgage Investors, Inc.,
as Depositor and Wells Fargo Bank Minnesota, National Association, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Trust Agreement.

      This letter relates to $__________ initial Certificate Balance of Class
Certificates which are held in the form of Definitive Certificates registered in
the name of (the "Transferor"). The Transferor has requested a transfer of such
Definitive Certificates for Definitive Certificates of such Class registered in
the name of [insert name of transferee].

      In connection with such request, and in respect of such Certificates, the
Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Trust Agreement
and the Certificates and (ii) Rule 144A under the Securities Act to a purchaser
that the Transferor reasonably believes is a "qualified institutional buyer"
within the meaning of Rule 144A purchasing for its own account or for the
account of a "qualified institutional buyer," which purchaser is aware that the
sale to it is being made in reliance upon Rule 144A, in a transaction meeting
the requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other applicable jurisdiction.

      This certificate and the statements contained herein are made for your
benefit and the benefit of the Underwriters and the Depositor.

                                        _____________________________________
                                        [Name of Transferor]

                                        By:__________________________________
                                             Name:
                                             Title:

Dated: ___________, ____

                                      G-1
<PAGE>

                                    EXHIBIT H

                         FORM OF PURCHASER'S LETTER FOR
                        INSTITUTIONAL ACCREDITED INVESTOR

                                                             Date

Dear Sirs:

      In connection with our proposed purchase of $______________ principal
amount of Merrill Lynch Mortgage Investors Trust Series MLCC 2003-D Mortgage
Pass-Through Certificates (the "Privately Offered Certificates") of Merrill
Lynch Mortgage Investors, Inc. (the "Depositor"), we confirm that:

(1)   We understand that the Privately Offered Certificates have not been, and
      will not be, registered under the Securities Act of 1933, as amended (the
      "Securities Act"), and may not be sold except as permitted in the
      following sentence. We agree, on our own behalf and on behalf of any
      accounts for which we are acting as hereinafter stated, that if we should
      sell any Privately Offered Certificates within two years of the later of
      the date of original issuance of the Privately Offered Certificates or the
      last day on which such Privately Offered Certificates are owned by the
      Depositor or any affiliate of the Depositor we will do so only (A) to the
      Depositor, (B) to "qualified institutional buyers" (within the meaning of
      Rule 144A under the Securities Act) in accordance with Rule 144A under the
      Securities Act ("QIBs"), (C) pursuant to the exemption from registration
      provided by Rule 144 under the Securities Act, or (D) to an institutional
      "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
      (7) of Regulation D under the Securities Act that is not a QIB (an
      "Institutional Accredited Investor") which, prior to such transfer,
      delivers to the Certificate Registrar under the Trust Agreement, dated as
      of July 1, 2003, by and between Merrill Lynch Mortgage Investors, Inc., as
      Depositor and Wells Fargo Bank Minnesota, National Association, as
      Trustee, a signed letter in the form of this letter; and we further agree,
      in the capacities stated above, to provide to any person purchasing any of
      the Privately Offered Certificates from us a notice advising such
      purchaser that resales of the Privately Offered Certificates are
      restricted as stated herein.

(2)   We understand that, in connection with any proposed resale of any
      Privately Offered Certificates to an Institutional Accredited Investor, we
      will be required to furnish to the Certificate Registrar a certification
      from such transferee in the form hereof to confirm that the proposed sale
      is being made pursuant to an exemption from, or in a transaction not
      subject to, the registration requirements of the Securities Act. We
      further understand that the Privately Offered Certificates purchased by us
      will bear a legend to the foregoing effect.

                                      H-1
<PAGE>

(3)   We are acquiring the Privately Offered Certificates for investment
      purposes and not with a view to, or for offer or sale in connection with,
      any distribution in violation of the Securities Act. We have such
      knowledge and experience in financial and business matters as to be
      capable of evaluating the merits and risks of our investment in the
      Privately Offered Certificates, and we and any account for which we are
      acting are each able to bear the economic risk of such investment.

(4)   We are an Institutional Accredited Investor and we are acquiring the
      Privately Offered Certificates purchased by us for our own account or for
      one or more accounts (each of which is an Institutional Accredited
      Investor) as to each of which we exercise sole investment discretion.

(5)   We have received such information as we deem necessary in order to make
      our investment decision.

(6)   If we are acquiring ERISA-Restricted Certificates, we understand that in
      accordance with ERISA, the Code and the Exemption, no Plan and no person
      acting on behalf of such a Plan may acquire such Certificate except in
      accordance with Section 3.03(d) of the Trust Agreement.

      Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Trust Agreement.

                                      H-2
<PAGE>

      You are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

                                       Very truly yours,

                                       _______________________________
                                       [Purchaser]

                                       By: ___________________________
                                            Name:
                                            Title:

                                      H-3
<PAGE>

                                    EXHIBIT I

                        FORM OF ERISA TRANSFER AFFIDAVIT

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

            The undersigned, being first duly sworn, deposes and says as
      follows:

            1. The undersigned is the ______________________ of ______________
      (the "Investor"), a [corporation duly organized] and existing under the
      laws of __________, on behalf of which he makes this affidavit.

            2. The Investor either (x) is not, and on ___________ [date of
      transfer] will not be, an employee benefit plan subject to Title I of the
      Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
      Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")
      or any provisions of applicable federal, state or local law substantially
      similar to the foregoing provisions of ERISA or the Code ("Similar Law"),
      the trustee of any such plan or a person acting on behalf of any such plan
      or investing the assets of any such plan; (y) if the Certificate (other
      than the Class A-R Certificate) has been the subject of an
      ERISA-Qualifying Underwriting, is an insurance company that is purchasing
      the Certificate with funds contained in an "insurance company general
      account" as defined in Section V(e) of Prohibited Transaction Class
      Exemption ("PTCE") 95-60 and the purchase and holding of the Certificate
      are covered under Sections I and III of PTCE 95-60; or (z) herewith
      delivers to the Certificate Registrar an opinion of counsel satisfactory
      to the Certificate Registrar, and upon which the Certificate Registrar
      shall be entitled to rely, to the effect that the purchase and holding of
      such Certificate by the Investor will not result in the assets of the
      Trust Fund being deemed to be plan assets and subject to the prohibited
      transaction provisions of ERISA or the Code or Similar Law, and will not
      subject the Trustee or the Depositor to any obligation in addition to
      those undertaken by such entities in the Trust Agreement, which opinion of
      counsel shall not be an expense of the Trust Fund, the Trustee, the
      Certificate Registrar or the Depositor.

            3. The Investor hereby acknowledges that under the terms of the
      Trust Agreement dated as of July 1, 2003 (the "Agreement"), by and between
      Merrill Lynch Mortgage Investors, Inc., as Depositor and Wells Fargo Bank
      Minnesota, National Association, as Trustee, no transfer of the
      ERISA-Restricted Certificates shall be permitted to be made to any person
      unless the Certificate Registrar has received a certificate from such
      transferee in the form hereof.

                                      I-1
<PAGE>

            IN WITNESS WHEREOF, the Investor has caused this instrument to be
      executed on its behalf, pursuant to proper authority, by its duly
      authorized officer, duly attested, this ____ day of _______________ 20___.

                                        _________________________________
                                        [Investor]

                                        By:______________________________
                                             Name:
                                             Title:

ATTEST:

_____________________________

STATE OF                   )
                           )        ss.:
COUNTY OF                  )

      Personally appeared before me the above-named ________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ____________________ of the Investor, and acknowledged 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

                                        My commission expires the
                                        _____ day of __________, 20___.

                                      I-2
<PAGE>

                                    EXHIBIT J

                        FORM OF LETTER OF REPRESENTATIONS
                        WITH THE DEPOSITORY TRUST COMPANY

                             [INTENTIONALLY OMITTED]

                                      J-1
<PAGE>

                                    EXHIBIT K

                              INITIAL CERTIFICATION
            MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2003-D

                                                              ____________, 2003

To:      Merrill Lynch Mortgage Investors, Inc.
         250 Vesey Street
         4 World Financial Center, 10th Floor
         New York, New York 10080

         Cendant Mortgage Corporation
         3000 Leadenhall Road
         Mt. Laurel, New Jersey 08054

         RWT Holdings, Inc.
         591 Redwood Highway, Suite 3140
         Mill Valley, CA 94941

      Reference is made to the Trust Agreement between Merrill Lynch Mortgage
Investors, Inc. (the "Depositor") and Wells Fargo Bank Minnesota, as Trustee
(the "Trustee"), dated as of July 1, 2003 (the "Trust Agreement"), pursuant to
which the Depositor has delivered to the Trustee, with respect to each Mortgage
Loan set forth on Schedule A hereto (the "Mortgage Loan Schedule"), the
documents set forth in Section 2.01 of the Trust Agreement.

      With respect to each Mortgage Loan listed on the Mortgage Loan Schedule
and except as otherwise noted on the Schedule of Exceptions set forth on
Schedule B hereto, the Trustee confirms that (1) the Trustee has received all of
the documents required to be delivered to the Trustee pursuant to Section 2.01
of the Trust Agreement, (2) the Trustee has reviewed each Trustee's Mortgage
File in accordance with Section 2.02(a) of the Trust Agreement, and the
documents contained in each Trustee's Mortgage File conform to the requirements
set forth in such Section 2.02(a), and (3) the Trustee has physical possession
of the documents in each Trustee's Mortgage File. The Trustee has not
independently verified the validity, enforceability, sufficiency, recordability,
due authorization or genuineness or any document in any Trustee's Mortgage File
or any related Mortgage Loan, nor the collectibility, insurability,
effectiveness or suitability of any related Mortgage Loan.

      All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Trust Agreement.

                                      K-1
<PAGE>

                                         WELLS FARGO BANK MINNESOTA, N.A.,
                                         as Trustee

                                         By:_________________________________
                                         Name:_______________________________
                                         Title:______________________________

                                      K-2
<PAGE>

                                    EXHIBIT L

                           FORM OF FINAL CERTIFICATION

                                                             _____________, 2003

To:      Merrill Lynch Mortgage Investors, Inc.
         250 Vesey Street
         4 World Financial Center, 10th Floor
         New York, New York 10080

         Cendant Mortgage Corporation
         3000 Leadenhall Road
         Mt. Laurel, New Jersey 08054

         RWT Holdings, Inc.
         591 Redwood Highway, Suite 3140
         Mill Valley, CA 94941

      Reference is made to the Trust Agreement between Merrill Lynch Mortgage
Investors, Inc. (the "Depositor") and Wells Fargo Bank Minnesota, National
Association, as Trustee (the "Trustee"), dated as of July 1, 2003 (the "Trust
Agreement"), pursuant to which the Depositor has delivered to the Trustee, with
respect to each Mortgage Loan set forth on Schedule A hereto (the "Mortgage Loan
Schedule"), the documents set forth in Section 2.01 of the Trust Agreement.

      With respect to each Mortgage Loan listed on the Mortgage Loan Schedule
and except as otherwise noted on the Schedule of Exceptions set forth on
Schedule B hereto, the Trustee confirms that (1) the Trustee has received all of
the documents required to be delivered to the Custodian pursuant to Section 2.01
of the Trust Agreement, (2) the Trustee has reviewed each Trustee's Mortgage
File in accordance with Section 2 of Amendment No. 1 to the Custody Agreement,
and the documents contained in each Trustee's Mortgage File conform to the
requirements set forth in such Section 2, and (3) the Trustee has physical
possession of the documents in each Trustee's Mortgage File. The Trustee has not
independently verified the validity, enforceability, sufficiency, recordability,
due authorization or genuineness or any document in any Trustee's Mortgage File
or any related Mortgage Loan, nor the collectibility, insurability,
effectiveness or suitability of any related Mortgage Loan.

      All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Trust Agreement.

                                      L-1
<PAGE>

                                     WELLS FARGO BANK MINNESOTA, N.A.,
                                     as Trustee

                                     By:______________________________
                                     Name:____________________________
                                     Title:___________________________

                                      K-2
<PAGE>

                                    EXHIBIT M

                           LIST OF SERVICING OFFICERS

                             [INTENTIONALLY OMITTED]

                                       M-1

<PAGE>

                                    EXHIBIT N

                               REQUEST FOR RELEASE

To:   Wells Fargo Bank Minnesota,
      National Association
      1031 10th Avenue S.E.
      Minneapolis, Minnesota  55414
      (Attention:  Merrill Lynch Mortgage Investors Trust Series MLCC 2003-D)

      Re:   Trust Agreement, dated as of July 1, 2003 by and between Merrill
            Lynch Mortgage Investors, Inc. and Wells Fargo Bank Minnesota,
            National Association, as Trustee

      In connection with the administration of the pool of Mortgage Loans held
by you as Trustee for the benefit of Certificateholders, we request the release
of the (Trustee's Mortgage File/[specify documents]) for the Mortgage Loan
described below, for the reason indicated.

File/document to be sent to:
         [Company]
         [Address]
         [Attn:]
         [Telephone Number ____]

Mortgagor's Name, Address & Zip Code:

Mortgage Loan Number:

Reason for Requesting Documents (check one)

______ 1.   Mortgage Loan Paid in Full ([Seller/Depositor] [Servicer], hereby
            certifies that all amounts received in connection therewith have
            been credited to the Custodial Account or the Distribution Account,
            as applicable.)

______ 2.   Mortgage Loan in Foreclosure

______ 3.   Mortgage Loan Repurchased or Substituted For ([Seller/Depositor]
            [Servicer], hereby certifies that any applicable repurchase price or
            substitution shortfall amount has been credited to the Custodial
            Account or the Distribution Account, as applicable.)

______ 4.   Mortgage Loan Liquidated

                                      N-1
<PAGE>

            ([Seller/Depositor] [Servicer], hereby certifies that all proceeds
            of foreclosure, insurance or other liquidation have been finally
            received and credited to the Custodial Account or the Distribution
            Account, as applicable.)

______ 5.   Other (explain)

      If box 1, 2 or 3 above is checked, and if all or part of the Trustee's
Mortgage File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Mortgage Loan.

      If box 4 or 5 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.

                                        [SELLER/DEPOSITOR]
                                        [SERVICER]

                                        By:_____________________________________
                                        Date:___________________________________

Documents returned to Trustee:

___________________________,
as Trustee

By:___________________________
Date:_________________________

                                      N-2
<PAGE>

                                    EXHIBIT O

                               CUSTODIAL AGREEMENT

            THIS CUSTODIAL AGREEMENT dated as of December 15, 2000 (this
"Agreement"), between MERRILL LYNCH CREDIT CORPORATION ("MLCC") having an
address at 4802 Deer Lake Drive East, Jacksonville, Florida 32246 and WELLS
FARGO BANK MINNESOTA, N.A. ("Custodian"), having an address at Sixth and
Marquette, Minneapolis, Minnesota 55479- 0031.

                              PRELIMINARY STATEMENT

            MLCC may, from time to time, purchase certain Mortgage Loans from
third party sellers pursuant to the terms and conditions of certain mortgage
loan purchase agreements entered into between MLCC and such third parties (each,
a "Purchase Agreement"). MLCC desires that the Custodian act as custodian with
respect to the documents for the Mortgage Loans delivered from time to time to
the Custodian hereunder, and the Custodian desires to act as custodian with
respect to the documents for the Mortgage Loans.

            NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:

      1. Definitions.

      "Additional Collateral Mortgage Loan": Each Mortgage Loan that is either a
Mortgage 100sm Loan or Parent Power(R) Mortgage Loan as to which the Additional
Collateral is provided. For purposes hereof, the term "Additional Collateral"
shall mean (i) with respect to any Mortgage 100sm Loan, the marketable
securities subject to a security interest pursuant to the related Mortgage 100sm
Pledge Agreement, or (ii) with respect to any Parent Power(R) Mortgage Loan, the
related Parent Power(R) Agreement.

      "Agreement": This Custodial Agreement and all amendments and attachments
hereto and supplements hereof.

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

      "Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking or savings associations in the State of New Jersey or the State
of Minnesota are authorized or obligated by law or executive order to be closed.

      "Closing Date": With respect to each Mortgage Loan, the date upon which
the MLCC completes the purchase of such Mortgage Loan.

                                      O-1
<PAGE>

      "Custodian": Wells Fargo Bank Minnesota, N.A., or its successor in
interest or assigns.

      "Custodian's Mortgage File": As to each Mortgage Loan, all Mortgage Loan
documents delivered to the Custodian pursuant hereto and held by the Custodian
with respect to each Mortgage Loan.

      "Custody Receipt": An Initial Custody Receipt and/or a Final Custody
Receipt.

      "Cut-off Date": With respect to each Mortgage Loan, the first day of the
month in which the related Delivery Date occurs or such other date specified by
the Registered Holder.

      "Delivery Date": The date on which MLCC delivers or causes to be delivered
to the Custodian the Mortgage Loans listed on the related Mortgage Loan
Schedule.

      "Exception Report": The Exception Report prepared by the Custodian as part
of the Initial Custody Receipt and as updated thereafter.

      "Final Custody Receipt": A final custody receipt as to each Mortgage Loan,
which final custody receipt is delivered to MLCC, or its successor in interest
or assigns, by the Custodian in the form annexed hereto as Exhibit Two.

      "First Mortgage Loan": A Mortgage Loan that is secured by a first lien on
the Mortgaged Property securing the related Mortgage Note.

      "Gross Margin": With respect to each adjustable rate Mortgage Loan, the
fixed number of basis points set forth in the Mortgage Loan Schedule that is
added to the Index on each Interest Rate Adjustment Date in accordance with the
terms of the related Mortgage Note to determine the Mortgage Interest Rate for
such Mortgage Loan, subject to any applicable Periodic Rate Cap or Lifetime Rate
Cap.

      "Index": With respect to each adjustable rate Mortgage Loan, a rate per
annum to which the Gross Margin is added on each Interest Rate Adjustment Date
to determine the new Mortgage Interest Rate for such Mortgage Loan.

      "Initial Custody Receipt": An initial custody receipt as to each Mortgage
Loan, which initial custody receipt is delivered to MLCC, or its successor in
interest or assigns, by the Custodian in the form annexed hereto as Exhibit One.

      "Interest Rate Adjustment Date": With respect to each adjustable rate
Mortgage Loan, the date on which the Mortgage Interest Rate is adjusted in
accordance with the terms of the related Mortgage Note.

      "Lifetime Rate Cap": With respect to each adjustable rate Mortgage Loan,
the maximum Mortgage Interest Rate that may be borne thereby, as set forth in
the related Mortgage Note.

                                      O-2
<PAGE>

      "Loan-to-Value Ratio": With respect to any First Mortgage Loan, as of any
date of determination, the ratio on such date of the outstanding principal
balance of such Mortgage Loan to the Appraised Value of the related Mortgaged
Property.

      "Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on real property securing the Mortgage Note.

      "Mortgage Interest Rate": The annual rate at which interest accrues on any
Mortgage Loan and with respect to any adjustable rate Mortgage Loan, as such
annual rate may be adjusted on any Interest Rate Adjustment Date and subject to
the limitations on such interest rate imposed by any Lifetime Rate Cap or any
Periodic Rate Cap.

      "Mortgage Loan": An individual Mortgage Loan, including but not limited to
all documents included in the Custodian's Mortgage File, monthly payments,
principal prepayments, proceeds from REO dispositions and any and all rights,
benefits, proceeds and obligations arising therefrom or in connection therewith,
and which is the subject of this Agreement.

      "Mortgage Loan Schedule": The list of Mortgage Loans purchased by MLCC
from a third party seller from time to time that are subject to this Agreement
which list shall set forth the following information with respect to each
Mortgage Loan:

            (i)   the loan number;

            (ii)  the Mortgagor's name, social security number, and FICO score;

            (iii) the street address of the Mortgaged Property, including city,
                  state and zip code, if available;

            (iv)  the Mortgage Interest Rate at origination and, in the case of
                  an adjustable rate Mortgage Loan, the Mortgage Interest Rate
                  in effect as of the related Cut-off Date, which rate may vary
                  from that reflected in the Mortgage and Note;

            (v)   for each adjustable rate Mortgage Loan, the first Interest
                  Rate Adjustment Date;

            (vi)  for each adjustable rate Mortgage Loan, the Gross Margin;

            (vii) for each adjustable rate Mortgage Loan, the Lifetime Rate Cap,
                  if applicable;

           (viii) for each adjustable rate Mortgage Loan, the Periodic Rate
                  Cap, if applicable;

                                      O-3
<PAGE>

            (ix)  the original term to maturity and remaining term to maturity;

            (x)   the original principal balance;

            (xi)  the first payment due date;

            (xii) the maturity date;

           (xiii) the monthly payment in effect as of the related Cut-off Date;

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

            (xv)  as to any First Mortgage Loan the Loan-to-Value Ratio at
                  origination;

            (xvi) a code indicating whether the Mortgaged Property is occupied
                  by the Mortgagor;

           (xvii) a code indicating the type of Residential Dwelling;

          (xviii) a code indicating the purpose of the Mortgage Loan;

            (xix) a code indicating the Mortgage Loan documentation type (i.e.
                  limited documentation, full documentation, easy documentation,
                  etc.); and

            (xx)  for each adjustable rate Mortgage Loan, a code indicating the
                  type of Index.

      "Mortgage Note": The note evidencing the indebtedness of a Mortgagor
secured by a Mortgage.

      "Mortgaged Property": The underlying real property securing repayment of a
Mortgage Note, consisting of a fee simple estate in a single parcel of real
property improved by a Residential Dwelling.

      "Mortgagor": The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successor in title to the Mortgaged Property.

      "Opinion of Counsel": A document signed by an attorney, explaining the
attorney's understanding of the law as applicable to a state of facts submitted
for the purpose of an opinion.

      "Periodic Rate Cap": With respect to each adjustable rate Mortgage Loan as
to which the related Mortgage Loan Schedule indicates the existence of a
Periodic Rate Cap, the provision of the related Mortgage Note that provides for
a maximum amount by which the Mortgage Interest Rate may increase (or, if so
indicated on such Mortgage Loan Schedule, decrease) on an Interest

                                      O-4
<PAGE>

Rate Adjustment Date above (or below) the Mortgage Interest Rate in effect
immediately prior to such Interest Rate Adjustment Date.

      "Pledge Agreement": Any Mortgage 100 Pledge Agreement, Parent Power
Guaranty and Security Agreement for Securities Account, or Parent Power Guaranty
Agreement for Real Estate related to an Additional Collateral Mortgage Loan.

      "Registered Holder": MLCC, its successors in interest or assigns, in whole
or in part, as the case may be.

      "Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a Fannie Mae-eligible condominium project, or (iv) a
detached one-family dwelling in a planned unit development, none of which is a
co-operative.

      "Second Mortgage Loan": A Mortgage Loan that is secured by a second lien
on the Mortgaged Property securing the related Mortgage Note.

      2. Delivery of Mortgage Loan Schedule and Custodian's Mortgage File.

      MLCC may, from time to time, deliver or cause to be delivered to the
Custodian a Mortgage Loan Schedule and the following documents for each Mortgage
Loan listed on such Mortgage Loan Schedule, to be held by the Custodian for the
benefit of the Registered Holder, as the owner thereof:

            (a) The original Mortgage Note endorsed, "Pay to the order of
            ___________, without recourse" and signed in the name of the name of
            last endorsee, by an authorized officer of the last endorsee. If the
            Mortgage Loan was acquired by the last endorsee in a merger or other
            type of acquisition, the endorsement must be by "[name of last
            endorsee], successor [by merger to or in interest to, as applicable]
            [name of predecessor]"; and if the Mortgage Loan was acquired or
            originated by the last endorsee while doing business under another
            name, the endorsement must be by "[name of last endorsee], successor
            in interest to [previous name]." The Mortgage Note shall include all
            intervening endorsements showing a complete chain of title from the
            originator to the last endorsee.

            (b) The original recorded Mortgage, with evidence of recording
            thereon, or, if the original Mortgage has not yet been returned from
            the recording office, a copy of the original Mortgage certified by
            the previous owner to be a true copy of the original of the Mortgage
            which has been delivered for recording in the appropriate recording
            office of the jurisdiction in which the Mortgaged Property is
            located.

            (c) The original Assignment of each Mortgage, executed in blank by
            either MLCC or its Servicer. If the Mortgage Loan was acquired by
            the last endorsee in a merger or other type of acquisition, the
            assignment must be by "[name of last assignee],

                                      O-5
<PAGE>

            successor [by merger to or in interest to, as applicable] [name of
            predecessor]"; and if the Mortgage Loan was acquired or originated
            by the last endorsee while doing business under another name, the
            assignment must be by "[name of last assignee], successor in
            interest to [previous name]."

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

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

            (f) With respect to a Mortgage Loan that, according to the Mortgage
            Loan Schedule is covered by a primary mortgage insurance policy, the
            original or a copy of primary mortgage insurance certificate, if
            any.

            (g) If indicated on the Mortgage Loan Schedule, originals of all
            assumption and modification agreements, if any, with originals or
            copies of the underlying instruments being modified.

            (h) With respect to each Additional Collateral Mortgage Loan,

                  1.    Copy of the related Mortgage 100 Pledge Agreement for
                        Securities Account or the Parent Power Guaranty and
                        Security Agreement for Securities Account or the Parent
                        Power Guaranty Agreement for Real Estate, as the case
                        may be;

                  2.    copy of the UCC-1 (applicable for South Carolina and
                        Rhode Island only);

                  3.    an original form UCC-3, if applicable;

                  4.    For loans originated by a correspondent lender, an
                        original assignment of security interest of the related
                        Mortgage 100 Pledge Agreement or Parent Power Agreement,
                        as the case may be.

            (i)   With respect to each Cooperative Loan:

                  1.    the original proprietary lease;

                  2.    the original recognition agreement;

                  3.    the original security agreement;

                  4.    the original or copy of the assignment of proprietary
                        lease;

                  5.    the original cooperative stock certificate and stock
                        power executed by borrower in blank;

                  6.    the original UCC-1 Financing Statements; and

                                      O-6
<PAGE>

                  7.    the original UCC-3 Financing Statements.

            (j)   Power of Attorney, if applicable.

      From time to time, MLCC shall forward or cause to be forwarded to the
Custodian additional documents, original or otherwise, evidencing an assumption
or modification of a Mortgage Loan which documents shall become part of the
Custodian's Mortgage File.

      3. Obligations of the Custodian.

      (a) With respect to each Custodian's Mortgage File, the Custodian is
exclusively the custodian for the Registered Holder from and after the related
Delivery Date. The Custodian shall hold all documents constituting the
Custodian's Mortgage File received by it for the exclusive use and benefit of
the Registered Holder, and shall make disposition thereof only in accordance
with this Agreement and the instructions furnished by the Registered Holder. The
Custodian shall segregate and maintain continuous custody of all documents
constituting the Custodian's Mortgage File received by it in secure and
fire-resistant facilities in accordance with customary standards for such
custody. The Custodian represents and warrants that it will verify the receipt
of required documents, the accuracy of certain information, and indicate
discrepancies pursuant to the custody receipt requirements herein. The Custodian
makes no representations or warranties as to, and shall not be responsible to,
verify: (i) the validity, legality, enforceability, sufficiency, recordability,
due authorization or genuineness of any of the documents contained in each
Custodian's Mortgage File or any of the Mortgage Loans or (ii) the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan. No provision of this Agreement shall be construed to impose on the
Custodian any obligation of a third party seller under this Agreement or a
Purchase Agreement under any circumstances.

      (b) The Custodian shall, at its own expense, maintain at all times during
the existence of this Agreement and keep in full force and effect a fidelity
bond, errors and omissions insurance, theft and documents insurance and forgery
insurance in amounts and with standard coverage as is customary for insurance
typically maintained by institutions that act as custodians. The minimum
coverage under any such bond and insurance policies shall be at least equal to
the corresponding amounts required by the Government National Mortgage
Association, Fannie Mae or Freddie Mac either of the Custodian or in their
respective Seller/Servicing Guides. A certificate of an authorized officer for
the Custodian shall be furnished to the Registered Holder upon request as
evidence of its compliance with any such requirement.

      4. Custody Receipts.

      (a) Initial Custody Receipt. The Custodian shall review the documents
delivered to it on each Delivery Date and shall deliver to MLCC as initial
Registered Holder within two (2) Business Days following the Delivery Date, or
within a mutually agreed upon time between the Bank and the Custodian, but prior
to the Closing Date, an Initial Custody Receipt with respect to the Mortgage
Loans, in which the Custodian shall certify that such Mortgage Loans are held
for MLCC (as Registered Holder) and that, as to each Mortgage Loan listed in the
Mortgage Loan

                                      O-7
<PAGE>

Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (a) all documents described in Paragraphs 2(a) through 2(e) and
to the extent provided in the Custodian's Mortgage Files Paragraphs 2(f) through
2(j), if applicable, of this Agreement are in its possession and (b) each
Mortgage Note has been endorsed and each Assignment has been executed as
provided in Paragraph 2 hereof. If the Custodian determines from such
verification that any discrepancy or deficiency exists with respect to a
Custodian's Mortgage File, the Custodian shall note such discrepancy on the
schedule of exceptions attached to the Initial Custody Receipt as Schedule B
thereto (the "Exception Report").

      The Custodian shall also note on the Exception Report, with respect to
each Mortgage Loan, whether a certified copy of the related Mortgage was
delivered to the Custodian in lieu of the original of such Mortgage, whether a
certified copy of an intervening assignment of the related Mortgage was
delivered to the Custodian in lieu of the original of such assignment, and
whether a preliminary title report with respect to such Mortgage Loan was
delivered to the Custodian in lieu of the original policy of title insurance.

      On the first Business Day of each calendar month following delivery of the
Initial Custody Receipt until the month in which the Final Custody Receipt is to
be delivered pursuant to Subsection (b) below, the Custodian shall deliver to
the Registered Holder of the Initial Custody Receipt, an updated Exception
Report, revised to reflect any changes with respect to the status of the
exceptions noted for the related Mortgage Loans.

      (b) Final Custody Receipt. Not later than sixty (60) days following the
date of each delivery of an Initial Custody Receipt, the Custodian shall deliver
to the Registered Holder of the Initial Custody Receipt the Final Custody
Receipt, with respect to the Mortgage Loans related to such Initial Custody
Receipt, in which the Custodian shall certify to the Registered Holder that, as
to each Mortgage Loan listed in the related Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), (a) all documents
described in Paragraphs 2(a) through 2(e), and to the extent provided in the
Custodian's Mortgage Files Paragraphs 2(f) through 2(j), if applicable, of this
Agreement are in its possession, (b) such documents have been reviewed by it and
appear regular on their face and relate to such Mortgage Loan, (c) based on its
examination and only as to the foregoing documents, the information set forth in
items (i), (ii), (iii) excluding the zip code requirement, (iv), (vi), (vii),
(viii) and (x) of the definition of "Mortgage Loan Schedule" respecting such
Mortgage Loan is correct, and which as to items (iv), (vi), (viii), and (x) for
adjustable rate Mortgage Loans may reflect interest rates or amounts that as of
the Cutoff Date vary from those provided in the Mortgage Loan Documents and (d)
each Mortgage Note has been endorsed and each Assignment has been executed as
provided in Paragraph 2 hereof. If the Custodian determines from such
verification that any discrepancy or deficiency exists with respect to a
Custodian's Mortgage File, the Custodian shall note such discrepancy on the
Exception Report attached to the Final Custody Receipt as Schedule B thereto.
The Custodian shall also note on such Exception Report, with respect to each
Mortgage Loan, whether a certified copy of the related Mortgage was delivered to
the Custodian in lieu of the original of such Mortgage, whether a certified copy
of an intervening assignment of the related Mortgage

                                      O-8
<PAGE>

was delivered to the Custodian in lieu of the original of such assignment, and
whether a preliminary title report with respect to such Mortgage Loan was
delivered to the Custodian in lieu of the original policy of title insurance.
Except as specifically provided above, the Custodian shall be under no duty to
review, inspect or examine such documents to determine that any of them are
enforceable or appropriate for their prescribed purpose. Upon delivery of the
Final Custody Receipt to the Registered Holder of the Initial Custody Receipt,
the Initial Custody Receipt shall be of no further force or effect.

      (c) Within five (5) days of receipt of written directions, in the form
attached hereto as Exhibit Six, from the Registered Holder with respect to all
or a portion of the Mortgage Loans owned by such Registered Holder, and upon the
prior tender by such Registered Holder of the applicable Initial and/or Final
Custody Receipt(s), as applicable, the Custodian shall deliver all or any
portion of the Custodian's Mortgage Files held by it to the Registered Holder,
or to such other party as the Registered Holder may direct, as provided in
Paragraph 19, at the place indicated in any such written direction from the
Registered Holder and shall deliver to the Registered Holder a new Initial or
Final Custody Receipt, as applicable, with respect to the Custodian's Mortgage
Files retained by the Custodian. The Registered Holder may require the Custodian
to complete the endorsements on any Mortgage Notes in its possession and to
complete the Assignment of Mortgages prepared by the Servicer in blank, within a
reasonable period of time. The cost of this shall be reimbursed by the
Registered Holder. A list of authorized signatures for such written directions
has been furnished to the Custodian by the Registered Holder pursuant to
Paragraph 20 hereof. Upon the Custodian's receipt of such written notification
from the Registered Holder that the Registered Holder has sold any or all of the
Mortgage Loans, which notification shall be accompanied by the Initial and/or
Final Custody Receipt(s), as applicable that relate to such Mortgage Loans, the
Custodian shall change its records to reflect that such purchaser is the owner
of such Mortgage Loans and shall immediately, upon the direction of such
Registered Holder, either deliver the related Custodian's Mortgage Files to such
purchaser at the expense of such purchaser or issue an Initial or Final Custody
Receipt in the name of such purchaser. Such purchaser, as a Registered Holder,
shall be required to simultaneously furnish to the Custodian a list of
authorized signatures for written directions pursuant to Paragraph 20 hereof.
The Custodian shall then deliver to the Registered Holder a new Initial and/or
Final Custody Receipt, as applicable reflecting all Mortgage Loans with respect
to which the Custodian still holds the related Custodian's Mortgage Files on
behalf of the Registered Holder. The Registered Holder and the Custodian agree
herein that any purchaser of any or all of the Mortgage Loans shall succeed to
the rights and obligations of the Registered Holder under this Agreement with
respect to such Mortgage Loans upon receipt of the related Initial and/or Final
Custody Receipt, as applicable subject to the provisions of Paragraph 15 hereof.

      5. Fees and Expenses of the Custodian.

      It is understood that the Custodian will charge such fees for its services
under this Agreement as are set forth in a separate agreement between the
Custodian and MLCC, the payment of which, together with the Custodian's expenses
in connection herewith, shall be solely the obligation of the Registered Holder
with respect to the related Mortgage Loans.

                                      O-9
<PAGE>

      6. Removal of the Custodian.

      Any Registered Holder with respect to all or a portion of the Mortgage
Loans owned by such Registered Holder, with or without cause, may, upon thirty
(30) days' written notice to the Custodian, remove and discharge or any
successor Custodian thereafter appointed, as to such portion or all of the
Mortgage Loans the Custodian, from the performance of its duties under this
Agreement. In the event of any such removal, upon tender of the Custody Receipts
and satisfaction of any outstanding fees and expenses of the Custodian, the
Custodian shall promptly transfer to such Registered Holder or to a successor
Custodian appointed by such Registered Holder at the expense of such Registered
Holder, as directed by such Registered Holder in writing, all Custodian's
Mortgage Files related to the Mortgage Loans as to which the Custodian is being
terminated.

      7. Examination of the Custodian's Mortgage File.

      Upon reasonable prior written notice to the Custodian, but not less than
two (2) Business Day, any Registered Holder with respect to all or a portion of
the Mortgage Loans owned by such Registered Holder and its agents, accountants,
attorneys, auditors, prospective purchasers, and third-party contractors
authorized by such Registered Holder will be permitted, during normal business
hours, to examine the Custodian's Mortgage Files, documents, records and other
papers in the possession of or under the control of the Custodian relating to
any or all of the Mortgage Loans for which the Custodian holds the related
Custodian's Mortgage File for such Registered Holder at the expense of the
inspecting party.

      8. Counterparts.

      For the purpose of facilitating the execution 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 all of which together shall constitute and be one and the same
instrument.

      9. Periodic Statements.

      Upon the request of any Registered Holder at any other time with at least
two (2) Business Days' notice to the Custodian, the Custodian shall provide to
the Registered Holder with respect to all or a portion of the Mortgage Loans
owned by such Registered Holder, a list of all of the Mortgage Loans for which
the Custodian holds a Custodian's Mortgage File pursuant to this Agreement. Such
list may be in the form of a copy of the Mortgage Loan Schedule with manual
deletions to denote specifically any Mortgage Loans paid off, liquidated or
repurchased or otherwise released by the Custodian since the date of this
Agreement.

      10. Governing Law.

                                      O-10
<PAGE>

      This Agreement shall be construed in accordance with the laws of the State
where MLCC is headquartered, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

      11. Copies of Mortgage Documents.

      Upon the request of the Registered Holder with respect to all or a portion
of the Mortgage Loans owned by such Registered Holder, and at the cost and
expense of such party, the Custodian shall provide such Registered Holder with
copies or originals as provided in Section 21 hereof, of the Mortgage Notes,
Mortgages, Assignments and other documents to the extent that such documents are
part of the Custodian's Mortgage File relating to one or more of the Mortgage
Loans.

      12. No Adverse Interest of Custodian.

      By execution of this Agreement, the Custodian represents, warrants and
covenants that it currently does not hold, and during the existence of this
Agreement shall not hold, any adverse interest, by way of security or otherwise,
in any Mortgage Loan.

      13. Termination By Custodian.

      The Custodian may terminate its obligations under this Agreement upon at
least sixty (60) days' notice to the Registered Holder with respect to all or a
portion of the Mortgage Loans owned by such Registered Holder. The Custodian
shall then be responsible for all costs associated with such termination,
including costs associated with the transfer of the Custodial Files. If, in the
event of such termination, the Registered Holder shall appoint a successor
Custodian within such sixty day period, then upon such appointment and tender of
the related Custody Receipts, the Custodian shall promptly transfer to such
successor Custodian, as directed by the Registered Holder with respect to all or
a portion of the Mortgage Loans owned by such Registered Holder, all of the
Custodian's Mortgage Files being administered under this Agreement and shall
either complete the Assignments and endorse the Mortgage Notes as directed by
the Registered Holder or allow the Registered Holder or its agents or attorneys,
access to the Custodian's Mortgage Files for such purpose. Notwithstanding the
foregoing, if the Registered Holder fails to appoint a Custodian within such
sixty day period, the Custodian may petition any court of competent jurisdiction
for the appointment of a successor Custodian.

      14. Termination of Agreement.

      This Agreement shall terminate upon the earlier of (a) the final payment
or other liquidation (or advance with respect thereto) of the last Mortgage
Loan, (b) the disposition of all property acquired upon foreclosure or by deed
in lieu of foreclosure of the last Mortgage Loan, or (c) the delivery by the
Custodian of the last Custodian's Mortgage File pursuant to the direction of the
Registered Holder hereunder. In such event the Registered Holder with respect to
all or a portion of the Mortgage Loans owned by such Registered Holder shall so
notify the

                                      O-11
<PAGE>

Custodian and tender all Custody Receipts, and thereafter all documents
remaining in the Custodian's Mortgage Files shall be forwarded to the Registered
Holder.

      15. Assignment of Agreement.

      The Registered Holder with respect to all or a portion of the Mortgage
Loans owned by such Registered Holder shall have the right to assign, in whole
or in part, its interests under this Agreement with respect to some or all of
the Mortgage Loans, and to designate any person or exercise any rights of the
Registered Holder hereunder, and such assignee or designee shall accede to the
rights and obligations hereunder of the Registered Holder with respect to such
Mortgage Loans. All references to the Registered Holder shall be deemed to
include its assignee or designee. In connection with any such assignment, the
Registered Holder with respect to all or a portion of the Mortgage Loans owned
by such Registered Holder may require that arrangements reasonably satisfactory
to it be made for the exchange of previously executed and outstanding Custody
Receipt(s) for a Custody Receipt representing such assignment. The Custodian may
not assign its interests or delegate its duties under this Agreement without the
prior written consent of the Registered Holder. In the event of any such
assignment or delegation, the Registered Holder shall not be responsible for any
fees of the successor Custodian in excess of the fees formerly paid by the
Registered Holder to the Custodian.

      16. Notice.

      (a) All demands, notices and communications hereunder shall be in writing
and shall be sent to the other party at the address shown on the first page
hereof, or such other address as may hereafter be furnished to the other party
by written notice given to the other party hereto in a notice complying with the
terms and provisions of this Section 16 or on an Exhibit Six notice provided
pursuant to Section 4(c).

      (b) Any such demand, notice or communication hereunder shall be deemed
conclusively to have been given if personally delivered at or mailed by
registered mail, postage prepaid, and return receipt requested or transmitted by
telex, telegraph or facsimile transmission and by a similar writing to the other
party at its address as described in Subclause (a).

      17. Indemnification.

      (a) Neither the Custodian nor any of its directors, officers, agents or
employees, shall be liable for any action taken or omitted to be taken by it or
them hereunder or in connection herewith in good faith and believed by it or
them to be within the purview of this Agreement, except for its or their own
negligence, lack of good faith or willful misconduct.

      (b) The Registered Holder and the Custodian agree to indemnify and hold
each other and their respective directors, officers, agents and employees
harmless against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever, including reasonable attorney's fees, that may be
imposed on, incurred by, or asserted against it or them in any action taken or
not taken by it or

                                      O-12
<PAGE>

them hereunder. This indemnification shall include, but not be limited to, the
claims of third parties arising from or related to this Agreement or the
Mortgage Loans. This indemnification applies if such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses,
disbursements, or claims were imposed on, incurred by or asserted against the
party seeking indemnification because of the breach of the obligations,
negligence, lack of good faith or willful misconduct of the other party or any
of its directors, officers, agents or employees. The foregoing indemnification
shall survive any termination of this Agreement and the resignation or removal
of the Custodian.

      (c) In the event that the Custodian fails to produce a Mortgage Note,
Assignment of Mortgage or any other document related to a Mortgage Loan that was
in its possession pursuant to Section 2 within four (4) Business Days after
required or requested by the Registered Holder or its Servicer (a "Custodial
Delivery Failure"), and provided that (i) Custodian previously delivered to the
Registered Holder an Initial Custody Receipt which did not list such document as
an exception; (ii) such document is not outstanding pursuant to a request for
release in the form annexed hereto as Exhibit Five; and (iii) such document was
held by the Custodian on behalf of the Registered Holder, then the Custodian
shall: (a) with respect to any missing Mortgage Note, promptly deliver to the
Registered Holder upon request, a Lost Note Affidavit in the form of Exhibit
Seven hereto and (b) with respect to any missing document related to such
Mortgage Loan, including but not limited to a missing Mortgage Note, (1)
indemnify the Registered Holder, and its successor in interest, in accordance
with the succeeding paragraph and, (2) obtain and maintain an insurance bond in
the name of the Registered Holder, and its successors in interest and assigns,
insuring against any losses associated with the loss of such document, in an
amount equal to the then outstanding principal balance of the related Mortgage
Loan or such lesser amount requested by the Registered Holder, at the Registered
Holder's sole option, at any time the long term obligations of the Custodian are
rated below the second highest rating category of Moody's Investors Service,
Inc. or Standard and Poor's Ratings Group, a division of McGraw-Hill, Inc.

      (d) The Custodian agrees to indemnify and hold the Registered Holder, and
its designees, harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever, including reasonable attorney's fees, that may
be imposed on, incurred by, or asserted against it or them in any way relating
to or arising out of a Custodial Delivery Failure, as defined herein, or the
Custodian's negligence, lack of good faith or willful misconduct. The forgoing
indemnification shall survive any termination or assignment of this Agreement.

      18. Reliance of Custodian.

      In the absence of bad faith on the part of the Custodian, the Custodian
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any request, instructions, certificate,
opinion or other document furnished to the Custodian, reasonably believed by
Custodian to be genuine and to have been signed or presented by the proper party
or parties and conforming to the requirements of this Agreement. No

                                      O-13
<PAGE>

representations, warranties, covenants or obligations of the Custodian shall be
implied with respect to this Agreement or the Custodian's services hereunder.

      19. Transmission of Custodian's Mortgage File.

      Written instructions as to the method of shipment and shipper(s) Custodian
is directed to utilize in connection with transmission of mortgage files and
loan documents in the performance of the Custodian's duties hereunder shall be
delivered by the Registered Holder (the "Requesting Party") with respect to all
or a portion of the Mortgage Loans owned by such Registered Holder to the
Custodian prior to any shipment of any mortgage files and loan documents
hereunder. The Registered Holder will arrange for the provision of such services
at its sole cost and expense (or, at Custodian's option, reimburse Custodian for
all costs and expenses incurred by Custodian consistent with such instructions)
and will maintain such insurance against loss or damage to mortgage files and
loan documents as the Requesting Party deems appropriate. Without limiting the
generality of the provisions of Paragraph 17 above, it is expressly agreed that
in no event shall the Custodian have any liability for any losses or damages to
any person, including, without limitation, the Requesting Party, arising out of
actions of the Custodian consistent with instructions of the Requesting Party.
In the absence of any written instructions with respect to the transmission of
the Custodian's Mortgage Files, the parties hereby agree that the Custodian may
utilize any nationally recognized overnight courier service and shall be
entitled to reimbursement from the Registered Holder.

      20. Authorized Representative.

      Unless the Registered Holder shall have given the Custodian written notice
to the contrary, each individual designated as an authorized representative of
the Registered Holder with respect to all or a portion of the Mortgage Loans
owned by such Registered Holder, and the Custodian, respectively (an "Authorized
Representative"), is authorized to give and receive notices, requests and
instructions and to deliver certificates and documents in connection with this
Agreement on behalf of the Registered Holder with respect to all or a portion of
the Mortgage Loans owned by such Registered Holder, or the Custodian, as the
case may be, and the specimen signature for each such Authorized Representative
of MLCC as the initial Registered Holder and each such Authorized Representative
of the Custodian initially authorized hereunder is set forth on Exhibit Three
and Exhibit Four hereof, respectively. Any subsequent Registered Holder of the
Mortgage Loans shall provide the Custodian specimen signatures for each
Authorized Representative of such Registered Holder. From time to time, the
Registered Holder and the Custodian may, by delivering to the other party a
revised exhibit, change the information previously given pursuant to this
Paragraph, but each of the parties hereto shall be entitled to rely conclusively
on the then current exhibit until receipt of a superseding exhibit.

      21. Release of Custodian's File for Servicing.

      Upon written request by the Registered Holder or its Servicer with respect
to all or a portion of the Mortgage Loans owned by such Registered Holder,
pursuant to the form attached hereto as Exhibit Five, the Custodian shall use
its best efforts to promptly, and in no event no

                                      O-14
<PAGE>

later than two (2) Business Days after receipt of such written request completed
in accordance with this Agreement, release to the Registered Holder or its
Servicer for the servicing or foreclosure of any of the Mortgage Loans the
related Custodian's Mortgage File. All Custodian's Mortgage Files so released to
the Registered Holder's Servicer shall be held by such Servicer in trust for the
benefit of the Registered Holder in accordance with the provisions of a
servicing agreement entered into between the Registered Holder and such
Servicer. The Registered Holder or its Servicer shall return to the Custodian
the Custodian's Mortgage File that has been released to the Registered Holder or
its Servicer, when the Registered Holder's or its Servicer's need therefor in
connection with such servicing or foreclosure no longer exists, unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a
certification to this effect from the Registered Holder or its Servicer to the
Custodian in the form annexed hereto as Exhibit Five, and the Custodian shall
thereupon reflect any such liquidation on the list of Mortgage Loans maintained
by it pursuant to Paragraph 9 of this Agreement.

      Custodian shall not release more than 5% of the number of Mortgage Loans
at any time without additional written consent from Registered Holder. This
limitation shall not apply to the release of Custodial Files upon payment in
full.

      22. Release of Custodian's Mortgage File for Payment.

      Upon the repurchase or substitution of any Mortgage Loan pursuant to a
Purchase Agreement or the payment in full of any Mortgage Loan, which shall be
evidenced by the Custodian's receipt of a request for release, receipt and
certification in the form annexed hereto as Exhibit Five (which certification
shall include a statement to the effect that all amounts received in connection
with such payment or repurchase have been credited to the account of the
Registered Holder), the Custodian shall use its best efforts promptly and in no
event later than two (2) Business Days after receipt of the written request
therefor completed in accordance with this Agreement, release the related
Custodian's Mortgage File to the Registered Holder or, at the request of the
Registered Holder, its Servicer, such repurchase thereupon to be noted on the
list maintained by the Custodian pursuant to Paragraph 9 of this Agreement.

      23. Reproduction of Documents.

      This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, and (b) certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

                                      O-15
<PAGE>

      24. Severability.

      If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or term of this Agreement shall in no
way affect the validity or enforceability of the other provisions of this
Agreement; provided, however, that if the invalidity of any covenant, agreement
or provision shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a structure the economic effect of which is as nearly as possible the
same as the economic effect of this Agreement.

      25. Amendment; Exhibits.

      This Agreement may be amended from time to time by the parties hereto only
by a written agreement signed by the parties hereto. The exhibits to this
Agreement are hereby incorporated and made a part hereof and are an integral
part of this Agreement.

      26. Captions.

      Section headings are used herein for convenience only and do not limit or
expand the scope of the provisions herein.

      27. Representations and Warranties of Custodian.

      Custodian represents and warrants to and covenants with MLCC as follows:

      (a)   Custodian is a corporation duly incorporated, validly existing and
            in good standing under the laws of Minnesota.

      (b)   Custodian has full corporate power to execute, deliver and perform
            the obligations under this Agreement. MLCC may rely on the actions
            of Custodian without further inquiry. No additional consent,
            authorization, or regulatory filing is required in order for
            Custodian to legally perform its obligations.

      (c)   This agreement constitutes a legal, valid and binding obligation of
            Custodian, enforceable against Custodian in accordance with the
            terms herein except as limited by bankruptcy, insolvency,
            liquidation or other similar laws affecting generally the
            enforcement of creditor's rights.

                                      O-16
<PAGE>

      IN WITNESS WHEREOF, the Custodian and MLCC have caused this Agreement to
be executed as of the date and year first written above.

                                  WELLS FARGO BANK MINNESOTA, N.A. ("Custodian")

                                  By: __________________________________________
                                  Name: ________________________________________
                                  Title: _______________________________________

                                  MERRILL LYNCH CREDIT CORPORATION
                                  ("MLCC")

                                  By: __________________________________________
                                  Name: ________________________________________
                                  Title: _______________________________________

                                      O-17
<PAGE>

                                    EXHIBIT P

                       AMENDMENT NO. 1 CUSTODIAL AGREEMENT

            Amendment No. 1, dated as of January 16, 2002 (this "Amendment"),
between Merrill Lynch Credit Corporation ("MLCC") and Wells Fargo Bank
Minnesota, N.A. (the "Custodian"), to the Custodial Agreement, dated as of
December 15, 2000 (the "Custodial Agreement").

                                    RECITALS

            WHEREAS, MLCC may from time to time, purchase certain Mortgage Loans
from third party sellers pursuant to the terms and condition of certain mortgage
loan purchase agreements entered into between MLCC and such parties (each, a
"Purchase Agreement");

            WHEREAS, pursuant to the Custodial Agreement, the Custodian has
agreed to take possession of mortgage notes evidencing Mortgage Loans and
certain other Mortgage Loan Documents delivered from time to time pursuant to
the Custodial Agreement;

            WHEREAS, MLCC and the Custodian have agreed, subject to the terms
and conditions of this Amendment, that the Custodial Agreement be amended to
reflect the replacement of individual certifications with a Master Trust
Receipt; and

            Accordingly, MLCC and Custodian hereby agree, in consideration of
the mutual promises and mutual obligations set forth herein, that the Custodial
Agreement is hereby amended as follows:

      SECTION 1. Definitions:

      (a)   Section 1 of the Custodial Agreement is hereby amended by deleting
            the definitions of "Custody Receipt", "Final Custody Receipt" and
            "Initial Custody Receipt."

      (b)   Section 1 of the Custodial Agreement is hereby amended by inserting
            the following definition into its proper alphabetical order:

            "Trust Receipt": A trust receipt in the form annexed hereto as
      Exhibit One delivered to MLCC by the Custodian covering all of the
      Mortgage Loans subject to this Custodial Agreement from time to time, as
      reflected in the Mortgage Loan Schedule and Exception Report attached
      thereto in accordance with Section 4(b).

      (c)   Section 1 of the Custodial Agreement is hereby amended by deleting
            the definition of " Exception Report" and replacing it in its
            entirety as follows:

            "Exception Report": The Exception Report prepared by the Custodian
      as an annex to the Trust Receipt which lists all exceptions with respect
      to the Mortgage Loan

                                      P-1
<PAGE>

      Schedule and attached thereto as Schedule B, as updated from time to time
      in accordance with Section 4 hereof.

      SECTION 2. Trust Receipt. Section 4 is hereby deleted in its entirety and
replaced in its entirety with the following:

      (a)   The Custodian shall review the documents delivered to it on each
            Delivery Date and shall deliver to Registered Holder within the time
            frames outlined in exhibit B to this amendment, but prior to Closing
            Date, a Mortgage Loan Schedule and Exception Report with respect to
            the Mortgage Loans, and the delivery of each Mortgage Loan Schedule
            and Exception Report by the Custodian hereunder shall be the
            Custodian's certification that such Mortgage Loans are held for MLCC
            (as Registered Holder) and that, as to each Mortgage Loan listed in
            the related Mortgage Loan Schedule (other than any Mortgage Loan
            paid in full or any Mortgage Loan specifically identified in such
            certification as not covered by the Exception Report), (a) all
            documents described in Paragraphs 2(a) through 2(e) and to the
            extent provided in the Custodian's Mortgage Files Paragraphs 2(f)
            through 2(j), if applicable, of this Agreement are in its
            possession, (b) such documents have reviewed by it and appear
            regular on their face and relate to such Mortgage Loan, (c) based on
            its examination and only as to the foregoing documents, the
            information set forth in terms (i), (ii), (iii) excluding the zip
            code requirement, (iv), (vi), (vii), (viii) and (x) of the
            definition of "Mortgage Loan Schedule" respecting such Mortgage Loan
            is correct, and which as to items (iv) (vi), (viii) and (x) for
            adjustable rate Mortgage Loan Documents and (d) each Mortgage Note
            has been endorsed and each Assignment has been executed as provided
            in Paragraph 2 hereof. The Custodian shall determine whether any
            discrepancy or deficiency exists with respect to a Custodian's
            Mortgage File and shall note such discrepancy on the Exception
            Report. The Custodian shall also note on such Exception Report, with
            respect to each Mortgage Loan, whether a certified copy of the
            related Mortgage was delivered to the Custodian in lieu of the
            original of such Mortgage, whether a certified copy of an
            intervening assignment of the related Mortgage was delivered to the
            Custodian in lieu of the original of such assignment, and whether a
            preliminary title report with respect to such Mortgage Loan was
            delivered to the Custodian in lieu of the original policy of title
            insurance. Except as specifically provided above, the Custodian
            shall be under no duty to review, inspect or examine such documents
            to determine that any of them are enforceable or appropriate for
            their prescribed purpose.

      (b)   On the date of this Amendment, the Custodian shall deliver to MLCC,
            a Trust Receipt with a Mortgage Loan Schedule and Exception Report
            attached thereto reflecting all Mortgage Loans subject to the
            Custodial Agreement as of such date.

      (c)   Each Mortgage Loan Schedule and Exception Report delivered by the
            Custodian to MLCC shall supersede and cancel the Mortgage Loan
            Schedule and Exception Report previously delivered by the Custodian
            to MLCC hereunder, and shall replace the then existing Mortgage Loan
            Schedule and Exception Report to be attached to the Trust Receipt.
            Notwithstanding anything to the contrary set forth herein, in the
            event

                                      P-2
<PAGE>

            that the Mortgage Loan Schedule and Exception Report attached to the
            Trust Receipt is different from the most recently delivered Mortgage
            Loan Schedule and Exception Report, then the most recently delivered
            Mortgage Loan Schedule and Exception Report shall control and be
            binding upon the parties hereto.

      (d)   The Custodian shall deliver to MLCC, electronically a Mortgage Loan
            Schedule and Exception Report reflecting any additional Mortgage
            Loans received and reviewed in accordance with the procedures set
            forth in Section 2(a) hereof.

      (e)   Within five (5) days of receipt of written directions, in the form
            attached hereto as Exhibit Six, from the Registered Holder with
            respect to all or a portion of the Mortgage Loans owned by such
            Registered Holder, the Custodian shall deliver all or any portion of
            the Custodian's Mortgage Files held by it to Registered Holder, or
            to such other party as the Registered Party may direct, as provided
            in Paragraph 19, at the place indicated in any such written
            direction from the Registered Holder and shall deliver to the
            Registered Holder a new Mortgage Loan Schedule and Exception Report,
            with respect to the Custodian's Mortgage Files retained by the
            Custodian. The Registered Holder may require the Custodian to
            complete the endorsements on any Mortgage Notes in its possession
            and to complete the Assignment of Mortgages prepared by the Servicer
            in blank, within a reasonable period of time. The cost of this shall
            be reimbursed by the Registered Holder. A list of authorized
            signatures for such written directions has been furnished to the
            Custodian by the Registered Holder pursuant to Paragraph 20 hereof.
            Upon the Custodian's receipt of such written notification from the
            Registered Holder that the Registered Holder has sold any or all of
            the Mortgage Loans, which notification shall be accompanied by a
            Mortgage Loan Schedule identifying such Mortgage Loans, the
            Custodian shall change its records to reflect that such purchaser is
            the owner of such Mortgage Loans and shall immediately, upon the
            direction of such Registered Holder, either deliver the related
            Custodian's Mortgage Files to such purchaser at the expense of such
            purchaser or issue a Mortgage Loan Schedule and Exception Report in
            the name of such purchaser. Such purchaser, as a Registered Holder,
            shall be required to simultaneously furnish to the Custodian a list
            of authorized signatures for written directions pursuant to
            Paragraph 20 hereof. The Custodian shall then deliver to the
            Registered Holder a new Mortgage Loan Schedule and Exception Report,
            reflecting all Mortgage Loans with respect to which the Custodian
            still holds the related Custodian's Mortgage Files on behalf of the
            Registered Holder. The Registered Holder and the Custodian agree
            herein that any purchaser of any or all of the Mortgage Loans shall
            succeed to the rights and obligations of the Registered Holder under
            this Agreement with respect to such Mortgage Loans upon receipt of
            its own Trust Receipt and Mortgage Loan Schedule and Exception
            Report, as further specified in Paragraph 15 hereof.

      SECTION 3. Termination of Agreement. Section 14 of the Custodial Agreement
is hereby amended by deleting "Custody Receipts" from the sixth line of the
paragraph and replacing it with "Mortgage Loan Schedule and Exception Report."

                                      P-3
<PAGE>

      SECTION 4. Assignment of Agreement. Section 15 of the Custodial Agreement
is hereby deleted in its entirety and replaced in its entirety with the
following:

            "The Registered Holder with respect to all or a portion of the
Mortgage Loans owned by such Registered Holder shall have the right to assign,
in whole or in part, its interests under this Agreement with respect to some or
all of the Mortgage Loans, and to designate any person (such person, an
"Assignee") or exercise any rights of the Registered Holder hereunder, and such
assignee or designee shall accede to the rights and obligations hereunder of the
Registered Holder with respect to such Mortgage Loans. All references to the
Registered Holder shall be deemed to include its assignee or designee. In
connection with any such assignment, the Registered Holder with respect to all
or a portion of the Mortgage Loans owned by such Registered Holder, the
Custodian shall issue (a) a Trust Receipt in the form of Exhibit One hereto with
a Mortgage Loan Schedule and Exception Report with respect to the Mortgage Loans
subject to such assignment to the Assignee and (b) an updated Mortgage Loan
Schedule and Exception Report to the assigning Registered Holder with respect to
the Mortgage Loans which the Custodian holds for the Registered Holder. The
Custodian may not assign its interest or delegate its duties under this
Agreement without the prior written consent of the Registered Holder. In the
event of any such assignment or delegation, the Registered Holder shall not be
responsible for any fees of the successor Custodian in excess of the fees
formerly paid by the Registered Holder to the Custodian."

      SECTION 5. Indemnification. Section 17 of the Custodial Agreement is
hereby amended by deleting "an Initial Custody Receipt" from the fifth line of
subsection (c) and replacing it with "a Mortgage Loan Schedule and Exception
Report."

      SECTION 6. Exhibits. The Exhibits of the Custodial Agreement are hereby
amended by deleting "Exhibit One" and "Exhibit Two" and adding The Form of Trust
Receipt attached as Exhibit A to this Amendment as Exhibit One to the Custodial
Agreement.

      SECTION 7. Delivered Documents. On the date hereof, MLCC shall have
received the following documents, each of which shall be satisfactory to the
MLCC in form and substance:

      (a)   Amendment. This Amendment No. 1, executed and delivered by a duly
            authorized officer of MLCC and the Custodian; and

      (b)   Other Documents. Such other documents as the Purchaser or counsel to
            the Purchaser may reasonably request.

      SECTION 8. Limited Effect. Except as expressly amended and modified by
this Amendment, the Custodial Agreement shall continue to be, and shall remain,
in full force and effect in accordance with its terms.

                                      P-4
<PAGE>

      SECTION 9. Counterparts. This Amendment may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
instrument.

      SECTION 10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                            [SIGNATURE PAGE FOLLOWS]

                                      P-5
<PAGE>

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

                                 WELLS FARGO BANK MINNESOTA, N.A. ("CUSTODIAN")

                                 By:    _______________________________________
                                        Name: Sarah J. Kerr
                                        Title: Assistant Vice President

                                 MERRILL LYNCH CREDIT CORPORATION ("MLCC")

                                 By:    _______________________________________
                                        Name:
                                        Title:

                                      P-6
<PAGE>

                                    EXHIBIT Q

                         OFFICER'S CERTIFICATE - TRUSTEE

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Re:   Trust Agreement (the "Agreement") dated as of July 1, 2003 between Merrill
      Lynch Mortgage Investors, Inc., as depositor and Wells Fargo Bank
      Minnesota, National Association, as trustee - Merrill Lynch Mortgage
      Investors Trust Series MLCC 2003-D Mortgage Loan Pass-Through Certificates

      I, [identify the certifying individual], a [title] of the Trustee hereby
certify to the Depositor, and its officers, directors and affiliates, and with
the knowledge and intent that they will rely upon this certification, that:

1.    I have reviewed the Monthly Statements delivered pursuant to Section 4.02
      the Agreement since the last Officer's Certificate executed pursuant to
      Section 6.20 of the Agreement [or in the case of the first certification,
      since the Cut-off Date] (the "Trustee Information").

2.    Based on my knowledge, the information in the Monthly Statements , taken
      as a whole, does not contain any untrue statement of a material fact or
      omit to state a material fact necessary to make the statements made, in
      light of the circumstances under which such statements were made, not
      misleading as of the date hereof;

3.    Based on my knowledge, the Monthly Statements required to be prepared by
      the Trustee under the Agreement has been prepared and provided in
      accordance with the Agreement; and

4.    I am responsible for reviewing the activities performed by the Trustee
      under the Agreement and the Trustee has, as of the date hereof fulfilled
      its obligations under the Agreement and there are no significant
      deficiencies relating to the Trustee's compliance with this Agreement.

Date:

                              Wells Fargo Bank Minnesota, National Association,
                              as Trustee

                              By:      ________________________________________
                              Name:    ________________________________________
                              Title:   ________________________________________

                                      Q-1
<PAGE>

                                   SCHEDULE A

                             MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                  Schedule A-1
<PAGE>

                                   SCHEDULE B

                  MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES
                                OF THE ORIGINATOR

      The Originator hereby represents and warrants to the Purchaser, as to each
Mortgage Loan, as of the Closing Date as follows:

      (a) The information set forth in the Mortgage Loan Schedule is true and
correct in all material respects as of the Cut-off Date;

      (b) As of the related Closing Date, the Mortgage Loan is not delinquent in
payment more than 30 days and the Mortgage Loan has not been dishonored; there
are no material defaults under the terms of the Mortgage Loan; the Originator
has not advanced funds, or induced, solicited or knowingly received any advance
of funds from a party other than the owner of the Mortgaged Property subject to
the Mortgage, directly or indirectly, for the payment of any amount required by
the Mortgage Loan;

      (c) To the best of the Originator's knowledge, with respect to those
Mortgage Loans as to which the Mortgagors are required to deposit funds into an
escrow account for payment of taxes, assessments, insurance premiums and similar
items as they become due, there are no delinquent taxes, ground rents, water
charges, sewer rents, assessments or other outstanding charges which constitute
a lien on the related Mortgaged Property, and all escrow deposits have been
collected, are under the control of the Servicer, and have been applied to the
payment of such items in a timely fashion, in accordance with such Mortgage. No
escrow deposits or escrow payments or other charges or payments due the Servicer
have been capitalized under the related Mortgage or Mortgage Note. With respect
to those Mortgage Loans for which escrow deposits are not required, to the best
of the Originator's knowledge, there are no delinquent taxes or other
outstanding charges affecting the related Mortgaged Property which constitute a
lien on the related Mortgaged Property;

      (d) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments contained in the Mortgage File, approved, if necessary, by the
insurer under any Primary Mortgage Insurance Policy and recorded in all places
necessary to maintain the first priority of the lien, the substance of which
waiver, alteration or modification is reflected on the Mortgage Loan Schedule.
No Mortgagor has been released, in whole or in part, except in connection with
an assumption agreement which assumption agreement is part of the Mortgage File
and the terms of which are reflected in the Mortgage Loan Schedule;

      (e) Neither the Mortgage Note nor the Mortgage is subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and to the best
of the Originator's

                                  Schedule B-1
<PAGE>

knowledge, no such right of rescission, set-off, counterclaim or defense has
been asserted by any Person with respect thereto;

      (f) All buildings upon the Mortgaged Property are required to be insured
by a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customarily included in extended coverage
in the area where the Mortgaged Property is located, pursuant to standard hazard
insurance policies in an amount which is equal to the lesser of (A) the
replacement cost of the improvements securing such Mortgage Loan or (B) the
principal balance owing on such Mortgage Loan. To the best knowledge of the
Originator, all such standard hazard policies are in effect. On the date of
origination, such standard hazard policies contained a standard mortgagee clause
naming the Originator or the Originator of the Mortgage Loan and their
respective successors in interest as mortgagee and, to the best knowledge of the
Originator, such clause is still in effect and, to the best of the Originator's
knowledge, all premiums due thereon have been paid. If the Mortgaged Property is
located in an area identified by the Federal Emergency Management Agency as
having special flood hazards under the National Flood Insurance Act of 1994, as
amended, such Mortgaged Property is covered by flood insurance in the amount
required under the National Flood Insurance Act of 1994. The Mortgage obligates
the Mortgagor thereunder to maintain all such insurance at Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;

      (g) To the best of the Originator's knowledge, at the time of origination
of such Mortgage Loan and thereafter, all requirements of any federal, state or
local law including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws required to be complied with by the Originator as the Originator
of the Mortgage Loan and applicable to the Mortgage Loan have been complied with
in all material respects;

      (h) The Mortgage has not been satisfied as of the Closing Date, canceled
or subordinated, in whole, or rescinded, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part (except for a
release that does not materially impair the security of the Mortgage Loan or a
release the effect of which is reflected in the Loan-to-Value Ratio for the
Mortgage Loan as set forth in the Mortgage Loan Schedule), nor to the best of
the Originator's knowledge has any instrument been executed that would effect
any such release, cancellation, subordination or rescission;

      (i) Ownership of the Mortgaged Property is held in fee simple or a
leasehold estate. With respect to Mortgage Loans that are secured by a leasehold
estate, (i) the lease is valid, in full force and effect, and conforms to all of
FNMA's requirements for leasehold estates; (ii) all rents and other payments due
under the lease have been paid; (iii) the lessee is not in default under any
provision of the lease; (iv) the term of the lease exceeds the maturity date of
the related Mortgage Loan by at least five (5) years; and (v) the terms of the
lease provide a Mortgagee with an opportunity to cure any defaults. Except as
permitted by the fourth sentence of this paragraph (i), the Mortgage is a valid,
subsisting and enforceable first lien on the

                                  Schedule B-2
<PAGE>

Mortgaged Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems affixed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing securing the
Mortgage Note's original principal balance. The Mortgage and the Mortgage Note
do not contain any evidence on their face of any security interest or other
interest or right thereto. Such lien is free and clear of all adverse claims,
liens and encumbrances having priority over the first lien of the Mortgage
subject only to (1) the lien of non-delinquent current real property taxes and
assessments not yet due and payable, (2) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording which are acceptable to mortgage lending institutions generally, or
which are specifically referred to in the lender's title insurance policy
delivered to the Originator of the Mortgage Loan and either (A) which are
referred to or otherwise considered in the appraisal made for the Originator of
the Mortgage Loan, or (B) which do not in the aggregate adversely affect the
appraised value of the Mortgaged Property as set forth in such appraisal, and
(3) other matters to which like properties are commonly subject which do not in
the aggregate materially interfere with the benefits of the security intended to
be provided by the Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property. Any security agreement, chattel mortgage or
equivalent document related to and delivered in connection with the Mortgage
Loan establishes and creates a valid, subsisting and enforceable first lien and
first priority security interest on the property described therein. With respect
to each Co-op Loan, the security instruments create a valid, enforceable and
subsisting first priority security interest in the Co-op Lease and Co-op Stock
securing the related Mortgage Note subject to only to (a) the lien of the
related cooperative for unpaid assessments representing the Mortgagor's pro rata
share of payments for a blanket mortgage, if any, current and future real
property taxes, insurance premiums, maintenance fees and other assessments to
which like collateral is commonly subject, and (b) other matters to which the
collateral is commonly subject which do not materially interfere with the
benefits of the security intended to be provided; provided, however, that the
related Co-op Loan may be subordinated or otherwise subject to the lien of a
Mortgage on the cooperative building;

      (j) The Mortgage Note is not subject to a third party's security interest
or other rights or interest therein;

      (k) The Mortgage Note and the related Mortgage are genuine and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms subject to bankruptcy, insolvency and other laws of
general application affecting the rights of creditors. All parties to the
Mortgage Note and the Mortgage had the legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note and the Mortgage. The Mortgage
Note and the Mortgage have been duly and properly executed by such parties. The
proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been complied with;

      (l) Originator has good title to, and the full right to transfer and sell,
the Mortgage Loan free and clear of any encumbrance, equity, lien, pledge,
charge, claim or security interest,

                                  Schedule B-3
<PAGE>

including, to the best knowledge of the Originator, any lien, claim or other
interest arising by operation of law;

      (m) To the best of the Originator's knowledge, each Mortgage Loan is
covered by an ALTA lender's title insurance policy or other generally acceptable
form of policy or insurance acceptable to FNMA or FHLMC, issued by a title
insurer acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in paragraph (ix)(1) (2) and (3) above) the Originator, its
successors and assigns, as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan. To the best of the Originator's
knowledge, the Originator is the sole insured of such lender's title insurance
policy, such title insurance policy has been duly and validly endorsed to the
Purchaser or the assignment to the Purchaser of the Originator's interest
therein does not require the consent of or notification to the insurer and such
lender's title insurance policy is in full force and effect and will be in full
force and effect upon the consummation of the transactions contemplated by this
Agreement. To the best of the Originator's knowledge, no claims have been made
under such lender's title insurance policy, and no prior holder of the related
Mortgage has done, by act or omission, anything which would impair the coverage
of such lender's title insurance policy;

      (n) To the best of the Originator's knowledge, there is no default,
breach, violation or event of acceleration existing under the Mortgage or the
related Mortgage Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event permitting acceleration, except for any
Mortgage Loan payment which is not late by more than 30 days, and the Originator
has not waived any default, breach, violation or event permitting acceleration;

      (o) To the best of the Originator's knowledge, there are no mechanics' or
similar liens or claims which have been filed for work, labor or material (and,
to the best of the Originator's knowledge, no rights are outstanding that under
law could give rise to such lien) affecting the related Mortgaged Property which
are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;

      (p) To the best of the Originator's knowledge, all improvements subject to
the Mortgage, lay wholly within the boundaries and building restriction lines of
the Mortgaged Property (and wholly within the project with respect to a
condominium unit) and no improvements on adjoining properties encroach upon the
Mortgaged Property except those which are insured against by the title insurance
policy referred to in paragraph (xiii) above and all improvements on the
property comply with all applicable zoning and subdivision laws and ordinances;

      (q) To the best of the Originator's knowledge, each Mortgage Loan was
originated by the Originator or by a savings association, a savings bank, a
commercial bank or similar banking institution that is supervised and examined
by a Federal or state banking authority, a mortgagee approved by the Secretary
of HUD pursuant to Section 203 and 211 of the National Housing Act, or a FNMA-
or FHLMC-approved seller. To the best of the Originator's knowledge, each
Mortgage Loan was underwritten generally in accordance with the Underwriting
Standards as in

                                  Schedule B-4
<PAGE>

effect at the time of origination. To the best of the Originator's knowledge,
the Mortgage contains the usual and customary provision of the Originator at the
time of origination for the acceleration of the payment of the unpaid principal
balance of the Mortgage Loan if the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder;

      (r) The Mortgaged Property at origination or acquisition was and, to the
best of the Originator's knowledge, currently is free of material damage and
waste and at origination there was, and to the best of the Originator's
knowledge there currently is, no proceeding pending for the total or partial
condemnation thereof;

      (s) The related Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale or judicial foreclosure, and (2) otherwise by
judicial foreclosure. The Originator has no knowledge of any homestead or other
exemption available to the Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;

      (t) To the best of the Originator's knowledge, if the Mortgage constitutes
a deed of trust, a trustee, duly qualified if required under applicable law to
act as such, has been properly designated and currently so serves and is named
in the Mortgage, and no fees or expenses are or will become payable to the
trustee under the deed of trust, except in connection with a trustee's sale or
attempted sale after default by the Mortgagor;

      (u) With respect to each Mortgage Loan, there is either (i) an automated
property valuation report or (ii) an appraisal on a FNMA-approved form (or a
narrative residential appraisal) of the related Mortgaged Property that conforms
to the applicable requirements of the Financial Institutions Reform Recovery and
Enforcement Act and that was signed prior to the approval of such Mortgage Loan
application by a qualified appraiser, appointed by the Originator or the
Originator of such Mortgage Loan, as appropriate, who has no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security thereof,
and whose compensation is not affected by the approval or disapproval of such
Mortgage Loan;

      (v) No Mortgage Loan contains "subsidized buydown" or "graduated payment"
features;

      (w) The Mortgaged Property is a single-family (one- to four-unit) dwelling
residence erected thereon, or an individual condominium unit in a condominium,
or a Co-operative Apartment or an individual unit in a planned unit development
or in a de minimis planned unit development as defined by FNMA. No such
residence is a mobile home or a manufactured dwelling which is not permanently
attached to the land;

      (x) No Mortgage Loan provides for negative amortization;

      (y) No Mortgage Loan had an original term in excess of thirty (30) years;

                                  Schedule B-5
<PAGE>

      (z) [RESERVED]

      (aa) Each Mortgage Loan is a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code (without regard to Treasury Regulations Section
1.860G-2(f) or any similar rule that provides that a defective obligation is a
qualified mortgage for a temporary period);

      (bb) No Mortgage Loan provides for interest other than at either (x) a
single fixed rate in effect throughout the term of the Mortgage Loan or (y) a
single "variable rate" (within the meaning of Treasury Regulations Section
1.860G-1(a)(3)) in effect throughout the term of the Mortgage Loan.

      (cc) No Mortgage Loan is the subject of pending or final foreclosure
proceedings.

      (dd) Based on delinquencies in payment on the Mortgage Loans, the
Originator would not initiate foreclosure proceedings with respect to any of the
Mortgage Loans prior to the next scheduled payment date on such Mortgage Loan.

      (ee) Each Mortgage Note is comprised of one original promissory note and
each such promissory note constitutes an "instrument" for purposes of section
9-102(a)(65) of the UCC.

      (ff) No Mortgage Loan contains any term or condition, or involves any loan
origination practice, that has been defined as "predatory", "covered", or
"threshold" under any applicable federal, state, or local law and in such
context has been expressly categorized as an "unfair" or "deceptive" term,
condition, or practice in any applicable federal, state, or local law dealing
with "predatory" or "high cost" mortgage lending.

      (gg) No Mortgage Loan is covered by the Home Ownership and Equity
Protection Act of 1994 ("HOEPA") and no Mortgage Loan is "high cost" as defined
by any applicable federal, state or local predatory or abusive lending law. Any
breach of this representation shall be deemed to materially and adversely affect
the value of the Mortgage Loan and shall require a repurchase of the affected
Mortgage Loan.

      (hh) With respect to Mortgage Loans that are secured by real property
located in the State of Georgia and that are primary residences, no such
Mortgage Loan originated between October 1, 2002 and December 31, 2002 had an
original principal balance of $300,700 or less and no such Mortgage Loan
originated between January 1, 2003 and March 6, 2003 had an original principal
balance of $322,700 or less. No Mortgage Loan was originated on or after March
7, 2003 that is a "high cost home loan" as defined under the Georgia Fair
Lending Act. Any breach of this representation shall be deemed to materially and
adversely affect the value of the Mortgage Loan and shall require a repurchase
of the affected Mortgage Loan.

      (ii) No Mortgage Loan (a) is secured by property located in the State of
New York; (b) had an original principal balance of $300,000 or less, and (c) has
an application date on or after April 1, 2003, the terms of which Mortgage Loan
equal or exceed either the APR or points and fees threshold for "high-cost home
loans," as defined in Section 6-L of the New York State

                                  Schedule B-6
<PAGE>

Banking Law. Any breach of this representation shall be deemed to materially and
adversely affect the value of the Mortgage Loan and shall require a repurchase
of the affected Mortgage Loan.

      (jj) Each Mortgage Loan at the time it was made complied in all material
respects with applicable local, state and federal laws, including, but not
limited to, all applicable predatory or abusive lending laws.

                                  Schedule B-7
<PAGE>

                                   SCHEDULE C

                           CLASS X-A-1 NOTIONAL AMOUNT

                    THE CLASS X-A-1 NOTIONAL AMOUNT SCHEDULE

<TABLE>
<CAPTION>
          Distribution Date                              Notional Amount ($)
          -----------------                              -------------------
<S>                                                      <C>
          August 2003................................      992,833,000.00
          September 2003.............................      956,703,831.10
          October 2003...............................      921,848,644.05
          November 2003..............................      888,222,515.88
          December 2003..............................      855,782,107.66
          January 2004...............................      824,485,608.72
          February 2004..............................      794,292,682.68
          March 2004.................................      765,164,415.49
          April 2004.................................      737,063,265.30
          May 2004...................................      709,953,014.06
          June 2004..................................      683,798,720.81
          July 2004..................................      658,566,676.70
          August 2004................................      634,224,361.51
          September 2004.............................      610,740,401.72
          October 2004...............................      588,084,530.14
          November 2004..............................      566,227,546.83
          December 2004..............................      545,141,281.49
          January 2005...............................      524,798,557.18
          February 2005..............................      505,173,155.25
          March 2005.................................      486,239,781.57
          April 2005.................................      467,974,033.95
          May 2005...................................      450,912,382.06
          June 2005..................................      434,462,229.35
          July 2005..................................      418,601,839.13
          August 2005................................      403,310,244.28
          September 2005.............................      388,567,220.01
          October 2005...............................      374,353,257.67
          November 2005..............................      360,649,539.42
          December 2005..............................      347,437,913.84
          January 2006...............................      334,700,872.38
          February 2006..............................      322,421,526.60
          March 2006.................................      310,583,586.32
          April 2006.................................      299,171,338.43
          May 2006...................................      288,169,626.51
          June 2006..................................      277,563,831.16
          July 2006..................................      267,339,851.00
          August 2006................................      257,484,084.38
          September 2006.............................      248,404,712.01
</TABLE>

                                  Schedule C-1
<PAGE>

<TABLE>
<S>                                                        <C>
          October 2006...............................      239,645,495.24
          November 2006..............................      231,195,144.78
          December 2006..............................      223,042,769.43
          January 2007...............................      215,177,862.03
          February 2007..............................      207,590,285.93
          March 2007.................................      200,270,261.90
          April 2007.................................      193,208,355.58
          May 2007...................................      186,395,465.23
          June 2007..................................      179,822,810.09
          July 2007..................................      173,481,919.03
          August 2007 and thereafter.................                0.00
</TABLE>

                                  Schedule C-2<PAGE>

                                                                    EXHIBIT 10.1

PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED AND ARE THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECRETARY OF THE SECURITIES AND
EXCHANGE COMMISSION.

<PAGE>

                              CONFIDENTIAL DOCUMENT

                              DISTRIBUTION AGREEMENT

This Agreement ("Agreement") is made and entered into on January 22, 2002
between:

SINCLAIR PHARMACEUTICALS LTD., a corporation duly organized and existing under
the laws of England having its place of business at Borough Rd, Godalming,
Surrey, United Kingdom GU7 2AB and Sinclair Pharma Srl, a corporation duly
organized and existing under the laws of Italy having its place of business at
Viale Marche, 15, 20125 Milano, Italy. Sinclair Pharmaceuticals Ltd and Sinclair
Pharma Srl are hereinafter collectively referred to as "Company"

and

CELL PATHWAYS, INC., a corporation duly organized and existing under the laws of
Delaware having a place of business at 702 Electronic Drive, Horsham,
Pennsylvania, 19044 hereinafter referred to as "Distributor".

Whereas Company has the exclusive rights to appoint exclusive distributors for
the Product in the Territory as defined below and has the right to supply
Products for that purpose.

Whereas Distributor wishes to become the exclusive distributor of such Products
in the Territory as set out herein.

Now, therefore, the Parties hereto in consideration of the premises and mutual
covenants and undertakings herein contained agree as follows:

ARTICLE 1. DEFINITIONS

         1.1 "Affiliate" of a Party hereto shall mean any entity which controls,
is controlled by, or is under common control with such party. For purposes of
this definition, a Party shall be deemed to control another entity if it owns or
controls, directly or indirectly, more than fifty percent (50%) of the voting
equity of the other entity (or other comparable ownership interest for an entity
other than a corporation) or if it possesses, directly or indirectly, the
ptoower to direct or cause the direction of the management and policies, whether
through ownership of voting securities, by contract, or otherwise, of such other
entity.

         1.2 "Approved Indication" shall mean the "management and relief of oral
pain, by adhering to the mucosal surface of the mouth for soothing of lesions of
various etiologies." The Approved Indication will be deemed amended or changed
in scope in accordance with any additional regulatory approvals of the Product
in the Territory.

         1.3 "Competing Product" shall mean any product other than the Products
that is used for the Approved Indication.

         1.4 "Effective Date" shall mean the date of receipt by Company of the
payment of $1,000,000 referred to in Section 5.3.

[*]CONFIDENTIAL TREATMENT REQUESTED    1
     CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION

<PAGE>

                              CONFIDENTIAL DOCUMENT

         1.5 "Force Majeure" is any factor beyond a Party's control, including,
without limitation, fire, explosion, accident, riot, flood, drought, storm,
earthquake, lightning, frost, civil commotion, sabotage, vandalism, smoke, hail,
embargo, act of God or the public enemy, other casualty, strike or lockout, or
interference, prohibition or restriction imposed by any government or any
officer or agent thereof.

         1.6 "Forecast" shall mean forecasts of sales by Distributor as set
forth in Section 3.3 of this Agreement.

         1.7 "Forecast Range" shall mean for any calendar quarter a quantity +/-
50% of Forecast for that quarter.

         1.8 "Know-how" shall mean technical or scientific information (1)
regarding the Products which may be necessary, useful or advisable to enable
Distributor to promote, market and sell the Products in the Territory, and as is
or will be specified in the documentation which Company has delivered or will
deliver to Distributor after the Effective Date and during the term of this
Agreement; or (2) regarding the manufacture, packaging and labeling of the
Product consistent with the Specifications.

         1.9 "Net Sales I" shall mean Distributor's (or any sub-distributor's)
gross sales of Products actually billed by Distributor or its Affiliates (or
sub-distributors) to unrelated third party customers less (a) rejection or
return of Products previously sold, and (b) any sales, excise, turnover and
similar taxes and any duties and other governmental charges imposed upon the
sale of Products.

         1.10 "Net Sales II" shall mean Distributor's (or any sub-distributor's)
gross sales of Products actually billed by Distributor or its Affiliates (or
sub-distributors) to unrelated third party customers less (a) any direct or
indirect credits and allowances and adjustments granted to such customers for
the Products, including without limitation credits and allowances on account of
price adjustments or on account of the rejection or return of Products
previously sold, (b) any trade and/or cash discounts, rebates and distribution
fees, and (c) any sales, excise, turnover and similar taxes and any duties and
other governmental charges imposed upon the production, importation, use or sale
of Products, and (d) transportation, insurance and handling charges on Product.

         1.11 "Parties" shall mean Company and Distributor and Party shall mean
either of them as the context indicates.

         1.12 "Present Product" means Company's Product known as "GELCLAIR" in a
box containing 21 packets with 15 ml of Product per packet.

         1.13 "Products" in this Agreement shall mean Company's oral gel care
formulation(s) for the Approved Indication, including but not limited to
GELCLAIR(R) as presently manufactured by Company and any modification thereof
which may be agreed between the Parties in future. "Products" does not include
Company's product known as "ALOCLAIR".

         1.14 "Purchase Price" shall mean the price of Product that Distributor
pays Company for the Distributor's purchase of Product from Company.

[*]CONFIDENTIAL TREATMENT REQUESTED    2
     CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION

<PAGE>

                              CONFIDENTIAL DOCUMENT

         1.15 "Registration" shall mean any official marketing approval,
authorization or license regarding the Products by the appropriate and competent
authorities in the Territory, allowing the lawful marketing of the Products.

         1.16 "Specifications" shall mean the specifications for Product,
including its packaging, set forth in Appendix A hereof, which Appendix is
incorporated in and made a part of this Agreement. Specifications shall not be
modified without prior written agreement by the Parties.

         1.17 "Territory" means the United States of America (including its
territories and possessions), Canada and Mexico.

         1.18 "Year" means calendar year. "Year 1" means 2002; "Year 2" means
2003; "Year 3" means 2004; etc.

         1.19 "$" means United States Dollars.

         1.20 "Aloclair" means a product also containing [ * ] which Company
agrees will in no circumstances contain a concentration of [ * ] exceeding [ * ]
of the concentration in Gelclair. Company warrants that Aloclair is
characterized by a substantially [ * ]. Company warrants that the Aloclair
product is unsuitable for the treatment of severe oral mucosal inflammation or
injury, e.g., mucositis, stomatitis and oral surgery.

ARTICLE 2. APPOINTMENT AND ACCEPTANCE

         2.1 Subject to the following terms and conditions, which includes the
payments set forth in this Agreement, the Company hereby appoints the
Distributor as the exclusive distributor to market, sell and distribute Products
in the Territory and the Distributor hereby accepts such appointment.
Distributor shall have the exclusive right to market, sell and distribute
Products, or have those Products marketed, sold or distributed on its behalf in
the Territory.

         2.2 Company shall not and shall cause its Affiliates not to, directly
or indirectly knowingly supply the Product or Competing Product to any Person
outside the Territory for resale or use in the Territory. Company shall promptly
refer exclusively to Distributor all orders or inquiries received by Company in
connection with the sale, marketing and/or distribution of the Product in the
Territory. To the extent that either Party becomes aware of a Person outside the
Territory re-selling Product in the Territory, each shall notify the other and
the Parties shall use best efforts to cooperate and cause such unauthorized sale
in the Territory to cease.

         2.3 Distributor shall not and shall cause its Affiliates not to,
directly or indirectly knowingly supply the Product or Competing Product to any
Person in the Territory for resale or use outside the Territory. Distributor
shall promptly refer exclusively to Company all orders or inquiries received by
Distributor in connection with the sale, marketing and/or distribution of the
Product outside the Territory. To the extent that either Party becomes aware of
a Person in the Territory re-selling Product outside the Territory, each shall
notify the other and the Parties shall use best efforts to cooperate and cause
such unauthorized sale outside the Territory to cease.

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         2.4 Distributor and its Affiliates shall not, directly or indirectly,
or jointly or in conjunction with any other person, whether as principal, agent,
shareholder, employee, independent contractor or in any other manner whatsoever,
distribute, market or sell any Competing Product in the Territory during the
term of this Agreement and 12 months thereafter.

         2.5 Distributor and its Affiliates shall purchase their entire
requirements for the Products from Company, subject to Section 3.9.

         2.6 Company warrants that it has not made any written or oral agreement
or undertaking with any other Person regarding the rights to distribute or sell
Product or Competing Product in the Territory.

         2.7 Company warrants that it has the exclusive rights to appoint
exclusive distributors for the Product in the Territory as defined herein and
that it has the right to supply Products for that purpose.

         2.8 If within [ * ] Distributor has not established a reasonable level
of prescriptions from the dental market, the Parties shall meet and discuss in
good faith the matter but, if they are not able to agree on a mutually
acceptable resolution of the problems within [ * ] of such meeting, Company
shall be entitled [ * ] to distribute the Products to the dental market in the
Territory independently of the Distributor using trademarks which are not
confusingly similar to any trademarks used on Products which are sold to
Distributor hereunder.

ARTICLE 3. PURCHASE AND SUPPLY OF PRODUCTS

         3.1 Within 90 days of the receiving from Distributor all necessary
camera ready art work and product insert, Company shall provide Distributor
[ * ] of the Present Product in accordance with the Specifications and within a
further [ * ] shall provide Distributor [ * ] of the Present Product in
accordance with the specifications.

         3.2 By October 31, 2002, Distributor shall place an order for the
Present Product of at least $2,000,000 at the price set forth in Section 5.1
below, which order shall be delivered by Company to Distributor on or before
December 31, 2002. If Distributor fails to place the order referred to in this
Section 3.2, Distributor shall be obliged to pay to Company the amount of
$2,000,000 by December 31, 2002 in any event.

         3.3 Upon the Effective Date, Distributor shall submit to Company a
non-binding good faith estimate of its requirements of Product for the current
Year broken down by quarters. Within and not later than September 30th of each
Year of this Agreement, Distributor shall submit to Company a non-binding good
faith estimate of its requirements of Product for the subsequent two Years
broken down by quarters. The first Year of each two-Year estimate shall serve to
amend the second Year of the previous two-Year estimate. The total amount and
the quarterly breakdown estimated by Distributor for any Year, as amended by
each annual estimate or as further amended in timely fashion, shall be known as
the Forecast for such Year.

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         3.4 Within and not later than ninety (90) days before the beginning of
each calendar quarter during the term of this Agreement, Distributor shall place
with Company a Firm Order for Product for that calendar quarter. Each Firm Order
shall specify the quantity of Product ordered and the delivery date, provided
that the terms and conditions of this Agreement shall prevail over any terms and
conditions included in any purchase order used in ordering Product. Firm Orders
for purchases for Products shall be submitted in writing to the Company at
Company's address above or at such other address as Company may indicate in
writing. Those orders shall bind Company if within the Forecast Range, and shall
otherwise bind Company if accepted by it in writing if outside the Forecast
Range. Company shall use reasonable efforts to accommodate orders higher than
+50% of Forecast for any calendar quarter.

         3.5 Distributor shall place the following minimum annual orders for the
Products from Company at the prices referred to in Section 5.1 for the Present
Product and such prices as may have been agreed between the Parties for other
versions of the Products (if prices have not been agreed for other versions,
Distributor shall be obliged to order the Present Product):

         ----------------------------------------------------------------------
                           Minimum Annual Order
         ----------------------------------------------------------------------
         Year 1            $4,000,000, including $2,000,000 in respect of the
                           quantities referred to in Section 3.1 and $2,000,000
                           for the order referred to in Section 3.2
         ----------------------------------------------------------------------
         Year 2            $ 3,000,000
         ----------------------------------------------------------------------
         Year 3            $ 5,000,000
         ----------------------------------------------------------------------

Minimum annual orders for the fourth and subsequent Years of this Agreement
shall have been negotiated in good faith and agreed upon by the Parties for each
of those Years by each October 1st from October 1, 2004 onward (i.e., one Year
at a time on a rolling basis). If the Parties are unable to agree upon a minimum
annual order level for any Year after 2004 which is at least 80% of the minimum
annual order level for the previous Year, either Party shall have the right to
terminate this Agreement upon 90 days' notice in writing to the other Party.

If Distributor fails, by the 31st December of Year 1, Year 2, or Year 3, to
place orders for the Products from the Company exceeding the minimum annual
order set out in this Section 3.5 for those Years (and Distributor has not
rectified the situation by ordering the shortfall within 90 days of being given
notice by the Company of such shortfall), Company may terminate this Agreement
upon 90 days notice in writing to Distributor.

         3.6 All Products shipped by or on behalf of Company to Distributor will
comply with the Specifications and shall have at least 30 months until the date
of product expiry from the date of delivery. The title to any consignment of the
Products shall not pass to Distributor until Company has received payment in
full for the price of the Products. Risk of loss or damage to any consignment of
the Products shall pass to Distributor from the time Company notifies
Distributor that the consignment is available for collection or from the time of
delivery to the carrier at Company's (or its supplier's) premises, whichever is
the earlier. The relevant batch release certificate and certificate of analysis
shall accompany each delivery.

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         3.6.1 Until such time as the title in the Products passes to the
Distributor, the Distributor shall be entitled to resell or use the Products in
the ordinary course of its business, but it shall be accountable to the Company
for the proceeds of sale or otherwise of the Products (such that Distributor
shall pay to Company such proportion of such proceeds owing to the Company),
whether tangible or intangible, including insurance proceeds, and it shall keep
all such proceeds (to the extent of the amounts owed to Company hereunder)
separate from any monies or property of the Distributor and third parties, and
in the case of tangible proceeds, properly stored, protected and insured;

         3.7 If within a reasonable time (not to exceed 30 days after receiving
any shipment at the Distributor's designated place of business in the United
States) Distributor demonstrates to the satisfaction of Company that any of the
Products shipped to it hereunder were defective at the time of delivery to
Distributor's designated place of business, Company will replace such defective
Products free of costs and delivery charges. As Company may direct, Distributor
will either return the defective Products to Company with the freight costs to
be at Company's expense or hold or otherwise dispose of such defective Products
in accordance with Company's instructions. Company shall replace all Product
which is defective hereunder within three (3) months from Company's receipt of
such notice from Distributor. Company shall pay the cost of customs, insurance,
and freight for any defective Product returned to it. In the event of any
unresolved dispute between the Parties concerning the rejection by Distributor
of all of or any part of the Product, the Product shall be submitted for testing
to a mutually agreed-upon qualified independent laboratory. If the Parties are
unable to agree upon such a laboratory, each will select a qualified independent
laboratory and the two laboratories will select a third qualified independent
laboratory which shall perform the testing. The parties agree to be bound by the
findings of the laboratory. All costs associated with the investigation shall be
paid by the unsuccessful party.

         3.8 Company will use all reasonable efforts to supply or have supplied
Distributor's requirements of Product and will keep Distributor closely informed
if there should be any anticipated problem of supply. Company shall be solely
responsible for providing all necessary equipment facilities and personnel to
manufacture the Product in compliance with GMP and government regulatory
requirements in the areas of the Territory where it is marketed, and Company
shall comply with all such regulatory and legal requirements in the manufacture
of Products both in such areas as well as in the country(s) of manufacture.

         3.9 Under a mutually acceptable escrow agreement, Company agrees to
deposit in escrow located in the United States copies of specifications and
other documents containing the Know How relating to the commercial manufacture
of Products, including formulation and packaging information, to enable
Distributor to make or have made Products. The escrow agreement shall provide
for Distributor's access to such escrowed materials in the event that Company or
its nominee is unable or unwilling to meet its obligations under this Agreement
to supply Distributor's requirements for Product for more than a 90-day period.

In the event that Company notifies Distributor that it is able to recommence
supply of the Present Product or Products to Distributor, Distributor shall
within a reasonable time cease to make or have made the Products and thereafter
shall purchase its entire requirements for the Products from Company.

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In respect of any Products which Distributor makes or has made in accordance
with this Section 3.9, Distributor shall pay a royalty to Company of [ * ] the
Net Sales II of all such Products sold or otherwise disposed of on a commercial
basis by Distributor. Distributor shall keep all such accounts and records as
may be necessary for the calculation of such royalty and shall supply copies of
such accounts and records to Company upon request. Distributor shall pay such
royalty to Company for each calendar quarter within [ * ] of the end of that
calendar quarter and at the same time shall supply to Company a detailed
calculation of the royalty concerned.

         3.10 Company shall provide batch release certificates and certificates
of analysis with each shipment of Product to Distributor (including Product
samples).

         3.11 Company warrants that all Product provided or sold by it to
Distributor under this Agreement shall:

         (a)      conform to the Specifications;

         (b)      be merchantable;

         (c)      be manufactured in accordance with ISO requirements and any
                  other applicable regulations and laws of the Territory and of
                  the jurisdiction of manufacture; and

         (d)      be fit for use by humans for the Approved Indication(s).

         3.12 Company warrants that it has the capacity to supply conforming
Product in accordance with the terms of the Agreement.

ARTICLE 4. REGULATORY MATTERS

         4.1 Company shall comply with all applicable laws and regulations in
relation to the manufacturing and handling of the Product in the Territory and
in any country outside the Territory where Company manufactures Product or has
Product manufactured on its behalf. Distributor shall comply with all applicable
regulations and laws in relation to the handling, storage, distribution and sale
of the Product in those areas of the Territory where the Product is distributed
and sold by Distributor.

         4.2 Each Party will report to the other all adverse events (hereinafter
called "AE"), customer complaints, technical or quality-related incidents and/or
issues, which come to its attention relating to the Product, including any that
come to a Party's attention through publications in journals or other media.
Each party shall report any serious adverse events relating to Product, within
48 hours of receipt, to the other.

         4.3 Distributor shall be responsible for preparing and submitting
medical device reports ("MDRs") to the FDA or other responsible national
governmental authorities in the Territory. Company shall review and evaluate all
Product complaints forwarded by Distributor. If Distributor believes that an MDR
report needs to be filed, Company shall fully investigate the complaint and
shall provide all information necessary to Distributor for Distributor to file
the MDR report. With respect to adverse events and the like occurring with the
Product outside the

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Territory, Company shall provide to Distributor all information relating to such
complaints that may be or are subject to the FDA's reporting MDR requirements.
Distributor shall evaluate this information and shall determine whether an MDR
should be submitted. Company shall evaluate such events in relation to the
standard operating procedures of Distributor's that will be adopted by
Distributor and agreed upon by the parties. Company shall designate Distributor
as agent to the FDA for these reporting purposes.

         4.4 Within 15 days of the Effective Date of this Agreement, Company
shall provide Distributor with copies of all documents relating to or
constituting Company's 510(k) filing with the FDA.

         4.5 Company agrees that it will not modify the Present Product or any
other Product whose specifications have been agreed upon by the Parties without
prior notification to and approval by Distributor (which approval shall not be
unreasonably withheld) so that Distributor can ascertain whether Distributor
will need to file any additional Rule 510(k) filings.

         4.6 Company will register as the Product manufacturer with the FDA.
Distributor will list Product with FDA as approved for marketing.

         4.7 Each Party will maintain such records and procedures to ensure that
any batch of Products can be effectively and completely recalled from the market
in the event that such action is required.

         4.8 If, for any reason, it shall become necessary to trace back or
recall any particular lot of the Product, or to identify the customer or
customers to whom units from such lot will have been delivered, each party shall
co-operate fully with the other in doing so. In the event that either Party has
reason to believe that one or more lots of the Product should be recalled or
withdrawn from distribution in the Territory, such Party shall immediately
notify the other Party in writing. To the extent permitted by the circumstances,
the Parties will confer before initiating any recall, but the decision as to
whether or not to initiate a recall of the Product and to notify regulatory
authorities in the Territory shall be Distributor's alone. If the recall is
required because of a modification or withdrawal of an approval from a competent
regulatory authority or a failure of the Product to conform to its
Specifications, Company shall promptly reimburse Distributor for the reasonable
costs and expenses of such recall, and, at Distributor's option, Company shall
replace the recalled Product free of additional charge, or credit or refund the
Purchase Price of the recalled Product. If the recall is required because of a
negligent act or omission of Distributor in handling, storage or distribution of
the Product, then such recall shall be conducted by Distributor at its sole cost
and expense and Distributor shall not be entitled to any such credits,
replacements or refunds from Company. If such recall is required because of a
joint act or omission of the Parties, Distributor shall conduct the recall, the
Parties shall divide the cost of such a recall, and any replacement Product
required by Distributor shall be provided by the Company to the Distributor at
cost.

         4.9 Each Party shall furthermore notify the other immediately of any
information that it receives regarding any threatened or pending action by any
Regulatory Authority which may affect the safety or efficacy claims of the
Product within the Territory or the continued marketing of same. Upon receipt of
any such information, the Parties shall consult with each other in an effort to
arrive at a mutually acceptable procedure for taking appropriate action;
provided, however, that nothing contained herein shall be construed as
restricting either Party's right to

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make a timely report of such matter to any Regulatory Authority in the Territory
or to take any further action that either Party deems appropriate or is required
by applicable law or regulation.

         4.10 Distributor will provide a medical information service concerning
the Products to the health professionals and patients in the Territory.

ARTICLE 5. PAYMENTS

         5.1 For quantities of Product beyond that set forth in Section 3.1,
Company shall initially sell Present Product to Distributor at the price of
[ * ] Ex Works Lecco, Italy. The price shall be revised [ * ] For the avoidance
of doubt, there shall be no downward revision of the price due to changes in the
above-mentioned index. If during any such two-Year period (or shorter initial
period), the documented actual Product manufacturing cost [ * ] (hereinafter
"extraordinary increase"), the then-current price will be adjusted accordingly,
provided Product is being manufactured in accordance with best manufacturing
practices (e.g., ISO standards). In the event of an extraordinary increase,
however, Company shall supply to Distributor (or its agents) details of the
manufacturing costs and methods to reasonably justify such an extraordinary
increase. Distributor shall be entitled to audit such details on reasonable
notice to Company. In the event of an extraordinary increase, the next increase
at the end of the two Year period referred to above (or shorter initial period)
shall be the percentage increase in the [ * ] from the date of the extraordinary
increase to the end of the two Year period concerned (or shorter initial
period). Further increases in price shall be made in the two Year period
concerned (or shorter initial period) if supported as described above as a
further extraordinary increase. If during any such two-Year period (or shorter
initial period), the documented actual Product manufacturing cost decreases by
more than [ * ](hereinafter "extraordinary decrease"), the Company will also
make an extraordinary decrease in the price of the Present Product due to
decreases in manufacturing costs but any such extraordinary decrease shall not
take the price of the Present Product to less than [ * ]

         5.2 Payment terms for conforming Product sold by Company under Section
5.1 are[ * ] from the date of the invoice (which date shall not be earlier than
the time of Product delivery under Section 3.6).

         5.3 The Distributor will pay Company $1,000,000 (one million dollars)
(U.S.) on the Effective Date of this Agreement, and a further $2,000,000 (two
million dollars) (U.S.) which latter payment will be credited against the amount
that would otherwise be due from Distributor to Company in respect of the
quantity of Product set forth in Section 3.1, based on the price set out in
Section 5.1.

         5.4. The Distributor will pay the Company $500,000 (five hundred
thousand U.S. dollars) upon issuance of a United States Patent in the name of
the Company or its Affiliates with claims covering the Products.

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         5.5. Upon Distributor achieving [ * ] cumulative Net Sales I of
Products, Distributor shall pay Company $1,000,000 (one million).

         5.6 Upon Distributor achieving [ * ] cumulative Net Sales I of
Products, Distributor shall pay Company $1,000,000 (one million).

         5.7 Upon the results of the first clinical trial concerning the
Products' efficacy appearing in a peer-reviewed journal, Distributor shall pay
Company $500,000 (five hundred thousand)

         5.8 All payments made by Distributor to Company shall be in U.S.
Dollars and shall be made by transfer to the following U.S. Dollar bank account
or such other bank account as Company may notify to Distributor from time to
time.

         [

                                        *

                                                                               ]

         5.9 The Products to be supplied by Company pursuant to this Agreement
shall be sold or otherwise supplied on an Ex Works basis (as defined in the
International Chamber of Commerce's Incoterms 2000 edition), and accordingly
Distributor shall, in addition to the price (where there is a price), be liable
for arranging and paying all costs of transport (including insurance for
transport). For the avoidance of doubt, the provisions of this Section 5.9 shall
apply to Products supplied in accordance with Sections 3.1, 6.5, 6.6 and 6.7 as
well as all other Products supplied under this Agreement.

         5.10 If Distributor fails to pay the price for any Products within
[ * ] of the date of the invoice therefor or fails to pay any other amount when
due under this Agreement, Company shall be entitled (without limiting any other
right or remedy it may have) to:

         (a)      cancel or suspend any further delivery to the Distributor
                  under any order until such time as the payment concerned is
                  made;

         (b)      sell or otherwise dispose of any Products which are the
                  subject of any orders by Distributor, whether or not
                  appropriated to the order;

         (c)      charge Distributor interest on the amount due, both before and
                  after any judgement, at the rate of 4 per cent per annum above
                  the Prime Rate prevailing in the United States from time to
                  time from the date the payment became due until actual payment
                  is made.

ARTICLE 6. PROMOTION/SALES OBLIGATIONS OF COMPANY

         6.1 The Company shall use its reasonable endeavors to cooperate with
and assist Distributor in its sales and marketing activities in the Territory.

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         6.2 The Company shall from time to time supply Distributor [ * ] with
specimens and artwork (including any electronic files of the same) of displays,
promotional and advertising material and literature previously published or
prepared by Company, provided that Company shall have no obligation to produce
such material for Distributor.

         6.3 The Company shall provide Distributor with technical assistance at
its request if required and against remuneration as agreed in each case.

         6.4 The Company shall assist Distributor if required in training
personnel concerned with the marketing of the Products, if Distributor requests
such assistance, subject to a maximum obligation on Company to provide the
assistance of one person for seven working days under this Agreement.

         6.5 The Company shall provide [ * ] reasonable quantities of Products
for the execution of formal clinical trials by or on behalf of Distributor,
protocols for which have been approved by Company which approval shall not
unreasonably be withheld.

         6.6 Company shall provide Product samples to Distributor [ * ] as
follows:

         (a)      [ * ] packets of Product delivered within 90 days of receiving
                  from Distributor all necessary camera ready art work and
                  product insert; and

         (b)      samples equal to [ * ] of all firm commercial Product orders
                  for the [ * ] of this Agreement;

         (c)      samples equal to [ * ] of firm commercial Product orders for
                  [ * ] of this Agreement;

         (d)      All samples under Sections 6.6(a) - (c) shall be made in
                  accordance with the Specifications and provided in boxes of
                  seven 15 ml packets of Product labeled as "sample use only."
                  [ * ].

         6.7 To the extent that Distributor desires additional samples beyond
the amounts set forth in the preceding Section, Company will provide them at
[ * ], provided that Distributor shall not be entitled to purchase as additional
samples more than [ * ] (determined on a per-packet basis) in any given Year.

         6.8 If Company or its licensed distributor intends to carry out a
controlled and randomized clinical trial of the Products, Company shall provide
Distributor a copy of the protocol at least 30 days prior to submission to any
institutional review board or regulatory authority (or initiation of the trial
if the protocol is not so submitted) to provide Distributor an opportunity to
comment on the same. Company shall have no obligation to accept such comments of
Distributor. Company shall provide to Distributor a copy of any data produced as
a result of such clinical trials, provided Company has the right to do so.

         6.9 Company agrees that it and its Affiliates and agents will not
conduct or actively permit other distributors outside the Territory to conduct
any clinical trial of the Product (or a Competing Product) in the Territory.

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         6.10 Company agrees that if Distributor's purchases of Product from
Company exceed [ * ] per year, Company shall as soon as practicable thereafter
begin manufacturing Distributor's requirements of Product within the Territory
at a location and facility that provides equal or better quality and equal or
lower cost to Distributor (including duties) than currently provided under this
Agreement.

ARTICLE 7. OBLIGATIONS OF DISTRIBUTOR

         7.1 Distributor shall use commercially reasonable efforts to launch the
Product in the United States within 90 days of receipt of at least 50% of the
quantity of conforming Product set forth in Section 3.1 above and 50% of the
conforming samples set forth in Section 6.6(a) above, in Distributor's
distribution center in the United States, provided that (1) Company has also
supplied to Distributor all regulatory materials specified under Article 4 of
Agreement; and (2) the U.S. government authorities have not otherwise precluded
Product from being marketed and/or sold in the United States. In the event of
any delay due to regulatory authorities or due to Force Majeure, Distributor
shall immediately notify Company and the above-mentioned period for launch of
the Products shall be extended for as long as any such delay continues. If
Distributor has still not launched the Products within 30 days of the end of the
90 day period as referred to above or, if there have been delays as referred to
in this Section 7.1, within 90 days of the end of the extended period as
referred to in the previous sentence, Company may forthwith terminate this
Agreement upon notice in writing to Distributor.

         7.2 Distributor shall use all reasonable efforts to sell and distribute
the Products in the Territory. With respect to countries in the Territory
outside the United States (hereinafter "the non-U.S. Territory"), Distributor
shall use all reasonable efforts to maximise its sales of the Products in such
countries unless to do so would not be materially profitable to Distributor. In
the event that Distributor decides to sell or distribute in the non-U.S.
Territory (or any portion thereof), Company shall make all necessary regulatory
filings required for Product approval at Company's expense in the part of the
non-U.S. Territory concerned.

         7.3 During the term of this Agreement, Distributor will spend at least
U.S. $1,300,000 (one million three hundred thousand) annually on direct sales
force expenses relating to Product. Distributor shall also spend at least the
following amounts annually on marketing the
Product:

         Year 1 - Year  5: US $750,000

         Year 6 - Year  7: US $500,000

         Year 8 - Year 10: US $250,000

With the sales force efforts outlined in this Section 7.3, Distributor shall be
permitted to sell, promote, market and distribute other products in addition to
Product with the same sales force efforts.

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     7.4  Distributor furthermore agrees:

     (a)  that as compliance with Section 7.3 above, to ensure that the
          Territory is covered by adequate and reasonable sales activities
          including sampling, promotion, distribution of technical and sales
          matter, demonstrations and other measures for promoting the sale of
          Products and to use commercially reasonable endeavors to achieve
          Forecast sales and to bear all expenses above arising in connection
          with its activities hereunder.

     (b)  to ensure that the Products are sold with the name of the
          manufacturer, Sinclair Pharmaceuticals Limited, on the Product's label
          and literature.

     (c)  not to disclose either during the term of this Agreement or thereafter
          to any third party any prices or technical or other information of a
          confidential nature received or obtained from the Company except
          insofar as may be required for the purpose of selling the Products and
          complying with any legal or regulatory requirements, and on
          termination of this Agreement to return all price lists and documents
          containing such information.

     (d)  to procure at Distributor's own expense the execution of clinical
          trials to support marketing of Products if Distributor feels further
          trials are necessary for successful commercialization of the Products.
          For any such randomized and controlled clinical trials, Distributor
          shall provide Company a copy of the protocol at least 30 days prior to
          submission to any institutional review board or regulatory authority
          (or initiation of the trial if the protocol is not so submitted) to
          provide Company an opportunity to comment on the same. Distributor
          shall have no obligation to accept such comments of Company.
          Distributor shall provide to Company a copy of any data produced as a
          result of such clinical trials.

     7.5  All scientific and clinical data related to Products generated by
Distributor or its agents shall be disclosed to the Company. Distributor shall
promptly deliver to the Company copies of any new scientific or clinical data
related to the Products, as soon as it comes into its possession. Company shall
be entitled (free of charge) to use such scientific and clinical data for any
purpose.

ARTICLE 8. PRODUCTS LIABILITY AND INSURANCE

     8.1  Each Party shall defend, indemnify and hold harmless the other Party
and the other's Affiliates, officers, directors, employees and agents, from and
against all claims, liabilities, demands, damages, expenses and losses
(including reasonable attorneys' fees and expenses) arising out of or connected
with:

     (a)  any breach by the Party of any of its representations, warranties or
          covenants under this Agreement; or

     (b)  any materially wrongful acts or wrongful omissions contrary to law on
          the part of the Party or its authorized agents or employees.

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     8.2  As to the Company's manufacture and Distributor's storage, handling,
promotion and sale of Products under this Agreement, each Party agrees to
maintain product liability insurance to cover its risks related to the Products
and, upon the other Party's request, to provide the other Party with
certificates of insurance attesting to the existence of such insurance. During
the Term of this agreement and for a period of five (5) years thereafter, to
satisfy the obligations in Sections 8.1 above, each Party shall obtain and
maintain insurance coverage from a reputable arm's length insurer in an amount
of not less than approximately $1.5 million per incident. Each Party shall add
the other Party as an additional insured under its respective insurance policy.
Each Party agrees, upon request, to advise the other of the status of the
required insurance and of any change in such status. It is understood and agreed
that furnishing of such insurance coverage will not relieve the Parties of their
respective obligations under this Agreement.

ARTICLE 9. TRADEMARKS

     9.1  Company grants Distributor the exclusive right and license to use the
trademarks GELCLAIR and SINCLAIR (hereinafter "Trademarks") in connection with
the marketing, sale, manufacture (if Distributor manufactures Product under the
provisions of Section 3.9 above) and distribution of the Products within the
Territory, subject to the terms of this Section 9.1. Company further authorizes
Distributor to grant sublicenses of the rights granted under this Section 9.1 to
Affiliates on identical terms to those set out in this Section 9.1 and
Distributor shall immediately inform Company of the identity of such Affiliates.
Distributor shall be entitled to use the Trademarks in ways which are consistent
with any regulatory approvals which Company may have for the Products in the
Territory. Distributor shall not use the Trademarks in any way which would
undermine or have a negative effect upon the reputation of the Company or the
strength or validity of Company's rights in the Trademarks. Distributor's
licence under this Section 9.1 is conditional on advertising using the
Trademarks complying with all applicable laws in the Territory. Distributor
shall discontinue all use of the Trademarks upon Company's request or upon
termination of this Agreement.

     9.2  Distributor shall use the Trademarks on or in connection only with
those Products that conform to the Specifications.

     9.3  To verify compliance with Article 9 hereof, Distributor will submit to
Company samples of promotional materials and any packaging therefor that
Distributor has prepared, and other items bearing the Trademarks that
Distributor may have prepared, and Company, or its delegate, will inspect such
material and inform Distributor of any objections thereto within 15 days. If
Company registers no objection after the 15 day period, Company is deemed to
have accepted such items as compliant. The Trademarks shall be the exclusive
property of the Company, and Distributor shall not seek to register or have
registered the Trademarks in the Territory.

     9.4  Company agrees that it will file applications for registration of the
marks GELCLAIR and SINCLAIR in all the countries in the Territory (if not
already filed). Company will:

     (a)  Provide Distributor with copies of all such filings and correspondence
          with the pertinent trademark registration authorities, and provide
          Distributor the opportunity to comment on the same prior to filing,
          provided that this obligation

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          will be satisfied by Company issuing a standing instruction to its
          trademark attorneys to copy all relevant correspondence to Distributor
          and if Distributor has not objected to any proposed action within 15
          days, Distributor will be taken to have accepted the proposed action;

     (b)  bear the expense and responsibility of such trademark registration
          filings, prosecution and maintenance, including filing any statements
          of use; and

     (c)  not allow such trademark registrations to become abandoned without
          Distributor's permission (which is not to be unreasonably withheld).

     Distributor shall reasonably cooperate with Company in supplying Company
with any appropriate information and specimens to support the trademark
registrations filed for or obtained in accordance with the terms of this
Agreement.

     9.5  Company agrees that if the "Gelclair" Trademark is unavailable for use
in the Territory or any portion thereof, the Parties shall agree upon an
alternative trademark to be used on the Products and such trademark shall be
owned by Company. The alternative trademark shall be deemed to fall within the
definition of `Trademarks' given in Section 9.1 and the provisions of Sections
9.1 to 9.8 shall apply to the alternative trademark.

     9.6  During the term of this Agreement, if either Party becomes aware of a
possible third party infringement of a Trademark in the Territory (or any
portion thereof) within the license grant in section 9.1, that Party shall
immediately notify the other of the possible infringement so that the other
Party can investigate the matter. Distributor shall, at its sole option, have
the right to enforce such trademark rights against such a third-party infringer
in such parts of the Territory as it sees fit using counsel of its own selection
and at its own expense. Distributor shall also have the option of joining
Company as a party to such an enforcement action, and Company will provide
reasonable cooperation in such joinder and in any such enforcement action. If
Company is made a party to such action, Distributor shall compensate Company for
any reasonable costs, expenses or fees which Company incurs as a result of such
action. In any such enforcement action initiated by Distributor, Distributor
shall have the option to settle such an action on such terms as it deems
reasonable. Any damages awarded as a result of any such infringement action, or
any monies recovered in such a settlement shall, in order, first be used to
compensate Distributor its costs of initiating and pursuing such an infringement
action and second to compensate Distributor and Company for their lost sales as
a result of such infringement in a proportion to reflect their respective loss
of sales recovered.

     9.7  Company warrants that it has no knowledge of any actual or potential
Trademark infringement claim by a third party in the Territory that would, if
successfully brought and prosecuted, impair the Company's ability to supply
Distributor Product consistent with the terms of this Agreement or impair the
Distributor's ability to distribute and sell Product in the Territory under the
licensed Trademarks. If, at any time during the term of this Agreement either
Party learns that any Product distributed or sold by Distributor under this
Agreement is subject to a possible third-party claim of trademark infringement
of any of the Trademarks, the Party learning of the claim shall promptly notify
the other Party in writing. Company shall indemnify and hold Distributor
harmless and accept all legal and financial responsibility for any liability,
damage, loss, cost or expense arising out of any such trademark infringement
claims in respect of the manufacture, use or sale of the Product bearing the
Trademark(s), provided that such

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liabilities are not related to any artwork or packaging that Distributor has
asked Company to produce. Distributor shall promptly notify Company of any
trademark infringement claims for Company to indemnify and at Company's cost,
permit attorneys mutually agreeable to the Parties to handle and control such
trademark infringement claims or suits. Distributor agrees to provide Company
with reasonable assistance in defending such infringement action or in
prosecuting any related action.

     9.8  The Distributor and its Affiliates shall at the request of the Company
execute such registered user or other agreements in respect of the use of the
Trademarks in the Territory as the Company may reasonably require. Each Party
will join with the other Party in registering the trademark licence granted
hereunder with the registrars of trademarks in the Territory as may be required
by the other Party. The Distributor and its Affiliates hereby agree that upon
any amendment or termination of this Agreement the Distributor and its
Affiliates will execute any documents that the Company may reasonably request
for the purpose of applying for variation or cancellation of the entries with
the registrars of the Distributor and its Affiliates as licensees of the
Trademarks.

     9.9  Distributor shall have the right to use the trademark "Cell Pathways"
on the Product, and Company shall cooperate with Distributor to ensure that that
mark (as well as any alternative mark under Section 9.5 above) appears on all
packaging of Product supplied by Company to Distributor under this Agreement.

ARTICLE 10. PATENTS

     10.1 Company grants Distributor an exclusive license to use and sell (and
to manufacture in the circumstances referred to in Section 3.9) Products under
any patents owned or licensed to the Company claiming Product or improvements or
modifications thereto, including such a license under any such patents that
claim priority from Italian Patent Application No. MI20000A001732 filed July 28,
2000 and/or PCT/EP/01/08303 filed July 18, 2001.

     10.2 Company agrees that as to any of its patent application filings in the
Territory within the scope of the preceding section:

     (a)  Company will file U.S, Canadian and Mexican patent applications
          claiming priority from Italian Patent Application No. MI20000A001732
          filed July 28, 2000 and/or PCT/EP/01/08303 filed July 18, 2001.

     (b)  Company will provide Distributor with copies of all such filings and
          correspondence to or from the pertinent patent granting authorities,
          and provide Distributor a reasonable opportunity to comment on
          correspondence to the patent authorities prior to filing, provided
          that this obligation will be satisfied by Company issuing a standing
          instruction to its patent attorneys to copy all relevant
          correspondence to Distributor and if Distributor has not objected to
          any proposed action within 15 days, Distributor will be taken to have
          accepted the proposed action;

     (c)  Company will employ counsel mutually agreed upon by the parties;

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     (d)  Such patent filings and prosecution will be at Company's expense;

     (e)  Company will pay all maintenance fees and taxes to maintain any issued
          patents in force in the Territory, and will not allow such issued
          patents to become abandoned without Distributor's permission (which is
          not to be unreasonably withheld).

     10.3 Company warrants that it or its Affiliates own and have title to
Italian Patent Application No. MI20000A001732 filed July 28, 2000 and
PCT/EP/01/08303 filed July 18, 2001, and have the right to file corresponding
applications in the Territory consistent with this Agreement. Company also
warrants that it or its Affiliates own and have title to Know-how regarding the
Product, including its formulation, manufacturing, Specifications and the like.

     10.4 During the term of this Agreement, if either Party becomes aware of a
possible third-party infringement of a patent right within the license grant in
section 10.1, that Party shall immediately notify the other of the possible
infringement so that the other Party can investigate the matter. Distributor
shall, at its sole option, have the right to enforce such patent rights against
such a third-party infringer in such parts of the Territory as it sees fit using
counsel of its own selection and at its own expense. Distributor shall also have
the option of joining Company as a party to such an enforcement action, and
Company will provide reasonable cooperation in such joinder and in any such
enforcement action. If Company is made a party to such action, Distributor shall
compensate Company for any reasonable costs, expenses or fees which Company
incurs as a result of such action. In any such enforcement action initiated by
Distributor, Distributor shall have the option to settle such an action on such
terms as it deems reasonable. Any damages awarded as a result of any such
infringement action, or any monies recovered in such a settlement shall, in
order, first be used to compensate Distributor its costs of initiating and
pursuing such an infringement action and second to compensate Distributor and
Company for their lost sales as a result of such infringement in a proportion to
reflect their respective loss of sales recovered.

     10.5. Company warrants that it has no knowledge of any actual or potential
patent infringement claim that would, if successfully brought and prosecuted,
impair the Company's ability to supply Distributor Product consistent with the
terms of this Agreement or impair the Distributor's ability to distribute and
sell Product in the Territory. If, at any time during the term of this Agreement
either Party learns that any Product manufactured by or on behalf of Company or
distributed or sold by Distributor under this Agreement is subject to a possible
third-party claim of patent infringement within the Territory, the Party
learning of the claim shall promptly notify the other Party in writing.

     Company shall indemnify and hold Distributor harmless and accept all legal
and financial responsibility for any liability, damage, loss, cost or expense
arising out of any such patent infringement claims as referred to in this
Section 10.5 in respect of the use or sale of the Product by Distributor
hereunder. Distributor shall promptly notify Company of any claims for Company
to indemnify and at Company's cost, permit attorneys mutually agreeable to the
parties to handle and control such patent infringement claims or suits.
Distributor agrees to provide Company with reasonable assistance in defending
such infringement action or in prosecuting any related action.

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ARTICLE 11. DURATION AND TERMINATION

     11.1 This Agreement shall become effective upon the receipt by Company of
the sum of $1,000,000 referred to in Section 5.3 and, subject to the provisions
of this Article 11, shall remain in effect for a period of ten (10) years and be
automatically renewed thereafter for successive one (1) year periods, unless
notice of the election not to renew shall have been given in writing by either
Party to the other not less than 180 days before the beginning of any such
renewal period, provided however that the Parties hereto also agree that during
the second 6 months of the eighth year of this Agreement they shall meet to
determine whether at the end of the ten (10) years term of this Agreement the
Agreement shall automatically be extended for a further five (5) year period
after the first 10 year term has expired.

     11.2 Without prejudice to any other rights or remedies it may have, Company
may terminate this Agreement at the time and in the circumstances described in
Section 7.1. In the event of such termination by the Company, Company may assign
the Territory to another distributor immediately and payments made by
Distributor under Section 5.3 above shall not be refundable to Distributor and
any amounts owing from Distributor to Company under Section 5.3 at the time that
Company notifies Distributor of termination shall forthwith be paid by
Distributor to Company.

     11.3 Without prejudice to any other rights or remedies it may have (but
subject to Section 12 hereof), either Party may terminate this Agreement by
prior notice in writing to the other Party ("the Other Party"):

     (a)  if the Other Party is in material breach of a material provision this
          Agreement (including, without limitation, any default by Distributor
          in the payment when due of any sum owed by Distributor to Company)
          and, in the case of a breach capable of a remedy, the breach is not
          remedied within 90 days of the Other Party receiving written notice
          specifying the breach and requiring its remedy; or

     (b)  in the event that the Other Party shall become bankrupt or insolvent,
          or if any reviewer or trustees shall be appointed for such Party or
          for all or substantially all of the property of such Other Party and
          such appointment shall not have been discharged within 30 days or such
          Other Party shall make an assignment for the benefit of its creditors,
          then the other Party may terminate this Agreement by tendering written
          notice to that effect;

     11.4 Without prejudice to any other rights or remedies it may have, Company
may terminate this Agreement in the circumstances described in Section 3.5.

     11.5 Distributor may terminate this Agreement upon one year's written
notice to the Company.

     11.6 Upon termination of the Agreement for any reason, Distributor shall,
at Company's written request which must be made within [ * ] sell to Company at
Distributor's cost [ * ] any or all Products then in Distributor's inventory
which are in saleable condition and shall return to Company all price lists,
catalogues and other advertising literature furnished by Company to Distributor.
Should Company not request to buy Distributor's inventory under this Section,
Distributor shall be

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permitted to sell such inventory, or otherwise dispose of it in the Territory in
accordance with all applicable laws.

     11.7 Distributor shall have no claim and compensation from Company in case
of termination of this Agreement by Company under Sections 3.5, 7.1 or 11.3
above. In the event of termination by Company, Distributor shall have no claim
against Company for loss of distribution rights, loss of goodwill or any similar
loss.

     11.8 Termination of this Agreement shall not affect rights which have
accrued as of the date of termination or obligations to maintain
confidentiality, which shall continue in force.

ARTICLE 12. FORCE MAJEURE

     Neither Distributor nor Company shall have any liability hereunder if
either is prevented from performing any of its obligations hereunder by reason
of Force Majeure. Such affected Party shall give to the other Party prompt
notice of any such event of Force Majeure, the date of commencement thereof and
its probable duration and shall give a further notice in like manner upon the
termination thereof. Each Party hereto shall endeavor with due diligence to
resume compliance with its obligations hereunder at the earliest date and shall
do all that it reasonably can to overcome or mitigate the effects of any such
Force Majeure upon both Party's obligations under this Agreement. Should the
Force Majeure continue for more than six (6) months, then the other Party shall
have the right to cancel this Agreement and the Parties shall seek an equitable
agreement on the Parties' reward of interests. To the extent that an event of
Force Majeure occurs that inhibits Company's ability to supply Product for more
than 90 days, there shall be no cancellation of this Agreement by Company and
the provisions of Section 3.9 shall control.

ARTICLE 13. MISCELLANEOUS PROVISIONS

     13.1 The relationship between Company and Distributor hereunder is solely
that of seller and purchaser. Distributor is not an agent of the Company for any
purpose hereof. Distributor shall have no power or authority to bind Company in
any manner and shall not hold itself out as the agent of the Company for any
purpose.

     13.2 To the extent that the Products are modified consistent with the terms
of this Agreement (i.e., by mutual agreement of the Parties) the term "Products"
as used herein shall be deemed to include the Products as so amended.

     13.3 In the event of a conflict between the terms of this Agreement and
Company's General Terms and Conditions of Sales, this Agreement shall govern.

     13.4 The headings of this Agreement have been provided for convenience only
and shall have no legal effect in connection with any interpretation of any of
the provisions of this Agreement. If one or more provisions of this Agreement
will be or should become invalid, this shall not affect the validity of the
remaining provisions and the Parties shall replace the invalid provision by a
valid and operable arrangement which achieves to the greatest extent possible
the economic results intended by the invalid provision.

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     13.5 Condition Precedent - This Agreement shall be of no force and effect
until Company has received the sum of $1,000,000 referred to in Section 5.3.

     13.6 In construing this Agreement:-

     --   words importing a person shall include a firm or corporation;

     --   words importing the singular shall include the plural and vice versa.

     13.7 Any notice required to be given by either Party in this Agreement
shall be duly given when mailed by registered mail, postage prepaid, or by
Federal Express to the other party at its address set forth above or at such
other address as shall have been designated by such other Party by written
notice.

     13.8 This Agreement cancels and supersedes all previous agreements relating
to any matter covered by this Agreement, except for the confidentiality
agreement between the Parties dated 18th October 2001.

     13.9 Any dispute in connection with this Agreement shall be finally settled
by arbitration in London by a single arbitrator in accordance with the rules of
arbitration of the International Chamber of Commerce.

ARTICLE 14. GOVERNING LAW

This Agreement shall in all aspects be construed and operated as an English
contract and in accordance with English law.

IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate.

SINCLAIR PHARMACEUTICALS LTD.             CELL PATHWAYS INCORPORATED
Signed by: Michael J. Flynn               Signed by:  Robert J. Towarnicki

Signature:                                Signature:
           ---------------------------               ---------------------------
Position: President & CEO                 Position: President & C.E.O.
Date: January ___, 2002                   Date: January ___, 2002

SINCLAIR PHARMA SRL
Signed by: Michael J. Flynn

Signature:
           ---------------------------
Position: President
Date: January ___, 2002

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                                   APPENDIX A

                                 SPECIFICATIONS

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Confidential                                                     [SINCLAIR LOGO]
PAGE 1 OF 4

                              PRODUCT SPECIFICATION

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

PRODUCT: GELCLAIR(R)

[

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PAGE 2 OF 4

[

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BIOKOSMES S.R.L.
============================
 MATERIAL SAFETY DATA SHEET
============================

--------------------------------------------------------------------------------
  1. IDENTIFICATION
--------------------------------------------------------------------------------
CHEMICAL NAME: NOT APPLICABLE

CHEMICAL FORMULA: AS PER INGREDIENT LIST MENTIONED ON THE PACKAGING

CAS NO.:
         --------------------------------
DOT LABEL(S)
             ----------------------------

--------------------------------------------------------------------------------
 2. PHYSICAL DATA
--------------------------------------------------------------------------------
APPEARANCE AND ODOR DESCRIPTION:  gelified, straw-coloured solution and
characteristic odour.

SPECIFIC GRAVITY @ 25/25 C: 1,040 +/- 0,05

VAPOR PRESSURE: not measurable

FLASH POINT: not measurable

SOLUBILITY IN WATER: good solubility

BOILING POINT: 99(degree)C

PH @25 C: 6,0 +/- 0,5

--------------------------------------------------------------------------------
 3. HAZARDOUS INGREDIENTS
--------------------------------------------------------------------------------
NO HAZARDOUS OR TOXIC INGREDIENTS.

--------------------------------------------------------------------------------
 4. PHYSICAL HAZARDOUS
--------------------------------------------------------------------------------
FIRE PROTECTION INFORMATION: not inflammable

REACTIVITY DATA:

STABILITY: stable from +5(degree)C to +40(degree)C

INCOMPATIBILITY:
                 --------------------------

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HAZARDOUS COMPOSITION OR DECOMPOSITION:
                                        -----------------
HAZARDOUS POLYMERIZATION: will not occur

PAGE 4 OF 4

BIOKOSMES S.R.L.
============================
 MATERIAL SAFETY DATA SHEET
============================

--------------------------------------------------------------------------------
 5. HEALTH HAZARDOUS
--------------------------------------------------------------------------------
THRESHOLD LIMIT VALUE: none known

OSHA PERMISSIBLE EXPOSURE LIMIT: none

PRIMARY ROUTES OF ENTRY: normally only a nuisance problem

EFFECT OF OVEREXPOSURE: none known

--------------------------------------------------------------------------------
 6. EMERGENCY & FIRST AID PROCEDURES
--------------------------------------------------------------------------------
EYES: wash with water

SKIN: wash with water

INGESTION: emetic normally not recommended, if problems consult physician

INHALATION: send away person from polluted zone, keeping in warm and well-aired
room. Consult physician

--------------------------------------------------------------------------------
 7. SAFE HANDLING
--------------------------------------------------------------------------------
SPILL OR LEAK PROCEDURES

Normally dry store. Away from high heat

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[

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