Document:

Converted by FileMerlin

EXECUTION COUNTERPART

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

dated as of June 30, 2004

among

DOLLAR GENERAL CORPORATION

as Borrower

THE LENDERS FROM TIME TO TIME PARTIES HERETO

KEYBANK NATIONAL ASSOCIATION

and BANK OF AMERICA, N.A.,

as Co-Syndication Agents,

U.S. BANK NATIONAL ASSOCIATION

and AMSOUTH BANK,

as Co-Documentation Agents,

and

SUNTRUST BANK 

as Administrative Agent

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

SUNTRUST ROBINSON HUMPHREY,

a division of SunTrust Capital Markets, Inc.,

as Sole Lead Arranger

#

[Amended and Restated

Revolving Credit Agreement]

TABLE OF CONTENTS

	ARTICLE I DEFINITIONS; CONSTRUCTION

	1

	 	 
	 	Section 1.1.

Definitions

	1

	 	Section 1.2.

Classifications of Loans and Borrowings

	21

	 	Section 1.3.

Accounting Terms and Determination

	21

	 	Section 1.4.

Terms Generally

	21

	 	 
	ARTICLE II AMOUNT AND TERMS OF THE COMMITMENTS

	22

	 	 
	 	Section 2.1.

General Description of Facilities

	22

	 	Section 2.2.

Revolving Loans

	22

	 	Section 2.3.

Procedure for Revolving Borrowings

	22

	 	Section 2.4.

Swingline Loans

	23

	 	Section 2.5.

Procedure for Swingline Borrowings

	23

	 	Section 2.6.

Funding of Revolving Borrowings

	25

	 	Section 2.7.

Interest Elections for Revolving Borrowings

	25

	 	Section 2.8.

Optional Reduction and Termination of Commitments

	26

	 	Section 2.9.

Repayment of Loans

	27

	 	Section 2.10.

Evidence of Indebtedness

	27

	 	Section 2.11.

Optional Prepayments

	27

	 	Section 2.12.

Mandatory Prepayments

	28

	 	Section 2.13.

Interest on Loans

	28

	 	Section 2.14.

Fees

	29

	 	Section 2.15.

Computation of Interest and Fees

	30

	 	Section 2.16.

Inability to Determine Interest Rates

	30

	 	Section 2.17.

Illegality

	30

	 	Section 2.18.

Increased Costs

	31

	 	Section 2.19.

Funding Indemnity

	32

	 	Section 2.20.

Taxes

	32

	 	Section 2.21.

Payments Generally; Pro Rata Treatment; Sharing of Set-offs

	34

	 	Section 2.22.

Mitigation of Obligations

	36

	 	Section 2.23.

Letters of Credit

	36

	 	Section 2.24.

Increase in Revolving Commitments

	41

	 	 
	ARTICLE III CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT

	42

	 	 
	 	Section 3.1.

Conditions To Effectiveness

	42

	 	Section 3.2.

Each Credit Event

	44

	 	Section 3.3.

Delivery of Documents

	45

	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES

	45

	 	 
	 	Section 4.1.

Existence; Power

	45

	 	Section 4.2.

Organizational Power; Authorization

	45

	 	Section 4.3.

Governmental Approvals; No Conflicts

	45

	 	Section 4.4.

Financial Statements

	46

	 	Section 4.5.

Litigation and Environmental Matters

	46

	 	Section 4.6.

Compliance with Laws

	47

	 	Section 4.7.

Investment Company Act, Etc. 

	47

	 	Section 4.8.

Taxes

	47

	 	Section 4.9.

Margin Regulations

	47

	 	Section 4.10.

ERISA

	47

	 	Section 4.11.

Ownership of Property

	48

	 	Section 4.12.

Insurance

	49

	 	Section 4.13.

Disclosure

	49

	 	Section 4.14.

Labor Relations

	50

	 	Section 4.15.

Status of Certain Agreements and Other Matters

	50

	 	Section 4.16.

Subsidiaries

	50

	 	 
	ARTICLE V AFFIRMATIVE COVENANTS

	51

	 	 
	 	Section 5.1.

Financial Statements and Other Information

	51

	 	Section 5.2.

Notices of Material Events.

	52

	 	Section 5.3.

Existence; Conduct of Business

	53

	 	Section 5.4.

Compliance with Laws, Etc. 

	53

	 	Section 5.5.

Payment of Taxes and Other Obligations

	53

	 	Section 5.6.

Books and Records

	54

	 	Section 5.7.

Visitation, Inspection, Etc. 

	54

	 	Section 5.8.

Maintenance of Properties; Insurance

	54

	 	Section 5.9.

Use of Proceeds and Letters of Credit

	54

	 	Section 5.10.

Additional Subsidiaries

	54

	 	 
	ARTICLE VI FINANCIAL COVENANTS

	55

	 	 
	 	Section 6.1.

Adjusted Funded Debt to EBITDAR Ratio

	55

	 	Section 6.2.

EBITR to Interest and Rents Ratio

	55

	 	Section 6.3.

Funded Debt to EBITDA Ratio

	56

	 	Section 6.4.

Consolidated Net Worth

	56

	 	 
	ARTICLE VII NEGATIVE COVENANTS

	56

	 	 
	 	Section 7.1.

Indebtedness

	56

	 	Section 7.2.

Liens

	57

	 	Section 7.3.

Fundamental Changes

	58

	 	Section 7.4.

Investments, Loans, Etc. 

	59

	 	Section 7.5.

Restricted Payments

	60

	 	Section 7.6.

Sale of Assets

	60

	 	Section 7.7.

Transactions with Affiliates

	61

	 	Section 7.8.

Restrictive Agreements

	61

	 	Section 7.9.

Sale and Leaseback Transactions

	61

	 	Section 7.11.

Hedging Transactions

	62

	 	Section 7.12.

Actions Relating to Indenture and Senior Notes

	62

	 	Section 7.13.

Accounting Changes

	62

	 	 
	ARTICLE VIII EVENTS OF DEFAULT

	62

	 	 
	 	Section 8.1.

Events of Default

	62

	 	 
	ARTICLE IX THE ADMINISTRATIVE AGENT

	65

	 	 
	 	Section 9.1.

Appointment of Administrative Agent; Status of Issuing Bank

	65

	 	Section 9.2.

Nature of Duties of Administrative Agent

	66

	 	Section 9.3.

Lack of Reliance on the Administrative Agent

	67

	 	Section 9.4.

Certain Rights of the Administrative Agent

	67

	 	Section 9.5.

Reliance by Administrative Agent

	67

	 	Section 9.6.

The Administrative Agent in its Individual Capacity

	67

	 	Section 9.7.

Successor Administrative Agent

	68

	 	 
	ARTICLE X MISCELLANEOUS

	68

	 	 
	 	Section 10.1.

Notices

	68

	 	Section 10.2.

Waiver; Amendments

	70

	 	Section 10.3.

Expenses; Indemnification

	70

	 	Section 10.4.

Successors and Assigns

	72

	 	Section 10.5.

Governing Law; Jurisdiction; Consent to Service of Process

	74

	 	Section 10.6.

WAIVER OF JURY TRIAL

	75

	 	Section 10.7.

Right of Setoff

	75

	 	Section 10.8.

Counterparts; Integration

	76

	 	Section 10.9.

Survival

	76

	 	Section 10.10.

Severability

	76

	 	Section 10.11.

Confidentiality

	76

	 	Section 10.12.

Interest Rate Limitation

	77

	 	Section 10.13.

Amendment and Restatement

	77

EXHIBITS

Exhibit A-1

Form of Revolving Credit Note

Exhibit A-2

Form of Swingline Note

Exhibit B

Form of Assignment and Acceptance

Exhibit C

Form of Amended and Restated Guaranty Agreement

Exhibit D

Form of Amended and Restated Contribution Agreement

Exhibit 2.3

Form of Notice of Revolving Borrowing

Exhibit 2.5

Form of Notice of Swingline Borrowing

Exhibit 2.9

Form of Continuation/Conversion

Exhibit 2.23

Form of LC Notice

	SCHEDULES:

Schedule 1.1-A

Applicable Margins and Applicable Percentages

Schedule 4.5 

Litigation and Environmental Matters

Schedule 4.10

ERISA Exceptions

Schedule 4.16         Subsidiaries

Schedule 7.1

Existing Indebtedness

Schedule 7.2 

Existing Liens

Schedule 7.4

Existing Investments

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this “Agreement”) is made and entered into as of June 30, 2004, by and among DOLLAR GENERAL CORPORATION, a Tennessee corporation (the “Borrower”), the several banks and other financial institutions from time to time party hereto (the “Lenders”), SUNTRUST BANK, in its capacities as Issuing Bank (the “Issuing Bank”) and as Administrative Agent (the “Administrative Agent”) for the Lenders, KEYBANK NATIONAL ASSOCIATION and BANK OF AMERICA, N.A., as Co-Syndication Agents for the Lenders (the “Syndication Agents”), and U.S. BANK NATIONAL ASSOCIATION and AMSOUTH BANK, as Co-Documentation Agents for the Lenders (the “Co-Documentation Agents”).

W I T N E S S E T H:

WHEREAS, the Borrower, the Lenders and certain other banks and financial institutions, and the Administrative Agent are parties to a certain Revolving Credit Agreement dated as of June 21, 2002, as amended by a certain First Amendment to 3-Year Revolving Credit Agreement dated as of December 12, 2003 (as so amended, the “Existing Credit Agreement”), pursuant to which a $300,000,000 revolving credit facility in favor of the Borrower was established;

WHEREAS, the Borrower has requested that the Aggregate Revolving Commitment Amount under the Existing Credit Agreement be reduced to $250,000,000 and that certain other amendments be made to the Existing Credit Agreement;

WHEREAS, the Lenders have agreed to amend and restate the Existing Credit Agreement in order to effect such reduction and other amendments to the Existing Credit Agreement, all subject to the terms, conditions, and requirements of this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Borrower, the Lenders and the Administrative Agent agree as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

Section 1.1.

Definitions.  In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined):

“Acquisition” shall mean the acquisition by any of the Borrower or its Subsidiaries of any of the following:  (i) the controlling interest in any Person, (ii) the capital stock or other equity securities or ownership interests in any Subsidiary not already owned by the Borrower or any of its Subsidiaries, and (iii) all or substantially all of the assets of any Person or a division, line of business, or business segment of any Person.

“Adjusted LIBO Rate” shall mean, with respect to each Interest Period for a Eurodollar Borrowing, the rate per annum obtained by dividing (i) LIBOR for such Interest Period by (ii) a percentage equal to 1.00 minus the Eurodollar Reserve Percentage. 

“Administrative Agent” shall have the meaning assigned to such term in the opening paragraph hereof.

“Administrative Questionnaire” shall mean, with respect to each Lender, an administrative questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative Agent duly completed by such Lender.

“Affiliate” shall mean, as to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person.  For purposes of this definition, “Control” shall mean the power, directly or indirectly, either to (i) vote 10% or more of securities having ordinary voting power for the election of directors (or persons performing similar functions) of a Person or (ii) direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  The terms “Controlling”, “Controlled by”, and “under common Control with” have meanings correlative thereto.

“Aggregate Revolving Commitment Amount” shall mean the amount of the Aggregate Revolving Commitments in effect from time to time.  Upon the effectiveness of this Agreement on the Restatement Date, the Aggregate Revolving Commitment Amount shall equal $250,000,000.

“Aggregate Revolving Commitments” shall mean at any time, collectively, all Revolving Commitments of all Lenders in effect at such time.  

“Agreement” shall mean this Amended and Restated Revolving Credit Agreement, as the same may be further amended, restated, and supplemented from time to time.

“Applicable Lending Office” shall mean, for each Lender and for each Type of Loan, the “Lending Office” of such Lender (or an Affiliate of such Lender) designated for such Type of Loan in the Administrative Questionnaire submitted by such Lender or such other office of such Lender (or an Affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office through which its Loans of such Type are to be made and maintained.

“Applicable Margin” shall mean, with respect to all Loans outstanding on any date, the percentage rate per annum determined by reference to the then applicable Ratio of Consolidated Funded Debt to Consolidated EBITDA as set forth on the Pricing Grid, with such percentage rate being subject to adjustment (upwards or downwards, as appropriate) quarterly based on the ratio of the Borrower’s Consolidated Funded Debt (as of the end of the most recent Fiscal Quarter) to the Borrower’s Consolidated EBITDA (calculated for the most recent Fiscal Quarter then ending and the immediately preceding three Fiscal Quarters).  Such ratio shall be determined from the then most recent annual or quarterly financial statements of the Borrower delivered by the Borrower pursuant to Section 5.1(a) or 5.1(b) and the compliance certificate delivered by the Borrower pursuant to Section 5.1(c).  The adjustment, if any, to the Applicable Margin shall be effective for all purposes under this Agreement on and after the second Business Day following the delivery to the Administrative Agent of such financial statements and compliance certificate (the “Adjustment Effective Date”).  If the Borrower shall at any time fail to furnish to the Administrative Agent such financial statements and compliance certificate within the applicable time limitations specified by Section 5.1, then the Applicable Margin shall be the respective percentage rates shown for Level I on the Pricing Grid and shall apply from the date of such failure until the second Business Day after such financial statements and compliance certificate are so delivered.  Notwithstanding anything to the contrary contained herein (i) at all such times as the Borrower maintains an Investment Grade Rating, the percentage rates shown on the Pricing Grid shall be reduced by an amount equal to the applicable Investment Grade Adjustment, and (ii) on and after the Restatement Date, the Applicable Margin shall be deemed to be 1.25% per annum until the Adjustment Effective Date immediately following the Borrower’s Fiscal Quarter ending July 30, 2004, and thereafter the Applicable Margin will be adjusted as provided herein.

“Applicable Percentage” shall mean, with respect to the Commitment Fee, as of any date, the percentage rate per annum determined by reference to the then applicable Ratio of Consolidated Funded Debt to Consolidated EBITDA as set forth on the Pricing Grid, with such percentage rate being subject to adjustment (upwards or downwards, as appropriate) quarterly based on the ratio of the Borrower’s Consolidated Funded Debt (as of the end of the most recent Fiscal Quarter) to the Borrower’s Consolidated EBITDA (calculated for the most recent Fiscal Quarter then ending and the immediately preceding three Fiscal Quarters).  Such ratio shall be determined from the then most recent annual or quarterly financial statements of the Borrower delivered by the Borrower pursuant to Section 5.1(a) or 5.1(b) and the compliance certificate delivered by the Borrower pursuant to Section 5.1(c).  The adjustment, if any, to the Applicable Percentage shall be effective for all purposes under this Agreement on and after each Adjustment Effective Date.  If the Borrower shall at any time fail to furnish to the Administrative Agent such financial statements and compliance certificate within the applicable time limitations specified by Section 5.1, then the Applicable Percentage shall be the percentage rate shown for Level I on the Pricing Grid and shall apply from the date of such failure until the second Business Day after such financial statements and compliance certificate are so delivered.  Notwithstanding anything to the contrary contained herein (i) at all such times as the Borrower maintains an Investment Grade Rating, the percentage rates shown on the Pricing Grid shall be reduced by an amount equal to the applicable Investment Grade Adjustment, and (ii) on and after the Restatement Date, the Applicable Percentage shall be deemed to be 0.20% per annum until the Adjustment Effective Date immediately following the Borrower’s Fiscal Quarter ending July 30, 2004, and thereafter the Applicable Percentage will be adjusted as provided herein.

“Approved Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business, that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender, and that in any case has been approved by the Administrative Agent and the Issuing Bank hereunder.

“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.4(b)) and accepted by the Administrative Agent, in the form of Exhibit B attached hereto or any other form approved by the Administrative Agent.

“Availability Period” shall mean the period from the Restatement Date to the Revolving Commitment Termination Date. 

“Base Rate” shall mean the higher of (i) the per annum rate which the Administrative Agent publicly announces from time to time to be its prime lending rate, as in effect from time to time, and (ii) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%) per annum. The Administrative Agent’s prime lending rate is a reference rate and does not necessarily represent the lowest or best rate charged to customers.  The Administrative Agent may make commercial loans or other loans at rates of inter­est at, above or below the Administrative Agent’s prime lending rate.  Each change in the Administrative Agent’s prime lending rate shall be effective from and including the date such change is publicly announced as being effective.

“Borrower” shall have the meaning assigned to such term in the introductory paragraph hereof. 

“Borrowing” shall mean a borrowing consisting of (i) Loans of the same Class and Type, made, converted or continued on the same date and, in case of Eurodollar Loans, as to which a single Interest Period is in effect or (ii) a Swingline Loan.

“Business Day” shall mean (i) any day other than a Saturday, Sunday or other day on which commercial banks in Atlanta, Georgia are authorized or required by law to close, and  (ii) if such day relates to a Borrowing of, a payment or prepayment of principal or interest on, a conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice with respect to any of the foregoing, any day on which dealings in Dollars are carried on in the London interbank market.

“Capital Lease Debt Obligations” shall mean, with respect to any Capital Lease Obligations of the Borrower or any Subsidiary, the debt obligations incurred by the lessor under any such capital lease to finance the property or properties subject to such capital lease and secured by an assignment of the lease or rental payments due from the Borrower or any Subsidiary under such capital lease.

“Capital Lease Obligations” of any Person shall mean all obligations of such Person to pay rent or other amounts under any lease (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Change in Control” shall mean the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in a single transaction or a series of related transactions) of all or substantially all of the assets of the Borrower to any Person or “group” (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder in effect on the date hereof), (ii) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or “group” (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) acting in concert acquiring beneficial ownership of 30% or more of the outstanding shares of the voting stock of the Borrower; (iii) during any period of 12 consecutive calendar months, Continuing Directors shall cease to constitute a majority of the board of directors of the Borrower, or (iv) any event or condition shall occur or exist which, pursuant to the terms of any change of control provision, requires or permits the holder(s) of Indebtedness of any Loan Party which individually or in the aggregate is equal to or exceeds $10,000,000 to require that such Indebtedness be redeemed, repurchased, defeased, prepaid or repaid, in whole or in part, or the maturity of such Indebtedness to be accelerated in any respect.

“Change in Law” shall mean (i) the adoption of any applicable law, rule or regulation after the date of this Agreement, (ii) any change in any applicable law, rule or regulation, or any change in the interpretation or application thereof, by any Governmental Authority after the date of this Agreement, or (iii) compliance by any Lender (or its Applicable Lending Office) or the Issuing Bank (or for purposes of Section 2.18(b), by such Lender’s or the Issuing Bank’s holding company, if applicable) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans, and when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment or a Swingline Commitment.

“Closing Date” shall mean June 21, 2002.

 “Code” shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time.

 “Commitment” shall mean a Revolving Commitment or a Swingline Commitment or any combination thereof (as the context shall permit or require).

“Commitment Fee” shall mean the commitment fee described in Section 2.14(b).

“Consolidated Adjusted Funded Debt” shall mean, as of any date of determination for the Borrower and its Subsidiaries on a consolidated basis, the sum of (i) Consolidated Funded Debt as of such date and, (ii) without duplication, the present value (determined based on a discount rate of ten percent (10%) in accordance with discounted present value analytical technology) as of such date, of all remaining payments due under leases and financing obligations (excluding capital leases and financing obligations already included in the calculation of Consolidated Funded Debt), whether for retail stores, distribution centers, administrative office space, furniture, fixtures, equipment, or other tangible assets, in each case determined on a consolidated basis in accordance with GAAP.

“Consolidated EBITDA” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of (i) Consolidated Net Income for such period, plus (ii) to the extent deducted in determining the Consolidated Net Income for such period, (x) Consolidated Interest Expense, (y) income tax expense, and (z) all depreciation and amortization for such period, in each case determined on a consolidated basis in accordance with GAAP.

“Consolidated EBITDAR” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of (i) Consolidated EBITDA for such period, and (ii) to the extent deducted in determining Consolidated Net Income for such period, Consolidated Rent Expense for such period, in each case determined on a consolidated basis in accordance with GAAP.

“Consolidated EBITR” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of (i) Consolidated Net Income for such period, plus (ii) to the extent deducted in determining the Consolidated Net Income for such period (x) Consolidated Interest Expense, (y) income tax expense, and (z) Consolidated Rent Expense, in each case determined on a consolidated basis in accordance with GAAP.

“Consolidated Funded Debt” shall mean, as of any date of determination, all outstanding Indebtedness of the Borrower and its Subsidiaries on a consolidated basis (other than in respect of commercial letters of credit and Indebtedness of the types described in clause (xi) of the definition of the term Indebtedness), including without limitation, all Obligations.

 “Consolidated Interest Expense” shall mean, for the Borrower and its Subsidiaries for any period, determined on a consolidated basis in accordance with GAAP, the sum of (i) total interest expense (net of interest income), including without limitation, the interest component of any payments in respect of capital leases capitalized or expensed during such period (whether or not actually paid during such period, and any program costs incurred in respect of any accounts receivable securitization or other financing arrangement), plus (ii) the net amount payable (or minus the net amount receivable) with respect to Hedging Obligations during such period (whether or not actually paid or received during such period).

“Consolidated Net Income” shall mean, for any period, the net income or loss of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (i) the income of any Person (other than the Borrower) in which any other Person (other than the Borrower or any Subsidiary) owns an equity interest in excess of 10%, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of the Subsidiaries during such period, (ii) any extraordinary items of gain or loss, and (iii) the income or loss of any Person or business accrued prior to the date such Person or business is included in the results of operations of the Borrower and its Subsidiaries, in each case as determined on a consolidated basis in accordance with GAAP.

“Consolidated Net Worth” shall mean, as of any date of determination, the shareholders’ equity of the Borrower, as set forth or reflected on the most recent consolidated balance sheet of the Borrower prepared in accordance with GAAP, but excluding any redeemable preferred stock.

“Consolidated Rent Expense” shall mean, for the Borrower and its Subsidiaries for any period, the aggregate amount of all rental payments (including both minimum and contingent rents) during such period in respect of all lease agreements and financing obligations (excluding any amounts in respect of capital leases or financing obligations included in the calculation of Consolidated Interest Expense for such period), whether for retail stores, distribution centers, administrative office space, furniture, fixtures, equipment, or other tangible assets.

“Contractual Obligation” of any Person shall mean any provision of any security issued by such Person or of any agreement, instrument or undertaking under which such Person is obligated or by which it or any of the property in which it has an interest is bound.

“Contribution Agreement” shall mean that certain Amended and Restated Contribution Agreement dated as of the date of this Agreement executed by the Borrower, the Guarantors, and the Administrative Agent substantially in the form of Exhibit D, as the same may be amended, restated or supplemented from time to time.

“Continuing Directors” shall mean, with respect to any period of twelve (12) consecutive calendar months, any member of the board of directors of the Borrower who (a) was a member of such board of directors on the first day of such period or (b) was nominated for election or elected to such board of directors with the approval of a majority of the Continuing Directors who were members of such board of directors at the time of such nomination or election.

“Debt Rating” shall mean the Moody’s Rating and the S&P’s Rating, as the case may be. 

“Default” shall mean any condition or event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

“Default Interest” shall have the meaning assigned to such term in Section 2.13(b).

“Dollar(s)” and the sign “$” shall mean lawful money of the United States of America.

“Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a Lender; (iii) an Approved Fund; and (iv) any other Person (other than a natural Person) approved by the Administrative Agent, the Issuing Bank, and unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed).  If the consent of the Borrower to an assignment to an Eligible Assignee is required hereunder, the Borrower shall be deemed to have given its consent five Business Days after the date notice thereof has actually been delivered by the assigning Lender (through the Administrative Agent) to the Borrower, unless such consent is expressly refused by the Borrower prior to such fifth Business Day.

“Environmental Indemnity Agreement” shall mean the Hazardous Materials Indemnity Agreement dated as of June 21, 2002 executed by the Borrower and certain of the Guarantors in favor of SunTrust Bank, as collateral agent, and the Lenders, as the same may be amended, restated and supplemented from time to time.

“Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material, or to health and safety matters.

“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental investigation and remediation, costs of administrative oversight, fines, natural resource damages, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (i) any actual or alleged violation of any Environmental Law, (ii) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (iii) any actual or alleged exposure to any Hazardous Materials, (iv) the Release or threatened Release of any Hazardous Materials or (v) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated), which, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for the purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” shall  mean (i) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (ii) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (iii) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (iv) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (v) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator appointed by the PBGC of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (vi) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (vii) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“Eurodollar” when used in reference to any Loan or Borrowing refers to whether such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference to the Adjusted LIBO Rate. 

“Eurodollar Reserve Percentage” shall mean the aggregate of the maximum reserve percentages (including, without limitation, any emergency, supplemental, special or other marginal reserves) expressed as a decimal (rounded upwards to the next 1/100th of 1%) in effect on any day to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate pursuant to regulations issued by the Board of Governors of the Federal Reserve System (or any Governmental Authority succeeding to any of its principal functions) with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities” under Regulation D).  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D.  The Eurodollar Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Event of Default” shall have the meaning assigned to such term in Article VIII.

“Excluded Taxes” shall mean with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (i) income or franchise taxes imposed on (or measured by) its net income by any United States local, state or federal governmental authority, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its Applicable Lending Office is located, or any nation within which such jurisdiction is located, or any political subdivision thereof, (ii) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction described in the preceding clause (i), and (iii) in the case of a Non-U.S. Lender, any withholding tax that (x) is imposed on amounts payable to such Non-U.S. Lender at the time such Non-U.S. Lender becomes a party to this Agreement, (y) is imposed on amounts payable to such Non-U.S. Lender at any time that such Non-U.S. Lender designates a new Applicable Lending Office, other than taxes that have accrued prior to the designation of such new Applicable Lending Office that are otherwise not Excluded Taxes, and (z) is attributable to such Non-U.S. Lender’s failure to comply with Section 2.20(e).

“Existing Credit Agreement” shall mean that certain 3-Year Revolving Credit Agreement dated as of June 21, 2002, by and among the Borrower, the lenders from time to time party thereto and SunTrust Bank, as amended and in effect as of the Restatement Date immediately prior to the effectiveness of this Agreement.

“Existing Letter of Credit” shall mean the irrevocable letter of credit issued by SunTrust Bank as Issuing Bank and outstanding as of the Restatement Date under the Existing Credit Agreement as described on Schedule 1.1-E, together with all extensions, renewals, modifications and replacements thereof.

“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal Reserve Bank of New York on the next succeeding Business Day or if such rate is not so published for any Business Day, the Federal Funds Rate for such day shall be the average rounded upwards, if necessary, to the next 1/100th of 1% of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent.

“Fee Letter” shall mean that certain fee letter, dated as of May 21, 2004, executed by SunTrust Capital Markets, Inc. and SunTrust Bank and accepted by the Borrower.

“Fiscal Quarter” shall mean a fiscal quarter of the Borrower.

“Fiscal Year” shall mean a fiscal year of the Borrower.

“Foreign Subsidiary” shall mean any Subsidiary that is not a U.S. Subsidiary.

“GAAP” shall mean generally accepted accounting principles in the United States applied on a consistent basis and subject to the terms of Section 1.3.

“GCIC” shall mean The Greater Cumberland Insurance Company, a Vermont corporation and wholly owned Subsidiary of the Borrower, or any other wholly owned Subsidiary of the Borrower succeeding GCIC after the Restatement Date as the so-called “captive” insurance company for the Borrower and its other Subsidiaries and performing the services described in Section 7.3(b).

“Governmental Authority” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly and including any obligation, direct or indirect, of the guarantor (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) as an account party in respect of any letter of credit or letter of guaranty issued in support of such Indebtedness or obligation; provided, that the term “Guarantee” shall not include endorsements for collection or deposits in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which Guarantee is made or, if not so stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. The term “Guarantee” used as a verb has a corresponding meaning.

“Guaranty Agreement” shall mean that certain Amended and Restated Guaranty Agreement dated as of the Restatement Date executed by the Guarantors in favor of the Administrative Agent for the benefit of the Lenders, substantially in the form of Exhibit C, as amended, restated, supplemented or otherwise modified from time to time.

“Guarantors” shall mean each U.S. Subsidiary (other than DGC Holdings, LLC so long as its sole purpose is to hold no more than 1% of the stock of Dollar General Global Sourcing, a company organized in Hong Kong) of the Borrower now existing or hereafter acquired, and each Foreign Subsidiary becoming a Guarantor as provided in the last sentence of Section 5.10(b).

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“Hedging Obligations” of any Person shall mean any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired under (i) any and all Hedging Transactions, (ii) any and all cancellations, unwinds, buy backs, reversals, terminations or assignments of any Hedging Transactions, and (iii) any and all renewals, extensions and modifications of any Hedging Transactions and any and all substitutions and replacements for any Hedging Transactions.

“Hedging Transaction” of any Person shall mean any transaction (including an agreement with respect thereto) now existing or hereafter entered into by such Person that is a rate swap, basis swap, forward rate transaction, commodity swap, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collateral transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

“Indebtedness” of any Person shall mean, without dupli­cation (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred purchase price of property or services (other than trade payables and other accrued expenses incurred in the ordinary course of business on terms customary in the trade); (iv) all obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (v) all Capital Lease Obligations of such Person, (vi) all obligations, contingent or otherwise, of such Person in respect of standby letters of credit, acceptances or similar extensions of credit, (vii) all Guarantees by such Person of any type of Indebtedness of others described in this definition, (viii) all Indebtedness of a third party secured by any Lien on property owned by such Person, whether or not such Indebtedness has been assumed by such Person; provided that the amount of any Indebtedness of others that constitutes Indebtedness of such Person solely by reason of this clause (viii) shall not for purposes of this Agreement exceed the greater of the book value or the fair market value of the properties or assets subject to such Lien, (ix) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock or partner, member or other ownership interests of such Person or any Subsidiary or other Affiliate of such Person, in each case where the holder of such capital stock or member or other ownership interests may require such purchase, redemption, retirement or other acquisition to be effected prior to the Revolving Commitment Termination Date, (x) all Off-Balance Sheet Liabilities of such Person, and (xi) all Hedging Obligations of such Person.  

“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

“Indenture” shall mean, collectively, that certain Indenture, dated as of June 21, 2000, by and among the Borrower, as issuer, the Guarantors, as Guarantors, and First Union National Bank, as trustee, either as originally executed or as the same may from time to time be supplemented, modified, amended, renewed or extended as permitted herein.

“Information Memorandum” shall mean the Confidential Executive Summary dated May 2004 relating to the Borrower and the transactions contemplated by this Agreement and the other Loan Documents.

“Interest Period” shall mean with respect to any Eurodollar Borrowing, a period of one, two, three or six months as the Borrower may elect; provided, that: 

(i)

the initial Interest Period for such Borrowing shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of another Type), and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires;

(ii)

if any Interest Period would otherwise end on a day other than a Business Day, such Interest Pe­riod shall be extended to the next succeeding Business Day, unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(iii)

any Interest Period which begins on the last Business Day of a calendar month or on a day for which there is no nu­merically corresponding day in the calendar month at the end of such Interest Period shall end on the last Business Day of such calendar month; and 

(iv)

no Interest Period may extend beyond the Revolving Commitment Termination Date.

“Investment Grade Adjustment”  shall mean (i) with respect to the Applicable Margin, a reduction in the applicable percentage by an amount equal to 0.125%, and (ii) with respect to the Applicable Percentage, a reduction in the applicable percentage by an amount equal to 0.025%.

“Investment Grade Rating” shall mean a Moody’s Rating of Baa3 or better, or an S&P Rating of BBB- or better, as either such rating be in effect from time to time.

“Issuing Bank” shall mean SunTrust Bank or any other Lender, each in its capacity as an issuer of Letters of Credit pursuant to Section 2.23.

“LC Commitment” shall mean that portion of the Aggregate Revolving Commitment Amount that may be used by the Borrower for the issuance of Letters of Credit in an aggregate face amount not to exceed $75,000,000.

“LC Disbursement” shall mean a payment made by the Issuing Bank pursuant to a Letter of Credit.

“LC Documents” shall mean the Letters of Credit and all applications, agreements and instruments relating to the Letters of Credit.

“LC Exposure” shall mean, at any time, the sum of (i) the aggregate undrawn amount of all outstanding Letters of Credit at such time, plus (ii) the aggregate amount of all LC Disbursements that have not been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender shall be its Pro Rata Share of the total LC Exposures for all Lenders at such time.

“LC Notice” shall have the meaning assigned to such term in Section 2.23(b).

“Lenders” shall have the meaning assigned to such term in the opening paragraph of this Agreement and, unless the context otherwise requires, shall include the Swingline Lender.

“Letter of Credit” shall mean any stand-by or trade letter of credit issued pursuant to Section 2.23 by the Issuing Bank for the account of the Borrower pursuant to the LC Commitment.

“Level” shall mean the respective category assigned to each applicable ratio of Consolidated Funded Debt to Consolidated EBITDA as set forth on the Pricing Grid, being Levels I through VI.

“LIBOR” shall mean, for any applicable Interest Period with respect to any Eurodollar Loan, the British Bankers’ Association Interest Settlement Rate per annum for deposits in Dollars for a period equal to such Interest Period appearing on the display designated as Page 3750 on the Dow Jones Market Services (or such other page on that service or such other service designated by the British Bankers’ Association for the display of such Association’s interest settlement rates for Dollar deposits) as of 11:00 a.m. (London, England time) on the day that is two Business Days prior to the first day of the Interest Period or, if such Page 3750 is un­available for any reason at such time, the rate which appears on the Reuters Screen ISDA Page as of such date and such time; provided, that if the Administrative Agent determines that the relevant foregoing sources are unavailable for the relevant Interest Period, LIBOR shall mean the rate of interest determined by the Administrative Agent to be the average (rounded upward, if necessary, to the nearest 1/100th of 1%) of the rates per annum at which deposits in Dollars are offered to the Administrative Agent two (2) Business Days preceding the first day of such Interest Period by leading banks in the London interbank market as of 10:00 a.m. for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Loan of the Administrative Agent.

“Lien” shall mean any mortgage, pledge, security inter­est, lien (statutory or otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement, or other arrangement having the practical effect of the foregoing or any preference, priority or other security agree­ment or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having the same economic effect as any of the foregoing).

“Loan Documents” shall mean, collectively, this Agree­ment, the Notes (if any), the LC Documents, the Environmental Indemnity Agreement, all Notices of Borrowing, all LC Notices, all Notices of Conversion/Continuation, and any and all other instruments, agreements, documents and writings executed in connection with any of the foregoing.

“Loan Parties” shall mean the Borrower and the Guarantors.

“Loans” shall mean all Revolving Loans and Swingline Loans in the aggregate or any of them, as the context shall require.

“Material Adverse Effect” shall mean, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, a material adverse change in, or a material adverse effect on, (i) the results of operations, finan­cial condition or assets of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Loan Parties to perform their respective obligations under the Loan Documents, (iii) the rights and remedies of the Administrative Agent, the Issuing Bank, the Swingline Lender, or the Lenders under any of the Loan Documents, or (iv) the legality, validity or enforceability of any of the Loan Documents.

“Material Indebtedness” shall mean Indebtedness (other than the Loans and Letters of Credit) of any one or more of the Borrower and the Subsidiaries in an aggregate principal amount exceeding $20,000,000.  For purposes of determining Material Indebtedness, the “principal amount” of any Hedging Obligation at any time shall be the Net Mark-to-Market Exposure of such Hedging Obligation at such time.

“Material Property” shall mean each of the corporate headquarters and executive office buildings and related real properties, and distribution center buildings and related real properties.

“Moody’s” shall mean Moody’s Investors Service, Inc and its successors.

“Moody’s Rating” shall mean, at any time, the rating assigned by Moody’s to the Borrower’s senior unsecured long-term, non-credit enhanced debt at such time or, if such rating is not then available, Moody’s long-term unsecured debt issuer rating of the Borrower then in effect.

“Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA.

“Net Mark-to-Market Exposure” of any Person shall mean, as of any date of determination with respect to any Hedging Obligation, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from such Hedging Obligation.   “Unrealized losses” shall mean the fair market value of the cost to such Person of replacing the Hedging Transaction giving rise to such Hedging Obligation as of the date of determination (assuming the Hedging Transaction was to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Hedging Transaction as of the date of determination (assuming such Hedging Transaction were to be terminated as of such date of determination).

“New Store Development Program” shall mean the Borrower’s program, commencing after the Restatement Date, for developing new retail store properties to be the subject of sale and leaseback transactions of the type described in Section 7.9.

“Non-U.S. Lender” shall mean any Lender that is not a United States person under Section 7701(a)(3) of the Code.

“Notes” shall mean, collectively, the Revolving Credit Notes and the Swingline Note.

“Notice of Conversion/Continuation” shall have the meaning assigned to such term in Section 2.7(b).

“Notice of Revolving Borrowing” shall have the meaning assigned to such term in Section 2.3.

“Notice of Swingline Borrowing” shall have the meaning as set forth in Section 2.5.

“Notices of Borrowing” shall mean, collectively, the Notices of Revolving Borrowing and the Notices of Swingline Borrowing.

“Obligations” shall mean all amounts owing by the Borrower to the Administrative Agent, the Issuing Bank and all Lenders pursuant to or in connection with this Agreement, the Notes or any other Loan Document, including without limitation, all principal, interest (including any interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), all reimbursement obligations, fees, expenses, indemnification and reimbursement payments, costs and expenses (including all fees and expenses of counsel to the Administrative Agent and any Lender incurred pursuant to this Agreement or any other Loan Document), whether direct or indirect, absolute or contingent, liquidated or unliquidated, now existing or hereafter arising hereunder or thereunder, and all Hedging Obligations owing to the Administrative Agent, any Lender or any of their Affiliates incurred in respect of any interest accruing on the Loans, and all obligations and liabilities incurred in connection with collecting and enforcing the foregoing, together with all renewals, extensions, modifications or refinancings thereof.

“Off-Balance Sheet Liabilities” of any Person shall mean (i) any obligations created through asset securitization financing programs arranged for such Person, (ii) any liabilities of such Person under any sale and leaseback transactions which do not create a liability on the balance sheet of such Person, (iii) any Synthetic Lease Obligations, and (iv) any obligations arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person, in each case in an amount that would result if such transaction had been treated as a borrowing, provided that any such obligation described in the preceding clause (ii) or this clause (iv) shall not include any liability pursuant to an obligation classified as an operating lease for purposes of GAAP.

“Operating Lease Obligations” of any Person shall mean all obligations of such Person to pay rent and other amounts under any lease (or other arrangements conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as operating leases on a balance sheet of such Person under GAAP.

“OSHA” shall mean the Occupational Safety and Health Act of 1970, as amended from time to time, and any successor statute.

“Other Taxes” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement, any Note, or any other Loan Document.

“Participant” shall have the meaning assigned to such term in Section 10.4(d).

“Payment Office” shall mean the office of the Administrative Agent located at 303 Peachtree Street, N.E., Atlanta, Georgia 30308, or such other location as to which the Administrative Agent shall have given written notice to the Borrower and the other Lenders. 

“PBGC” shall mean the Pension Benefit Guaranty Corpora­tion referred to and defined in ERISA, and any successor entity performing similar functions.

“Permitted Encumbrances” shall mean 

(i)

Liens imposed by law for taxes or special assessments not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP;

(ii)

statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; 

(iii)

pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations and deposits securing liabilities to insurance carriers under insurance or self-insurance arrangements; 

(iv)

deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obli­gations of a like nature, in each case in the ordinary course of business;

(v)

judgment and attachment Liens not giving rise to an Event of Default or Liens created by or existing from any litigation or legal proceeding that are currently being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; and

(vi)

easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Borrower and its Subsidiaries taken as a whole;

provided, that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

“Permitted Investments” shall mean:

(i)

direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States), in each case maturing within one year from the date of acquisition thereof;

(ii)

commercial paper having the highest rating, at the time of acquisition thereof, of S&P or Moody’s and in either case maturing within six months from the date of acquisition thereof;

(iii)

certificates of de­posit, bankers’ acceptances and time deposits maturing within 180 days of the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States or any state thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

(iv)

fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (i) above and entered into with a financial institution satisfying the criteria described in clause (iii) above; 

(v)

mutual funds investing solely in any one or more of the Permitted Investments described in clauses (i) through (iv) above;

(vi)

money market deposit accounts having the highest rating by either S&P or Moody’s; and 

(vii)

tax exempt bonds having the highest rating by either S&P or Moody’s and maturing or having a rate re-set date at or within thirty-five days of the acquisition thereof.

“Person” shall mean any individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or any Governmental Authority.

“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pricing Grid” shall mean the table of applicable ratios of Consolidated Funded Debt to Consolidated EBITDA and corresponding Applicable Margins and Applicable Percentages set forth as Schedule 1.1-A attached to this Agreement.

“Pro Rata Share” shall mean, with respect to any Commitment of any Lender at any time, a percentage, the numerator of which shall be such Lender’s Commitment (or if such Commitments have been terminated or expired or the Loans have been declared to be due and payable, such Lender’s Revolving Credit Exposure), and the denominator of which shall be the sum of such Commitments of all Lenders (or if such Commitments have been terminated or expired or the Loans have been declared to be due and payable, all Revolving Credit Exposure of all Lenders).

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

 “Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture.

“Required Lenders” shall mean, at any time, Lenders holding more than 50% of the aggregate outstanding Revolving Commitments at such time or, if no Revolving Commitments are then outstanding, then Lenders having more than 50% of the Revolving Credit Exposures of all Lenders.

“Requirement of Law” for any Person shall mean the articles or certificate of incorporation and bylaws, partnership agreement, certificate of limited partnership, articles of organization, limited liability company operating and/or management agreement, or other organizational or governing documents of such Person, and any law, treaty, rule or regulations, or determination of a Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer” shall mean any of the president, the chief executive officer, the chief operating officer, the chief financial officer, the treasurer or a vice president of the Borrower or such other representative of the Borrower as may be designated in writing by any one of the foregoing with the consent of the Administrative Agent; and, with respect to the financial covenants only, the chief financial officer or the treasurer of the Borrower.

“Restatement Date” shall mean the date on which the conditions precedent set forth in Section 3.1 and Section 3.2 have been satisfied or waived in accordance with Section 10.2.

“Restricted Payment” shall have the meaning assigned to such term in Section 7.5. 

“Revolving Commitment” shall mean, with respect to each Lender, the obligation of such Lender to make Revolving Loans to the Borrower and to participate in Letters of Credit and Swingline Loans in an aggregate principal amount not exceeding the amount set forth with respect to such Lender on the signature pages to this Agreement, or in the case of a Person becoming a Lender after the Restatement Date, the amount of the assigned “Revolving Commitment” as provided in the Assignment and Acceptance executed by such Person as an assignee, in each case as the same may be increased or decreased pursuant to the terms hereof.

“Revolving Commitment Termination Date” shall mean the earliest of (i) June 30, 2009, (ii) the date on which the Revolving Commitments are terminated pursuant to Section 2.8, and (iii) the date on which all amounts outstanding under this Agreement have been declared or have automatically become due and payable (whether by acceleration or otherwise).

“Revolving Credit Exposure” shall mean, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans, LC Exposure, and Swingline Exposure.

“Revolving Credit Note” shall mean a promissory note of the Borrower payable to the order of a requesting Lender in the principal amount of such Lender’s Revolving Commitment, in substantially the form of Exhibit A-1.

“Revolving Loan” shall mean a loan made by a Lender (other than the Swingline Lender) to the Borrower under its Revolving Commitment, which may either be a Base Rate Loan or a Eurodollar Loan. 

“S&P” shall mean Standard & Poor’s and its successors.

“S&P Rating” shall mean, at any time, the rating assigned by S&P to the Borrower’s senior unsecured long-term, non-credit enhanced debt at such time or, if such rating is not then available, S&P’s issuer credit rating of the Borrower then in effect.

“Senior Notes” shall mean, collectively, the Borrower’s 8 5/8% Notes due June 15, 2010, in the aggregate principal amount of $200,000,000, issued pursuant to the Indenture.  

 “Subsidiary” shall mean, with respect to any Person (the “parent”), any corporation, part­nership, joint venture, limited liability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, part­nership, joint venture, limited liability company, association or other entity (i) of which securities  or other ownership interests representing more than 50% of the equity  or more than 50% of  the ordinary voting power, or in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (ii) that is, as of such date, otherwise controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless otherwise indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of the Borrower.

“Swingline Commitment” shall mean the commitment of the Swingline Lender to make Swingline Loans in an aggregate principal amount at any time outstanding not to exceed $10,000,000.

“Swingline Commitment Termination Date” shall mean the date that is five (5) Business Days prior to the Revolving Commitment Termination Date.

“Swingline  Exposure” shall mean, with respect to each Lender, the aggregate principal amount of the Swingline Loans as to which such Lender is obligated either to make Base Rate Loans or to purchase participations therein in accordance with Section 2.5, which amount shall equal such Lender’s Pro Rata Share of all outstanding Swingline Loans.

“Swingline Lender” shall mean SunTrust Bank or any other Lender that may agree to make Swingline Loans hereunder.

“Swingline Loan” shall mean a loan made to the Borrower by the Swingline Lender under the Swingline Commitment.

“Swingline Loan Period” shall mean the period of time not more than 10 days, specified by the Borrower in respect of a Swingline Loan requested to be made bearing interest at a Swingline Quoted Rate.

“Swingline Note” shall mean the promissory note of the Borrower payable to the order of the Swingline Lender in the principal amount of the Swingline Commitment, substantially the form of Exhibit A-2.

“Swingline Quoted Rate” shall mean the rate of interest quoted by the Swingline Lender, and accepted by the Borrower, with respect to a requested Swingline Loan made pursuant to Section 2.5.

“Synthetic Lease” means a lease transaction under which (i) the lease will be treated as an “operating lease” by the lessee pursuant to Statement of Financial Accounting Standards No. 13, as amended and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.

“Synthetic Lease Obligations” shall mean, with respect to any Person, the sum of (i) all remaining rental obligations of such Person as lessee under Synthetic Leases that are attributable to principal and, without duplication, (ii) all rental and purchase price payment obligations of such Person under such Synthetic Leases assuming such Person exercises the option to purchase the lease property at the end of the lease term.

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

 “Type”, when used in reference to a Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Base Rate.

 “U.S. Subsidiary” shall mean a Subsidiary that is a United States person under Section 7701(a)(3) of the Code.

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.2.

Classifications of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan” or “Swingline Loan”) or by Type (e.g., a “Eurodollar Loan” or “Base Rate Loan”) or by Class and Type (e.g., “Revolving Eurodollar Loan”).  Borrowings also may be classified and referred to by Class (e.g., “Revolving Borrowing” or “Swingline Borrowing”) or by Type (e.g., “Eurodollar Borrowing”) or by Class and Type (e.g., “Revolving Eurodollar Borrowing”).

Section 1.3.

Accounting Terms and Determination.  Un­less otherwise defined or specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from time to time, applied on a basis consistent with the most recent audited consolidated financial statements of the Borrower delivered pursuant to Section 5.1(a); provided, that if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article VI to eliminate the effect of any change in GAAP on the operation of such covenant (or if the Administrative Agent notifies  the Borrower that the Required Lenders wish to amend Article VI for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders.

Section 1.4.

Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the word “to” means “to but excluding”. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as it was originally executed or as it may from time to time be amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (iii) the words “hereof”, “herein” and “hereunder” and words of similar import shall be construed to refer to this Agreement as a whole and not to any particular provision hereof, (iv) all references to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles, Sections, Exhibits and Schedules to this Agreement, and (v) all references to a specific time shall be construed to refer to the time in the city and state of the Administrative Agent’s principal office, unless otherwise indicated. 

ARTICLE II

AMOUNT AND TERMS OF THE COMMITMENTS

Section 2.1.

General Description of Facilities.  Subject to and upon the terms and conditions set forth herein, (i) the Lenders hereby establish in favor of the Borrower a revolving credit facility pursuant to which each Lender severally agrees (to the extent of such Lender’s Revolving Commitment) to make Revolving Loans to the Borrower in accordance with Section 2.2, (ii) the Issuing Bank agrees to issue Letters of Credit in accordance with Section 2.23, (iii) the Swingline Lender agrees to make Swingline Loans in accordance with Section 2.4, (iv) each Lender agrees to purchase a participation interest in the Swingline Loans as provided in Section 2.5; and (v) each Lender agrees to purchase a participation interest in the Letters of Credit as provided in Section 2.23; provided, that in no event shall the aggregate principal amount of all outstanding Revolving Loans, Swingline Loans and outstanding LC Exposure exceed at any time the Aggregate Revolving Commitment Amount from time to time in effect.

Section 2.2.

Revolving Loans.  Subject to the terms and conditions set forth herein, each Lender severally agrees to make Revolving Loans to the Borrower, from time to time during the Availability Period, in an aggregate principal amount outstanding at any time that will not result in (i) such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Commitment or (ii) the sum of the aggregate Revolving Credit Exposures of all Lenders exceeding the Aggregate Revolving Commitment Amount.  During the Availability Period, the Borrower shall be entitled to borrow, prepay and reborrow Revolving Loans in accordance with the terms and conditions of this Agreement; provided, that the Borrower may not borrow or reborrow any Loans should there exist a Default or Event of Default (other than a reborrowing (x) consisting solely of a continuation of an existing Eurodollar Borrowing for a new Interest Period of one (1) month at a time when there exists a Default (but not an Event of Default), or (y) consisting solely of a conversion of an existing Eurodollar Borrowing to a Base Rate Borrowing).

Section 2.3.

Procedure for Revolving Borrowings.  The Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of each Revolving Borrowing substantially in the form of Exhibit 2.3 attached hereto (a “Notice of Revolving Borrowing”) (x) prior to 12:00 noon (Atlanta, Georgia time) on the requested date of each Base Rate Borrowing and (y) prior to 12:00 noon (Atlanta, Georgia time) at least three (3) Business Days prior to the requested date of each Eurodollar Borrowing. Each Notice of Revolving Borrowing shall be irrevocable and shall specify: (i) the aggregate principal amount of such Borrowing, (ii) the date of such Borrowing (which shall be a Business Day), (iii) the Type of such Revolving Loan comprising such Borrowing and (iv) in the case of a Eurodollar Borrowing, the duration of the initial Interest Period applicable thereto (subject to the provisions of the definition of Interest Period). Each Revolving Borrowing shall consist entirely of Base Rate Loans or Eurodollar Loans, as the Borrower may request.  The aggregate principal amount of each such Eurodollar Borrowing shall be not less than $5,000,000 or a larger multiple of $1,000,000, and the aggregate principal amount of each such Base Rate Borrowing shall not be less than $1,000,000 or a larger multiple of $100,000; provided, that Base Rate Loans made pursuant to Section 2.5(b) and Section 2.23(d) may be made in lesser amounts as provided therein.  At no time shall the total number of Eurodollar Borrowings outstanding at any time exceed eight.  Promptly following the receipt of a Notice of Revolving Borrowing in accordance herewith, the Administrative Agent shall advise each Lender of the details thereof and the amount of such Lender’s Revolving Loan to be made as part of the requested Revolving Borrowing. 

Section 2.4.

Swingline Loans.  Subject to and upon the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower, from time to time from the Restatement Date to the Swingline Commitment Termination Date, in an aggregate principal amount outstanding at any time not to exceed the lesser of (i) the Swingline Commitment then in effect and (ii) the difference between the Aggregate Revolving Commitment Amount then in effect and the aggregate Revolving Credit Exposures of all Lenders then existing.  The Borrower shall be entitled to borrow, repay and reborrow Swingline Loans in accordance with the terms and conditions of this Agreement; provided, that the Borrower may not borrow or reborrow any Swingline Loans should there exist a Default or Event of Default. 

Section 2.5.

Procedure for Swingline Borrowings.

(a)

The Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of each Swingline Borrowing substantially in the form of Exhibit 2.5 attached hereto (“Notice of Swingline Borrowing”) prior to 12:00 noon (Atlanta, Georgia time) on the requested date of each Swingline Borrowing.  Each Notice of Swingline Borrowing shall be irrevocable and shall specify: (i) the principal amount of such Swingline Loan, (ii) the date of such Swingline Loan (which shall be a Business Day), (iii) the account of the Borrower to which the proceeds of such Swingline Loan should be credited, and (iv) if the Borrower is requesting that such Swingline Loan accrue interest based on a Swingline Quoted Rate, the requested Swingline Loan Period for such Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of each Notice of Swingline Borrowing, and the Swingline Lender and the Borrower shall establish by mutual agreement the Swingline Quoted Rate.  Each Swingline Loan shall accrue interest at the rate in effect for Base Rate Loans, or if applicable, the Swingline Quoted Rate.  The aggregate principal amount of each Swingline Loan shall be not less than $100,000 (or the remaining unused amount of the Swingline Commitment, if less) or a larger multiple of $50,000, or such other minimum amounts agreed to by the Swingline Lender and the Borrower.  The Swingline Lender will make the proceeds of each Swingline Loan available to the Borrower in Dollars in immediately available funds at the account specified by the Borrower in the applicable Notice of Swingline Borrowing not later than 3:00 p.m. on the requested date of such Swingline Loan.  At no time shall the total number of Swingline Loans outstanding that bear interest based on a Swingline Quoted Rate exceed three.

(b)

The Swingline Lender, at any time and from time to time in its sole discretion, may, on behalf of the Borrower (which hereby irrevocably authorizes and directs the Swingline Lender to act on its behalf), give a Notice of Revolving Borrowing to the Administrative Agent requesting the Lenders (including the Swingline Lender) to make Base Rate Loans in an amount equal to their respective Pro Rata Shares of the unpaid principal amounts of any Swingline Loans.  Each Lender will make the proceeds of its Base Rate Loan included in such Borrowing available to the Administrative Agent for the account of the Swingline Lender in accordance with Section 2.6, which will be used solely for the repayment of such Swingline Loans. 

(c)

If for any reason a Base Rate Borrowing may not be (as determined in the sole discretion of the Administrative Agent), or is not, made in accordance with the foregoing provisions of Section 2.5(b), then each Lender (other than the Swingline Lender) shall purchase an undivided participating interest in such Swingline Loans in an amount equal to its Pro Rata Share thereof on the date that such Base Rate Borrowing should have occurred. On the date of such required purchase, (i) each Lender shall promptly transfer, in immediately available funds, the amount of its participating interest to the Administrative Agent for the account of the Swingline Lender, and (ii) the Swingline Loan shall thereafter bear interest at the rate in effect for Base Rate Loans.

(d)

Each Lender’s obligation to make a Base Rate Loan pursuant to Section 2.5(b) or to purchase the participating interests pursuant to Section 2.5(c) shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation (i) any setoff, counterclaim, recoupment, defense or other right that such Lender or any other Person may have or claim against the Swingline Lender, the Borrower or any other Person for any reason whatsoever, (ii) the existence of a Default or an Event of Default or the termination of any Lender’s Revolving Commitment, (iii) the existence (or alleged existence) of any event or condition  which has had or could reasonably be expected to have a Material Adverse Effect, (iv) any breach of this Agreement or any other Loan Document by the Borrower, the Administrative Agent or any Lender or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If such amount is not in fact made available to the Swingline Lender by any Lender, the Swingline Lender shall be entitled to recover such amount on demand from such Lender, together with accrued interest thereon for each day from the date of demand thereof at the Federal Funds Rate. Until such time as such Lender makes its required payment, the Swingline Lender shall be deemed to continue to have outstanding Swingline Loans in the amount of the unpaid participation for all purposes of the Loan Documents.  In addition, such Lender shall be deemed to have assigned any and all payments made of principal and interest on its Loans and any other amounts due to it hereunder to the Swingline Lender to fund the amount of such Lender’s participation interest in such Swingline Loans that such Lender failed to fund pursuant to this Section 2.5, until such amount has been purchased in full.

Section 2.6.

Funding of Revolving Borrowings.

(a)

Each Lender will make available each Revolving Loan to be made by it hereunder on the proposed date thereof by wire transfer in immediately available funds by 1:00 p.m. (Atlanta, Georgia time) to the Administrative Agent at the Payment Office.  The Administrative Agent will make such Revolving Loans available to the Borrower by promptly crediting the amounts that it receives, in like funds by the close of business on such proposed date, to an account maintained by the Borrower with the Administrative Agent or at the Borrower’s option, by effecting a wire transfer of such amounts to an account designated in writing by the Borrower to the Administrative Agent.

(b)

Unless the Administrative Agent shall have been notified by any Lender prior to 5:00 p.m. one (1) Business Day prior to the date of a Revolving Borrowing in which such Lender is participating that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date, and the Administrative Agent, in reliance on such assumption, may make available to the Borrower on such date a corresponding amount.  If such corresponding amount is not in fact made available to the Administrative Agent by such Lender on the date of such Borrowing, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender to­gether with interest at the Federal Funds Rate for up to two (2) days and thereafter at the rate specified for such Borrowing.  If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent together with interest at the rate specified for such Borrowing.  Nothing in this subsection shall be deemed to relieve any Lender from its obligation to fund its Pro Rata Share of any Borrowing hereunder or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder.

(c)

All Revolving Borrowings shall be made by the Lenders on the basis of their respective Pro Rata Shares.  No Lender shall be responsible for any default by any other Lender in its obligations hereunder, and each Lender shall be obligated to make its Revolving Loans provided to be made by it hereunder, regardless of the failure of any other Lender to make its Revolving Loans hereunder.

Section 2.7.

Interest Elections for Revolving Borrowings.

(a)

Each Revolving Borrowing initially shall be of the Type specified in the applicable Notice of Revolving Borrowing, and in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Notice of Revolving Borrowing.  Thereafter, the Borrower may elect to convert such Borrowing into a different Type or to continue such Borrowing, and in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding Revolving Loans comprising such Borrowing, and the Revolving Loans comprising each such portion shall be considered a separate Borrowing.

(b)

To make an election pursuant to this Section, the Borrower shall give the Administrative Agent prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing (a “Notice of Conversion/Continuation”) that is to be converted or continued, as the case may be, (x) prior to 12:00 noon (Atlanta, Georgia time) on the requested date of a conversion into a Base Rate Borrowing, and (y) prior to 12:00 noon (Atlanta, Georgia time) three (3) Business Days prior to a continuation of or conversion into a Eurodollar Borrowing. Each such Notice of Conversion/Continuation shall be irrevocable and shall specify (i) the Borrowing to which such Notice of Continuation/Conversion applies and if different options are being elected with respect to different portions thereof, the portions thereof that are to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) shall be specified for each resulting Borrowing), (ii) the effective date of the election made pursuant to such Notice of Continuation/Conversion, which shall be a Business Day, (iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a Eurodollar Borrowing, and (iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the Interest Period applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of “Interest Period.” If any such Notice of Continuation/Conversion requests a Eurodollar Borrowing but does not specify an Interest Period, the Borrower shall be deemed to have selected an Interest Period of one month.  The principal amount of any resulting Borrowing shall satisfy the minimum borrowing amount for Eurodollar Borrowings and Base Rate Borrowings set forth in Section 2.3.

(c)

If, on the expiration of any Interest Period in respect of any Eurodollar Borrowing, the Borrower shall have failed to deliver a Notice of Conversion/ Continuation, then, unless such Borrowing is repaid as provided herein, the Borrower shall be deemed to have elected to convert such Borrowing to a Base Rate Borrowing. No Borrowing may be converted into, or continued as, a Eurodollar Borrowing if an Event of Default exists, unless the Administrative Agent and each of the Lenders shall have otherwise consented in writing.  The Borrower will pay any amounts due under Section 2.19 if Eurodollar Loans are converted on a day that is not the last day of an Interest Period for such Loans.  

(d)

Upon receipt of any Notice of Conversion/Continuation, the Administrative Agent shall promptly notify each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

Section 2.8.

Optional Reduction and Termination of Commitments.

(a)

Unless previously terminated, all Revolving Commitments shall terminate on the Revolving Commitment Termination Date, and the Swingline Commitment shall terminate on the Swingline Commitment Termination Date.

(b)

Upon at least three (3) Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent (which notice shall be irrevocable), the Borrower may reduce the Aggregate Revolving Commitments in part or terminate the Aggregate Revolving Commitments in whole; provided, that (i) any partial reduction shall apply to reduce proportionately and permanently the Revolving Commitment of each Lender, (ii) any partial reduction pursuant to this Section 2.8 shall be in an amount of at least $10,000,000 and any larger multiple of $1,000,000, and (iii) no such reduction shall be permitted which would reduce the Aggregate Revolving Commitments to an amount less than the outstanding Revolving Credit Exposures of all Lenders. 

Section 2.9.

Repayment of Loans.  

(a)

The outstanding principal amount of all Revolving Loans shall be due and payable (together with accrued and unpaid interest thereon) on the Revolving Commitment Termination Date.

(b)

The outstanding principal amount of each Swingline Loan shall be due and payable (together with accrued interest thereon) on the earlier of (i) the last day of the Swingline Loan Period of such Swingline Loan, and (ii) the Swingline Commitment Termination Date. 

Section 2.10.

Evidence of Indebtedness.

(a)

Each Lender shall maintain in accordance with its usual practice appropriate records evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable thereon and paid to such Lender from time to time under this Agreement. The Administrative Agent shall maintain appropriate records in which shall be recorded (i) the Commitment of each Lender, (ii) the amount of each Loan made hereunder by each Lender, the Class and Type thereof and the Interest Period applicable thereto, (iii) the date of each continuation thereof pursuant to Section 2.7, (iv) the date of each conversion of all or a portion thereof to another Type pursuant to Section 2.7, (v) the date and amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder in respect of such Loans, and (vi) both the date and amount of any sum received by the Administrative Agent hereunder from the Borrower in respect of the Loans and each Lender’s share thereof. The entries made in such records shall be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded subject to manifest error; provided, that the failure or delay of any Lender or the Administrative Agent in maintaining or making entries into any such record or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans (both principal and unpaid accrued interest) of such Lender in accordance with the terms of this Agreement.

(b)

At the request of any Lender (including the Swingline Lender) at any time, the Borrower agrees that it will execute and deliver to such Lender a Revolving Credit Note and, in the case of the Swingline Lender only, the Swingline Note, payable to the order of such Lender evidencing such Lender’s Loans.

Section 2.11.

Optional Prepayments.

(a)

The Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, without premium or penalty, by giving irrevocable written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent no later than (i) in the case of prepayment of any Eurodollar Borrowing, 12:00 noon (Atlanta, Georgia time) not less than three (3) Business Days prior to any such prepayment, (ii) in the case of any prepayment of any Base Rate Borrowing or any Swingline Borrowing, 12:00 noon (Atlanta, Georgia time) on the date of such prepayment.  Each such notice shall be irrevocable and shall specify the proposed date of such prepayment and the principal amount of each Borrowing or portion thereof to be prepaid. Upon receipt of any such notice, the Administrative Agent shall promptly notify each affected Lender of the contents thereof and of such Lender’s share of any such prepayment.  If such notice is given, the aggregate amount specified in such notice shall be due and payable no later than one (1) Business Day after the date designated in such notice, together with accrued interest to such date on the amount so prepaid in accordance with Section 2.13(c); provided, that if a Eurodollar Borrowing or Swingline Borrowing is prepaid on a date other than the last day of an Interest Period or Swingline Loan Period applicable thereto, the Borrower shall also pay all amounts required pursuant to Section 2.19.  Each partial prepayment of any Loan shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type pursuant to Section 2.3 or in the case of a Swingline Loan pursuant to Section 2.5, as the case may be.  Each prepayment of a Borrowing shall be applied ratably to the Loans comprising such Borrowing. 

Section 2.12.

Mandatory Prepayments. 

(a)

If at any time the aggregate Revolving Credit Exposures of all Lenders exceed the Aggregate Revolving Commitment Amount at such time, the Borrower shall immediately prepay Loans (or, if no Loans are then outstanding, deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.23(g)) in an aggregate amount equal to such excess. 

(b)

The Borrower agrees to pay all accrued and unpaid interest on all amounts prepaid pursuant to the requirements of this Section 2.12, together with any amounts due in respect of such prepayment pursuant to Section 2.19.  Each prepayment to be applied under this Agreement shall be applied ratably first to the Base Rate Loans to the full extent thereof, and thereafter to Eurodollar Loans to the full extent thereof.  

Section 2.13.

Interest on Loans.

(a)

The Borrower shall pay interest (i) on each Base Rate Loan at the Base Rate in effect from time to time, and (ii) on each Eurodollar Loan at the Adjusted LIBO Rate for the applicable Interest Period in effect for such Loan, plus, in each case, the Applicable Margin in effect from time to time with respect to such Base Rate Loan or Eurodollar Loan, as the case may be.  The Borrower shall pay interest on each Swingline Loan, other than a Base Rate Loan, at the Swingline Quoted Rate applicable to such Swingline Loan as in effect from time to time.

(b)

While an Event of Default exists or after acceleration, unless otherwise agreed by the Required Lenders, the Borrower shall pay interest (“Default Interest”) with respect to all Eurodollar Loans at the rate otherwise applicable hereunder for such Eurodollar Loans for the then-current Interest Period, plus an additional 2% per annum until the last day of such Interest Period, and thereafter, and with respect to all Base Rate Loans and all other Obligations hereunder (other than Loans), at the rate otherwise applicable hereunder for Base Rate Loans, plus an additional 2% per annum.

(c)

Interest on the principal amount of all Loans shall accrue from and includ­ing the date such Loans are made to but excluding the date of any repay­ment thereof. Interest on all outstanding Base Rate Loans shall be payable quarterly in arrears on the last day of each March, June, September and December, on the Revolving Commitment Termination Date (in respect of Revolving Loans), and on the Swingline Commitment Termination Date (in respect of Swingline Loans).  Interest on all outstanding Eurodollar Loans shall be payable on the last day of each Interest Period applicable thereto, and, in the case of any Eurodollar Loans having an Interest Period in excess of three months, on each day which occurs every three months, after the initial date of such Interest Period, and on the Revolving Commitment Termination Date.  Interest on all outstanding Swingline Loans, other than Base Rate Loans, shall be payable on the last day of each Swingline Loan Period applicable thereto and on the Swingline Commitment Termination Date.  Interest on any Loan which is converted into a Loan of another Type or which is repaid or prepaid shall be payable on the date of such conversion or on the date of any such repayment or prepayment (on the amount repaid or prepaid) thereof.  All Default Interest shall be payable on demand.

(d)

The Administrative Agent shall determine each interest rate applicable to the Loans hereunder and shall promptly notify the Borrower and the Lenders of such rate in writing (or by telephone, promptly con­firmed in writing).  Any such determination shall be conclusive and binding for all purposes, absent manifest error.

Section 2.14.

Fees.

(a)

The Borrower shall pay to the Administrative Agent for its own account fees in the amounts and at the times previously agreed upon by the Borrower and the Administrative Agent. 

(b)

The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (the “Commitment Fee”) which shall accrue at the Applicable Percentage (determined daily in accordance with the Pricing Grid) on the daily unused amount of the total Revolving Commitment of such Lender during the Availability Period.  For purposes of the foregoing, outstanding LC Exposure at any time shall be deemed to be usage of the Revolving Commitments at such time, but outstanding Swing Line Loans shall not be deemed to constitute any such usage at such time.

(c)

The Borrower agrees to pay (i) to the Administrative Agent, for the account of each Lender, a letter of credit fee with respect to its participation in each Letter of Credit, which shall accrue at the Applicable Margin for Eurodollar Loans then in effect on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) attributable to such Letter of Credit during the period from and including the date of issuance of such Letter of Credit to but excluding the date on which such Letter of Credit expires or is drawn in full (including without limitation any LC Exposure that remains outstanding after the Revolving Commitment Termination Date) and (ii) to the Issuing Bank for its own account a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) in respect of each Letter of Credit issued and outstanding during the Availability Period (or until the date that such Letter of Credit is irrevocably cancelled, whichever is later), as well as the Issuing Bank’s standard fees with respect to  issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. 

(d)

Accrued fees shall be payable quarterly in arrears on the last day of each March, June, September and December, commencing on June 30, 2004 and on the Revolving Commitment Termination Date (and if later, the date the Loans and LC Exposure shall be repaid in their entirety); provided, that any Commitment Fees accruing after the Revolving Commitment Termination Date shall be payable on demand.

Section 2.15.

Computation of Interest and Fees.  All computations of interest and fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable (to the extent computed on the basis of days elapsed), except that, with respect to Base Rate Loans, interest based on the prime lending rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). Each determination by the Administrative Agent of an interest amount or fee hereunder shall be made in good faith and, except for manifest error, shall be final, con­clusive and binding for all purposes. 

Section 2.16.

Inability to Determine Interest Rates.  If prior to the commencement of any Interest Period for any Eurodollar Borrowing,

(a)

the Administrative Agent shall have determined (which determination shall be made in good faith and, absent manifest error, shall be final, conclusive and binding upon all parties) that, by reason of circumstances affecting the relevant interbank market, ad­equate means do not exist for ascertaining LIBOR for such Interest Period, or 

(b)

the Administrative Agent shall have received notice from the Required Lenders that the Adjusted LIBO Rate does not adequately and fairly reflect the cost to such Lenders (or Lender, as the case may be) of making, funding or maintaining their (or its, as the case may be) Eurodollar Loans for such Interest Period,

the Administrative Agent shall give written notice (or telephonic notice, promptly confirmed in writing) and a summary of the basis for such determination to the Borrower and to the Lenders as soon as practicable thereafter.  Until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) the obligations of the Lenders to make Eurodollar Loans or to continue or convert outstanding Loans as or into Eurodollar Loans shall be suspended, and  (ii) all such affected Eurodollar Loans shall be converted into Base Rate Loans on the last day of the then current Interest Period applicable thereto unless the Borrower prepays such Loans in accordance with this Agreement. Unless the Borrower notifies the Administrative Agent at least one Business Day before the date of any Eurodollar Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, then such Borrowing shall be made as a Base Rate Borrowing. 

Section 2.17.

Illegality.  If any Change in Law shall make it unlawful or impossible for any Lender to make, maintain or fund any Eurodollar Loan and such Lender shall so notify the Administrative Agent, the Administrative Agent shall promptly give notice thereof to the Borrower and the other Lenders, whereupon until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Eurodollar Loans, or to continue or convert outstanding Loans as or into Eurodollar Loans, shall be suspended.  In the case of the making of a Eurodollar Borrowing, such Lender’s Loan shall be made as a Base Rate Loan as part of the same Borrowing for the same Interest Period and if the affected Eurodollar Loan is then outstanding, such Loan shall be converted to a Base Rate Loan on the last day of the then current Interest Period applicable to such Eurodollar Loan if such Lender may lawfully continue to maintain such Loan to such date or within such earlier period as required by law.  Notwithstanding the foregoing, the affected Lender shall, prior to giving such notice to the Administrative Agent, designate a different Applicable Lending Office if such designation would avoid the need for giving such notice and if such designation would not otherwise be disadvantageous to such Lender in the good faith exercise of its discretion.

Section 2.18.

Increased Costs.

(a)

If any Change in Law shall:

(i)

impose, modify or deem applicable any reserve, special deposit or similar requirement that is not otherwise included in the determination of the Adjusted LIBO Rate hereunder against assets of, deposits with or for the account of, or credit extended by, any Lender or the Issuing Bank; or 

(ii)

impose on any Lender or on the Issuing Bank or the eurodollar interbank market any other condition affecting this Agreement or any Eurodollar Loans made by such Lender or any Letter of Credit or any participation therein;

and the result of the foregoing is to increase the cost to such Lender of making, converting into, continuing or maintaining a Eurodollar Loan or to increase the cost to such Lender or the Issuing Bank of participating in or issuing any Letter of Credit or to reduce the amount received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or any other amount), then the Borrower shall promptly pay, upon written notice from and demand by such Lender on the Borrower (with a copy of such notice and demand to the Administrative Agent), to the Administrative Agent for the account of such Lender or the Issuing Bank, within five Business Days after the date of such notice and demand, additional amount or amounts sufficient to compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered. 

(b)

If any Lender or the Issuing Bank shall have determined that on or after the date of this Agreement any Change in Law regarding capital requirements has or would have the ef­fect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital (or on the capital of such Lender’s or the Issuing Bank’s holding company) as a consequence of its obligations here­under or under or in respect of any Letter of Credit to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies or the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy) then, from time to time, within five (5) Business Days after receipt by the Borrower of written de­mand by such Lender (with a copy thereof to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.  

(c)

A certifi­cate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company, as the case may be, specified in paragraph (a) or (b) of this Section, prepared in good faith and accompanied by a statement describing in reasonable detail the basis for and calculation of such increased cost, shall be delivered to the Borrower (with a copy to the Administrative Agent) at the time of such Lender’s demand therefor and shall be conclusive, absent manifest error.  

(d)

Subject to Section 2.21(f), failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation.

Section 2.19.

Funding Indemnity.  In the event of (i) the payment of any principal of a Eurodollar Loan, or a Swingline Loan that is bearing interest at a Swingline Quoted Rate, other than on the last day of the Interest Period or Swingline Loan Period applicable thereto (including as a result of an Event of Default), (ii) the conversion or continuation of a Eurodollar Loan other than on the last day of the Interest Period applicable thereto, or (iii) the failure by the Borrower to borrow, prepay, convert or continue any Eurodollar Loan, or a Swingline Loan that is bearing interest at a Swingline Quoted Rate, on the date specified in any applicable notice (regardless of whether such notice is withdrawn or revoked) then, in any such event, the Borrower shall compensate each Lender, within five (5) Business Days after written demand from such Lender, for any loss, cost or expense attributable to such event.  Such compensation shall not include the Applicable Margin, but without limiting the foregoing, shall include an amount equal to the excess, if any, of (x) the amount of interest that would have otherwise accrued on the principal amount of such Eurodollar Loan or Swingline Loan if such event had not occurred at the Adjusted LIBO Rate applicable to such Eurodollar Loan, or at the Swingline Quoted Rate applicable to such Swingline Loan, as the case may be, for the period from the date of such event to the last day of the then current Interest Period or Swingline Loan Period therefor (or in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period or Swingline Loan Period for such Loan) (excluding any Applicable Margin) less (y) the amount of interest (as reasonably determined by such Lender) that would accrue on the principal amount of such Loan for the same period if the Adjusted LIBO Rate or Swingline Quoted Rate, as the case may be, were set on the date such Loan was prepaid or converted or the date on which the Borrower failed to borrow, convert or continue such Loan, provided that such Lender shall have delivered to the Borrower a certificate setting forth in reasonable detail its calculation as to any additional amount payable under this Section 2.19 submitted to the Borrower by any Lender (with a copy to the Administrative Agent) shall be conclusive, absent manifest error.

Section 2.20.

Taxes.

(a)

Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided, that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable or attributable to additional sums payable under this Section) the Administrative Agent, any Lender or the Issuing Bank (as the case may be) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b)

The Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)

The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within ten (10) Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes imposed or asserted by any Governmental Authority paid where due by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

(d)

As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment, or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)

Any Non-U.S. Lender that is entitled to an exemption from or reduction of withholding tax under the Code or any treaty to which the United States is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.  Without limiting the generality of the foregoing, each Non-U.S. Lender agrees that it will deliver to the Administrative Agent and the Borrower (or in the case of a Participant, to the Lender from which the related participation shall have been purchased), as appropriate, two (2) duly completed copies of (i) Internal Revenue Service Form W-8 ECI, or any successor form thereto, certifying that the payments received from the Borrower hereunder are effectively connected with such Non-U.S. Lender’s conduct of a trade or business in the United States, (ii) Internal Revenue Service Form W-8 BEN, or any successor form thereto, certifying that such Non-U.S. Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest, (iii) Internal Revenue Service Form W-8 BEN, or any successor form prescribed by the Internal Revenue Service, together with a certificate (A) establishing that the payment to the Non-U.S. Lender qualifies as “portfolio interest” exempt from U.S. withholding tax under Code section 871(h) or 881(c), and (B) stating that (1) the Non-U.S. Lender is not a bank for purposes of Code section 881(c)(3)(A), or the obligation of the Borrower hereunder is not, with respect to such Non-U.S. Lender, a loan agreement entered into in the ordinary course of its trade or business, within the meaning of that section, (2) the Non-U.S. Lender is not a 10% shareholder of the Borrower within the meaning of Code section 871(h)(3) or 881(c)(3)(B), and (3) the Non-U.S. Lender is not a controlled foreign corporation that is related to the Borrower within the meaning of Code section 881(c)(3)(C), or (iv) such other Internal Revenue Service forms as may be applicable to the Non-U.S. Lender, including Forms W-8 IMY or W-8 EXP.  Each such Non-U.S. Lender shall deliver to the Borrower and the Administrative Agent such forms on or before the date that it becomes a party to this Agreement (or in the case of a Participant, on or before the date such Participant purchases the related participation).  In addition, each such Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Each such Non-U.S. Lender shall promptly notify the Borrower and the Administrative Agent at any time that it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the Internal Revenue Service for such purpose). 

(f)

If the Administrative Agent, any Lender or the Issuing Bank receives a refund in respect of Taxes for which the Borrower has made additional payments pursuant to this Section 2.20, the Administrative Agent, Lender or the Issuing Bank, as the case may be, shall promptly pay such refund (together with any interest with respect thereto received from the relevant Governmental Authority) to the Borrower (but only to the extent of additional payments actually made by the Borrower pursuant to this Section 2.20 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, Issuing Bank or applicable Lender, as the case may be, with respect thereto, provided, that the Borrower agrees promptly to return such refund (together with any interest and penalties (other than penalties imposed on the Administrative Agent, Issuing Bank, or Applicable Lender, as the case may be, in respect of a filing determined by the relevant Governmental Authority to have been made by such Person in bad faith and without the consent or approval of the Borrower) with respect thereto due to the relevant Governmental Authority) (free of all Indemnified Taxes or Other Taxes) to the Administrative Agent, the applicable Lender or the Issuing Bank, as the case may be, upon receipt of a notice that such refund is required to be repaid to the relevant Governmental Authority.  Notwithstanding anything to the contrary contained in this Section 2.20(f), none of the Administrative Agent, Issuing Bank or the Lenders shall have any obligation to disclose to the Borrower any of such Person’s books, records, tax filings or any other information relating to its Taxes that it deems confidential.

Section 2.21.

Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a)

The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.18, 2.19 or 2.20, or otherwise) prior to 1:00 p.m. (Atlanta, Georgia time), on the date when due, in immediately available funds, free and clear of any defenses, rights of set-off, counterclaim, or withholding or deduction of taxes.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at the Payment Office, except (i) payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein, and (ii) that payments pursuant to Sections 2.18, 2.19 and 2.20 and 10.3 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be made payable for the period of such extension.  All payments hereunder shall be made in Dollars.

(b)

If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c)

If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans that would result in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements and Swingline Loans; provided, that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Revolving Loans or participations in LC Disbursements and Swingline Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(d)

Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount or amounts due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with then-current banking industry practices on interbank compensation.

(e)

If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.6(b), 2.21(d), 2.23, or 10.3(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

(f)

The Borrower shall not be required to compensate or indemnify a Lender pursuant to Sections 2.18, 2.19 or 2.20 for any increased costs loss, cost or any other expense incurred more than one year prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs loss, cost or any other expense and of such Lender’s intention to claim compensation therefore; provided further that, if a Change in Law giving rise to such increased costs loss, cost or any other expense is retroactive, then the one year period referred to above shall be extended to include the period of retroactive effect thereof.

Section 2.22.

Mitigation of Obligations.  If any Lender requests compensation under Section 2.18, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.20, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the good faith judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable under Section 2.18 or Section 2.20, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all costs and expenses incurred by any Lender in connection with such designation or assignment.

Section 2.23.

Letters of Credit.

(a)

During the Availability Period, the Issuing Bank, in reliance upon the agreements of the other Lenders pursuant to this Section 2.23, agrees to issue, at the request of the Borrower, Letters of Credit for the account of the Borrower on the terms and conditions hereinafter set forth; provided, that (i) each Letter of Credit shall expire not later than the earlier of (x) the date one year after the date of issuance of such Letter of Credit (or in the case of any renewal or extension thereof, one year after such renewal or extension), and (y) the date that is five (5) Business Days prior to the Revolving Commitment Termination Date, (ii) each Letter of Credit shall be in a stated amount of at least $1,000,000, and (iii) the Borrower may not request any Letter of Credit, if, after giving effect to such issuance (A) the aggregate LC Exposures of all Lenders would exceed the LC Commitment, or (B) the aggregate Revolving Credit Exposures of all Lenders would exceed the Aggregate Revolving Commitment Amount. Upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank without recourse a participation in such Letter of Credit equal to such Lender’s Pro Rata Share of the aggregate amount available to be drawn under such Letter of Credit.  Each issuance of a Letter of Credit shall be deemed to utilize the Revolving Commitment of each Lender by an amount equal to the amount of such participation. Any Letter of Credit may provide for automatic renewal for additional subsequent periods of 12-months (but in no event to a date which is later than five (5) Business Days prior to the Revolving  Commitment Termination Date).

(b)

To request the issuance of a Letter of Credit (or any amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall give the Issuing Bank and the Administrative Agent irrevocable written notice substantially in the form of Exhibit 2.23 attached hereto (an “LC Notice”) at least three (3) Business Days prior to the requested date of such issuance specifying the date (which shall be a Business Day) such Letter of Credit is to be issued (or amended, extended or renewed, as the case may be), the expiration date of such Letter of Credit, the amount of such Letter of Credit , the name and address of the beneficiary  thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. In addition to the satisfaction of the conditions in Article III, the issuance of such Letter of Credit (or any amendment which increases the amount of such Letter of Credit) will be subject to the further conditions that (i) such Letter of Credit shall be in such form and contain such terms as the Issuing Bank shall approve, and (ii) the Borrower shall have executed and delivered any additional applications, agreements and instruments relating to such Letter of Credit as the Issuing Bank shall reasonably require; provided, that in the event of any conflict between such applications, agreements or instruments and this Agreement, the terms of this Agreement shall control. 

(c)

At least two Business Days prior to the issuance of any Letter of Credit, the Issuing Bank will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received such notice and if not, the Issuing Bank will provide the Administrative Agent with a copy thereof.  Unless the Issuing Bank has received notice from the Administrative Agent on or before the Business Day immediately preceding the date the Issuing Bank is to issue the requested Letter of Credit directing the Issuing Bank not to issue the Letter of Credit because such issuance is not then permitted hereunder because of the limitations set forth in Section 2.23(a) or that one or more conditions specified in Article III are not then satisfied, then, subject to the terms and conditions hereof, the Issuing Bank shall, on the requested date, issue such Letter of Credit in accordance with the Issuing Bank’s usual and customary business practices.

(d)

The Issuing Bank shall examine all documents purporting to represent a demand for payment under a Letter of Credit promptly following its receipt thereof.  The Issuing Bank shall notify the Borrower and the Administrative Agent of such demand for payment and whether the Issuing Bank has made or will make a LC Disbursement thereunder; provided, that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to such LC Disbursement. The Borrower shall be irrevocably and unconditionally obligated to reimburse the Issuing Bank for any LC Disbursements paid by the Issuing Bank in respect of such drawing no later than one (1) Business Day after the date designated for payment of the LC Disbursement in the notice provided to the Borrower (together with interest thereon from the date of payment of such LC Disbursements at the rate then applicable to Base Rate Loans), without presentment, demand or other formalities of any kind.  Unless the Borrower shall have notified the Issuing Bank and the Administrative Agent prior to 12:00 noon on the Business Day immediately prior to the date on which such drawing is honored that the Borrower intends to reimburse the Issuing Bank for the amount of such drawing in funds other than from the proceeds of Revolving Loans, the Borrower shall be deemed to have timely given a Notice of Borrowing to the Administrative Agent requesting the Lenders to make a Base Rate Borrowing on the date on which such drawing is honored in an exact amount due to the Issuing Bank; provided, that for purposes solely of such Borrowing, the conditions precedent set forth in Section 3.2 hereof shall not be applicable. The Administrative Agent shall notify the Lenders of such Borrowing in accordance with Section 2.3, and each Lender shall make the proceeds of its Base Rate Loan included in such Borrowing available to the Administrative Agent for the account of the Issuing Bank in accordance with Section 2.6.  The proceeds of such Borrowing shall be applied directly by the Administrative Agent to reimburse the Issuing Bank for such LC Disbursement. 

(e)

If for any reason a Base Rate Borrowing may not be made in accordance with the foregoing provisions, then each Lender (other than the Issuing Bank) shall be obligated to fund the participation that such Lender purchased pursuant to subsection (a) in an amount equal to its Pro Rata Share of such LC Disbursement on and as of the date which such Base Rate Borrowing should have occurred. Each Lender’s obligation to fund its participation shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation (i) any setoff, counterclaim, recoupment, defense or other right that such Lender or any other Person may have against the Issuing Bank or any other Person for any reason whatsoever, (ii) the existence of a Default or an Event of Default or the termination of the Aggregate Revolving Commitments, (iii) any adverse change in the condition (financial or otherwise) of the Borrower or  any of its Subsidiaries, (iv) any breach of this Agreement by the Borrower or any other Lender, (v) any amendment, renewal or extension of any Letter of Credit, or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. On the date that such participation is required to be funded, each Lender shall promptly transfer, in immediately available funds, the amount of its participation to the Administrative Agent for the account of the Issuing Bank. Whenever, at any time after the Issuing Bank has received from any such Lender the funds for its participation in a LC Disbursement, the Issuing Bank (or the Administrative Agent on its behalf) receives any payment on account thereof, the Administrative Agent or the Issuing Bank, as the case may be, will distribute to such Lender its Pro Rata Share of such payment; provided, that if such payment is required to be returned for any reason to the Borrower or to a trustee, receiver, liquidator, custodian or similar official in any bankruptcy or other insolvency proceeding, such Lender will return to the Administrative Agent or the Issuing Bank any portion thereof previously distributed by the Administrative Agent or the Issuing Bank to it.

(f)

To the extent that any Lender shall fail to pay any amount required to be paid pursuant to paragraph (d) of this Section 2.23 on the due date therefor, such Lender shall pay interest to the Issuing Bank (through the Administrative Agent) on such amount from such due date to the date such payment is made at a rate per annum equal to the Federal Funds Rate; provided, that if such Lender shall fail to make such payment to the Issuing Bank within three (3) Business Days of such due date, then, retroactively to the due date, such Lender shall be obligated to pay interest on such amount at the interest rate set forth in Section 2.13(b).

(g)

If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, or as otherwise required pursuant to Section 2.12, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Issuing Bank and the Lenders, an amount in cash equal to the aggregate LC Exposures of all Lenders as of such date plus any accrued and unpaid fees thereon; provided, that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in subsection (g) or (h) of Section 8.1.  Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Borrower agrees to execute any documents and/or certificates to effectuate the intent of this paragraph.  Other than any interest earned on the investment of such deposits, which investments shall be made at the reasonable discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest.  Interest and profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall applied by the Administrative Agent to reimburse the Issuing Bank and the Lenders, as the case may be, for LC Disbursements for which no reimbursement has been made and to the extent so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the aggregate LC Exposures of all Lenders at such time or, if the maturity of the Loans has been accelerated, with the consent of the Required Lenders, be applied to satisfy other obligations of the Borrower under this Agreement.  If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not so applied as aforesaid) shall be returned to the Borrower with three Business Days after all Events of Default have been cured or waived.

(h)

The Borrower’s obligation to reimburse LC Disbursements hereunder shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under all circumstances whatsoever and irrespective of any of the following circumstances:

(i)

Any lack of validity or enforceability of any Letter of Credit or this Agreement;

(ii)

The existence of any claim, set-off, defense or other right which the Borrower or any Subsidiary or Affiliate of the Borrower may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such beneficiary or transferee may be acting), any Lender (including the Issuing Bank) or any other Person, whether in connection with this Agreement or the Letter of Credit or any document related hereto or thereto or any unrelated transaction (it being understood that the foregoing shall not be deemed to preclude the initiation and prosecution to conclusion by the Borrower, in a separate legal proceeding, of any claim for damages against any Person in respect of liability arising from such Person’s gross negligence or willful misconduct); 

(iii)

Any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect;

(iv)

Payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document to the Issuing Bank that does not comply with the terms of such Letter of Credit;

(v)

Any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder; or

(vi)

The existence of a Default or an Event of Default.

Neither the Administrative Agent, the Issuing Bank, the Lenders nor any Related Party of any of the foregoing shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to above), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence  arising from causes beyond the control of the Issuing Bank; provided, that the foregoing provisions of this Section 2.23(h) shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent not prohibited by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts or other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree, that in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(i)

Each Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended from time to time,  and, to the extent not inconsistent therewith, the governing law of this Agreement set forth in Section 10.5.

(j)

The parties acknowledge and agree that the Existing Letter of Credit shall, for all purposes of this Agreement and the other Loan Documents, be deemed to be a Letter of Credit to the same extent and with the same effect as if such Existing Letter of Credit had been issued as a Letter of Credit pursuant to this Section 2.23 on the Restatement Date.

Section 2.24.

Increase in Revolving Commitments.

(a)

On not more than one occasion during any calendar year, the Borrower may submit to the Administrative Agent the Borrower’s written request that the Revolving Commitments be increased up to a total amount not to exceed $400,000,000 (such requested amount being the “Maximum Revolving Commitments”), and the Administrative Agent shall promptly give notice of such request to each Lender (the “Revolving Commitment Increase Notice”).  Within fifteen (15) Business Days after its receipt from the Administrative Agent of a Revolving Commitment Increase Notice, each Lender that desires to increase its Revolving Commitment in response to such request (each such Lender, a “Consenting Lender”) shall deliver written notice to the Administrative Agent of its election to increase its Revolving Commitment and the maximum amount of such increase (for each Consenting Lender, its “Additional Revolving Commitment”), which may not be larger than the excess of (a) the Maximum Revolving Commitments, over (b) the Revolving Commitments then in effect.  The failure of any Lender to so notify the Administrative Agent of its election and its Additional Revolving Commitment, if any, shall be deemed to be a refusal by such Lender to increase its Revolving Commitment.  If the sum of the Revolving Commitments then in effect plus the aggregate Additional Revolving Commitments does not exceed the Maximum Revolving Commitments, the Revolving Commitment of each Consenting Lender shall be increased by its Additional Revolving Commitment as hereinafter provided.  If the sum of the Revolving Commitments then in effect plus the aggregate Additional Revolving Commitments exceeds the Maximum Revolving Commitments, the Revolving Commitment of each Consenting Lender shall be increased by an amount equal to the product of (i) such Consenting Lender’s Additional Revolving Commitment multiplied by (ii) the quotient of (a) the excess of (A) the Maximum Revolving Commitments, over (B) the Revolving Commitments then in effect, divided by (b) the aggregate Additional Revolving Commitments of all Consenting Lenders.  Any increase in the Revolving Commitments shall be effective as of the date specified pursuant to Section 2.24(c); provided, that the Revolving Commitments may not at any time exceed the Maximum Revolving Commitments.

(b)

If the sum of the Revolving Commitments then in effect plus the aggregate Additional Revolving Commitments pursuant to Section 2.24(a) is less than the Maximum Revolving Commitments, then the Borrower may obtain the remainder of the Maximum Revolving Commitments from one or more new banks or other financial institutions acceptable to the Borrower and the Administrative Agent (each a “New Lender”).  Upon (i) the execution of a joinder agreement with respect to this Agreement by such New Lender and acceptance thereof by the Administrative Agent, (ii) the execution and delivery by the Borrower of any Notes requested by the New Lender evidencing its Loans, and (iii) delivery of notice to the Lenders by the Administrative Agent setting forth the effective date of the addition of the New Lender(s) hereunder and the amount of such New Lender(s)’ Revolving Commitment(s), such New Lender(s) shall be for all purposes Lender(s) party to this Agreement to the same extent as if original parties hereto with Revolving Commitment(s) as set forth on the joinder agreement executed by the New Lender(s); provided, however, (i) the total Revolving Commitments of all Lenders (including any New Lenders) shall not exceed in the aggregate the Maximum Revolving Commitments, and (ii) the Revolving Commitments of all Lenders that are parties hereto prior to the addition of any New Lender shall not be affected by the addition of such New Lender.

(c)

Prior to any increase in the Revolving Commitments becoming effective pursuant to this Section 2.24, Borrower shall deliver evidence of appropriate corporate authorization on the part of the Borrower with respect to the increase in the Revolving Commitments and such opinions of counsel for the Borrower with respect thereto as the Administrative Agent may reasonably request. Effective on the date on which the increase in Revolving Commitments pursuant to this Section 2.24 takes effect, which date shall be mutually agreed upon by the Borrower, the Administrative Agent, and each Lender or New Lender increasing or providing, as the case may be, its Revolving Commitments, (i) all Loans outstanding hereunder shall be converted into, and shall be advanced as, Eurodollar Loans or ABR Loans (or both) as selected by the Borrower by notice to the Administrative Agent in accordance with the provisions of Section 2.3 or 2.7, as the case may be, such that all such Loans are held by the Lenders (including any New Lenders) in the proportion of their Revolving Percentages, as determined taking into account the increase in the Revolving Commitments, and (ii) each New Lender and each other Lender increasing its Revolving Commitment shall advance any additional amounts to be advanced by it hereunder, by making funds available to the Administrative Agent, in immediately available funds, not later than 1:00 p.m. Atlanta, Georgia time on such date.  After the Administrative Agent’s receipt of such funds, the Administrative Agent shall disburse to the non-Consenting Lenders any resulting repayments of such outstanding Loans.  If any conversion or payment of a Eurodollar Loan pursuant to the foregoing provisions occurs on a day that is not the last day of the applicable Interest Period, the provisions of Section 2.19 shall apply thereto.

ARTICLE III

CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT

Section 3.1.

Conditions To Effectiveness. The amendment and restatement of the Existing Credit Agreement as provided herein, and the obligations of the Lenders (including the Swingline Lender) to make Loans and the obligation of the Issuing Bank to issue any Letter of Credit hereunder, shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.2):

(a)

The Administrative Agent shall have received all fees and other amounts due and payable to the Administrative Agent and the Lenders on or prior to the Restatement Date, including reimbursement or payment of all out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder, under any other Loan Document and under any agreement with the Administrative Agent or SunTrust Robinson Humphrey Capital Markets, a division of SunTrust Capital Markets, Inc., as Sole Lead Arranger.

(b)

The Administrative Agent shall have received the following:

(i)

a counterpart of this Agreement signed by or on behalf of each party hereto or written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement;

(ii)

a duly executed Note payable to each Lender requesting such Note;

(iii)

the duly executed Guaranty Agreement and Contribution Agreement;

(iv)

payment in full of all Loans and all accrued interest, facility fees, letter of credit fees, and other fees, expenses and amounts owing under the Existing Credit Agreement through the Restatement Date;

(v)

evidence that satisfactory arrangements have been made for the cancellation, termination, and releases of the real estate collateral documents and related filings and registrations made pursuant to the conditions and requirements of the Existing Credit Agreement;

(vi)

certificates of insurance, all in form and detail acceptable to the Administrative Agent, describing the types and amounts of insurance (property and liability) covering the properties of the Borrower and its Subsidiaries;

(vii)

a certificate of the Secretary or Assistant Secre­tary of each Loan Party, attaching and certifying copies of its bylaws and of the resolutions of its board of directors, or other comparable governing documents and authorizations, authorizing the execution, delivery and performance of the Loan Documents to which it is a party and certifying the name, title and true signature of each officer of such Loan Party executing the Loan Documents to which it is a party; 

(viii)

certified copies of the articles of incorporation or other organizational documents of each Loan Party, together with certificates of good standing or existence, as may be avail­able from the Secretary of State of the jurisdiction of incorporation or formation of such Loan Party and each other jurisdiction where such Loan Party is required to be qualified to do business as a foreign corporation;

(ix)

the favorable written opinions of (i) Bass, Berry & Sims, PLC, (ii) Paul Frank & Collins and (iii) Frost Brown & Todd LLC, each as counsel to the Loan Parties, addressed to the Administrative Agent, the Issuing Bank, and each of the Lend­ers, and covering such matters relating to the Loan Parties, the Loan Documents and the transactions contemplated therein as the Administrative Agent or the Required Lenders shall reasonably request; 

(x)

a certificate, dated the Restatement Date and signed by a Responsible Officer, confirming compliance with the conditions set forth in paragraphs (a), (b) and (c) of Section 3.2;

(xi)

a certified copy of the Indenture and all modifications and amendments thereto; 

(xii)

a duly executed Notice or Notices of Borrowing and/or Notice or Notices of Conversion/Continuation, as applicable;

(xiii)

certified copies of all consents, approvals, authorizations, registrations and filings and orders required or advisable to be made or obtained under any Requirement of Law, or by any Contractual Obligation of each Loan Party, in connection with the execution, delivery, performance, validity and enforceability of the Loan Documents or any of the transactions contemplated thereby, and such consents, approvals, authorizations, registrations, filings and orders shall be in full force and effect and all applicable waiting periods shall have expired;

(xiv)

copies of the consolidated financial statements of Borrower and its Subsidiaries for the 2004 and 2003 Fiscal Years, including balance sheets, income and cash flow statements audited by independent public accountants of recognized national standing and prepared in conformity with GAAP and such other financial information as the Administrative Agent may reasonably request;

(xv)

acknowledgments from those Persons that were “Lenders” under the Existing Credit Agreement but are not Lenders under this Agreement, confirming as of the Restatement Date their receipt of payment in full of all amounts then owing to them under the Existing Credit Agreement, the termination of their respective Commitments, and their ceasing to continue as Lenders that will be parties to the Agreement after the effective time of the restatement and amendment of the Existing Credit Agreement; and

(xvi)

such other docu­ments, certificates, information or legal opinions as the Administrative Agent or the Required Lenders may reasonably request, all in form and substance reasonably sat­isfactory to the Administrative Agent.

Section 3.2.

Each Credit Event.  The obligation of each Lender to make a Loan on the occasion of any Borrowing (other than a Borrowing consisting solely of a continuation or a conversion of a Borrowing already then outstanding) and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit is subject to the satisfaction of the following conditions:

(a)

at the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default or Event of Default shall exist; and 

(b)

all representations and warranties of each Loan Party set forth  in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, extension or renewal  of such Letter of Credit, in each case before and after giving effect thereto; and

(c)

since the date of the audited financial statements of the Borrower described in Section 4.4, there shall have been no change which has had or is reasonably likely to have a Material Adverse Effect.

Each Borrowing and each issuance, amendment, extension or renewal of any Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section 3.2.  The Borrower shall provide such additional information and certificates as the Administrative Agent or the Required Lenders may reasonably request in order to confirm satisfaction of such conditions.

Section 3.3.

Delivery of Documents.  All of the Loan Documents, certificates, legal opinions and other documents and papers referred to in this Article III, unless otherwise specified, shall be delivered to the Administrative Agent for the account of each of the Lenders and, except for the Notes, in sufficient counterparts or copies for each of the Lenders, and shall be in form and substance satisfactory in all respects to the Administrative Agent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Administrative Agent and each Lender as follows:

Section 4.1.

Existence; Power.  Except as described on Schedule 4.1, the Borrower and each of its Subsidiaries (i) is duly orga­nized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) ­has all requisite corporate or other organizational power and authority to carry on its business as now conducted, and (iii) is duly qualified to do business, and is in good standing, in each jurisdiction where such qualification is required, except where a failure to be so qualified is not reasonably likely to result in a Material Adverse Effect. 

Section 4.2.

Organizational Power; Authorization.  The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party are within such Loan Party’s organizational powers and have been duly authorized by all necessary organizational action, including if required, action of its stockholders, partners, members, or other owners, as the case may be. This Agreement and each other Loan Document have been duly executed and delivered by the Borrower and the other Loan Parties, as the case may be, and constitute valid and binding obligations of the Borrower or such Loan Party (as the case may be), en­forceable against it in accordance with their re­spective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

Section 4.3.

Governmental Approvals; No Conflicts.  The execution, delivery and performance by the Borrower of this Agreement, and by each Loan Party of the other Loan Documents to which it is a party (i) do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect (ii) will not violate any applicable law, rule or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any judgment, order or ruling of any Governmental Authority, (iii) will not violate or result in a default under the Indenture or any other indenture, mortgage, loan or credit agreement, lease or financing agreement, or other material agreement or instrument binding on the Borrower or any of its Subsidiaries or any of its assets or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, and (iv) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries, except Liens (if any) created under the Loan Documents.

Section 4.4.

Financial Statements.  The Borrower has furnished to each Lender (i) the audited con­solidated balance sheet of the Borrower and its Subsidiaries as of January 30, 2004 and the related consolidated statements of income, shareholders’ equity and cash flows for the Fiscal Year then ended prepared by Ernst & Young LLP, and (ii) the unaudited consolidated balance sheet of the Borrower and its Subsidiaries as at April 30, 2004, and the related unaudited consolidated statements of in­come and cash flows for the Fiscal Quarter and year-to-date period then ending, certified by a Responsible Officer.  Such financial statements fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as of such dates and the consolidated results of op­erations for such periods in conformity with GAAP consistently applied, subject to year-end audit adjustments and the absence of notes in the case of the statements referred to in clause (ii).  None of the Borrower or its Subsidiaries has any material contingent obligations or liabilities, or material liabilities for known taxes, long-term leases or unusual forward or long-term commitments required by GAAP to be reflected in the foregoing financial statements or the notes thereto that are not so reflected.  Since January 30, 2004 through the Restatement Date, there have been no changes with respect to the Borrower and its Subsidiaries which have had or are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.5.

Litigation and Environmental Matters.

(a)

Except as may be disclosed on Schedule 4.5, no litigation, investigation or proceeding of or before any arbitra­tors, courts or other Governmental Authorities is pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination that is reasonably likely to materially impair the value of any Material Properties or otherwise have, either individually or in the aggregate, a Material Adverse Effect, or (ii) that in any manner draws into question the validity or enforceability of this Agreement or any other Loan Document.

(b)

Neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become the subject of any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability, which in the case of any of the matters described in the preceding clauses (i) through (iv) are reasonably likely to, individually or in the aggregate, result in a Material Adverse Effect or are reasonably likely to materially impair the value of any Material Properties.

Section 4.6.

Compliance with Laws.  The Borrower and each Subsidiary is in compliance with all applicable laws, rules, regulations, judgments and orders of any Governmental Authority except where non-compliance, either individually or in the aggregate, is not reasonably likely to result in a Material Adverse Effect. 

Section 4.7.

Investment Company Act, Etc.  Neither the Borrower nor any of its Subsidiaries is (i) an “investment company” or is “controlled” by an “investment company”, as such terms are defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or (ii) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended, which prohibits its ability to incur or consummate the transactions contemplated hereby, and neither the Borrower nor any Subsidiary is otherwise subject to any other regulatory limitations  of any Governmental Authority affecting its ability to incur or guarantee debt as contemplated hereby or by any other Loan Document.

Section 4.8.

Taxes.  The Borrower and its Subsidiaries and each other Person for whose taxes the Borrower or any Subsidiary could become liable have timely filed or caused to be filed all Federal and state tax returns (except as noted in this Section 4.8) and all other material tax returns that are required to be filed by them, and have paid all taxes (other than local and municipal taxes and assessments in an aggregate amount not to exceed $1,000,000) shown to be due and payable on such returns or on any assessments made against it or its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, except where the same are currently being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as the case may be, has set aside on its books adequate reserves in accordance with GAAP.  As of the Restatement Date, the charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of such taxes are adequate, and no tax liabilities that could be materially in excess of the amount so provided are anticipated.

Section 4.9.

Margin Regulations.  None of the proceeds of any of the Loans will be used for “purchasing” or “carrying” any “margin stock” with the respective meanings of each of such terms under Regulation U of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time and any successor regulation, or for any purpose that would result in a violation of the provisions of Regulation U.  If requested by the Administrative Agent or any Lender, the Borrower will furnish the requesting party a statement to the foregoing effect in conformity with the requirements of Regulation U.

Section 4.10.

ERISA.  Except as may be disclosed on Schedule 4.10:

(a)

None of the Borrower or its Subsidiaries or their respective ERISA Affiliates maintains or contributes to, or has during the past five (5) years maintained or contributed to, any Plan that is subject to Title IV of ERISA;

(b)

Each Plan maintained by the Borrower or any of its Subsidiaries or their respective ERISA Affiliates has at all times been maintained, by their terms and in operation, in compliance with all applicable laws, and none of such Persons are subject to tax or penalty with respect to any such Plan, including without limitation, any tax or penalty under Title I or Title IV of ERISA or under Chapter 43 of the Code, or any tax or penalty resulting from a loss of deduction under Sections 162, 401, or 419 of the Code, where the failure to comply with such laws, and such taxes and penalties, taken as a whole with all other liabilities referred to in this Section 4.10, is in the aggregate reasonably likely to have a Material Adverse Effect;

(c)

Neither the Borrower nor any of its Subsidiaries is subject to liabilities (including Withdrawal Liabilities) with respect to any of its Plans or the Plans of any of its ERISA Affiliates, including without limitation, any liabilities arising from Title I or Title IV of ERISA, other than obligations to fund benefits under an on-going Plan and to pay current contributions, expenses and premiums with respect to such Plans, where such liabilities, taken as a whole with all other liabilities referred to in this Section 4.10, is in the aggregate reasonably likely to have a Material Adverse Effect;

(d)

The Borrower and its Subsidiaries and, with respect to any Plan that is subject to Title IV of ERISA, each of their respective ERISA Affiliates, have made full and timely payment of all amounts (i) required to be contributed under the terms of each Plan and applicable law, and (ii) required to be paid as expenses of each Plan, where the failure to pay such amounts (when taken as a whole, including any penalties attributable to such amounts) is reasonably likely to have a Material Adverse Effect.  No Plan subject to Title IV of ERISA has an “amount of unfunded benefit liabilities” (as defined in Section 4001(a)(18) of ERISA), determined as if such Plan terminated on any date on which this representation and warranty is deemed made, in any amount which, taken as a whole with all other liabilities referred to in this Section 4.10, is reasonably likely to have a Material Adverse Effect if such amount were then due and payable.  Neither the Borrower nor any of its Subsidiaries is subject to liabilities with respect to post-retirement medical benefits in any amounts which, taken as a whole with all other liabilities referred to in this Section 4.10, could have a Material Adverse Effect if such amounts were then due and payable; and

(e)

No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability  is reasonably expected to occur, is reasonably likely to result in a Material Adverse Effect.  The present value of  all accumulated  benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans.

Section 4.11.

Ownership of Property.

(a)

Each of the Borrower and its Subsidiaries has good and marketable fee simple title to, or a valid leasehold interest in, all of its real property, and good title to or valid leasehold interest in all of its personal property and other assets, all as such real and personal property and assets are reflected in the consolidated balance sheet of the Borrower described in clause (ii) of Section 4.4, except for properties or assets disposed of in the ordinary course of business since such date or as otherwise permitted by the terms of this Agreement and where the failure to hold such title, leasehold or possession is not reasonably likely to have a Material Adverse Effect, and the Borrower and its Subsidiaries enjoy peaceful and undisturbed possession under all of their respective leases of real and personal property, except where the failure to enjoy peaceful and undisturbed possession is not reasonably likely to have a Material Adverse Effect.  None of such real or personal property or other assets is subject to any Liens which secure obligations in excess of $250,000 individually or $5,000,000 in the aggregate as of the Restatement Date except as described on Schedule 7.2 or other Permitted Encumbrances.

(b)

Each of the Borrower and its Subsidiaries owns, or is licensed, or otherwise has the right, to use, all  patents, trademarks, service marks, tradenames, copyrights, franchises, licenses, and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe on the rights of any other Person, except for any such infringements that, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect.

Section 4.12.

Insurance.  The Borrower and its Subsidiaries currently maintain, and have maintained at all times during the previous five years, such insurance with respect to their properties and business with financially sound and reputable insurers, in such amounts and having such coverages against losses and damages which the Borrower in the exercise of its reasonable prudent business judgment has determined to be necessary to prevent the Borrower and its Subsidiaries from experiencing a loss that is reasonably likely to have a Material Adverse Effect.  The Borrower and its Subsidiaries have paid all material insurance premiums now due and owing with respect to such insurance policies and coverages, and such policies and coverages are in full force and effect.

Section 4.13.

Disclosure.  As of the Restatement Date, the Borrower has identified in a certificate delivered to the Administrative Agent on the Restatement Date (i) all agreements, instruments, and corporate or other restrictions to which the Borrower or any of its Subsidiaries is subject where the breach of any such agreements, instruments, and corporate or other restrictions is reasonably likely to result in a Material Adverse Effect, (ii) all agreements, instruments and corporate or other restrictions to which the Borrower or any of its Subsidiaries is subject when performed by their respective terms are reasonably likely to result in a Material Adverse Effect, (iii) and all other matters known to any of them, that, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect.  Neither the information furnished by the Borrower for inclusion in the Information Memorandum nor any of the reports (including without limitation all reports that the Borrower is required to file with the Securities and Exchange Commission), financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation or syndication of this Agreement or any other Loan Document or otherwise delivered hereunder or thereunder (as modified or supplemented by any other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, taken as a whole, in light of the circumstances under which they were made, not misleading.  It is understood that no representation or warranty is made concerning any forecasts, estimates, pro forma information, projections and statements as to anticipated future performance or conditions contained in any such financial statements, certificates or documents except that as of the date such forecasts, estimates, pro forma information, projections and statements were generated, (i) such forecasts, estimates, pro forma information, projections and statements were based on the good faith assumptions of the management of the Borrower, and (ii) such assumptions were believed by such management to be reasonable.  Such forecasts, estimates, pro forma information and statements, and the assumptions on which they were based, may or may not prove to be correct.

Section 4.14.

Labor Relations.  There are no strikes, lockouts or other material labor disputes or grievances against the Borrower or any of its Subsidiaries, or, to the Borrower’s knowledge, threatened against or affecting the Borrower or any of its Subsidiaries, and no significant unfair labor practice, charges or grievances are pending against the Borrower or any of its Subsidiaries, or to the Borrower’s knowledge, threatened against any of them before any Governmental Authority that are reasonably likely to have a Material Adverse Effect. All payments due from the Borrower or any of its Subsidiaries pursuant to the provisions of any collective bargaining agreement have been paid or accrued as a liability on the books of the Borrower or any such Subsidiary, except where the failure to do so is not reasonably likely to have a Material Adverse Effect.

Section 4.15.

Status of Certain Agreements and Other Matters. 

(a)

None of the Borrower or its Subsidiaries is in default which is continuing under or with respect to any Contractual Obligation, including, without limitation, the Indenture, or any Requirement of Law in any respect which has had or is reasonably likely to have a Material Adverse Effect.  Without limiting the foregoing, as of the Restatement Date, none of the Borrower or its Subsidiaries has received any notice or claim as to the existence or occurrence of any unwaived default or breach by the Borrower or any of its Subsidiaries under the provisions of the Indenture or any other indenture, mortgage, loan or credit agreement, lease or financing agreement, or other material agreement or instrument binding on the Borrower or any of its Subsidiaries or any of their respective properties.

(b)

None of the Subsidiaries is party to or subject to any agreement or arrangement restricting or limiting the payment of any dividends or other distributions by such Subsidiary to the Borrower or any other Subsidiary, the repayment of any loans or advances made to such Subsidiary by the Borrower or any other Subsidiary, or the sale or transfer by the Subsidiary of any assets to the Borrower or any other Subsidiary.

(c)

The Borrower has furnished to the Administrative Agent a correct and complete copy of each agreement or instrument evidencing Indebtedness of the Borrower or any Subsidiary in each case in an amount greater than $10,000,000, including all amendments, modifications, and supplements that have been made with respect thereto, in each case as of the Restatement Date.

Section 4.16.

Subsidiaries.  

(a)

Schedule 4.16 sets forth the name of, the ownership interest of the Borrower in, the jurisdiction of organization of, and the type of, each Subsidiary, as of the Restatement Date.

(b)

On the Restatement Date and after giving effect to the transactions contemplated by this Agreement and the other Loan Documents, (i) the assets of each Subsidiary at fair valuation and based on their present fair saleable value will exceed such Subsidiary’s debts, including contingent liabilities but excluding intercompany debt among the Loan Parties, (ii) the remaining capital of such Subsidiary will not be unreasonably small to conduct such Subsidiary’s business, and (iii) such Subsidiary will not have incurred debts, or have intended to incur debts, beyond the Subsidiary’s ability to pay such debts as they mature.  For purposes of this Section 4.16, “debt” means any liability on a claim, and “claim” means (x) the right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y) the right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.

ARTICLE V

AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that so long as any Lender has a Commitment in effect hereunder or the principal of and interest on any Loan or any fee or any LC Disbursement remains unpaid or any Letter of Credit remains outstanding: 

Section 5.1.

Financial Statements and Other Information.  The Borrower will deliver to the Administrative Agent and each Lender:

(a)

as soon as reasonably available and in any event within 100 days after the end of each Fiscal Year, a copy of the annual audited financial statements for such Fiscal Year for the Borrower and its Subsidiaries, containing a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows (together with all notes thereto) of the Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and reported on by Ernst & Young LLP or other independent public accountants of nationally recognized standing (without a “going concern” or like qualification, exception or explanation and without any qualification or exception as to the scope of such audit) to the effect that such financial statements present fairly in all material respects the financial condition and the results of operations of the Borrower and its Subsidiaries for such Fiscal Year on a consolidated basis in accordance with GAAP and that the exami­nation by such accountants in connection with such consoli­dated financial statements has been made in accordance with generally accepted auditing standards;

(b)

as soon as reasonably avail­able and in any event within 50 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, an unaudited consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Quarter and the related unaudited consolidated statements of in­come and cash flows of the Borrower and its Subsidiaries for such Fiscal Quarter and the then elapsed portion of such Fiscal Year, setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter and the corresponding portion of Borrower’s previous Fiscal Year, all certified by the chief financial officer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of notes;

(c)

concurrently with the delivery of the financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer of the Borrower, (i) certifying as to whether there exists a Default or Event of De­fault on the date of such certificate, and if a Default or an Event of Default then exists, specifying the details thereof and the action which the Borrower has taken or proposes to take with respect thereto, (ii) setting forth in reasonable detail calculations demonstrating compliance with Article VI, and (iii) stating whether any material change in GAAP or the application thereof affecting such financial statements or calculations has occurred since the date of the Borrower’s audited financial statements referred to in Section 4.4 and, if any change has occurred, specifying the effect  of such change on the financial statements accompanying such certificate or the calculations set forth therein;

(d)

promptly (and in no event later than 5 Business Days) provide to the Administrative Agent, upon the written request of the Administrative Agent or any Lender,  copies of any specified periodic and other reports (including without limitation, all reports filed on Forms 8-K, 10-Q, and 10-K), proxy statements and other materials filed by the Borrower with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be; and

(e)

promptly following any request therefor, such other information regarding the results of operations, business affairs and  financial condition of the Borrower or any Subsidiary as the Administrative Agent or any Lender may reasonably request.

Section 5.2.

Notices of Material Events.  The Borrower will furnish to the Administrative Agent and each Lender reasonably prompt written notice (given in no event later than 5 Business Days) of the following:

(a)

after a Responsible Officer of the Borrower knows thereof, the occurrence of any Default or Event of Default;

(b)

after a Responsible Officer of the Borrower knows thereof, the filing or commencement of any action, suit or proceeding by or before any arbitrator, court or other Governmental Authority against or, to the knowledge of the Borrower, affecting the Borrower or any Subsidiary which, if adversely determined (but excluding any action, suit or proceeding where the Borrower’s management has determined in good faith after reasonable inquiry that the likelihood of any adverse determination is remote), is reasonably likely to result in a Material Adverse Effect;

(c)

after a Responsible Officer of the Borrower knows thereof, the occurrence of any event or any other development by which the Borrower or any of its Subsidiaries (i) fails to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) becomes subject to any Environmental Liability, (iii) receives notice of any claim with respect to any Environmental Liability, or (iv) becomes aware of any basis for any Environmental Liability, and in each of the preceding clauses, which individually or in the aggregate is reasonably likely to result in a Material Adverse Effect; 

(d)

the occurrence of any ERISA Event that alone, or together with any other ERISA Events that have occurred, is reasonably likely to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $10,000,000;

(e)

the effectiveness of any material amendment, modification or supplement to the Indenture; 

(f)

the receipt by the Borrower or any of its Subsidiaries of any notice or claim asserting the existence or occurrence of (i) any default, breach, or violation of the terms of the Indenture or any other indenture, mortgage, loan or credit agreement, lease or financing arrangement, or other material agreement or instrument, in any case where the Indebtedness associated with any such agreement or instrument exceeds $10,000,000, or (ii) any event or condition that would require or permit the holder of any Indebtedness of the Borrower or any of its Subsidiaries in an amount greater than $10,000,000 to exercise its rights to require the repayment, redemption or repurchase, or other acquisition of such Indebtedness by the Borrower or any of its Subsidiaries prior to the scheduled maturity thereof; and

(g)

any other development that results in, or is reasonably likely to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a written statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 5.3.

Existence; Conduct of Business.  The Borrower will, and will cause each of its Subsidiaries to, (i) preserve, renew and maintain in full force and effect its legal existence, (ii) do or cause to be done all things reasonably necessary to preserve, renew and maintain in full force and effect its respective rights, licenses, permits, privileges, fran­chises, patents, copyrights, trademarks and trade names material to the conduct of its business and (iii) continue to engage in the same business as presently conducted or such other businesses that are reasonably related thereto; provided, that nothing in this Section shall prohibit any merger, consolidation, liquidation or dissolution permitted under Section 7.3. 

Section 5.4.

Compliance with Laws, Etc. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and requirements of any Governmental Authority applicable to its properties and business operations (including, without limitation, all Environmental Laws and all licenses, permits, approvals, orders and directives issued by Governmental Authorities pursuant to such Environmental Laws, and all ERISA laws, regulations and orders), except where the failure to do so, either individually or in the aggregate, is not reasonably likely to result in a Material Adverse Effect.

Section 5.5.

Payment of Taxes and Other Obligations.  The Borrower will, and will cause each of its Subsidiaries to, pay and discharge at or before maturity, all of its obligations and liabilities (including without limitation all tax liabilities and claims that could result in a statutory Lien) before the same shall become delinquent or in default, except where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, and (ii) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP; provided, however, that no Default or Event of Default shall be deemed to exist hereunder at any time where the aggregate outstanding amount of such obligations and liabilities not so paid and discharged does not exceed $100,000 at such time.

Section 5.6.

Books and Records.  The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities to the extent necessary to prepare the consolidated financial statements of Borrower in conformity with GAAP.

Section 5.7.

Visitation, Inspection, Etc.  The Borrower will, and will cause each of its Subsidiaries to, permit any representative of the Administrative Agent or any Lender to visit and inspect its properties, and to discuss its affairs, finances with any of its officers, all at such reasonable times during normal business hours and as often as the Administrative Agent or any Lender may reasonably request after reasonable prior notice to the Borrower; provided, however, if an Event of Default has occurred and is continuing, the Borrower will, and will cause each of its Subsidiaries to, permit any representative of the Administrative Agent or any Lender to visit and inspect its properties, to examine its books and records, and to make copies and take extracts therefrom, and to discuss its affairs, finances and accounts with any of its officers and with its independent certified public accountants, all at such reasonable times during normal business hours and as often as the Administrative Agent or any Lender may reasonably request and with no prior notice.

Section 5.8.

Maintenance of Properties; Insurance.  The Borrower will, and will cause each of its Subsidiaries to, (i) keep and maintain all property material to the conduct of its business in good working order and condition, subject to ordinary wear and tear, except where the failure to do so, either individually or it the aggregate, is not reasonably likely to result in a Material Adverse Effect, and (ii) maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business, and the properties and business of its Subsidiaries, against loss or damage of the kinds customarily insured against by companies in the same or similar businesses operating in the same or similar locations. 

Section 5.9.

Use of Proceeds and Letters of Credit.  Proceeds of Loans shall be used to finance working capital needs and capital expenditures and for other general corporate purposes of the Borrower and its Subsidiaries (including funding of draws under trade letters of credit issued for the account of the Borrower or its Subsidiaries). No part of the proceeds of any Loan, or any Letter of Credit, will be used, whether directly or indirectly, for any purpose that would result in a violation of any rule or regulation of the Board of Governors of the Federal Reserve System, including Regulations T, U or X.  

Section 5.10.

Additional Subsidiaries.   If any additional U.S. Subsidiary is acquired or formed after the Closing Date, the Borrower will, within ten (10) Business Days after such U.S. Subsidiary is acquired or formed, notify the Administrative Agent and the Lenders thereof and cause such Subsidiary to become a Guarantor by joining the Guaranty Agreement and the Contribution Agreement pursuant to joinder agreements in substantially the form of Annex A to the Guaranty Agreement and Annex A to the Contribution Agreement and will cause such Subsidiary to deliver simultaneously therewith similar documents applicable to such Subsidiary required under Section 3.1 as requested by the Administrative Agent.

(a)

If any Foreign Subsidiary is acquired or formed after the Closing Date, the Borrower will, within ten (10) Business Days after such Foreign Subsidiary is acquired or formed, notify the Administrative Agent and the Lenders thereof and, unless otherwise agreed by the Required Lenders, the Borrower shall, or shall cause its U.S. Subsidiary owning such Person, to pledge sixty-five percent (65%) of each class of voting shares or comparable equity interest and one hundred percent (100%) of each class of  nonvoting shares or comparable equity interest (or if such pledge of 100% thereof would have an adverse income tax consequence to the Borrower, sixty five percent (65%) of each class of nonvoting shares or comparable equity interest) owned by the Borrower or such U.S. Subsidiary to the Administrative Agent as security for the Obligations pursuant to a pledge agreement in form and substance satisfactory to the Administrative Agent and the Required Lenders, and to deliver the original stock certificates evidencing such shares or comparable equity interest to the Administrative Agent, together with appropriate transfer powers executed in blank and Uniform Commercial Code financing statements.  Notwithstanding the foregoing, the Borrower may, at its option within such ten (10) Business Day period, in lieu of providing any such pledge pursuant to this Section 5.10(b), cause any such Foreign Subsidiary to become a Guarantor by joining the Guaranty Agreement and the Contribution Agreement pursuant to joinder agreements in substantially the form of Annex A to the Guaranty Agreement and Annex A to the Contribution Agreement and cause such Foreign Subsidiary to deliver simultaneously therewith similar documents applicable to such Foreign Subsidiary required under Section 3.1 as requested by the Administrative Agent.

ARTICLE VI

FINANCIAL COVENANTS

The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder, or the principal of or interest on any Loan remains unpaid, or any fee or any LC Disbursement remains unpaid, or any Letter of Credit remains outstanding: 

Section 6.1.

Adjusted Funded Debt to EBITDAR Ratio.  The Borrower and its Subsidiaries shall maintain on a consolidated basis, as of the end of each Fiscal Quarter, commencing with the Fiscal Quarter ending July 30, 2004, a ratio of (i) Consolidated Adjusted Funded Debt (as of the end of such Fiscal Quarter) to (ii) Consolidated EBITDAR (calculated for the Fiscal Quarter then ending and the immediately preceding three (3) Fiscal Quarters) of less than 2.00:1.00.

Section 6.2.

EBITR to Interest and Rents Ratio.  The Borrower and its Subsidiaries shall maintain on a consolidated basis, as of the end of each Fiscal Quarter, commencing with the Fiscal Quarter ending July 30, 2004, a ratio of (i) Consolidated EBITR to (ii) Consolidated Interest Expense plus without duplication Consolidated Rent Expense (all such amounts to be calculated for the Fiscal Quarter then ending and the immediately preceding three (3) Fiscal Quarters) of greater than 2.00:1.00.

Section 6.3.

Funded Debt to EBITDA Ratio.  The Borrower and its Subsidiaries shall maintain on a consolidated basis, as of the end of each Fiscal Quarter, commencing with the Fiscal Quarter ending July 30, 2004, a ratio of (i) Consolidated Funded Debt (as of the end of such Fiscal Quarter) to (ii) Consolidated EBITDA (calculated for the Fiscal Quarter then ending in the immediately preceding three (3) Fiscal Quarters) of less than 1.50:1.00.

Section 6.4.

Consolidated Net Worth.  The Borrower will not permit its Consolidated Net Worth at any time to be less than $1,250,000,000, plus 50% of Consolidated Net In­come on a cumulative basis for all preceding Fiscal Quarters, commencing with the Fiscal Quarter ending July 30, 2004; provided, that if Consolidated Net Income is negative in any Fiscal Quarter the amount added for such Fiscal Quarter shall be zero and such negative Consolidated Net Income shall not reduce the amount of Consolidated Net Income added from any previous Fiscal Quarter.  The minimum required amount of Consolidated Net Worth set forth above shall be increased by 100% of the amount by which the Borrower’s total shareholders’ equity is increased as a result of any issuance or sale of capital stock of the Borrower after April 30, 2004.  Promptly upon the consummation of such issuance or sale, the Borrower shall notify the Administrative Agent in writing of the amount of such increase in “total shareholders’ equity”.

ARTICLE VII

NEGATIVE COVENANTS

The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder, or the principal of or interest on any Loan remains unpaid, or any fee or any LC Disbursement remains unpaid, or any Letter of Credit remains outstanding: 

Section 7.1.

Indebtedness.  The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness, except: 

(a)

Indebtedness created pursuant to the Loan Documents;

(b)

Indebtedness of the Borrower owing to any Subsidiary, Indebtedness of any Subsidiary owing to the Borrower, and Indebtedness of any Subsidiary owing to any other Subsidiary; provided, that the aggregate amount of Indebtedness of the Borrower to any Subsidiary that is not a Guarantor (including all such Indebtedness existing on the Restatement Date), shall be subordinated to the Obligations on terms satisfactory to the Administrative Agent and shall not exceed $5,000,000 at any time outstanding;

(c)

Indebtedness existing on the Restatement Date and set forth on Schedule 7.1 and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (immediately prior to giving effect to such extension, renewal or replacement) or shorten the maturity or the weighted average life thereof;

(d)

Indebtedness of a Person which becomes a Subsidiary after the date hereof, provided that (i) such Indebtedness existed at the time such Person became a Subsidiary and was not created in anticipation thereof and (ii) immediately after giving effect to the acquisition of such Person by the Borrower no Default or Event of Default shall have occurred and be continuing;

(e)

Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof; provided, that such Indebtedness is incurred prior to or within 120 days after such acquisition or the completion of such construction or improvements, and all extensions, renewals, and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (immediately prior to giving effect to such extension, renewal or replacement) or shorten the maturity or the weighted average life thereof; 

(f)

Guarantees by the Borrower of Indebtedness of any Subsidiary otherwise permitted to be incurred or exist under the terms of this Agreement, and Guarantees by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary that is otherwise permitted to be incurred or exist under the terms of this Agreement;

(g)

Hedging Obligations permitted by Section 7.11; 

(h)

Indebtedness of the Borrower or any Subsidiary incurred in connection with sale leaseback transactions permitted by Section 7.9;

(i)

Unsecured Indebtedness of any Subsidiaries of the Borrower not otherwise permitted by this Section 7.1, in an aggregate principal amount outstanding at any time not to exceed $25,000,000; and

(j)

Unsecured Indebtedness of the Borrower not otherwise permitted by this Section 7.1, in an aggregate principal amount outstanding at any time not to exceed an amount equal to (x) $150,000,000 less (y) the amount of unsecured Indebtedness of any Subsidiaries of the Borrower as permitted pursuant to clause (i) above.

Section 7.2.

Liens.  The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of its assets or property now owned or hereafter acquired or, except:

(a)

Liens created in favor of the Administrative Agent securing the Obligations under this Agreement; 

(b)

Permitted Encumbrances;

(c)

any Liens on any property or asset of the Borrower or any Subsidiary existing on the Restatement Date as described on Schedule 7.2, provided, that such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary; 

(d)

any Liens granted to secure purchase money Indebtedness permitted to be incurred as provided in Section 7.1(e) and any renewals and extensions thereof as provided by Section 7.1(e), provided that (i) such Lien secures only such purchase money Indebtedness, (ii) such Lien attaches to such asset concurrently or within 60 days after the acquisition, improvement or completion of the construction thereof, and (iii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets; 

(e)

Liens on the property or assets of a Person which becomes a Subsidiary after the date hereof securing Indebtedness permitted by subsection 7.1(d), provided that (i) such Liens existed at the time such Person became a Subsidiary and were not created in anticipation thereof, (ii) any such Lien does not extend to cover any property or assets of such Person after the time such Person becomes a Subsidiary and (iii) such Liens do not secure obligations in excess of $10,000,000 in the aggregate at any time outstanding; and

(f)

Liens (not otherwise permitted hereunder) which secure obligations not exceeding (as to the Borrower and all Subsidiaries) $125,000,000 in aggregate amount at any time, provided, that (i) the aggregate amount of such secured obligations owing to any Persons other than the Borrower and the Guarantors shall not exceed $25,000,000 at any time, and (ii) such Liens shall be created or granted only with respect to fixed assets and shall in no event attach to or otherwise encumber any inventory, accounts receivable, cash or deposit accounts, investment property or general intangibles of the Borrower or its Subsidiaries.

Section 7.3.

Fundamental Changes.

(a)

The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate into any other Person, or permit any other Person to merge into or consolidate with it, or sell, lease, transfer or otherwise dispose of (in a single transaction or a series of transactions) all or substantially all of its assets (in each case, whether now owned or hereafter acquired) or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired) or liquidate or dissolve; provided, that if at the time thereof and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing (i) the Borrower or any Subsidiary may merge with a Person if the Borrower (or such Subsidiary if the Borrower is not a party to such merger) is the surviving Person, and any Subsidiary may merge into another Subsidiary, provided, that (x) if either party to such a merger between Subsidiaries is a Guarantor, a Guarantor shall be the surviving Person, and (y) any such merger involving a Person that is not a wholly-owned Subsidiary immediately prior to such merger shall not be permitted hereunder unless also permitted by Section 7.4, (ii) any Subsidiary may sell, transfer, lease or otherwise dispose of all or substantially all of its assets (including by way of liquidation) to the Borrower or to a Guarantor, and (iii) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders.  

(b)

The Borrower will not, and will not permit any of its Subsidiaries to, engage in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the date hereof and businesses reasonably related thereto.  Without limiting the foregoing, the Borrower shall not permit GCIC to engage in any business or activities other than (i) providing insurance coverage and related services to the Borrower and its other Subsidiaries, and (ii) any other business and activities in which GCIC is engaged as of the Restatement Date.

Section 7.4.

Investments, Loans, Etc.  The Borrower will not, and will not permit any of its Subsidiaries to, hold or acquire (including pursuant to any merger with any Person that was not a wholly-owned Subsidiary prior to such merger), any capital stock, partner or limited liability company interests or other ownership interests, evidence of Indebtedness or other securities (including any option, warrant, or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person (all of the foregoing being collectively called “Investments”), except: 

(a)

Investments (other than Permitted Investments) existing on the Restatement Date and set forth on Schedule 7.4 (including Investments in Subsidiaries);

(b)

Permitted Investments;

(c)

Guarantees constituting Indebtedness permitted by Section 7.1;

(d)

repurchase of Senior Notes (to the extent permitted by the Indenture and applicable securities laws), so long as, before and after giving effect thereto, the Borrower shall be in compliance with the financial covenants set forth in Article VI and no other Default or Event of Default shall have occurred and be continuing at the time such repurchase is effected;

(e)

Investments made by the Borrower in or to any Subsidiary and by any Subsidiary to the Borrower or in or to another Subsidiary; provided, that (i) the aggregate amount of Investments by Loan Parties in or to, and Guarantees by Loan Parties of Indebtedness of, any Subsidiary that is not a Guarantor (including all such Investments and Guarantees existing on the Restatement Date), shall not exceed $5,000,000 at any time outstanding, and (ii) any Acquisition giving rise to any such Investment shall have been permitted pursuant to Section 7.10;

(f)

loans or advances to employees and officers of the Borrower or any Subsidiary made in the ordinary course of business and not in excess of amounts customarily and historically loaned or advanced by the Borrower to such employees and officers; provided, however, that the aggregate amount of all such loans and advances does not exceed $2,500,000 at any time outstanding;

(g)

Hedging Obligations permitted by Section 7.11; 

(h)

Investments received in settlement of debt created in the ordinary course of business; and

(i)

extension of trade credit in the ordinary course of business; 

(j)

Investments in assets held under non-qualified plans and deferred compensation arrangements for certain members of management and other employees as disclosed from time to time in the notes to the Borrower’s consolidated financial statements as filed by the Borrower with the Securities and Exchange Commission; 

(k)

purchases of Capital Lease Debt Obligations permitting the Borrower or its Subsidiaries to offset and reduce their related Capital Lease Obligations; and

(l)

Investments in fixed income assets by GCIC consistent with customary practices of portfolio management on the part of so-called “captive” insurance companies of comparable size and scope of activities as GCIC; and

(m)

Investments not otherwise permitted by the preceding clauses of this Section 7.4 in an aggregate amount not to exceed $10,000,000 at any one time outstanding.

Section 7.5.

Restricted Payments.  The Borrower will not, and will not permit its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any dividend or distribution on any class of its capital stock, partner or limited liability company interests, or other ownership interests, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, retirement, defeasance or other acquisition of, any shares of capital stock, partner or limited liability company interests, or other ownership interests, or Indebtedness subordinated to the Obligations of the Borrower, or any options, warrants, or other rights to purchase such capital stock, partner or limited  liability company interests, or other ownership interests, or such Indebtedness, whether now or hereafter outstanding (each, a “Restricted Payment”), except for (i) dividends and distributions payable by the Borrower solely in shares of any class of its common stock, (ii) Restricted Payments made by any Subsidiary to the Borrower or to another Subsidiary, (iii) cash dividends paid on, and cash redemptions of, the common stock of the Borrower so long as, before and after giving effect thereto, the Borrower shall be in compliance with the financial covenants set forth in Article VI and no other Default or Event of Default shall have occurred and be continuing at the time such dividend is paid or redemption is made and (iv) Restricted Payments made in respect of restricted stock and stock options granted or to be granted under the employee compensation plans of the Borrower described in applicable reports or other filings made by the Borrower with the Securities and Exchange Commission or as otherwise disclosed by the Borrower in writing to the Lenders.

Section 7.6.

Sale of Assets.  The Borrower will not, and will not permit any of its Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose of, any of its assets, business or property, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s common stock to any Person other than the Borrower or any wholly-owned Subsidiary of the Borrower (or to qualify directors if required by applicable law), except:

(a)

the sale or other disposition, for fair market value and in the ordinary course of business, of obsolete or worn out property or other property not necessary for operations of the Borrower and its Subsidiaries; 

(b)

the sale of inventory and Permitted Investments in the ordinary course of business; 

(c)

the sale or transfer of properties in accordance with Section 7.9; and 

(d)

the sale or other disposition of other assets (including assets that are the subject of transactions of the type described in clause (ii) of Section 7.9) in an aggregate amount from the Restatement Date to the Revolving Commitment Termination Date not to exceed 10% of the consolidated total assets of the Borrower as of the last day of the most recently ended Fiscal Year of the Borrower; provided that if at the end of any Fiscal Year, 10% of the consolidated total assets of the Borrower for such Fiscal Year is less than 10% of the consolidated total assets of the Borrower for any preceding Fiscal Year and the Borrower’s sales and dispositions of assets made from the Restatement Date to such date exceed 10% of the consolidated total assets of the Borrower for such Fiscal Year but do not exceed 10% of the consolidated total assets of the Borrower for such preceding Fiscal Year, the Borrower shall not be in violation of this Section 7.6(d).

Section 7.7.

Transactions with Affiliates.  The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (ii) transactions between or among the Borrower and its wholly owned Subsidiaries not involving any other Affiliates, (iii) any Restricted Payment permitted by Section 7.5 and (iv) any transaction permitted under Section 7.4(e).

Section 7.8.

Restrictive Agreements.  The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement that prohibits, restricts or imposes any condition upon (i) the ability of the Borrower or any Subsidiary to create, incur or permit any Lien upon any of its assets or properties, whether now owned or hereafter acquired, or (ii) the ability of any Subsidiary to pay dividends or other distributions with respect to its capital stock, partner or limited liability company interests, or other ownership interests, to make or repay loans or advances to the Borrower or any other Subsidiary, to Guarantee Indebtedness of the Borrower or any other Subsidiary, or to transfer any of its property or assets to the Borrower or any Subsidiary of the Borrower; provided, that the foregoing shall not apply to (x) restrictions or conditions imposed by law, this Agreement, or the Indenture, (y) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions and conditions apply only to the property or assets securing such Indebtedness, and (z) customary provisions in leases and other contracts restricting the assignment thereof. 

Section 7.9.

Sale and Leaseback Transactions.  The Borrower will not, and will not permit any of the Subsidiaries to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any properties, real or personal, used or useful in its business, whether now owned or hereinafter acquired, and thereafter rent or lease such properties or portions thereof that it intends to use for substantially the same purpose or purposes as the properties sold or transferred, except (i) new retail store properties that have been developed as part of the New Store Development Program, and (ii) any other properties where the aggregate market values of such other properties, taken together with the assets sold or otherwise disposed of as otherwise permitted in Section 7.6(d), would not exceed the aggregate amounts permitted by such Section 7.6(d).

Section 7.10.

Acquisitions.  The Borrower will not, and will not permit any Subsidiary to, make or effect any Acquisitions for a total purchase price in excess of $50,000,000 in the aggregate during any twelve (12) month period.  For purposes hereof, any purchase price shall be determined by the sum of the following items paid, given, transferred or assumed or acquired in consideration of such Acquisition:  (i) all cash, (ii) the principal amounts of all promissory notes, other deferred payment obligations given as a portion of the consideration for such Acquisition, and all Indebtedness of the Person or business acquired in such Acquisition that remains in effect as an obligation of the Borrower or any Subsidiary following such Acquisition, (iii) the value of all capital stock, partner or limited liability company interests, and other ownership interests, and (iv) the value of all other property (the value of such stock and property to be as determined in good faith by the Borrower).

Section 7.11.

Hedging Transactions.  The Borrower will not, and will not permit any of its Subsidiaries to, enter into any Hedging Transaction, other than Hedging Transactions entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in the management of its liabilities arising in the ordinary course of business.  Solely for the avoidance of doubt, the Borrower acknowledges that a Hedging Transaction entered into for speculative purposes or of a speculative nature (which shall be deemed to include any Hedging Transaction under which the Borrower or any of its Subsidiaries is or may become obliged to make any payment (i) in connection with the purchase by any third party of any capital stock, partner or limited liability company interests or other ownership interests, or any Indebtedness, of the Borrower or any Subsidiary, or (ii) as a result of changes in the market value of any such capital stock, partner or limited liability company interests or other ownership interests, or Indebtedness) is not a Hedging Obligations entered into in the ordinary course of business to hedge or mitigate such risks.

Section 7.12.

Actions Relating to Indenture and Senior Notes.   The Borrower will not (i) amend, supplement, or otherwise modify the Indenture or the Senior Notes in any manner so as to increase the interest rate payable thereon, shorten the maturity or the average life thereof, or impose or modify any restrictions on the Borrower of a type or in a manner, taken as a whole with other changes effected by such amendment, more restrictive on, or otherwise less favorable to, the Borrower, or (ii) repurchase, redeem, or otherwise acquire any of the Senior Notes prior to the maturity thereof except as permitted by Section 7.4(d).

Section 7.13.

Accounting Changes.  The Borrower will not, and will not permit any Subsidiary to, make any significant change in accounting treatment or reporting practices, except as required or permitted by GAAP, or change the Fiscal Year of the Borrower or of any Subsidiary, except to change the fiscal year of a Subsidiary to conform its Fiscal Year to that of the Borrower.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.1.

Events of Default.  If any of the following events (each an “Event of Default”) shall occur:

(a)

the Borrower shall fail to pay any principal of any Loan or of any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment or otherwise; or

(b)

the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount payable under clause (a) of this Section 8.1) pay­able under this Agreement or any other Loan Document, within five (5) Business Days after the same shall have become due and payable; or

(c)

any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with this Agreement or any other Loan Document (including the Sched­ules attached hereto) and any amendments or modifications hereof or waivers hereunder, or in any certificate, report, financial statement or other document sub­mitted to the Administrative Agent or the Lenders by any Loan Party or any representative of any Loan Party pursuant to or in connection with this Agreement or any other Loan Document, shall prove to be incorrect in any material respect when made or deemed made or submitted; or

(d)

the Borrower shall fail to observe or perform any covenant or agreement contained in Sections 5.1, 5.2, or 5.3 (with respect to any Loan Party’s existence), or in Article VI or Article VII; or

(e)

any Loan Party shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those referred to in clauses (a), (b) and (d) above) or any other Loan Document, and such failure shall remain unremedied for 30 days after the earlier of (i) any officer of the Borrower becomes aware of such failure, or (ii)  notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

(f)

the Borrower or any Subsidiary (whether as primary obligor or as guarantor or otherwise shall fail to pay any principal of or premium or interest on any Material Indebtedness that is outstanding, when and as the same shall become due and payable (whether at scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument evidencing or governing such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable or required to be prepaid or redeemed (other  than by a regularly scheduled required prepayment or redemption), purchased or defeased, or any offer to prepay, redeem, purchase or defease such Indebtedness shall be required to be made, in each case prior to the stated maturity thereof; or

(g)

the Borrower or any Subsidiary shall (i) commence a voluntary case or other proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect  or seeking the appointment of a custodian, trustee, receiver, liquidator or other similar official of it or any substantial part of its property, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of this subsection (g), (iii) apply for or consent to the appointment of a custodian, trustee, receiver, liquidator or other similar official for the Borrower or any such Subsidiary or for a substantial part of its property, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take any action for the purpose of effecting  any of the foregoing; or

(h)

an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its debts, or any substantial part of its property, under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect, or (ii) the appointment of a custodian, trustee, receiver, liquidator or other similar official for the Borrower or any Subsidiary or for a substantial part of its property, and in any such case, such  proceeding or petition shall remain undismissed for a period of 60 days or an order or decree approving or  ordering any of the foregoing shall be entered; or

(i)

the Borrower or any Subsidiary shall become unable to pay, shall admit in writing its inability to pay, or shall fail generally to pay, its debts as they become due; or

(j)

an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with other ERISA Events that have occurred, is reasonably likely to result in liability to the Borrower and the Subsidiaries in an aggregate amount exceeding $25,000,000; or 

(k)

any judgment or order  for the payment of money in excess of $25,000,000 in the aggregate shall be rendered against the Borrower or any Subsidiary, and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order, or (ii) there shall be a period of more than 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(l)

any non-monetary judgment or order shall be rendered against the Borrower or any Subsidiary that is reasonably likely to have a Material Adverse Effect, and  there shall be a period of more than 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(m)

 a Change in Control shall occur or exist; or

(n)

any provision of the Guaranty Agreement shall for any reason cease to be valid and binding on, or enforceable against, any Guarantor, or any Guarantor shall so state in writing, or any Guarantor shall seek to terminate its obligations under the Guaranty Agreement; or

(o)

an “Event of Default” shall occur under any other Loan Document;

then, and in every such event (other than an event with respect to the Borrower described in subsections (g) or (h) of this Section) and at any time thereafter during the continuance of such event, the Administrative Agent may, and upon the written request of the Required Lenders shall,  by notice to the Borrower, take any or all of the follow­ing actions, at the same or different times:  (i) terminate the Commitments, whereupon the Commitment of each Lender shall terminate immediately; (ii) declare the principal of and any accrued interest on the Loans, and all other Obligations (except Hedging Obligations) owing hereunder, to be, whereupon the same shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (iii) exercise all remedies contained in any other Loan Document; and (iv) exercise any other remedies available at law or in equity; and  that, if an Event of Default specified in either subsections (g) or (h) of this Section shall occur with respect to the Borrower, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon, and all fees and other Obligations (except Hedging Obligations) shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.   Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, all payments received as proceeds hereunder or under any other Loan Document, or any part thereof, as well as any and all amounts realized in connection with the enforcement of any right or remedy under or with respect to any Loan Document, shall be applied by the Administrative Agent as follows: first, to the payment of all necessary expenses incident to the execution of any remedies under any Loan Document, including reasonable attorneys’ fees as provided herein and in the other Loan Documents, appraisal fees, title search fees and foreclosure notice costs; second, to all fees and reimbursable expenses of the Administrative Agent then due and payable pursuant to any of the Loan Documents; third, to all fees and reimbursable expenses of the Lenders and the Issuing Bank then due and payable pursuant to any of the Loan Documents, made pro rata to the Lenders and the Issuing Bank based on their respective Pro Rata Share of such fees and expenses; fourth, to interest then due and payable on the Loans, made pro rata to the Lenders based on their respective Pro Rata Shares of the Loans; fifth, to principal then due and payable on the Loans, unreimbursed LC Disbursements and amounts due in respect of cash collateral required to be maintained for undrawn amounts under any Letters of Credit issued and outstanding, made pro rata to the Lenders, the Administrative Agent and the Issuing Bank based on their respective Pro Rata Shares of the Loans, unreimbursed LC Disbursements and such cash collateral amounts; and sixth, to the payment of any amounts then due and payable with respect to any Hedging Obligations and any other amounts then included in the Obligations as provided herein, and the remainder, if any, shall be paid to the Borrower or such other persons as may be entitled thereto by law, after deducting therefrom the cost of ascertaining their identity.

ARTICLE IX

THE ADMINISTRATIVE AGENT

Section 9.1.

Appointment of Administrative Agent; Status of Issuing Bank.  

(a)

Each of the Lenders and the Issuing Bank irrevocably appoints SunTrust Bank as the Administrative Agent and authorizes it to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent under this Agreement and the other Loan Documents, together with all such actions and powers that are reasonably incidental thereto. The Administrative Agent may perform any of its duties hereunder or under the other Loan Documents by or through any one or more sub-agents or attorneys-in-fact appointed by the Administrative Agent. The Administrative Agent and any such sub-agent or attorney-in-fact may perform any and all of its duties and exercise its rights and powers through their respective Related Parties.  The exculpatory provisions set forth in this Article shall apply to any such sub-agent or attorney-in-fact and the Related Parties of the Administrative Agent, any such sub-agent and any such attorney-in-fact and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.  

(b)

The Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith until such time and except for so long as the Administrative Agent may agree at the request of the Required Lenders to act for the Issuing Bank with respect thereto; provided, that the Issuing Bank shall have all the benefits and immunities (i) provided to the Administrative Agent in this Article IX with respect to any acts taken or omissions suffered by the Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements pertaining to the Letters of Credit as fully as though the term “Administrative Agent” as used in this Article IX  included the Issuing Bank with respect to such acts or omissions, and (ii) as additionally provided in this Agreement with respect to the Issuing Bank.

Section 9.2.

Nature of Duties of Administrative Agent.  The Administrative Agent shall not have any duties or obligations except those expressly set forth in this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, (i) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing, (ii) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except those discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.2), and (iii) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be li­able for any action taken or not taken by it, its sub-agents or attorneys-in-fact with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.2) or in the absence of its own gross negli­gence or willful misconduct.  The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents or attorneys-in-fact selected by it with reasonable care.  The Administrative Agent shall not be deemed to have knowledge of any Default or Event of Default unless and until written notice thereof (which notice shall expressly state that it is a notice of Default or Event of Default arising under this Agreement), is given to the Administrative Agent by the Borrower or any Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (A) any statement, warranty or representation made in or in connection with any Loan Document, (B) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (C) the performance or observance of any of the covenants, agreements, or other terms and conditions set forth in any Loan Document, (D) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (E) the satisfaction  of any condition set forth in Article III or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.  

Section 9.3.

Lack of Reliance on the Administrative Agent.  Each of the Lenders, the Swingline Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each of the Lenders, the Swingline Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, continue to make its own decisions in taking or not taking of any action under or based on this Agreement, any related agreement or any document furnished hereunder or thereunder.  Each Lender represents to each other party hereto that it is a bank, savings and loan association or other similar savings or thrift institution, insurance company, investment fund or company, or other financial institution or lending company that makes or acquires commercial loans in the ordinary course of its business and that it is participating hereunder as a Lender for its own account (but subject to its rights to direct the disposition of its assets, including, without limitation, assignments and sales of participation interest in the Loans and its Commitment as contemplated hereunder), and for such commercial purposes, and that it has the knowledge and experience to be and is capable of evaluating the merits and risks of being a Lender hereunder.  

Section 9.4.

Certain Rights of the Administrative Agent.  If the Administrative Agent shall request instructions from the Required Lenders with re­spect to any action or ac­tions (including the failure to act) in connection with this Agreement, the Administrative Agent shall be entitled to refrain from such act or taking such act, unless and until it shall have received instructions from such Lend­ers; and the Administrative Agent shall not incur liability to any Person by rea­son of so refraining.  Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting hereunder in ac­cordance with the instructions of the Required Lenders where required by the terms of this Agreement.

Section 9.5.

Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed, sent or made by the proper Person.  The Administrative Agent may also rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (including counsel for the Borrower), indepen­dent public accountants and other experts selected by it and shall not be liable for any action taken or not taken by it in accordance with the advice of such counsel, accountants or experts.

Section 9.6.

The Administrative Agent in its Individual Capacity.  The Person serving as the Administrative Agent shall have the same rights and powers under this Agreement and any other Loan Document in its capacity as a Lender as any other Lender and may exercise or refrain from exercising the same as though it were not the Administrative Agent; and the terms “Lenders”, “Required Lenders”, “holders of Notes”, or any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its capacity as one of such Lenders or holders.  The Person acting as the Administrative Agent and its Affiliates may accept de­posits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or Affiliate of the Borrower as if it were not the Administrative Agent hereunder.

Section 9.7.

Successor Administrative Agent.

(a)

The Administrative Agent may resign at any time by giving notice thereof to the Lenders and the Borrower.  Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent, subject to the approval by the Borrower provided that no Default or Event of Default shall exist at such time.  If no suc­cessor Administrative Agent shall have been so appointed, and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States of America or any state thereof or a bank which maintains an office in the United States, having a combined capital and surplus of at least $500,000,000.

(b)

Upon the acceptance of its appointment as the Administrative Agent hereunder by a successor, such successor Administrative Agent shall there­upon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents.  If within 45 days after written notice is given of the retiring Administrative Agent’s resignation under this Section 9.7 no successor Administrative Agent shall have been appointed and shall have accepted such appointment, then on such 45th day (i) the retiring Administrative Agent’s resignation shall become effective, (ii) the retiring Administrative Agent shall thereupon be discharged from its duties and obligations under the Loan Documents, and (iii) the Required Lenders shall thereafter perform all duties of the retiring Administrative Agent under the Loan Documents until such time as the Required Lenders  appoint a successor Administrative Agent as provided above. After any retir­ing Administrative Agent’s resignation hereunder, the provi­sions of this Article IX shall continue in effect for the benefit of such retiring Administrative Agent and its representatives and agents in respect of any ac­tions taken or not taken by any of them while it was serving as the Administrative Agent. 

ARTICLE X

MISCELLANEOUS

Section 10.1.

Notices.

(a)

Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications to any party herein to be effective shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: 

	 	To the Borrower:

	DOLLAR GENERAL CORPORATION

	 	 	100 Mission Ridge

	 	 	Goodlettsville, Tennessee 37072

	 	 	Attention:         Wade Smith

	 	 	Telecopy Number:  (615) 855-4973

	 	To the Administrative Agent

	SunTrust Bank

	 	or Swingline Lender:

	303 Peachtree Street, N.E.

	 	 	Atlanta, Georgia 30308

	 	 	Attention:     Doris Folsom, Agency Services

	 	 	Telecopy Number:  (404) 724-3879

	 	With copies to:

	SunTrust Bank

	 	 	201 Fourth Avenue North

	 	 	3rd Floor

	 	 	Nashville, Tennessee 37219

	 	 	Attention:     Scott Corley

	 	 	Telecopy Number:  (615) 748-5269

	 	To the Issuing Bank:

	SunTrust Bank

	 	 	25 Park Place

	 	 	Atlanta, Georgia 30303

	 	 	Attention:     Jon Conley

	 	 	Telecopy Number:  (404) 588-8129

To any other Lender:

the address set forth in the Administrative 

Questionnaire

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.  All such notices and other communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the mail or if delivered, upon delivery; provided, that notices delivered  to the Administrative Agent, or the Issuing Bank or the Swingline Lender shall not be effective until actually received by such Person at its address specified in this Section 10.1.

(b)

Any agreement of the Administrative Agent and the Lenders herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Borrower.  The Administrative Agent and the Lenders shall be entitled to rely in good faith on the authority of any Person purporting to be a Person authorized by the Borrower to give such notice and the Administrative Agent and Lenders shall not have any liability to the Borrower or other Person on account of any action taken or not taken by the Administrative Agent or the Lenders in good faith reliance upon such telephonic or facsimile notice.  The obligation of the Borrower to repay the Loans, LC Disbursements, and all other Obligations hereunder shall not be affected in any way or to any extent by any failure of the Administrative Agent and the Lenders to receive written confirmation of any telephonic or facsimile notice.

Section 10.2.

Waiver; Amendments.

(a)

No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or any other Loan Document, and no course of dealing between the Borrower and the Administrative Agent or any Lender, shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power hereunder or thereunder.  The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies provided by law.  No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by subsection (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or the issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default or Event of Default at the time.

(b)

No amendment or waiver of any provision of this Agreement or the other Loan Documents, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower and the Required Lenders or the Borrower and the Administrative Agent with the consent of the Required Lenders and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that no amendment or waiver shall:  (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or obligation to pay any LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the date fixed for any scheduled payment of any princi­pal of, or interest on, any Loan or LC Disbursement or interest thereon or any fees hereunder or reduce the amount of, waive or excuse any such scheduled payment, or postpone the scheduled date for the termination or reduction of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.21 (b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the consent of each Lender, or (vi) release any Guarantor or limit the liability of any such Guarantor under the Guaranty Agreement, without the written consent of each Lender; provided further, that no such amendment or waiver shall amend, modify or otherwise affect the rights, duties or obligations of the Administrative Agent, the Swingline Lender or the Issuing Bank without the prior written consent of such Person.  

Section 10.3.

Expenses; Indemnification.

(a)

The Borrower shall pay (i) all reasonable, out-of-pocket costs and expenses of the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of a single firm of primary counsel, and of the Administrative Agent and its Affiliates, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of the Loan Documents and any amendments, modifications or waivers thereof (whether or not the transactions contemplated in this Agreement or any other Loan Document shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all reasonable out-of-pocket costs and expenses (including, without limitation, the reasonable fees, charges and disbursements of outside counsel and the allocated cost of inside counsel) incurred by the Administrative Agent, the Issuing Bank or after the occurrence and during the continuance of any Event of Default, any Lender in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made or any Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b)

The Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing (each, an “Indemnitee”) against, and hold each of them harmless from, any and all costs, losses, liabilities, claims, damages and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, which may be incurred by or asserted against any Indemnitee by any Person including the Loan Parties arising out of, in connection with or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, or any other agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation  of any of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or any actual or proposed use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned by the Borrower or any Subsidiary or any Environmental Liability  related in any way to the Borrower or any Subsidiary, and (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided, that the Borrower shall not be obligated to indemnify any Indemnitee for any of the foregoing (i) arising out of such Indemnitee’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and nonappealable judgment, and (ii) as a result of any claim for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

(c)

The Borrower shall pay, and hold the Administrative Agent, the Issuing Bank, and each of the Lenders harmless from and against, any and all present and future stamp, documentary, and other similar taxes with respect to this Agreement and any other Loan Documents, any collateral described therein, or any payments due thereunder, and save the Administrative Agent, the Issuing Bank, and each Lender harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes.

(d)

To the extent that the Borrower fails to pay any amount required to be paid to the Administrative Agent, the Issuing Bank or the Swingline Lender under subsections (a), (b) or (c) hereof, each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s Pro Rata Share (determined as of the time that the unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided, that the unreimbursed expense or indemnified payment, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity as such.

(e)

To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages) arising out of, in connection with or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions contemplated therein, any Loan or any Letter of Credit  or the use of proceeds thereof.

(f)

All amounts due under this Section shall be payable promptly after written demand therefor.

Section 10.4.

Successors and Assigns.

(a)

The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)

Any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be an amount which, is not less than $1,000,000 and in an integral multiple of $1,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consent (such consent of the Borrower not to be unreasonably withheld or delayed), (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loan or the Commitment assigned, and (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $1,000, and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.  Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Acceptance, the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.18, 2.20, 2.21 and 10.3.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c)

The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in Atlanta, Georgia a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d)

Any Lender may, without the consent of, or prior notice to, the Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Issuing Bank, the Swingline Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided  that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver with respect to the following to the extent affecting such Participant: (i) increase the Commitment of such Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of such Lender if affected thereby, (iii) postpone the date fixed for any payment of any principal of, or interest on, any Loan or LC Disbursement or interest thereon or any fees hereunder or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date for the termination or reduction of any Commitment, without the written consent of such Lender if affected thereby, (iv) change Section 2.21(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders which are required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, or (vi) release any Guarantor or limit the liability of any such Guarantor under the Guaranty Agreement without the written consent of such Lender except to the extent such release is expressly provided under the terms of the Guaranty Agreement.  Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.16, 2.17, and 2.18 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.7 as though it were a Lender, provided such Participant agrees to be subject to Section 10.7 as though it were a Lender.

(e)

A Participant shall not be entitled to receive any greater payment under Section 2.18 or Section 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent.  A Participant that would be a Non-U.S. Lender if it were a Lender shall not be entitled to the benefits of Section 2.20 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.20(e) as though it were a Lender.  

(f)

Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g)

Notwithstanding anything to the contrary set forth herein, no assignment by any Lender to an Approved Fund shall relieve the assigning Lender of any of its obligations to fund Loans or make payments in respect of any Letters of Credit under this Agreement if, for any reason, such Approved Fund fails to fund any such Loans or make any such payments, and the assigning Lender (and not the Approved Fund) shall have the sole right and responsibility to deliver all consents, waivers, amendments, and other actions required or requested under the terms of this Agreement with respect to its Approved Fund.  

Section 10.5.

Governing Law; Jurisdiction; Consent to Service of Process.

(a)

This Agreement and the other Loan Documents shall be construed in accordance with and be governed by the law (without giving effect to the conflict of law principles thereof) of the State of Georgia. 

(b)

The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the United States District Court of the Northern District of Georgia, and of any state court of the State of Georgia located in Fulton County and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Georgia state court or, to the extent permitted by applicable law, such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding  relating  to this Agreement or any other Loan Document against the Borrower or its properties in the courts of any jurisdiction.

(c)

The Borrower irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding described in subsection (b) of this Section and brought in any court referred to in subsection (b) of this Section. Each of the parties hereto irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)

Each party to this Agreement irrevocably consents to the service of process in the manner provided for notices in Section 10.1.  Nothing in this Agreement or in any other Loan Document will affect the right of any party hereto to serve process in any other manner permitted by law.

Section 10.6.

WAIVER OF JURY TRIAL.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 10.7.

Right of Setoff.  In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, each Lender and the Issuing Bank shall have the right, at any time or from time to time upon the occurrence and during the continuance of an Event of Default, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, to set off and apply against all deposits (general or special, time or demand, provisional or final) of the Borrower at any time held or other obligations at any time owing by such Lender and the Issuing Bank to or for the credit or the account of the Borrower against any and all Obligations held by such Lender or the Issuing Bank, as the case may be, irrespective of whether such Lender or the Issuing Bank shall have made demand hereunder and although such Obligations may be unmatured.  Each Lender and the Issuing Bank agree promptly to notify the Administrative Agent and the Borrower after any such set-off and any application made by such Lender and the Issuing Bank, as the case may be; provided, that the failure to give such notice shall not affect the validity of such set-off and application. 

Section 10.8.

Counterparts; Integration.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  This Agreement, the other Loan Documents, and any separate letter agreement(s) among the Borrower, SunTrust Bank and SunTrust Capital Markets, Inc. constitute the entire agreement among the parties hereto and thereto regarding the subject matters hereof and thereof and supersede all prior agreements and understandings, oral or written, regarding such subject matters.  

Section 10.9.

Survival.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.  The provisions of Sections 2.18, 2.19, 2.20, 10.3 and 10.11 and Article IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.  All representations and warranties made herein, in the certificates, reports, notices, and other documents delivered pursu­ant to this Agreement shall survive the execution and delivery of this Agreement and the other Loan Documents, and the making of the Loans and the issuance of the Letters of Credit.

Section 10.10.

Severability.  Any provision of this Agreement or any other Loan Document held to be illegal, invalid or unenforceable in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability without affecting the legality, validity or enforceability of the remaining provisions hereof or thereof; and the illegality, invalidity or unenforceability of a particular provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 10.11.

Confidentiality.  Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’, directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential pursuant to the terms hereof), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to a written agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower, or (h) to the extent such Information (x) is publicly available at the time of disclosure or become publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis other than from any Person known by the Administrative Agent, Issuing Bank, or Lender, as the case may be, to have made such information available in violation of a duty of confidentiality owed to the Borrower or any Subsidiary.  For the purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or its business; provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has observed customary practices and procedures of commercial banks in respect of confidential information of their customers and otherwise exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 10.12.

Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which may be treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate of interest (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by a Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges  that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to the date of repayment, shall have been received by such Lender.

Section 10.13.

Amendment and Restatement.  This Agreement constitutes an amendment and restatement of the Existing Credit Agreement and is not, and is not intended by the parties to be, a novation of the Existing Credit Agreement.  All rights and obligations of the parties shall continue in effect, except as otherwise expressly set forth herein.  Without limiting the foregoing, no Default or Event of Default existing under the Existing Credit Agreement as of the Restatement Date shall be deemed waived or cured by this amendment and restatement thereof.  On the Restatement Date, any and all Loans outstanding under the Existing Credit Agreement, together with all accrued and unpaid interest, fees, and other expenses and amounts payable by the Borrower under the Existing Credit Agreement shall be paid in full to the “Lenders” under the Existing Credit Agreement, the Issuing Bank, and the Administrative Agent, and the Revolving Commitments of those “Lenders” under the Existing Credit Agreement that are not continuing as Lenders under this Agreement shall automatically terminate and cease to be of any force or effect without further action on the part of any party.  The Revolving Commitments of the Lenders under this Agreement after giving effect to this amendment and restatement are set forth on the respective signature pages for such Lenders hereinafter set forth.  On and after the Restatement Date, all Loans and other extensions of credit shall be made by the Lenders under this Agreement in accordance with their respective Pro Rata Shares of the Revolving Commitments as in effect from time to time.  All references in the other Loan Documents to the Credit Agreement shall be deemed to refer to and mean this Amended and Restated Revolving Credit Agreement, as the same may be further amended, supplemented, and restated from time to time.

(remainder of page left intentionally blank)

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

	 	DOLLAR GENERAL CORPORATION

	 	 	 
	 	By:

	/s/ Wade Smith

	 	Name:

	Wade Smith

	 	Title:

	Treasurer

	 	SUNTRUST BANK

	 	as Administrative Agent, as Issuing Bank, 

	 	as Swingline Lender, and as a Lender

	 	 	 
	 	By:

	/s/ Scott Corley

	 	Name:

	Scott Corley

	 	Title:

	Managing Partner

	 	Commitment:

	$40,000,000

	 	 	 
	 	Letter of Credit

	 
	 	Subcommitment:

	$75,000,000

	 	 	 
	 	Swingline

	 
	 	Subcommitment:

	$10,000,000

	 	BANK OF AMERICA, N.A., 

	 	as Co-Syndication Agent and as a Lender

	 	 	 
	 	By:

	/s/ Timothy H. Spanos

	 	Name:

	Timothy H. Spanos

	 	Title:

	Managing Director

	 	Commitment:

	$26,000,000

	 	AMSOUTH BANK,

	 	as Co-Documentation Agent and as a Lender

	 	 	 
	 	By:

	/s/ Monty Trimble

	 	Name:

	Monty Trimble

	 	Title:

	Senior Vice President

	 	Commitment:

	$26,000,000

	 	KEYBANK NATIONAL ASSOCIATION,

	 	as Co-Syndication Agent and as a Lender

	 	 	 
	 	By:

	/s/ David J. Wechter

	 	Name:

	David J. Wechter

	 	Title:

	Vice President

	 	Commitment:

	$26,000,000

	 	U.S. BANK NATIONAL ASSOCIATION,

	 	as Co-Documentation Agent and as a Lender

	 	 	 
	 	By:

	/s/ Ward C. Wilson

	 	Name:

	Ward C. Wilson

	 	Title:

	Senior Vice President

	 	Commitment:

	$26,000,000

	 	HUNTINGTON BANK, as a Lender

	 	 	 
	 	By:

	/s/ Steven P. Clemens

	 	Name:

	Steven P. Clemens

	 	Title:

	Vice President

	 	Commitment:

	$17,000,000

	 	FIFTH THIRD BANK, N.A. (Tennessee)

	 	 	 
	 	By:

	/s/ David J. Hicks

	 	Name:

	David J. Hicks

	 	Title:

	Vice President, Managing Director

	 	Commitment:

	$17,000,000

	 	UNION PLANTERS BANK, N.A., as a Lender

	 	 	 
	 	By:

	/s/ Carol S. Geraghty

	 	Name:

	Carol S. Geraghty

	 	Title:

	Vice President

	 	Commitment:

	$21,000,000

	 	NATIONAL CITY BANK, as a Lender

	 	 	 
	 	By:

	/s/ Michael J. Durbin

	 	Name:

	Michael J. Durbin

	 	Title:

	Senior Vice President

	 	Commitment:

	$17,000,000

	 	BRANCH BANKING AND TRUST COMPANY, as a Lender

	 	 	 
	 	By:

	/s/ R. Andrew Beam

	 	Name:

	R. Andrew Beam

	 	Title:

	Senior Vice President

	 	Commitment:

	$17,000,000

	 	LASALLE BANK NATIONAL ASSOCIATION, as a Lender

	 	 	 
	 	By:

	/s/ Kyle Fenwick

	 	Name:

	Kyle Fenwick

	 	Title:

	VP

	 	Commitment:

	$17,000,000

SCHEDULE 1.1-A

APPLICABLE MARGINS AND APPLICABLE PERCENTAGES

	 	 	 
	

Level

	Ratio of Consolidated 

Funded Debt to Consolidated      ________EBITDA_________

	

Applicable Margin

	

Applicable Percentage1

	 	 	LIBOR

	Base Rate

	 
	I

	>1.25 to 1.00

 

	1.750%

	0.250%

	0.375%

	II

	< 1.25 to 1.00, but

> 1.00 to 1.00

	1.500%

	0.000%

	0.250%

	III

	< 1.00 to 1.00, but

> 0.75 to 1.00

	1.250%

	0.000%

	0.200%

	IV

	< 0.75 to 1.00, but 

> 0.50 to 1.00

	1.000%

	0.000%

	0.175%

	V

	< 0.50 to 1.00, but

> 0.25 to 1.00

	0.875%

	0.000%

	0.150%

	VI

	< 0.25 to 1.00

	0.750%

	0.000%

	0.125%

1  Investment Grade Adjustment to be made in Applicable Margin for Eurodollar loans and in Applicable Percentage.   

EXHIBIT A-1

REVOLVING CREDIT NOTE

[$___________]

         Atlanta, Georgia

June __, 2004

FOR VALUE RECEIVED, the undersigned, DOLLAR GENERAL CORPORATION, a Tennessee corporation (the “Borrower”), hereby promises to pay to the order of [NAME OF LENDER] (the “Lender”), for the account of its Applicable Lending Office, at the office of SunTrust Bank, as Administrative Agent (the “Administrative Agent”), at 303 Peachtree St., N.E., Atlanta, Georgia 30303, on the Commitment Termination Date, the principal sum of [amount of such Lender’s Commitment] or, if less, the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to the Credit Agreement described below, in lawful money of the United States of America in immediately available funds, and to pay interest from the date hereof on the principal amount thereof from time to time outstanding, in like funds, at said office, at the rate or rates per annum and payable on such dates as provided in the Credit Agreement.  In addition, the Borrower further promises to pay all costs of collection, including the reasonable attorneys’ fees of the Lender, if any amounts evidenced by this Note are collected by or through an attorney-at-law or in bankruptcy or other judicial proceedings.

The Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates at a rate or rates provided in the Credit Agreement.

All borrowings evidenced by this Note and all payments and prepayments of the principal hereof and the date thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided, that the failure of the holder hereof to make such a notation or any error in such notation shall not affect the obligations of the Borrower to make the payments of principal and interest in accordance with the terms of this Note and the Credit Agreement.

This Note is one of the Notes referred to in, and is entitled to the benefits of, the Amended and Restated Revolving Credit Agreement dated as of June __, 2004, among the Borrower, the Lender and certain other lenders parties thereto, the Administrative Agent, KEYBANK, NATIONAL ASSOCATION and BANK OF AMERICA, N.A., as Co-Syndication Agents, and U.S. BANK, NATIONAL ASSOCIATION and AMSOUTH BANK, as Co-Documentation Agents (as the same may be further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”; the capitalized terms that are defined in the Credit Agreement being used in this Note with the respective meanings assigned to such capitalized terms in the Credit Agreement).  The Credit Agreement contains, among other things, provisions for the acceleration of the maturity hereof upon the happening of certain events, for prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.  

THIS NOTE HAS BEEN EXECUTED AND DELIVERED BY THE BORROWER IN ATLANTA, GEORGIA, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF GEORGIA AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

	 	DOLLAR GENERAL CORPORATION

	 	 
	 	Name:

	 
	 	Title:

	 

LOANS AND PAYMENTS

	Date

	Amount and

Type of Loan

	Payments of

Principal

	Unpaid Principal

Balance of

Note

	Name of Person

Making

Notation

	 	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 

1

EXHIBIT A-2

SWINGLINE NOTE

$10,000,000.00

         Atlanta, Georgia

June __, 2004

FOR VALUE RECEIVED, the undersigned, DOLLAR GENERAL CORPORATION, a Tennessee corporation (the “Borrower”), hereby promises to pay to the order of SUNTRUST BANK (the “Lender”), for the account of its Applicable Lending Office, at the office of SunTrust Bank, as Administrative Agent (the “Administrative Agent”), at 303 Peachtree St., N.E., Atlanta, Georgia 30303, on the Swingline Commitment Termination Date, the principal sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) or, if less, the aggregate unpaid principal amount of all Swingline Loans made by the Lender to the Borrower pursuant to the Credit Agreement described below, in lawful money of the United States of America in immediately available funds, and to pay interest from the date hereof on the principal amount thereof from time to time outstanding, in like funds, at said office, at the rate or rates per annum and payable on such dates as provided in the Credit Agreement.  In addition, the Borrower further promises to pay all costs of collection, including the reasonable attorneys’ fees of the Lender, if any amounts evidenced by this Note are collected by or through an attorney-at-law or in bankruptcy or other judicial proceedings.

The Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates at a rate or rates provided in the Credit Agreement.

All borrowings evidenced by this Note and all payments and prepayments of the principal hereof and the date thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided, that the failure of the holder hereof to make such a notation or any error in such notation shall not affect the obligations of the Borrower to make the payments of principal and interest in accordance with the terms of this Note and the Credit Agreement.

This Note is the Swingline Note referred to in, and is entitled to the benefits of, the Amended and Restated Revolving Credit Agreement dated as of June __, 2004, among the Borrower, the Lender and certain other lenders parties thereto, the Administrative Agent, KEYBANK, NATIONAL ASSOCATION and BANK OF AMERICA, N.A., as Co-Syndication Agents, and U.S. BANK, NATIONAL ASSOCIATION and AMSOUTH BANK, as Co-Documentation Agents (as the same may be further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”; the capitalized terms that are defined in the Credit Agreement being used in this Note with the respective meanings assigned to such capitalized terms in the Credit Agreement).  The Credit Agreement contains, among other things, provisions for the acceleration of the maturity hereof upon the happening of certain events, for prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.  

THIS NOTE HAS BEEN EXECUTED AND DELIVERED BY THE BORROWER IN ATLANTA, GEORGIA, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF GEORGIA AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

	 	DOLLAR GENERAL CORPORATION

	 	 
	 	Name:

	 
	 	Title:

	 

LOANS AND PAYMENTS

	

Date

	

Amount and

Type of Loan

	

Payments of

Principal

	

Unpaid Principal

Balance of

Note

	

Name of Person

Making

Notation

	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 

EXHIBIT B

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of June _____, 2004 (as further amended and in effect on the date hereof, the “Credit Agreement”), among DOLLAR GENERAL CORPORATION, a Tennessee corporation, the Lenders from time to time party thereto and SunTrust Bank, as Administrative Agent for the Lenders.  Terms defined in the Credit Agreement are used herein with the same meanings.

The Assignor hereby sells and assigns, without recourse, to the Assignee designated below, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Assignment Date set forth below, the interests set forth below (the “Assigned Interest”) in the Assignor’s rights and obligations under the Credit Agreement, including, without limitation, the interests set forth below in the Revolving Commitment of the Assignor on the Assignment Date and Revolving Loans owing to the Assignor which are outstanding on the Assignment Date, together with the participations in the LC Exposure and the Swingline Exposure of the Assignor on the Assignment Date, but excluding accrued interest and fees to and excluding the Assignment Date.  The Assignee hereby acknowledges receipt of a copy of the Credit Agreement.  From and after the Assignment Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the Assigned Interest, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of the Assigned Interest, relinquish its rights and be released from its obligations under the Credit Agreement.

This Assignment and Acceptance is being delivered to the Administrative Agent together with (i) if the Assignee is a Non-U.S. Lender, any documentation required to be delivered by the Assignee pursuant to Section 2.20(e) of the Credit Agreement, duly completed and executed by the Assignee, and (ii) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire in the form supplied by the Administrative Agent, duly completed by the Assignee.  The Assignee shall pay the fee payable to the Administrative Agent pursuant to Section 10.4(b) of the Credit Agreement.

This Assignment and Acceptance is made subject to the Standard Terms and Conditions for Assignment and Assumption attached hereto as Annex 1, such Standard Terms and Conditions being incorporated herein by reference with the same effect as if fully set forth herein.  This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of Georgia.

Date of Assignment:

Legal Name of Assignor:

Legal Name of Assignee:

Assignee’s Address for Notices:

Effective Date of Assignment:

(“Assignment Date”):

	

Facility_____________

	

Principal Amount Assigned

	Percentage Assigned of Revolving Commitment (set forth, to at least 8 decimals, as a percentage of the aggregate Revolving Commitments of all Lenders thereunder)_____

	Revolving Loans

	$________________

	______________%

The terms set forth above are hereby agreed to:

	 	[Name of Assignor], as Assignor

	 	 
	 	By:

	 
	 	Name:

	 
	 	Title:

	 

	 	[Name of Assignee], as Assignee

	 	 
	 	By:

	 
	 	Name:

	 
	 	Title:

	 

The undersigned hereby consents to the within assignment:

[Borrower]

SunTrust Bank, as Administrative Agent

By_______________________

By___________________________

Name:

Name:

Title:

Title:

SunTrust Bank, as Issuing Bank

By___________________________

Name:

Title:

ANNEX 1

[                             ]

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.

Representations and Warranties.

1.1

Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (ii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby, and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2

Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and,  to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.1 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Non-U.S. Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2.

Payments.  Choose in the alternative [Alternative A: From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.]  [Alternative B:  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to, on or after the Effective Date.  The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.]

3.

General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by and construed in accordance with the law of the State of Georgia.

- # -

EXHIBIT C

AMENDED AND RESTATED GUARANTY AGREEMENT

THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this “Guarantee”) made and delivered as of June ___, 2004, by each of the Subsidiaries of Dollar General Corporation, a Tennessee corporation (“Borrower”), identified on the signature pages of this Guarantee (each a “Guarantor” and collectively the “Guarantors”) in favor of (i) each of the Lenders from time to time parties to the Credit Agreement described below (each a “Lender” and collectively the “Lenders”), and (ii) SUNTRUST BANK, in its capacities as Administrative Agent and Issuing Bank under the terms of the Credit Agreement and the other Loan Documents referred to in the Credit Agreement (in such capacities, the “Administrative Agent” and the “Issuing Bank” respectively; the Lenders, the Administrative Agent and Issuing Bank collectively referred to herein as the “Guaranteed Parties”).

W I T N E S S E T H:

WHEREAS, Borrower, the Lenders, the Administrative Agent, KEYBANK, NATIONAL ASSOCATION and BANK OF AMERICA, N.A., as Co-Syndication Agents, and U.S. BANK, NATIONAL ASSOCIATION and AMSOUTH BANK, as Co-Documentation Agents, are parties to a certain Amended and Restated Revolving Credit Agreement dated as of June ___, 2004 (as the same may be further amended, restated, and supplemented from time to time, the “Credit Agreement”; capitalized terms used in this Guarantee that are defined in the Credit Agreement being used herein with the respective meanings given to such capitalized terms in the Credit Agreement);

WHEREAS, the Credit Agreement, upon the effectiveness thereof, shall constitute an amendment and restatement of the Existing Credit Agreement that has been requested by Borrower to extend the maturity thereof and to amend certain other provisions thereof;

WHEREAS, the obligations of Borrower under the Existing Credit Agreement have been guaranteed by each of the Guarantors pursuant to a certain Guaranty Agreement dated as of June 21, 2002 (as the same may have been amended, supplemented and restated and is now in effect, the “Existing Guarantee”);

WHEREAS, it is a condition to the amendment and restatement of the Existing Credit Agreement as requested by the Borrower that each Guarantor, as a Subsidiary of Borrower, enter into this Guarantee in order to restate, reaffirm and continue in effect its unconditional guarantee of the payment of the Loans and all other Obligations of Borrower as provided in the Loan Documents (the Loans and such other Obliga­tions being herein collectively referred to as the “Guaranteed Obligations”; the term “Guaranteed Obligations” to include, without limitation (i) all principal and interest due with respect to all Loans outstanding under the terms of the Credit Agreement, and all reimbursement obligations in respect of Letters of Credit issued by the Issuing Bank under the Credit Agreement, in all cases including, without limitation, interest accruing or that would have accrued after the filing of a petition in bankruptcy or other insolvency proceeding (whether or not such claim for interest is allowed or allowable in such proceeding), and all obligations and liabilities of Borrower arising pursuant to any interest rate protection or swap agreements entered into with one or more of the Lenders, (ii) all fees, expenses, amounts payable by Borrower for reimbursement  or indemnification under the terms of the Credit Agreement and any other Loan Document, and all amounts advanced by any of the Guaranteed Parties to protect or preserve the value of any security for the Loans and other Guaranteed Obligations, and (iii) all renewals, extensions, modifications, and refinancings (in whole or in part) of any of the amounts referred to in clauses (i) and (ii) above);

WHEREAS, the amendment and restatement of the Existing Credit Agreement, and the making of the Loans and other extensions of credit thereunder, will result in direct and substantial benefits to each Guarantor;

NOW, THEREFORE, in order to induce the Guaranteed Parties to amend and restate the Existing Credit Agreement and to make the Loans and otherwise to extend and continue to extend credit to Borrower hereafter, and in consideration of $10.00 and other good and valuable consideration received by Guarantor, each Guarantor hereby declares and agrees:

1.

Each Guarantor hereby unconditionally and irrevocably guarantees to the Guaranteed Parties, and any transferee of any of the Guaranteed Obligations, jointly and severally, the full and prompt payment of all Guaranteed Obligations and all costs, charges and expenses (including reasonable attorneys’ fees) in­curred or sustained by the Guaranteed Parties in enforcing the obligations of such Guarantor hereunder.  If any portion of the Guaranteed Obligations is not paid when due, each Guarantor hereby agrees to and will im­mediately pay same, without resort by the Guaranteed Parties to any other person or party.  The obligation of each Guarantor to the Guaranteed Parties hereunder is primary, absolute and unconditional, except as may be specifically set forth herein.  Any and all payments by each Guarantor hereunder shall be made free and clear of, and without deduction for, any set-off, counterclaim, recoupment, or withholding so that, in each case, each Guaranteed Party will receive, after giving effect to any Taxes (other than taxes applicable to the Guaranteed Party of the types described in the definition of “Excluded Taxes” as set forth in the Credit Agreement), the full amount that it would otherwise be entitled to receive with respect to the Guaranteed Obligations (but without duplication of amounts for Taxes already included in the Guaranteed Obligations).  Each Guarantor acknowledges and agrees that this is a guarantee of payment when due, and not of collection.

2.

This Guarantee is continuing in nature and shall be effective with respect to the full amount outstand­ing under all Guaranteed Obligations, now existing or hereafter made or extended, and notwithstanding (i) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or like proceeding relating to any Guarantor or Borrower, or any action taken with respect to this Guarantee by any trustee or receiver, or by any court, in any such proceeding, (ii) any lack of validity or enforceability of the Credit Agreement or the other Loan Documents, or (iii) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Guarantor.  Each Guarantor acknowledges and agrees that the number and amounts of outstanding Guaranteed Obligations may fluctuate from time to time hereafter, and that Borrower may make payments to the Guaranteed Parties from time to time hereafter.  Each Guarantor expressly agrees that this Guarantee shall continue in full force and effect notwithstanding such fluc­tuations and payments, and whether or not any Guaranteed Obliga­tions are outstand­ing at any particular time, until such time as all Guaranteed Obligations have been paid in full and any commit­ment of the Guaranteed Parties under the Credit Agreement has been terminated.

3.

Each Guarantor hereby waives notice of the Guaranteed Parties’ ac­ceptance of this Guarantee and the creation, extension or renewal of any Loans or other Guaranteed Obligations.  Each Guarantor hereby con­sents and agrees that, at any time or times, without notice to or further approval from Guarantor, and without in any way affect­ing the obligations of such Guaran­tor hereunder, the Guaranteed Parties may, with or without consideration (i) release, compromise with, or agree not to sue, in whole or in part, Borrower or any other obligor, guarantor, endorser or surety on any Loans or any other Guaranteed Obligations, (ii) renew, extend, accelerate, or increase or decrease the principal amount of any Loans or other Guaranteed Obligations, either in whole or in part, (iii) amend, waive, or otherwise modify any of the terms of any Loans or other Guaranteed Obligations or of any mortgage, deed of trust, security agreement, or other undertaking of Borrower or any other obligor, endorser, guarantor or surety in connection with any Loans or other Guaranteed Obligations, and (iv) apply any payment received from Borrower or from any other obligor, guarantor, endorser or surety on the Loans or other Guaranteed Obligations to any of the li­abilities of Borrower or of such other obligor, guarantor, en­dorser, or surety which the Guaranteed Parties may choose.

4.

Each Guarantor hereby consents and agrees that the Guaranteed Parties may at any time or times, either with or without con­sideration, sur­render, release or receive any property or other collateral of any kind or nature whatsoever held by it or for its account secur­ing any Loans or other Guaranteed Obligations, or substitute any collateral so held by the Guaranteed Parties for other collateral of like or differ­ent kind, without notice to or further consent from such Guaran­tor, and such sur­render, receipt, release or substitution shall not in any way affect the obligations of such Guarantor hereunder.  The Guaranteed Parties shall have full authority to adjust, compromise, and receive less than the amount due upon any such collateral, and may  enter into any accord and satisfaction agreement with re­spect to the same as the Guaranteed Parties may deem advisable without affect­ing the obliga­tions of such Guarantor hereunder.  The Guaranteed Parties shall be under no duty to undertake to collect upon such collateral or any part thereof, and no Guarantor’s obliga­tions hereunder shall be affected by the Guaranteed Parties’ alleged negligence or mis­take in judgment in handling, disposing of, obtaining, or failing to collect upon or perfect a security interest in, any such collateral.

5.

Each Guarantor hereby waives presentment, demand, pro­test, and notice of dishonor of any of the liabilities guaranteed hereby.  The Guaranteed Parties shall have no duty or obligation (i) to proceed or exhaust any remedy against Borrower, any other obligor, guaran­tor, endorser, or surety on any Loans or other Guaranteed Obliga­tions, or any other security held by the Guaranteed Parties for any Loans or other Guaranteed Obligations, or (ii) to give any notice whatsoever to Bor­rower, any Guarantor, or any other obligor, guaran­tor, endorser, or surety on any Loans or other Guaranteed Obliga­tions, in any case before bringing suit, exercising rights to any such security or instituting proceedings of any kind against any Guarantor, Borrower, or any of them, and each Guarantor hereby waives any requirement for such actions by the Guaranteed Parties.  Upon default by Bor­rower and the Guaranteed Parties’ demand to any Guarantor hereunder, such Guarantor shall be held and bound to the Guaranteed Parties directly as principal debtor in respect of the payment of the amounts hereby guaranteed, such liability of such Guarantor being joint and several with Borrower, each other Guarantor, and all other ob­ligors, guarantors, endorsers and sureties on the Loans or other Guaranteed Obligations.

6.

Each Guarantor hereby waives to the fullest extent possible as against Borrower and its assets, any and all rights, whether at law, in equity, by agreement or otherwise, to subrogation, indemnity, reimbursement, contribution, payment or any other claim, cause of action, right or remedy that would otherwise arise out of any payment by such Guarantor hereunder, notwithstanding the manner or nature of such payment including but not limited to (a) direct payment by such Guarantor, (b) set-off by the Administrative Agent or any Lender against any liability or deposit owed by such entity to such Guarantor, (c) recovery by the Administrative Agent or any Lender against such Guarantor or any property of such Guarantor, as the result of any judgment, judgment lien, or legal process, (d) the application of the proceeds of any disposition of all or any part of the collateral to the repayment or all or any part of the Guaranteed Obligations, or (e) the conveyance of all or any part of any Collateral to the Administrative Agent or the Lenders in satisfaction of all or any part of the Guaranteed Obligations, until the indefeasible payment in full of the Guaranteed Obligations.  The waivers set forth above are intended by each Guarantor, the Administrative Agent, and the Lenders to be for the benefit of Borrower and such waivers shall be enforceable by Borrower as an absolute defense to any action by such Guarantor against Borrower or its assets which action arises out of any payment by any Guarantor hereunder.

7.

As an independent covenant, each Guarantor hereby expressly covenants and agrees for the benefit of the Guaranteed Parties that all obligations and liabilities of Borrower and any other Subsidiaries of Borrower to any Guarantor of whatsoever description, including without limitation, all intercompany receivables of such Guarantor from Borrower and any such other Subsidiaries (collectively, the “Junior Claims”) shall be subordinate and junior in right of payment to all obligations of Borrower and any such other Subsidiaries to the Guaranteed Parties under the terms of the Credit Agreement, this Guarantee, and the other Loan Documents (collectively, the “Senior Claims”).  If an Event of Default shall occur, then, unless and until such Event of Default shall have been cured, waived, or shall have otherwise ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made by Borrower and any such other Subsidiaries to any Guarantor on account of or in any manner in respect of any Junior Claim except such payments and distributions the proceeds of which shall be applied to the payment of Senior Claims.  

In the event of a Proceeding (as hereinafter defined), all Senior Claims shall first be paid in full before any direct or indirect payment or distribution (in cash, property, securities, by set-off or otherwise) shall be made to any Guarantor on account of or in any manner in respect of any Junior Claim except such payments and distributions the proceeds of which shall be applied to the payment of Senior Claims.  For purposes of the immediately preceding sentence, “Proceeding” means Borrower or any Guarantor shall commence a voluntary case concerning itself under the United States Bankruptcy Code or any other applicable bankruptcy laws; or any involuntary case is commenced against Borrower or any Guarantor; or a custodian (as defined in the Bankruptcy Code or any other applicable bankruptcy laws) is appointed for, or takes charge of, all or any substantial part of the property of Borrower or any Guarantor, or Borrower or any Guarantor commences any other proceedings under any reorganization, arrangement, adjustment of debt, relief of debtor, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether commenced against Borrower or any Guarantor, or Borrower or any Guarantor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Borrower or any Guarantor suffers any appointment of any custodian or the like for it or any substantial part of its property; or Borrower or any Guarantor makes a general assignment for the benefit of creditors; or Borrower or any Guarantor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or Borrower or any Guarantor shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or Borrower or any Guarantor shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or any organizational action shall be taken by Borrower or any Guarantor for the purpose of effecting any of the foregoing.

In the event any direct or indirect payment or distribution is made to a Guarantor in contravention of this Section 7, such payment or distribution shall be deemed received in trust for the benefit of the Guaranteed Parties and shall be immediately paid over to the Administrative Agent for application against the Guaranteed Obligations in accordance with the terms of the Credit Agreement

Each Guarantor agrees to execute such additional documents as the Administrative Agent may reasonably request to evidence the subordination provided for in this Section 7.

8.

(a)  Upon the occurrence of an Event of Default specified in Section 8.1(g) or (h) of the Credit Agreement with respect to the Borrower, all Guaranteed Obligations shall automatically become immediately due and payable by the Guarantors, without notice or other action on the part of the Guaranteed Parties, and regardless of whether payment of the Guaranteed Obligations by Borrower has then been accelerated.  In addition, if any event of the types described in Section 8.1(g) or (h) of the Credit Agreement should occur with respect to any Guarantor, and the Guaranteed Obligations of the Borrower have or thereafter become due and payable, then the Guaranteed Obligations shall automatically become immediately due and payable by such Guarantor, without further notice or other action on the part of the Guaranteed Parties.

(b)

Upon the insolvency or bankruptcy of Borrower, the Guaranteed Parties’ rights hereunder shall not be affected or impaired by their omission to prove all or any portion of its claim, and the Guaranteed Parties may in its discre­tion value or refrain from valuing any security held by it without in any way releasing, reducing or otherwise affecting any Guarantor’s obligations hereunder. Each Guarantor agrees that this Guarantee shall con­tinue to be effective or be reinstated, as the case may be, if at any time any payment of the liabilities hereby guaranteed are re­scinded or must otherwise be returned or restored by the Guaranteed Parties upon the insolvency or bankruptcy of Bor­rower or any other obligor, guaran­tor, endorser or surety on any Loans or other Guaranteed Obligations, all as though such payment had not been made.

9.

This Guarantee is in addition to, and is not in­tended to supersede or be a substitute for any other guarantee, suretyship agreement, or instrument which the Guaranteed Parties may hold in connection with any Loans or other Guaranteed Obligations and each Guarantor’s obligations hereunder shall be deemed to be joint and several with the obligations of each other Guarantor. 

10.

This Guarantee contains the entire agreement be­tween the parties relating to the subject matter hereof, and no provision hereof may be waived or modified except by a writing executed by each Guarantor and the Guaranteed Parties.  There is no understanding that any person other than the Guarantors shall execute this or any similar Guarantee.  No Guarantor’s execu­tion of this Guarantee was based upon any facts or materials provided by the Guaranteed Parties, nor was  any Guarantor induced to execute this Guarantee by any representa­tion, statement or information made or furnished by the Guaranteed Parties. Each Guarantor further acknowledges and agrees that such Guarantor assumes sole respon­sibility for independently obtaining any information or reports deemed nec­essary by such Guarantor in reaching any deci­sion to execute this Guar­antee.

11.

 The failure or forbearance of the Guaranteed Parties on any oc­casion to exercise any rights or remedies hereunder or otherwise granted to it by law or another agreement shall not affect the obligations of any Guarantor hereunder and shall not constitute a waiver of such right or remedy or preclude the later or further exercise thereof.  Time is of the essence of this Guarantee and each Guarantor’s obliga­tions here­under.

12.

  Any notice or demand which the Guaranteed Party’s may be re­quired to give to any Guarantor may be sent or made, at any Guaranteed Parties’ option, to or on such Guar­antor in the same manner and with the same effect as provided with respect to notices pursuant to Section 10.1 of the Credit Agreement, when delivered, mailed or sent by telecopy to the address or telecopier number indicated for such Guarantor below.

13.

 This Guarantee shall bind and inure to the benefit of the respective successors and assigns of each Guarantor and the Guaranteed Parties.

14.

 If any provision of this Guarantee or the applica­tion thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Guarantee or the application of such provision to the other persons or circum­stances, other than those as to which it is held invalid or un­enforceable, shall not be affected thereby, and each provision of this Guarantee shall be valid and enforceable to the full extent permitted by law.

15.

In addition to and not in limitation of all rights of set-off that the Guaranteed Parties may have under applicable law, the Guaranteed Parties shall, upon the occurrence of any Event of Default and whether or not the Guaranteed Parties have made any demand or the Guaranteed Obligations are matured, have the right to appropriate and apply to the payment of the Guaranteed Obligations all deposits of any Guarantor (general or special, time or demand, provisional or final) then or thereafter held by, and other indebtedness or property then or thereafter owing to any Guarantor by, any of the Guaranteed Parties whether or not related to this Guarantee or any transaction hereunder.  

16.

(a)  It is the intent of each Guarantor and the Guaranteed Parties that each Guarantor’s maximum obligations hereunder shall be:

  (i)  in a case or proceeding commenced by or against such Guarantor under the Bankruptcy Code on or within one  year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Guaranteed Parties) to be avoidable or unenforceable against such Guarantor under (A) Section 548 of the Bankruptcy Code or (B) any state fraudulent transfer or fraudulent conveyance act or statute applied in such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

(ii)  in a case or proceeding commenced by or against such Guarantor under the Bankruptcy Code subsequent to one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of the Guarantor to the Guaranteed Parties) to be avoidable or unenforceable against such Guarantor under any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

(iii)  in a case or proceeding commenced by or against such Guarantor under any law, statute or regulation other than the Bankruptcy Code (including, without limitation, any other bankruptcy, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar debtor relief laws), the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Guaranteed Parties) to be avoidable or unenforceable against such Guarantor under such law, statute or regulation including, without limitation, any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding.

(The substantive laws under which the possible avoidance or unenforceability of the Guaranteed Obligations (or any other obligations of such Guarantor to the Guaranteed Parties) shall be determined in any such case or proceeding shall hereinafter be referred to as the “Avoidance Provisions”).

(b)

To the end set forth in Section 16(a), but only to the extent that the Guaranteed Obligations would otherwise be subject to avoidance under the Avoidance Provisions if such Guarantor is not deemed to have received valuable consideration, fair value or reasonably equivalent value for the Guaranteed Obligations, or if the Guaranteed Obligations would render the Guarantor insolvent, or leave the Guarantor with an unreasonably small capital to conduct its business, or cause the Guarantor to have incurred debts (or to have  intended to have incurred debts) beyond its ability to pay such debts as they mature, in each case as of the time any of the Guaranteed Obligations are deemed to have been incurred under the Avoidance Provisions and after giving effect to contribution as among Guarantors, the maximum Guaranteed Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amount which, after giving effect thereto, would not cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Guaranteed Parties), as so reduced, to be subject to avoidance under the Avoidance Provisions.  This Section 16(b) is intended solely to preserve the rights of the Guaranteed Parties hereunder to the maximum extent that would not cause the Guaranteed Obligations of any Guarantor to be subject to avoidance under the Avoidance Provisions, and neither such Guarantor nor any other Person shall have any right or claim under this Section 16 as against the Guaranteed Parties that would not otherwise be available to such Person under the Avoidance Provisions.

(c)

None of the provisions of this Section 16 are intended in any manner to alter the obligations of any holder of subordinated Indebtedness or the rights of the holders of “senior indebtedness” as provided by the terms of the subordinated Indebtedness.  Accordingly, it is the intent of each of the Guarantors that, in the event that any payment or distribution is made with respect to the subordinated Indebtedness prior to the payment in full of the Guaranteed Obligations by virtue of the provisions of this Section 16, in any case or proceeding of the kinds described in clauses (i)-(iii) of Section 16(a), the holders of the subordinated Indebtedness shall be obligated to pay or deliver such payment or distribution to or for the benefit of the Guaranteed Parties.  Furthermore, in respect of the Avoidance Provisions, it is the intent of each Guarantor that the subrogation rights of the holders of subordinated Indebtedness with respect to the obligations of the Guarantor under this Guaranty, be subject in all respects to the provisions of Section 16(b).

17.

(a)

THIS GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF EACH GUARANTOR HEREUNDER SHALL BE CONSTRUED IN AC­CORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.

(b)

ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTEE OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS GUARANTEE, EACH GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.  EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES [CORPORATION SERVICE COMPANY] AS ITS DESIGNEE, APPOINTEE AND AGENT OF SUCH GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF SUCH GUARANTOR, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTEE OR ANY DOCUMENT RELATED HERETO AND SUCH SERVICE SHALL BE DEEMED COMPLETED THIRTY (30) DAYS AFTER MAILING THEREOF TO SAID AGENT.  IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY SUCH AGENT AND BY THE SERVER OF PROCESS BY MAIL TO THE RESPECTIVE GUARANTOR AT ITS ADDRESS SET FORTH HEREIN, BUT THE FAILURE OF SUCH GUARANTOR TO RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE GUARANTEED PARTIES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY GUARANTOR IN ANY OTHER JURISDICTION.

(c)

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER OR THEREUNDER.

18. 

Upon execution and delivery by any Subsidiary of Borrower of an instrument in the form of Annex I, such Subsidiary of Borrower shall become a Guarantor hereunder with the same force and effect as if originally named a Guarantor herein (each an “Additional Guarantor”).  The execution and delivery of any such instrument shall not require the consent of any Guarantor hereunder.  The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any Additional Guarantor as a party to this Guarantee.  

19.

This Guarantee may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. 

20.

This Guarantee constitutes an amendment and restatement of the Existing Guarantee and is not, and is not intended by the parties to be, a novation of the Existing Guarantee.  All rights and obligations of the parties under the Existing Guarantee as of the date hereof shall continue in full force and effect, except as may be expressly set forth herein.  All references in the other Loan Documents to the Existing Guarantee shall be deemed to refer to and mean this Amended and Restated Guaranty Agreement, as the same may be further amended, supplemented and restated from time to time.

IN WITNESS WHEREOF, each Guarantor has caused this Guaran­tee to be executed by its duly authorized offic­er as of the date first above written. 

	 	GUARANTORS:

	 	 	 
	 	DOLLAR GENERAL FINANCIAL, INC.

	 	(a Tennessee corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DADE LEASE MANAGEMENT, INC.

	 	(a Delaware corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLGENCORP, INC.

	 	(a Kentucky corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLGENCORP OF NEW YORK, INC.

	 	(a Kentucky corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLGENCORP OF TEXAS, INC.

	 	(a Kentucky corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DG LOGISTICS, LLC

	 	(a Tennessee limited liability [company])

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLLAR GENERAL STORES, LTD.

	 	(a Kentucky [corporation])

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLLAR GENERAL PARTNERS

	 	(a Kentucky [general] partnership)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	THE GREATER CUMBERLAND INSURANCE 

	 	COMPANY (a Vermont corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	NATIONS TITLE COMPANY, INC.

	 	(a Tennessee corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLLAR GENERAL INTELLECTUAL

	 	PROPERTY, L.P. (a Vermont limited [liability]

	 	Partnership)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLLAR GENERAL INVESTMENTS, INC.

	 	(a Delaware corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DGC PROPERTIES LLC

	 	(a Delaware limited liability company)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DGC PROPERTIES OF KENTUCKY LLC

	 	(a Delaware limited liability company)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

THE PROVISIONS OF SECTION 7 ABOVE HEREBY ACKNOWLEDGED AND AGREED TO:

	 	DOLLAR GENERAL CORPORATION

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

ANNEX I

SUPPLEMENT TO AMENDED AND RESTATED GUARANTY AGREEMENT

THIS SUPPLEMENT TO AMENDED AND RESTATED GUARANTY AGREEMENT (this “Supplement”) made and delivered as of __________________, by _____________________________, a __________________________ (the “Additional Guarantor”) in favor of (i) each of the Lenders from time to time parties to the Credit Agreement described below (each a “Lender” and collectively the “Lenders”), and (ii) SUNTRUST BANK, in its capacities as Administrative Agent and Issuing Bank under the terms of the Credit Agreement and the other Loan Documents referred to in the Credit Agreement (in such capacities, the “Administrative Agent” and “Issuing Bank” respectively; the Lenders, the Administrative Agent and Issuing Bank collectively referred to herein as the “Guaranteed Parties”).

A.

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of June __, 2004 (as the same may have been or may hereafter be further amended, supplemented, and restated from time to time, the “Credit Agreement”), among Dollar General Corporation, a Tennessee corporation (“Borrower”), SunTrust Bank, as Administrative Agent, each other bank and lending institution from time to time that has become a Lender thereunder (collectively, “Lenders”), KeyBank, National Association, and Bank of America., as Co-Syndication Agents, and U.S. Bank, National Association and AmSouth Bank, as Co-Documentation Agents.

B.

Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement and the Guaranty Agreement (as defined in the Credit Agreement).

C.

Certain Subsidiaries of Borrower have entered into the Guaranty Agreement in order to induce the Lenders to make Loans and other extensions of credit to Borrower under the Credit Agreement.  Pursuant to Section 5.10 of the Credit Agreement, certain Subsidiaries of Borrower are required to enter into the Guaranty Agreement and become a Guarantor thereunder.  The undersigned (the “Additional Guarantor”) is executing this Supplement in accordance with the requirements of the Credit Agreement and Guaranty Agreement to become a Guarantor under the Guaranty Agreement in order to induce the Lenders to make Loans and other extensions of credit to Borrower and as consideration for Loans and other extensions of credit previously made.  

Accordingly, the Administrative Agent and the Additional Guarantor agree as follows:

SECTION 1.

(a)

By its signature below, the Additional Guarantor becomes a Guarantor under the Guaranty Agreement with the same force and effect as if originally named as a Guarantor therein, and the Additional Guarantor hereby (a) agrees to all the terms and provisions of the Guaranty Agreement applicable to it as a Guarantor thereunder, and (b) represents and warrants that the representations and warranties made with respect to each Guarantor thereunder and under the Credit Agreement are true and correct in respect of the Additional Guarantor on and as of the date hereof.  Each reference to a “Guarantor” in the Guaranty Agreement shall be deemed to include the Additional Guarantor.  The Guaranty Agreement is hereby incorporated herein by reference.

(b)

Without limiting the foregoing, the Additional Guarantor hereby jointly and severally (with respect to the obligations of the Guarantors under the Guaranty Agreement) irrevocably and unconditionally guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all principal of, and interest on, each Loan made to Borrower pursuant to the Credit Agreement, the full and punctual payment when due of all fees, expenses, indemnity and reimbursement payments, and other Obligations payable by Borrower under the Credit Agreement and the other Loan Documents (including, without limitation, interest accruing or that would have accrued after the filing of a petition in bankruptcy or other insolvency proceeding, whether or not any claim for interest is allowed or allowable in such proceeding), and all obligations of Borrower arising pursuant to any interest rate protection or swap agreements entered into with one or more of the Lenders.  Upon failure by Borrower to pay punctually when due any such amount, the Additional Guarantor agrees that it shall forthwith on demand pay the amount not so paid at the place and in the manner specified in the Credit Agreement or the relevant Loan Documents, as the case may be.  The Additional Guarantor acknowledges and agrees that this is a guarantee of payment when due, and not of collection, and that the obligations of the Additional Guarantor hereunder may be enforced up to the full amount hereof without proceeding against Borrower, any security held by or on behalf of the Lenders, or against any other Guarantor or any other party that may have liability on all or any portion of the Guaranteed Obligations.

SECTION 2.

The Additional Guarantor represents and warrants to the Administrative Agent and the Lenders that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, or moratorium or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.  

SECTION 3.

This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single agreement.  This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the Additional Guarantor and the Administrative Agent.  Delivery of an executed signature page to this Supplement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4.

Except as expressly supplemented hereby, the Guaranty Agreement shall remain in full force and effect.  

SECTION 5.

This Supplement shall be governed by, and construed in accordance with, the laws of the State of Georgia, without giving effect to the principles of conflict of laws thereof.  

SECTION 6.

In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guaranty Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction.)  The parties hereto shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.  

SECTION 7.

All communications and notices hereunder shall be in writing and given as provided in the Guaranty Agreement.  All communications and notices hereunder to the Additional Guarantor shall be given to it at the address of Borrower as set forth in the Credit Agreement.

IN WITNESS WHEREOF, the Additional Guarantor and the Administrative Agent have duly executed this Supplement to the Guaranty Agreement as of the day and year first above written.

	 	[Name of Additional Guarantor]

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

SUNTRUST BANK, 

As Administrative Agent

By:__________________________________

Name:

Title: 

EXHIBIT D

AMENDED AND RESTATED CONTRIBUTION AGREEMENT

THIS AMENDED AND RESTATED CONTRIBUTION AGREEMENT (this “Agreement”) is entered into as of June __, 2002, by and among DOLLAR GENERAL CORPORATION, a Tennessee corporation (the “Principal”), each of the Subsidiaries of the Principal identified on the signature pages of this Agreement (each a “Guarantor” and collectively the “Guarantors”), and SUNTRUST BANK, a Georgia banking corporation, as Administrative Agent for the Lenders (as defined in the Credit Agreement referred to below).  

W I T N E S S E T H:

WHEREAS, the Principal, the Lenders, the Administrative Agent, KEYBANK, NATIONAL ASSOCATION and BANK OF AMERICA, N.A., as Co-Syndication Agents, and U.S. BANK, NATIONAL ASSOCIATION and AMSOUTH BANK, as Co-Documentation Agents, are parties to a certain Amended and Restated Revolving Credit Agreement dated as of June ___, 2004 (as the same may be further amended, modified, and restated from time to time, the “Credit Agreement”; capitalized terms used herein that are defined in such Credit Agreement are used herein with the respective meanings provided for such terms in the Credit Agreement);

WHEREAS, pursuant to the requirements of the Credit Agreement, the Guarantors have executed and delivered an Amended and Restated Guaranty Agreement dated as of June ___, 2004, in favor of the Administrative Agent, the Issuing Bank, and the Lenders (as the same may hereafter from time to time be amended, modified, and restated, the “Guaranty Agreement”);

WHEREAS, it is a further requirement and condition of the Credit Agreement that the Guarantors execute and deliver an agreement in the form hereof in order to restate, reaffirm and continue in effect their respective rights and obligations under the Contribution Agreement dated as of June 21, 2002 executed by them (as the same may have been amended, supplemented, and restated and is now in effect, the “Existing Contribution Agreement”) in connection with the Guaranty Agreement dated as of June 21, 2002, that is being amended and restated by the Guaranty Agreement described above;

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, and to induce the Guarantors to enter into the Guaranty Agreement, each Guarantor and the Administrative Agent agree as follows:

SECTION 1.

Indemnity and Subrogation.  In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 3), the Principal agrees that in the event a payment shall be made on behalf of the Principal by any Guarantor under the Guaranty Agreement, the Principal shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payment shall have been made to the extent of such payment.  

SECTION 2.

Contribution and Subrogation.  Each Guarantor (a “Contributing Guarantor”) agrees (subject to Section 3) that, in the event a payment shall be made by any other Guarantor under the Guaranty Agreement and such other Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by the Principal as provided in Section 1, each Contributing Guarantor shall indemnify each Claiming Guarantor in an amount equal to the amount of such payment, in each case multiplied by a fraction of which the numerator shall be the net worth of such Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 12, the date of the Supplement hereto executed and delivered by such Guarantor).  Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 2 shall be subrogated to the rights of such Claiming Guarantor under Section 1 to the extent of such payment.  As used herein, the term “net worth” shall mean, as at any date of determination, the consolidated members’ capital, partners’ capital, or stockholders’ equity of each Guarantor, as the case may be, as determined on a consolidated basis in accordance with GAAP.

SECTION 3.

Subordination.  Notwithstanding any provision of this Agreement to the contrary, all rights of the Principal and the Guarantors under Sections 1 and 2 and all other rights of indemnity, contribution, subrogation or reimbursement under applicable law or otherwise shall be fully subordinated to the indefeasible payment in full in cash of the Obligations owing by the Principal.  No failure on the part of the Principal or any Guarantor to make the payments required by Sections 1 and 2 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of the Principal or any Guarantor with respect to its obligations hereunder, and the Principal and each Guarantor shall remain liable for the full amount of the obligations of the Principal and such Guarantor hereunder.

SECTION 4.

Termination.  This Agreement shall survive and be in full force and effect so long as any Obligation owing by the Principal is outstanding and has not been indefeasibly paid in full in cash, and so long as the Commitments in favor of the Principal under the Credit Agreement have not been terminated.  This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any such Obligation is rescinded or must otherwise be restored by any Lender or any Guarantor upon the bankruptcy or reorganization of the Principal or any Guarantor or otherwise.  

SECTION 5.

Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF GEORGIA.

SECTION 6.

No Waiver; Amendment.  (a) No failure on the part of the Administrative Agent, the Principal, or any Guarantor to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Administrative Agent, the Principal or any Guarantor preclude any other or further exercise thereof or the exercise of any other right power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.  None of the Administrative Agent, the Principal or the Guarantors shall be deemed to have waived any rights hereunder unless such waiver shall be in writing and signed by such parties.

(b)

Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into among the Principal, the Guarantors and the Administrative Agent.

SECTION 7.

Notices.  All communications and notices hereunder shall be in writing and given as provided in the Guaranty Agreement and addressed as specified therein.

SECTION 8.

Binding Agreement; Assignments.  Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the parties that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.  Neither the Principal nor any Guarantor may assign or transfer any of its rights or obligations hereunder (and any such attempted assignment or transfer shall be void) without the prior written consent of the Administrative Agent.

SECTION 9.

Survival of Agreement; Severability.  (a) All covenants and agreements made by the Principal and each Guarantor herein and in the certificates or other instruments prepared or delivered in connection with this Agreement or the other Credit Documents shall be considered to have been relied upon by the Administrative Agent, the Lenders, the Principal, and each Guarantor, and all covenants and agreement made herein shall survive the making of the Loans and the issuance of the Letters of Credit, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loans, or any Letter of Credit, or any other fee or amount payable by the Principal under the Credit Agreement or this Agreement or under any of the other Loan Documents, is outstanding and unpaid, or as long as any Commitments in favor of the Principal under the Credit Agreement have not been terminated.

(b)

In case any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, no party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 10.

Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but  all of which when taken together shall constitute a single contract.  This Agreement shall be effective with respect to the Principal or Guarantor when a counterpart bearing the signature of the Principal or such Guarantor shall have been delivered to the Administrative Agent.  Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

SECTION 11.

Effect of Contribution Agreement.  This Agreement is intended only to define the relative rights of the Principal and the Guarantors, and nothing set forth in this Agreement is intended to or shall impair the obligations of the Guarantors, jointly and severally, to  pay any amounts as and when the same shall become due and payable in accordance with the terms of the Guaranty Agreement.  The parties hereto acknowledge that the rights of indemnification, subrogation, and contribution hereunder shall constitute assets in favor of each Guarantor to which such right of indemnification, subrogation, or indemnification is owing.  

SECTION 12.

Additional Guarantors.  Pursuant to Section 5.10 of the Credit Agreement, certain Subsidiaries of the Principal are required to enter into the Guaranty Agreement as a Guarantor.  Upon execution and delivery, after the date hereof, by the Administrative Agent and such a Subsidiary of an instrument in the form of Annex I hereto, such Subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor hereunder.  The execution and delivery of any instrument adding an additional Guarantor as a party to this Agreement shall not require the consent of any Guarantor hereunder.  The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Agreement.  

SECTION 13.

Amendment and Restatement.  This Agreement constitutes an amendment and restatement of the Existing Contribution Agreement and is not, and is not intended by the parties to be, a novation of the Existing Contribution Agreement.  All rights and obligations of the parties under the Existing Contribution Agreement as of the date hereof shall continue in full force and effect, except as may be expressly set forth herein.  All references in the other Loan Documents to the Existing Contribution Agreement shall be deemed to refer to and mean this Amended and Restated Contribution Agreement, as the same may be further amended, supplemented and restated from time to time.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized offices as of the date first appearing above.

	 	PRINCIPAL:

	 	 	 
	 	DOLLAR GENERAL CORPORATION

	 	(a Tennessee corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	GUARANTORS:

	 	 	 
	 	DOLLAR GENERAL FINANCIAL, INC.

	 	(a Tennessee corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DADE LEASE MANAGEMENT, INC.

	 	(a Delaware corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLGENCORP, INC.

	 	(a Kentucky corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLGENCORP OF NEW YORK, INC.

	 	(a Kentucky corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLGENCORP OF TEXAS, INC.

	 	(a Kentucky corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DG LOGISTICS, LLC

	 	(a Tennessee limited liability [company])

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLLAR GENERAL STORES, LTD.

	 	(a Kentucky [corporation])

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLLAR GENERAL PARTNERS

	 	(a Kentucky [general] partnership)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	THE GREATER CUMBERLAND INSURANCE 

	 	COMPANY (a Vermont corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	NATIONS TITLE COMPANY, INC.

	 	(a Tennessee corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLLAR GENERAL INTELLECTUAL

	 	PROPERTY, L.P. (a Vermont limited [liability]

	 	Partnership)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DOLLAR GENERAL INVESTMENTS, INC.

	 	(a Delaware corporation)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DGC PROPERTIES LLC

	 	(a Delaware limited liability company)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	DGC PROPERTIES OF KENTUCKY LLC

	 	(a Delaware limited liability company)

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	SUNTRUST BANK

	 	as Administrative Agent

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

ANNEX I

SUPPLEMENT TO AMENDED AND 

RESTATED CONTRIBUTION AGREEMENT

THIS SUPPLEMENT TO AMENDED AND RESTATED CONTRIBUTION AGREEMENT (this “Supplement”) dated as of ________________________, made by and between __________________, a _________ (the “New Guarantor”), and the Administrative Agent described in the Credit Agreement referred to below.

A.  Reference is made to (a) the Amended and Restated Revolving Credit Agreement dated as of June ___, 2004 (as further amended, supplemented and restated from time to time, the “Credit Agreement”), among Dollar General Corporation (the “Principal”), SunTrust Bank, as Administrative Agent, the banks and other lending institutions from time to time that are parties thereto (the “Lenders”), KeyBank, National Association, and Bank of America., as Co-Syndication Agents, and U.S. Bank, National Association and AmSouth Bank, as Co-Documentation Agents, (b) the Amended and Restated Guaranty Agreement dated as of June ___, 2004, among the Guarantors that are parties thereto in favor of the Administrative Agent, the Issuing Bank, and the Lenders (as further amended, supplemented and restated from time to time, the “Guaranty Agreement”), and (c) the Amended and Restated Contribution Agreement dated as of June ____, 2004, among the Principal, the Guarantors, and the Administrative Agent (as further amended, supplemented and restated from time to time, the “Contribution Agreement”).  

B.  Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Contribution Agreement or the Credit Agreement, as the case may be.  

C.  The Principal and the Guarantors have entered into the Contribution Agreement in order to induce the Lenders to make Loans and make other extensions of credit to the Principal.  Pursuant to Section 5.10 of the Credit Agreement, certain Subsidiaries of the Principal are required to enter into the Guaranty Agreement as a Guarantor.  Section 12 of the Contribution Agreement provides that additional Subsidiaries of the Principal may become Guarantors under the Contribution Agreement by execution and delivery of an instrument in the form of this Supplement.  The undersigned Subsidiary of the Principal (the “New Guarantor”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Guarantor under the Contribution Agreement in order to induce the Lenders to make additional Loans and make other additional extensions of credit to the Principal and as consideration for Loans and other extensions of credit previously made and issued.

Accordingly, the Administrative Agent and the New Guarantor agree as follows:

SECTION 1.

In accordance with Section 12 of the Contribution Agreement, the New Guarantor by its signature below becomes a Guarantor under the Contribution Agreement with the same force and effect as if originally named therein as a Guarantor, and the New Guarantor hereby agrees to all the terms and provisions of the Contribution Agreement applicable to it as a Guarantor thereunder.  Each reference to a “Guarantor” in the Contribution Agreement shall be deemed to include the New Guarantor.  The Contribution Agreement is hereby incorporated herein by reference.

SECTION 2.

The New Guarantor represents and warrants to the Administrative Agent and the Lenders that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3.

This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4.

Except as expressly supplemented hereby, the Contribution Agreement shall remain in full force and effect.

SECTION 5.

THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.

SECTION 6.

In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Contribution Agreement shall not in any way be affected or impaired.  The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7.

All communications and notices hereunder shall be in writing and given  as provided in Section 7 of the Contribution Agreement.  All communications and notices hereunder to the New Guarantor shall be given to it at the address of the Principal as provided in the Credit Agreement.

IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this Supplement to Contribution Agreement as of the day and year first above written.

	 	[Name of New Guarantor]

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

	 	SUNTRUST BANK,

	 	as Administrative Agent

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

EXHIBIT 2.3

NOTICE OF BORROWING

[Date]

SunTrust Bank,

   as Administrative Agent

   for the Lenders referred to below

303 Peachtree Street, N.E.

Atlanta, GA  30308

Attention: 

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of June __, 2004 (as further amended and in effect on the date hereof, the “Credit Agreement”), among the undersigned, as Borrower, the Lenders named therein, SunTrust Bank, as Administrative Agent, KeyBank, National Association, and Bank of America., as Co-Syndication Agents, and U.S. Bank, National Association and AmSouth Bank, as Co-Documentation Agents.  Terms defined in the Credit Agreement are used herein with the same meanings.  This notice constitutes a Notice of Borrowing, and the Borrower hereby requests a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to the Borrowing requested hereby:

(A)

Aggregate principal amount of Borrowing 1/:

(B)

Date of Borrowing  (which is a Business Day): 

(C)

Interest Rate basis 2/:

(D)

Interest Period 3/:

(E)

Location and number of Borrower’s account to which proceeds of Borrowing are to be disbursed:

1/ Not less than $5,000,000 or a larger multiple of $1,000,000 if a Eurodollar Borrowing, and not be less than $1,000,000 or a larger multiple of $100,000 if a Base Rate Borrowing.

2/ Eurodollar Borrowing or Base Rate Borrowing.

3/ Which must comply with the definition of “Interest Period” and end not later than the Commitment Termination Date.

The Borrower hereby represents and warrants that the conditions specified in paragraphs (a), (b) and (c) of Section 3.2 of the Credit Agreement are satisfied as of the date hereof.

	 	Very truly yours,

	 	 
	 	DOLLAR GENERAL CORPORATION

	 	 
	 	 
	 	Name:

	 	Title:

EXHIBIT 2.5

NOTICE OF SWINGLINE BORROWING

[Date]

SunTrust Bank,

   as Administrative Agent

   for the Lenders referred to below

303 Peachtree Street, N.E.

Atlanta, GA  30308

Attention: 

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of June __, 2004 (as further amended and in effect on the date hereof, the “Credit Agreement”), among the undersigned, as Borrower, the Lenders named therein, SunTrust Bank, as Administrative Agent, KeyBank, National Association, and Bank of America., as Co-Syndication Agents, and U.S. Bank, National Association and AmSouth Bank, as Co-Documentation Agents.  Terms defined in the Credit Agreement are used herein with the same meanings.  This notice constitutes a Notice of Swingline Borrowing, and the Borrower hereby requests a Swingline Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to the Swingline Borrowing requested hereby:

(A)

Aggregate principal amount of Swingline Borrowing 1/:

(B)

Date of Swingline Borrowing  (which is a Business Day): 

(C)

Interest Rate basis 2/:

(D)

Location and number of Borrower’s account to which proceeds of Swingline Borrowing are to be disbursed:

1/ Not less than $100,000 or a larger multiple of $50,000.

2/ Base Rate Borrowing or other agreed upon interest rate.

The Borrower hereby represents and warrants that the conditions specified in paragraphs (a), (b) and (c) of Section 3.2 of the Credit Agreement are satisfied as of the date hereof.

	 	Very truly yours,

	 	 
	 	DOLLAR GENERAL CORPORATION

	 	 
	 	 
	 	Name:

	 	Title:

EXHIBIT 2.9

NOTICE OF CONTINUATION/CONVERSION

[Date]

SunTrust Bank,

   as Administrative Agent

   for the Lenders referred to below

303 Peachtree Street, N.E.

Atlanta, GA  30308

Attention: 

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of June __, 2004 (as further amended and in effect on the date hereof, the “Credit Agreement”), among the undersigned, as Borrower, the Lenders named therein, SunTrust Bank, as Administrative Agent, KeyBank, National Association, and Bank of America., as Co-Syndication Agents, and U.S. Bank, National Association and AmSouth Bank, as Co-Documentation Agents.  Terms defined in the Credit Agreement are used herein with the same meanings.  This notice constitutes a Notice of Continuation/Conversion and the Borrower hereby requests the conversion or continuation of a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to the Borrowing to be converted or continued as requested hereby:

(A)

Borrowing to which this request 

applies:

 (amount)

, 200__ (Interest Period End Date)

(B)

Principal amount(s) of Borrowing to

be converted/continued1:

(1)

$

(2)

$

(3)

$

(C)

Effective date of election (must be a Business Day):

1Not less than $5,000,000 or a larger multiple of $1,000,000 if a Eurodollar Borrowing, and not be less than $1,000,000 or a larger multiple of $100,000 if a Base Rate Borrowing.

(D)

Interest rates basis for each resulting Borrowing2:

(1)

(2)

(3)

(E)

Interest period for each resulting Borrowing3:

(1)

(2)

(3)

2Eurodollar Borrowing or Base Rate Borrowing.

3Which must comply with the definition of “Interest Period” and end not later than the Commitment Termination Date.

	 	Very truly yours,

	 	 
	 	DOLLAR GENERAL CORPORATION

	 	 
	 	 
	 	Name:

	 	Title:

EXHIBIT 2.23

NOTICE OF REQUESTED LETTER OF CREDIT ISSUANCE

[Date]

SunTrust Bank, as 

  Administrative Agent

  for the Lenders referred to below

303 Peachtree Street, N.E.

Atlanta, GA  30308

Attention:

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of June __, 2004 (as further amended and in effect on the date hereof, the “Credit Agreement”), among the undersigned, as Borrower, the Lenders named therein, SunTrust Bank, as Administrative Agent and Issuing Bank, KeyBank, National Association, and Bank of America., as Co-Syndication Agents, and U.S. Bank, National Association and AmSouth Bank, as Co-Documentation Agents.  Terms defined in the Credit Agreement are used herein with the same meanings.  This notice constitutes an LC Notice, and the Borrower hereby requests issuance of a Letter of Credit as provided in the Credit Agreement, and in that connection the Borrower specifies the following information with respect to the Letter of Credit requested hereby:

(A)

Requested date of issuance:

, 200__

(B)

Expiration date of Letter of Credit1:

, 200__

(C)

Amount of Letter of Credit2:

$

(D)

Name and address of beneficiary:

________________

1Not later than the earlier of (x) one year from date of issuance or renewal or extension, as the case may be, and (y) five (5) Business Days prior to the Revolving Commitment Termination Date.

2Not less than $1,000,000

(E)

Requested form of Letter of Credit is attached to this

Notice.  

The Borrower hereby represents and warrants that the conditions specified in paragraphs (a), (b), and (c) of Section 3.2 of the Credit Agreement are satisfied as of the date hereof.

	 	Very truly yours,

	 	 
	 	DOLLAR GENERAL CORPORATION

	 	 
	 	By:

	 
	 	 	Name:

	 	 	Title:

SCHEDULE 1.1-E

LETTERS OF CREDIT

	 	 	AMOUNT

	NO.

	EXISTING LETTERS OF CREDIT

	$ IN THOUSANDS

	1

	Irrevocable letter of credit issued by SunTrust Bank dated December 6, 2001 

	$6,500 

	 	(Letter of Credit No. NSH/F400698) to Travelers Casualty and Surety Company

	 
	 	of America and certain beneficiaries, together with all extensions, renewals,

	 
	 	modifications and replacements thereof.

	 

SCHEDULE 4.5

LITIGATION 

	 

	EXISTING LITIGATION 

	1

	Complaint filed in the US District Court for the Northern District of Alabama

	 	  to commence a collective action against the Company on behalf of current

	 	  and former salaried store managers.

	 	 
	2

	SEC investigation relating to the restatement of audited financial statements for

	 	  fiscal years 1999 and 1998, and certain unaudited financial information for fiscal

	 	  year 2000.

SCHEDULE 4.10

ERISA MATTERS

	EXISTING ERISA MATTERS

	Dollar General Corporation Retiree Medical Plan - Medical and Rx coverage

	  for officers of the corporation.  The eligibility requirement is age 45 or 5 years

	of service.  Coverage terminates when retiree becomes Medicare eligible or

	upon the death of employee.

SCHEDULE 4.16

SUBSIDIARIES

	 	 	JURISDICTION OF

	 	 
	 	 	INCORPORATION/

	 	 
	NO.

	ENTITY

	ORGANIZATION

	OWNERSHIP OF CAPITAL STOCK/PARTNERS/MEMBERS

	TYPE

	1

	Dolgencorp, Inc.

	Kentucky

	Dollar General Corporation

	Corporation

	2

	Dolgencorp of Texas, Inc.

	Kentucky

	Dolgencorp, Inc.

	Corporation

	3

	Dade Lease Management, Inc.

	Delaware

	Dollar General Corporation

	Corporation

	4

	The Greater Cumberland Insurance Company

	Vermont

	Dollar General Financial, Inc.

	Corporation

	5

	Dollar General Financial, Inc.

	Tennessee

	Dollar General Corporation

	Corporation

	6

	Dollar General Intellectual Property, L.P.

	Vermont

	Dade Lease Management, Inc. - General Partner

	Limited partnership

	 	 	 	The Greater Cumberland Insurance Company - Limited Partner

	 
	7

	Dollar General Partners

	Kentucky

	Dolgencorp, Inc. - General Partner

	General partnership

	 	 	 	Dade Lease Management, Inc. - General Partner

	 
	 	 	 	Dollar General Financial, Inc. - General Partner

	 
	8

	Dolgencorp of New York, Inc.

	Kentucky

	Dolgencorp, Inc.

	Corporation

	9

	DG Logistics, LLC

	Tennessee

	Dolgencorp, Inc.

	Limited liability company

	10

	Dollar General Stores, Ltd.

	Kentucky

	Dolgencorp, Inc. - General Partner

	Limited partnership

	 	 	 	Dade Lease Management, Inc. - Limited Partner

	 
	11

	Nations Title Company, Inc.

	Tennessee

	Dollar General Financial, Inc.

	Corporation

	12

	DGC Properties LLC

	Delaware

	Dolgencorp, Inc.

	Limited liability company

	13

	DGC Properties of Kentucky LLC

	Delaware

	Dollar General Partners

	Limited liability company

	14

	Dollar General Investment, Inc.

	Delaware

	Dollar General Corporation

	Corporation

	15

	Lonestar Administrative Servies

	Tennessee

	Dollar General Corporation

	Corporation

	16

	Dollar General Global Sourcing Limited

	Hong Kong

	Dollar General Corporation & DGC Holdings, LLC-stockholders

	Corporation

	17

	DGC Holdings, LLC

	Delaware

	Dollar General Corporation

	Limited liability company

SCHEDULE 7.1

EXISTING INDEBTEDNESS

	 	 	AMOUNT

	NO.

	EXISTING INDEBTEDNESS AS OF May 28, 2004

	$ IN THOUSANDS

	1

	Indenture dated as of June 21, 2000 between Dollar General Corporation as Issuer, 

	$200,000 

	 	  the Guarantors and First Union National Bank as Trustee, governing the Borrower's

	 
	 	  8 5/8% Notes due June 15, 2010

	 
	2

	Lease and Agreement dated as of April 30, 1997 between Sun-Dollar, L.P. as Landlord

	$51,971 

	 	  and Dollar General Corporation as Tenant (South Boston, VA distribution center); 

	 
	 	  (Capital Lease Obligation)

	 
	3

	Lease dated as of January 19, 1999 between DG Ardmore, LLC as Landlord and

	$40,643 

	 	  Dollar General Corporation as Tenant (Ardmore, OK distribution center)

	 
	 	  (Capital Lease Obligation)

	 
	4

	Lease Agreement dated as of June 1, 2000 between FU/DG Fulton, LLC as Lessor and 

	$10,498 

	 	  Dollar General Corporation as Lessee (Fulton, MO distribution center) 

	 
	 	  (Capital Lease Obligation)

	 
	5

	Lease Agreement dated as of June 1, 2000 between FU/DG Indianola, LLC as Lessor 

	$7,286 

	 	  and Dollar General Corporation as Lessee (Indianola, MS  distribution center)

	 
	 	  (Capital Lease Obligation)

	 
	6

	Equipment Lease dated as of July 28, 1999 between First Union Commercial

	$8,216 

	 	  Corporation as Lessor and Dollar General Corporation as Lessee

	 
	 	  (Synthetic Lease Obligation for airplane)

	 
	7

	Term Lease Master Agreement dated as of November 14, 1994 between IBM Credit

	$11,507 

	 	  Corporation as Lessor and Dollar General Corp as Lessee

	 
	 	  (Capital Lease Obligation)

	 
	8

	Motor Vehicle Fleet Open-End Finance Lease Agreement dated as of April 3, 2002

	$4,474 

	 	  between D.L. Peterson Trust as Lessor and Dolgencorp, Inc. as Lessee

	 
	 	  (Capital Lease Obligation)

	 
	9

	Standby letter of credit, Bank of America as Issuer, Dollar General Corporation

	$1,959 

	 	  as Applicant and National Union Fire Insurance as Beneficiary - (face amount)

	 
	10

	Standby letter of credit, Bank of America as Issuer, Dollar General Corporation

	$73 

	 	  as Applicant and Ace American Insurance Group as Beneficiary - (face amount)

	 
	11

	Standby letter of credit line, Farmers National Bank as lender and Dollar General 

	$87 

	 	  Corporation as borrower ($250 line of credit; $87 face amount)

	 
	12

	Standby letter of credit, SunTrust Bank as Issuer and Dollar General 

	$365 

	 	  Corporation and Dolgencorp, Inc as Applicant and Georgia Self-Insurers Guaranty

	 
	 	  Trust Fund as Beneficiary - (face amount)

	 

SCHEDULE 7.2

LIENS

	NO.

	EXISTING LIENS ($ IN THOUSANDS) as of May 28, 2004

	1 - 8

	Leases described in items 1 through 8 of Schedule 7.1 and extensions, renewals,

	 	  modifications and replacements thereof

	9

	Cash collateral held by Texas Workers' Compensation Commission in the amount 

	 	  of $16,000 and extensions, renewals, modifications and replacements thereof.

	10

	Security interests granted in goods that are the subjects of drafts drawn under the 

	 	  trade letters of credit issued pursuant to the Continuing Reimbursement for Letters 

	 	  of Credit between U.S. Bank National Association, Dolgencorp, Inc., and 

	 	  Dollar General Corporation, and extensions, renewals, modifications and

	 	  replacements thereof

	11

	Security interests granted in goods that are the subjects of drafts drawn under the 

	 	  Authorization and Agreement for Treasury Services between Bank of America

	 	  Corporation and Dollar General Corporation, and extensions, renewals, modifications

	 	  and replacements thereof

	12

	Security interests granted in goods that are the subjects of drafts drawn under the 

	 	  trade letters of credit issued pursuant to the Master Letter of Credit Agreement

	 	  between LaSalle Bank National Association, Dolgencorp, Inc. and Dollar

	 	  General Corporation, and extensions, renewals, modifications and replacements

	 	  thereof

	13

	The Greater Cumberland Insurance Company cash collateral in the amount of $250 as

	 	  of May 28, 2004, and extensions, renewals, modifications and replacements thereof

	14

	Cash deposits as of May 28, 2004 held by various utility companies securing utility 

	 	  payments of retail locations and extensions, renewals, modifications and 

	 	  replacements thereof

SCHEDULE 7.4

INVESTMENTS

	 	 	AMOUNT

	NO.

	EXISTING INVESTMENTS as of May 28, 2004

	$ IN THOUSANDS

	1

	Purchase of Secured Promissory Notes, dated April 30, 

	$48,664 

	 	 1997 and July 31, 1998 between Sun-Dollar L.P. and 

	 
	 	 Principal Mutual Life Insurance Company, from 

	 
	 	 Principal Life Insurance Company on May 29, 2003

	 

FootnotesNEW CENTURY MORTGAGE SECURITIES, INC.

                                    Depositor

                       COUNTRYWIDE HOME LOANS SERVICING LP
                            GMAC MORTGAGE CORPORATION

                                    Servicers

                     FEDERAL NATIONAL MORTGAGE ASSOCIATION,

          Guarantor (with respect to the Group I Class A Certificates)

                                       and

                      DEUTSCHE BANK NATIONAL TRUST COMPANY

                                     Trustee

                         POOLING AND SERVICING AGREEMENT
                            Dated as of July 1, 2004

                New Century Home Equity Loan Trust, Series 2004-A
                     Asset Backed Pass-Through Certificates

                                  Series 2004-A

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

                                                     ARTICLE I

                                                    DEFINITIONS
<S>                                                                                                             <C>
         SECTION 1.01.     Defined Terms........................................................................-1-
         SECTION 1.02.     Allocation of Certain Interest Shortfalls...........................................-68-

                                                    ARTICLE II

                                           CONVEYANCE OF MORTGAGE LOANS;
                                         ORIGINAL ISSUANCE OF CERTIFICATES
         SECTION 2.01.     Conveyance of the Mortgage Loans....................................................-72-
         SECTION 2.02.     Acceptance of REMIC I by Trustee....................................................-74-
         SECTION 2.03.     Repurchase or Substitution of Mortgage Loans by the Seller..........................-76-
         SECTION 2.04.     Reserved............................................................................-78-
         SECTION 2.05.     Representations, Warranties and Covenants of the ...................................-78-
         SECTION 2.06.     Issuance of the REMIC I-A Regular Interests and the Class I
                           Certificates........................................................................-80-
         SECTION 2.07.     Conveyance of the REMIC I-A Regular Interests, REMIC I-B Regular
                           Interests and REMIC I-C Regular Interests; Acceptance of REMIC II
                           by the Trustee......................................................................-81-
         SECTION 2.08.     Conveyance of the REMIC II Regular Interests; Acceptance of
                           REMIC III by the Trustee.
         SECTION 2.09.     Issuance of Residual Certificates...................................................-82-

                                                    ARTICLE III

                                           ADMINISTRATION AND SERVICING
                                               OF THE MORTGAGE LOANS
         SECTION 3.01.     Servicer to Act as .................................................................-83-
         SECTION 3.02.     Sub-Servicing Agreements Between Servicer and Sub-Servicers
                            ...................................................................................-85-
         SECTION 3.03.     Successor Sub-Servicers.............................................................-86-
         SECTION 3.04.     Liability of the Servicer...........................................................-87-
         SECTION 3.05.     No Contractual Relationship Between Sub-Servicers, the Trustee, the
                           Certificate Insurer, the Guarantor or the Certificateholders
                            ...................................................................................-87-
         SECTION 3.06.     Assumption or Termination of Sub-Servicing Agreements by the
                           Trustee.............................................................................-87-
         SECTION 3.07.     Collection of Certain Mortgage Loan Payments........................................-88-
         SECTION 3.08.     Sub-Servicing Accounts..............................................................-89-
         SECTION 3.09.     Collection of Taxes, Assessments and Similar Items; Servicing

                                                        -i-

<PAGE>

                           Accounts............................................................................-89-
         SECTION 3.10.     Collection Account and Distribution Account.........................................-90-
         SECTION 3.11.     Withdrawals from the Collection Account and Distribution Account....................-92-
         SECTION 3.12.     Investment of Funds in the Collection Account and the Distribution
                           Account.............................................................................-94-
         SECTION 3.13.     Agreement to Appoint a Special Servicer.............................................-95-
         SECTION 3.14.     Maintenance of Hazard Insurance and Errors and Omissions and
                           Fidelity Coverage...................................................................-97-
         SECTION 3.15.     Enforcement of Due-On-Sale Clauses; Assumption Agreements
                            ...................................................................................-98-
         SECTION 3.16.     Realization Upon Defaulted Mortgage Loans...........................................-99-
         SECTION 3.17.     Trustee to Cooperate; Release of Mortgage Files....................................-102-
         SECTION 3.18.     Servicing Compensation.............................................................-103-
         SECTION 3.19.     Reports to the Trustee and Others; Collection Account Statements
                            ..................................................................................-104-
         SECTION 3.20.     Statement as to Compliance.........................................................-104-
         SECTION 3.21.     Independent Public Accountants' Servicing Report...................................-104-
         SECTION 3.22.     Access to Certain Documentation....................................................-105-
         SECTION 3.23.     Title, Management and Disposition of REO Property..................................-106-
         SECTION 3.24.     Obligations of the Servicer in Respect of Prepayment Interest Shortfalls...........-109-
         SECTION 3.25.     Obligations of the Servicer in Respect of Mortgage Rates and Monthly
                           Payments...........................................................................-109-
         SECTION 3.26.     Advance Facility...................................................................-109-
         3.28     Net WAC Rate Carryover Reserve Account......................................................-110-

                                                    ARTICLE IV

                                          PAYMENTS TO CERTIFICATEHOLDERS
         SECTION 4.01.     Distributions......................................................................-113-
         SECTION 4.02.     Statements to Certificateholders...................................................-139-
         SECTION 4.03.     Remittance Reports; P&I Advances...................................................-142-
         SECTION 4.04.     Allocation of Realized Losses......................................................-144-
         SECTION 4.05.     Compliance with Withholding Requirements...........................................-147-
         SECTION 4.07.     Derivative Contracts...............................................................-149-
         SECTION 4.08.     The Policy.........................................................................-149-
         SECTION 4.09.     The Guaranty.......................................................................-151-

                                                     ARTICLE V

                                                 THE CERTIFICATES
         SECTION 5.01.     The Certificate....................................................................-153-
         SECTION 5.02.     Registration of Transfer and Exchange of Certificates..............................-154-

                                                       -ii-

<PAGE>

         SECTION 5.03.     Mutilated, Destroyed, Lost or Stolen Certificates..................................-159-
         SECTION 5.04.     Persons Deemed Owners..............................................................-159-
         SECTION 5.05.     Certain Available Information......................................................-160-

                                                    ARTICLE VI

                                          THE DEPOSITOR AND THE SERVICERS
         SECTION 6.01.     Liability of the Depositor and the Servicer........................................-161-
         SECTION 6.02.     Merger or Consolidation of the Depositor or the Servicer...........................-161-
         SECTION 6.03.     Limitation on Liability of the Depositor, the Servicers and Others
                            ..................................................................................-161-
         SECTION 6.04.     Limitation on Resignation of the Servicers.........................................-162-
         SECTION 6.05.     Rights of the Depositor in Respect of the Servicers................................-163-

                                                    ARTICLE VII

                                                      DEFAULT
         SECTION 7.01.     Servicer Events of Default.........................................................-165-
         SECTION 7.02.     Trustee to Act; Appointment of Successor...........................................-167-
         SECTION 7.03.     Notification to Certificateholders.................................................-168-
         SECTION 7.04.     Waiver of Servicer Events of Default...............................................-168-

                                                   ARTICLE VIII

                                              CONCERNING THE TRUSTEE
         8.01.    Duties of Trustee...........................................................................-169-
         8.02.    Certain Matters Affecting the Trustee.......................................................-170-
         8.03.    Trustee Not Liable for Certificates or Mortgage Loans.......................................-171-
         8.04.    Trustee May Own Certificates................................................................-171-
         8.05.    Trustee's Fees and Expenses.................................................................-172-
         8.06.    Eligibility Requirements for Trustee........................................................-172-
         8.07.    Resignation and Removal of the Trustee......................................................-173-
         8.08.    Successor Trustee...........................................................................-174-
         8.09.    Merger or Consolidation of Trustee..........................................................-174-
         8.10.    Appointment of Co-Trustee or Separate Trustee...............................................-174-
         8.11.    [Reserved]..................................................................................-175-
         8.12.    Appointment of Office or Agency.............................................................-175-
         8.13.    Representations and Warranties of the Trustee...............................................-176-

                                                    ARTICLE IX

                                                    TERMINATION
         SECTION 9.01      Termination Upon Repurchase or Liquidation of All Mortgage Loans...................-177-

                                                       -iii-

<PAGE>

         SECTION 9.02      Additional Termination Requirements................................................-179-

                                                     ARTICLE X

                                                 REMIC PROVISIONS
         SECTION 10.01.             REMIC Administration......................................................-181-
         SECTION 10.02.             Prohibited Transactions and Activities....................................-184-
         SECTION 10.03.             Servicer and Trustee Indemnification......................................-184-

                                                    ARTICLE XI

                                             MISCELLANEOUS PROVISIONS
         SECTION 11.01.             Amendment.................................................................-185-
         SECTION 11.02.             Recordation of Agreement; Counterparts....................................-186-
         SECTION 11.03.             Limitation on Rights of Certificateholders................................-187-
         SECTION 11.04.             Governing Law.............................................................-187-
         SECTION 11.05.             Notices...................................................................-187-
         SECTION 11.06.             Severability of Provisions................................................-188-
         SECTION 11.07.             Notice to Rating Agencies.................................................-188-
         SECTION 11.08.             Article and Section References............................................-189-
         SECTION 11.09.             Grant of Security Interest................................................-189-
         SECTION 11.10.             Waiver of Jury Trial......................................................-190-
         SECTION 11.11.             Rights of the Certificate Insurer.........................................-190-
</TABLE>

                                                       -iv-

<PAGE>

Exhibits
--------

Exhibit A-1       Form of Class A-I-1 Certificate
Exhibit A-2       Form of Class A-I-2 Certificate
Exhibit A-3       Form of Class A-I-3 Certificate
Exhibit A-4       Form of Class A-I-4 Certificate
Exhibit A-5       Form of Class A-I-5 Certificate
Exhibit A-6       Form of Class A-I-6 Certificate
Exhibit A-7       Form of Class A-I-7 Certificate
Exhibit A-8       Form of Class A-I-8 Certificate
Exhibit A-9       Form of Class A-I-9 Certificate
Exhibit A-10      Form of Class A-II-1 Certificate
Exhibit A-11      Form of Class A-II-2 Certificate
Exhibit A-12      Form of Class A-II-3 Certificate
Exhibit A-13      Form of Class A-II-4 Certificate
Exhibit A-14      Form of Class A-II-5 Certificate
Exhibit A-15      Form of Class A-II-6 Certificate
Exhibit A-16      Form of Class A-II-7 Certificate
Exhibit A-17      Form of Class A-II-8 Certificate
Exhibit A-18      Form of Class A-II-9 Certificate
Exhibit A-19      Form of Class A-III-A Certificate
Exhibit A-20      Form of Class A-III-B1 Certificate
Exhibit A-21      Form of Class A-III-B2 Certificate
Exhibit A-22      Form of Class M-I-1 Certificate
Exhibit A-23      Form of Class M-I-2 Certificate
Exhibit A-24      Form of Class M-II Certificate
Exhibit A-25      Form of Class M-III Certificate
Exhibit A-26      Form of Class B-I Certificate
Exhibit A-27      Form of Class B-II Certificate
Exhibit A-28      Form of Class B-III Certificate
Exhibit A-29      Form of Class CE-I Certificate
Exhibit A-30      Form of Class CE-II Certificate
Exhibit A-31      Form of Class CE-III Certificate
Exhibit A-32      Form of Class P-I Certificate
Exhibit A-33      From of Class P-II Certificate
Exhibit A-34      From of Class P-III Certificate
Exhibit A-35      Form of Class R-I Certificate
Exhibit A-36      Form of Class R-II Certificate
Exhibit A-37      From of Class R-III Certificate
Exhibit A-38      From of Class R-X Certificate
Exhibit B         Copy of the Policy with respect to the Insured Certificates
Exhibit C-1       Form of Trustee's Initial Certification
Exhibit C-2       Form of Trustee's Final Certification

                                       -v-

<PAGE>

Exhibit D         Form of Mortgage Loan Purchase Agreement
Exhibit E         Request for Release
Exhibit           F-1 Form of Transferor Representation Letter and Form of
                  Transferee Representation Letter in Connection with Transfer
                  of the Class B Certificates, Class CE Certificates, Class P
                  Certificates or Residual Certificates Pursuant to Rule 144A
                  Under the 1933 Act

Exhibit F-2       Form of Transfer Affidavit and Agreement and Form of
                  Transferor Affidavit in Connection with Transfer of Residual
                  Certificates

Exhibit G         Form of Certification with respect to ERISA and the Code
Exhibit H         Form of Report Pursuant to Section 4.06
Exhibit I         Form of Lost Note Affidavit
Exhibit J-1       Form of Certification to Be Provided by the Depositor with
                  Form 10-K
Exhibit J-2       Form of Certification to Be Provided to the Depositor by the
                  Trustee
Exhibit J-3       Form of Certification to Be Provided to the Depositor by the
                  Servicers
Exhibit K         [Reserved]
Exhibit L         Form of Annual Statement as to Compliance

Schedule 1        Mortgage Loan Schedule
Schedule 2        Prepayment Charge Schedule

                                      -vi-

<PAGE>

                  This Pooling and Servicing Agreement, is dated and effective
as of July 1, 2004, among NEW CENTURY MORTGAGE SECURITIES, INC. as Depositor,
COUNTRYWIDE HOME LOANS SERVICING LP, GMAC MORTGAGE CORPORATION, as Servicers,
FEDERAL NATIONAL MORTGAGE ASSOCIATION, as Guarantor of the Class A-I-A
Certificates and DEUTSCHE BANK NATIONAL TRUST COMPANY as Trustee.

                             PRELIMINARY STATEMENT:

                  The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest in each REMIC (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool of assets comprised
of the Mortgage Loans and certain other related assets subject to this
Agreement.

                                    REMIC I-A
                                    ---------

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Group I Mortgage Loans and certain
other related assets (other than the Servicer Prepayment Charge Payment Amounts
with respect to the Group I Mortgage Loans, the Group I Net WAC Rate Carryover
Reserve Account and the Class A-I-1 Cap Contract) subject to this Agreement as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC I-A." The Class R-I Certificates will be the sole class
of "residual interests" in REMIC I-A for purposes of the REMIC Provisions (as
defined herein). The following table irrevocably sets forth the designation, the
REMIC I-A Remittance Rate, the initial Uncertificated Balance and, solely for
purposes of satisfying Treasury regulation section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC I-A Regular Interests (as
defined herein). None of the REMIC I-A Regular Interests will be certificated.

<TABLE>
<CAPTION>
                                        REMIC I-A                      Initial                   Latest Possible
         Designation                 Remittance Rate           Uncertificated Balance           Maturity Date(1)
         -----------                 ---------------           ----------------------           ----------------
<S>                                            <C>                 <C>                                    <C>
           IA-LT1                      Variable(2)                 $725,275,251.15                 August 2034
           IA-LT2                      Variable(2)                 $ 2,272,852.13                  August 2034
           IA-LTP                      Variable(2)                    $ 100.00                     August 2034
</TABLE>
---------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC I-A Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC I-A Remittance Rate"
     herein.

                                      -vii-

<PAGE>

                                    REMIC I-B
                                    ---------

         As provided herein, the Trustee will elect to treat the segregated pool
of assets consisting of the Group II Mortgage Loans and certain other related
assets (other than the Servicer Prepayment Charge Payment Amounts with respect
to the Group II Mortgage Loans, the Group II Net WAC Rate Carryover Reserve
Account and the Class A-II-1 Cap Contract) subject to this Agreement as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC I-B." The Class R-II Certificates will be the sole class of
"residual interests" in REMIC I-B for purposes of the REMIC Provisions (as
defined herein). The following table irrevocably sets forth the designation, the
REMIC I-B Remittance Rate, the initial Uncertificated Balance and, solely for
purposes of satisfying Treasury regulation section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC I-B Regular Interests (as
defined herein). None of the REMIC I-B Regular Interests will be certificated.

<TABLE>
<CAPTION>
                                        REMIC I-B                      Initial                   Latest Possible
         Designation                 Remittance Rate           Uncertificated Balance           Maturity Date(1)
         -----------                 ---------------           ----------------------           ----------------
<S>                                    <C>                        <C>                              <C>
           IB-LT1                      Variable(2)                $ 476,232,124.02                 August 2034
           IB-LTP                      Variable(2)                    $ 100.00                     August 2034
</TABLE>
---------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC I-B Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC I-B Remittance Rate"
     herein.

                                     -viii-

<PAGE>

                                   REMIC I-C
                                   ---------

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Group III Mortgage Loans and certain
other related assets (other than the Servicer Prepayment Charge Payment Amounts
with respect to the Group III Mortgage Loans, the Group III Net WAC Rate
Carryover Reserve Account, the Group III Cap Contract) subject to this Agreement
as a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC I-C." The Class R-III Certificates will be the sole
class of "residual interests" in REMIC I-C for purposes of the REMIC Provisions
(as defined herein). The following table irrevocably sets forth the designation,
the REMIC I-C Remittance Rate, the initial Uncertificated Balance and, solely
for purposes of satisfying Treasury regulation section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC I-C Regular Interests (as
defined herein). None of the REMIC I-B Regular Interests will be certificated.

<TABLE>
<CAPTION>
                                        REMIC I-C                      Initial                   Latest Possible
         Designation                 Remittance Rate           Uncertificated Balance           Maturity Date(1)
         -----------                 ---------------           ----------------------           ----------------
<S>                                    <C>                        <C>                              <C>
           IC-LT1                      Variable(2)                $ 474,707,259.13                 August 2034
           IC-LT2                      Variable(2)                  $ 909,100.00                   August 2034
           IC-LTP                      Variable(2)                    $ 100.00                     August 2034
</TABLE>
---------------
(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date immediately following the maturity
         date for the Mortgage Loan with the latest maturity date has been
         designated as the "latest possible maturity date" for each REMIC I-C
         Regular Interest.
(2)      Calculated in accordance with the definition of "REMIC I-C Remittance
         Rate" herein.

                                      -ix-

<PAGE>

                                    REMIC II
                                    --------

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I-A Regular Interests, the
REMIC I-B Regular Interests and the REMIC I-C Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Interest will evidence the sole class
of "residual interests" in REMIC II for purposes of the REMIC Provisions under
federal income tax law. The following table irrevocably sets forth the
designation, the REMIC II Remittance Rate, the initial Uncertificated Balance
and, solely for purposes of satisfying Treasury regulation section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC
II Regular Interests (as defined herein). None of the REMIC II Regular Interests
will be certificated.

<TABLE>
<CAPTION>
                                        REMIC II                       Initial                   Latest Possible
         Designation                 Remittance Rate           Uncertificated Balance           Maturity Date(1)
         -----------                 ---------------           ----------------------           ----------------
<S>                                    <C>                        <C>                              <C>
          II-LTAA1                     Variable(2)                $ 712,997,043.21                 August 2034
          II-LTAI1                     Variable(2)                 $ 1,619,660.00                  August 2034
          II-LTAI2                     Variable(2)                  $ 502,740.00                   August 2034
          II-LTAI3                     Variable(2)                  $ 976,790.00                   August 2034
          II-LTAI4                     Variable(2)                  $ 380,480.00                   August 2034
          II-LTAI5                     Variable(2)                  $ 547,470.00                   August 2034
          II-LTAI6                     Variable(2)                  $ 503,720.00                   August 2034
          II-LTAI7                     Variable(2)                  $ 369,010.00                   August 2034
          II-LTAI8                     Variable(2)                  $ 731,350.00                   August 2034
          II-LTAI9                     Variable(2)                  $ 625,690.00                   August 2034
          II-LTMI1                     Variable(2)                  $ 654,790.00                   August 2034
          II-LTMI2                     Variable(2)                   $ 72,750.00                   August 2034
           II-LTB1                     Variable(2)                   $ 72,760.00                   August 2034
          II-LTZZ1                     Variable(2)                 $ 7,493,750.07                  August 2034
           II-LTP1                     Variable(2)                    $ 100.00                     August 2034
          II-LTAA2                     Variable(2)                $ 466,707,432.54                 August 2034
          II-LTAII1                    Variable(2)                 $ 1,057,590.00                  August 2034
          II-LTAII2                    Variable(2)                  $ 329,180.00                   August 2034
          II-LTAII3                    Variable(2)                  $ 638,810.00                   August 2034
          II-LTAII4                    Variable(2)                  $ 253,020.00                   August 2034
          II-LTAII5                    Variable(2)                  $ 430,200.00                   August 2034
          II-LTAII6                    Variable(2)                  $ 449,770.00                   August 2034
          II-LTAII7                    Variable(2)                  $ 308,250.00                   August 2034
          II-LTAII8                    Variable(2)                  $ 604,960.00                   August 2034
          II-LTAII9                    Variable(2)                  $ 452,420.00                   August 2034
           II-LTM2                     Variable(2)                   $ 47,630.00                   August 2034
           II-LTB2                     Variable(2)                   $ 47,620.00                   August 2034
          II-LTZZ2                     Variable(2)                 $ 4,905,191.48                  August 2034
           II-LTP2                     Variable(2)                    $ 100.00                     August 2034
          II-LTAA3                     Variable(2)                 $ 466,103933.95                 August 2034
         II-LTAIII1                    Variable(2)                 $ 1,943,300.00                  August 2034
         II-LTAIII2                    Variable(2)                 $ 1,734,270.00                  August 2034
         II-LTAIII3                    Variable(2)                  $ 840,780.00                   August 2034
           II-LTM3                     Variable(2)                   $ 95,120.00                   August 2034
           II-LTB3                     Variable(2)                   $ 71,340.00                   August 2034
          II-LTZZ3                     Variable(2)                 $ 4,827,515.18                  August 2034
           II-LTP3                     Variable(2)                    $ 100.00                     August 2034
</TABLE>

                                      -x-

<PAGE>

---------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC II Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC II Remittance Rate"
     herein.

                                      -xi-

<PAGE>

                                    REMIC III
                                    ---------

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III." The Class R-III Interest will evidence the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
designation, the Pass-Through Rate, the initial aggregate Certificate Principal
Balance and, solely for purposes of satisfying Treasury regulation section
1.860G- 1(a)(4)(iii), the "latest possible maturity date" for the indicated
Classes of Certificates.

<TABLE>
<CAPTION>
                                                                  Initial Aggregate
                                                                Certificate Principal            Latest Possible
         Designation                Pass-Through Rate                  Balance                  Maturity Date(1)
         -----------                -----------------                  -------                  ----------------
<S>                                    <C>                         <C>                             <C>
         Class A-I-1                   Variable(2)                 $161,966,000.00                 August 2034
         Class A-I-2               3.930% per annum(3)             $ 50,274,000.00                 August 2034
         Class A-I-3               4.420% per annum(3)             $ 97,679,000.00                 August 2034
         Class A-I-4               4.800% per annum(3)             $ 38,048,000.00                 August 2034
         Class A-I-5               5.170% per annum(3)             $ 54,747,000.00                 August 2034
         Class A-I-6               5.640% per annum(3)             $ 50,372,000.00                 August 2034
         Class A-I-7               5.650% per annum(3)             $ 36,901,000.00                 August 2034
         Class A-I-8               5.650% per annum(3)             $ 73,135,000.00                 August 2034
         Class A-I-9               5.450% per annum(3)             $ 62,569,000.00                 August 2034
         Class M-I-1               5.650% per annum(3)             $ 65,479,000.00                 August 2034
         Class M-I-2               5.650% per annum(3)             $ 7,275,000.00                  August 2034
          Class B-I                5.650% per annum(3)             $ 7,276,000.00                  August 2034
         Class CE-I                    Variable(2)               $ 21,827,003.28(4)                August 2034
          Class P-I                      N/A(5)                        $ 100.00                    August 2034
        Class A-II-1                   Variable(2)                $ 105,759,000.00                 August 2034
        Class A-II-2               3.930% per annum(3)             $ 32,918,000.00                 August 2034
        Class A-II-3               4.450% per annum(3)             $ 63,881,000.00                 August 2034
        Class A-II-4               4.860% per annum(3)             $ 25,302,000.00                 August 2034
        Class A-II-5               5.250% per annum(3)             $ 43,020,000.00                 August 2034
        Class A-II-6               5.650% per annum(3)             $ 44,977,000.00                 August 2034
        Class A-II-7               5.650% per annum(3)             $ 30,825,000.00                 August 2034
        Class A-II-8               5.650% per annum(3)             $ 60,496,000.00                 August 2034
        Class A-II-9               5.470% per annum(3)             $ 45,242,000.00                 August 2034
         Class M-II                5.650% per annum(3)             $ 4,763,000.00                  August 2034
         Class B-II                5.650% per annum(3)             $ 4,762,000.00                  August 2034
         Class CE-II                   Variable(2)               $ 14,287,074.02(4)                August 2034
         Class P-II                      N/A(5)                        $ 100.00                    August 2034
        Class A-III-A                  Variable(2)                $ 194,330,000.00                 August 2034
       Class A-III-B1                  Variable(2)                 $173,427,000.00                 August 2034
       Class A-III-B2                  Variable(2)                 $ 84,078,000.00                 August 2034
         Class M-III                   Variable(2)                 $ 9,512,000.00                  August 2034
         Class B-III                   Variable(2)                 $ 7,134,000.00                  August 2034
        Class CE-III                   Variable(2)                $ 7,135,259.13(4)                August 2034
         Class P-III                     N/A(5)                        $ 100.00                    August 2034
</TABLE>
---------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loans with the latest maturity date has been designated as
     the "latest possible maturity date" for each Class of Certificates.
(2)  Calculated in accordance with the definition of "Pass-Through Rate" herein.

                                      -xii-

<PAGE>

(3)  Subject to the related Net WAC Pass-Through Rate.
(4)  The Class CE-I Certificates, the Class CE-II Certificates and the Class
     CE-III Certificates will each accrue interest at their variable
     Pass-Through Rates on the related Notional Amount for such Class
     outstanding from time to time. The Class CE-I Certificates, the Class CE-II
     Certificates and the Class CE-III Certificates will not accrue interest on
     their respective Certificate Principal Balances.
(5)  The Class P-I Certificates, the Class P-II Certificates and the Class P-III
     Certificates will not accrue interest.

                  As of the Cut-off Date, the Group I Mortgage Loans had an
aggregate Stated Principal Balance equal to $725,275,251.15, the Group II
Mortgage Loans had an aggregate Stated Principal Balance equal to
$476,232,174.02, the Group III-A Mortgage Loans had an aggregate Stated
Principal Balance equal to $201,883,650.92 and the Group III-B Mortgage Loans
had an aggregate Stated Principal Balance equal to $272,823,608.21.

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

                                     -xiii-

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01. Defined Terms.

                  Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.

                  "Accepted Servicing Practices": The servicing standards set
forth in Section 3.01.

                  "Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate or Class CE Certificate and each Distribution
Date, interest accrued during the related Interest Accrual Period at the
Pass-Through Rate for such Certificate for such Distribution Date on the
Certificate Principal Balance, in the case of the Class A Certificates and the
Mezzanine Certificates, or on the Notional Amount, in the case of the Class CE
Certificates, of such Certificate immediately prior to such Distribution Date.
The Class P Certificates are not entitled to distributions in respect of
interest and, accordingly, will not accrue interest. All distributions of
interest on the Floating Rate Certificates will be calculated on the basis of a
360-day year and the actual number of days in the applicable Interest Accrual
Period. All distributions of interest on the Fixed Rate Certificates and the
Class CE Certificates will be based on a 360- day year consisting of twelve
30-day months. Accrued Certificate Interest with respect to each Distribution
Date, as to any Class A Certificate, Mezzanine Certificate or Class CE
Certificate, shall be reduced by an amount equal to the portion allocable to
such Certificate pursuant to Section 1.02 hereof of the sum of (a) the aggregate
Prepayment Interest Shortfall, if any, for such Distribution Date to the extent
not covered by payments pursuant to Section 3.24 and (b) the aggregate amount of
any Relief Act Interest Shortfall, if any, for such Distribution Date. In
addition, Accrued Certificate Interest with respect to each Distribution Date,
as to any Class CE Certificate, shall be reduced by an amount equal to the
portion allocable to such Class CE Certificate of Realized Losses, if any,
pursuant to Section 4.04 hereof.

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

                  "Advancing Person": As defined in Section 3.26(a) hereof.

                  "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.

<PAGE>

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

                  "Allocated Realized Loss Amount": With respect to any
Distribution Date and any Class of Mezzanine Certificates, the sum of (i) any
Realized Losses allocated to such Class of Certificates on such Distribution
Date and (ii) the amount of any Allocated Realized Loss Amount for such Class of
Certificates remaining unpaid from the previous Distribution Date and reduced by
the amount of any Subsequent Recoveries on the related Mortgage Loans added to
the Certificate Principal Balance of such Class of Certificates.

                  "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office), which is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering Mortgages secured by Mortgaged
Properties located in the same county, if permitted by law.

                  "Available Distribution Amount": The Group I Available
Distribution Amount, the Group II Available Distribution Amount or the Group III
Available Distribution Amount, as applicable.

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

                  "Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.

                  "Book-Entry Certificate": The Class A Certificates and the
Mezzanine Certificates for so long as the Certificates of such Class shall be
registered in the name of the Depository or its nominee.

                  "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.

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

                  "Cap Contracts": Collectively, the Class A-I-1 Cap Contract,
the Class A-II-1 Cap Contract and the Group III Cap Contract.

                  "Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which are more than a nominal amount in excess of the principal
balance of any existing first mortgage or subordinate mortgage on the related
Mortgaged Property and related closing costs.

                                       -2-

<PAGE>

                  "Certificate": Any one of the Asset Backed Pass-Through
Certificates, Series 2004-A, Class A-I-1, Class A-I-2, Class A-I-3, Class A-I-4,
Class A-I-5, Class A-I-6, Class A-I-7, Class A-I-8, Class A-I-9, Class A-II-1,
Class A-II-2, Class A-II-3, Class A-II-4, Class A-II-5, Class A-II-6, Class
A-II-7, Class A-II-8, Class A-II-9, Class A-III-A, Class A-III-B1, Class
A-III-B2, Class M-I-1, Class M-I-2, Class M-II, Class M-III, Class B-I, Class
B-II, Class B-III, Class CE-I, Class CE-II, Class CE- III, Class P-I, Class
P-II, Class P-III, Class R-I, Class R-II, Class R-III and Class R-X issued under
this Agreement.

                  "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or either Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee may conclusively rely upon a
certificate of the Depositor or either Servicer in determining whether a
Certificate is held by an Affiliate thereof. All references herein to "Holders"
or "Certificateholders" shall reflect the rights of Certificate Owners as they
may indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee, the Certificate Insurer and the Guarantor shall be required to
recognize as a "Holder" or "Certificateholder" only the Person in whose name a
Certificate is registered in the Certificate Register.

                  "Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (or the Notional Amount, in the case of the Class CE
Certificates) of such Class of Certificates on such Distribution Date (after
giving effect to any distributions of principal and allocations of Realized
Losses in reduction of the Certificate Principal Balance (or the Notional
Amount, in the case of the Class CE Certificates) of such Class of Certificates
to be made on such Distribution Date), and the denominator of which is the
initial aggregate Certificate Principal Balance (or the Notional Amount, in the
case of the Class CE Certificates) of such Class of Certificates as of the
Closing Date.

                  "Certificate Insurer": Financial Guaranty Insurance Company, a
New York stock insurance corporation, organized and created under the laws of
the State of New York and its successors in interest.

                  "Certificate Insurer Account": An account of the Certificate
Insurer maintained at JPMorgan Chase Bank (ABA No. 021000021), Account No.
904951812, Attention: New Century, Series 2004-A, or such other account as may
be designated by the Certificate Insurer to the Trustee in writing not less than
five Business Days prior to the related Distribution Date. Any wire transfers to
the Certificate Insurer Account shall reference the Policy No. of the Policy.

                  "Certificate Insurer Default": The existence and continuance
of any of the following: (a) a failure by the Certificate Insurer to make a
payment required under the Policy in accordance with its

                                       -3-

<PAGE>

terms; or (b)(i) the Certificate Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the Bankruptcy Code, the
New York Insurance Law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B) makes
a general assignment for the benefit of its creditors, or (C) has an order for
relief entered against it under the Bankruptcy Code, the New York Insurance Law
or any other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final and nonappealable;
or (ii) a court of competent jurisdiction, the New York Department of Insurance
or other competent regulatory authority enters a final and nonappealable order,
judgment or decree (A) appointing a custodian, trustee, agent or receiver for
the Certificate Insurer or for all or any material portion of its property or
(B) authorizing the taking of possession by a custodian, trustee, agent or
receiver of the Certificate Insurer (or the taking of possession of all or any
material portion of the property of the Certificate Insurer).

                  "Certificate Margin": With respect to the Class A-I-1
Certificates, 0.08% in the case of each Distribution Date.

                  With respect to the Class A-II-1 Certificates, 0.180% in the
case of each Distribution Date.

                  With respect to the Class A-III-A Certificates, 0.280% in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the sum of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date and the Initial Deposit and 0.560% in the
case of each Distribution Date thereafter.

                  With respect to the Class A-III-B1 Certificates, 0.210% in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the sum of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date and the Initial Deposit and 0.420% in the
case of each Distribution Date thereafter.

                  With respect to the Class A-III-B2 Certificates, 0.450% in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the sum of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date and the Initial Deposit and 0.900% in the
case of each Distribution Date thereafter.

                  With respect to the Class M-III Certificates, 4.000% in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the sum of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date and the Initial Deposit and 6.000% in the
case of each Distribution Date thereafter.

                  With respect to the Class B-III Certificates, 4.000% in the
case of each Distribution Date

                                       -4-

<PAGE>

through and including the Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans (and properties acquired in respect
thereof) remaining in the Trust Fund is reduced to less than 10% of the sum of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date and the Initial Deposit and 6.000% in the case of each Distribution Date
thereafter.

                  "Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.

                  "Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination plus any
Subsequent Recoveries on the related Mortgage Loans added to the Certificate
Principal Balance of such Certificate pursuant to Section 4.01, minus all
distributions allocable to principal made thereon and in the case of a Mezzanine
Certificate, Realized Losses allocated thereto on such immediately prior
Distribution Date (or, in the case of any date of determination up to and
including the first Distribution Date, the initial Certificate Principal Balance
of such Certificate, as stated on the face thereof).

                  With respect to the Class CE-I Certificates as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balance of REMIC II Regular Interest II-LTAI1, REMIC II Regular Interest II-
LTAI2, REMIC II Regular Interest II-LTAI3, REMIC II Regular Interest II-LTAI4,
REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest II-LTAI6, REMIC II
Regular Interest II-LTAI7, REMIC II Regular Interest II-LTAI8, REMIC II Regular
Interest II-LTAI9, REMIC II Regular Interest II-LTMI1, REMIC II Regular Interest
II-LTMI2, REMIC II Regular Interest II-LTB1, REMIC II Regular Interest II-LTZZ1
and REMIC II Regular Interest II-LTP1 over (B) the then aggregate Certificate
Principal Balance of the Group I Class A Certificates, the Group I Mezzanine
Certificates and the Class P-I Certificates then outstanding.

                  With respect to the Class CE-II Certificates as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balance of REMIC II Regular Interest II-LTAII1, REMIC II Regular Interest II-
LTAII2, REMIC II Regular Interest II-LTAII3, REMIC II Regular Interest
II-LTAII4, REMIC II Regular Interest II-LTAII5, REMIC II Regular Interest
II-LTAII6, REMIC II Regular Interest II-LTAII7, REMIC II Regular Interest
II-LTAII8, REMIC II Regular Interest II-LTAII9, REMIC II Regular Interest II-
LTM2, REMIC II Regular Interest II-LTB2, REMIC II Regular Interest II-LTZZ2 and
REMIC II Regular Interest II-LTP2 over (B) the then aggregate Certificate
Principal Balance of the Group II Class A Certificates, the Group II Mezzanine
Certificates and the Class P-II Certificates then outstanding.

                  With respect to the Class CE-III Certificates as of any date
of determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balance of REMIC II Regular Interest II-LTAIII1, REMIC II Regular Interest

                                       -5-

<PAGE>

II-LTAIII2, REMIC II Regular Interest II-LTAIII3, REMIC II Regular Interest
II-LTM3, REMIC II Regular Interest II-LTB3, REMIC II Regular Interest II-LTZZ3
and REMIC II Regular Interest II-LTP3 over (B) the then aggregate Certificate
Principal Balance of the Group III Class A Certificates, the Group III Mezzanine
Certificates and the Class P-III Certificates then outstanding.

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

                  "Class": Collectively, all of the Certificates bearing the
same class designation.

                  "Class A-I-1 Cap Contract": The cap contract between the
Trustee and the counterparty thereunder for the benefit of the Holders of the
Class A-I-1 Certificates.

                  "Class A-I-1 Certificate": Any one of the Class A-I-1
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-1 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-I-2 Certificate": Any one of the Class A-I-2
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-2 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-I-3 Certificate": Any one of the Class A-I-3
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-3 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-I-4 Certificate": Any one of the Class A-I-4
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-4 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-I-5 Certificate": Any one of the Class A-I-5
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-5 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-I-6 Certificate": Any one of the Class A-I-6
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-6 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-I-7 Certificate": Any one of the Class A-I-7
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-7 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-I-8 Certificate": Any one of the Class A-I-8
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-8 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                                       -6-

<PAGE>

                  "Class A-I-9 Certificate": Any one of the Class A-I-9
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-9 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-1 Cap Contract": The cap contract between the
Trustee and the counterparty thereunder for the benefit of the Holders of the
Class A-II-1 Certificates.

                  "Class A-II-1 Certificate": Any one of the Class A-II-1
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-10 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-2 Certificate": Any one of the Class A-II-2
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-11 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-3 Certificate": Any one of the Class A-II-3
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-12 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-4 Certificate": Any one of the Class A-II-4
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-13 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-5 Certificate": Any one of the Class A-II-5
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-14 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-6 Certificate": Any one of the Class A-II-6
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-15 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-7 Certificate": Any one of the Class A-II-7
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-16 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-8 Certificate": Any one of the Class A-II-8
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-17 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-II-9 Certificate": Any one of the Class A-II-9
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-18 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                                       -7-

<PAGE>

                  "Class A-III-A Certificate": Any one of the Class A-III-A
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-19 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-III-B1 Certificate": Any one of the Class A-III-B1
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-20 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class A-III-B2 Certificate": Any one of the Class A-III-B2
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-21 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class B Certificate": Any one of the Class B-I Certificates,
the Class B-II Certificates or the Class B-III Certificates.

                  "Class B-I Certificate": Any one of the Class B-I Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-26 and evidencing a Regular Interest in REMIC III
for purposes of the REMIC Provisions.

                  "Class B-I Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Group I Class A Certificates (after taking into account
the distribution of the Group I Class A Principal Distribution Amount on such
Distribution Date), (ii) the aggregate Certificate Principal Balance of the
Class M-I-1 Certificates (after taking into account the distribution of the
Class M-I-1 Principal Distribution Amount on such Distribution Date), (iii) the
aggregate Certificate Principal Balance of the Class M-I-2 Certificates (after
taking into account the distribution of the Class M-I-2 Principal Distribution
Amount on such Distribution Date), and (iv) the Certificate Principal Balance of
the Class B-I Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) approximately 94.00% and (ii) the aggregate
Stated Principal Balance of the Group I Mortgage Loans as of the last day of the
related Due Period and (B) the aggregate Stated Principal Balance of the Group I
Mortgage Loans as of the last day of the related Due Period minus $3,637,741.

                  "Class B-II Certificate": Any one of the Class B-II
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-27 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class B-II Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Group II Class A Certificates (after taking
into account the distribution of the Group II Class A Principal Distribution
Amount on such Distribution Date), (ii) the Certificate Principal Balance of the
Class M-II Certificates (after taking into account the distribution of the Class
M-II Principal Distribution Amount on such Distribution Date) and (iii) the
Certificate Principal Balance of the Class B-II Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i)
approximately 94.00% and (ii) the aggregate Stated Principal

                                       -8-

<PAGE>

Balance of the Group II Mortgage Loans as of the last day of the related Due
Period and (B) the aggregate Stated Principal Balance of the Group II Mortgage
Loans as of the last day of the related Due Period minus $2,381,161.

                  "Class B-III Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Group III Class A Certificates (after
taking into account the distribution of the Group III Class A Principal
Distribution Amount on such Distribution Date), (ii) the Certificate Principal
Balance of the Class M-III Certificates (after taking into account the
distribution of the Class M-III Principal Distribution Amount on such
Distribution Date) and (iii) the Certificate Principal Balance of the Class
B-III Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) approximately 97.00% and (ii) the aggregate
Stated Principal Balance of the Group III Mortgage Loans as of the last day of
the related Due Period and (B) the aggregate Stated Principal Balance of the
Group III Mortgage Loans as of the last day of the related Due Period minus
$2,378,082.

                  "Class CE Certificate": Any one of the Class CE-I
Certificates, the Class CE-II Certificates or the Class CE-III Certificates.

                  "Class CE-I Certificate": Any one of the Class CE-I
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-29 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class CE-II Certificate": Any one of the Class CE-II
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-30 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class CE-III Certificate": Any one of the Class CE-III
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-31 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class M Certificate": Any one of the Class M-I-1
Certificates, the Class M-I-2 Certificates, the Class M-II Certificates or the
Class M-III Certificates.

                  "Class M-I-1 Certificate": Any one of the Class M-I-1
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-22 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class M-I-1 Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Group I Class A Certificates (after taking
into account the distribution of the Group I Class A Principal Distribution
Amount on such Distribution Date) and (ii) the Certificate Principal Balance of
the Class M-I-1 Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) approximately 90.00% and (ii) the
aggregate Stated Principal Balance of the Group I Mortgage Loans as of the last
day of the related Due

                                       -9-

<PAGE>

Period and (B) the aggregate Stated Principal Balance of the Group I Mortgage
Loans as of the last day of the related Due Period minus $3,637,741.

                  "Class M-I-2 Certificate": Any one of the Class M-I-2
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-23 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class M-I-2 Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Group I Class A Certificates (after taking
into account the distribution of the Group I Class A Principal Distribution
Amount on such Distribution Date), (ii) the Certificate Principal Balance of the
Class M-I-1 Certificates (after taking into account the distribution of the
Class M-I-1 Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M-I-2 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
approximately 92.00% and (ii) the aggregate Stated Principal Balance of the
Group I Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Stated Principal Balance of the Group I Mortgage Loans as of the last
day of the related Due Period minus $3,637,741.

                  "Class M-II Certificate": Any one of the Class M-II
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-24 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class M-II Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Group II Class A Certificates (after taking
into account the distribution of the Group II Class A Principal Distribution
Amount on such Distribution Date) and (ii) the Certificate Principal Balance of
the Class M-II Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) approximately 92.00% and (ii) the aggregate
Stated Principal Balance of the Group II Mortgage Loans as of the last day of
the related Due Period and (B) the aggregate Stated Principal Balance of the
Group II Mortgage Loans as of the last day of the related Due Period minus
$2,381,161.

                  "Class M-III Certificate": Any one of the Class M-III
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-25 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class M-III Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Group III Class A Certificates (after
taking into account the distribution of the Group III Class A Principal
Distribution Amount on such Distribution Date) and (ii) the Certificate
Principal Balance of the Class M-III Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) approximately
94.00% and (ii) the aggregate Stated Principal Balance of the Group III Mortgage
Loans as of the last day of the related Due Period and (B) the aggregate Stated
Principal Balance of the Group III Mortgage Loans as of the last day of the
related Due Period minus $2,378,082.

                                      -10-

<PAGE>

                  "Class P Certificate": Any one of the Class P-I Certificates,
the Class P-II Certificates or the Class P-III Certificates.

                  "Class P-I Certificate": Any one of the Class P-I Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-32 and evidencing a Regular Interest in REMIC III
for purposes of the REMIC Provisions.

                  "Class P-II Certificate": Any one of the Class P-II
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-33 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class P-III Certificate": Any one of the Class P-II
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-34 and evidencing a Regular Interest in
REMIC III for purposes of the REMIC Provisions.

                  "Class R-I Certificate": Any one of the Class R-I Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-35.

                  "Class R-II Certificate": Any one of the Class R-II
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto.

                  "Class R-III Certificate": Any one of the Class R-II
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-37.

                  "Class R-X Certificate": Any one of the Class R-X Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-38 and evidencing the ownership of the Class R-II
Interest and the Class R-III Interest.

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

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

                  "Closing Date": August 4, 2004.

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

                  "Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by each Servicer pursuant to
Section 3.10(a), which shall be entitled as appropriate (i) "Countrywide Home
Loans Servicing, LP, as a Servicer for Deutsche Bank National Trust Company, as
Trustee, in trust for the registered holders of New Century Home Equity Loan
Trust, Series 2004-A, Asset Backed Pass-Through Certificates" or (ii) "GMAC
Mortgage Corporation, as a Servicer for Deutsche Bank National Trust Company, as
Trustee, in trust for the registered holders of New Century

                                      -11-

<PAGE>

Home Equity Loan Trust, Series 2004-A, Asset Backed Pass-Through Certificates."
Each Collection Account must be an Eligible Account.

                  "Commission": The Securities and Exchange Commission.

                  "Controlling Person": As of any date of determination: (i) the
Certificate Insurer, so long as (A) the Insured Certificates or any amounts are
owed to the Certificate Insurer under this Agreement or the Insurance Agreement,
(B) no Certificate Insurer Default has occurred and is continuing; provided,
however, that the Certificate Insurer shall not be the Controlling Person with
respect to the Group I Class A Certificates on or after the Distribution Date on
which the Certificate Principal Balance of the Class M-I- 1 Certificates is less
than $5,000,000, (ii) the Guarantor, so long as (A) the Guaranteed Certificates
are outstanding or any amounts are owed to the Guarantor under this Agreement,
(B) no event of default has occurred and is continuing under the Guaranty and
(C) the Certificate Insurer is not the Certificates Controlling Person under
clause (i) above; and (iii) none, so long as neither the Certificate Insurer nor
the Guarantor is the Controlling Person pursuant to clause (i) or (ii) above.

                  "Corporate Trust Office": The principal corporate trust office
of the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 1761 East St. Andrew Place,
Santa Ana, California 92705-4934, Attn: NC040A, or at such other address as the
Trustee may designate from time to time by notice to the Certificateholders, the
Depositor, the Servicers, the Guarantor and the Certificate Insurer.

                  "Corresponding Certificate": With respect to each REMIC II
Regular Interest set forth below, the Regular Certificate set forth in the table
below:

  REMIC II REGULAR INTEREST            Certificate
  -------------------------            -----------
           II-LTAI1                    Class A-I-1
           II-LTAI2                    Class A-I-2
           II-LTAI3                    Class A-I-3
           II-LTAI4                    Class A-I-4
           II-LTAI5                    Class A-I-5
           II-LTAI6                    Class A-I-6
           II-LTAI7                    Class A-I-7
           II-LTAI8                    Class A-I-8
           II-LTAI9                    Class A-I-9
           II-LTMI1                    Class M-I-1
           II-LTMI2                    Class M-I-2
           II-LTB1                      Class B-I
           II-LTP1                      Class P-I
          II-LTAII1                    Class A-I-1
          II-LTAII2                    Class A-I-2
          II-LTAII3                    Class A-I-3
          II-LTAII4                    Class A-I-4
          II-LTAII5                    Class A-I-5
          II-LTAII6                    Class A-I-6
          II-LTAII7                    Class A-I-7

                                      -12-

<PAGE>

          II-LTAII8                    Class A-I-8
          II-LTAII9                    Class A-I-9
           II-LTM2                     Class M-II
           II-LTB2                     Class B-II
           II-LTP2                     Class P-II
          II-LTAIII1                  Class A-III-A
          II-LTAIII2                  Class A-III-A
          II-LTAIII3                  Class A-III-A
           II-LTM3                     Class M-III
           II-LTB3                     Class B-III
           II-LTP3                     Class P-III

                  "Countrywide": Countrywide Home Loans Servicing, LP, or any
successor Servicer of the Group III Mortgage Loans appointed as herein provided,
in its capacity as a Servicer hereunder.

                  "Cumulative Loss Percentage": With respect to any Distribution
Date, either (1) with respect to the Group I Mortgage Loans, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred on the Group I Mortgage Loans from the Cut-off Date to
the last day of the preceding calendar month and the denominator of which is the
aggregate Stated Principal Balance of the Group I Mortgage Loans as of the
Cut-off Date and the Group I Initial Deposit and (ii) with respect to the Group
II Mortgage Loans, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount of Realized Losses incurred on the Group II
Mortgage Loans from the Cut-off Date to the last day of the preceding calendar
month and the denominator of which is the aggregate Stated Principal Balance of
the Group II Mortgage Loans as of the Cut-off Date.

                  "Cut-off Date": With respect to each Original Mortgage Loan,
July 1, 2004. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.

                  "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

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

                  "Definitive Certificates": As defined in Section 5.01(b).

                  "Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.

                  "Delinquency Trigger": With respect to any Distribution Date,
a Delinquency Trigger exists

                                      -13-

<PAGE>

if either (a) the quotient (expressed as a percentage) of (1) the rolling
three-month average of the aggregate unpaid principal balance of Group I
Mortgage Loans delinquent 60 or more days as of the last day of the related Due
Period, divided by (2) the aggregate unpaid principal balance of the Group I
Mortgage Loans as of the last day of the related Due Period, equals or exceeds
10.00%; or (b) the quotient (expressed as a percentage) of (1) the rolling
three-month average of the aggregate unpaid principal balance of Group II
Mortgage Loans delinquent 60 or more days as of the last day of the related Due
Period, divided by (2) the aggregate unpaid principal balance of the Group II
Mortgage Loans as of the last day of the related Due Period, equals or exceeds
10.00%.

                  "Depositor": New Century Mortgage Securities, Inc., a Delaware
corporation, or its successor in interest.

                  "Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
Cede & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.

                  "Depository Institution": Any depository institution or trust
company, including the Trustee that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is the principal subsidiary of a
holding company, such holding company has unsecured commercial paper or other
short-term unsecured debt obligations) that are rated at least P-1 by Moody's
and A-1+ by S&P.

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

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

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

                                      -14-

<PAGE>

with respect to such REO Property.

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

                  "Distribution Account": The trust account or accounts created
and maintained by the Trustee pursuant to Section 3.10(b), which shall be
entitled "Deutsche Bank National Trust Company, as Trustee, in trust for the
registered holders of New Century Home Equity Loan Trust, Series 2004-A, Asset
Backed Pass-Through Certificates." The Distribution Account must be an Eligible
Account.

                  "Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in August 2004.

                  "Due Date": With respect to each Distribution Date, the first
day of the calendar month in which such Distribution Date occurs, which is
generally the day of the month on which the Monthly Payment is due on a Mortgage
Loan, exclusive of any days of grace.

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

                  "Effective Date": As defined in Section 3.13 hereof.

                  "Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution or (ii) a segregated, non-interest
bearing trust account or accounts maintained with the corporate trust department
of a federal or state chartered depository institution or trust company acting
in its fiduciary capacity. Eligible Accounts may bear interest.

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

                                      -15-

<PAGE>

                  "Estate in Real Property": A fee simple estate in a parcel of
land.

                  "Expense Adjusted Maximum Mortgage Rate": With respect to any
Group III Mortgage Loan (or the related REO Property), as of any date of
determination, a per annum rate of interest equal to the applicable Maximum
Mortgage Rate thereon as of the close of business on the first day of the
calendar month preceding the month in which the Distribution Date occurs minus
the sum of (i) the Trustee Fee Rate and (ii) the Servicing Fee Rate.

                  "Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan (or the related REO Property), as of any date of determination, a per annum
rate of interest equal to the applicable Mortgage Rate thereon as of the close
of business on the first day of the calendar month preceding the month in which
the Distribution Date occurs minus the sum of (i) the Trustee Fee Rate and (ii)
the Servicing Fee Rate.

                  "Extraordinary Trust Fund Expense": Any amounts reimbursable
to the Trustee or any director, officer, employee or agent of the Trustee from
the Trust Fund pursuant to Section 8.05 or Section 10.01(c), any amounts payable
from the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii) and any costs incurred by the Trustee endorsing any Mortgage Notes
delivered in blank under Section 2.01 or recording the Assignments pursuant to
Section 2.01 (to the extent the Seller is unable to pay such costs).

                  "Fannie Mae": Fannie Mae, formally known as the Federal
National Mortgage Association, or any successor thereto.

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

                  "Final Stated Maturity Date": The Distribution Date in August
2034.

                  "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller, the Depositor or either Servicer pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01), a determination
made by the related Servicer that all Insurance Proceeds, Liquidation Proceeds
and other payments or recoveries which such Servicer, in its reasonable good
faith judgment, expects to be finally recoverable in respect thereof have been
so recovered. Each Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.

                  "Fixed Rate Certificates": The Group I Class A Certificates
(other than the Class A-I-1 Certificates), the Group II Class A Certificates
(other than the Class A-II-1 Certificates), the Group I Mezzanine Certificates
and the Group II Mezzanine Certificates.

                  "Floating Rate Certificates": The Class A-I-1 Certificates,
the Class A-II-1 Certificates, the Group III Class A Certificates and the Group
III Mezzanine Certificates.

                                      -16-

<PAGE>

                  "Formula Rate": For any Distribution Date and the Class A-I-1
Certificates and the Class A-II-1 Certificates, One-Month LIBOR plus the related
Certificate Margin. For any Distribution Date and the Group III Class A
Certificates and the Group III Mezzanine Certificates, the lesser of (i)
One-Month LIBOR plus the related Certificate Margin and (ii) the Maximum Cap
Rate.

                  "Freddie Mac": Freddie Mac, formally known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.

                  "GMAC": GMAC Mortgage Corporation, or any successor Servicer
of the Group I Mortgage Loans and the Group II Mortgage Loans appointed as
herein provided, in its capacity as a Servicer hereunder.

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

                  "Group I Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the related Collection Account and Distribution Account as
of the close of business on the related Determination Date with respect to the
Group I Mortgage Loans, (b) the aggregate of any amounts received in respect of
an REO Property in Loan Group I withdrawn from any REO Account and deposited in
the Distribution Account for such Distribution Date pursuant to Section 3.23,
(c) the aggregate of any amounts deposited in the Distribution Account by the
related Servicer in respect of Prepayment Interest Shortfalls on the Group I
Mortgage Loans for such Distribution Date pursuant to Section 3.24, (d) the
aggregate of any P&I Advances made by the related Servicer on the Group I
Mortgage Loans for such Distribution Date pursuant to Section 4.03 and (e) the
aggregate of any P&I Advances or Servicing Advances made on the Group I Mortgage
Loans by the Trustee as a successor Servicer or any other successor Servicer for
such Distribution Date pursuant to Section 7.02, reduced (to not less than
zero), by (2) the portion of the amount described in clause (1)(a) above that
represents (i) Monthly Payments on the Group I Mortgage Loans received from a
Mortgagor on or prior to the Determination Date but due during any Due Period
subsequent to the related Due Period, (ii) Principal Prepayments on the Group I
Mortgage Loans received after the related Prepayment Period (together with any
interest payments received with such Principal Prepayments to the extent they
represent the payment of interest accrued on the Group I Mortgage Loans during a
period subsequent to the related Prepayment Period), (iii) Liquidation Proceeds
and Insurance Proceeds received in respect of the Group I Mortgage Loans after
the related Prepayment Period, (iv) amounts reimbursable or payable to the
Depositor, the related Servicer, the Trustee, the Seller or any Sub-Servicer
pursuant to Section 3.11 or Section 3.12 or otherwise payable in respect of
Extraordinary Trust Fund Expenses, (v) the Trustee Fee in respect of the Group I
Mortgage Loans payable from the Distribution Account pursuant to Section 8.05,
(vi) amounts deposited in the related Collection Account or the Distribution
Account with respect to the Group I Mortgage Loans in error and (vii) the amount
of any Prepayment Charges collected by the related Servicer in connection with
the Principal Prepayment of any of the Group I Mortgage Loans or any Servicer
Prepayment Charge Payment Amount with respect to the Group I Mortgage Loans.

                                      -17-

<PAGE>

                  "Group I Class A Certificates": The Class A-I-1 Certificates,
the Class A-I-2 Certificates, the Class A-I-3 Certificates, the Class A-I-4
Certificates, the Class A-I-5 Certificates, the Class A-I-6 Certificates, the
Class A-I-7 Certificates, the Class A-I-8 Certificates and the Class A-I-9
Certificates.

                  "Group I Class A Principal Distribution Amount": With respect
to any Distribution Date, the excess of (x) the aggregate Certificate Principal
Balance of the Group I Class A Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) approximately
72.00% and (ii) the aggregate Stated Principal Balance of the Group I Mortgage
Loans as of the last day of the related Due Period and (B) the aggregate Stated
Principal Balance of the Group I Mortgage Loans as of the last day of the
related Due Period minus $3,637,741.

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

                  "Group I Delinquency Percentage": As of the last day of the
related Due Period, the percentage equivalent of a fraction, the numerator of
which is the aggregate Stated Principal Balance of all Group I Mortgage Loans
that, as of the last day of the previous calendar month, are 60 or more days
delinquent, are in foreclosure, have been converted to REO Properties or are in
bankruptcy (and delinquent 60 days or more), and the denominator of which is the
aggregate Stated Principal Balance of the Group I Mortgage Loans and REO
Properties in Loan Group I as of the last day of the previous calendar month;
provided, however, that any Mortgage Loan purchased by the related Servicer
pursuant to Section 3.16(c) shall not be included in either the numerator or the
denominator for purposes of calculating the Group I Delinquency Percentage.

                  "Group I Excess Overcollateralized Amount": With respect to
the Group I Class A Certificates and the Group I Mezzanine Certificates and any
Distribution Date, the excess, if any, of (i) the Group I Overcollateralized
Amount for such Distribution Date (calculated for this purpose only after
assuming that 100% of the sum of the Group I Principal Remittance Amount on such
Distribution Date has been distributed) over (ii) the Group I
Overcollateralization Target Amount for such Distribution Date.

                  "Group I Initial Deposit": With respect to the Closing Date,
the cash deposited by the Depositor with respect to the Group I Principal
Remittance Amount pursuant to Section 3.10(g).

                  "Group I Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Distribution Amount for such
Distribution Date allocable to interest on the Group I Mortgage Loans. With
respect to the first Distribution Date, the Group I Interest Remittance Amount
will also include $11,237.42 deposited on the Closing Date pursuant to Section
3.10(g).

                  "Group I Marker Rate": With respect to the Class CE-I
Certificates and any Distribution

                                      -18-

<PAGE>

Date, a per annum rate equal to two (2) times the weighted average of the REMIC
II Remittance Rate for REMIC II Regular Interest II-LTAI1, REMIC II Regular
Interest II-LTAI2, REMIC II Regular Interest II-LTAI3, REMIC II Regular Interest
II-LTAI4, REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest
II-LTAI6, REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest
II-LTAI8, REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest
II-LTMI1, REMIC II Regular Interest II-LTMI2, REMIC II Regular Interest II-LTB1
and REMIC II Regular Interest II-LTZZ1, with the rate on each such REMIC II
Regular Interest (other than REMIC II Regular Interest II-LTZZ1) subject to a
cap equal to the related Pass-Through Rate for the Corresponding Certificate for
the purpose of this calculation for such Distribution Date and with the rate on
REMIC II Regular Interest II-LTZZ1 subject to a cap of zero for the purpose of
this calculation; provided, however, that for this purpose, calculations of the
REMIC II Remittance Rate and the related cap with respect to REMIC II Regular
Interest II-LTAI1 shall be multiplied by a fraction, the numerator of which is
30 and the denominator of which is the actual number of days elapsed in the
related Accrual Period.

                  "Group I Mezzanine Certificates": The Class M-I-1
Certificates, the Class M-I-2 Certificates and the Class B-I Certificates.

                  "Group I Mortgage Loan": Each of the Mortgage Loans identified
in the Mortgage Loan Schedule as having a Mortgage Rate that is fixed for the
life of the Mortgage Loan and having a principal balance at origination that
conforms with Fannie Mae and Freddie Mac loan limits.

                  "Group I Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Group I Overcollateralization Reduction
Amount for such Distribution Date and (ii) the excess of (x) the Group I
Available Distribution Amount for such Distribution Date over (y) the sum for
such Distribution Date of (A) the Senior Interest Distribution Amount payable to
the holders of the Group I Class A Certificates and the Class M-I-1 Certificates
and the Interest Distribution Amount payable to the holders of the Group I
Mezzanine Certificates (other than the Class M-I-1 Certificates), (B) any
amounts paid to the Certificate Insurer or the Guarantor from the Group I
Interest Remittance Amount, (C) any amounts distributed to the holders of the
Group II Class A Certificates and the Group III Class A Certificates from the
Group I Interest Remittance Amount and (D) the Group I Principal Remittance
Amount.

                  "Group I Net WAC Rate Carryover Reserve Account": The account
established and maintained pursuant to Section 3.28.

                  "Group I Overcollateralization Increase Amount": With respect
to any Distribution Date, the lesser of (a) the amount of Accrued Certificate
Interest distributable on the Class CE-I Certificates on such Distribution Date
as reduced by Realized Losses allocated thereto with respect to such
Distribution Date pursuant to Section 4.04 and (b) the excess, if any, of (a)
the Group I Overcollateralization Target Amount applicable to such Distribution
Date over (b) the Group I Overcollateralized Amount applicable to such
Distribution Date (calculated for this purpose only after assuming that 100% of
the Group I Principal Remittance Amount on such Distribution Date has been
distributed).

                  "Group I Overcollateralization Reduction Amount": With respect
to any Distribution Date,

                                      -19-

<PAGE>

an amount equal to the lesser of (a) the Group I Excess Overcollateralized
Amount and (b) the Group I Principal Remittance Amount.

                  "Group I Overcollateralization Target Amount": With respect to
any Distribution Date (a) prior to the Group I Stepdown Date, an amount equal to
3.00% of the sum of the aggregate Stated Principal Balance of the Group I
Mortgage Loans as of the Cut-off Date and the Group I Initial Deposit; (b) on or
after the Group I Stepdown Date provided a Group I Trigger Event is not in
effect, the greater of (i) 6.00% of the then current aggregate outstanding
Stated Principal Balance of the Group I Mortgage Loans as of the last day of the
related Due Period and (ii) $3,367,741; and (c) on or after the Group I Stepdown
Date and if a Group I Trigger Event is in effect, the Group I
Overcollateralization Target Amount for the immediately preceding Distribution
Date.

                  "Group I Overcollateralized Amount": With respect to any
Distribution Date, the excess, if any, of (a) the sum of the aggregate Stated
Principal Balances of the Group I Mortgage Loans and REO Properties in Loan
Group I as of the last day of the related Due Period and the Group I Initial
Deposit over (b) the sum of the aggregate Certificate Principal Balance of the
Group I Class A Certificates, the Group I Mezzanine Certificates and the Class
P-I Certificates after giving effect to distributions to be made on such
Distribution Date.

                  "Group I Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the principal portion of each Monthly Payment
on the Group I Mortgage Loans due during the related Due Period, whether or not
received on or prior to the related Determination Date; (ii) the Stated
Principal Balance of any Group I Mortgage Loan that was purchased during the
related Prepayment Period pursuant to or as contemplated by Section 2.03,
Section 3.16(c) or Section 9.01 and the amount of any shortfall deposited in the
related Collection Account in connection with the substitution of a Deleted
Mortgage Loan in Loan Group I pursuant to Section 2.03 during the related
Prepayment Period; (iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds, Subsequent Recoveries and REO Principal
Amortization) received during the related Prepayment Period on the Group I
Mortgage Loans, net of any portion thereof that represents a recovery of
principal for which an advance was made by the related Servicer pursuant to
Section 4.03 in respect of a preceding Distribution Date; and (iv) the amount of
any Group I Overcollateralization Increase Amount for such Distribution Date
MINUS (v) the the amount of any Group I Overcollateralization Reduction Amount
for such Distribution Date.

                  "Group I Principal Remittance Amount": With respect to any
Distribution Date, the sum of the amounts set forth in clauses (i) through (iii)
of the definition of Group I Principal Distribution Amount. With respect to the
first Distribution Date, the Group I Principal Remittance Amount will also
include the Group I Initial Deposit.

                  "Group I Stepdown Date": The earlier to occur of (i) the
Distribution Date on which the aggregate Certificate Principal Balance of the
Group I Class A Certificates has been reduced to zero and (ii) the later to
occur of (a) the Distribution Date occurring in August 2007 and (b) the first
Distribution Date on which the Group I Credit Enhancement Percentage (calculated
for this purpose only after taking into

                                      -20-

<PAGE>

account payments of principal on the Group I Mortgage Loans but prior to any
distribution of the Group I Principal Distribution Amount on the Certificates
then entitled to distributions of principal on such Distribution Date) is equal
to or greater than 28.00%.

                  "Group I Trigger Event": A Group I Trigger Event is in effect
with respect to any Distribution Date on or after the Group I Stepdown Date if:

                  (a) the Group I Delinquency Percentage exceeds 50.00% of the
then current Group I Credit Enhancement Percentage for the prior Distribution
Date or

                  (b) the aggregate amount of Realized Losses on the Group I
Mortgage Loans incurred since the Cut-off Date through the last day of the
related Due Period (reduced by the aggregate amount of Subsequent Recoveries
received on the Group I Mortgage Loans since the Cut-off Date through the last
day of the related Due Period) divided by the sum of the aggregate Stated
Principal Balance of the Group I Mortgage Loans as of the Cut-off Date and the
Group I Initial Deposit exceeds the applicable percentages set forth below with
respect to such Distribution Date:

       DISTRIBUTION DATE OCCURRING IN              PERCENTAGE
       ------------------------------              ----------
August 2007 through July 2008                         1.25%
August 2008 through July 2009                         2.00%
August 2009 through July 2010                         2.75%
August 2010 through July 2011                         3.25%

                  "Group II Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the related Collection Account and Distribution Account as
of the close of business on the related Determination Date with respect to the
Group II Mortgage Loans, (b) the aggregate of any amounts received in respect of
an REO Property in Loan Group II withdrawn from any REO Account and deposited in
the Distribution Account for such Distribution Date pursuant to Section 3.23,
(c) the aggregate of any amounts deposited in the Distribution Account by the
related Servicer in respect of Prepayment Interest Shortfalls on the Group II
Mortgage Loans for such Distribution Date pursuant to Section 3.24, (d) the
aggregate of any P&I Advances made by the related Servicer on the Group II
Mortgage Loans for such Distribution Date pursuant to Section 4.03 and (e) the
aggregate of any P&I Advances or Servicing Advances made on the Group II
Mortgage Loans by the Trustee as a successor Servicer or any other successor
Servicer for such Distribution Date pursuant to Section 7.02, reduced (to not
less than zero), by (2) the portion of the amount described in clause (1)(a)
above that represents (i) Monthly Payments on the Group II Mortgage Loans
received from a Mortgagor on or prior to the Determination Date but due during
any Due Period subsequent to the related Due Period, (ii) Principal Prepayments
on the Group II Mortgage Loans received after the related Prepayment Period
(together with any interest payments received with such Principal Prepayments to
the extent they represent the payment of interest accrued on the Group II
Mortgage Loans during a period subsequent to the related Prepayment Period),
(iii) Liquidation Proceeds and Insurance Proceeds received in respect of the
Group II Mortgage Loans after the related Prepayment Period, (iv) amounts
reimbursable or payable to the Depositor, the related Servicer, the Trustee, the
Seller or any Sub- Servicer pursuant to Section 3.11 or Section 3.12 or
otherwise payable in respect of Extraordinary Trust

                                      -21-

<PAGE>

Fund Expenses, (v) the Trustee Fee in respect of the Group II Mortgage Loans
payable from the Distribution Account pursuant to Section 8.05, (vi) amounts
deposited in the related Collection Account or the Distribution Account with
respect to the Group II Mortgage Loans in error and (vii) the amount of any
Prepayment Charges collected by the related Servicer in connection with the
Principal Prepayment of any of the Group II Mortgage Loans or any Servicer
Prepayment Charge Payment Amount with respect to the Group II Mortgage Loans.

                  "Group II Class A Certificates": The Class A-II-1
Certificates, the Class A-II-2 Certificates, the Class A-II-3 Certificates, the
Class A-II-4 Certificates, the Class A-II-5 Certificates, the Class A-II-6
Certificates, the Class A-II-7 Certificates, the Class A-II-8 Certificates and
the Class A-II-9 Certificates.

                  "Group II Class A Principal Distribution Amount": With respect
to any Distribution Date, the excess of (x) the aggregate Certificate Principal
Balance of the Group II Class A Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) approximately
90.00% and (ii) the aggregate Stated Principal Balance of the Group II Mortgage
Loans as of the last day of the related Due Period and (B) the aggregate Stated
Principal Balance of the Group II Mortgage Loans as of the last day of the
related Due Period minus $2,381,160.

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

                  "Group II Delinquency Percentage": As of the last day of the
related Due Period, the percentage equivalent of a fraction, the numerator of
which is the aggregate Stated Principal Balance of all Group II Mortgage Loans
that, as of the last day of the previous calendar month, are 60 or more days
delinquent, are in foreclosure, have been converted to REO Properties or are in
bankruptcy (and Delinquent 60 days or more), and the denominator of which is the
aggregate Stated Principal Balance of the Group II Mortgage Loans and REO
Properties in Loan Group II as of the last day of the previous calendar month;
provided, however, that any Mortgage Loan purchased by the related Servicer
pursuant to Section 3.16(c) shall not be included in either the numerator or the
denominator for purposes of calculating the Group II Delinquency Percentage.

                  "Group II Excess Overcollateralized Amount": With respect to
the Group II Class A Certificates and the Group II Mezzanine Certificates and
any Distribution Date, the excess, if any, of (i) the Group II
Overcollateralized Amount for such Distribution Date (calculated for this
purpose only after assuming that 100% of the sum of the Group II Principal
Remittance Amount on such Distribution Date has been distributed) over (ii) the
Group II Overcollateralization Target Amount for such Distribution Date.

                  "Group II Interest Remittance Amount": With respect to any
Distribution Date, that portion

                                      -22-

<PAGE>

of the Available Distribution Amount for such Distribution Date allocable to
interest on the Group II Mortgage Loans.

                  "Group II Marker Rate": With respect to the Class CE-II
Certificates and any Distribution Date, a per annum rate equal to two (2) times
the weighted average of the REMIC II Remittance Rate for REMIC II Regular
Interest II-LTAII1, REMIC II Regular Interest II-LTAII2, REMIC II Regular
Interest II-LTAII3, REMIC II Regular Interest II-LTAII4, REMIC II Regular
Interest II-LTAII5, REMIC II Regular Interest II-LTAII6, REMIC II Regular
Interest II-LTAII7, REMIC II Regular Interest II-LTAII8, REMIC II Regular
Interest II-LTAII9, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest
II-LTB2 and REMIC II Regular Interest II-LTZZ2, with the rate on each such REMIC
II Regular Interest (other than REMIC II Regular Interest II-LTZZ2) subject to a
cap equal to the related Pass-Through Rate for the Corresponding Certificate for
the purpose of this calculation for such Distribution Date and with the rate on
REMIC II Regular Interest II-LTZZ2 subject to a cap of zero for the purpose of
this calculation; provided, however, that for this purpose, calculations of the
REMIC II Remittance Rate and the related cap with respect to REMIC II Regular
Interest IILTAII1 shall be multiplied by a fraction, the numerator of which is
30 and the denominator of which is the actual number of days elapsed in the
related Accrual Period.

                  "Group II Mezzanine Certificates": The Class M-II Certificates
and the Class B-II Certificates.

                  "Group II Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is fixed
for the life of the Mortgage Loan and having a principal balance at origination
that may or may not conform with Fannie Mae and Freddie Mac loan limits.

                  "Group II Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Group II Overcollateralization Reduction
Amount for such Distribution Date and (ii) the excess of (x) the Group II
Available Distribution Amount for such Distribution Date over (y) the sum for
such Distribution Date of (A) the Senior Interest Distribution Amount payable to
the holders of the Group II Class A Certificates and the Interest Distribution
Amount payable to the holders of the Group II Mezzanine Certificates, (B) any
amounts paid to the Certificate Insurer or the Guarantor from the Group II
Interest Remittance Amount, (C) any amounts distributed to the holders of the
Group I Class A Certificates and the Group III Class A Certificates from the
Group II Interest Remittance Amount and (D) the Group II Principal Remittance
Amount.

                  "Group II Net WAC Rate Carryover Reserve Account": The account
established and maintained pursuant to Section 3.28.

                  "Group II Overcollateralization Increase Amount": With respect
to any Distribution Date, the lesser of (a) the amount of Accrued Certificate
Interest distributable on the Class CE-I Certificates on such Distribution Date
as reduced by Realized Losses allocated thereto with respect to such
Distribution Date pursuant to Section 4.04 and (b) the excess, if any, of (a)
the Group II Overcollateralization Target Amount applicable to such Distribution
Date over (b) the Group II Overcollateralized Amount applicable

                                      -23-

<PAGE>

to such Distribution Date (calculated for this purpose only after assuming that
100% of the Group II Principal Remittance Amount on such Distribution Date has
been distributed).

                  "Group II Overcollateralization Reduction Amount": With
respect to any Distribution Date, an amount equal to the lesser of (a) the Group
II Excess Overcollateralized Amount and (b) the Group II Principal Remittance
Amount.

                  "Group II Overcollateralization Target Amount": With respect
to any Distribution Date (a) prior to the Group II Stepdown Date, an amount
equal to 3.00% of the aggregate Stated Principal Balance of the Group II
Mortgage Loans as of the Cut-off Date; (b) on or after the Group II Stepdown
Date provided a Group II Trigger Event is not in effect, the greater of (i)
6.00% of the then current aggregate outstanding Stated Principal Balance of the
Group II Mortgage Loans as of the last day of the related Due Period and (ii)
$2,381,161; and (c) on or after the Group II Stepdown Date and if a Group II
Trigger Event is in effect, the Group II Overcollateralization Target Amount for
the immediately preceding Distribution Date.

                  "Group II Overcollateralized Amount": With respect to any
Distribution Date, the excess, if any, of (a) the aggregate Stated Principal
Balances of the Group II Mortgage Loans and REO Properties in Loan Group II as
of the last day of the related Due Period over (b) the sum of the aggregate
Certificate Principal Balance of the Group II Class A Certificates, the Group II
Mezzanine Certificates and the Class P-I Certificates after giving effect to
distributions to be made on such Distribution Date.

                  "Group II Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the principal portion of each Monthly Payment
on the Group II Mortgage Loans due during the related Due Period, whether or not
received on or prior to the related Determination Date; (ii) the Stated
Principal Balance of any Group II Mortgage Loan that was purchased during the
related Prepayment Period pursuant to or as contemplated by Section 2.03,
Section 3.16(c) or Section 9.01 and the amount of any shortfall deposited in the
related Collection Account in connection with the substitution of a Deleted
Mortgage Loan in Loan Group II pursuant to Section 2.03 during the related
Prepayment Period; (iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds, Subsequent Recoveries and REO Principal
Amortization) received during the related Prepayment Period on the Group II
Mortgage Loans, net of any portion thereof that represents a recovery of
principal for which an advance was made by the related Servicer pursuant to
Section 4.03 in respect of a preceding Distribution Date; and (iv) the amount of
any Group II Overcollateralization Increase Amount for such Distribution Date
MINUS (v) the amount of any Group II Overcollateralization Reduction Amount for
such Distribution Date.

                  "Group II Principal Remittance Amount": With respect to any
Distribution Date, the sum of the amounts set forth in clauses (i) through (iii)
of the definition of Group II Principal Distribution Amount.

                  "Group II Stepdown Date": The earlier to occur of (i) the
Distribution Date on which the aggregate Certificate Principal Balance of the
Group II Class A Certificates has been reduced to zero and (ii) the later to
occur of (a) the Distribution Date occurring in August 2007 and (b) the first
Distribution Date

                                      -24-

<PAGE>

on which the Group II Credit Enhancement Percentage (calculated for this purpose
only after taking into account payments of principal on the Group II Mortgage
Loans but prior to any distribution of the Group II Principal Distribution
Amount on the Certificates then entitled to distributions of principal on such
Distribution Date) is equal to or greater than 10.00%.

                  "Group II Trigger Event": A Group II Trigger Event is in
effect with respect to any Distribution Date on or after the Group II Stepdown
Date if:

                  (a) the Group II Delinquency Percentage exceeds 50.00% of the
then current Group II Credit Enhancement Percentage for the prior Distribution
Date or

                  (b) the aggregate amount of Realized Losses on the Group II
Mortgage Loans incurred since the Cut-off Date through the last day of the
related Due Period (reduced by the aggregate amount of Subsequent Recoveries
received on the Group II Mortgage Loans since the Cut-off Date through the last
day of the related Due Period) divided by aggregate Stated Principal Balance of
the Group II Mortgage Loans as of the Cut-off Date exceeds the applicable
percentages set forth below with respect to such Distribution Date:

       DISTRIBUTION DATE OCCURRING IN              PERCENTAGE
       ------------------------------              ----------
August 2007 through July 2008                         1.25%
August 2008 through July 2009                         2.00%
August 2009 through July 2010                         2.75%
August 2010 through July 2011                         3.25%

                  "Group III-A Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is (x) the Group III-A Principal Remittance Amount for such Distribution
Date and the denominator of which is (y) the Group III Principal Remittance
Amount for such Distribution Date.

                  "Group III-A Initial Deposit": With respect to the Closing
Date, the cash deposited by the Depositor with respect to the Group III-A
Principal Remittance Amount pursuant to Section 3.10(g).

                  "Group III-A Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Distribution Amount for such
Distribution Date allocable to interest on the Group III-A Mortgage Loans. With
respect to the first Distribution Date, the Group III-A Interest Remittance
Amount will also include $2,850.38 deposited on the Closing Date pursuant to
Section 3.10(g).

                  "Group III-A Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
adjustable and having a principal balance at origination that conforms with
Fannie Mae and Freddie Mac loan limits.

                  "Group III-A Principal Distribution Amount": With respect to
any Distribution Date, the sum of (i) the principal portion of each Monthly
Payment on the Group III-A Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination Date; (ii) the

                                      -25-

<PAGE>

Stated Principal Balance of any Group III-A Mortgage Loan that was purchased
during the related Prepayment Period pursuant to or as contemplated by Section
2.03, Section 3.16(c) or Section 9.01 and the amount of any shortfall deposited
in the related Collection Account in connection with the substitution of a
Deleted Mortgage Loan in Loan Group III-A pursuant to Section 2.03 during the
related Prepayment Period; (iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds, Subsequent Recoveries and REO Principal
Amortization) received during the related Prepayment Period on the Group III-A
Mortgage Loans, net of any portion thereof that represents a recovery of
principal for which an advance was made by the related Servicer pursuant to
Section 4.03 in respect of a preceding Distribution Date; and (iv) the Group
III-A Allocation Percentage of the amount of any Group III Overcollateralization
Increase Amount for such Distribution Date MINUS (v) the Group III-A Allocation
Percentage of the amount of any Group III Overcollateralization Reduction Amount
for such Distribution Date.

                  "Group III-A Principal Remittance Amount": With respect to any
Distribution Date, the sum of the amounts set forth in clauses (i) through (iii)
of the definition of Group III-A Principal Distribution Amount. With respect to
the first Distribution Date, the Group III-A Principal Remittance Amount will
also include the Group III-A Initial Deposit.

                  "Group III-B Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is (x) the Group III-B Principal Remittance Amount for such Distribution
Date and the denominator of which is (y) the Group III Principal Remittance
Amount for such Distribution Date.

                  "Group III-B Certificates": The Class A-III-B1 Certificates
and the Class A-III-B2 Certificates.

                  "Group III-B Initial Deposit": With respect to the Closing
Date, the cash deposited by the Depositor with respect to the Group III-B
Principal Remittance Amount pursuant to Section 3.10(g)

                  "Group III-B Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Distribution Amount for such
Distribution Date allocable to interest on the Group III-B Mortgage Loans. With
respect to the first Distribution Date, the Group III-B Interest Remittance
Amount will also include $2,224.06 deposited on the Closing Date pursuant to
Section 3.10(g).

                  "Group III-B Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
adjustable and having a principal balance at origination that may or may not
conform with Fannie Mae and Freddie Mac loan limits.

                  "Group III-B Principal Distribution Amount": With respect to
any Distribution Date, the sum of (i) the principal portion of each Monthly
Payment on the Group III-B Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination Date; (ii) the
Stated Principal Balance of any Group III-B Mortgage Loan that was purchased
during the related Prepayment Period pursuant to or as contemplated by Section
2.03, Section 3.16(c) or Section 9.01 and

                                      -26-

<PAGE>

the amount of any shortfall deposited in the related Collection Account in
connection with the substitution of a Deleted Mortgage Loan in Loan Group III-B
pursuant to Section 2.03 during the related Prepayment Period; (iii) the
principal portion of all other unscheduled collections (including, without
limitation, Principal Prepayments, Insurance Proceeds, Liquidation Proceeds,
Subsequent Recoveries and REO Principal Amortization) received during the
related Prepayment Period on the Group III-B Mortgage Loans, net of any portion
thereof that represents a recovery of principal for which an advance was made by
the related Servicer pursuant to Section 4.03 in respect of a preceding
Distribution Date; and (iv) the Group III-B Allocation Percentage of the amount
of any Group III Overcollateralization Increase Amount for such Distribution
Date MINUS (v) the Group III-B Allocation Percentage of the amount of any Group
III Overcollateralization Reduction Amount for such Distribution Date.

                  "Group III-B Principal Remittance Amount": With respect to any
Distribution Date, the sum of the amounts set forth in clauses (i) through (iii)
of the definition of Group III-B Principal Distribution Amount. With respect to
the first Distribution Date, the Group III-B Principal Remittance Amount will
also include the Group III-B Initial Deposit.

                  "Group III Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the related Collection Account and Distribution Account as
of the close of business on the related Determination Date with respect to the
Group III Mortgage Loans, (b) the aggregate of any amounts received in respect
of an REO Property in Loan Group III withdrawn from any REO Account and
deposited in the Distribution Account for such Distribution Date pursuant to
Section 3.23, (c) the aggregate of any amounts deposited in the Distribution
Account by the related Servicer in respect of Prepayment Interest Shortfalls on
the Group III Mortgage Loans for such Distribution Date pursuant to Section
3.24, (d) the aggregate of any P&I Advances made by the related Servicer on the
Group III Mortgage Loans for such Distribution Date pursuant to Section 4.03 and
(e) the aggregate of any P&I Advances or Servicing Advances made on the Group
III Mortgage Loans by the Trustee as a successor Servicer or any other successor
Servicer for such Distribution Date pursuant to Section 7.02, reduced (to not
less than zero), by (2) the portion of the amount described in clause (1)(a)
above that represents (i) Monthly Payments on the Group III Mortgage Loans
received from a Mortgagor on or prior to the Determination Date but due during
any Due Period subsequent to the related Due Period, (ii) Principal Prepayments
on the Group III Mortgage Loans received after the related Prepayment Period
(together with any interest payments received with such Principal Prepayments to
the extent they represent the payment of interest accrued on the Group III
Mortgage Loans during a period subsequent to the related Prepayment Period),
(iii) Liquidation Proceeds and Insurance Proceeds received in respect of the
Group III Mortgage Loans after the related Prepayment Period, (iv) amounts
reimbursable or payable to the Depositor, the related Servicer, the Trustee, the
Seller or any Sub-Servicer pursuant to Section 3.11 or Section 3.12 or otherwise
payable in respect of Extraordinary Trust Fund Expenses, (v) the Trustee Fee in
respect of the Group III Mortgage Loans payable from the Distribution Account
pursuant to Section 8.05, (vi) amounts deposited in the related Collection
Account or the Distribution Account with respect to the Group III Mortgage Loans
in error and (vii) the amount of any Prepayment Charges collected by the related
Servicer in connection with the Principal Prepayment of any of the Group III
Mortgage Loans or any Servicer Prepayment Charge Payment Amount with respect to
the Group III Mortgage Loans.

                                      -27-

<PAGE>

                  "Group III Cap Contract": The cap contract between the Trustee
and the counterparty thereunder for the benefit of the Holders of the Group III
Class A Certificates and the Group III Mezzanine Certificates.

                  "Group III Class A Certificates": The Class A-III-A
Certificates, the Class A-III-B1 Certificates and the Class A-III-B2
Certificates.

                  "Group III Class A Principal Distribution Amount": With
respect to any Distribution Date, the excess of (x) the aggregate Certificate
Principal Balance of the Group III Class A Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 92.00% and
(ii) the aggregate Stated Principal Balance of the Group III Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Group III Mortgage Loans as of the last day of the related Due
Period minus $2,378,082.

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

                  "Group III Delinquency Percentage": As of the last day of the
related Due Period, the percentage equivalent of a fraction, the numerator of
which is the aggregate Stated Principal Balance of all Group III Mortgage Loans
that, as of the last day of the previous calendar month, are 60 or more days
delinquent, are in foreclosure, have been converted to REO Properties or are in
bankruptcy (and Delinquent 60 days or more), and the denominator of which is the
aggregate Stated Principal Balance of the Group III Mortgage Loans and REO
Properties in Loan Group III as of the last day of the previous calendar month;
provided, however, that any Mortgage Loan purchased by the related Servicer
pursuant to Section 3.16(c) shall not be included in either the numerator or the
denominator for purposes of calculating the Group III Delinquency Percentage.

                  "Group III Excess Overcollateralized Amount": With respect to
the Group III Class A Certificates and the Group III Mezzanine Certificates and
any Distribution Date, the excess, if any, of (i) the Group III
Overcollateralized Amount for such Distribution Date (calculated for this
purpose only after assuming that 100% of the Group III Principal Remittance
Amount on such Distribution Date has been distributed) over (ii) the Group III
Overcollateralization Target Amount for such Distribution Date.

                  "Group III Marker Rate": With respect to the Class CE-III
Certificates and any Distribution Date, a per annum rate equal to two (2) times
the weighted average of the REMIC II Remittance Rate for REMIC II Regular
Interest II-LTAIII1, REMIC II Regular Interest II-LTAIII2, REMIC II Regular
Interest II-LTAIII3, REMIC II Regular Interest II-LTM3, REMIC II Regular
Interest II-LTB3 and REMIC II Regular Interest II-LTZZ3, with the rate on each
such REMIC II Regular Interest (other than REMIC II Regular Interest II-LTZZ3)
subject to a cap equal to the related Pass-Through Rate

                                      -28-

<PAGE>

for the Corresponding Certificate for the purpose of this calculation for such
Distribution Date and with the rate on REMIC II Regular Interest II-LTZZ3
subject to a cap of zero for the purpose of this calculation; provided, however,
that for this purpose, calculations of the REMIC II Remittance Rate and the
related caps with respect to each such REMIC II Regular Interest (other than
REMIC II Regular Interest II- LTZZ3) shall be multiplied by a fraction, the
numerator of which is 30 and the denominator of which is the actual number of
days elapsed in the related Accrual Period.

                  "Group III Mezzanine Certificates": The Class M-III
Certificates and the Class B-III Certificates.

                  "Group III Mortgage Loan": The Group III-A Mortgage Loans and
the Group III-B Mortgage Loans.

                  "Group III Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Group III Overcollateralization Reduction
Amount for such Distribution Date and (ii) the excess of (x) the Group III
Available Distribution Amount for such Distribution Date over (y) the sum for
such Distribution Date of (A) the Senior Interest Distribution Amount payable to
the holders of the Group III Class A Certificates and the Interest Distribution
Amount payable to the holders of the Group III Mezzanine Certificates, (B) any
amounts paid to the Certificate Insurer or the Guarantor from the Group III-A
Interest Remittance Amount and the Group III-B Interest Remittance Amount, (C)
any amount distributed to the Holders of the Group I Class A Certificates and
the Group II Class A Certificates from the Group III-A Interest Remittance
Amount or the Group III-B Interest Remittance Amount and (D) the Group III
Principal Remittance Amount.

                  "Group III Net WAC Rate Carryover Reserve Account": The
account established and maintained pursuant to Section 3.28.

                  "Group III Overcollateralization Increase Amount": With
respect to any Distribution Date, the lesser of (a) the amount of Accrued
Certificate Interest distributable on the Class CE-III Certificates on such
Distribution Date as reduced by Realized Losses allocated thereto with respect
to such Distribution Date pursuant to Section 4.04 and (b) the excess, if any,
of (a) the Group III Overcollateralization Target Amount applicable to such
Distribution Date over (b) the Group III Overcollateralized Amount applicable to
such Distribution Date (calculated for this purpose only after assuming that
100% of the Group III Principal Remittance Amount on such Distribution Date has
been distributed).

                  "Group III Overcollateralization Reduction Amount": With
respect to any Distribution Date, an amount equal to the lesser of (a) the Group
III Excess Overcollateralized Amount and (b) the Group III Principal Remittance
Amount.

                  "Group III Overcollateralization Target Amount": With respect
to any Distribution Date (a) prior to the Group III Stepdown Date, an amount
equal to 1.50% of the sum of the aggregate Stated Principal Balance of the Group
III Mortgage Loans as of the Cut-off Date, the Group III-A Initial Deposit and
the Group III-B Initial Deposit ; (b) on or after the Group III Stepdown Date
provided a Group III

                                      -29-

<PAGE>

Trigger Event is not in effect, the greater of (i) 3.00% of the then current
aggregate outstanding Stated Principal Balance of the Group III Mortgage Loans
as of the last day of the related Due Period and (ii) $2,378,082; and (c) on or
after the Group III Stepdown Date and if a Group III Trigger Event is in effect,
the Group III Overcollateralization Target Amount for the immediately preceding
Distribution Date.

                  "Group III Overcollateralized Amount": With respect to any
Distribution Date, the excess, if any, of (a) the sum of the aggregate Stated
Principal Balances of the Group III Mortgage Loans and REO Properties in Loan
Group III as of the last day of the related Due Period, the Group III-A Initial
Deposit and the Group III-B Initial Deposit over (b) the sum of the aggregate
Certificate Principal Balance of the Group III Class A Certificates, the Group
III Mezzanine Certificates and the Class P-III Certificates after giving effect
to distributions to be made on such Distribution Date.

                  "Group III Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) the Group III-A Principal Remittance Amount
and (ii) the Group III-B Principal Remittance Amount.

                  "Group III Stepdown Date": The earlier to occur of (i) the
Distribution Date on which the aggregate Certificate Principal Balance of the
Group III Class A Certificates has been reduced to zero and (ii) the later to
occur of (a) the Distribution Date occurring in August 2007 and (b) the first
Distribution Date on which the Group III Credit Enhancement Percentage
(calculated for this purpose only after taking into account payments of
principal on the Group III Mortgage Loans but prior to any distribution of the
Group III-A Principal Distribution Amount and the Group III-B Principal
Distribution Amount on the Certificates then entitled to distributions of
principal on such Distribution Date) is equal to or greater than 10.00%.

                  "Group III Trigger Event": A Group III Trigger Event is in
effect with respect to any Distribution Date on or after the Group III Stepdown
Date if:

                  (a) the Group III Delinquency Percentage exceeds 40.00% of the
then current Group III Credit Enhancement Percentage for the prior Distribution
Date or

                  (b) the aggregate amount of Realized Losses on the Group III
Mortgage Loans incurred since the Cut-off Date through the last day of the
related Due Period (reduced by the aggregate amount of Subsequent Recoveries
received on the Group III Mortgage Loans since the Cut-off Date through the last
day of the related Due Period) divided by the sum of the aggregate Stated
Principal Balance of the Group III Mortgage Loans as of the Cut-off Date, the
Group III-A Initial Deposit and the Group III-B Initial Deposit exceeds the
applicable percentages set forth below with respect to such Distribution Date:

       DISTRIBUTION DATE OCCURRING IN              PERCENTAGE
       ------------------------------              ----------
August 2007 through July 2008                         2.75%
August 2008 through July 2009                         4.50%
August 2009 through July 2010                         5.75%
August 2010 through July 2011                         6.00%

                                      -30-

<PAGE>

                  "Guaranteed  Certificates":  The Group I Class A Certificates.

                  "Guaranteed Interest Distribution Amount": With respect to any
Distribution Date and the Guaranteed Certificates, the amount, if any, after
giving effect to the distributions of the Group I Interest Remittance Amount,
the Group II Interest Remittance Amount, the Group III-A Interest Remittance
Amount and the Group III-B Interest Remittance Amount on such Distribution Date,
by which the (i) the Senior Interest Distribution Amount payable on the
Guaranteed Certificates for such Distribution Date exceeds (ii) the amount of
interest actually distributed (without giving effect to any Guarantor Payment)
to the Holders of the related Classes of Guaranteed Certificates on such
Distribution Date.

                  "Guaranteed Principal Distribution Amount": With respect to
(a) any Distribution Date other than the Distribution Date in August 2034, the
amount, if any, by which (i) the aggregate Certificate Principal Balance of the
Guaranteed Certificates (after giving effect to all amounts distributable and
allocable to principal on the Guaranteed Certificates but prior to giving effect
to any Guarantor Payment on such Distribution Date) exceeds (ii) the aggregate
Stated Principal Balance of the Group I Mortgage Loans (after giving effect to
the principal portion of Monthly Payments due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (b) the Distribution Date in
August 2034, the amount equal to the aggregate Certificate Principal Balance of
the Guaranteed Certificates (after giving effect to all amounts distributable
and allocable to principal on the Guaranteed Certificates, including any Insured
Amount, but prior to giving effect to any Guarantor Payment on such Distribution
Date).

                  "Guarantor": Fannie Mae, or its successor in interest.

                  "Guarantor Deficiency Amount": With respect to any
Distribution Date, the sum of (i) the Guaranteed Interest Distribution Amount
and (ii) the Guaranteed Principal Distribution Amount.

                  "Guarantor Interest Reimbursement Amount": With respect to any
Distribution Date, (i) the sum of any accrued but unpaid Guaranty Fees, not
including the Guaranty Fee due on such Distribution Date, and (ii) the sum of
all amounts paid by the Guarantor in respect of the Guaranteed Interest
Distribution Amounts on all prior Distribution Dates to the extent not
previously reimbursed.

                  "Guarantor Payment": Any payment made by the Guarantor in
respect of a Guaranteed Interest Distribution Amount or a Guaranteed Principal
Distribution Amount.

                  "Guarantor Principal Reimbursement Amount": With respect to
any Distribution Date, the sum of all amounts paid by the Guarantor in respect
of Guaranteed Principal Distribution Amounts on all prior Distribution Dates to
the extent not previously reimbursed.

                  "Guarantor Reimbursement Amount": With respect to any
Distribution Date, the sum of Guarantor Interest Reimbursement Amount and the
Guarantor Principal Reimbursement Amount.

                  "Guaranty": The obligations of the Guarantor pursuant to
Section 4.09.

                                      -31-

<PAGE>

                  "Guaranty Fee": With respect to any Distribution Date and with
respect to the Guaranteed Certificates, the fee payable to the Guarantor in
respect of its services as Guarantor that accrues at the applicable Guaranty Fee
Rate for such Guaranteed Certificates on a balance equal to the aggregate
Certificate Principal Balance of the Guaranteed Certificates immediately prior
to such Distribution Date computed on the basis of a 360-day year consisting of
twelve 30-day months.

                  "Guaranty Fee Rate": The per annum rate set forth in a side
letter of the Guarantor, addressed to the Trustee and the Seller.

                  "Highest Priority": As of any date of determination, the Class
of Mezzanine Certificates then outstanding with a Certificate Principal Balance
greater than zero, with the highest priority for payments pursuant to Section
4.01, in the following order of decreasing priority: (i) with respect to
Subsequent Recoveries received on the Group I Mortgage Loans: Class M-I-1, Class
M-I-2 and Class B-I, (ii) with respect to Subsequent Recoveries received on the
Group II Mortgage Loans: Class M-II and Class B-II and (iii) with respect to
Subsequent Recoveries received on the Group III Mortgage Loans: Class M-III and
Class B-III.

                  "Indemnification Agreement": The Indemnification Agreement,
dated August 2, 2004, between the Certificate Insurer and Bear, Stearns & Co.
Inc.

                  "Indenture": An indenture relating to the issuance of notes
backed by all or a portion of the Class CE Certificates, the Class P
Certificates and/or the Residual Certificates.

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

                  "Independent Contractor": Either (i) any Person (other than
the Servicers) that would be an "independent contractor" with respect to REMIC
I-A, REMIC I-B or REMIC I-C within the meaning of Section 856(d)(3) of the Code
if REMIC I-A, REMIC I-B or REMIC I-C were a real estate investment trust (except
that the ownership tests set forth in that section shall be considered to be met
by any Person that owns, directly or indirectly, 35% or more of any Class of
Certificates), so long as REMIC I-A, REMIC I-B or REMIC I-C does not receive or
derive any income from such Person and provided that the relationship between
such Person and REMIC I-A, REMIC I-B or REMIC I-C is at arm's length, all within
the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other
Person (including the Servicers) if the Trustee, the Guarantor and the
Certificate Insurer has received an Opinion of Counsel to the effect that the
taking of any action in respect of any REO Property by such Person, subject to
any conditions therein specified, that is otherwise herein contemplated to be
taken by an Independent

                                      -32-

<PAGE>

Contractor will not cause such REO Property to cease to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (determined
without regard to the exception applicable for purposes of Section 860D(a) of
the Code), or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.

                  "Index": With respect to each Group III Mortgage Loan and each
related Adjustment Date, the average of the interbank offered rates for
six-month or one-month United States dollar deposits in the London market as
published in THE WALL STREET JOURNAL and as most recently available either (i)
as of the first business day 45 days prior to such Adjustment Date or (ii) as of
the first business day of the month preceding the month of such Adjustment Date,
as specified in the related Mortgage Note.

                  "Information Circular": The Information Circular of the
Depositor dated August 2, 2004, relating to the Guaranteed Certificates.

                  "Initial Deposit": The sum of (i) the Group I Initial Deposit,
(ii) the Group III-A Initial Deposit and (iii) the Group III-B Initial Deposit.

                  "Insurance Account": The account or accounts created and
maintained pursuant to Section 4.08, which shall be entitled "Deutsche Bank
National Trust Company, as Trustee, in trust for the registered holders of New
Century Home Equity Loan Trust, Series 2004-A, Asset Backed Pass-Through
Certificates." The Insurance Account must be an Eligible Account.

                  "Insurance Agreement": The Insurance and Indemnity Agreement,
dated as of July 4, 2004, among the Certificate Insurer, the Trustee, the Trust,
the Seller and the Depositor.

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

                  "Insured Amount": The sum of (i) for any Distribution Date
(including the Distribution Date occurring on the Final Stated Maturity Date)
the excess, if any, of the Senior Interest Distribution Amount allocable to the
Insured Certificates on such Distribution Date, over the Available Distribution
Amount available on such Distribution Date to pay the Insured Certificates in
accordance with Section 4.01, (ii) for any Distribution Date prior to the Final
Stated Maturity Date, the Insured Certificate Principal Parity Amount, if any,
for such Distribution Date, (iii) for the Distribution Date occurring on the
Final Stated Maturity Date, or earlier termination of the Trust pursuant to
Article IX of this Agreement, the aggregate Certificate Principal Balance of the
Insured Certificates (after giving effect to all distributions to be made
thereon on such Distribution Date other than pursuant to the Policy), and (iv)
any Preference Amount to be paid pursuant to the Policy on such Distribution
Date.

                  "Insured Certificate Principal Parity Amount": With respect to
any Distribution Date, the

                                      -33-

<PAGE>

excess of (i) the aggregate Certificate Principal Balance of the Insured
Certificates and the Group I Class A Certificates after giving effect to
distributions of principal to be made on such Distribution Date (without regard
to any payments of principal under the Policy) over (ii) the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date.

                  "Insured Certificates": The Class M-I-1 Certificates, the
Group II Class A Certificates and the Group III Class A Certificates.

                  "Interest Accrual Period": With respect to any Distribution
Date and the Floating Rate Certificates, the period commencing on the
Distribution Date of the month immediately preceding the month in which such
Distribution Date occurs (or, in the case of the first Distribution Date,
commencing on the Closing Date) and ending on the day preceding such
Distribution Date. With respect to any Distribution Date and the Fixed Rate
Certificates, the Class CE Certificates and the REMIC I Regular Interests, the
one-month period ending on the last day of the calendar month preceding the
month in which such Distribution Date occurs.

                  "Interest Carry Forward Amount": With respect to any
Distribution Date and the Class A Certificates and the Mezzanine Certificates,
the sum of (i) the amount, if any, by which (a) the Interest Distribution Amount
for such Class of Certificates as of the immediately preceding Distribution Date
exceeded (b) the actual amount distributed on such Class of Certificates in
respect of interest on such immediately preceding Distribution Date, (ii) the
amount of any Interest Carry Forward Amount for such Class of Certificates
remaining unpaid from the previous Distribution Date and (iii) accrued interest
on the sum of (i) and (ii) above calculated at the related Pass-Through Rate for
the most recently ended Interest Accrual Period.

                  "Interest Determination Date": With respect to the Floating
Rate Certificates, REMIC II Regular Interest II-LTAI1, REMIC II Regular Interest
II-LTAII1, REMIC II Regular Interest II-LTAIII1, REMIC II Regular Interest
II-LTAIII2, REMIC II Regular Interest II-LTAIII3, REMIC II Regular Interest
II-LTM3 and REMIC II Regular Interest II-LTB3, and any Interest Accrual Period
therefor, the second London Business Day preceding the commencement of such
Interest Accrual Period.

                  "Interest Distribution Amount": With respect to any
Distribution Date and any class of Class A Certificates, any Mezzanine
Certificates and any Class CE Certificates, the aggregate Accrued Certificate
Interest on the Certificates of such Class for such Distribution Date.

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

                  "Late Payment Rate": The lesser of (a) the greater of (i) the
per annum rate of interest

                                      -34-

<PAGE>

publicly announced from time to time by Citibank, N.A. as its prime or base
lending rate (any change in such rate of interest to be effective on the date
such change is announced by Citibank, N.A.), and (ii) the then applicable
highest rate of interest on the Insured Certificates and (b) the maximum rate
permissible under applicable usury or similar laws limiting interest rates as
determined by the Certificate Insurer. The Late Payment Rate shall be computed
on the basis of the actual number of days elapsed over a year consisting of 360
days.

                  "Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I-A, REMIC I-B or REMIC I-C by reason of its being
purchased, sold or replaced pursuant to or as contemplated by Section 2.03,
Section 3.16(c) or Section 9.01. With respect to any REO Property, either of the
following events: (i) a Final Recovery Determination is made as to such REO
Property; or (ii) such REO Property is removed from REMIC I-A, REMIC I-B or
REMIC I-C by reason of its being purchased pursuant to Section 9.01.

                  "Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the related Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.

                  "Loan Group": Loan Group I, Loan Group I, Loan Group II, Loan
Group III-A or Loan Group III-B, as the context requires.

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

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

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

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

                  "Loan-to-Value Ratio": As of 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 and the denominator of which
is the Value of the related Mortgaged Property.

                  "Lockout Certificate Percentage": With respect to (i) the
Class A-I-9 Certificates and any Distribution Date, the percentage equal to the
Certificate Principal Balance of the Class A-I-9 Certificates

                                      -35-

<PAGE>

immediately prior to such Distribution Date divided by the aggregate Certificate
Principal Balance of the Group I Class A Certificates immediately prior to such
Distribution Date and (ii) the Class A-II-9 Certificates and any Distribution
Date, the percentage equal to the Certificate Principal Balance of the Class
A-II-9 Certificates immediately prior to such Distribution Date divided by the
aggregate Certificate Principal Balance of the Group II Class A Certificates
immediately prior to such Distribution Date.

                  "Lockout Distribution Percentage": With respect to the Class
A-I-9 Certificates and the Class A-II-9 Certificates and any Distribution Date,
the indicated percentage of the Lockout Certificate Percentage for such
Distribution Date:

      DISTRIBUTION DATE OCCURRING IN               PERCENTAGE
      ------------------------------               ----------
August 2004 through July 2007                          0%
August 2007 through July 2009                          45%
August 2009 through July 2010                          80%
August 2010 through July 2011                         100%
August 2011 and thereafter                            300%

                  "London Business Day": Any day on which banks in the City of
London and New York are open and conducting transactions in United States
dollars.

                  "Maximum Cap Rate": For any Distribution Date with respect to
the Group III Class A Certificates and the Group III Mezzanine Certificates, a
per annum rate equal to the product of (x) the weighted average of the Expense
Adjusted Maximum Mortgage Rates of the Group III Mortgage Loans, weighted based
on their Stated Principal Balances as of the first day of the calendar month
preceding the month in which the Distribution Date occurs less the rate at which
the premium payable to the Certificate Insurer is calculated multiplied by a
fraction the numerator of which is the aggregate Certificate Principal Balance
of the Group III Class A Certificates immediately prior to such Distribution
Date and the denominator of which is the aggregate Stated Principal Balance of
the Group III Mortgage Loans as of the first day of the month preceding the
month of such Distribution Date and (y) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Interest Accrual Period.

                  "Maximum II-LTZZ1 Uncertificated Interest Deferral Amount":
With respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC II Remittance Rate applicable to REMIC II Regular Interest II-LTZZ1 for
such Distribution Date on a balance equal to the Uncertificated Balance of REMIC
II Regular Interest II-LTZZ1 minus the REMIC II Group I Overcollateralized
Amount, in each case for such Distribution Date, over (ii) Uncertificated
Interest on REMIC II Regular Interest II-LTAI1, REMIC II Regular Interest
II-LTAI2, REMIC II Regular Interest II-LTAI3, REMIC II Regular Interest
II-LTAI4, REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest
II-LTAI6, REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest
II-LTAI8, REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest
II-LTMI1, REMIC II Regular Interest II-LTMI2 and REMIC II Regular Interest II-
LTB1 for such Distribution Date, with the rate on each such REMIC II Regular
Interest subject to a cap equal to the Pass-Through Rate for the Corresponding
Certificate; provided, however, that for this purpose, calculations of the REMIC
II Remittance Rate and the related cap with respect to REMIC II

                                      -36-

<PAGE>

Regular Interest II-LTAI1 shall be multiplied by a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days elapsed in
the related Accrual Period.

                  "Maximum II-LTZZ2 Uncertificated Interest Deferral Amount":
With respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC II Remittance Rate applicable to REMIC II Regular Interest II-LTZZ2 for
such Distribution Date on a balance equal to the Uncertificated Balance of REMIC
II Regular Interest II-LTZZ2 minus the REMIC II Group II Overcollateralized
Amount, in each case for such Distribution Date, over (ii) Uncertificated
Interest on REMIC II Regular Interest II-LTAII1, REMIC II Regular Interest
II-LTAII2, REMIC II Regular Interest II-LTAII3, REMIC II Regular Interest
II-LTAII4, REMIC II Regular Interest II-LTAII5, REMIC II Regular Interest
II-LTAII6, REMIC II Regular Interest II-LTAII7, REMIC II Regular Interest
II-LTAII8, REMIC II Regular Interest II-LTAII9, REMIC II Regular Interest
II-LTM2 and REMIC II Regular Interest II-LTB2 for such Distribution Date, with
the rate on each such REMIC II Regular Interest subject to a cap equal to the
Pass-Through Rate for the Corresponding Certificate; provided, however, that for
this purpose, calculations of the REMIC II Remittance Rate and the related cap
with respect to REMIC II Regular Interest II-LTAII1 shall be multiplied by a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.

                  "Maximum II-LTZZ3 Uncertificated Interest Deferral Amount":
With respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC II Remittance Rate applicable to REMIC II Regular Interest II-LTZZ3 for
such Distribution Date on a balance equal to the Uncertificated Balance of REMIC
II Regular Interest II-LTZZ3 minus the REMIC II Group III Overcollateralized
Amount, in each case for such Distribution Date, over (ii) Uncertificated
Interest on REMIC II Regular Interest II- LTAIII1, REMIC II Regular Interest
II-LTAIII2, REMIC II Regular Interest II-LTAIII3, REMIC II Regular Interest
II-LTM3 and REMIC II Regular Interest II-LTB3 for such Distribution Date, with
the rate on each such REMIC II Regular Interest subject to a cap equal to the
Pass-Through Rate for the Corresponding Certificate; provided, however, that for
this purpose, calculations of the REMIC II Remittance Rate and the related caps
with respect to each such REMIC II Regular Interest shall be multiplied by a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.

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

                  "Mezzanine Certificate": Any Class M Certificate or Class B
Certificate.

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

                  "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount

                                      -37-

<PAGE>

of interest collectible from the related Mortgagor pursuant to the Relief Act;
(b) without giving effect to any extension granted or agreed to by the related
Servicer pursuant to Section 3.07 and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.

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

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

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

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

                  "Mortgage Loan Purchase Agreement": The agreement between the
Seller and the Depositor, regarding the sale of the Mortgage Loans by the Seller
to the Depositor, substantially in the form of Exhibit D annexed hereto.

                  "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I-A, REMIC I-B and REMIC I-C on such date, separately
identifying the Group I Mortgage Loans, the Group II Mortgage Loans, the Group
III-A Mortgage Loans and the Group III-B Mortgage Loans, attached hereto as
Schedule 1. The Mortgage Loan Schedule shall set forth the following information
with respect to each Mortgage Loan:

                  (i)      the Mortgage Loan identifying number;

                  (ii)     [reserved];

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

                  (iv)     a code indicating whether the Mortgaged Property is
                           owner-occupied;

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

                  (vi)     the original months to maturity;

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

                                      -38-

<PAGE>

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

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

                  (x) (A) the date on which the first Monthly Payment was due on
         the Mortgage Loan and (B) if such date is not consistent with the Due
         Date currently in effect, such Due Date;

                  (xi) the stated maturity date;

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

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

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

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

                  (xvi) the Stated Principal Balance of the Mortgage Loan as of
         the close of business on the Cut-off Date;

                  (xvii) with respect to each Group III Mortgage Loan, the
         Adjustment Dates, the Gross Margin, the Maximum Mortgage Rate, the
         Minimum Mortgage Rate, the Periodic Rate Cap and the maximum first
         Adjustment Date Mortgage Rate adjustment, the first Adjustment Date
         immediately following the origination date and the rounding code (i.e.,
         nearest 0.125%, next highest 0.125%);

                  (xviii) a code indicating the purpose of the Mortgage Loan
         (i.e., purchase financing, Rate/Term Refinancing, Cash-Out
         Refinancing);

                  (xix) the Mortgage Rate at origination;

                  (xx) a code indicating the documentation program (i.e., Full
         Documentation, Limited Documentation, Stated Income Documentation);

                  (xxi) the risk grade;

                  (xxii) the Value of the Mortgaged Property;

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

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

                                      -39-

<PAGE>

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

                  (xxvi) the program code; and

                  (xxviii) the total amount of points and fees charged such
         Mortgage Loan.

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

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

                  "Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 and existing from time to time thereafter, and any REO Properties
acquired in respect thereof.

                  "Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) with
respect to each Group I Mortgage Loan and Group II Mortgage Loan shall remain
constant at the rate set forth in the Mortgage Loan Schedule as the Mortgage
Rate in effect immediately following the Cut-off Date and (ii) with respect to
the Group III Mortgage Loans, (A) as of any date of determination until the
first Adjustment Date following the Cut-off Date shall be the rate set forth in
the Mortgage Loan Schedule as the Mortgage Rate in effect immediately following
the Cut-off Date and (B) as of any date of determination thereafter shall be the
rate as adjusted on the most recent Adjustment Date equal to the sum, rounded as
provided in the Mortgage Note, of the Index, as most recently available as of a
date prior to the Adjustment Date as set forth in the related Mortgage Note,
plus the related Gross Margin; provided that the Mortgage Rate on such Group III
Mortgage Loan on any Adjustment Date shall never be more than the lesser of (i)
the sum of the Mortgage Rate in effect immediately prior to the Adjustment Date
plus the related Periodic Rate Cap, if any, and (ii) the related Maximum
Mortgage Rate, and shall never be less than the greater of (i) the Mortgage Rate
in effect immediately prior to the Adjustment Date less the Periodic Rate Cap,
if any, and (ii) the related Minimum Mortgage Rate. With respect to each
Mortgage Loan that becomes an REO Property, as of any date of determination, the
annual rate determined in accordance with the immediately preceding sentence as
of the date such Mortgage Loan became an REO Property.

                  "Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.

                  "Mortgagor": The obligor on a Mortgage Note.

                                      -40-

<PAGE>

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

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

                  "Net WAC Pass-Through Rate": For the first Distribution Date
with respect to the Class A-I-1 Certificates, a per annum rate equal to the
product of (x) (1) the weighted average of the Expense Adjusted Mortgage Rates
of the Group I Mortgage Loans, weighted based on their Stated Principal Balances
as of the first day of the calendar month preceding the month in which the
Distribution Date occurs and (2) the product of (a) 5.93303% and (b) the Group I
Initial Deposit, less the Guaranty Fee Rate multiplied by a fraction the
numerator of which is the aggregate Certificate Principal Balance of the Group I
Class A Certificates immediately prior to such Distribution Date and the
denominator of which is the outstanding Stated Principal Balance of the Group I
Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date and (y) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related
Interest Accrual Period. For each Distribution Date following the first
Distribution Date with respect to the Class A-I-1 Certificates, a per annum rate
equal to the product of (x) the weighted average of the Expense Adjusted
Mortgage Rates of the Group I Mortgage Loans, weighted based on their Stated
Principal Balances as of the first day of the calendar month preceding the month
in which the Distribution Date occurs less the Guaranty Fee Rate multiplied by a
fraction the numerator of which is the aggregate Certificate Principal Balance
of the Group I Class A Certificates immediately prior to such Distribution Date
and the denominator of which is the outstanding Stated Principal Balance of the
Group I Mortgage Loans as of the first day of the month preceding the month of
such Distribution Date and (y) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related
Interest Accrual Period. For federal income tax purposes, the equivalent of the
foregoing shall be expressed as the weighted average of the REMIC II Remittance
Rate on REMIC II Regular Interest II-LTAI1, less the Guaranty Fee Rate
multiplied by a fraction the numerator of which is the aggregate Certificate
Principal Balance of the Group I Class A Certificates immediately prior to such
Distribution Date and the denominator of which is the outstanding Stated
Principal Balance of the Group I Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date and (y) a fraction, the numerator
of which is 30 and the denominator of which is the actual number of days elapsed
in the related Interest Accrual Period, weighted on the basis of the
Uncertificated Balance of such REMIC II Regular Interest.

                  For the first Distribution Date with respect to the Group I
Class A Certificates (other than the Class A-I-1 Certificates), a per annum rate
equal to (1) the weighted average of the Expense Adjusted Mortgage Rates of the
Group I Mortgage Loans, weighted based on their Stated Principal Balances as of
the first day of the calendar month preceding the month in which the
Distribution Date occurs and (2) the product of (a) 5.93303% and (b) the Group I
Initial Deposit, less the Guaranty Fee Rate multiplied by a fraction the
numerator of which is the aggregate Certificate Principal Balance of the Group I
Class A Certificates immediately prior to such Distribution Date and the
denominator of which is the outstanding

                                      -41-

<PAGE>

Stated Principal Balance of the Group I Mortgage Loans as of the first day of
the month preceding the month of such Distribution Date. For each Distribution
Date following the first Distribution Date with respect to the Group I Class A
Certificates (other than the Class A-I-1 Certificates), a per annum rate equal
to the weighted average of the Expense Adjusted Mortgage Rates of the Group I
Mortgage Loans, weighted based on their Stated Principal Balances as of the
first day of the calendar month preceding the month in which the Distribution
Date occurs less the Guaranty Fee Rate multiplied by a fraction the numerator of
which is the aggregate Certificate Principal Balance of the Group I Class A
Certificates immediately prior to such Distribution Date and the denominator of
which is the outstanding Stated Principal Balance of the Group I Mortgage Loans
as of the first day of the month preceding the month of such Distribution Date.
For federal income tax purposes, the equivalent of the foregoing shall be
expressed as the weighted average of the REMIC II Remittance Rate on REMIC II
Regular Interests II-LTAI1, II- LTAI2, II-LTAI3, II-LTAI4, II-LTAI5, II-LTAI6,
II-LTAI7, II-LTAI8 and II-LTAI9, less the Guaranty Fee Rate multiplied by a
fraction the numerator of which is the aggregate Certificate Principal Balance
of the Group I Class A Certificates immediately prior to such Distribution Date
and the denominator of which is the outstanding Stated Principal Balance of the
Group I Mortgage Loans as of the first day of the month preceding the month of
such Distribution Date, weighted on the basis of the Uncertificated Balance of
such REMIC II Regular Interests.

                  For the first Distribution Date with respect to the Group I
Mezzanine Certificates, a per annum rate equal to (1) the weighted average of
the Expense Adjusted Mortgage Rates of the Group I Mortgage Loans, weighted
based on their Stated Principal Balances as of the first day of the calendar
month preceding the month in which the Distribution Date occurs and (2) the
product of (a) 5.93303% and (b) the Group I Initial Deposit, less the sum of (i)
the rate at which the premium payable to the Certificate Insurer is calculated
multiplied by a fraction the numerator of which is the aggregate Certificate
Principal Balance of the Class M-I-1 Certificates immediately prior to such
Distribution Date and the denominator of which is the outstanding Stated
Principal Balance of the Group I Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date and (ii) the Guaranty Fee Rate
multiplied by a fraction the numerator of which is the aggregate Certificate
Principal Balance of the Group I Class A Certificates immediately prior to such
Distribution Date and the denominator of which is the outstanding Stated
Principal Balance of the Group I Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date. For each Distribution Date
following the first Distribution Date with respect to the Group I Mezzanine
Certificates, a per annum rate equal to the weighted average of the Expense
Adjusted Mortgage Rates of the Group I Mortgage Loans, weighted based on their
Stated Principal Balances as of the first day of the calendar month preceding
the month in which the Distribution Date occurs less the sum of (i) the rate at
which the premium payable to the Certificate Insurer is calculated multiplied by
a fraction the numerator of which is the aggregate Certificate Principal Balance
of the Class M-I-1 Certificates immediately prior to such Distribution Date and
the denominator of which is the outstanding Stated Principal Balance of the
Group I Mortgage Loans as of the first day of the month preceding the month of
such Distribution Date and (ii) the Guaranty Fee Rate multiplied by a fraction
the numerator of which is the aggregate Certificate Principal Balance of the
Group I Class A Certificates immediately prior to such Distribution Date and the
denominator of which is the outstanding Stated Principal Balance of the Group I
Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date. For federal income tax purposes, the equivalent of the
foregoing shall be expressed as

                                      -42-

<PAGE>

the weighted average of the REMIC II Remittance Rate on REMIC II Regular
Interests II-LTMI1, II- LTMI2 and II-LTBI, less the sum of (i) the rate at which
the premium payable to the Certificate Insurer is calculated multiplied by a
fraction the numerator of which is the aggregate Certificate Principal Balance
of the Class M-I-1 Certificates immediately prior to such Distribution Date and
the denominator of which is the outstanding Stated Principal Balance of the
Group I Mortgage Loans as of the first day of the month preceding the month of
such Distribution Date and (ii) the Guaranty Fee Rate multiplied by a fraction
the numerator of which is the aggregate Certificate Principal Balance of the
Group I Class A Certificates immediately prior to such Distribution Date and the
denominator of which is the outstanding Stated Principal Balance of the Group I
Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date, weighted on the basis of the Uncertificated Balance of such
REMIC II Regular Interests.

                  For any Distribution Date with respect to the Class A-II-1
Certificates, a per annum rate equal to the product of (x) the weighted average
of the Expense Adjusted Mortgage Rates of the Group II Mortgage Loans, weighted
based on their Stated Principal Balances as of the first day of the calendar
month preceding the month in which the Distribution Date occurs less the rate at
which the premium payable to the Certificate Insurer is calculated multiplied by
a fraction the numerator of which is the aggregate Certificate Principal Balance
of the Group II Class A Certificates immediately prior to such Distribution Date
and the denominator of which is the outstanding Stated Principal Balance of the
Group II Mortgage Loans as of the first day of the month preceding the month of
such Distribution Date and (y) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related
Interest Accrual Period. For federal income tax purposes, the equivalent of the
foregoing shall be expressed as the weighted average of the REMIC II Remittance
Rate on REMIC II Regular Interest II-LTAII1, less the rate at which the premium
payable to the Certificate Insurer is calculated multiplied by a fraction the
numerator of which is the aggregate Certificate Principal Balance of the Group
II Class A Certificates immediately prior to such Distribution Date and the
denominator of which is the outstanding Stated Principal Balance of the Group II
Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date and (y) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related
Interest Accrual Period, weighted on the basis of the Uncertificated Balance of
such REMIC II Regular Interest.

                  For any Distribution Date with respect to the Group II Class A
Certificates (other than the Class A-II-1 Certificates) and the Group II
Mezzanine Certificates, a per annum rate equal to the weighted average of the
Expense Adjusted Mortgage Rates of the Group II Mortgage Loans, weighted based
on their Stated Principal Balances as of the first day of the calendar month
preceding the month in which the Distribution Date occurs less the rate at which
the premium payable to the Certificate Insurer is calculated multiplied by a
fraction the numerator of which is the aggregate Certificate Principal Balance
of the Group II Class A Certificates immediately prior to such Distribution Date
and the denominator of which is the outstanding Stated Principal Balance of the
Group II Mortgage Loans as of the first day of the month preceding the month of
such Distribution Date. For federal income tax purposes, the equivalent of the
foregoing shall be expressed as the weighted average of the REMIC II Remittance
Rate on REMIC II Regular Interests II-LTAI1, II-LTAI2, II-LTAI3, II-LTAI4,
II-LTAI5, II-LTAI6, II-LTAI7, II-LTAI8, II-LTAI9, II-LTMII and II-LTBII, less
the rate at which the premium payable to the Certificate Insurer is calculated
multiplied by a fraction the numerator of which is the aggregate Certificate
Principal Balance

                                      -43-

<PAGE>

of the Group II Class A Certificates immediately prior to such Distribution Date
and the denominator of which is the outstanding Stated Principal Balance of the
Group II Mortgage Loans as of the first day of the month preceding the month of
such Distribution Date, weighted on the basis of the Uncertificated Balance of
such REMIC II Regular Interests.

                  For the first Distribution Date with respect to the Group III
Class A Certificates and the Group III Mezzanine Certificates, a per annum rate
equal to the product of (x) (1) the weighted average of the Expense Adjusted
Mortgage Rates of the Group III Mortgage Loans, weighted based on their Stated
Principal Balances as of the first day of the calendar month preceding the month
in which the Distribution Date occurs and (2) the product of (a) 6.69818% and
(b) the Group III Initial Deposit, less the rate at which the premium payable to
the Certificate Insurer is calculated multiplied by a fraction the numerator of
which is the aggregate Certificate Principal Balance of the Group III Class A
Certificates immediately prior to such Distribution Date and the denominator of
which is the outstanding Stated Principal Balance of the Group III Mortgage
Loans as of the first day of the month preceding the month of such Distribution
Date and (y) a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days elapsed in the related Interest Accrual
Period. For each Distribution Date following the first Distribution Date with
respect to the Group III Class A Certificates and the Group III Mezzanine
Certificates, a per annum rate equal to the product of (x) the weighted average
of the Expense Adjusted Mortgage Rates of the Group III Mortgage Loans, weighted
based on their Stated Principal Balances as of the first day of the calendar
month preceding the month in which the Distribution Date occurs less the rate at
which the premium payable to the Certificate Insurer is calculated multiplied by
a fraction the numerator of which is the aggregate Certificate Principal Balance
of the Group III Class A Certificates immediately prior to such Distribution
Date and the denominator of which is the outstanding Stated Principal Balance of
the Group III Mortgage Loans as of the first day of the month preceding the
month of such Distribution Date and (y) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Interest Accrual Period. For federal income tax purposes, the equivalent of the
foregoing shall be expressed as the weighted average of the REMIC II Remittance
Rate on REMIC II Regular Interests II-LTAIII1, II-LTAIII2, II-LTAIII3, II-LTMIII
and II-LTBIII, less the rate at which the premium payable to the Certificate
Insurer is calculated multiplied by a fraction the numerator of which is the
aggregate Certificate Principal Balance of the Group III Class A Certificates
immediately prior to such Distribution Date and the denominator of which is the
outstanding Stated Principal Balance of the Group III Mortgage Loans as of the
first day of the month preceding the month of such Distribution Date and (y) a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Interest Accrual Period, weighted
on the basis of the Uncertificated Balance of such REMIC II Regular Interests.

                  "Net WAC Rate Carryover Reserve Account": The Group I Net WAC
Rate Carryover Reserve Account, the Group II Net WAC Rate Carryover Reserve
Account or the Group III Net WAC Rate Carryover Reserve Account.

                  "Net WAC Rate Carryover Amount": With respect to any Class of
Class A Certificates and any Class of Mezzanine Certificates and any
Distribution Date, the sum of (A) the positive excess of (i) the amount of
interest accrued on such Class of Certificates for such Distribution Date at the
related

                                      -44-

<PAGE>

fixed rate or Formula Rate, as applicable, for such Distribution Date over (ii)
the amount of interest accrued on such Class of Certificates at the related Net
WAC Pass-Through Rate for such Distribution Date and (B) the related Net WAC
Rate Carryover Amount for the previous Distribution Date not previously
distributed, together with interest thereon at a rate equal to the related fixed
rate or Formula Rate, as applicable, for such Class of Certificates for such
Distribution Date.

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

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

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

                  "Non-United States Person": Any Person other than a United
States Person.

                  "Notice of Claim": On the third Business Day preceding each
Distribution Date, the Trustee shall deliver to the Guarantor (by electronic
medium as specified in the next sentence) a statement identifying the Guaranty
Deficiency Amount with respect to a Distribution Date, separately identifying
the amounts attributable to principal and interest. The Trustee shall deliver
such statement on or before 12:00 noon (New York time) on such day via the
internet using the following domain name: bond_admin@fanniemae.com.

                  "Notional Amount": With respect to (i) the Class CE-I
Certificates and any Distribution Date, the aggregate Uncertificated Balance of
REMIC II Regular Interest II-LTAA1, REMIC II Regular Interest II-LTAI1, REMIC II
Regular Interest II-LTAI2, REMIC II Regular Interest II-LTAI3, REMIC II Regular
Interest II-LTAI4, REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest
II-LTAI6, REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest
II-LTAI8, REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest
II-LTMI1, REMIC II Regular Interest II-LTMI2, REMIC II Regular Interest II-LTB1
and REMIC II Regular Interest II-LTZZ1 for such Distribution Date and (ii) the
Class CE-II Certificates and any Distribution Date, the aggregate Uncertificated
Balance of REMIC II Regular Interest II-LTAA2, REMIC II Regular Interest
II-LTAII1, REMIC II Regular Interest II-LTAII2, REMIC II Regular Interest
II-LTAII3, REMIC II Regular Interest II-LTAII4, REMIC II Regular Interest
II-LTAII5, REMIC II Regular Interest II-LTAII6, REMIC II Regular Interest
II-LTAII7, REMIC II Regular Interest II-LTAII8, REMIC II Regular Interest
II-LTAII9, REMIC II Regular Interest II-LTM2,

                                      -45-

<PAGE>

REMIC II Regular Interest II-LTB2 and REMIC II Regular Interest II-LTZZ2 for
such Distribution Date and (iii) the Class CE-III Certificates and any
Distribution Date, the aggregate Uncertificated Balance of REMIC II Regular
Interest II-LTAA3, REMIC II Regular Interest II-LTAIII1, REMIC II Regular
Interest II-LTAIII2, REMIC II Regular Interest II-LTAIII3, REMIC II Regular
Interest II-LTM3, REMIC II Regular Interest II-LTB3 and REMIC II Regular
Interest II-LTZZ3 for such Distribution Date.

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

                  "One-Month LIBOR": With respect to the Floating Rate
Certificates and any Interest Accrual Period therefor, the rate determined by
the Trustee on the related Interest Determination Date on the basis of the
offered rate for one-month U.S. dollar deposits, as such rate appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest Determination
Date; provided that if such rate does not appear on Telerate Page 3750, the rate
for such date will be determined on the basis of the offered rates of the
Reference Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London
time) on such Interest Determination Date. In such event, the Trustee will
request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If on such Interest Determination Date, two or more
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 1/16%). If on
such Interest Determination Date, fewer than two Reference Banks provide such
offered quotations, One-Month LIBOR for the related Interest Accrual Period
shall be the higher of (i) LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate. Notwithstanding the
foregoing, if, under the priorities described above, LIBOR for an Interest
Determination Date would be based on LIBOR for the previous Interest
Determination Date for the third consecutive Interest Determination Date, the
Trustee, after consultation with the Depositor, the Certificate Insurer and the
Guarantor, shall select an alternative comparable index (over which the Trustee
has no control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.

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

                  "Original Mortgage Loan": Any of the Mortgage Loans included
in REMIC I-A (with respect to the Group I Mortgage Loans), REMIC I-B (with
respect to the Group II Mortgage Loans) or REMIC I-C (with respect to the Group
III Mortgage Loans) as of the Closing Date.

                  "Originator": New Century Mortgage Corporation, or its
successor in interest.

                  "Ownership Interest": As to any Certificate, any ownership or
security interest in such

                                      -46-

<PAGE>

Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.

                  "Pass-Through Rate": With respect to the Floating Rate
Certificates and any Distribution Date, a rate per annum equal to the lesser of
(i) the related Formula Rate for such Distribution Date and (ii) the related Net
WAC Pass-Through Rate for such Distribution Date.

                  With respect to the Fixed Rate Certificates, the lesser of (i)
the fixed rate per annum set forth below and (ii) the related Net WAC
Pass-Through Rate for such Distribution Date:

      Class             Pass-Through Rate
      -----             -----------------
      A-I-2             3.930% per annum
      A-I-3             4.420% per annum
      A-I-4             4.800% per annum
      A-I-5             5.170% per annum
      A-I-6             5.640% per annum
      A-I-7             5.650% per annum
      A-I-8             5.650% per annum
      A-I-9             5.450% per annum
     A-II-2             3.930% per annum
     A-II-3             4.450% per annum
     A-II-4             4.860% per annum
     A-II-5             5.250% per annum
     A-II-6             5.650% per annum
     A-II-7             5.650% per annum
     A-II-8             5.650% per annum
     A-II-9             5.470% per annum
      M-I-1             5.650% per annum
      M-I-2             5.650% per annum
      M-II              5.650% per annum
       B-I              5.650% per annum
      B-II              5.650% per annum

                  With respect to the Class CE-I Certificates and any
Distribution Date, a rate per annum equal to the percentage equivalent of a
fraction, the numerator of which is the sum of the amounts calculated pursuant
to clauses (A) through (O) below, and the denominator of which is the aggregate
Uncertificated Balance of REMIC II Regular Interest II-LTAA1, REMIC II Regular
Interest II-LTAI1, REMIC II Regular Interest II-LTAI2, REMIC II Regular Interest
II-LTAI3, REMIC II Regular Interest II-LTAI4, REMIC II Regular Interest
II-LTAI5, REMIC II Regular Interest II-LTAI6, REMIC II Regular Interest
II-LTAI7, REMIC II Regular Interest II-LTAI8, REMIC II Regular Interest
II-LTAI9, REMIC II Regular Interest II-LTMI1, REMIC II Regular Interest
II-LTMI2, REMIC II Regular Interest II-LTB1, REMIC II Regular Interest II-LTZZ1
and REMIC II Regular Interest II-LTP1. For purposes of calculating the
Pass-Through Rate for the Class CE-I Certificates, the numerator is equal to the
sum of the following components:

                  (A) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAA1 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II

                                      -47-

<PAGE>

         Regular Interest II-LTAA1;

                  (B) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI1 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI1;

                  (C) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI2 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI2;

                  (D) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI3 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI3;

                  (E) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI4 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI4;

                  (F) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI5 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI5;

                  (G) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI6 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI6;

                  (H) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI7 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI7;

                  (I) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI8 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI8;

                  (J) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAI9 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAI9;

                  (K) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTMI1 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTMI1;

                  (L) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTMI2 minus

                                      -48-

<PAGE>

         the Group I Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC II Regular Interest II-LTMI2;

                  (M) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTB1 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTB1;

                  (N) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTZZ1 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTZZ1; and

                  (O) 100% of the interest on REMIC II Regular Interest II-LTP1.

                  With respect to the Class CE-II Certificates and any
Distribution Date, a rate per annum equal to the percentage equivalent of a
fraction, the numerator of which is the sum of the amounts calculated pursuant
to clauses (A) through (N) below, and the denominator of which is the aggregate
Uncertificated Balance of REMIC II Regular Interest II-LTAA2, REMIC II Regular
Interest II-LTAII1, REMIC II Regular Interest II-LTAII2, REMIC II Regular
Interest II-LTAII3, REMIC II Regular Interest II-LTAII4, REMIC II Regular
Interest II-LTAII5, REMIC II Regular Interest II-LTAII6, REMIC II Regular
Interest II-LTAII7, REMIC II Regular Interest II-LTAII8, REMIC II Regular
Interest II-LTAII9, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest
II-LTB2, REMIC II Regular Interest II-LTZZ2 and REMIC II Regular Interest
II-LTP2. For purposes of calculating the Pass-Through Rate for the Class CE- II
Certificates, the numerator is equal to the sum of the following components:

                  (A) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAA2 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAA2;

                  (B) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII1 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII1;

                  (C) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII2 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII2;

                  (D) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII3 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII3;

                  (E) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII4 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII4;

                                      -49-

<PAGE>

                  (F) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII5 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII5;

                  (G) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII6 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII6;

                  (H) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII7 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII7;

                  (I) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII8 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII8;

                  (J) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAII9 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAII9;

                  (K) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTM2 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTM2;

                  (L) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTB2 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTB2;

                  (M) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTZZ2 minus the Group I Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTZZ2; and

                  (N) 100% of the interest on REMIC II Regular Interest II-LTP2.

                  With respect to the Class CE-III Certificates and any
Distribution Date, a rate per annum equal to the percentage equivalent of a
fraction, the numerator of which is the sum of the amounts calculated pursuant
to clauses (A) through (H) below, and the denominator of which is the aggregate
Uncertificated Balance of REMIC II Regular Interest II-LTAA3, REMIC II Regular
Interest II-LTAIII1, REMIC II Regular Interest II-LTAIII2, REMIC II Regular
Interest II-LTAIII3, REMIC II Regular Interest II-LTM3, REMIC II Regular
Interest II-LTB3, REMIC II Regular Interest II-LTZZ3 and REMIC II Regular
Interest II-LTP3. For purposes of calculating the Pass-Through Rate for the
Class CE-III Certificates, the numerator is equal to the sum of the following
components:

                                      -50-

<PAGE>

                  (A) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAA3 minus the Group II Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTAA3;

                  (B) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAIII1 minus the Group II Marker Rate, applied to an amount equal
         to the Uncertificated Balance of REMIC II Regular Interest II-LTAIII1;

                  (C) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAIII2 minus the Group II Marker Rate, applied to an amount equal
         to the Uncertificated Balance of REMIC II Regular Interest II-LTAIII2;

                  (D) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTAIII3 minus the Group II Marker Rate, applied to an amount equal
         to the Uncertificated Balance of REMIC II Regular Interest II-LTAIII3;

                  (E) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTM3 minus the Group II Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTM3;

                  (F) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTB3 minus the Group II Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTB3;

                  (G) the REMIC II Remittance Rate for REMIC II Regular Interest
         II-LTZZ3 minus the Group II Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTZZ3; and

                  (H) 100% of the interest on REMIC II Regular Interest II-LTP3.

                  "Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
or Notional Amount represented by such Certificate and the denominator of which
is the aggregate initial Certificate Principal Balance or Notional Amount of all
of the Certificates of such Class. The Class A Certificates and the Mezzanine
Certificates are issuable only in minimum Percentage Interests corresponding to
minimum initial Certificate Principal Balances of $25,000 and integral multiples
of $1.00 in excess thereof. The Class P Certificates are issuable only in
Percentage Interests corresponding to initial Certificate Principal Balances of
$20 and integral multiples thereof. The Class CE Certificates are issuable only
in minimum Percentage Interests corresponding to minimum initial Certificate
Principal Balances of $25,000 and integral multiples of $1.00 in excess thereof;
provided, however, that a single Certificate of each such Class of Certificates
may be issued having a Percentage Interest corresponding to the remainder of the
aggregate initial Certificate Principal Balance or Notional Amount of such Class
or to an otherwise authorized denomination

                                      -51-

<PAGE>

for such Class plus such remainder. With respect to any Residual Certificate,
the undivided percentage ownership in such Class evidenced by such Certificate,
as set forth on the face of such Certificate. The Residual Certificates are
issuable in Percentage Interests of 20% and multiples thereof.

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

                  "Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, either Servicer, the Trustee or
any of their respective Affiliates:

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

                  (ii) demand and time deposits in, certificates of deposit of,
         or bankers' acceptances issued by, any Depository Institution;

                  (iii) repurchase obligations with respect to any security
         described in clause (i) above entered into with a Depository
         Institution (acting as principal);

                  (iv) securities bearing interest or sold at a discount that
         are issued by any corporation incorporated under the laws of the United
         States of America or any state thereof and that are rated by each
         Rating Agency that rates such securities in its highest long-term
         unsecured rating categories at the time of such investment or
         contractual commitment providing for such investment;

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

                  (vi) units of money market funds that have been rated "AAAm"
         or "AAAm-G" by S&P; and

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

provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only

                                      -52-

<PAGE>

interest with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations.

                  "Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.

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

                  "P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the related Servicer in respect of any Distribution Date
pursuant to Section 4.03.

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

                  "Policy": The Financial Guaranty Surety Bonds No. 04030024 and
No. 04030025, and all endorsements thereto, dated as of the Closing Date, issued
by the Certificate Insurer in respect of the Insured Certificates, a copy of
which is attached hereto as Exhibit B.

                  "Preference Amount": Any amounts covered by the Policy that
were distributed in respect of the Insured Certificates which are recovered from
any Holder of an Insured Certificate as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code or other similar law in
accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Holders.

                  "Prepayment Assumption": As set forth in the Prospectus
Supplement.

                  "Prepayment Charge": With respect to any Prepayment Period,
any prepayment premium, penalty or charge payable by a Mortgagor in connection
with any Principal Prepayment on a Mortgage Loan pursuant to the terms of the
related Mortgage Note (other than any Servicer Prepayment Charge Payment
Amount).

                  "Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in REMIC I-A, REMIC I-B or
REMIC I-C on such date, attached hereto as Schedule 2 (including the Prepayment
Charge Summary attached thereto). The Prepayment Charge Schedule shall set forth
the following information with respect to each related Mortgage Loan:

                  (i) the Mortgage Loan identifying number;

                                      -53-

<PAGE>

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

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

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

                  (v)      the term of the related Mortgage Loan; and

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

                  The Prepayment Charge Schedule shall be amended from time to
time by the Depositor in accordance with the provisions of this Agreement and
such amended Prepayment Charge Schedule shall be delivered by the Depositor to
the Certificate Insurer and the Guarantor.

                  "Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related Prepayment
Period the subject of a Principal Prepayment in full or in part that was applied
by the Servicer to reduce the outstanding principal balance of such loan on a
date preceding the Due Date in the succeeding Prepayment Period, an amount equal
to one month's interest at the applicable Net Mortgage Rate less any payments
made by the Mortgagor. The obligations of the Servicer in respect of any
Prepayment Interest Shortfall are set forth in Section 3.24.

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

                  "Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.

                  "Prospectus Supplement": That certain Prospectus Supplement
dated August 2, 2004 relating to the public offering of the Group II Class A
Certificates, the Group III Class A Certificates and the Mezzanine Certificates.

                  "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c), Section 3.16(e) or Section 9.01, and as confirmed by an Officers'
Certificate from the related Servicer to the Trustee, an amount equal to the sum
of (i) 100% of the Stated Principal Balance thereof as of the date of purchase
(or such other price as provided in Section 9.01), (ii) in the case of (x) a
Mortgage Loan, accrued interest on such Stated Principal Balance at the
applicable Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the related Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected and (y) an REO Property, the sum of (1)

                                      -54-

<PAGE>

accrued interest on such Stated Principal Balance at the applicable Mortgage
Rate in effect from time to time from the Due Date as to which interest was last
covered by a payment by the Mortgagor or an advance by the related Servicer
through the end of the calendar month immediately preceding the calendar month
in which such REO Property was acquired, plus (2) REO Imputed Interest for such
REO Property for each calendar month commencing with the calendar month in which
such REO Property was acquired and ending with the calendar month in which such
purchase is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the related Collection Account in respect of
such Mortgage Loan or REO Property pursuant to Section 3.11(a)(ix) and Section
3.16(b), and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the
related Servicer, the Certificate Insurer, the Guarantor or the Trustee in
respect of the breach or defect giving rise to the purchase obligation including
any costs and damages incurred by the Trust in connection with any violation by
such loan of any predatory or abusive lending law.

                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Stated
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) with respect to any Group III Mortgage
Loan, have a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on
the Deleted Mortgage Loan, (iv) with respect to any Group III Mortgage Loan,
have a Minimum Mortgage Rate not less than the Minimum Mortgage Rate of the
Deleted Mortgage Loan, (v) with respect to any Group III Mortgage Loan, have a
Gross Margin equal to the Gross Margin of the Deleted Mortgage Loan, (vi) with
respect to any Group III Mortgage Loan, have a next Adjustment Date not more
than two months later than the next Adjustment Date on the Deleted Mortgage
Loan, (vii) have a remaining term to maturity not greater than (and not more
than one year less than) that of the Deleted Mortgage Loan, (viii) have the same
Due Date as the Due Date on the Deleted Mortgage Loan, (ix) have a Loan-to-Value
Ratio as of the date of substitution equal to or lower than the Loan-to-Value
Ratio of the Deleted Mortgage Loan as of such date, (x) have a risk grading
determined by the Originator at least equal to the risk grading assigned on the
Deleted Mortgage Loan, (xi) with respect to Qualified Substituted Mortgage Loans
substituted for Deleted Mortgage Loans that are Group I-A Mortgage Loans, have
an original principal balance that conforms to Fannie Mae loan limits as of the
date of its origination and be otherwise acceptable to the Guarantor and (xii)
conform to each representation and warranty set forth in Section 6 of the
Mortgage Loan Purchase Agreement applicable to the Deleted Mortgage Loan. In the
event that one or more mortgage loans are substituted for one or more Deleted
Mortgage Loans, the amounts described in clause (i) hereof shall be determined
on the basis of aggregate principal balances, the Mortgage Rates described in
clause (ii) hereof shall be determined on the basis of weighted average Mortgage
Rates, the terms described in clause (vii) hereof shall be determined on the
basis of weighted average remaining term to maturity, the Loan-to-Value Ratios

                                      -55-

<PAGE>

described in clause (ix) hereof shall be satisfied as to each such mortgage
loan, the risk gradings described in clause (x) hereof shall be satisfied as to
each such mortgage loan and, except to the extent otherwise provided in this
sentence, the representations and warranties described in clause (xi) hereof
must be satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as the case may be.

                  "Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than a nominal amount in excess of the existing
first mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for such
nominal amount) to satisfy the then existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.

                  "Rating Agency or Rating Agencies": Moody's and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor (and if
rating the Class A Certificates, consented to in writing by the Certificate
Insurer and if rating the Group I Class A Certificates, consented to in writing
by the Guarantor), notice of which designation shall be given to the Trustee and
the Servicers.

                  "Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) any
amounts previously withdrawn from the related Collection Account in respect of
such Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(iv) the proceeds, if any, received in respect of such Mortgage Loan during the
calendar month in which such Final Recovery Determination was made, net of
amounts that are payable therefrom to the related Servicer with respect to such
Mortgage Loan pursuant to Section 3.11(a)(iii).

                  With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus

                                      -56-

<PAGE>

(iv) any amounts previously withdrawn from the related Collection Account in
respect of the related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section
3.16(b), minus (v) the aggregate of all P&I Advances and Servicing Advances (in
the case of Servicing Advances, without duplication of amounts netted out of the
rental income, Insurance Proceeds and Liquidation Proceeds described in clause
(vi) below) made by the related Servicer in respect of such REO Property or the
related Mortgage Loan for which the related Servicer has been or, in connection
with such Final Recovery Determination, will be reimbursed pursuant to Section
3.23 out of rental income, Insurance Proceeds and Liquidation Proceeds received
in respect of such REO Property, minus (vi) the total of all net rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of such REO
Property that has been, or in connection with such Final Recovery Determination,
will be transferred to the Distribution Account pursuant to Section 3.23.

                  With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, 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.

                  With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.

                  If either Servicer receives Subsequent Recoveries with respect
to any Mortgage Loan, the amount of the Realized Loss with respect to that
Mortgage Loan will be reduced to the extent such recoveries are applied to
principal distributions on any Distribution Date.

                  "Record Date": With respect to each Distribution Date and any
Floating Rate Certificate, the Business Day immediately preceding such
Distribution Date. With respect to the 1st Distribution Date and any Fixed Rate
Certificate, or any other Certificates, including any Definitive Certificates,
the Closing Date and with respect to each other Distribution Date and any Fixed
Rate Certificate, or any other Certificates, including any Definitive
Certificates, the last Business Day of the month immediately preceding the month
in which such Distribution Date occurs.

                  "Reference Banks": Deutsche Bank AG, Barclay's Bank PLC, The
Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors in
interest; provided, however, that if any of the foregoing banks are not suitable
to serve as a Reference Bank, then any leading banks selected by the Trustee,
after consultation with the Depositor and with the consent of the Certificate
Insurer and the Guarantor, which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London and (ii) not controlling, under the control of or under
common control with the Depositor or any Affiliate thereof.

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

                                      -57-

<PAGE>

                  "Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class CE Certificate or Class P Certificate.

                  "Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.

                  "Reimbursement Amount": As to any Distribution Date, the sum
of (x) (i) all Insured Amounts paid by the Certificate Insurer, but for which
the Certificate Insurer has not been reimbursed prior to such Distribution Date
pursuant to Section 4.01, plus (ii) interest accrued on such Insured Amounts not
previously repaid, calculated at the Late Payment Rate from the date the Trustee
received the related Insured Amounts or the date such Insured Amounts were made,
and (y) without duplication (i) any amounts then due and owing to the
Certificate Insurer under the Insurance Agreement, as certified to the Trustee
by the Certificate Insurer plus (ii) interest on such amounts at the Late
Payment Rate.

                  "Relief Act": The Servicemembers Civil Relief Act, or similar
state laws.

                  "Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.

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

                  "REMIC I-A": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Group I Mortgage Loans and Prepayment Charges with respect to the Group I
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof; (ii) any REO Property relating to a Group I Mortgage Loan,
together with all collections thereon and proceeds thereof; (iii) the Trustee's
rights with respect to the Group I Mortgage Loans under all insurance policies
required to be maintained pursuant to this Agreement and any proceeds thereof;
(iv) the Depositor's rights with respect to the Group I Mortgage Loans under the
Mortgage Loan Purchase Agreement (including any security interest created
thereby); and (v) the related Collection Account (other than any amounts
representing any Servicer Prepayment Charge Payment Amount with respect to the
Group I Mortgage Loans), the Distribution Account (other than any amounts
representing any Servicer Prepayment Charge Payment Amount with respect to the
Group I Mortgage Loans) and any REO Account, and such assets that are deposited
therein from time to time with respect to the Group I Mortgage Loans and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto. Notwithstanding the foregoing, however, REMIC I-A
specifically excludes the Group I Net WAC Rate Carryover Reserve Account, the
Class A-I-1 Cap Contract, all payments and other collections of principal and
interest due on the Group I Mortgage Loans on or before the Cut-off Date and all
Prepayment Charges with respect to the Group I Mortgage Loans payable in
connection with Principal Prepayments made before the Cut-off Date.

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<PAGE>

                  "REMIC I-A Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC I-A issued hereunder
and designated as a "regular interest" in REMIC I-A. Each REMIC I-A Regular
Interest shall accrue interest at the related REMIC I-A Remittance Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Balance as set forth in the Preliminary Statement hereto.
The designations for the respective REMIC I-A Regular Interests are set forth in
the Preliminary Statement hereto.

                  "REMIC I-A Remittance Rate": With respect to (a) the first
Distribution Date and (i) REMIC I-A Regular Interest IA-LT1 and REMIC I-A
Regular Interest IA-LTP, the weighted average of the Expense Adjusted Mortgage
Rates of the Group I Mortgage Loans and (ii) REMIC I-A Regular Interest I-LT2,
5.93303% and (b) any Distribution Date thereafter, the weighted average of the
Expense Adjusted Mortgage Rates of the Group I Mortgage Loans.

                  "REMIC I-B": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Group II Mortgage Loans and Prepayment Charges with respect to the Group II
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof; (ii) any REO Property relating to a Group II Mortgage
Loan, together with all collections thereon and proceeds thereof; (iii) the
Trustee's rights with respect to the Group II Mortgage Loans under all insurance
policies required to be maintained pursuant to this Agreement and any proceeds
thereof; (iv) the Depositor's rights with respect to the Group II Mortgage Loans
under the Mortgage Loan Purchase Agreement (including any security interest
created thereby); and (v) the related Collection Account (other than any amounts
representing any Servicer Prepayment Charge Payment Amount with respect to the
Group II Mortgage Loans), the Distribution Account (other than any amounts
representing any Servicer Prepayment Charge Payment Amount with respect to the
Group II Mortgage Loans) and any REO Account, and such assets that are deposited
therein from time to time with respect to the Group II Mortgage Loans and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto. Notwithstanding the foregoing, however, REMIC I-A
specifically excludes the Group II Net WAC Rate Carryover Reserve Account, the
Class A-II-1 Cap Contract, all payments and other collections of principal and
interest due on the Group II Mortgage Loans on or before the Cut-off Date and
all Prepayment Charges with respect to the Group II Mortgage Loans payable in
connection with Principal Prepayments made before the Cut-off Date.

                  "REMIC I-B Regular Interest": Either of the separate
non-certificated beneficial ownership interests in REMIC I-B issued hereunder
and designated as a "regular interest" in REMIC I-B. Each REMIC I-B Regular
Interest shall accrue interest at the related REMIC I-B Remittance Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Balance as set forth in the Preliminary Statement hereto.
The designations for the respective REMIC I-B Regular Interests are set forth in
the Preliminary Statement hereto.

                                      -59-

<PAGE>

                  "REMIC I-B Remittance Rate": With respect to the REMIC I-B
Regular Interest IB-LT1 and REMIC I-B Regular Interest IB-LTP, the weighted
average of the Expense Adjusted Mortgage Rates of the Group II Mortgage Loans.

                  "REMIC I-C": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Group III Mortgage Loans and Prepayment Charges with respect to the Group III
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof; (ii) any REO Property relating to a Group III Mortgage
Loan, together with all collections thereon and proceeds thereof; (iii) the
Trustee's rights with respect to the Group III Mortgage Loans under all
insurance policies required to be maintained pursuant to this Agreement and any
proceeds thereof; (iv) the Depositor's rights with respect to the Group III
Mortgage Loans under the Mortgage Loan Purchase Agreement (including any
security interest created thereby); and (v) the related Collection Account
(other than any amounts representing any Servicer Prepayment Charge Payment
Amount with respect to the Group III Mortgage Loans), the Distribution Account
(other than any amounts representing any Servicer Prepayment Charge Payment
Amount with respect to the Group III Mortgage Loans) and any REO Account, and
such assets that are deposited therein from time to time with respect to the
Group III Mortgage Loans and any investments thereof, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, REMIC I-C specifically excludes the Group III Net WAC Rate
Carryover Reserve Account, the Class A-I-1 Cap Contract, the Class A-II-1 Cap
Contract, the Group III Cap Contract, all payments and other collections of
principal and interest due on the Group III Mortgage Loans on or before the
Cut-off Date and all Prepayment Charges with respect to the Group III Mortgage
Loans payable in connection with Principal Prepayments made before the Cut-off
Date.

                  "REMIC I-C Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC I-C issued hereunder
and designated as a "regular interest" in REMIC I-C. Each REMIC I-C Regular
Interest shall accrue interest at the related REMIC I-C Remittance Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Balance as set forth in the Preliminary Statement hereto.
The designations for the respective REMIC I-C Regular Interests are set forth in
the Preliminary Statement hereto.

                  "REMIC I-C Remittance Rate": With respect to (a) the first
Distribution Date and (i) REMIC I-B Regular Interest IC-LT1 and REMIC I-C
Regular Interest IC-LTP, the weighted average of the Expense Adjusted Mortgage
Rates of the Group III Mortgage Loans and (ii) REMIC I-C Regular Interest I-LT2,
6.69819% and (b) any Distribution Date thereafter, the weighted average of the
Expense Adjusted Mortgage Rates of the Group III Mortgage Loans.

                  "REMIC II": The segregated pool of assets consisting of the
REMIC I-A Regular Interests, the REMIC I-B Regular Interests and the REMIC I-C
Regular Interests conveyed in trust to the Trustee for the benefit of the Class
R-II Interest pursuant to Section 2.08, and all amounts deposited therein, with
respect to which a separate REMIC election is to be made.

                                      -60-

<PAGE>

                  "REMIC II Group I Interest Loss Allocation Amount": With
respect to any Distribution Date, an amount equal to (a) the product of (i) the
aggregate Stated Principal Balance of the Group I Mortgage Loans and REO
Properties in Loan Group I then outstanding and (ii) the REMIC II Remittance
Rate for REMIC II Regular Interest II-LTAA1 minus the Group I Marker Rate,
divided by (b) 12.

                  "REMIC II Group I Overcollateralized Amount": With respect to
any date of determination, (i) 1.00% of the aggregate Uncertificated Balance of
REMIC II Regular Interest II-LTAA1, REMIC II Regular Interest II-LTAI1, REMIC II
Regular Interest II-LTAI2, REMIC II Regular Interest II-LTAI3, REMIC II Regular
Interest II-LTAI4, REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest
II-LTAI6, REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest
II-LTAI8, REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest
II-LTMI1, REMIC II Regular Interest II-LTMI2, REMIC II Regular Interest II-LTB1,
REMIC II Regular Interest II-LTZZ1 and REMIC II Regular Interest II-LTP1 minus
(ii) the aggregate Uncertificated Balance of REMIC II Regular Interest II-LTAI1,
REMIC II Regular Interest II-LTAI2, REMIC II Regular Interest II-LTAI3, REMIC II
Regular Interest II-LTAI4, REMIC II Regular Interest II-LTAI5, REMIC II Regular
Interest II-LTAI6, REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest
II-LTAI8, REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest
II-LTMI1, REMIC II Regular Interest II-LTMI2, REMIC II Regular Interest II-LTB1
and REMIC II Regular Interest II-LTP1, in each case as of such date of
determination.

                  "REMIC II Group I Principal Loss Allocation Amount": With
respect to any Distribution Date, an amount equal to the product of (i) the
aggregate Stated Principal Balance of the Group I Mortgage Loans and REO
Properties in Loan Group I then outstanding and (ii) 1 minus a fraction, the
numerator of which is two times the aggregate Uncertificated Balance of REMIC II
Regular Interest II-LTAI1, REMIC II Regular Interest II-LTAI2, REMIC II Regular
Interest II-LTAI3, REMIC II Regular Interest II-LTAI4, REMIC II Regular Interest
II-LTAI5, REMIC II Regular Interest II-LTAI6, REMIC II Regular Interest
II-LTAI7, REMIC II Regular Interest II-LTAI8, REMIC II Regular Interest
II-LTAI9, REMIC II Regular Interest II-LTMI1, REMIC II Regular Interest II-LTMI2
and REMIC II Regular Interest II-LTB1 and the denominator of which is the
aggregate Uncertificated Balance of REMIC II Regular Interest II-LTAI1, REMIC II
Regular Interest II-LTAI2, REMIC II Regular Interest II-LTAI3, REMIC II Regular
Interest II-LTAI4, REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest
II-LTAI6, REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest
II-LTAI8, REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest
II-LTMI1, REMIC II Regular Interest II-LTMI2, REMIC II Regular Interest II-LTB1
and REMIC II Regular Interest II-LTZZ1.

                  "REMIC II Group II Interest Loss Allocation Amount": With
respect to any Distribution Date, an amount equal to (a) the product of (i) the
aggregate Stated Principal Balance of the Group II Mortgage Loans and REO
Properties in Loan Group II then outstanding and (ii) the REMIC II Remittance
Rate for REMIC II Regular Interest II-LTAA2 minus the Group II Marker Rate,
divided by (b) 12.

                  "REMIC II Group II Overcollateralized Amount": With respect to
any date of determination, (i) 1.00% of the aggregate Uncertificated Balance of
REMIC II Regular Interest II-LTAA2, REMIC II Regular Interest II-LTAII1, REMIC
II Regular Interest II-LTAII2, REMIC II Regular Interest II-LTAII3, REMIC II
Regular Interest II-LTAII4, REMIC II Regular Interest II-LTAII5, REMIC II

                                      -61-

<PAGE>

Regular Interest II-LTAII6, REMIC II Regular Interest II-LTAII7, REMIC II
Regular Interest II-LTAII8, REMIC II Regular Interest II-LTAII9, REMIC II
Regular Interest II-LTM2, REMIC II Regular Interest II-LTB2, REMIC II Regular
Interest II-LTZZ2 and REMIC II Regular Interest II-LTP2 minus (ii) the aggregate
Uncertificated Balance of REMIC II Regular Interest II-LTAII1, REMIC II Regular
Interest II- LTAII2, REMIC II Regular Interest II-LTAII3, REMIC II Regular
Interest II-LTAII4, REMIC II Regular Interest II-LTAII5, REMIC II Regular
Interest II-LTAII6, REMIC II Regular Interest II-LTAII7, REMIC II Regular
Interest II-LTAII8, REMIC II Regular Interest II-LTAII9, REMIC II Regular
Interest II- LTM2, REMIC II Regular Interest II-LTB2 and REMIC II Regular
Interest II-LTP2, in each case as of such date of determination.

                  "REMIC II Group II Principal Loss Allocation Amount": With
respect to any Distribution Date, an amount equal to the product of (i) the
aggregate Stated Principal Balance of the Group II Mortgage Loans and REO
Properties in Loan Group II then outstanding and (ii) 1 minus a fraction, the
numerator of which is two times the aggregate Uncertificated Balance of REMIC II
Regular Interest II- LTAII1, REMIC II Regular Interest II-LTAII2, REMIC II
Regular Interest II-LTAII3, REMIC II Regular Interest II-LTAII4, REMIC II
Regular Interest II-LTAII5, REMIC II Regular Interest II-LTAII6, REMIC II
Regular Interest II-LTAII7, REMIC II Regular Interest II-LTAII8, REMIC II
Regular Interest II- LTAII9, REMIC II Regular Interest II-LTM2 and REMIC II
Regular Interest II-LTB2 and the denominator of which is the aggregate
Uncertificated Balance of REMIC II Regular Interest II-LTAII1, REMIC II Regular
Interest II-LTAII2, REMIC II Regular Interest II-LTAII3, REMIC II Regular
Interest II-LTAII4, REMIC II Regular Interest II-LTAII5, REMIC II Regular
Interest II-LTAII6, REMIC II Regular Interest II-LTAII7, REMIC II Regular
Interest II-LTAII8, REMIC II Regular Interest II-LTAII9, REMIC II Regular
Interest II-LTM2, REMIC II Regular Interest II-LTB2 and REMIC II Regular
Interest II-LTZZ2.

                  "REMIC II Group III Interest Loss Allocation Amount": With
respect to any Distribution Date, an amount equal to (a) the product of (i) the
aggregate Stated Principal Balance of the Group III Mortgage Loans and REO
Properties in Loan Group III then outstanding and (ii) the REMIC II Remittance
Rate for REMIC II Regular Interest II-LTAA3 minus the Group III Marker Rate,
divided by (b) 12.

                  "REMIC II Group III Overcollateralized Amount": With respect
to any date of determination, (i) 1.00% of the aggregate Uncertificated Balance
of REMIC II Regular Interest II-LTAA3, REMIC II Regular Interest II-LTAIII1,
REMIC II Regular Interest II-LTAIII2, REMIC II Regular Interest II-LTAIII3,
REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTB3, REMIC II
Regular Interest II-LTZZ3 and REMIC II Regular Interest II-LTP3 minus (ii) the
aggregate Uncertificated Balance of REMIC II Regular Interest II-LTAIII1, REMIC
II Regular Interest II-LTAIII2, REMIC II Regular Interest II-LTAIII3, REMIC II
Regular Interest II-LTM3, REMIC II Regular Interest II-LTB3 and REMIC II Regular
Interest II-LTP3, in each case as of such date of determination.

                  "REMIC II Group III Principal Loss Allocation Amount": With
respect to any Distribution Date, an amount equal to the product of (i) the
aggregate Stated Principal Balance of the Group III Mortgage Loans and REO
Properties in Loan Group III then outstanding and (ii) 1 minus a fraction, the
numerator of which is two times the aggregate Uncertificated Balance of REMIC II
Regular Interest II-

                                      -62-
<PAGE>

LTAIII1, REMIC II Regular Interest II-LTAIII2, REMIC II Regular Interest
II-LTAIII3, REMIC II Regular Interest II-LTM3 and REMIC II Regular Interest
II-LTB3 and the denominator of which is the aggregate Uncertificated Balance of
REMIC II Regular Interest II-LTAIII1, REMIC II Regular Interest II-LTAIII2,
REMIC II Regular Interest II-LTAIII3, REMIC II Regular Interest II-LTM3, REMIC
II Regular Interest II-LTB3 and REMIC II Regular Interest II-LTZZ3.

                  "REMIC II Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC II Regular Interests are set forth in the
Preliminary Statement hereto.

                  "REMIC II Remittance Rate": With respect to REMIC II Regular
Interest II-LTAA1, REMIC II Regular Interest II-LTAI1, REMIC II Regular Interest
II-LTAI2, REMIC II Regular Interest II-LTAI3, REMIC II Regular Interest
II-LTAI4, REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest
II-LTAI6, REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest
II-LTAI8, REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest
II-LTMI1, REMIC II Regular Interest II-LTMI2, REMIC II Regular Interest II-LTB1,
REMIC II Regular Interest II-LTZZ1 and REMIC II Regular Interest II-LTP1, the
weighted average of the REMIC I-A Remittance Rate on REMIC I-A Regular Interest
IA- LT1, REMIC I-A Regular Interest IA-LT2 and REMIC I-A Regular Interest IA-LTP
weighted on the basis on the Uncertificated Balance of such REMIC I-A Regular
Interests.

                  With respect to REMIC II Regular Interest II-LTAA2, REMIC II
Regular Interest II- LTAII1, REMIC II Regular Interest II-LTAII2, REMIC II
Regular Interest II-LTAII3, REMIC II Regular Interest II-LTAII4, REMIC II
Regular Interest II-LTAII5, REMIC II Regular Interest II-LTAII6, REMIC II
Regular Interest II-LTAII7, REMIC II Regular Interest II-LTAII8, REMIC II
Regular Interest II- LTAII9, REMIC II Regular Interest II-LTM2, REMIC II Regular
Interest II-LTB2, REMIC II Regular Interest II-LTZZ2 and REMIC II Regular
Interest II-LTP2, the weighted average of the REMIC I-B Remittance Rate on REMIC
I-B Regular Interest IB-LT1 and REMIC I-B Regular Interest IB-LTP, weighted on
the basis on the Uncertificated Balance of such REMIC I-B Regular Interests.

                  With respect to REMIC II Regular Interest II-LTAA3, REMIC II
Regular Interest II- LTAIII1, REMIC II Regular Interest II-LTAIII2, REMIC II
Regular Interest II-LTAIII3, REMIC II Regular Interest II-LTM3, REMIC II Regular
Interest II-LTB3, REMIC II Regular Interest II-LTZZ3 and REMIC II Regular
Interest II-LTP3, the weighted average of the REMIC I-C Remittance Rate on REMIC
I-C Regular Interest IC-LT1, REMIC I-C Regular Interest IC-LT2 and REMIC I-C
Regular Interest IC- LTP, weighted on the basis on the Uncertificated Balance of
such REMIC I-C Regular Interests.

                  "REMIC II Group I Required Overcollateralized Amount": 1.00%
of the Group I Overcollateralization Target Amount.

                                      -63-
<PAGE>

                  "REMIC II Group II Required Overcollateralized Amount": 1.00%
of the Group II Overcollateralization Target Amount.

                  "REMIC II Group III Required Overcollateralized Amount": 1.00%
of the Group III Overcollateralization Target Amount.

                  "REMIC III": The segregated pool of assets consisting of all
of the REMIC II Regular Interests conveyed in trust to the Trustee for the
benefit of the Class R-III Interest pursuant to Section 2.08, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.

                  "REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.

                  "REMIC Regular Interest": Any of the REMIC I-A Regular
Interests, the REMIC I-B Regular Interests, the REMIC I-C Regular Interests or
the REMIC II Regular Interests.

                  "Remittance Report": A report in form and substance acceptable
to the Trustee and Guarantor on a magnetic disk or tape prepared by the related
Servicer pursuant to Section 4.03 with such additions, deletions and
modifications as agreed to by the Trustee, the Guarantor and the related
Servicer.

                  "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

                  "REO Account": The account or accounts maintained, or caused
to be maintained, by the related Servicer in respect of an REO Property pursuant
to Section 3.23.

                  "REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I-A, REMIC I-B or REMIC I-C.

                  "REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I-A,
REMIC I-B or REMIC I-C, one month's interest at the applicable Net Mortgage Rate
on the Stated Principal Balance of such REO Property (or, in the case of the
first such calendar month, of the related Mortgage Loan, if appropriate) as of
the close of business on the Distribution Date in such calendar month.

                  "REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
9.01 that is allocable to such REO Property) or otherwise, net of any portion of
such amounts (i) payable pursuant to Section 3.23(c) in respect of the proper
operation,

                                      -64-
<PAGE>

management and maintenance of such REO Property or (ii) payable or reimbursable
to the related Servicer pursuant to Section 3.23(d) for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and P&I
Advances in respect of such REO Property or the related Mortgage Loan, over (b)
the REO Imputed Interest in respect of such REO Property for such calendar
month.

                  "REO Property": A Mortgaged Property acquired by the related
Servicer on behalf of REMIC I-A, REMIC I-B or REMIC I-C through foreclosure or
deed-in-lieu of foreclosure, as described in Section 3.23.

                  "Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E attached hereto.

                  "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trustee, after consultation with the Depositor and
with the consent of the Certificate Insurer and the Guarantor, are quoting on
the relevant Interest Determination Date to the principal London offices of
leading banks in the London interbank market or (ii) in the event that the
Trustee can determine no such arithmetic mean, the lowest one-month U.S. dollar
lending rate which New York City banks selected by the Trustee, after
consultation with the Depositor and with the consent of the Certificate Insurer
and the Guarantor, are quoting on such Interest Determination Date to leading
European banks.

                  "Residential Dwelling": Any one of the following: (i) an
attached, detached or semi- detached one-family dwelling, (ii) an attached,
detached or semi-detached two-to four-family dwelling, (iii) a one-family
dwelling unit in a Fannie Mae eligible condominium project, or (iv) an attached,
detached or semi-detached one-family dwelling in a planned unit development,
none of which is a co-operative or mobile home (as defined in 42 United States
Code, Section 5402(6)).

                  "Residual Certificate": The Class R-I Certificates, the Class
R-II Certificates, the Class R- III Certificates and the Class R-X Certificates.

                  "Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.

                  "Responsible Officer": When used with respect to the Trustee,
any vice president, managing director, director, any assistant vice president,
the Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
any associate, any trust officer or assistant trust officer or any other officer
of the Trustee having direct responsibility over this Agreement or otherwise
engaged in performing functions similar to those performed by any of the above
designated officers and, with respect to a particular matter, to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.

                  "S&P": Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies,

                                      -65-
<PAGE>

Inc., or its successor in interest.

                  "Seller": NC Capital Corporation, or its successor in
interest, in its capacity as seller under the Mortgage Loan Purchase Agreement.

                  "Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A Certificates and the Class
M-I-1 Certificates and (ii) the Interest Carry Forward Amount, if any, for such
Distribution Date for the Class A Certificates and the Class M-I-1 Certificates.

                  "Servicers": With respect to the Group I Mortgage Loans, GMAC.
With respect to the Group II Mortgage Loans, Countrywide.

                  "Servicer Event of Default": As to either Servicer, one or
more of the events described in Section 7.01 with respect to such Servicer.

                  "Servicer Prepayment Charge Payment Amount": The amounts
payable by either Servicer in respect of any waived Prepayment Charges pursuant
to Section 2.05 or Section 3.01.

                  "Servicer Remittance Date": With respect to any Distribution
Date, by 3:00 p.m. New York time on the Business Day preceding the related
Distribution Date.

                  "Servicer Termination Test": With respect to GMAC and any
Distribution Date, the Servicer Termination Test will be failed if either (i) a
Delinquency Trigger exists with respect to such Distribution Date, or (ii) the
Cumulative Loss Percentage exceeds the applicable percentages set forth below
with respect to such Distribution Date:

       DISTRIBUTION DATE OCCURRING IN              PERCENTAGE
       ------------------------------              ----------
August 2007 through July 2008                         1.75%
August 2008 through July 2009                         3.00%
August 2009 through July 2010                         4.00%
August 2010 and thereafter                            4.75%

                  "Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.

                  "Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by either Servicer in connection with a default, delinquency
or other unanticipated event by a Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including but not limited to foreclosures, in respect of a
particular Mortgage Loan, (iii) the management (including reasonable fees in
connection therewith) and liquidation of any REO Property and (iv) the
performance of its obligations under Section 3.01, Section 3.09, Section 3.14,
Section 3.16 and Section 3.23. Neither Servicer shall be required to make any
Nonrecoverable Servicing Advances.

                                      -66-
<PAGE>

                  "Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to the Servicing Fee Rate accrued for one
month (or in the event of any payment of interest which accompanies a Principal
Prepayment in full or in part made by the Mortgagor during such calendar month,
interest for the number of days covered by such payment of interest) on the same
principal amount on which interest on such Mortgage Loan accrues for such
calendar month, calculated on the basis of a 360-day year consisting of twelve
30-day months. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.

                  "Servicing Fee Rate": With respect to the Group I Mortgage
Loans and the first lien Group II Mortgage Loans, 0.35% per annum. With respect
to the second lien Group II Mortgage Loans and the Group III Mortgage Loans,
0.50% per annum.

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

                  "Single Certificate": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual
Certificates), a hypothetical Certificate of such Class evidencing a Percentage
Interest for such Class corresponding to an initial Certificate Principal
Balance or Notional Amount of $1,000. With respect to the Class P Certificates
and the Residual Certificates, a hypothetical Certificate of such Class
evidencing a 100% Percentage Interest in such Class.

                  "Special Servicer": As defined in Section 3.13 hereof.

                  "Specially Serviced Mortgage Loan": A Mortgage Loan that (i)
has been delinquent in payment with respect to three or more monthly payments
(provided, however, that the third such payment shall not be deemed to be
delinquent for purposes of this clause (i) until the close of business on the
last day of the month in which such payment first became due), and (ii) has been
transferred to the Special Servicer in accordance with Section 3.13.

                  "Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 10.01(b) hereof.

                  "Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the principal balance of such Mortgage Loan
as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum of
(i) the principal portion of each Monthly Payment due on a Due Date subsequent
to the Cut-off Date, to the extent received from the Mortgagor or advanced by
the related Servicer and distributed pursuant to Section 4.01 on or before such
date of determination, (ii) all Principal Prepayments received after the Cut-off
Date, to the extent distributed pursuant to Section 4.01 on or before such date
of determination, (iii) all Liquidation Proceeds and Insurance Proceeds applied
by the related Servicer as recoveries of principal in accordance

                                      -67-
<PAGE>

with the provisions of Section 3.16, to the extent distributed pursuant to
Section 4.01 on or before such date of determination, and (iv) any Realized Loss
incurred with respect thereto as a result of a Deficient Valuation made during
or prior to the Prepayment Period for the most recent Distribution Date
coinciding with or preceding such date of determination; and (b) as of any date
of determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, zero. With respect to any REO Property: (a) as of any date
of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of REMIC I-A, REMIC I-B or REMIC I-C, minus the sum of
(i) if such REO Property was acquired before the Distribution Date in any
calendar month, the principal portion of the Monthly Payment due on the Due Date
in the calendar month of acquisition, to the extent advanced by the related
Servicer and distributed pursuant to Section 4.01 on or before such date of
determination, and (ii) the aggregate amount of REO Principal Amortization in
respect of such REO Property for all previously ended calendar months, to the
extent distributed pursuant to Section 4.01 on or before such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.

                  "Sub-Servicer": Any Person with which either Servicer has
entered into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

                  "Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the applicable Servicer.

                  "Sub-Servicing Agreement": The written contract between a
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.

                  "Subsequent Recoveries": As of any Distribution Date, amounts
received by either Servicer (net of any related expenses permitted to be
reimbursed pursuant to Section 3.11) specifically related to a Mortgage Loan
that was the subject of a liquidation or an REO Disposition prior to the related
Prepayment Period that resulted in a Realized Loss.

                  "Substitution Shortfall Amount": As defined in Section
2.03(b).

                  "Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to the classification of portions
thereof as REMICs under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.

                                      -68-
<PAGE>

                  "Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).

                  "Termination Price": As defined in Section 9.01.

                  "Terminator": As defined in Section 9.01.

                  "Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.

                  "Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.

                  "Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.

                  "Trust": The express trust created hereunder in Section 2.01.

                  "Trust Fund": Collectively, all of the assets of the Trust
REMICs, and the other assets conveyed by the Depositor to the Trustee pursuant
to Section 2.01.

                  "Trust REMIC": Any of REMIC I-A, REMIC I-B, REMIC I-C, REMIC
II or REMIC III.

                  "Trustee": Deutsche Bank National Trust Company, a national
banking association, or its successor in interest, or any successor trustee
appointed as herein.

                  "Trustee Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal the Trustee Fee Rate accrued for one month on the aggregate
Stated Principal Balance of the Mortgage Loans and any REO Properties as of the
first day of the related Due Period (or, in the case of the initial Distribution
Date, as of the Cut-off Date) and the Group I Initial Deposit, the Group III-A
Initial Deposit and the Group III-B Initial Deposit, calculated on the basis of
a 360-day year consisting of twelve 30-day months.

                  "Trustee Fee Rate": 0.0024% per annum.

                  "Uncertificated Balance": The amount of any REMIC Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC Regular Interest shall equal the amount
set forth in the Preliminary Statement hereto as its initial uncertificated
balance. On each Distribution Date, the Uncertificated Balance of each REMIC
Regular Interest shall be

                                      -69-
<PAGE>

reduced by all distributions of principal made on such REMIC Regular Interest on
such Distribution Date pursuant to Section 4.01 and, if and to the extent
necessary and appropriate, shall be further reduced on such Distribution Date by
Realized Losses as provided in Section 4.04. The Uncertificated Balances of
REMIC II Regular Interest II-LTZZ1, REMIC II Regular Interest II-LTZZ2 and REMIC
II Regular Interest II-LTZZ3 shall each be increased by interest deferrals as
provided in Section 4.01(2). The Uncertificated Balance of each REMIC Regular
Interest shall never be less than zero.

                  "Uncertificated Interest": With respect to any REMIC Regular
Interest for any Distribution Date, one month's interest at the REMIC I-A
Remittance Rate, REMIC I-B Remittance Rate, REMIC I-C Remittance Rate or REMIC
II Remittance Rate, as the case may be, applicable to such REMIC Regular
Interest for such Distribution Date, accrued on the Uncertificated Balance
thereof immediately prior to such Distribution Date. Uncertificated Interest in
respect of any REMIC Regular Interest shall accrue on the basis of a 360-day
year consisting of twelve 30-day months. Uncertificated Interest with respect to
each Distribution Date, as to any REMIC Regular Interest, shall be reduced by an
amount equal to the sum of (a) the aggregate Prepayment Interest Shortfall, if
any, for such Distribution Date to the extent not covered by payments pursuant
to Section 3.24 and (b) the aggregate amount of any Relief Act Interest
Shortfall, if any allocated, in each case, to such REMIC Regular Interest
pursuant to Section 1.02. In addition, Uncertificated Interest with respect to
each Distribution Date, as to any REMIC Regular Interest shall be reduced by
Realized Losses, if any, allocated to such REMIC Regular Interest pursuant to
Section 1.02 and Section 4.04.

                  "Underwriter's Exemption": An individual exemption issued by
the United States Department of Labor, as Prohibited Transaction Exemption
("PTE"), 90-30, as amended, to Bear, Stearns & Co. Inc., for specific offerings
in which Bear, Stearns & Co. Inc. or any person directly or indirectly, through
one or more intermediaries, controlling, controlled by or under common control
with Bear, Stearns & Co. Inc. is an underwriter, placement agent or a manager or
co-manager of the underwriting syndicate or selling group where the trust and
the offered certificates meet specified conditions.

                  "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.

                  "United States Person": A citizen or resident of the United
States, a corporation, partnership (or other entity treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States, any state thereof, or the District
of Columbia (except in the case of a partnership, to the extent provided in
Treasury regulations) provided that, for purposes solely of the restrictions on
the transfer of Residual Certificates, no partnership or other entity treated as
a partnership for United States federal income tax purposes shall be treated as
a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are required by the applicable
operative agreement to be United States Persons, or an estate the income of
which from sources without the United States is includible in gross income for
United States federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States, or a trust if a court
within

                                      -70-
<PAGE>

the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority
to control all substantial decisions of the trust. The term "United States"
shall have the meaning set forth in Section 7701 of the Code or successor
provisions.

                  "Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as determined by an appraisal made for
the Originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of Fannie Mae and Freddie
Mac and (b) the value thereof as determined by a review appraisal conducted by
the Originator in accordance with the Originator's underwriting guidelines, and
(ii) the purchase price paid for the related Mortgaged Property by the Mortgagor
with the proceeds of the Mortgage Loan; provided, however, (A) in the case of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the lesser of (1) the value determined by an appraisal made for the
Originator of such Refinanced Mortgage Loan at the time of origination of such
Refinanced Mortgage Loan by an appraiser who met the minimum requirements of
Fannie Mae and Freddie Mac and (2) the value thereof as determined by a review
appraisal conducted by the Originator in accordance with the Originator's
underwriting guidelines, and (B) in the case of a Mortgage Loan originated in
connection with a "lease-option purchase," such value of the Mortgaged Property
is based on the lower of the value determined by an appraisal made for the
Originator of such Mortgage Loan at the time of origination or the sale price of
such Mortgaged Property if the "lease option purchase price" was set less than
12 months prior to origination, and is based on the value determined by an
appraisal made for the Originator of such Mortgage Loan at the time of
origination if the "lease option purchase price" was set 12 months or more prior
to origination.

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, 98% of all Voting Rights will be allocated among the Holders
of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the Holders of the Class P Certificates and 1% of all Voting Rights
will be allocated among the Holders of the Residual Certificates. The Voting
Rights allocated to each Class of Certificates shall be allocated among Holders
of each such Class in accordance with their respective Percentage Interests as
of the most recent Record Date. Notwithstanding any of the foregoing, (i) unless
a Certificate Insurer Default is continuing, on any date on which any Insured
Certificates are outstanding or any amounts are owed to the Certificate Insurer
under the Insurance Agreement or this Agreement, the Certificate Insurer will
have all Voting Rights of the Class A Certificates, and (ii) unless the
Guarantor defaults on its obligation under the Guaranty, on any date on which a
Certificate Insurer Default is continuing and any amounts are owed to the
Guarantor under this Agreement, the Guarantor will have all Voting Rights of the
Guaranteed Certificates. So long as the Certificate Insurer and the Guarantor
have the Voting Rights pursuant to the preceding sentence, the reference to
"holders of Certificates representing Voting Rights" shall be deemed to refer to
the Certificate Insurer or the Guarantor, as applicable.

                  SECTION 1.02. Allocation of Certain Interest Shortfalls.

                  For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Group I
Class A Certificates, the Group I Mezzanine Certificates

                                      -71-
<PAGE>

and the Class CE-I Certificates for any Distribution Date, (1) the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the related Servicer pursuant to Section 3.24) and any Relief Act
Interest Shortfall incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, among the Class CE-I Certificates on
a PRO RATA basis based on, and to the extent of, one month's interest at the
then applicable respective Pass-Through Rate on the respective Notional Amount
of each such Certificate and, thereafter, among the Group I Class A Certificates
and the Group I Mezzanine Certificates on a PRO RATA basis based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the respective Certificate Principal Balance or Notional Amount of each
such Certificate and (2) the aggregate amount of any Realized Losses and Net WAC
Rate Carryover Amounts incurred for any Distribution Date shall be allocated
among the Class CE-I Certificates on a PRO RATA basis based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the respective Notional Amount of each such Certificate.

                  For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Group II
Class A Certificates, the Group II Mezzanine Certificates and the Class CE-II
Certificates for any Distribution Date, (1) the aggregate amount of any
Prepayment Interest Shortfalls (to the extent not covered by payments by the
related Servicer pursuant to Section 3.24) and any Relief Act Interest Shortfall
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated first, among the Class CE-II Certificates on a PRO RATA basis based
on, and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Notional Amount of each such Certificate
and, thereafter, among the Group II Class A Certificates and the Group II
Mezzanine Certificates on a PRO RATA basis based on, and to the extent of, one
month's interest at the then applicable respective Pass-Through Rate on the
respective Certificate Principal Balance or Notional Amount of each such
Certificate and (2) the aggregate amount of any Realized Losses and Net WAC Rate
Carryover Amounts incurred for any Distribution Date shall be allocated among
the Class CE-II Certificates on a PRO RATA basis based on, and to the extent of,
one month's interest at the then applicable respective Pass-Through Rate on the
respective Notional Amount of each such Certificate.

                  For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Group III
Class A Certificates, the Group III Mezzanine Certificates and the Class CE-III
Certificates for any Distribution Date, (1) the aggregate amount of any
Prepayment Interest Shortfalls (to the extent not covered by payments by the
related Servicer pursuant to Section 3.24) and any Relief Act Interest Shortfall
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated first, among the Class CE-III Certificates on a PRO RATA basis based
on, and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Notional Amount of each such Certificate
and, thereafter, among the Group III Class A Certificates and the Group III
Mezzanine Certificates on a PRO RATA basis based on, and to the extent of, one
month's interest at the then applicable respective Pass-Through Rate on the
respective Certificate Principal Balance or Notional Amount of each such
Certificate and (2) the aggregate amount of any Realized Losses and Net WAC Rate
Carryover Amounts incurred for any Distribution Date shall be allocated among
the Class CE-III Certificates on a PRO RATA basis based on, and to the extent
of, one month's interest at the then applicable respective Pass-Through Rate on
the respective Notional Amount of each such Certificate.

                                      -72-
<PAGE>

                  For purposes of calculating the amount of Uncertificated
Interest for the REMIC I-A Regular Interests, the REMIC I-B Regular Interests
and the REMIC I-C Regular Interests for any Distribution Date, the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the related Servicer pursuant to Section 3.24) and any Relief Act
Interest Shortfall incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated shall be allocated (i) with respect to the
Group I Mortgage Loans and (a) the first Distribution Date, to REMIC I-A Regular
Interest IA-LT1, to the extent of one month's interest at the then applicable
REMIC I-A Remittance Rate on the Uncertificated Balance of such REMIC I-A
Regular Interest and (b) any Distribution Date thereafter, to REMIC I-A Regular
Interest IA-LT1 and REMIC I-A Regular Interest IA-LT2, pro rata, to the extent
of one month's interest at the then applicable REMIC I-A Remittance Rate on the
Uncertificated Balance of such REMIC I-A Regular Interest, (ii) with respect to
the Group II Mortgage Loans to REMIC I-B Regular Interest IB-LT1, to the extent
of one month's interest at the then applicable REMIC I-B Remittance Rate on the
Uncertificated Balance of such REMIC I-B Regular Interest and (iii) with respect
to the Group III Mortgage Loans and (a) the first Distribution Date, to REMIC
I-C Regular Interest IC- LT1, to the extent of one month's interest at the then
applicable REMIC I-C Remittance Rate on the Uncertificated Balance of such REMIC
I-C Regular Interest and (b) any Distribution Date thereafter, to REMIC I-C
Regular Interest IC-LT1 and REMIC I-C Regular Interest IC-LT2, pro rata, to the
extent of one month's interest at the then applicable REMIC I-C Remittance Rate
on the Uncertificated Balance of such REMIC I-C Regular Interest.

                  For purposes of calculating the amount of Uncertificated
Interest for the REMIC II Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the related Servicer pursuant to Section 3.24) and any
Relief Act Interest Shortfall incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated shall be allocated (i) with respect to the
Group I Mortgage Loans, among REMIC II Regular Interest II- LTAA1, REMIC II
Regular Interest II-LTAI1, REMIC II Regular Interest II-LTAI2, REMIC II Regular
Interest II-LTAI3, REMIC II Regular Interest II-LTAI4, REMIC II Regular Interest
II-LTAI5, REMIC II Regular Interest II-LTAI6, REMIC II Regular Interest
II-LTAI7, REMIC II Regular Interest II-LTAI8, REMIC II Regular Interest
II-LTAI9, REMIC II Regular Interest II-LTMI1, REMIC II Regular Interest
II-LTMI2, REMIC II Regular Interest II-LTB1 and REMIC II Regular Interest
II-LTZZ1 on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective REMIC II Remittance Rate on the
respective Uncertificated Balance of each such REMIC II Regular Interest, (i)
with respect to the Group II Mortgage Loans, among REMIC II Regular Interest
II-LTAA2, REMIC II Regular Interest II-LTAII1, REMIC II Regular Interest
II-LTAII2, REMIC II Regular Interest II-LTAII3, REMIC II Regular Interest
II-LTAII4, REMIC II Regular Interest II-LTAII5, REMIC II Regular Interest II-
LTAII6, REMIC II Regular Interest II-LTAII7, REMIC II Regular Interest
II-LTAII8, REMIC II Regular Interest II-LTAII9, REMIC II Regular Interest
II-LTM2, REMIC II Regular Interest II-LTB2 and REMIC II Regular Interest
II-LTZZ2 on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective REMIC II Remittance Rate on the
respective Uncertificated Balance of each such REMIC II Regular Interest and
(iii) with respect to the Group III Mortgage Loans, among REMIC II Regular
Interest II-LTAA3, REMIC II Regular Interest II-LTAIII1, REMIC II Regular
Interest II-LTAIII2, REMIC II Regular Interest II-LTAIII3, REMIC II Regular
Interest II-LTM3, REMIC II Regular Interest II-LTB3 and REMIC II Regular
Interest II-LTZZ3 on a PRO RATA basis based

                                      -73-
<PAGE>

on, and to the extent of, one month's interest at the then applicable respective
REMIC II Remittance Rate on the respective Uncertificated Balance of each such
REMIC II Regular Interest.

                  SECTION 1.03. Rights of the Certificate Insurer and the
                                Guarantor.

                  (a) Notwithstanding anything to the contrary anywhere in this
Agreement, all rights of the Guarantor hereunder, except any rights to
indemnification, shall permanently terminate upon the later to occur of (A) such
time as the Guaranteed Certificates shall no longer be outstanding and (B) the
payment in full to the Guarantor of any amounts owed to the Guarantor in respect
of its guarantee of payment on the Guaranteed Certificates; provided that the
Guarantor shall not have any rights hereunder, except indemnification rights, so
long as any default has occurred and is continuing under the Guaranty.

                  (b) Notwithstanding anything to the contrary anywhere in this
Agreement, all rights of the Certificate Insurer hereunder, except any rights to
indemnification, shall permanently terminate upon the later to occur of (A) such
time as the Class A Certificates shall no longer be outstanding and (B) the
payment in full to the Certificate Insurer of any amounts owed to the
Certificate Insurer hereunder or under the Insurance Agreement; provided that
the Certificate Insurer shall not have any rights hereunder, except
indemnification rights and the right to receive distributions pursuant to
Article IV, so long as any Certificate Insurer Default has occurred and is
continuing.

                  (c) If the Certificate Insurer is the Controlling Person
hereunder, prior to taking any action as the Controlling Person under this
Section 1.03(c), the Certificate Insurer shall (i) obtain the Guarantor's prior
written consent to such action if such action (i) relates to either the Group I
Class A Certificates or Group I Mortgage Loans or (ii) is taken pursuant to
Section 3.02(a), 3.03, 6.04, 7.01, 7.02(a), 7.04, 8.07 or 8.10 of this
Agreement, which consent shall not be unreasonably withheld by the Guarantor.

                                      -74-
<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

                  SECTION 2.01. Conveyance of the Mortgage Loans.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse, for the benefit of the Certificateholders and the
Certificate Insurer, all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in and
to the Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement, and all other assets
included or to be included in REMIC I-A, REMIC I-B and REMIC I-C. Such
assignment includes all interest and principal received by the Depositor or
either Servicer on or with respect to the Mortgage Loans (other than payments of
principal and interest due on such Mortgage Loans on or before the Cut-off
Date). The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement.

                  In connection with such transfer and assignment, the
Depositor, does hereby deliver to, and deposit with the Trustee the following
documents or instruments with respect to each Mortgage Loan so transferred and
assigned (in each case, a "Mortgage File") :

                  (i) the original Mortgage Note, endorsed in blank or in the
         following form "Pay to the order of Deutsche Bank National Trust
         Company, as Trustee under the applicable agreement, without recourse,"
         with all prior and intervening endorsements showing a complete chain of
         endorsement from the originator to the Person so endorsing to the
         Trustee;

                  (ii) the original Mortgage with evidence of recording thereon,
         and the original recorded power of attorney, if the Mortgage was
         executed pursuant to a power of attorney, with evidence of recording
         thereon;

                  (iii) an original Assignment in blank;

                  (iv) the original recorded Assignment or Assignments showing a
         complete chain of assignment from the originator to the Person
         assigning the Mortgage to the Trustee as contemplated by the
         immediately preceding clause (iii);

                  (v) the original or copies of each assumption, modification or
         substitution agreement, if any; and

                  (vi) the original lender's title insurance policy or, if the
         original title policy has not been issued, the irrevocable commitment
         to issue the same.

                                      -75-
<PAGE>

                  With respect to a maximum of approximately 2.0% of the
Original Mortgage Loans, by outstanding principal balance of the Original
Mortgage Loans as of the Cut-off Date, if any original Mortgage Note referred to
in Section 2.01(i) above cannot be located, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon delivery to the
Trustee of a photocopy of such Mortgage Note, if available, with a lost note
affidavit substantially in the form of Exhibit I attached hereto. If any of the
original Mortgage Notes for which a lost note affidavit was delivered to the
Trustee is subsequently located, such original Mortgage Note shall be delivered
to the Trustee within three Business Days.

                  If any of the documents referred to in Sections 2.01(ii),
(iii) or (iv) above has, as of the Closing Date, been submitted for recording
but either (x) has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained the original
of such document, the obligations of the Depositor to deliver such documents
shall be deemed to be satisfied upon (1) delivery to the Trustee of a copy of
each such document certified by the Originator in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Originator, delivery to the Trustee promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Trustee and the Rating Agencies by the
Depositor if delivery pursuant to clause (2) above will be made more than 180
days after the Closing Date. If the original lender's title insurance policy was
not delivered pursuant to Section 2.01(vi) above, the Depositor shall deliver or
cause to be delivered to the Trustee, promptly after receipt thereof, the
original lender's title insurance policy. The Depositor shall deliver or cause
to be delivered to the Trustee promptly upon receipt thereof any other original
documents constituting a part of a Mortgage File received with respect to any
Mortgage Loan, including, but not limited to, any original documents evidencing
an assumption or modification of any Mortgage Loan.

                  The Trustee shall enforce the obligations of the Seller under
the Mortgage Loan Purchase Agreement to promptly (within sixty Business Days
following the later of the Closing Date and the date of receipt by the Seller of
the recording information for a Mortgage, but in no event later than ninety days
following the Closing Date) submit or cause to be submitted for recording, at no
expense to the Trust Fund, the Trustee, the Certificate Insurer, the Guarantor
or the Depositor, in the appropriate public office for real property records,
each Assignment referred to in Sections 2.01(iii) and (iv) above and the
Depositor shall execute each original Assignment or cause each original
Assignment to be executed in the following form: "Deutsche Bank National Trust
Company, as Trustee under the applicable agreement." In the event that any such
Assignment is lost or returned unrecorded because of a defect therein, the
Seller shall promptly prepare or cause to be prepared a substitute Assignment or
cure or cause to be cured such defect, as the case may be, and thereafter cause
each such Assignment to be duly recorded. If the Seller is unable to pay the
cost of recording the Assignments, such expense will be paid by the Trustee and
shall be reimbursable to the Trustee as an Extraordinary Trust Fund Expense.
Notwithstanding the foregoing, the Trustee shall not be responsible for
determining whether any Assignment delivered by the Depositor hereunder is in
recordable form.

                  Notwithstanding the foregoing, however, for administrative
convenience and facilitation of

                                      -76-
<PAGE>

servicing and to reduce closing costs, the Assignments shall not be required to
be submitted for recording (except with respect to any Mortgage Loan located in
Florida, Hawaii, Maryland or Mississippi) unless the Trustee or the Depositor
receives notice that such failure to record would result in a withdrawal or a
downgrading by any Rating Agency of the rating on any Class of Certificates
(which, in the case of the Class A Certificates, shall be without regard to the
Policy); provided, however, the Trustee shall enforce the obligations of the
Seller under the Mortgage Loan Purchase Agreement to submit or cause to be
submitted each Assignment for recording (at the expense of the Seller) in the
manner described above, at no expense to the Trust Fund or the Trustee, upon the
earliest to occur of: (i) reasonable direction by Holders of Certificates
entitled to at least 25% of the Voting Rights, (ii) the occurrence of a Servicer
Event of Termination with respect to the applicable Servicer, (iii) the
occurrence of a bankruptcy, insolvency or foreclosure relating to the applicable
Servicer, (iv) the occurrence of a servicing transfer as described in Section
7.02 hereof, (v) with respect to any one Assignment, the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Mortgagor under the
related Mortgage and (vi) any Mortgage Loan that is 90 days or more Delinquent.
Upon receipt of written notice by the Trustee from the Servicer that recording
of the Assignments is required pursuant to one or more of the conditions set
forth in the preceding sentence, the Depositor shall be required to deliver such
Assignments or shall cause such Assignments to be delivered within 30 days
following receipt of such notice.

                  All original documents relating to the Mortgage Loans that are
not delivered to the Trustee are and shall be held by or on behalf of the
Seller, the Depositor or the related Servicer, as the case may be, in trust for
the benefit of the Trustee on behalf of the Certificateholders and the
Certificate Insurer. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Trustee. Any such original document
delivered to or held by the Depositor that is not required pursuant to the terms
of this Section to be a part of a Mortgage File, shall be delivered promptly to
the related Servicer.

                  The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust (the "Trust") to be known, for convenience, as "New Century Home Equity
Loan Trust Series 2004-A" and Deutsche Bank National Trust Company is hereby
appointed as Trustee in accordance with the provisions of this Agreement. The
parties hereto acknowledge and agree that it is the policy and intention of the
Trust to acquire only Mortgage Loans meeting the requirements set forth in this
Agreement.

                  The Depositor hereby directs the Trustee to enter into the
Insurance Agreement. In addition, the Depositor hereby directs the Trustee to
execute, deliver and perform its obligations under the Cap Contracts on the
Closing Date and thereafter on behalf of the Holders of the Class A-I-A1
Certificates, the Class A-I-B1 Certificates, the Class A-II Certificates and the
Group II Mezzanine Certificates. The Depositor, the Servicers, the Certificate
Insurer, the Guarantor and the Holders of the Class A-I-A1 Certificates, the
Class A-I-B1 Certificates, the Class A-II Certificates and the Group II
Mezzanine Certificates by their acceptance of such Certificates acknowledge and
agree that the Trustee shall execute, deliver and perform its obligations under
the Cap Contract and shall do so solely in its capacity as Trustee of the Trust
Fund and not in its individual capacity.

                                      -77-
<PAGE>

                  SECTION 2.02. Acceptance of REMIC I by Trustee.

                  The Trustee acknowledges receipt, subject to the provisions of
Section 2.01 and subject to any exceptions noted on the exception report
described in the next paragraph below, of the documents referred to in Section
2.01 (other than such documents described in Section 2.01(v)) above and all
other assets included in the definition of "REMIC I" under clauses (i), (iii),
(iv) and (v) (to the extent of amounts deposited into the Distribution Account)
and declares that it holds and will hold such documents and the other documents
delivered to it constituting a Mortgage File, and that it holds or will hold all
such assets and such other assets included in the definition of "REMIC I" in
trust for the exclusive use and benefit of all present and future
Certificateholders.

                  The Trustee agrees, for the benefit of the Certificateholders
and the Certificate Insurer, to review each Mortgage File on or before the
Closing Date and to certify to the Depositor, each Servicer, the Guarantor and
the Certificate Insurer, in substantially the form attached hereto as Exhibit
C-1 that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Mortgage Loan specifically identified in the exception report annexed
thereto as not being covered by such certification), (i) all documents
constituting part of such Mortgage File (other than such documents described in
Section 2.01(v)) required to be delivered to it pursuant to this Agreement are
in its possession, (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan and (iii) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i) through (iii), (vi),(xi),
(xii), (xv), (xvii), (xviii), (xx) through (xxiii) and (xxv) of the definition
of "Mortgage Loan Schedule" accurately reflects information set forth in the
Mortgage File. It is herein acknowledged that, in conducting such review, the
Trustee was under no duty or obligation (i) to inspect, review or examine any
such documents, instruments, certificates or other papers to determine whether
they are genuine, enforceable, or appropriate for the represented purpose or
whether they have actually been recorded or that they are other than what they
purport to be on their face or (ii) to determine whether any Mortgage File
should include any of the documents specified in clause (v) of Section 2.01.

                  Prior to the first anniversary date of this Agreement the
Trustee shall deliver to the Depositor, each Servicer, the Guarantor and the
Certificate Insurer a final certification in the form annexed hereto as Exhibit
C-2 evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon, and the Servicers shall forward a copy thereof to any
Sub-Servicer.

                  If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee finds any document or documents constituting a part of a Mortgage File
to be missing or defective in any material respect, at the conclusion of its
review the Trustee shall so notify the Depositor, the related Servicer, the
Guarantor and the Certificate Insurer. In addition, upon the discovery by the
Depositor, either Servicer, the Guarantor or the Trustee of a breach of any of
the representations and warranties made by the Seller in the Mortgage Loan
Purchase Agreement in respect of any Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests of the related Certificateholders or
the Certificate Insurer in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties and the Certificate
Insurer.

                                      -78-
<PAGE>

                  The Trustee shall, at the written request and expense of any
Certificateholder, the Guarantor or the Certificate Insurer, provide a written
report to such Certificateholder, the Guarantor or the Certificate Insurer of
all Mortgage Files released to the Servicers for servicing purposes.

                  SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
                                the Seller.

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
adversely affects the value of such Mortgage Loan or the interest therein of the
Certificateholders or the Certificate Insurer, the Trustee shall promptly notify
the Seller, the related Servicer, the Guarantor and the Certificate Insurer of
such defect, missing document or breach and request that the Seller deliver such
missing document or cure such defect or breach within 60 days from the date the
Seller was notified of such missing document, defect or breach, and if the
Seller does not deliver such missing document or cure such defect or breach in
all material respects during such period, the related Servicer, to the extent it
is not the Seller or an Affiliate of the Seller, and otherwise the Trustee shall
enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement
to repurchase such Mortgage Loan from REMIC I-A, REMIC I-B or REMIC I-C, as
applicable, at the Purchase Price within 90 days after the date on which the
Seller was notified (subject to Section 2.03(c)) of such missing document,
defect or breach, if and to the extent that the Seller is obligated to do so
under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be remitted to the related Servicer for deposit
in the related Collection Account and the Trustee, upon receipt of written
certification from the related Servicer of such deposit, shall release to the
Seller the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Seller shall furnish to it and as shall be necessary to vest in the Seller any
Mortgage Loan released pursuant hereto. The Trustee shall not have any further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, if so provided in the Mortgage Loan
Purchase Agreement, the Seller may cause such Mortgage Loan to be removed from
REMIC I (in which case it shall become a Deleted Mortgage Loan) and substitute
one or more Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.03(b). It is understood and agreed that the
obligation of the Seller to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such omission, defect or
breach available to the Trustee and the Certificateholders. The related Servicer
or the Trustee, as applicable, will be reimbursed for expenses reasonably
incurred in connection with any breach or defect giving rise to the purchase
obligation under this Section 2.03 pursuant to Section 3.11(a)(viii).

                  With respect to the representations and warranties made by the
Seller in the Mortgage Loan Purchase Agreement, the Trustee shall not be charged
with knowledge of any breach of any such representation or warranty by the
Seller unless a Responsible Officer of the Trustee at the Corporate Trust Office
obtains actual knowledge of such breach or the Trustee receives written notice
of such breach from the Depositor, either Servicer, the Guarantor, the
Certificate Insurer or the Certificateholders.

                                      -79-
<PAGE>

                  (b) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the date which is two years after the Startup Day for REMIC I.

                  As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Seller delivering to the Trustee, for such Qualified
Substitute 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, as are required by Section 2.01, together with
an Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Trustee shall acknowledge receipt for such Qualified Substitute Mortgage Loan or
Loans and, within ten Business Days thereafter, shall review such documents as
specified in Section 2.02 and deliver to the Depositor, the related Servicer,
the Guarantor and the Certificate Insurer, with respect to such Qualified
Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit C-1, with any applicable exceptions noted thereon.
Within one year of the date of substitution, the Trustee shall deliver to the
Depositor, the related Servicer, the Guarantor and the Certificate Insurer a
certification substantially in the form of Exhibit C-2 hereto with respect to
such Qualified Substitute Mortgage Loan or Loans, with any applicable exceptions
noted thereon. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution are not part of REMIC I-A, REMIC
I-B, REMIC I-C and will be retained by the Seller. For the month of
substitution, distributions to Certificateholders will reflect the Monthly
Payment due on such Deleted Mortgage Loan on or before the Due Date in the month
of substitution, and the Seller shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted Mortgage Loan. The
Depositor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be
subject in all respects to the terms of this Agreement and the Mortgage Loan
Purchase Agreement, including, all applicable representations and warranties
thereof included in the Mortgage Loan Purchase Agreement.

                  For any month in which the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
related Servicer will determine the amount (the "Substitution Shortfall
Amount"), if any, by which the aggregate Purchase Price of all such Deleted
Mortgage Loans exceeds the aggregate of, as to each such Qualified Substitute
Mortgage Loan, the Stated Principal Balance thereof as of the date of
substitution, together with one month's interest on such Stated Principal
Balance at the applicable Net Mortgage Rate, plus all outstanding P&I Advances
and Servicing Advances (including Nonrecoverable P&I Advances and Nonrecoverable
Servicing Advances) related thereto. On the date of such substitution, the
Seller will deliver or cause to be delivered to the related Servicer for deposit
in the related Collection Account an amount equal to the Substitution Shortfall
Amount, if any, and the Trustee, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans and certification by the related Servicer of
such deposit, shall release to the Seller the related Mortgage File or

                                      -80-
<PAGE>

Files and the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, the Seller shall deliver to it and as
shall be necessary to vest therein any Deleted Mortgage Loan released pursuant
hereto.

                  In addition, the Seller shall obtain at its own expense and
deliver to the Trustee, the Guarantor and the Certificate Insurer an Opinion of
Counsel to the effect that such substitution will not cause (a) any federal tax
to be imposed on any Trust REMIC, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code, or
(b) any Trust REMIC to fail to qualify as a REMIC at any time that any
Certificate is outstanding.

                  (c) Upon discovery by the Depositor, the Seller, the Servicer,
the Trustee, the Guarantor or the Certificate Insurer 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 Seller shall repurchase or, subject to the limitations set forth
in Section 2.03(b), substitute one or more Qualified Substitute Mortgage Loans
for the affected Mortgage Loan within 90 days of the earlier of discovery or
receipt of such notice with respect to such affected Mortgage Loan. Any such
repurchase or substitution shall be made in the same manner as set forth in
Section 2.03(a). The Trustee shall reconvey to the Seller 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.

                  SECTION 2.04. Reserved

                  SECTION 2.05. Representations, Warranties and Covenants of the
                                Servicers.

                  Each Servicer hereby represents, warrants and covenants as to
itself to the Trustee, for the benefit of the Certificateholders, and to the
Depositor, the Certificate Insurer and the Guarantor that as of the Closing Date
or as of such date specifically provided herein:

                  (i) It is either (a) in the case of GMAC, a corporation duly
         organized and validly existing under the laws of the State of Delaware
         or (b) in the case of Countrywide, a limited partnership duly organized
         and validly existing under the laws of the State of Texas, and is duly
         authorized and qualified to transact any and all business contemplated
         by this Agreement to be conducted by such Servicer in any state in
         which a Mortgaged Property is located or is otherwise not required
         under applicable law to effect such qualification and, in any event, is
         in compliance with the doing business laws of any such State, to the
         extent necessary to ensure its ability to enforce each Mortgage Loan
         and to service the Mortgage Loans in accordance with the terms of this
         Agreement;

                  (ii) Such Servicer has the full power and authority to conduct
         its business as presently conducted by it and to execute, deliver and
         perform, and to enter into and consummate, all transactions
         contemplated by this Agreement. Such Servicer has duly authorized the
         execution,

                                      -81-
<PAGE>

         delivery and performance of this Agreement, has duly executed and
         delivered this Agreement, and this Agreement, assuming due
         authorization, execution and delivery by the Depositor and the Trustee,
         constitutes a legal, valid and binding obligation of such Servicer,
         enforceable against it in accordance with its terms except as the
         enforceability thereof may be limited by bankruptcy, insolvency,
         reorganization or similar laws affecting the enforcement of creditors'
         rights generally and by general principles of equity;

                  (iii) The execution and delivery of this Agreement by such
         Servicer, the servicing of the Mortgage Loans by such Servicer
         hereunder, the consummation by such Servicer of any other of the
         transactions herein contemplated, and the fulfillment of or compliance
         with the terms hereof are in the ordinary course of business of such
         Servicer and will not (A) result in a breach of any term or provision
         of the organizational documents of such Servicer or (B) conflict with,
         result in a breach, violation or acceleration of, or result in a
         default under, the terms of any other material agreement or instrument
         to which such Servicer is a party or by which it may be bound, or any
         statute, order or regulation applicable to such Servicer of any court,
         regulatory body, administrative agency or governmental body having
         jurisdiction over such Servicer; and such Servicer is not a party to,
         bound by, or in breach or violation of any indenture or other agreement
         or instrument, or subject to or in violation of any statute, order or
         regulation of any court, regulatory body, administrative agency or
         governmental body having jurisdiction over it, which materially and
         adversely affects or, to such Servicer's knowledge, would in the future
         materially and adversely affect, (x) the ability of such Servicer to
         perform its obligations under this Agreement or (y) the business,
         operations, financial condition, properties or assets of such Servicer
         taken as a whole;

                  (iv) Such Servicer is a HUD approved servicer or an approved
         seller/servicer for Fannie Mae or Freddie Mac;

                  (v) Such Servicer does not believe, nor does it have any
         reason or cause to believe, that it cannot perform each and every
         covenant made by it and contained in this Agreement;

                  (vi) [Reserved];

                  (vii) No litigation is pending against such Servicer that
         would materially and adversely affect the execution, delivery or
         enforceability of this Agreement or the ability of such Servicer to
         service the Mortgage Loans or to perform any of its other obligations
         hereunder in accordance with the terms hereof;

                  (viii) There are no actions or proceedings against, or
         investigations known to it of, such Servicer before any court,
         administrative or other tribunal (A) that might prohibit its entering
         into this Agreement, (B) seeking to prevent the consummation of the
         transactions contemplated by this Agreement or (C) that might prohibit
         or materially and adversely affect the performance by such Servicer of
         its obligations under, or validity or enforceability of, this
         Agreement;

                  (ix) No consent, approval, authorization or order of any court
         or governmental agency

                                      -82-
<PAGE>

         or body is required for the execution, delivery and performance by such
         Servicer of, or compliance by such Servicer with, this Agreement or the
         consummation by it of the transactions contemplated by this Agreement,
         except for such consents, approvals, authorizations or orders, if any,
         that have been obtained prior to the Closing Date;

                  (x) Such Servicer will not waive any Prepayment Charge unless
         it is waived in accordance with the standard set forth in Section 3.01;
         and

                  (xi) Each Servicer has fully furnished and will continue to
         fully furnish, in accordance with the Fair Credit Reporting Act and its
         implementing regulations, accurate and complete information (e.g.,
         favorable and unfavorable) on its borrower credit files to Equifax,
         Experian and Trans Union Credit Information Company or their successors
         on a monthly basis.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee and shall inure to the benefit of the
Trustee, the Depositor, the Certificateholders, the Guarantor and the
Certificate Insurer. Upon discovery by any of the Depositor, either Servicer,
the Trustee, the Guarantor or the Certificate Insurer of a breach of any of the
foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan or the interests therein of the
Certificateholders or the Certificate Insurer, the party discovering such breach
shall give prompt written notice (but in no event later than two Business Days
following such discovery) to the Trustee, the Guarantor and the Certificate
Insurer. Subject to Section 7.01, unless such breach shall not be susceptible of
cure within 90 days, the obligation of the related Servicer set forth in this
Section 2.05 to cure breaches shall constitute the sole remedy against such
Servicer available to the Certificateholders, the Depositor, the Guarantor and
the Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.05.
Notwithstanding the foregoing, within 90 days of the earlier of discovery by
either Servicer or receipt of notice by either Servicer of the breach of the
representation of a Servicer set forth in Section 2.05(x) above which materially
and adversely affects the interests of the Holders of the Class P Certificates
in any Prepayment Charge, the related Servicer shall remedy such breach as
follows: the related Servicer must pay the amount of the scheduled Prepayment
Charge, for the benefit of the Holders of the Class P Certificates, by
depositing such amount into the related Collection Account, net of any amount
previously collected by such Servicer or paid by such Servicer, for the benefit
of the Holders of the Class P Certificates, in respect of such Prepayment
Charge.

                  SECTION 2.06. Issuance of the REMIC I-A Regular Interests and
                                the Class I Certificates; Issuance of the REMIC
                                I-B Regular Interests and the Class R-II
                                Certificates; Issuance of the REMIC I-C Regular
                                Interests and the Class R-III Certificates.

                  (a) The Trustee acknowledges the assignment to it of the Group
I Mortgage Loans and the delivery to it of the Mortgage Files, subject to the
provisions of Section 2.01 and Section 2.02, together with the assignment to it
of all other assets included in REMIC I-A, the receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee,

                                      -83-
<PAGE>

pursuant to the written request of the Depositor executed by an officer of the
Depositor, has executed, authenticated and delivered to or upon the order of the
Depositor, the Class R-I Certificates in authorized denominations. The interests
evidenced by the Class R-I Certificates, together with the REMIC I-A Regular
Interests, constitute the entire beneficial ownership interest in REMIC I-A. The
rights of the Class R-I Certificates and REMIC II (as holder of the REMIC I-A
Regular Interest) to receive distributions from the proceeds of REMIC I-A in
respect of the Class I Certificates and the REMIC I-A Regular Interests, and all
ownership interests evidenced or constituted by the Class R-I Certificates and
the REMIC I-A Regular Interests, shall be as set forth in this Agreement.

                  (b) The Trustee acknowledges the assignment to it of the Group
II Mortgage Loans and the delivery to it of the Mortgage Files, subject to the
provisions of Section 2.01 and Section 2.02, together with the assignment to it
of all other assets included in REMIC I-B, the receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Depositor executed
by an officer of the Depositor, has executed, authenticated and delivered to or
upon the order of the Depositor, the Class R-II Certificates in authorized
denominations. The interests evidenced by the Class R-II Certificates Interest,
together with the REMIC I-B Regular Interests, constitute the entire beneficial
ownership interest in REMIC I-B. The rights of the R-II Certificates and REMIC
II (as holder of the REMIC I-B Regular Interest) to receive distributions from
the proceeds of REMIC I-B in respect of the Class R-II Certificates and the
REMIC I-B Regular Interests, and all ownership interests evidenced or
constituted by the Class R-II Certificates and the REMIC I-B Regular Interests,
shall be as set forth in this Agreement.

                  (c) The Trustee acknowledges the assignment to it of the Group
II IMortgage Loans and the delivery to it of the Mortgage Files, subject to the
provisions of Section 2.01 and Section 2.02, together with the assignment to it
of all other assets included in REMIC I-C, the receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Depositor executed
by an officer of the Depositor, has executed, authenticated and delivered to or
upon the order of the Depositor, the Class R-III Certificates in authorized
denominations. The interests evidenced by the Class R-III Certificates, together
with the REMIC I-C Regular Interests, constitute the entire beneficial ownership
interest in REMIC I-C. The rights of the Class R-III Certificates and REMIC II
(as holder of the REMIC I-C Regular Interest) to receive distributions from the
proceeds of REMIC I-C in respect of the Class R-III Certificates and the REMIC
I-C Regular Interests, and all ownership interests evidenced or constituted by
the Class R-III Certificates and the REMIC I-C Regular Interests, shall be as
set forth in this Agreement.

                  SECTION 2.07. Conveyance of the REMIC I-A Regular Interests,
                                REMIC I-B Regular Interests and REMIC I-C
                                Regular Interests; Acceptance of REMIC II by the
                                Trustee.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I-A Regular Interests, the REMIC I-B Regular Interests and the
REMIC I-C Regular Interests for the benefit of the Class R-II Interest and REMIC
II (as holder of the REMIC I-A

                                      -84-
<PAGE>

Regular Interests, the REMIC I-B Regular Interests and the REMIC I-C Regular
Interests). The Trustee acknowledges receipt of the REMIC I-A Regular Interests,
the REMIC I-B Regular Interests and the REMIC I-C Regular Interests and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of all present and future Class R-II Interest and REMIC II (as holder of the
REMIC I-A Regular Interests, the REMIC I-B Regular Interests and the REMIC I-C
Regular Interests). The rights of the Class R-II Interest and REMIC II (as
holder of the REMIC I-A Regular Interests, the REMIC I-B Regular Interests and
the REMIC I-C Regular Interests) to receive distributions from the proceeds of
REMIC II in respect of the Class R-II Interest and REMIC II Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-II Interest and the REMIC II Regular Interests, shall be as set forth in this
Agreement.

                  SECTION 2.08. Conveyance of the REMIC II Regular Interests;
                                Acceptance of REMIC III by the Trustee.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the Class R-X
Certificateholders and REMIC III (as holder of the REMIC II Regular Interests).
The Trustee acknowledges receipt of the REMIC II Regular Interests and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of all present and future Class R-X Certificateholders and REMIC III (as holder
of the REMIC II Regular Interests). The rights of the Class R-X
Certificateholders and REMIC III (as holder of the REMIC II Regular Interests)
to receive distributions from the proceeds of REMIC III in respect of the Class
R-X Certificates and REMIC III Certificates, respectively, and all ownership
interests evidenced or constituted by the Class R-X Certificates and the REMIC
III Certificates, shall be as set forth in this Agreement.

                  SECTION 2.09. Issuance of Residual Certificates.

                  The Trustee acknowledges the assignment to it of the REMIC
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the Residual Certificates in authorized denominations.

                                      -85-
<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

                  SECTION 3.01. Servicer to Act as Servicer.

                  (a) Unless otherwise specified, all references to actions to
         be taken or previously taken by "the Servicer" under this Article III
         or any other provision of this Agreement with respect to a Mortgage
         Loan or Mortgage Loans or with respect to an REO Property or REO
         Properties shall be to actions to be taken or previously taken by each
         Servicer with respect to a Mortgage Loan or Mortgage Loans serviced
         thereby or with respect to an REO Property or REO Properties
         administered thereby. Furthermore, unless otherwise specified, all
         references to actions to be taken or previously taken by "the Servicer"
         under this Article III or any other provision of this Agreement with
         respect to "the Collection Account," "the Servicing Account" or "the
         REO Account" shall be to actions to be taken or previously taken by
         each Servicer with respect to the Collection Account, the Servicing
         Account or the REO Account to be established and maintained thereby.
         Consistent with the foregoing, but only insofar as the context so
         permits, this Article III is to be read with respect to each Servicer
         as if such Servicer alone was servicing and administering its
         respective Mortgage Loans hereunder.

                  (b) The Servicer shall service and administer the Mortgage
         Loans on behalf of the Trust Fund and in the best interests of and for
         the benefit of the Certificateholders and the Certificate Insurer (as
         determined by the Servicer in its reasonable judgment) in accordance
         with the terms of this Agreement and the respective Mortgage Loans and,
         to the extent consistent with such terms, in the same manner in which
         it services and administers similar mortgage loans for its own
         portfolio, giving due consideration to customary and usual standards of
         practice of mortgage lenders and loan servicers administering similar
         mortgage loans but without regard to:

                  (i) any relationship that the Servicer, any Sub-Servicer or
         any Affiliate of the Servicer or any Sub-Servicer may have with the
         related Mortgagor;

                  (ii) the ownership or non-ownership of any Certificate by the
         Servicer or any Affiliate of the Servicer;

                  (iii) the Servicer's obligation to make P&I Advances or
         Servicing Advances; or

                  (iv) the Servicer's or any Sub-Servicer's right to receive
         compensation for its services hereunder or with respect to any
         particular transaction.

                  To the extent consistent with the foregoing, the Servicer (a)
shall seek to maximize the timely and complete recovery of principal and
interest on the Mortgage Notes and (b) shall waive (or permit a Sub-Servicer to
waive) a Prepayment Charge only under the following circumstances: (i) such
waiver is standard and customary in servicing similar Mortgage Loans, (ii) such
waiver relates to a default

                                      -86-
<PAGE>

or a reasonably foreseeable default and would, in the reasonable judgment of the
Servicer, maximize recovery of total proceeds taking into account the value of
such Prepayment Charge and the related Mortgage Loan, (iii) the collection of
such Prepayment Charge would be in violation of applicable laws or (iv) the
Servicer has not been provided with sufficient information to enable it to
collect the Prepayment Charge. If a Prepayment Charge is waived as permitted by
meeting the standard described in clause (iii) or (iv) above, then the Servicer
shall enforce the Trustee's rights under the Mortgage Loan Purchase Agreement
including the obligation of the Seller to pay the amount of such waived
Prepayment Charge to the Servicer for deposit in the Collection Account for the
benefit of the Holders of the Class P Certificates.

                  Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, the Servicer
shall have full power and authority, acting alone or through Sub-Servicers as
provided in Section 3.02, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer in its
own name or in the name of a Sub-Servicer is hereby authorized and empowered by
the Trustee when the Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver,
on behalf of the Trust Fund, the Certificateholders and the Trustee or any of
them, and upon written notice to the Trustee, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans and the
Mortgaged Properties and to institute foreclosure proceedings or obtain a
deed-in-lieu of foreclosure so as to convert the ownership of such properties,
and to hold or cause to be held title to such properties, on behalf of the
Trustee and Certificateholders, and to market, sell and transfer title of REO
Properties held in the name of the Trust Fund to third party purchasers upon
terms and conditions deemed reasonable by the Servicer, to bring or respond to
civil actions or complaints (in its own name or that of the Trust Fund and to
execute any other document necessary or appropriate to enable the Servicer to
carry out its duties. The Servicer shall service and administer the Mortgage
Loans in accordance with applicable state and federal law and shall provide to
the Mortgagors any reports required to be provided to them thereby. The Servicer
shall also comply in the performance of this Agreement with all reasonable rules
and requirements of each insurer under any standard hazard insurance policy.
Subject to Section 3.17, the Trustee shall execute, at the written request of
the Servicer, and furnish to the Servicer and any Sub-Servicer any special or
limited powers of attorney and other documents necessary or appropriate to
enable the Servicer or any Sub-Servicer to carry out their servicing and
administrative duties hereunder and the Trustee shall not be liable for the
actions of the Servicer or any Sub-Servicers under such powers of attorney.

                  Subject to Section 3.09 hereof, in accordance with the
standards of the preceding paragraph, the Servicer shall advance or cause to be
advanced funds as necessary for the purpose of effecting the timely payment of
taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in Section
3.11. Any cost incurred by the Servicer or by Sub-Servicers in effecting the
timely payment of taxes and assessments on a Mortgaged Property shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.

                                      -87-
<PAGE>

                  Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.03) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for (A) a reduction of
interest payments resulting from the application of the Relief Act or any
similar state statutes or (B) reductions resulting from actual payments of
principal) or change the final maturity date on such Mortgage Loan (unless, as
provided in Section 3.07, the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Servicer, reasonably
foreseeable) or (ii) permit any modification, waiver or amendment of any term of
any Mortgage Loan that would both (A) effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the Code (or Treasury regulations
promulgated thereunder) and (B) cause any Trust REMIC to fail to qualify as a
REMIC under the Code or the imposition of any tax on "prohibited transactions"
or "contributions after the startup date" under the REMIC Provisions.

                  The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement.

                  SECTION 3.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers.

                  (a) The Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that (i) such agreements would not result in a withdrawal or
a downgrading by any Rating Agency of the rating on any Class of Certificates
(without regard to the Policy) as evidenced by a letter to that effect delivered
to the Depositor, the Trustee, each Servicer, the Certificate Insurer and the
Guarantor; and (ii) the Controlling Person (as provided in Section 1.03) shall
have consented to such Sub-Servicing Agreements (which consent shall not be
unreasonably withheld) with Sub-Servicers, for the servicing and administration
of the Mortgage Loans. The Trustee is hereby authorized to acknowledge, at the
request of the Servicer, any Sub-Servicing Agreement that, based on an Officers'
Certificate of the Servicer delivered to the Trustee (upon which the Trustee can
conclusively rely), meets the requirements applicable to Sub-Servicing
Agreements set forth in this Agreement and that is otherwise permitted under
this Agreement.

                  Each Sub-Servicer shall be (i) authorized to transact business
in the state or states where the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Servicer will
examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub- Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Servicer and the Sub-Servicers may
enter into and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Agreement, and that no such amendment or different form shall
be made or entered into which could be reasonably expected to be materially

                                      -88-
<PAGE>

adverse to the interests of the Certificateholders or the Certificate Insurer
without the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights or the Certificate Insurer; provided, further, that the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights or the Certificate Insurer shall not be required (i) to cure any
ambiguity or defect in a Sub-Servicing Agreement, (ii) to correct, modify or
supplement any provisions of a Sub-Servicing Agreement, or (iii) to make any
other provisions with respect to matters or questions arising under a
Sub-Servicing Agreement, which, in each case, shall not be inconsistent with the
provisions of this Agreement. Any variation without the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights or the Certificate
Insurer from the provisions set forth in Section 3.08 relating to insurance or
priority requirements of Sub-Servicing Accounts, or credits and charges to the
Sub-Servicing Accounts or the timing and amount of remittances by the
Sub-Servicers to the Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee, the Certificate Insurer and the Guarantor copies of all Sub-Servicing
Agreements, and any amendments or modifications thereof, promptly upon the
Servicer's execution and delivery of such instruments.

                  (b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee, the Certificateholders and the
Certificate Insurer, shall enforce the obligations of each Sub- Servicer under
the related Sub-Servicing Agreement, including, without limitation, any
obligation of a Sub- Servicer to make advances in respect of delinquent payments
as required by a Sub-Servicing Agreement. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Sub-Servicing
Agreements, and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Servicer, in its good
faith business judgment, would require were it the owner of the related Mortgage
Loans. The Servicer shall pay the costs of enforcing the obligations of a
Sub-Servicer at its own expense, and shall be reimbursed therefor only (i) from
a general recovery resulting from such enforcement, to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Mortgage Loans,
or (ii) from a specific recovery of costs, expenses or attorneys' fees against
the party against whom such enforcement is directed.

                  SECTION 3.03. Successor Sub-Servicers.

                  The Servicer, with the consent of the Controlling Person (as
provided in Section 1.04), shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such Sub-
Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub- Servicer shall be assumed simultaneously by
the Servicer without any act or deed on the part of such Sub- Servicer or the
Servicer, and the Servicer either shall service directly the related Mortgage
Loans or shall enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02.

                  Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Trustee (if the Trustee is
acting as a Servicer) without fee, in accordance with the terms of this
Agreement, in the event that the Servicer (or the Trustee, if it is then acting
as a Servicer) shall, for any reason, no longer be the Servicer (including
termination due to a Servicer Event of Default).

                                      -89-
<PAGE>

                  SECTION 3.04. Liability of the Servicer.

                  Notwithstanding any Sub-Servicing Agreement or the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Certificateholders and the Certificate Insurer for the servicing
and administering of the Mortgage Loans in accordance with the provisions of
Section 3.01 without diminution of such obligation or liability by virtue of
such Sub-Servicing Agreements or arrangements or by virtue of indemnification
from the Sub-Servicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Mortgage Loans. The Servicer shall be entitled to enter into any agreement with
a Sub- Servicer for indemnification of the Servicer by such Sub-Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.

                  SECTION 3.05. No Contractual Relationship Between
                                Sub-Servicers, the Trustee, the Certificate
                                Insurer, the Guarantor or the
                                Certificateholders.

                  Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Servicer alone, and the Trustee and the Certificateholders, the Certificate
Insurer and the Guarantor shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Sub-Servicer except as set forth in Section 3.06. The Servicer shall be solely
liable for all fees owed by it to any Sub-Servicer, irrespective of whether the
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.

                  SECTION 3.06. Assumption or Termination of Sub-Servicing
                                Agreements by the Trustee.

                  In the event the Servicer shall for any reason no longer be
the Servicer (including by reason of the occurrence of a Servicer Event of
Default), the Trustee, its designee or other successor Servicer shall thereupon
assume all of the rights and obligations of the Servicer under each
Sub-Servicing Agreement that the Servicer may have entered into, unless the
Trustee, such designee or other successor Servicer elects to terminate any
Sub-Servicing Agreement in accordance with its terms as provided in Section
3.03. Upon such assumption, the Trustee, its designee or the successor Servicer
for the Trustee appointed pursuant to Section 7.02 shall be deemed, subject to
Section 3.03, to have assumed all of the Servicer's interest therein and to have
replaced the Servicer as a party to each Sub-Servicing Agreement to the same
extent as if each Sub-Servicing Agreement had been assigned to the assuming
party, except that (i) the Servicer shall not thereby be relieved of any
liability or obligations under any Sub-Servicing Agreement that arose before it
ceased to be the Servicer and (ii) none of the Trustee, its designee or any
successor Servicer shall be deemed to have assumed any liability or obligation
of the Servicer that arose before it ceased to be the Servicer.

                  The Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage Loans then being

                                      -90-
<PAGE>

serviced and an accounting of amounts collected and held by or on behalf of it,
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Sub-Servicing Agreements to the assuming party.

                  The Servicing Fee payable to the Trustee or other successor
Servicer shall be payable from payments received on the Mortgage Loans in the
amount and in the manner set forth in this Agreement.

                  SECTION 3.07. Collection of Certain Mortgage Loan Payments.

                  The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates for
the Monthly Payments due on a Mortgage Note for a period of not greater than 180
days; provided, however, that any extension pursuant to clause (ii) above shall
not affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.03
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan (such payment, a "Short Pay-off"), or consent
to the postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor. If the Class C-I Certificates are no longer
outstanding, GMAC shall not take any action pursuant to the preceding sentence
with respect to a Group I Mortgage Loan without obtaining the prior written
consent of the Guarantor to such modification. GMAC shall submit to the
Guarantor with its request for consent, such information related to the proposed
modification as can be expected to be needed by the Guarantor to evaluate GMAC's
request, including the terms of the proposed modification and the reasons for
GMAC's decision that such Group I Mortgage Loan should be modified. The
Guarantor shall be deemed to have consented to GMAC's request in the event that
the Guarantor does not provide GMAC with either its written consent to such
requested modification or written notice of its objection to such modification
within five Business Days of its receipt of GMAC's request. Requests for
modification shall be sent to the Guarantor at: Fannie Mae, Special Products
Group, Mail Stop 5H-5W-03, 13150 Worldgate Drive, Herndon, Virginia 20170,
Attention: Director. With respect to each Group I Mortgage Loan which is
modified with the consent of the Guarantor, GMAC shall give written notice to
the Certificate Insurer to the address set forth in Section 11.05 and to the
Guarantor to the following address: Fannie Mae, Special Products Group, Mail
Stop 5H- 5W-03, 13150 Worldgate Drive, Herndon, Virginia 20170, Attention:
Director. Such notice shall be delivered within thirty Business Days following
such modification and shall include information with respect to the
modification, including, without limitation, the interest rate, the principal
balance and the maturity date

                                      -91-
<PAGE>

of such Group I Mortgage Loan before and after such modification.

                  SECTION 3.08. Sub-Servicing Accounts.

                  In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required
to establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.

                  SECTION 3.09. Collection of Taxes, Assessments and Similar
                                Items; Servicing Accounts.

                  The Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts"),
into which all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments") shall
be deposited and retained. Servicing Accounts shall be Eligible Accounts. The
Servicer shall deposit in the Servicing Account all Escrow Payments collected on
account of the Mortgage Loans within two Business Days of the Servicer's receipt
thereof, for the purpose of effecting the payment of any such items as required
under the terms of this Agreement. Withdrawals of amounts from a Servicing
Account may be made only to (i) effect payment of taxes, assessments, hazard
insurance premiums, and comparable items in a manner and at a time that assures
that the lien priority of the Mortgage is not jeopardized (or, with respect to
the payment of taxes, in a manner and at a time that avoids the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien); (ii) reimburse the Servicer (or a Sub-Servicer to the extent provided in
the related Sub-Servicing Agreement) out of related collections for any advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.14 (with respect to hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if required and as
described below, to Mortgagors on balances in the Servicing Account; or (v)
clear and terminate the Servicing Account at the termination of the Servicer's
obligations and responsibilities in respect of the Mortgage Loans under this
Agreement in accordance with Article IX. As part of its servicing duties, the
Servicer or Sub-Servicers shall pay to the Mortgagors interest on funds in the
Servicing Accounts, to the extent required by law and, to the extent that
interest earned on funds in the Servicing Accounts is insufficient, to pay such
interest from its or their own funds, without any reimbursement therefor.

                                      -92-
<PAGE>

                  SECTION 3.10. Collection Account and Distribution Account.

                  (a) On behalf of the Trust Fund, the Servicer shall establish
         and maintain, or cause to be established and maintained, one or more
         accounts (such account or accounts, the "Collection Account"), held in
         trust for the benefit of the Trustee, the Certificateholders and the
         Certificate Insurer. On behalf of the Trust Fund, the Servicer shall
         deposit or cause to be deposited in the Collection Account, in no event
         more than two Business Days after the Servicer's receipt thereof, as
         and when received or as otherwise required hereunder, the following
         payments and collections received or made by it subsequent to the Cut-
         off Date (other than in respect of principal or interest on the related
         Mortgage Loans due on or before the Cut-off Date), or payments (other
         than Principal Prepayments) received by it on or prior to the Cut-off
         Date but allocable to a Due Period subsequent thereto:

                  (i) all payments on account of principal, including Principal
         Prepayments, on the Mortgage Loans;

                  (ii) all payments on account of interest (net of the related
         Servicing Fee) on each Mortgage Loan;

                  (iii) all Insurance Proceeds, Subsequent Recoveries and
         Liquidation Proceeds (other than proceeds collected in respect of any
         particular REO Property and amounts paid in connection with a purchase
         of Mortgage Loans and REO Properties pursuant to Section 9.01);

                  (iv) any amounts required to be deposited pursuant to Section
         3.12 in connection with any losses realized on Permitted Investments
         with respect to funds held in the Collection Account;

                  (v) any amounts required to be deposited by the Servicer
         pursuant to the second paragraph of Section 3.14(a) in respect of any
         blanket policy deductibles;

                  (vi) all proceeds of any Mortgage Loan repurchased or
         purchased in accordance with Section 2.03, Section 3.16 or Section
         9.01;

                  (vii) all amounts required to be deposited in connection with
         shortfalls in principal amount of Qualified Substitute Mortgage Loans
         pursuant to Section 2.03; and

                  (viii) all Prepayment Charges collected by the Servicer in
         connection with the Principal Prepayment of any of the Mortgage Loans.

                  The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, modification or assumption fees, or insufficient funds charges need not
be deposited by the Servicer in the Collection Account and may be retained by
the Servicer as additional compensation. In the event the Servicer shall deposit
in the Collection Account any amount not required to be deposited

                                      -93-
<PAGE>

therein, it may at any time withdraw such amount from the Collection Account,
any provision herein to the contrary notwithstanding.

                  (b) On behalf of the Trust Fund, the Trustee shall establish
         and maintain one or more accounts (such account or accounts, the
         "Distribution Account"), held in trust for the benefit of the Trustee,
         the Trust Fund, the Certificateholders and the Certificate Insurer. On
         behalf of the Trust Fund, the Servicer shall deliver to the Trustee in
         immediately available funds for deposit in the Distribution Account by
         3:00 p.m. New York time on the Servicer Remittance Date, that portion
         of the Available Distribution Amount (calculated without regard to the
         references in clause (2) of the definition thereof to amounts that may
         be withdrawn from the Distribution Account) for the related
         Distribution Date then on deposit in the Collection Account and the
         amount of all Prepayment Charges collected by the Servicer in
         connection with the Principal Prepayment of any of the Mortgage Loans
         then on deposit in the Collection Account and the amount of any funds
         reimbursable to an Advancing Person pursuant to Section 3.26.

                  (c) Funds in the Collection Account and the Distribution
         Account may be invested in Permitted Investments in accordance with the
         provisions set forth in Section 3.12. The Servicer shall give notice to
         the Trustee, the Guarantor and the Certificate Insurer of the location
         of the Collection Account maintained by it when established and prior
         to any change thereof. The Trustee shall give notice to the Servicer,
         the Depositor, the Guarantor and the Certificate Insurer of the
         location of the Distribution Account when established and prior to any
         change thereof.

                  (d) Funds held in the Collection Account at any time may be
         delivered by the Servicer to the Trustee for deposit in an account
         (which may be the Distribution Account and must satisfy the standards
         for the Distribution Account as set forth in the definition thereof)
         and for all purposes of this Agreement shall be deemed to be a part of
         the Collection Account; provided, however, that the Trustee shall have
         the sole authority to withdraw any funds held pursuant to this
         subsection (d). In the event the Servicer shall deliver to the Trustee
         for deposit in the Distribution Account any amount not required to be
         deposited therein, it may at any time request in writing that the
         Trustee withdraw such amount from the Distribution Account and remit to
         it any such amount, any provision herein to the contrary
         notwithstanding. In addition, the Servicer shall deliver to the Trustee
         from time to time for deposit, and the Trustee shall so deposit, in the
         Distribution Account:

                  (i) any P&I Advances, as required pursuant to Section 4.03;

                  (ii) any amounts required to be deposited pursuant to Section
         3.23(d) or (f) in connection with any REO Property;

                  (iii) any amounts to be paid in connection with a purchase of
         Mortgage Loans and REO Properties pursuant to Section 9.01; and

                  (iv) any amounts required to be deposited pursuant to Section
         3.24 in connection with any Prepayment Interest Shortfall.

                                      -94-
<PAGE>

                  (e) [Reserved].

                  (f) The Servicer shall deposit in the Collection Account or
Distribution Account, as the case may be, any amounts required to be deposited
pursuant to Section 3.12(b) in connection with losses realized on Permitted
Investments with respect to funds held in the Collection Account or Distribution
Account, respectively.

                  (g) On the Closing Date, the Depositor shall deposit into the
Distribution Account an amount equal to $3,181,952.13. The Trustee shall
allocate $2,272,852.13 to the Group I Principal Remittance Amount, $11,237.42 to
the Group I Interest Remittance Amount, $543,850.00 to the Group III-A Principal
Remittance Amount, $2,850.38 to the Group III-A Interest Remittance Amount,
$365,250.00 to the Group III-B Principal Remittance Amount and $2,224.06 to the
Group III-B Interest Remittance Amount, and shall distribute such amount to the
Certificates on the first Distribution Date pursuant to Section 4.01(a).

                  SECTION 3.11. Withdrawals from the Collection Account and
                                Distribution Account.

                  (a) The Servicer shall, from time to time, make withdrawals
         from the Collection Account for any of the following purposes or as
         described in Section 4.03:

                  (i) to remit to the Trustee for deposit in the Distribution
         Account the amounts required to be so remitted pursuant to Section
         3.10(b) or permitted to be so remitted pursuant to the first sentence
         of Section 3.10(d);

                  (ii) subject to Section 3.16(d), to reimburse the Servicer for
         P&I Advances, but only to the extent of amounts received which
         represent Late Collections (net of the related Servicing Fees) of
         Monthly Payments on Mortgage Loans with respect to which such P&I
         Advances were made in accordance with the provisions of Section 4.03;

                  (iii) subject to Section 3.16(d), to pay the Servicer or any
         Sub-Servicer, as applicable, (a) any unpaid Servicing Fees, (b) any
         unreimbursed Servicing Advances with respect to each Mortgage Loan, but
         only to the extent of any Late Collections, Liquidation Proceeds and
         Insurance Proceeds received with respect to such Mortgage Loan and (c)
         any Nonrecoverable Servicing Advances with respect to the final
         liquidation of a Mortgage Loan, but only to the extent that Late
         Collections, Liquidation Proceeds and Insurance Proceeds received with
         respect to such Mortgage Loan are insufficient to reimburse the
         Servicer or any Sub-Servicer for Servicing Advances;

                  (iv) to pay to the Servicer as servicing compensation (in
         addition to the Servicing Fee) on the Servicer Remittance Date any
         interest or investment income earned on funds deposited in the
         Collection Account;

                                      -95-
<PAGE>

                  (v) to pay to the Servicer, the Depositor, the Originator or
         the Seller, as the case may be, with respect to each Mortgage Loan that
         has previously been purchased or replaced pursuant to Section 2.03 or
         Section 3.16(c) all amounts received thereon subsequent to the date of
         purchase or substitution, as the case may be;

                  (vi) to reimburse the Servicer for any P&I Advance previously
         made which the Servicer has determined to be a Nonrecoverable P&I
         Advance in accordance with the provisions of Section 4.03;

                  (vii) to reimburse the Servicer or the Depositor for expenses
         incurred by or reimbursable to the Servicer or the Depositor, as the
         case may be, pursuant to Section 3.02(b) and Section 6.03;

                  (viii) to reimburse the Servicer, the Guarantor (with respect
         to the Group I-A Loans) or Trustee for expenses reasonably incurred in
         connection with any breach or defect giving rise to the purchase
         obligation under Section 2.03 of this Agreement, including any expenses
         arising out of the enforcement of the purchase obligation;

                  (ix) to pay, or to reimburse the Servicer for Servicing
         Advances in respect of, expenses incurred in connection with any
         Mortgage Loan pursuant to Section 3.16(b); and

                  (x) to clear and terminate the Collection Account pursuant to
         Section 9.01.

                  The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (viii) and (ix) above.
The Servicer shall provide written notification to the Trustee, the Guarantor
and the Certificate Insurer, on or prior to the next succeeding Servicer
Remittance Date, upon making any withdrawals from the Collection Account
pursuant to subclauses (vi) and (vii) above; provided that an Officers'
Certificate in the form described under Section 4.03(d) shall suffice for such
written notification to the Trustee in respect of clause (vi) hereof.

                  (b) The Trustee shall, from time to time, make withdrawals
         from the Distribution Account, for any of the following purposes,
         without priority:

                  (i) to make distributions to Certificateholders, the
         Certificate Insurer and the Guarantor in accordance with Section 4.01;

                  (ii) to pay to itself amounts to which it is entitled pursuant
         to Section 8.05 or for Extraordinary Trust Fund Expenses;

                  (iii) to reimburse itself pursuant to Section 7.02;

                                      -96-
<PAGE>

                  (iv) to pay any amounts in respect of taxes pursuant to
         Section 10.01(g)(iii);

                  (v) to pay to an Advancing Person reimbursements for P&I
         Advances and/or Servicing Advances pursuant to Section 3.26; and

                  (vi) to clear and terminate the Distribution Account pursuant
         to Section 9.01.

                  SECTION 3.12. Investment of Funds in the Collection Account
                                and the Distribution Account.

                  (a) The Servicer may direct any depository institution
         maintaining the Collection Account (for purposes of this Section 3.12,
         an "Investment Account") to invest the funds in such Investment Account
         in one or more Permitted Investments bearing interest or sold at a
         discount, and maturing, unless payable on demand, (i) no later than the
         Business Day immediately preceding the date on which such funds are
         required to be withdrawn from such account pursuant to this Agreement,
         if a Person other than the Trustee is the obligor thereon, and (ii) no
         later than the date on which such funds are required to be withdrawn
         from such account pursuant to this Agreement, if the Trustee is the
         obligor thereon. Amounts in the Distribution Account may be held
         uninvested. All such Permitted Investments shall be held to maturity,
         unless payable on demand. Any investment of funds in an Investment
         Account shall be made in the name of the Trustee for the benefit of the
         Certificateholders and the Certificate Insurer. The Trustee shall be
         entitled to sole possession (except with respect to investment
         direction of funds held in the Collection Account and any income and
         gain realized thereon) over each such investment, and any certificate
         or other instrument evidencing any such investment shall be delivered
         directly to the Trustee or its agent, together with any document of
         transfer necessary to transfer title to such investment to the Trustee
         or its nominee. In the event amounts on deposit in an Investment
         Account are at any time invested in a Permitted Investment payable on
         demand, the party with investment discretion over such Investment
         Account shall:

                  (x) consistent with any notice required to be given
         thereunder, demand that payment thereon be made on the last day such
         Permitted Investment may otherwise mature hereunder in an amount equal
         to the lesser of (1) all amounts then payable thereunder and (2) the
         amount required to be withdrawn on such date; and

                  (y) demand payment of all amounts due thereunder promptly upon
         determination by a Responsible Officer of the Trustee that such
         Permitted Investment would not constitute a Permitted Investment in
         respect of funds thereafter on deposit in the Investment Account.

                  (b) All income and gain realized from the investment of funds
         deposited in the Collection Account and any REO Account held by or on
         behalf of the Servicer, shall be for the benefit of the Servicer and
         shall be subject to its withdrawal in accordance with Section 3.11 or
         Section 3.23, as applicable. The Servicer shall deposit in the
         Collection Account or any REO Account, as applicable, the amount of any
         loss of principal incurred in respect of any such Permitted Investment
         made with funds in such accounts immediately upon realization of such
         loss. All income in the nature of interest from the

                                      -97-
<PAGE>

investment of funds in the Distribution Account shall be for the benefit of the
Trustee. The Trustee shall remit from its own funds for deposit into the
Distribution Account the amount of any loss incurred on Permitted Investments in
the Distribution Account, if amounts on deposit in the Distribution Account are
invested in Permitted Investments by the Trustee in the absence of direction
from another party.

                  (c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01 and Section
8.02(v), upon the request of the Holders of Certificates representing more than
50% of the Voting Rights allocated to any Class of Certificates, shall take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings.

                  (d) The Trustee or its Affiliates are permitted to receive
additional compensation that could be deemed to be in the Trustee's economic
self-interest for (i) serving as investment adviser, administrator, shareholder
servicing agent, custodian or sub-custodian with respect to certain of the
Permitted Investments, (ii) using Affiliates to effect transactions in certain
Permitted Investments and (iii) effecting transactions in certain Permitted
Investments. Such compensation shall not be considered an amount that is
reimbursable or payable to the Trustee pursuant to Section 3.11 or 3.12 or
otherwise payable in respect of Extraordinary Trust Fund Expenses.

                  SECTION 3.13. Agreement to Appoint a Special Servicer.

                  (a) The Guarantor (with the consent of the Certificate
         Insurer, which consent shall not be unreasonably withheld) may require
         GMAC to enter into a special subservicing agreement with a servicer
         with expertise in servicing delinquent mortgage loans as designated by
         the Guarantor (the "Special Servicer") on or after the earliest
         Distribution Date with respect to which the aggregate Certificate
         Principal Balance of the Class C-I Certificates has been reduced to
         zero. Such special subservicing agreement shall relate to the servicing
         of only Group I-A Mortgage Loans that (x) have been delinquent in
         payment with respect to three or more Monthly Payments (provided,
         however, that the third such Monthly Payment shall not be deemed to be
         delinquent for purposes of this clause (x) until the close of business
         on the last day of the month in which such Monthly Payment first became
         due) and (y) have been transferred to the Special Servicer in
         accordance with this Section 3.13 and the related special subservicing
         agreement (a "Specially Serviced Mortgage Loan").

                  (b) The special subservicing agreement shall be consistent
         with the provisions of this Agreement, including but not limited to
         this Section 3.13, Section 3.02(a), Section 3.02(b), and Section 3.08,
         except as provided otherwise in this Section 3.13. In addition, the
         special subservicing agreement shall be on terms which shall be
         reasonably acceptable to the Guarantor and GMAC and shall provide, at a
         minimum that:

                  (1) the Special Servicer shall at all times meet the
         eligibility criteria described in Section 3.02(a);

                                      -98-
<PAGE>

                  (2) the Special Servicer shall service only the Specially
         Serviced Mortgage Loans in a manner consistent with the provisions with
         this Agreement except as provided otherwise in the special subservicing
         agreement;

                  (3) the Special Servicer shall use the Fannie Mae foreclosure
         network (and pay the customary fees therefor) for foreclosures and
         bankruptcies relating to Specially Serviced Mortgage Loans;

                  (4) the Special Servicer shall use the Fannie Mae disposition
         service (and pay the customary fees therefor) for the disposition of
         REO Property related to Specially Serviced Mortgage Loans;

                  (5) the Special Servicer shall make Servicing Advances on the
         Specially Serviced Mortgage Loans to the same extent and in the same
         manner as GMAC with respect to the Group I-A Mortgage Loans pursuant to
         this Agreement;

                  (6) the Special Servicer shall be entitled to receive the
         Servicing Fee with respect to all Specially Serviced Mortgage Loans;

                  (7) prior to the transfer of servicing to the Special
         Servicer, GMAC and the Special Servicer shall have provided all notices
         relating to such transfer of servicing as required to be delivered to
         the borrowers by applicable state and federal law;

                  (8) the Special Servicer shall indemnify GMAC and the Trustee
         for any liabilities to them arising from failures of the Special
         Servicer to perform its obligations according to the terms of the
         subservicing agreement;

                  (9) GMAC shall promptly give notice thereof to the Trustee,
         the Certificate Insurer and the Guarantor of the transfer of servicing
         to the Special Servicer, including the loan number together with the
         borrower's name and the unpaid Stated Principal Balance of the
         transferred Mortgage Loan at the time of transfer;

                  (10) each of the respective obligations, duties, and
         liabilities of GMAC and the Special Servicer (or either of them) with
         respect to the servicing of the Specially Serviced Mortgage Loans that
         have arisen prior to the date on which the servicing of such Specially
         Serviced Mortgage Loan was transferred to the Special Servicer (the
         "Effective Date"), or that arise on and after the Effective Date, under
         this Agreement and the subservicing agreement and that remain
         unperformed or unsatisfied shall survive any transfer of servicing;

                  (11) once a Group I-A Mortgage Loan becomes a Specially
         Serviced Mortgage Loan, such Mortgage Loan shall remain a Specially
         Serviced Mortgage Loan, and shall continue to be serviced by the
         Special Servicer, until the earlier of the liquidation or other
         disposition of such

                                      -99-
<PAGE>

         Mortgage Loan or the termination of the subservicing agreement,
         regardless of delinquency status or otherwise;

                  (12) the Guarantor may remove the Special Servicer if the
         Special Servicer at any time fails to meet any of the above criteria or
         otherwise, in the judgment of the Guarantor, fails to perform according
         to the terms of the subservicing agreement and the provisions of this
         Section 3.13; provided that prior to any such removal the Guarantor
         shall designate a successor Special Servicer meeting the requirements
         of this Section 3.13, and no removal of a Special Servicer shall be
         effective until a successor Special Servicer has entered into a special
         subservicing agreement meeting the requirements of this Section 3.13
         and agreed to assume the duties of the Special Servicer or GMAC has
         undertaken such duties; and

                  (13) in connection with any transfer of a Group I-A Mortgage
         Loan to the Special Servicer as a Specially Serviced Mortgage Loan,
         GMAC shall execute any appropriate assignments or other documents
         reasonable and necessary to further the prosecution of the Special
         Servicer obligations under the special subservicing agreement.

                  SECTION 3.14. Maintenance of Hazard Insurance and Errors and
                                Omissions and Fidelity Coverage.

                  (a) Each Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Servicer shall also cause
to be maintained fire insurance with extended coverage on each REO Property in
an amount which is at least equal to the lesser of (i) the maximum insurable
value of the improvements which are a part of such property and (ii) the
outstanding principal balance of the related Mortgage Loan at the time it became
an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related Mortgage and Mortgage Note) shall be deposited in the Collection
Account, subject to withdrawal pursuant to Section 3.11, if received in respect
of a Mortgage Loan, or in the REO Account, subject to withdrawal pursuant to
Section 3.23, if received in respect of an REO Property. Any cost incurred by
the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property

                                     -100-
<PAGE>

or REO Property is at any time in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards and
flood insurance has been made available, the Servicer will cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Mortgage Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).

                  In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.14, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Collection Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee and Certificateholders, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy.

                  (b) Each Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Fannie Mae if it were the purchaser of the Mortgage Loans,
unless the Servicer has obtained a waiver of such requirements from Fannie Mae.
The Servicer shall also maintain a fidelity bond in the form and amount that
would meet the requirements of Fannie Mae, unless the Servicer has obtained a
waiver of such requirements from Fannie Mae. The Servicer shall be deemed to
have complied with this provision if an Affiliate of the Servicer has such
errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to
the Servicer. The Servicer shall provide the Guarantor with any such errors and
omissions policy and fidelity bond and any such errors and omissions policy and
fidelity bond shall by its terms not be cancelable without thirty days prior
written notice to the Trustee. The Servicer shall also cause each Sub-Servicer
to maintain a policy of insurance covering errors and omissions and a fidelity
bond which would meet such requirements.

                  SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
                                Agreements.

                  Each Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due- on-sale" clause, if any, applicable thereto; provided, however,
that the Servicer shall not be required to

                                     -101-
<PAGE>

take such action if in its sole business judgment the Servicer believes it is
not in the best interests of the Trust Fund and shall not exercise any such
rights if prohibited by law from doing so. If the Servicer reasonably believes
it is unable under applicable law to enforce such "due-on-sale" clause, or if
any of the other conditions set forth in the proviso to the preceding sentence
apply, the Servicer will enter into an assumption and modification agreement
from or with the person to whom such property has been conveyed or is proposed
to be conveyed, pursuant to which such person becomes liable under the Mortgage
Note and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. Each Servicer is also authorized to enter into a substitution of
liability agreement with such person, pursuant to which the original Mortgagor
is released from liability and such person is substituted as the Mortgagor and
becomes liable under the Mortgage Note, provided that no such substitution shall
be effective unless such person satisfies the underwriting criteria of the
Originator and has a credit risk rating at least equal to that of the original
Mortgagor. In connection with any assumption or substitution, the Servicer shall
apply the Originator's underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Servicer shall not take or enter into any assumption and modification agreement,
however, unless (to the extent practicable in the circumstances) it shall have
received confirmation, in writing, of the continued effectiveness of any
applicable hazard insurance policy. Any fee collected by the Servicer in respect
of an assumption, modification or substitution of liability agreement shall be
retained by the Servicer as additional servicing compensation. In connection
with any such assumption, no material term of the Mortgage Note (including but
not limited to the related Mortgage Rate and the amount of the Monthly Payment)
may be amended or modified, except as otherwise required pursuant to the terms
thereof. The Servicer shall notify the Trustee, the Certificate Insurer and the
Guarantor that any such substitution, modification or assumption agreement has
been completed by forwarding to the Trustee (with a copy to the Certificate
Insurer and the Guarantor) the executed original of such substitution,
modification or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. If the Class C-I Certificates are no longer
outstanding, GMAC shall not take or enter into any substitution, assumption or
modification agreement with respect to a Group I Mortgage Loan without obtaining
the prior written consent of the Guarantor to such substitution, assumption or
modification agreement. GMAC shall submit to the Guarantor with its request for
consent, such information related to the proposed substitution, assumption or
modification agreement as can be expected to be needed by the Guarantor to
evaluate GMAC's request, including the terms of the proposed substitution,
assumption or modification and the reasons for GMAC's decision that such
substitution, assumption or modification agreement should be taken or entered
into with respect to such Group I Mortgage Loan. The Guarantor shall be deemed
to have consented to GMAC's request in the event that the Guarantor does not
provide GMAC with either its written consent to such requested substitution,
assumption or modification agreement or written notice of its objection to such
substitution, assumption or modification agreement within five Business Days of
its receipt of the GMAC's request. Such requests shall be sent to the Guarantor
at: Fannie Mae, Special Products Group, Mail Stop 5H-5W-03, 13150 Worldgate
Drive, Herndon, Virginia 20170, Attention: Director. With respect to each
substitution, assumption or modification agreement which is entered into with
the consent of the Guarantor, GMAC shall give written notice to the Certificate
Insurer to the addresses set forth in Section 11.05, to the Guarantor to the
following address: Fannie Mae, Special Products Group, Mail Stop 5H-5W-03, 13150
Worldgate Drive, Herndon, Virginia 20170, Attention: Director. Such notice

                                     -102-
<PAGE>

shall be delivered within thirty Business Days following the date of such
substitution, assumption or modification agreement.

                  Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.15, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.

                  SECTION 3.16. Realization Upon Defaulted Mortgage Loans.

                  (a) The Servicer shall exercise its discretion, consistent
with customary servicing procedures and the terms of this Agreement, with
respect to the enforcement and servicing of defaulted Mortgage Loans in such
manner as will maximize the receipt of principal and interest with respect
thereto, including but not limited to the sale of such Mortgage Loan to a third
party, the modification of such Mortgage Loan, or foreclosure upon the related
Mortgaged Property and disposition thereof.

                  In furtherance of the foregoing, the Servicer shall use its
best efforts, consistent with Accepted Servicing Practices, to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. The Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will be recoverable as Servicing Advances by the Servicer as
contemplated in Section 3.11 and Section 3.23. The foregoing is subject to the
provision that, in any case in which Mortgaged Property shall have suffered
damage from an Uninsured Cause, the Servicer shall not be required to expend its
own funds toward the restoration of such property unless it shall determine in
its discretion that such restoration will increase the proceeds of liquidation
of the related Mortgage Loan after reimbursement to itself for such expenses.

                  (b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trust Fund either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Fund or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in- possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Servicer has also previously
determined, based on its reasonable judgment and a report prepared by an
Independent Person who regularly conducts environmental audits using customary
industry standards, that:

                                     -103-
<PAGE>

                  (1) such Mortgaged Property is in compliance with applicable
         environmental laws or, if not, that it would be in the best economic
         interest of the Trust Fund to take such actions as are necessary to
         bring the Mortgaged Property into compliance therewith; and

                  (2) there are no circumstances present at such Mortgaged
         Property relating to the use, management or disposal of any hazardous
         substances, hazardous materials, hazardous wastes, or petroleum-based
         materials for which investigation, testing, monitoring, containment,
         clean-up or remediation could be required under any federal, state or
         local law or regulation, or that if any such materials are present for
         which such action could be required, that it would be in the best
         economic interest of the Trust Fund to take such actions with respect
         to the affected Mortgaged Property.

                  Notwithstanding the foregoing, if such environmental audit
reveals, or if the Servicer has knowledge or notice, that the Mortgaged Property
securing such Mortgage Loan contains such wastes or substances or is within one
mile of the site of such wastes or substances, the Servicer shall not foreclose
or accept a deed in lieu of foreclosure without the prior written consent of the
Guarantor (with respect to the Group I Mortgage Loans) and the Certificate
Insurer.

                  The cost of the environmental audit report contemplated by
this Section 3.16 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders, the Certificate Insurer and the Guarantor to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.

                  If the Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Trust Fund; provided that any amounts disbursed by the Servicer
pursuant to this Section 3.16(b) shall constitute Servicing Advances, subject to
Section 4.03(d). The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.11(a)(iii) and (a)(ix), such right of reimbursement being prior to the rights
of Certificateholders, the Certificate Insurer and the Guarantor to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.

                  (c) Each Servicer may at its option purchase from REMIC I-A,
REMIC I-B or REMIC I-C, as applicable, any Mortgage Loan or related REO Property
that is 90 days or more delinquent, which the Servicer determines in good faith
will otherwise become subject to foreclosure proceedings (evidence of such
determination to be delivered in writing to the Trustee, in form and substance
satisfactory to the Trustee prior to purchase), at a price equal to the Purchase
Price; provided, however, that the Servicer shall purchase any such Mortgage
Loans or related REO Properties on the basis of delinquency, purchasing the most
delinquent Mortgage Loans or related REO Properties first. In the event

                                     -104-
<PAGE>

GMAC fails to purchase from REMIC I-A any such Group I Mortgage Loan or related
REO Property, the Guarantor shall be entitled to purchase such Group I Mortgage
Loan or related REO Property at any time thereafter. The Purchase Price for any
Mortgage Loan or related REO Property purchased hereunder shall be deposited in
the Collection Account, and the Trustee, upon receipt of written certification
from the Servicer of such deposit, shall release or cause to be released to the
Servicer or the Guarantor, as applicable, the related Mortgage File and the
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Servicer or the Guarantor, as applicable,
shall furnish and as shall be necessary to vest in the Servicer or the Guarantor
title to any Mortgage Loan or related REO Property released pursuant hereto.

                  (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer or any Sub-Servicer for any related unreimbursed Servicing Advances and
P&I Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); second, to accrued
and unpaid interest on the Mortgage Loan, to the date of the Final Recovery
Determination, or to the Due Date prior to the Distribution Date on which such
amounts are to be distributed if not in connection with a Final Recovery
Determination; and third, as a recovery of principal of the Mortgage Loan. If
the amount of the recovery so allocated to interest is less than the full amount
of accrued and unpaid interest due on such Mortgage Loan, the amount of such
recovery will be allocated by the Servicer as follows: first, to unpaid
Servicing Fees; and second, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).

                  (e) Furthermore, the Holder of the Class R-X Certificates will
have the option to purchase, at any one time, 1.00% (and in any case, at least 5
Mortgage Loans) of the Mortgage Loans, by aggregate Stated Principal Balance of
the Mortgage Loans as of such date, at a purchase price equal to the greater of
(A) the aggregate Purchase Price of such Mortgage Loans and (B) the aggregate
fair market value of such Mortgage Loans. The Mortgage Loans that may be
purchased by the Holder of the Class R Certificates pursuant to this paragraph
will be selected by the Servicer in its sole discretion. If at any time the
Holder of the Class R-X Certificates exercises such option, it shall immediately
notify or cause to be notified the Trustee by a certification in the form of
Exhibit E (which certification shall include a statement to the effect that all
amounts required to be deposited in the Collection Account pursuant to Section
3.10 have been or will be so deposited) of a Servicing Officer and shall request
delivery to it of the Mortgage File. Upon receipt of such certification and
request, the Trustee shall promptly release the related Mortgage Files to the
Holder of the Class R-X Certificates. Any tax on "prohibited transactions" (as
defined in Section 860F(a)(2) of the Code) imposed on any REMIC created
hereunder related to the exercise of the option provided by this paragraph (e)
shall in no event be payable by the Trustee, the Guarantor, the Certificate
Insurer or the Trust Fund.

                                     -105-
<PAGE>

                  SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.

                  (a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Servicer will immediately notify or
cause to be notified the Trustee by a certification in the form of Exhibit E
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 3.10 have been or
will be so deposited) of a Servicing Officer and shall request delivery to it of
the Mortgage File. Upon receipt of such certification and request, the Trustee
shall promptly release the related Mortgage File to the Servicer at the cost of
the related Servicer and at no cost to the Trustee or the Trust Fund. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.

                  (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, at the
expense of the related Servicer, upon any request made by or on behalf of the
Servicer and delivery to the Trustee of a Request for Release in the form of
Exhibit E, release the related Mortgage File to the Servicer, and the Trustee
shall, at the direction of the Servicer, execute such documents as shall be
necessary to the prosecution of any such proceedings. Such Request for Release
shall obligate the Servicer to return each and every document previously
requested from the Mortgage File to the Trustee when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Mortgage File or such document has been delivered to
an attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered, or caused to be delivered, to the Trustee an
additional Request for Release certifying as to such liquidation or action or
proceedings. Upon the request of the Trustee, the Servicer shall provide notice
to the Trustee of the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery.
Upon receipt of a certificate of a Servicing Officer stating that such Mortgage
Loan was liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Collection Account have been so deposited, or that such Mortgage Loan has become
an REO Property, any outstanding Requests for Release with respect to such
Mortgage Loan shall be released by the Trustee to the Servicer or its designee.

                  (c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Servicer or the Sub-Servicer, as the
case may be, any court pleadings, requests for trustee's sale or other documents
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Mortgage Note or Mortgage
or otherwise available at law or in equity. Each such certification shall
include a request that such pleadings or documents be executed by the Trustee
and a statement as to the reason such documents or pleadings are required and
that the execution and delivery thereof by the Trustee will

                                     -106-
<PAGE>

not invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.

                  SECTION 3.18. Servicing Compensation.

                  As compensation for the activities of the Servicer hereunder,
the Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance Proceeds or
Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii) and out of
amounts derived from the operation and sale of an REO Property to the extent
permitted by Section 3.23. Except as provided in Sections 3.26, the right to
receive the Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of the Servicer's responsibilities and
obligations under this Agreement; provided, however, that the Servicer may pay
from the Servicing Fee any amounts due to a Sub-Servicer pursuant to a
Sub-Servicing Agreement entered into under Section 3.02.

                  Additional servicing compensation in the form of assumption or
modification fees, late payment charges, insufficient funds charges or otherwise
(subject to Section 3.24 and other than Prepayment Charges) shall be retained by
the Servicer only to the extent such fees or charges are received by the
Servicer. The Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to
withdraw from the Collection Account and pursuant to Section 3.23(b) to withdraw
from any REO Account, as additional servicing compensation, interest or other
income earned on deposits therein, subject to Section 3.12 and Section 3.24. The
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including premiums for the insurance
required by Section 3.14, to the extent such premiums are not paid by the
related Mortgagors or by a Sub-Servicer, servicing compensation of each
Sub-Servicer, and to the extent provided herein in Section 8.05, the expenses of
the Trustee) and shall not be entitled to reimbursement therefor except as
specifically provided herein.

                  SECTION 3.19. Reports to the Trustee and Others; Collection
                                Account Statements.

                  Not later than twenty days after each Distribution Date, the
Servicer shall forward to the Trustee (upon the Trustee's request), the
Guarantor (upon request), the Certificate Insurer and the Depositor the most
current available bank statement for the Collection Account. Copies of such
statement shall be provided by the Trustee to any Certificateholder and to any
Person identified to the Trustee as a prospective transferee of a Certificate,
upon request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Trustee.

                  In addition, on each Distribution Date, the Servicer shall
forward to the Rating Agencies, the Guarantor, the Certificate Insurer and the
Trustee a report setting forth the percentage of Mortgage Loans that are 30 or
more days delinquent, in foreclosure, have been converted to REO Properties or
have been discharged by reason of bankruptcy.

                                     -107-
<PAGE>

                  SECTION 3.20. Statement as to Compliance.

                  Not later than March 15th of each calendar year commencing in
2005, each Servicer will deliver to the Trustee, the Depositor, the Guarantor
and the Certificate Insurer an Officers' Certificate (upon which the Trustee can
conclusively rely in connection with its obligations under Section 4.06)
substantially in the form of Exhibit L attached hereto stating, as to each
signatory thereof, that (i) a review of the activities of the Servicer during
the preceding calendar year and of performance under this Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such calendar year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. Copies of any
such statement shall be provided by the Trustee to any Certificateholder and to
any Person identified to the Trustee as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Servicer to the Trustee.

                  SECTION 3.21. Independent Public Accountants' Servicing
                                Report.

                  Not later than March 15th of each calendar year commencing in
2005, each Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the servicing of residential mortgage loans during the most recently
completed calendar year and (ii) on the basis of an examination conducted by
such firm in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. In rendering its report such firm may rely, as to matters
relating to the direct servicing of residential mortgage loans by Sub-Servicers,
upon comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to those
Sub-Servicers. Immediately upon receipt of such report, the Servicer shall, at
its own expense, furnish a copy of such report to the Trustee, the Guarantor,
the Certificate Insurer and each Rating Agency. Copies of such statement shall
be provided by the Trustee to any Certificateholder upon request, provided that
such statement is delivered by the Servicer to the Trustee.

                  SECTION 3.22. Access to Certain Documentation.

                  (a) The Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder or
Certificate Owner, access to the documentation in the Servicer's possession
regarding the Mortgage Loans required by applicable laws and regulations. Such
access shall be afforded without charge, but only upon reasonable request and
during normal business hours at the offices of the Servicer designated by it. In
addition, access to the documentation in the Servicer's possession regarding the

                                     -108-
<PAGE>

Mortgage Loans will be provided to any Certificateholder or Certificate Owner,
the Trustee, the Guarantor, the Certificate Insurer and to any Person identified
to the Servicer as a prospective transferee of a Certificate; provided, however,
that providing access to such Person will not violate any applicable laws, upon
reasonable request during normal business hours at the offices of the Servicer
designated by it at the expense of the Person requesting such access. Nothing in
this Section shall limit the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access as provided in this Section
3.22(a) as a result of such obligation shall not constitute a breach of this
Section 3.22(a). In each case, access to any documentation regarding the
Mortgage Loans may be conditioned upon the requesting party's acknowledgement in
writing of a confidentiality agreement reasonably satisfactory to the Servicer
regarding any information that is required to remain confidential under the
Gramm-Leach-Bliley Act of 1999.

                  (b) For a period of two years from the Closing Date, the
Guarantor may contact the Depositor to confirm that the Originator continues to
actively engage in a program to originate mortgage loans to low-income families
and to obtain other non-proprietary information about the Originator's
activities that may assist the Guarantor in completing its own regulatory
requirements during normal business hours and subject to reimbursement for
expenses. The Depositor shall use reasonable efforts to provide such information
to the Guarantor.

                  SECTION 3.23. Title, Management and Disposition of REO
                                Property.

                  (a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The Servicer, on behalf of REMIC I, shall either sell
any REO Property prior to the end of the third taxable year after REMIC I
acquires ownership of such REO Property for purposes of Section 860G(a)(8) of
the Code or request from the Internal Revenue Service, no later than 60 days
before the day on which the three-year grace period would otherwise expire, an
extension of the three-year grace period, unless the Servicer shall have
delivered to the Trustee, the Certificate Insurer and the Guarantor an Opinion
of Counsel, addressed to the Trustee, the Depositor, the Guarantor and the
Certificate Insurer, to the effect that the holding by REMIC I-A, REMIC I-B or
REMIC I-C of such REO Property subsequent to three years after its acquisition
will not result in the imposition on any Trust REMIC of taxes on "prohibited
transactions" thereof, as defined in Section 860F of the Code, or cause any
Trust REMIC to fail to qualify as a REMIC under Federal law at any time that any
Certificates are outstanding. The Servicer shall manage, conserve, protect and
operate each REO Property for the Certificateholders solely for the purpose of
its prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by any Trust REMIC of
any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code, or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions.

                  (b) The Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain, or
cause to be established and maintained, with respect to REO Properties, an

                                     -109-
<PAGE>

account held in trust for the Trustee for the benefit of the Certificateholders
and the Certificate Insurer (the "REO Account"), which shall be an Eligible
Account. The Servicer shall be permitted to allow the Collection Account to
serve as the REO Account, subject to separate ledgers for each REO Property. The
Servicer shall be entitled to retain or withdraw any interest income paid on
funds deposited in the REO Account.

                  (c) The Servicer shall have the sole discretion to determine
         whether an immediate sale of an REO Property or continued management of
         such REO Property is in the best interests of the Certificateholders
         and the Certificate Insurer. In furtherance of the foregoing, the
         Servicer shall have full power and authority, subject only to the
         specific requirements and prohibitions of this Agreement, to do any and
         all things in connection with any REO Property as are consistent with
         the manner in which the Servicer manages and operates similar property
         owned by the Servicer or any of its Affiliates, all on such terms and
         for such period as the Servicer deems to be in the best interests of
         Certificateholders. In connection therewith, the Servicer shall
         deposit, or cause to be deposited in the REO Account, in no event more
         than two Business Days after the Servicer's receipt thereof, all
         revenues received by it with respect to an REO Property and shall
         withdraw therefrom funds necessary for the proper operation, management
         and maintenance of such REO Property including, without limitation:

                  (i) all insurance premiums due and payable in respect of such
         REO Property;

                  (ii) all real estate taxes and assessments in respect of such
         REO Property that may result in the imposition of a lien thereon; and

                  (iii) all costs and expenses necessary to maintain such REO
         Property.

                  To the extent that amounts on deposit in the REO Account with
respect to an REO Property are insufficient for the purposes set forth in
clauses (i) through (iii) above with respect to such REO Property, the Servicer
shall advance from its own funds such amount as is necessary for such purposes
if, but only if, the Servicer would make such advances if the Servicer owned the
REO Property and if in the Servicer's judgment, the payment of such amounts will
be recoverable from the rental or sale of the REO Property.

                  Notwithstanding the foregoing, neither the Servicer nor the
Trustee shall:

                  (i) authorize the Trust Fund to enter into, renew or extend
         any New Lease with respect to any REO Property, if the New Lease by its
         terms will give rise to any income that does not constitute Rents from
         Real Property;

                  (ii) authorize any amount to be received or accrued under any
         New Lease other than amounts that will constitute Rents from Real
         Property;

                  (iii) authorize any construction on any REO Property, other
         than the completion of a building or other improvement thereon, and
         then only if more than ten percent of the construction

                                     -110-
<PAGE>

         of such building or other improvement was completed before default on
         the related Mortgage Loan became imminent, all within the meaning of
         Section 856(e)(4)(B) of the Code; or

                  (iv) authorize any Person to Directly Operate any REO Property
         on any date more than 90 days after its date of acquisition by the
         Trust Fund;

unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee, the Guarantor and the Certificate Insurer, to the
effect that such action will not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code at
any time that it is held by REMIC I, in which case the Servicer may take such
actions as are specified in such Opinion of Counsel.

                  The Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:

                  (i) the terms and conditions of any such contract shall not be
         inconsistent herewith;

                  (ii) any such contract shall require, or shall be administered
         to require, that the Independent Contractor pay all costs and expenses
         incurred in connection with the operation and management of such REO
         Property, including those listed above and remit all related revenues
         (net of such costs and expenses) to the Servicer as soon as
         practicable, but in no event later than thirty days following the
         receipt thereof by such Independent Contractor;

                  (iii) none of the provisions of this Section 3.23(c) relating
         to any such contract or to actions taken through any such Independent
         Contractor shall be deemed to relieve the Servicer of any of its duties
         and obligations to the Trustee on behalf of the Certificateholders and
         the Certificate Insurer with respect to the operation and management of
         any such REO Property; and

                  (iv) the Servicer shall be obligated with respect thereto to
         the same extent as if it alone were performing all duties and
         obligations in connection with the operation and management of such REO
         Property.

                  The Servicer shall be entitled to enter into any agreement
with any Independent Contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Servicer shall be solely liable for all fees
owed by it to any such Independent Contractor, irrespective of whether the
Servicer's compensation pursuant to Section 3.18 is sufficient to pay such fees;
provided, however, that to the extent that any payments made by such Independent
Contractor would constitute Servicing Advances if made by the Servicer, such
amounts shall be reimbursable as Servicing Advances made by the Servicer.

                  (d) In addition to the withdrawals permitted under Section
3.23(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any

                                     -111-
<PAGE>

Sub-Servicer unpaid Servicing Fees in respect of the related Mortgage Loan; and
(ii) to reimburse itself or any Sub-Servicer for unreimbursed Servicing Advances
and P&I Advances made in respect of such REO Property or the related Mortgage
Loan. On the Servicer Remittance Date, the Servicer shall withdraw from each REO
Account maintained by it and deposit into the Distribution Account in accordance
with Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).

                  (e) Subject to the time constraints set forth in Section
3.23(a), each REO Disposition shall be carried out by the Servicer at such price
and upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in its Accepted Servicing Practices.

                  (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Servicer Remittance Date in the month following
the receipt thereof for distribution on the related Distribution Date in
accordance with Section 4.01. Any REO Disposition shall be for cash only (unless
changes in the REMIC Provisions made subsequent to the Startup Day allow a sale
for other consideration).

                  (g) The Servicer shall file information returns with respect
to the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.

                  SECTION 3.24. Obligations of the Servicer in Respect of
                                Prepayment Interest Shortfalls.

                  Each Servicer shall deliver to the Trustee for deposit into
the Distribution Account by 3:00 p.m. New York time on the Servicer Remittance
Date from its own funds an amount equal to the lesser of (i) the aggregate of
the Prepayment Interest Shortfalls for the related Distribution Date resulting
from full or partial Principal Prepayments during the related Prepayment Period
and (ii) the aggregate Servicing Fee for the related Servicer for the related
Prepayment Period. Any amounts paid by the Servicer pursuant to this Section
3.24 shall not be reimbursed by any Trust REMIC or the Trust Fund.

                  SECTION 3.25. Obligations of the Servicer in Respect of
                                Mortgage Rates and Monthly Payments.

                  In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Servicer in a manner not consistent with the terms of the
related

                                     -112-
<PAGE>

Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Guarantor,
the Certificate Insurer, the Depositor and any successor Servicer in respect of
any such liability. Such indemnities shall survive the termination or discharge
of this Agreement. Notwithstanding the foregoing, this Section 3.25 shall not
limit the ability of the Servicer to seek recovery of any such amounts from the
related Mortgagor under the terms of the related Mortgage Note, as permitted by
law.

                  SECTION 3.26. Advance Facility.

                  (a) Either Servicer, with the consent of the Certificate
Insurer and the Guarantor, is hereby authorized to enter into a facility with
any Person which provides that such Person (an "Advancing Person") may fund P&I
Advances and/or Servicing Advances to the Trust Fund under this Agreement,
although no such facility shall reduce or otherwise affect the Servicer's
obligation to fund such P&I Advances and/or Servicing Advances. If the Servicer
enters into such an Advance Facility pursuant to this Section 3.26, upon
reasonable request of the Advancing Person, the Trustee shall execute a letter
of acknowledgment, confirming its receipt of notice of the existence of such
Advance Facility. If the Trustee enters into such an Advance Facility pursuant
to this Section 3.26, the Servicer shall also be a party to such Advance
Facility. To the extent that an Advancing Person funds any P&I Advance or any
Servicing Advance and the Servicer provides the Trustee with an Officers'
Certificate that such Advancing Person is entitled to reimbursement, such
Advancing Person shall be entitled to receive reimbursement pursuant to this
Agreement for such amount to the extent provided in Section 3.26(b). Such
Officers' Certificate must specify the amount of the reimbursement, the Section
of this Agreement that permits the applicable P&I Advance or Servicing Advance
to be reimbursed and the section(s) of the Advance Facility that entitle the
Advancing Person to request reimbursement from the Trustee, rather than the
Servicer or proof of an Event of Default under the Advance Facility. The Trustee
shall have no duty or liability with respect to any calculation of any
reimbursement to be paid to an Advancing Person and shall be entitled to rely
without independent investigation on the Advancing Person's notice provided
pursuant to this Section 3.26. An Advancing Person whose obligations hereunder
are limited to the funding of P&I Advances and/or Servicing Advances shall not
be required to meet the qualifications of the Servicer or a Sub-Servicer
pursuant to Section 3.02 hereof and will not be deemed to be a Sub-Servicer
under this Agreement.

                  (b) If an advancing facility is entered into, then the
Servicer shall not be permitted to reimburse itself therefor under Section
3.11(a)(ii), Section 3.11(a)(iii) and Section 3.11(a)(vi) prior to the
remittance to the Trust Fund, but instead the Servicer shall remit such amounts
in accordance with the documentation establishing the Advance Facility to such
Advancing Person or to a trustee, agent or custodian (an "Advance Facility
Trustee") designated by such Advancing Person. The Trustee is hereby authorized
to pay to the Advancing Person, reimbursements for P&I Advances and Servicing
Advances from the Distribution Account to the same extent the Servicer would
have been permitted to reimburse itself for such P&I Advances and/or Servicing
Advances in accordance with 3.11(a)(ii), Section 3.11(a)(iii) and Section
3.11(a)(vi), as the case may be, had the Servicer itself funded such P&I Advance
or Servicing Advance. The Trustee is hereby authorized to pay directly to the
Advancing Person such portion of the Servicing Fee as the parties to any
advancing facility agree in writing.

                                     -113-
<PAGE>

                  (c) All P&I Advances and Servicing Advances made pursuant to
the terms of this Agreement shall be deemed made and shall be reimbursed on a
"first in-first out" (FIFO) basis.

                  (d) Any amendment to this Section 3.26 or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 3.26,
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee and the Servicer without the consent of any
Certificateholder, notwithstanding anything to the contrary in this Agreement.

                  SECTION 3.27. [Reserved].

                  SECTION 3.28 Net WAC Rate Carryover Reserve Accounts.

                  (a) No later than the Closing Date, the Trustee shall
establish and maintain with itself, as agent for the Trustee, three separate,
segregated trust accounts titled, "Group I Net WAC Rate Carryover Reserve
Account, Deutsche Bank National Trust Company, as Trustee, in trust for the
registered holders of New Century Home Equity Loan Trust, Series 2004-A, Asset
Backed Pass-Through Certificates," "Group II Net WAC Rate Carryover Reserve
Account, Deutsche Bank National Trust Company, as Trustee, in trust for the
registered holders of New Century Home Equity Loan Trust, Series 2004-A, Asset
Backed Pass-Through Certificates" and "Group III Net WAC Rate Carryover Reserve
Account, Deutsche Bank National Trust Company, as Trustee, in trust for the
registered holders of New Century Home Equity Loan Trust, Series 2004-A, Asset
Backed Pass-Through Certificates." The amount on deposit in the Net WAC Rate
Carryover Reserve Accounts will consist of any payments received by the Trustee
under the related Cap Contracts and deposited into the Net WAC Rate Carryover
Reserve Account. All amounts deposited in the Net WAC Rate Carryover Reserve
Account shall be distributed to the Holders of the related Class A Certificates
and the Mezzanine Certificates in the manner set forth in Section 4.01(a)(4).

                  (b) On each Distribution Date as to which there is a Net WAC
Rate Carryover Amount payable to the Class A Certificates or the Mezzanine
Certificates, the Trustee has been directed by the Class CE-I Certificateholders
(in the case of the Group I Net WAC Rate Carryover Reserve Account), the Class
CE-II Certificateholders (in the case of the Group II Net WAC Rate Carryover
Reserve Account) and the Class CE-III Certificateholders (in the case of the
Group III Net WAC Rate Carryover Reserve Account) to, and therefore will,
deposit into the related Net WAC Rate Carryover Reserve Account the amounts
described in Section 4.01(a)(4), rather than distributing such amounts to the
related Class CE Certificateholders. On each such Distribution Date, the Trustee
shall hold all such amounts for the benefit of the Holders of the related Class
A Certificates, and Mezzanine Certificates, and will distribute such amounts to
the Holders of such Class A Certificates and Mezzanine Certificates in the
amounts and priorities set forth in Section 4.01(a).

                  (c) For federal and state income tax purposes, the Class CE-I
Certificateholders (in the case of the Group I Net WAC Rate Carryover Reserve
Account), the Class CE-II Certificateholders (in the case of the Group II Net
WAC Rate Carryover Reserve Account) and the Class CE-III

                                     -114-
<PAGE>

Certificateholders (in the case of the Group III Net WAC Rate Carryover Reserve
Account) will be deemed to be the owners of the related Net WAC Rate Carryover
Reserve Account and all amounts deposited into such Net WAC Rate Carryover
Reserve Account shall be treated as amounts distributed by REMIC III to the
Holders of the related Class CE Certificates. Upon the termination of the Trust
Fund, or the payment in full of the related Class A Certificates and Mezzanine
Certificates, all amounts remaining on deposit in the related Net WAC Rate
Carryover Reserve Account will be released by the Trust Fund and distributed to
the related Class CE Certificateholders or their designees. The Net WAC Rate
Carryover Reserve Account will be part of the Trust Fund but not part of any
REMIC and any payments to the Holders of the related Class A Certificates or
Mezzanine Certificates of Net WAC Rate Carryover Amounts will not be payments
with respect to a "regular interest" in a REMIC within the meaning of Code
Section 860G(a)(1).

                  (d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees to direct the Trustee, and the Trustee hereby is
directed, to deposit into the related Net WAC Rate Carryover Reserve Account the
amounts described above on each Distribution Date as to which there is any Net
WAC Rate Carryover Amount rather than distributing such amounts to the related
Class CE Certificateholders. By accepting a Class CE Certificate, each Class CE
Certificateholder further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.

                  (e) Funds on deposit in the Net WAC Rate Carryover Reserve
Accounts shall remain uninvested.

                  (f) For federal tax return and information reporting, the
right of the Holders of the Class A Certificates and the Mezzanine Certificates
to receive payments from the related Net WAC Rate Carryover Reserve Account in
respect of any Net Wac Rate Carryover Amount shall be assigned a value of zero.

                                     -115-
<PAGE>

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

                  SECTION 4.01. Distributions.

                  (1) On each Distribution Date, the following amounts, in the
following order of priority, shall be distributed by REMIC I-A, REMIC I-B and
REMIC I-C to REMIC II on account of the REMIC I-A Regular Interests, the REMIC
I-B Regular Interests and the REMIC I-C Regular Interests or withdrawn from the
Distribution Account and distributed to the holders of the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates, as
the case may be:

                  With respect to the Group I Mortgage Loans:

                  (i) to the Holders of REMIC I-A Regular Interest IA-LT1, REMIC
         I-A Regular Interest IA-LT2 and REMIC I-A Regular Interest IA-LTP in an
         amount equal to (A) the Uncertificated Interest for each REMIC I-A
         Regular Interest for such Distribution Date, plus (B) any amounts in
         respect thereof remaining unpaid from previous Distribution Dates;

                  (ii) to the Holders of REMIC I-A Regular Interest IA-LT1 and
         REMIC I-A Regular Interest IA-LT2 until the Uncertificated Balance of
         each such REMIC I-A Regular Interest is reduced to zero;

                  (iii) to the Holders of REMIC I-A Regular Interest IA-LTP, on
         the Distribution Date immediately following the expiration of the
         latest Prepayment Charge on the Group I Mortgage Loans as identified on
         the Prepayment Charge Schedule or any Distribution Date thereafter
         until $100 has been distributed pursuant to this clause; and

                  (iv) any remaining amount to the Holders of the Class R-I
         Certificates.

                  With respect to the Group II Mortgage Loans:

                  (i) to the Holders of REMIC I-B Regular Interest IB-LT1 and
         REMIC I-B Regular Interest IB-LTP in an amount equal to (A) the
         Uncertificated Interest for each REMIC I-B Regular Interest for such
         Distribution Date, plus (B) any amounts in respect thereof remaining
         unpaid from previous Distribution Dates;

                  (ii) to the Holders of REMIC I-B Regular Interest IB-LT1 until
         the Uncertificated Balance of REMIC I-B Regular Interest IB-LT1 is
         reduced to zero;

                  (iii) to the Holders of REMIC I-B Regular Interest IB-LTP, on
         the Distribution Date immediately following the expiration of the
         latest Prepayment Charge on the Group II Mortgage

                                     -116-
<PAGE>

         Loans as identified on the Prepayment Charge Schedule or any
         Distribution Date thereafter until $100 has been distributed pursuant
         to this clause; and

                  (iv) any remaining amount to the Holders of the Class R-II
         Certificates.

                  With respect to the Group III Mortgage Loans:

                  (i) to the Holders of REMIC I-C Regular Interest IC-LT1, REMIC
         I-C Regular Interest IC-LT2 and REMIC I-C Regular Interest IC-LTP in an
         amount equal to (A) the Uncertificated Interest for each REMIC I-C
         Regular Interest for such Distribution Date, plus (B) any amounts in
         respect thereof remaining unpaid from previous Distribution Dates;

                  (ii) to the Holders of REMIC I-C Regular Interest IC-LT1 and
         REMIC I-C Regular Interest IC-LT2, until the Uncertificated Balance of
         each such REMIC I-C Regular Interest is reduced to zero;

                  (iii) to the Holders of REMIC I-C Regular Interest IC-LTP, on
         the Distribution Date immediately following the expiration of the
         latest Prepayment Charge on the Group III Mortgage Loans as identified
         on the Prepayment Charge Schedule or any Distribution Date thereafter
         until $100 has been distributed pursuant to this clause; and

                  (iv) any remaining amount to the Holders of the Class R-III
         Certificates.

                  On each Distribution Date, all amounts representing Prepayment
Charges in respect of the Group I Mortgage Loans received during the related
Prepayment Period will be distributed by REMIC I-A to the Holders of REMIC I-A
Regular Interest IA-LTP. The payment of the foregoing amounts to the Holders of
REMIC I-A Regular Interest IA-LTP shall not reduce the Uncertificated Balance
thereof. On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group II Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC I-B to the Holders of REMIC I-B Regular
Interest IB-LTP. The payment of the foregoing amounts to the Holders of REMIC
I-B Regular Interest IB-LTP shall not reduce the Uncertificated Balance thereof.
On each Distribution Date, all amounts representing Prepayment Charges in
respect of the Group III Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC I-C to the Holders of REMIC I-C Regular
Interest IC-LTP. The payment of the foregoing amounts to the Holders of REMIC
I-C Regular Interest IC-LTP shall not reduce the Uncertificated Balance thereof.

                  (2) On each Distribution Date, the Trustee shall cause in the
following order of priority, the following amounts which shall be deemed to be
distributed by REMIC II to REMIC III on account of the REMIC II Regular
Interests or withdrawn from the Distribution Account and distributed to the
holders of the Class R-X Certificates (in respect of the Class R-II Interest),
as the case may be:

                  With respect to the Group I Mortgage Loans:

                                     -117-
<PAGE>

                  (i) to the Holders of REMIC II Regular Interest II-LTAA1,
         REMIC II Regular Interest II-LTAI1, REMIC II Regular Interest II-LTAI2,
         REMIC II Regular Interest II-LTAI3, REMIC II Regular Interest II-LTAI4,
         REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest II-LTAI6,
         REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest II-LTAI8,
         REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest II-LTMI1,
         REMIC II Regular Interest II-LTMI2, REMIC II Regular Interest II-LTB1
         and REMIC II Regular Interest II-LTZZ1 in an amount equal to (A) the
         Uncertificated Interest for such Distribution Date, plus (B) any
         amounts in respect thereof remaining unpaid from previous Distribution
         Dates. Amounts payable as Uncertificated Interest in respect of REMIC
         II Regular Interest II-LTZZ1 shall be reduced when the sum of the REMIC
         II Group I Overcollateralized Amount is less than the REMIC II Group I
         Required Overcollateralized Amount, by the lesser of (x) the amount of
         such difference and (y) the Maximum II-LTZZ1 Uncertificated Interest
         Deferral Amount and such amounts will be payable to the Holders of
         REMIC II Regular Interest II-LTAI1, REMIC II Regular Interest II-LTAI2,
         REMIC II Regular Interest II-LTAI3, REMIC II Regular Interest II-LTAI4,
         REMIC II Regular Interest II-LTAI5, REMIC II Regular Interest II-LTAI6,
         REMIC II Regular Interest II-LTAI7, REMIC II Regular Interest II-LTAI8,
         REMIC II Regular Interest II-LTAI9, REMIC II Regular Interest II-LTMI1,
         REMIC II Regular Interest II-LTMI2 and REMIC II Regular Interest
         II-LTB1 in the same proportion as the Group I Overcollateralization
         Increase Amount is allocated to the Corresponding Certificates and the
         Uncertificated Balance of REMIC II Regular Interest II-LTZZ1 shall be
         increased by such amount; and

                  (ii) to the Holders of REMIC II Regular Interests, in an
         amount equal to the remainder of the Group I Available Distribution
         Amount for such Distribution Date after the distributions made pursuant
         to clause (i) above, allocated as follows:

                           (a) 98.00% of such remainder to the Holders of REMIC
                  II Regular Interest II-LTAA1, (less the amount payable in
                  clause (d) below), until the Uncertificated Balance of such
                  REMIC II Regular Interest is reduced to zero;

                           (b) 2.00% of such remainder, first, to the Holders of
                  REMIC II Regular Interest II-LTAI1, REMIC II Regular Interest
                  II-LTAI2, REMIC II Regular Interest II- LTAI3, REMIC II
                  Regular Interest II-LTAI4, REMIC II Regular Interest II-LTAI5,
                  REMIC II Regular Interest II-LTAI6, REMIC II Regular Interest
                  II-LTAI7, REMIC II Regular Interest II-LTAI8, REMIC II Regular
                  Interest II-LTAI9, REMIC II Regular Interest II-LTMI1, REMIC
                  II Regular Interest II-LTMI2 and REMIC II Regular Interest
                  II-LTB1, 1.00% of and in the same proportion as principal
                  payments are allocated to the Corresponding Certificates,
                  until the Uncertificated Balances of such REMIC II Regular
                  Interests are reduced to zero and second, to the Holders of
                  REMIC II Regular Interest II- LTZZ1 (less the amount payable
                  in clause (d) below), until the Uncertificated Balance of such
                  REMIC II Regular Interest is reduced to zero; then

                           (c) to the Holders of REMIC II Regular Interest
                  II-LTP1, on the Distribution Date immediately following the
                  expiration of the latest Prepayment Charge on the Group

                                     -118-
<PAGE>

                  I Mortgage Loans as identified on the Prepayment Charge
                  Schedule or any Distribution Date thereafter until $100 has
                  been distributed pursuant to this clause; and

                           (d) any remaining amount to the Holders of the Class
                  R-X Certificates (as Holder of the Class R-II Interest);

provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to a Group I Overcollateralization Reduction Amount shall be
allocated to Holders of REMIC II Regular Interest II- LTAA1 and REMIC II Regular
Interest I-LTZZ1, respectively.

                  With respect to the Group II Mortgage Loans:

                  (i) to the Holders of REMIC II Regular Interest II-LTAA2,
         REMIC II Regular Interest II-LTAII1, REMIC II Regular Interest
         II-LTAII2, REMIC II Regular Interest II-LTAII3, REMIC II Regular
         Interest II-LTAII4, REMIC II Regular Interest II-LTAII5, REMIC II
         Regular Interest II-LTAII6, REMIC II Regular Interest II-LTAII7, REMIC
         II Regular Interest II-LTAII8, REMIC II Regular Interest II-LTAII9,
         REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTB2
         and REMIC II Regular Interest II-LTZZ2 in an amount equal to (A) the
         Uncertificated Interest for such Distribution Date, plus (B) any
         amounts in respect thereof remaining unpaid from previous Distribution
         Dates. Amounts payable as Uncertificated Interest in respect of REMIC
         II Regular Interest II-LTZZ2 shall be reduced when the sum of the REMIC
         II Group II Overcollateralized Amount is less than the REMIC II Group
         II Required Overcollateralized Amount, by the lesser of (x) the amount
         of such difference and (y) the Maximum II-LTZZ2 Uncertificated Interest
         Deferral Amount and such amounts will be payable to the Holders of
         REMIC II Regular Interest II-LTAII1, REMIC II Regular Interest
         II-LTAII2, REMIC II Regular Interest II-LTAII3, REMIC II Regular
         Interest II-LTAII4, REMIC II Regular Interest II-LTAII5, REMIC II
         Regular Interest II-LTAII6, REMIC II Regular Interest II-LTAII7, REMIC
         II Regular Interest II-LTAII8, REMIC II Regular Interest II-LTAII9,
         REMIC II Regular Interest II-LTM2 and REMIC II Regular Interest II-LTB2
         in the same proportion as the Group II Overcollateralization Increase
         Amount is allocated to the Corresponding Certificates and the
         Uncertificated Balance of REMIC II Regular Interest II-LTZZ2 shall be
         increased by such amount; and

                  (ii) to the Holders of REMIC II Regular Interests, in an
         amount equal to the remainder of the Group II Available Distribution
         Amount for such Distribution Date after the distributions made pursuant
         to clause (i) above, allocated as follows:

                           (a) 98.00% of such remainder to the Holders of REMIC
                  II Regular Interest II-LTAA2, (less the amount payable in
                  clause (d) below), until the Uncertificated Balance of such
                  REMIC II Regular Interest is reduced to zero;

                           (b) 2.00% of such remainder, first, to the Holders of
                  REMIC II Regular Interest II-LTAII1, REMIC II Regular Interest
                  II-LTAII2, REMIC II Regular Interest II-

                                     -119-
<PAGE>

                  LTAII3, REMIC II Regular Interest II-LTAII4, REMIC II Regular
                  Interest II-LTAII5, REMIC II Regular Interest II-LTAII6, REMIC
                  II Regular Interest II-LTAII7, REMIC II Regular Interest
                  II-LTAII8, REMIC II Regular Interest II-LTAII9, REMIC II
                  Regular Interest II-LTM2 and REMIC II Regular Interest
                  II-LTB2, 1.00% of and in the same proportion as principal
                  payments are allocated to the Corresponding Certificates,
                  until the Uncertificated Balances of such REMIC II Regular
                  Interests are reduced to zero and second, to the Holders of
                  REMIC II Regular Interest II-LTZZ2 (less the amount payable in
                  clause (d) below), until the Uncertificated Balance of such
                  REMIC II Regular Interest is reduced to zero; then

                           (c) to the Holders of REMIC II Regular Interest
                  II-LTP2, on the Distribution Date immediately following the
                  expiration of the latest Prepayment Charge on the Group II
                  Mortgage Loans as identified on the Prepayment Charge Schedule
                  or any Distribution Date thereafter until $100 has been
                  distributed pursuant to this clause; and

                           (d) any remaining amount to the Holders of the Class
                  R-X Certificates (as Holder of the Class R-II Interest);

provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to a Group II Overcollateralization Reduction Amount shall be
allocated to Holders of REMIC II Regular Interest II- LTAA2 and REMIC II Regular
Interest I-LTZZ2, respectively.

                  With respect to the Group III Mortgage Loans:

                  (i) to the Holders of REMIC II Regular Interest II-LTAA3,
         REMIC II Regular Interest II-LTAIII1, REMIC II Regular Interest
         II-LTAIII2, REMIC II Regular Interest II- LTAIII3, REMIC II Regular
         Interest II-LTM3, REMIC II Regular Interest II-LTB3 and REMIC II
         Regular Interest II-LTZZ3 in an amount equal to (A) the Uncertificated
         Interest for such Distribution Date, plus (B) any amounts in respect
         thereof remaining unpaid from previous Distribution Dates. Amounts
         payable as Uncertificated Interest in respect of REMIC II Regular
         Interest II-LTZZ3 shall be reduced when the sum of the REMIC II Group
         III Overcollateralized Amount is less than the REMIC II Group III
         Required Overcollateralized Amount, by the lesser of (x) the amount of
         such difference and (y) the Maximum II-LTZZ3 Uncertificated Interest
         Deferral Amount and such amounts will be payable to the Holders of
         REMIC II Regular Interest II-LTAIII1, REMIC II Regular Interest
         II-LTAIII2, REMIC II Regular Interest II-LTAIII3, REMIC II Regular
         Interest II-LTM3 and REMIC II Regular Interest II-LTB3 in the same
         proportion as the Group III Overcollateralization Increase Amount is
         allocated to the Corresponding Certificates and the Uncertificated
         Balance of REMIC II Regular Interest II-LTZZ3 shall be increased by
         such amount; and

                  (ii) to the Holders of REMIC II Regular Interests, in an
         amount equal to the remainder of the Group III Available Distribution
         Amount for such Distribution Date after the distributions made pursuant
         to clause (i) above, allocated as follows:

                                     -120-
<PAGE>

                           (a) 98.00% of such remainder to the Holders of REMIC
                  II Regular Interest II-LTAA3 (less the amount payable in
                  clause (d) below), until the Uncertificated Balance of such
                  REMIC II Regular Interest is reduced to zero;

                           (b) 2.00% of such remainder, first, to the Holders of
                  REMIC II Regular Interest II-LTAIII1, REMIC II Regular
                  Interest II-LTAIII2, REMIC II Regular Interest II-LTAIII3,
                  REMIC II Regular Interest II-LTM3 and REMIC II Regular
                  Interest II- LTB3, 1.00% of and in the same proportion as
                  principal payments are allocated to the Corresponding
                  Certificates, until the Uncertificated Balances of such REMIC
                  II Regular Interests are reduced to zero and second, to the
                  Holders of REMIC II Regular Interest II- LTZZ3 (less the
                  amount payable in clause (d) below), until the Uncertificated
                  Balance of such REMIC II Regular Interest is reduced to zero;
                  then

                           (c) to the Holders of REMIC II Regular Interest
                  II-LTP3, on the Distribution Date immediately following the
                  expiration of the latest Prepayment Charge on the Group III
                  Mortgage Loans as identified on the Prepayment Charge Schedule
                  or any Distribution Date thereafter until $100 has been
                  distributed pursuant to this clause; and

                           (d) any remaining amount to the Holders of the Class
                  R-X Certificates (as Holder of the Class R-II Interest);

provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to a Group I Overcollateralization Reduction Amount shall be
allocated to Holders of REMIC II Regular Interest II- LTAA3 and REMIC II Regular
Interest I-LTZZ3, respectively.

                  Notwithstanding the distributions pursuant to this Section
4.01(1), distribution of funds shall conform to the distributions made pursuant
to Section 4.01(2), (3) and (4).

                  (2)(I) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account an amount equal to the Group I Interest Remittance
Amount and distribute to the Certificateholders the following amounts, in the
following order of priority:

                  (i) to Fannie Mae, the Guaranty Fee;

                  (ii) concurrently, to the Holders of each Class of Group I
Class A Certificates, on a PRO RATA basis based on the entitlement of each such
Class, the Senior Interest Distribution Amount allocable to such Certificates;

                  (iii) to Fannie Mae, any Guarantor Reimbursement Amount then
due;

                  (iv) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for the premium payable in
respect of the Class M-I-1 Certificates;

                                     -121-
<PAGE>

                  (v) to the Holders of the Class M-I-1 Certificates, the Senior
Interest Distribution Amount allocable to such Certificates;

                  (vi) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for reimbursement for prior
draws made on the Policy in respect of the Class M-I-1 Certificates and any
other amounts owing to the Certificate Insurer under the Insurance Agreement
with respect to the Class M-I-1 Certificates;

                  (vii) concurrently, to the Holders of each Class of Group II
Class A Certificates and Group III Class A Certificates, on a PRO RATA basis
based on the entitlement of each such Class, the Senior Interest Distribution
Amount for such Certificates, to the extent remaining undistributed after the
distributions of the Group II Interest Remittance Amount as set forth in Section
4.01(a)(2)(II), the Group III-A Interest Remittance Amount as set forth in
Section 4.01(a)(2)(III) and the Group III-B Interest Remittance Amount as set
forth in Section 4.01(a)(2)(IV);

                  (viii) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Group II Class A Certificates
and Group III Class A Certificates and any other remaining amounts owing to the
Certificate Insurer under the Insurance Agreement with respect to the Group II
Class A Certificates and the Group III Class A Certificates, in each case, to
the extent remaining unpaid after the distributions of the Group II Interest
Remittance Amount as set forth in Section 4.01(a)(2)(II), the Group III-A
Interest Remittance Amount as set forth in Section 4.01(a)(2)(III) and the Group
III-B Interest Remittance Amount as set forth in Section 4.01(a)(2)(IV).

                  (II) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account an amount equal to the Group II Interest
Remittance Amount and distribute to the Certificateholders the following
amounts, in the following order of priority:

                  (i) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for the premium payable in
respect of the Group II Class A Certificates;

                  (ii) concurrently, to the Holders of each Class of Group II
Class A Certificates, on a PRO RATA basis based on the entitlement of each such
Class, the Senior Interest Distribution Amount allocable to such Certificates;

                  (iii) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for reimbursement for prior
draws made on the Policy in respect of the Group II Class A Certificates and any
other amounts owing to the Certificate Insurer under the Insurance Agreement
with respect to the Group II Class A Certificates;

                  (iv) concurrently, to the Holders of each Class of Group I
Class A Certificates, the Class M-I-1 Certificates and the Group III Class A
Certificates, on a PRO RATA basis based on the entitlement of each such Class,
the Senior Interest Distribution Amount for such Certificates, to the extent

                                     -122-
<PAGE>

remaining undistributed after the distributions of the Group I Interest
Remittance Amount as set forth in Section 4.01(a)(2)(I), the Group III-A
Interest Remittance Amount as set forth in Section 4.01(a)(2)(III) and the Group
III-B Interest Remittance Amount as set forth in Section 4.01(a)(2)(IV);

                  (v) to the Certificate Insurer, any remaining amounts owing to
the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class M-I-1 Certificates and
Group III Class A Certificates and any other remaining amounts owing to the
Certificate Insurer under the Insurance Agreement with respect to the Class
M-I-1 Certificates and the Group III Class A Certificates, in each case, to the
extent remaining unpaid after the distributions of the Group I Interest
Remittance Amount as set forth in Section 4.01(a)(2)(I), the Group III-A
Interest Remittance Amount as set forth in Section 4.01(a)(2)(III) and the Group
III-B Interest Remittance Amount as set forth in Section 4.01(a)(2)(IV); and

                  (vi) to Fannie Mae, any outstanding Guarantor Reimbursement
Amount, to the extent remaining unpaid after the distribution of the Group I
Principal Remittance Amount as set forth in Section 4.01(a)(2)(I).

                  (III) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account an amount equal to the Group III-A Interest
Remittance Amount and distribute to the Certificateholders the following
amounts, in the following order of priority:

                  (i) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for the premium payable in
respect of the Class A-III-A Certificates;

                  (ii) to the Holders of the Class A-III-A Certificates, the
Senior Interest Distribution Amount allocable to such Certificates;

                  (iii) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for reimbursement for prior
draws made on the Policy in respect of the Class A-III-A Certificates and any
other amounts owing to the Certificate Insurer under the Insurance Agreement
with respect to the Class A-III-A Certificates;

                  (iv) concurrently, to the Holders of each Class of Group I
Class A Certificates, the Class M-I-1 Certificates, the Group II Class A
Certificates and the Group III-B Certificates, on a PRO RATA basis based on the
entitlement of each such Class, the Senior Interest Distribution Amount for such
Certificates, to the extent remaining undistributed after the distributions of
the Group I Interest Remittance Amount as set forth in Section 4.01(a)(2)(I),
the Group II Interest Remittance Amount as set forth in Section 4.01(a)(2)(II)
and the Group III-B Interest Remittance Amount as set forth in Section
4.01(a)(2)(IV); and

                  (v) to the Certificate Insurer, any remaining amounts owing to
the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class M-I-1 Certificates, the
Group II Class A Certificates and the Group III-B Certificates and any other

                                     -123-
<PAGE>

remaining amounts owing to the Certificate Insurer under the Insurance Agreement
with respect to the Class M-I-1 Certificates, the Group II Class A Certificates
and the Group III-B Certificates, in each case, to the extent remaining unpaid
after the distributions of the Group I Interest Remittance Amount as set forth
in Section 4.01(a)(2)(I), the Group II Interest Remittance Amount as set forth
in Section 4.01(a)(2)(II) and the Group III-B Interest Remittance Amount as set
forth in Section 4.01(a)(2)(IV); and

                  (vi) to Fannie Mae, any outstanding Guarantor Reimbursement
Amount, to the extent remaining unpaid after the distribution of the Group I
Principal Remittance Amount as set forth in Section 4.01(a)(2)(I).

                  (IV) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account an amount equal to the Group III-B Interest
Remittance Amount and distribute to the Certificateholders the following
amounts, in the following order of priority:

                  (i) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for the premium payable in
respect of the Group III-B Certificates;

                  (ii) concurrently, to the Holders of each Class of Group III-B
Certificates, on a PRO RATA basis based on the entitlement of each such Class,
the Senior Interest Distribution Amount allocable to such Certificates;

                  (iii) to the Certificate Insurer, the amount owing to the
Certificate Insurer under the Insurance Agreement for reimbursement for prior
draws made on the Policy in respect of the Group III-B Certificates and any
other amounts owing to the Certificate Insurer under the Insurance Agreement
with respect to the Group III-B Certificates;

                  (iv) concurrently, to the Holders of each Class of Group I
Class A Certificates, the Class M-I-1 Certificates, the Group II Class A
Certificates and the Class A-III-A Certificates, on a PRO RATA basis based on
the entitlement of each such Class, the Senior Interest Distribution Amount for
such Certificates, to the extent remaining undistributed after the distributions
of the Group I Interest Remittance Amount as set forth in Section 4.01(a)(2)(I),
the Group II Interest Remittance Amount as set forth in Section 4.01(a)(2)(II)
and the Group III-A Interest Remittance Amount as set forth in Section
4.01(a)(2)(III); and

                  (v) to the Certificate Insurer, any remaining amounts owing to
the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class M-I-1 Certificates, the
Group II Class A Certificates and the Group III-A Certificates and any other
remaining amounts owing to the Certificate Insurer under the Insurance Agreement
with respect to the Class M-I-1 Certificates, the Group II Class A Certificates
and the Group III-A Certificates, in each case, to the extent remaining unpaid
after the distributions of the Group I Interest Remittance Amount as set forth
in Section 4.01(a)(2)(I), the Group II Interest Remittance Amount as set forth
in Section 4.01(a)(2)(II) and the Group III-A Interest Remittance Amount as set
forth in Section 4.01(a)(2)(III); and

                                     -124-
<PAGE>

                  (vi) to Fannie Mae, any outstanding Guarantor Reimbursement
         Amount, to the extent remaining unpaid after the distribution of the
         Group I Principal Remittance Amount as set forth in Section
         4.01(a)(2)(I).

                  (V) On each Distribution Date, following the distributions
         made pursuant to Section 4.01(a)(2)(I), the Trustee shall withdraw from
         the Distribution Account an amount equal to any remaining Group I
         Interest Remittance Amount and distribute to the Certificateholders the
         following amounts, in the following order of priority:

                  (i) to the Holders of the Class M-I-2 Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-I-2
         Certificates; and

                  (ii) to the Holders of the Class B-I Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class B-I
         Certificates.

                  (VI) On each Distribution Date, following the distributions
         made pursuant to Section 4.01(a)(2)(II), the Trustee shall withdraw
         from the Distribution Account an amount equal to any remaining Group II
         Interest Remittance Amount and distribute to the Certificateholders the
         following amounts, in the following order of priority:

                  (i) to the Holders of the Class M-II Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-II
         Certificates; and

                  (ii) to the Holders of the Class B-II Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class B-II
         Certificates.

                  (VII) On each Distribution Date, following the distributions
         made pursuant to Section 4.01(a)(2)(III) and (IV), the Trustee shall
         withdraw from the Distribution Account an amount equal to any remaining
         Group III-A Interest Remittance Amount and the Group III-B Interest
         Remittance Amount and distribute to the Certificateholders the
         following amounts, in the following order of priority:

                  (i) to the Holders of the Class M-III Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-III
         Certificates; and

                  (ii) to the Holders of the Class B-III Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class B-III
         Certificates.

                  (3)(I) On each Distribution Date (a) prior to the Stepdown
         Date or (b) on which a Trigger Event is in effect, the Group I
         Principal Distribution Amount shall be distributed in the following
         order of priority:

                                     -125-
<PAGE>

                  (i) to the Holders of the Group I Class A Certificates
(allocated among the Group I Class A Certificates in the priority described
below), until the Certificate Principal Balances thereof have been reduced to
zero;

                  (ii) to Fannie Mae, any Guarantor Reimbursement Amount then
due to the extent not paid pursuant to Section 4.02(a)(2)(I)(iii);

                  (iii) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class M-I-1 Certificates and
any other remaining amounts owing to the Certificate Insurer under the Insurance
Agreement with respect to the Class M-I-1 Certificates, to the extent not paid
pursuant to Section 4.02(a)(2)(I)(vi);

                  (iv) after taking into account the amount distributed to the
Holders of the Group II Class A Certificates pursuant to Section
4.02(a)(3)(II)(i), the Class A-III-A Certificates pursuant to Section
4.02(a)(3)(III)(i) and the Group III-B Certificates pursuant to Section
4.02(a)(3)(IV)(i) on such Distribution Date, concurrently, to the Holders of the
Group II Class A Certificates (allocated among the Group II Class A Certificates
in the priority described below), the Class A-III-A Certificates and the Group
III-B Certificates (allocated among the Group III-B Certificates in the priority
described below), on a PRO RATA basis based on the Certificate Principal Balance
of each such group or Class, until the Certificate Principal Balances thereof
have been reduced to zero; and

                  (v) to the Certificate Insurer, any remaining amounts owing to
the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Group II Class A Certificates
and the Group III Class A Certificates and any other remaining amounts owing to
the Certificate Insurer under the Insurance Agreement with respect to the Group
II Class A Certificates and the Group III Class A Certificates, in each case, to
the extent not paid pursuant to Section 4.02(a)(2).

                  (II) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, the Group II Principal
Distribution Amount shall be distributed in the following order of priority:

                  (i) to the Holders of the Group II Class A Certificates
(allocated among the Group II Class A Certificates in the priority described
below), until the Certificate Principal Balances thereof have been reduced to
zero;

                  (ii) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Group II Class A Certificates
and any other remaining amounts owing to the Certificate Insurer under the
Insurance Agreement with respect to the Group II Class A Certificates, to the
extent not paid pursuant to Section 4.02(a)(2)(II)(iii);

                                     -126-
<PAGE>

                  (iii) after taking into account the amount distributed to the
Holders of the Group I Class A Certificates pursuant to Section
4.02(a)(3)(I)(i), the Class A-III-A Certificates pursuant to Section
4.02(a)(3)(III)(i) and the Group III-B Certificates pursuant to Section
4.02(a)(3)(IV)(i) on such Distribution Date, concurrently, to the Holders of the
Group I Class A Certificates (allocated among the Group I Class A Certificates
in the priority described below), the Class A-III-A Certificates and the Group
III-B Certificates (allocated among the Group III-B Certificates in the priority
described below), on a PRO RATA basis based on the Certificate Principal Balance
of each such group or Class, until the Certificate Principal Balances thereof
have been reduced to zero; and

                  (iv) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class M-I-1 Certificates and
the Group III Class A Certificates and any other remaining amounts owing to the
Certificate Insurer under the Insurance Agreement with respect to the Class
M-I-1 Certificates and the Group III Class A Certificates, in each case, to the
extent not paid pursuant to Section 4.02(a)(2).

                  (III) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, the Group III-A Principal
Distribution Amount shall be distributed in the following order of priority:

                  (i) to the Holders of the Class A-III-A Certificates, until
the Certificate Principal Balance thereof has been reduced to zero;

                  (ii) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class A-III-A Certificates and
any other remaining amounts owing to the Certificate Insurer under the Insurance
Agreement with respect to the Class A-III-A Certificates, to the extent not paid
pursuant to Section 4.02(a)(2)(III)(iii);

                  (iii) after taking into account the amount distributed to the
Holders of the Group I Class A Certificates pursuant to Section
4.02(a)(3)(I)(i), the Group II Class A Certificates pursuant to Section
4.02(a)(3)(II)(i) and the Group III-B Certificates pursuant to Section
4.02(a)(3)(IV)(i) on such Distribution Date, concurrently, to the Holders of the
Group I Class A Certificates (allocated among the Group I Class A Certificates
in the priority described below), the Group II Class A Certificates (allocated
among the Group II Class A Certificates in the priority described below) and the
Group III-B Certificates (allocated among the Group III-B Certificates in the
priority described below), on a PRO RATA basis based on the Certificate
Principal Balance of each such group, until the Certificate Principal Balances
thereof have been reduced to zero; and

                  (iv) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class M-I-1 Certificates and
the Group II Class A Certificates and any other remaining amounts owing to the
Certificate Insurer under the Insurance Agreement with respect to the Class
M-I-1 Certificates and the Group II Class A Certificates, in each case, to the
extent not paid pursuant to Section 4.02(a)(2).

                                     -127-
<PAGE>

                  (IV) On each Distribution Date (a) prior to the Stepdown Date
         or (b) on which a Trigger Event is in effect, the Group III-B Principal
         Distribution Amount shall be distributed in the following order of
         priority:

                  (i) to the Holders of the Group III-B Certificates (allocated
         among the Group III-B Certificates in the priority described below),
         until the Certificate Principal Balances thereof have been reduced to
         zero;

                  (ii) to the Certificate Insurer, any remaining amounts owing
         to the Certificate Insurer under the Insurance Agreement for
         reimbursement for prior draws made on the Policy in respect of the
         Group III-B Certificates and any other remaining amounts owing to the
         Certificate Insurer under the Insurance Agreement with respect to the
         Group III-B Certificates, to the extent not paid pursuant to Section
         4.02(a)(2)(IV)(iii);

                  (iii) after taking into account the amount distributed to the
         Holders of the Group I Class A Certificates pursuant to Section
         4.02(a)(3)(I)(i), the Group II Class A Certificates pursuant to Section
         4.02(a)(2)(II)(i) and the Class A-III-A Certificates pursuant to
         Section 4.02(a)(2)(III)(i) on such Distribution Date, concurrently, to
         the Holders of the Group I Class A Certificates (allocated among the
         Group I Class A Certificates in the priority described below), the
         Group II Class A Certificates (allocated among the Group II Class A
         Certificates in the priority described below) and the Class A-III-A
         Certificates, on a PRO RATA basis based on the Certificate Principal
         Balance of each such group or Class, until the Certificate Principal
         Balances thereof have been reduced to zero; and

                  (iv) to the Certificate Insurer, any remaining amounts owing
         to the Certificate Insurer under the Insurance Agreement for
         reimbursement for prior draws made on the Policy in respect of the
         Class M-I-1 Certificates and the Group II Class A Certificates and any
         other remaining amounts owing to the Certificate Insurer under the
         Insurance Agreement with respect to the Class M-I-1 Certificates and
         the Group II Class A Certificates, in each case, to the extent not paid
         pursuant to Section 4.02(a)(2).

                  (V) On each Distribution Date (a) prior to the Stepdown Date
         or (b) on which a Trigger Event is in effect, the Group I Principal
         Distribution Amount remaining undistributed for such Distribution Date
         shall be distributed in the following order of priority:

                  (i) to the Holders of the Class M-I-1 Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero;

                  (ii) to the Holders of the Class M-I-2 Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero;
         and

                  (iii) to the Holders of the Class B-I Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero.

                                     -128-
<PAGE>

                  (VI) On each Distribution Date (a) prior to the Stepdown Date
         or (b) on which a Trigger Event is in effect, the Group II Principal
         Distribution Amount remaining undistributed for such Distribution Date
         shall be distributed in the following order of priority:

                  (i) to the Holders of the Class M-II Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero;
         and

                  (ii) to the Holders of the Class B-II Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero.

                  (VII) On each Distribution Date (a) prior to the Stepdown Date
         or (b) on which a Trigger Event is in effect, the Group III-A Principal
         Distribution Amount and the Group III-B Principal Distribution Amount
         remaining undistributed for such Distribution Date shall be distributed
         in the following order of priority:

                  (i) to the Holders of the Class M-III Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero;
         and

                  (ii) to the Holders of the Class B-III Certificates, until the
         Certificate Principal Balance of such Class has been reduced to zero.

                  (VIII) On each Distribution Date (a) on or after the Stepdown
         Date and (b) on which a Trigger Event is not in effect, the Group I
         Principal Distribution Amount shall be distributed in the following
         order of priority:

                  (i) to the Holders of the Group I Class A Certificates
         (allocated among the Group I Class A Certificates in the priority
         described below), the Group I Class A Principal Distribution Amount,
         until the Certificate Principal Balances thereof have been reduced to
         zero;

                  (ii) to Fannie Mae, any Guarantor Reimbursement Amount then
         due to the extent not paid pursuant to Section 4.02(a)(2)(I)(iii);

                  (iii) to the Certificate Insurer, any remaining amounts owing
         to the Certificate Insurer under the Insurance Agreement for
         reimbursement for prior draws made on the Policy in respect of the
         Class M-I-1 Certificates and any other remaining amounts owing to the
         Certificate Insurer under the Insurance Agreement with respect to the
         Class M-I-1 Certificates, to the extent not paid pursuant to Section
         4.02(a)(2)(I)(vi);

                  (iv) concurrently, to the Holders of the Group II Class A
         Certificates (allocated among the Group II Class A Certificates in the
         priority described below), the Class A-III-A Certificates and the Group
         III-B Certificates (allocated among the Group III-B Certificates in the
         priority described below), on a PRO RATA basis based on the Certificate
         Principal Balance of each such group or Class, an amount equal to the
         excess, if any, of (x) the amount required to be distributed pursuant
         to Section

                                     -129-
<PAGE>

4.02(a)(3)(IX)(i) (in the case of the Group II Class A Certificates), Section
4.02(a)(3)(X)(i) (in the case of the Class A-III-A Certificates) or Section
4.02(a)(3)(XI)(i) (in the case of the Group III-B Certificates) for such
Distribution Date over (y) the amount actually distributed pursuant to Section
4.02(a)(3)(IX)(i), Section 4.02(a)(3)(X)(i) and Section 4.02(a)(3)(XI)(i) from
the Group II Principal Distribution Amount, the Group III-A Principal
Distribution Amount or the Group III-B Principal Distribution Amount, as
applicable, on such Distribution Date; and

                  (v) to the Certificate Insurer, any remaining amounts owing to
the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Group II Class A Certificates
and the Group III Class A Certificates and any other remaining amounts owing to
the Certificate Insurer under the Insurance Agreement with respect to the Group
II Class A Certificates and the Group III Class A Certificates, in each case, to
the extent not paid pursuant to Section 4.02(a)(2).

                  (IX) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the Group II Principal
Distribution Amount shall be distributed in the following order of priority:

                  (i) to the Holders of the Group II Class A Certificates
(allocated among the Group II Class A Certificates in the priority described
below), the Group II Class A Principal Distribution Amount, until the
Certificate Principal Balances thereof have been reduced to zero;

                  (ii) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Group II Class A Certificates
and any other remaining amounts owing to the Certificate Insurer under the
Insurance Agreement with respect to the Group II Class A Certificates, to the
extent not paid pursuant to Section 4.02(a)(2)(II)(iii);

                  (iii) concurrently, to the Holders of the Group I Class A
Certificates (allocated among the Group I Class A Certificates in the priority
described below), the Class A-III-A Certificates and the Group III-B
Certificates (allocated among the Group III-B Certificates in the priority
described below), on a PRO RATA basis based on the Certificate Principal Balance
of each such group or Class, an amount equal to the excess, if any, of (x) the
amount required to be distributed pursuant to Section 4.02(a)(3)(VIII)(i) (in
the case of the Group I Class A Certificates), Section 4.02(a)(3)(X)(i) (in the
case of the Class A-III-A Certificates) or Section 4.02(a)(3)(XI)(i) (in the
case of the Group III-B Certificates) for such Distribution Date over (y) the
amount actually distributed pursuant to Section 4.02(a)(3)(VIII)(i), Section
4.02(a)(3)(X)(i) and Section 4.02(a)(3)(XI)(i) from the Group I Principal
Distribution Amount, the Group III-A Principal Distribution Amount or the Group
III-B Principal Distribution Amount, as applicable, on such Distribution Date;
and

                  (iv) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class M-I-1 Certificates and
the Group III Class A Certificates and any other remaining amounts owing

                                     -130-
<PAGE>

to the Certificate Insurer under the Insurance Agreement with respect to the
Class M-I-1 Certificates and the Group III Class A Certificates, in each case,
to the extent not paid pursuant to Section 4.02(a)(2).

                  (X) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the Group III-A
Principal Distribution Amount shall be distributed in the following order of
priority:

                  (i) to the Holders of the Class A-III-A Certificates, the
Group III-A Allocation Percentage of the Group III Class A Principal
Distribution Amount, until the Certificate Principal Balance thereof has been
reduced to zero;

                  (ii) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class A-III-A Certificates and
any other remaining amounts owing to the Certificate Insurer under the Insurance
Agreement with respect to the Class A-III-A Certificates, to the extent not paid
pursuant to Section 4.02(a)(2)(III)(iii);

                  (iii) concurrently, to the Holders of the Group I Class A
Certificates (allocated among the Group I Class A Certificates in the priority
described below), the Group II Class A Certificates (allocated among the Group
II Class A Certificates in the priority described below) and the Group III-B
Certificates (allocated among the Group III-B Certificates in the priority
described below), on a PRO RATA basis based on the Certificate Principal Balance
of each such group, an amount equal to the excess, if any, of (x) the amount
required to be distributed pursuant to Section 4.02(a)(2)(VIII)(i) (in the case
of the Group I Class A Certificates), Section 4.02(a)(3)(IX)(i) (in the case of
the Group II Class A Certificates) or Section 4.02(a)(3)(XI)(i) (in the case of
the Group III-B Certificates) for such Distribution Date over (y) the amount
actually distributed pursuant to Section 4.02(a)(3)(VIII)(i),Section
4.02(a)(3)(IX)(i) and Section 4.02(a)(3)(XI)(i) from the Group I Principal
Distribution Amount, the Group II Principal Distribution Amount or the Group
III-B Principal Distribution Amount, as applicable, on such Distribution Date;
and

                  (iv) to the Certificate Insurer, any remaining amounts owing
to the Certificate Insurer under the Insurance Agreement for reimbursement for
prior draws made on the Policy in respect of the Class M-I-1 Certificates and
the Group II Class A Certificates and any other remaining amounts owing to the
Certificate Insurer under the Insurance Agreement with respect to the Class
M-I-1 Certificates and the Group II Class A Certificates, in each case, to the
extent not paid pursuant to Section 4.02(a)(2).

                  (XI) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the Group III-B
Principal Distribution Amount shall be distributed in the following order of
priority:

                  (i) to the Holders of the Group III-B Certificates (allocated
among the Group III-B Certificates in the priority described below), the Group
III-B Allocation Percentage of the Group III Class A Principal Distribution
Amount, until the Certificate Principal Balances thereof have been reduced to
zero;

                                     -131-
<PAGE>

                  (ii) to the Certificate Insurer, any remaining amounts owing
         to the Certificate Insurer under the Insurance Agreement for
         reimbursement for prior draws made on the Policy in respect of the
         Group III-B Certificates and any other remaining amounts owing to the
         Certificate Insurer under the Insurance Agreement with respect to the
         Group III-B Certificates, to the extent not paid pursuant to Section
         4.02(a)(2)(IV)(iii);

                  (iii) concurrently, to the Holders of the Group I Class A
         Certificates (allocated among the Group I Class A Certificates in the
         priority described below), the Group II Class A Certificates (allocated
         among the Group II Class A Certificates in the priority described
         below) and the Class A-III-A Certificates, on a PRO RATA basis based on
         the Certificate Principal Balance of each such group or Class, an
         amount equal to the excess, if any, of (x) the amount required to be
         distributed pursuant to Section 4.02(a)(3)(VIII)(i) (in the case of the
         Group I Class A Certificates), Section 4.02(a)(3)(IX)(i) (in the case
         of the Group II Class A Certificates) or Section 4.02(a)(3)(X)(i) (in
         the case of the Class A-III-A Certificates) for such Distribution Date
         over (y) the amount actually distributed pursuant to Section
         4.02(a)(3)(VIII)(i), Section 4.02(a)(3)(IX)(i) and Section
         4.02(a)(3)(X)(i) from the Group I Principal Distribution Amount, the
         Group II Principal Distribution Amount or the Group III-A Principal
         Distribution Amount, as applicable, on such Distribution Date; and

                  (iv) to the Certificate Insurer, any remaining amounts owing
         to the Certificate Insurer under the Insurance Agreement for
         reimbursement for prior draws made on the Policy in respect of the
         Class M-I-1 Certificates and the Group II Class A Certificates and any
         other remaining amounts owing to the Certificate Insurer under the
         Insurance Agreement with respect to the Class M-I-1 Certificates and
         the Group II Class A Certificates, in each case, to the extent not paid
         pursuant to Section 4.02(a)(2).

                  (XII) On each Distribution Date (a) on or after the Stepdown
         Date and (b) on which a Trigger Event is not in effect, the Group I
         Principal Distribution Amount remaining undistributed for such
         Distribution Date shall be distributed in the following order of
         priority:

                  (i) to the Holders of the Class M-I-1 Certificates, the Class
         M-I-1 Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero;

                  (ii) to the Holders of the Class M-I-2 Certificates, the Class
         M-I-2 Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero;

                  (iii) to the Holders of the Class B-I Certificates, the Class
         B-I Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero.

                  (XIII) On each Distribution Date (a) on or after the Stepdown
         Date and (b) on which a Trigger Event is not in effect, the Group II
         Principal Distribution Amount remaining undistributed for such
         Distribution Date shall be distributed in the following order of
         priority:

                  (i) to the Holders of the Class M-II Certificates, the Class
         M-II Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero; and

                                     -132-
<PAGE>

                  (ii) to the Holders of the Class B-II Certificates, the Class
         B-II Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero.

                  (XIV) On each Distribution Date (a) on or after the Stepdown
         Date and (b) on which a Trigger Event is not in effect, the Group III-A
         Principal Distribution Amount and the Group III-B Principal
         Distribution Amount remaining undistributed for such Distribution Date
         shall be distributed in the following order of priority:

                  (i) to the Holders of the Class M-III Certificates, the Class
         M-III Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero; and

                  (ii) to the Holders of the Class B-III Certificates, the Class
         B-III Principal Distribution Amount until the Certificate Principal
         Balance thereof has been reduced to zero.

                  With respect to the Group I Class A Certificates, all
principal distributions will be distributed first, to the Holders of the Class
A-I-9 Certificates, the Lockout Distribution Percentage of such principal
distributions, until the Certificate Principal Balance of the Class A-I-9
Certificates has been reduced to zero; second, to the Holders of the Class A-I-1
Certificates, until the Certificate Principal Balance of the Class A-I-1
Certificates has been reduced to zero; third, to the Holders of the Class A-I-2
Certificates until the Certificate Principal Balance of the Class A-I-2
Certificates has been reduced to zero; fourth, to the Holders of the Class A-I-3
Certificates, until the Certificate Principal Balance of the Class A-I-3
Certificates has been reduced to zero; fifth, to the Holders of the Class A-I-4
Certificates, until the Certificate Principal Balance of the Class A-I-4
Certificates has been reduced to zero, sixth, to the Holders of the Class A-I-5
Certificates, until the Certificate Principal Balance of the Class A-I-5
Certificates has been reduced to zero, seventh, to the Holders of the Class
A-I-6 Certificates, until the Certificate Principal Balance of the Class A-I-6
Certificates has been reduced to zero, eighth, to the Holders of the Class A-I-7
Certificates, until the Certificate Principal Balance of the Class A-I-7
Certificates has been reduced to zero, ninth, to the Holders of the Class A-I-8
Certificates, until the Certificate Principal Balance of the Class A-I- 8
Certificates has been reduced to zero and tenth, to the Holders of the Class
A-I-9 Certificates, until the Certificate Principal Balance of the Class A-I-9
Certificates has been reduced to zero; provided, however, on any Distribution
Date on which the aggregate Certificate Principal Balance of the Group I
Mezzanine Certificates and the Class CE-I Certificates has been reduced to zero,
notwithstanding anything contained herein to the contrary, all distributions of
principal to the Group I Class A Certificates will be distributed concurrently,
on a PRO RATA basis based on the Certificate Principal Balance of each such
Class.

                  With respect to the Group II Class A Certificates, all
principal distributions will be distributed first, to the Holders of the Class
A-II-9 Certificates, the Lockout Distribution Percentage of such principal
distributions, until the Certificate Principal Balance of the Class A-II-9
Certificates has been reduced to zero; second, to the Holders of the Class
A-II-1 Certificates, until the Certificate Principal Balance of the Class A-II-1
Certificates has been reduced to zero; third, to the Holders of the Class A-II-2
Certificates until the Certificate Principal Balance of the Class A-II-2
Certificates has been reduced to zero; fourth, to the Holders of the Class
A-II-3 Certificates, until the Certificate Principal Balance of the Class A-II-3
Certificates has been reduced to zero; fifth, to the Holders of the Class A-II-4
Certificates, until the

                                     -133-
<PAGE>

Certificate Principal Balance of the Class A-II-4 Certificates has been reduced
to zero, sixth, to the Holders of the Class A-II-5 Certificates, until the
Certificate Principal Balance of the Class A-II-5 Certificates has been reduced
to zero, seventh, to the Holders of the Class A-II-6 Certificates, until the
Certificate Principal Balance of the Class A-II-6 Certificates has been reduced
to zero, eighth, to the Holders of the Class A-II-7 Certificates, until the
Certificate Principal Balance of the Class A-II-7 Certificates has been reduced
to zero, ninth, to the Holders of the Class A-II-8 Certificates, until the
Certificate Principal Balance of the Class A-II-8 Certificates has been reduced
to zero and tenth, to the Holders of the Class A-II-9 Certificates, until the
Certificate Principal Balance of the Class A-II-9 Certificates has been reduced
to zero; provided, however, on any Distribution Date on which the aggregate
Certificate Principal Balance of the Group II Mezzanine Certificates and the
Class CE-II Certificates has been reduced to zero, notwithstanding anything
contained herein to the contrary, all distributions of principal to the Group II
Class A Certificates will be distributed concurrently, on a PRO RATA basis based
on the Certificate Principal Balance of each such Class.

                  With respect to the Group III-B Certificates, all principal
distributions will be distributed first, to the Holders of the Class A-III-B1
Certificates, until the Certificate Principal Balance of the Class A-III-B1
Certificates has been reduced to zero and second, to the Holders of the Class
A-III-B2 Certificates until the Certificate Principal Balance of the Class
A-III-B2 Certificates has been reduced to zero; provided, however, on any
Distribution Date on which the aggregate Certificate Principal Balance of the
Group III Subordinate Certificates has been reduced to zero, notwithstanding
anything contained herein to the contrary, all distributions of principal to the
Group III-B Certificates will be distributed concurrently, on a PRO RATA basis
based on the Certificate Principal Balance of each such Class.

                  (4)(a) On each Distribution Date, the Group I Net Monthly
          Excess Cashflow shall be distributed by the Trustee as follows:

                  (i) to the Holders of the Class or Classes of Certificates
          then entitled to receive distributions in respect of principal, as
          part of the Group I Principal Distribution Amount in an amount equal
          to the Group I Overcollateralization Increase Amount for the
          Certificates, applied to reduce the Certificate Principal Balance of
          such Certificates until the aggregate Certificate Principal Balance of
          such Certificates is reduced to zero;

                  (ii) after taking into account the amount distributed pursuant
          to Section 4.01(4)(b)(i) and Section 4.01(c)(i) on such Distribution
          Date, to the Holders of the Class or Classes of Certificates then
          entitled to receive distributions in respect of principal, as part of
          the Group II Principal Distribution Amount, the Group III-A Principal
          Distribution Amount or the Group III-B Principal Distribution Amount,
          applied to reduce the Certificate Principal Balance of such
          Certificates until the aggregate Certificate Principal Balance of such
          Certificates is reduced to zero;

                  (iii) to the holders of the Class M-I-1 Certificates, in an
          amount equal to the Allocated Realized Loss Amount allocable to such
          Certificates;

                                     -134-
<PAGE>

                  (iv) to the Holders of the Class M-I-2 Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (v) to the Holders of the Class M-I-2 Certificates, in an
         amount equal to the Allocated Realized Loss Amount allocable to such
         Certificates;

                  (vi) to the Holders of the Class B-I Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (vii) to the Holders of the Class B-I Certificates, in an
         amount equal to the Allocated Realized Loss Amount allocable to such
         Certificates;

                  (viii) concurrently, to the Holders of each Class of Group I
         Class A Certificates, on a PRO RATA basis based on the entitlement of
         each such Class, in an amount equal to the aggregate of any Prepayment
         Interest Shortfalls and any Relief Act Interest Shortfall on the
         Mortgage Loans allocated to such Certificates, PRO RATA based on the
         entitlement of each such Class, in each case, without interest accrued
         thereon;

                  (ix) sequentially, to the Holders of the Class M-I-1
         Certificates, the Class M-I-2 Certificates and the Class B-I
         Certificates, in that order, in an amount equal to the aggregate of any
         Prepayment Interest Shortfalls and any Relief Act Interest Shortfall on
         the Mortgage Loans allocated to such Certificates, in each case,
         without interest accrued thereon;

                  (x) after taking into account the amount distributed pursuant
         to Section 4.01(a)(4)(b)(ix) and Section 4.01(a)(4)(c)(ix) below on
         such distribution date, to the Holders of the Group II Class A
         Certificates, the Group II Mezzanine Certificates, the Group III Class
         A Certificates and the Group III Mezzanine Certificates, in an amount
         equal to such Certificates' remaining allocated share of any Prepayment
         Interest Shortfalls and any shortfalls resulting from the application
         of the Relief Act or similar state laws, in each case, without interest
         accrued thereon, allocated among the classes in each group in the same
         manner as distributions of such amounts are allocated from the related
         Net Monthly Excess Cashflow;

                  (xi) to the Group I Net WAC Rate Carryover Reserve Account,
         the amount by which the aggregate Net WAC Rate Carryover Amount for the
         Group I Class A Certificates and the Group I Mezzanine Certificates for
         such Distribution Date exceeds the amounts received by the Trustee
         under the Class A-I-1 Cap Contract;

                  (xii) to the Holders of the Class CE-I Certificates, (a) the
         Interest Distribution Amount and any remaining Group I
         Overcollateralization Reduction Amount for such Distribution Date and
         (b) on any Distribution Date on which the aggregate Certificate
         Principal Balance of the Group I Class A Certificates and the Group I
         Mezzanine Certificates have been reduced to zero, any remaining amounts
         in reduction of the Certificate Principal Balance of the Class C-I
         Certificates, until the Certificate Principal Balance thereof has been
         reduced to zero; and

                                     -135-
<PAGE>

                  (xiii) to the Holders of the Class R-I Certificates, any
         remaining amounts; provided that if such Distribution Date is the
         Distribution Date immediately following the expiration of the latest
         Prepayment Charge term on a Group I Mortgage Loan as identified on the
         Mortgage Loan Schedule or any Distribution Date thereafter, then any
         such remaining amounts will be distributed first, to the Holders of the
         Class P-I Certificates, until the Certificate Principal Balance thereof
         has been reduced to zero; and second, to the Holders of the Class R-I
         Certificates.

                  (b) On each Distribution Date, the Group II Net Monthly Excess
         Cashflow shall be distributed by the Trustee as follows:

                  (i) to the Holders of the Class or Classes of Certificates
         then entitled to receive distributions in respect of principal, as part
         of the Group II Principal Distribution Amount in an amount equal to the
         Group II Overcollateralization Increase Amount for the Certificates,
         applied to reduce the Certificate Principal Balance of such
         Certificates until the aggregate Certificate Principal Balance of such
         Certificates is reduced to zero;

                  (ii) after taking into account the amount distributed pursuant
         to Section 4.01(4)(a)(i) and Section 4.01(c)(i) on such Distribution
         Date, to the Holders of the Class or Classes of Certificates then
         entitled to receive distributions in respect of principal, as part of
         the Group I Principal Distribution Amount, the Group III-A Principal
         Distribution Amount or the Group III-B Principal Distribution Amount,
         applied to reduce the Certificate Principal Balance of such
         Certificates until the aggregate Certificate Principal Balance of such
         Certificates is reduced to zero;

                  (iii) to the Holders of the Class M-II Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (iv) to the Holders of the Class M-II Certificates, in an
         amount equal to the Allocated Realized Loss Amount allocable to such
         Certificates;

                  (v) to the Holders of the Class B-II Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (vi) to the Holders of the Class B-II Certificates, in an
         amount equal to the Allocated Realized Loss Amount allocable to such
         Certificates;

                  (vii) concurrently, to the Holders of each Class of Group II
         Class A Certificates, on a PRO RATA basis based on the entitlement of
         each such Class, in an amount equal to the aggregate of any Prepayment
         Interest Shortfalls and any Relief Act Interest Shortfall on the
         Mortgage Loans allocated to such Certificates, PRO RATA based on the
         entitlement of each such Class, in each case, without interest accrued
         thereon;

                  (viii) sequentially, to the Holders of the Class M-II
         Certificates and the Class B-II Certificates, in that order, in an
         amount equal to the aggregate of any Prepayment Interest Shortfalls

                                     -136-
<PAGE>

         and any Relief Act Interest Shortfall on the Mortgage Loans allocated
         to such Certificates, in each case, without interest accrued thereon;

                  (ix) after taking into account the amount distributed pursuant
         to Section 4.01(a)(4)(a)(ix) and Section 4.01(a)(4)(c)(ix) on such
         distribution date, to the Holders of the Group I Class A Certificates,
         the Group I Mezzanine Certificates, the Group III Class A Certificates
         and the Group III Mezzanine Certificates, in an amount equal to such
         Certificates' remaining allocated share of any Prepayment Interest
         Shortfalls and any shortfalls resulting from the application of the
         Relief Act or similar state laws, in each case, without interest
         accrued thereon, allocated among the classes in each group in the same
         manner as distributions of such amounts are allocated from the related
         Net Monthly Excess Cashflow;

                  (x) to the Group II Net WAC Rate Carryover Reserve Account,
         the amount by which the aggregate Net WAC Rate Carryover Amount for the
         Group II Class A Certificates and the Group II Mezzanine Certificates
         for such Distribution Date exceeds the amounts received by the Trustee
         under the Class A-II-1 Cap Contract;

                  (xi) to the Holders of the Class CE-II Certificates, (a) the
         Interest Distribution Amount and any remaining Group II
         Overcollateralization Reduction Amount for such Distribution Date and
         (b) on any Distribution Date on which the aggregate Certificate
         Principal Balance of the Group II Class A Certificates and the Group II
         Mezzanine Certificates have been reduced to zero, any remaining amounts
         in reduction of the Certificate Principal Balance of the Class CE-II
         Certificates, until the Certificate Principal Balance thereof has been
         reduced to zero; and

                  (xii) to the Holders of the Class R-II Certificates, any
         remaining amounts; provided that if such Distribution Date is the
         Distribution Date immediately following the expiration of the latest
         Prepayment Charge term on a Group II Mortgage Loan as identified on the
         Mortgage Loan Schedule or any Distribution Date thereafter, then any
         such remaining amounts will be distributed first, to the Holders of the
         Class P-II Certificates, until the Certificate Principal Balance
         thereof has been reduced to zero; and second, to the Holders of the
         Class R-II Certificates.

                  (c) On each Distribution Date, the Group III Net Monthly
         Excess Cashflow shall be distributed by the Trustee as follows:

                  (i) to the Holders of the Class or Classes of Certificates
         then entitled to receive distributions in respect of principal, as part
         of the Group III Principal Distribution Amount in an amount equal to
         the Group III Overcollateralization Increase Amount for the
         Certificates, applied to reduce the Certificate Principal Balance of
         such Certificates until the aggregate Certificate Principal Balance of
         such Certificates is reduced to zero;

                  (ii) after taking into account the amount distributed pursuant
         to Section 4.01(4)(a)(i) and Section 4.01(b)(i) on such Distribution
         Date, to the Holders of the Class or Classes of Certificates then
         entitled to receive distributions in respect of principal, as part of
         the Group I

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         Principal Distribution Amount or the Group II Principal Distribution
         Amount, applied to reduce the Certificate Principal Balance of such
         Certificates until the aggregate Certificate Principal Balance of such
         Certificates is reduced to zero;

                  (iii) to the Holders of the Class M-III Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (iv) to the Holders of the Class M-III Certificates, in an
         amount equal to the Allocated Realized Loss Amount allocable to such
         Certificates;

                  (v) to the Holders of the Class B-III Certificates, in an
         amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

                  (vi) to the Holders of the Class B-III Certificates, in an
         amount equal to the Allocated Realized Loss Amount allocable to such
         Certificates;

                  (vii) concurrently, to the Holders of each Class of Group III
         Class A Certificates, on a PRO RATA basis based on the entitlement of
         each such Class, in an amount equal to the aggregate of any Prepayment
         Interest Shortfalls and any Relief Act Interest Shortfall on the
         Mortgage Loans allocated to such Certificates, PRO RATA based on the
         entitlement of each such Class, in each case, without interest accrued
         thereon;

                  (viii) sequentially, to the Holders of the Class M-III
         Certificates and the Class B-III Certificates, in that order, in an
         amount equal to the aggregate of any Prepayment Interest Shortfalls and
         any Relief Act Interest Shortfall on the Mortgage Loans allocated to
         such Certificates, in each case, without interest accrued thereon;

                  (ix) after taking into account the amount distributed pursuant
         to Section 4.01(a)(4)(a)(ix) and Section 4.01(a)(4)(b)(ix) on such
         distribution date, to the Holders of the Group I Class A Certificates,
         the Group I Mezzanine Certificates, the Group II Class A Certificates
         and the Group II Mezzanine Certificates, in an amount equal to such
         Certificates' remaining allocated share of any Prepayment Interest
         Shortfalls and any shortfalls resulting from the application of the
         Relief Act or similar state laws, in each case, without interest
         accrued thereon, allocated among the classes in each group in the same
         manner as distributions of such amounts are allocated from the related
         Net Monthly Excess Cashflow;

                  (x) to the Group III Net WAC Rate Carryover Reserve Account,
         the amount by which the aggregate Net WAC Rate Carryover Amount for the
         Group III Class A Certificates and the Group III Mezzanine Certificates
         for such Distribution Date exceeds the amounts received by the Trustee
         under the Class A-III-A Cap Contract, the Class A-III-B2/3 Cap Contract
         and the Group III Mezzanine Cap Contract;

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<PAGE>

                  (xi) to the Holders of the Class CE-III Certificates, (a) the
         Interest Distribution Amount and any remaining Group III
         Overcollateralization Reduction Amount for such Distribution Date and
         (b) on any Distribution Date on which the aggregate Certificate
         Principal Balance of the Group III Class A Certificates and the Group
         III Mezzanine Certificates have been reduced to zero, any remaining
         amounts in reduction of the Certificate Principal Balance of the Class
         CE-III Certificates, until the Certificate Principal Balance thereof
         has been reduced to zero; and

                  (xii) to the Holders of the Class R-III Certificates, any
         remaining amounts; provided that if such Distribution Date is the
         Distribution Date immediately following the expiration of the latest
         Prepayment Charge term on a Group III Mortgage Loan as identified on
         the Mortgage Loan Schedule or any Distribution Date thereafter, then
         any such remaining amounts will be distributed first, to the Holders of
         the Class P-III Certificates, until the Certificate Principal Balance
         thereof has been reduced to zero; and second, to the Holders of the
         Class R-III Certificates.

                  Following the foregoing distributions, an amount equal to the
amount of Subsequent Recoveries deposited into the related Collection Account
pursuant to Section 3.10 shall be applied to increase the Certificate Principal
Balance of the Class of Certificates with the Highest Priority up to the extent
of such Realized Losses previously allocated to that Class of Certificates
pursuant to Section 4.04. An amount equal to the amount of any remaining
Subsequent Recoveries shall be applied to increase the Certificate Principal
Balance of the Class of Certificates with the next Highest Priority, up to the
amount of such Realized Losses previously allocated to that Class of
Certificates pursuant to Section 4.04. Holders of such Certificates will not be
entitled to any distribution in respect of interest on the amount of such
increases for any Interest Accrual Period preceding the Distribution Date on
which such increase occurs. Any such increases shall be applied to the
Certificate Principal Balance of each Certificate of such Class in accordance
with its respective Percentage Interest.

                  (b)(1) On each Distribution Date, after making the
distributions of the Group I Available Distribution Amount as set forth above,
the Trustee will withdraw from the Group I Net WAC Rate Carryover Reserve
Account, the Group II Net WAC Rate Carryover Reserve Account and the Group III
Net WAC Rate Carryover Reserve Account, to the extent of amounts remaining on
deposit therein, the amount of any Net WAC Rate Carryover Amount with respect to
the Class A Certificates and the Mezzanine Certificates for such Distribution
Date and distribute such amount in the following order of priority:

                           (i) any amounts received by the Trustee in respect of
         the Class A-I-1 Cap Contract will be distributed to the Holders of the
         Class A-I-1 Certificates, to the extent of the Net WAC Rate Carryover
         Amount for such Distribution Date;

                           (ii) any amounts received by the Trustee in respect
         of the Class A-II-1 Cap Contract will be distributed to the Holders of
         the Class A-II-1 Certificates, to the extent of the Net WAC Rate
         Carryover Amount for such Distribution Date;

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<PAGE>

                           (iii) any amounts received by the Trustee in respect
         of the Group III Cap Contract will be distributed to the Group III
         Class A Certificates and the Group III Mezzanine Certificates, to the
         extent of the Net WAC Rate Carryover Amount for such Distribution Date,
         in the following order: concurrently, to the Class A-III-A Certificates
         (in an amount equal to the Group III-A Allocation Percentage of all
         such amounts) and the Group III-B Certificates (in an amount equal to
         the Group III-B Allocation Percentage of all such amounts) and
         sequentially, to the Class M-III Certificates and the Class B-III
         Certificates, in that order, any remaining amounts;

                           (vi) any amounts deposited in (a) the Group I Net WAC
         Carryover Reserve Account from the Group I Net Monthly Excess Cashflow,
         (b) the Group II Net WAC Carryover Reserve Account from the Group II
         Net Monthly Excess Cashflow and (c) the Group III Net WAC Carryover
         Reserve Account from the Group III Net Monthly Excess Cashflow will be
         distributed as follows, in each case to the extent of the applicable
         Net WAC Rate Carryover Amount:

                                    (a) concurrently to each Class of related
                           Class A Certificates, on a PRO RATA basis based on
                           the Net WAC Rate Carryover Amount for each such
                           Class;

                                    (ii) to the related Class M Certificates, to
                           the extent of the Net WAC Rate Carryover Amount for
                           each such Class; and

                                    (iii) to the related Class B Certificates,
                           to the extent of the Net WAC Rate Carryover Amount
                           for each such Class.

                  On each Distribution Date, the Trustee shall withdraw (i) any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges collected by the related Servicer in connection with the Principal
Prepayment of any of the Group I Mortgage Loans or any Servicer Prepayment
Charge Payment Amount in respect of the Group I Mortgage Loans and shall
distribute such amounts to the Holders of the Class P-I Certificates, (ii) any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges collected by the related Servicer in connection with the Principal
Prepayment of any of the Group II Mortgage Loans or any Servicer Prepayment
Charge Payment Amount in respect of the Group II Mortgage Loans and shall
distribute such amounts to the Holders of the Class P-II Certificates and (ii)
any amounts then on deposit in the Distribution Account that represent
Prepayment Charges collected by the related Servicer in connection with the
Principal Prepayment of any of the Group III Mortgage Loans or any Servicer
Prepayment Charge Payment Amount in respect of the Group III Mortgage Loans and
shall distribute such amounts to the Holders of the Class P-III Certificates.
Such distributions shall not be applied to reduce the Certificate Principal
Balance of the Class P Certificates.

                  (c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date shall be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall

                                     -140-
<PAGE>

be made by wire transfer of immediately available funds to the account of any
such Holder at a bank or other entity having appropriate facilities therefor, if
such Holder shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date, or
otherwise by check mailed by first Class mail to the address of such Holder
appearing in the Certificate Register. The final distribution on each
Certificate shall be made in like manner, but only upon presentment and
surrender of such Certificate at the office of the Trustee maintained for such
purpose pursuant to Section 8.12 or such other location specified in the notice
to Certificateholders of such final distribution.

                  Payments to the Guarantor on each Distribution Date will be
made by wire transfer of immediately available funds to the following Federal
Reserve Account:

                           Telegraphic:  FNMA NYC
                           ABA:  021-039-500
                           Ref:  2004-T4

                  Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the Depositor
or either Servicer shall have any responsibility therefor except as otherwise
provided by this Agreement or applicable law.

                  (d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trustee or
either Servicer shall in any way be responsible or liable to the Holders of any
other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.

                  (e) On each Distribution Date, following the distributions
made pursuant to Section 4.01(a)(2), Section 4.01(a)(3) and Section 4.01(a)(4),
the Trustee shall withdraw from the Distribution Account the amount of any
Insured Amount for such Distribution Date and shall distribute such Insured
Amount to the Holders of the Insured Certificates.

                  (f) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than three (3) days before the related Distribution Date (to the extent
that an accurate Remittance Report is received in a timely manner by the
Trustee), mail to each Holder on such date of such Class of Certificates, the
Guarantor and the Certificate Insurer a notice to the effect that:

                                     -141-
<PAGE>

                  (i) the Trustee expects that the final distribution with
         respect to such Class of Certificates will be made on such Distribution
         Date but only upon presentation and surrender of such Certificates at
         the office of the Trustee therein specified, and

                  (ii) no interest shall accrue on such Certificates from and
         after the end of the related Interest Accrual Period; provided that
         such notice shall be sent to the Guarantor only with respect to the
         Guaranteed Certificates.

                  Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Trustee and credited to the account of the
appropriate non- tendering Holder or Holders. If any Certificates as to which
notice has been given pursuant to this Section 4.01(e) shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall, directly or through an agent, mail a final
notice to the remaining non-tendering Certificateholders concerning surrender of
their Certificates but shall continue to hold any remaining funds for the
benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the Trust Fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Bear, Stearns & Co. Inc., in accordance
with its wiring instructions, all such amounts, and all rights of non-tendering
Certificateholders in or to such amounts shall thereupon cease. No interest
shall accrue or be payable to any Certificateholder on any amount held in trust
by the Trustee as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(e). Any such amounts held in trust by the Trustee shall be held in an
Eligible Account and shall be held uninvested.

                  (g) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate, a
Mezzanine Certificate or a Class B Certificate be reduced more than once in
respect of any particular amount both (a) allocated to such Certificate in
respect of Realized Losses pursuant to Section 4.04 and (b) distributed to the
Holder of such Certificate in reduction of the Certificate Principal Balance
thereof pursuant to this Section 4.01 from Net Monthly Excess Cashflow and (ii)
in no event shall the Uncertificated Balance of a REMIC I Regular Interest be
reduced more than once in respect of any particular amount both (a) allocated to
such REMIC I Regular Interest in respect of Realized Losses pursuant to Section
4.04 and (b) distributed on such REMIC I Regular Interest in reduction of the
Uncertificated Balance thereof pursuant to this Section 4.01.

                  SECTION 4.02. Statements to Certificateholders.

                  On each Distribution Date, the Trustee shall prepare and make
available via its website to each Holder of the Regular Certificates, the
Guarantor and the Certificate Insurer, a statement as to the distributions made
on such Distribution Date setting forth:

                                     -142-
<PAGE>

                  (i) the amount of the distribution made on such Distribution
         Date to the Holders of the Certificates of each Class allocable to
         principal, and the amount of the distribution made on such Distribution
         Date to the Holders of the Class P Certificates allocable to Prepayment
         Charges;

                  (ii) the amount of the distribution made on such Distribution
         Date to the Holders of the Certificates of each Class allocable to
         interest;

                  (iii) the aggregate Servicing Fee received by each Servicer
         during the related Due Period and such other customary information as
         the Trustee deems necessary or desirable, or which a Certificateholder
         reasonably requests, to enable Certificateholders to prepare their tax
         returns;

                  (iv) the aggregate amount of P&I Advances for such
         Distribution Date;

                  (v) the aggregate Stated Principal Balance of the Mortgage
         Loans and any REO Properties as of the close of business on such
         Distribution Date;

                  (vi) the number, aggregate principal balance, weighted average
         remaining term to maturity and weighted average Mortgage Rate of the
         Mortgage Loans as of the related Due Date;

                  (vii) the number and aggregate unpaid principal balance of
         Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
         days, (c) delinquent 90 or more days, in each case, as of the last day
         of the preceding calendar month, (d) as to which foreclosure
         proceedings have been commenced and (e) with respect to which the
         related Mortgagor has filed for protection under applicable bankruptcy
         laws, with respect to whom bankruptcy proceedings are pending or with
         respect to whom bankruptcy protection is in force;

                  (viii) with respect to any Mortgage Loan that became an REO
         Property during the preceding calendar month, the loan number of such
         Mortgage Loan, the unpaid principal balance and the Stated Principal
         Balance of such Mortgage Loan as of the date it became an REO Property;

                  (ix) the book value of any REO Property as of the close of
         business on the last Business Day of the calendar month preceding the
         Distribution Date;

                  (x) the aggregate amount of Principal Prepayments made during
         the related Prepayment Period;

                  (xi) the aggregate amount of Realized Losses incurred during
         the related Prepayment Period (or, in the case of Bankruptcy Losses
         allocable to interest, during the related Due Period), separately
         identifying whether such Realized Losses constituted Bankruptcy Losses
         and the aggregate amount of Realized Losses incurred since the Closing
         Date and the aggregate amount

                                     -143-
<PAGE>

         of Subsequent Recoveries received during the related Prepayment Period
         and the cumulative amount of Subsequent Recoveries received since the
         Closing Date;

                  (xii) the aggregate amount of Extraordinary Trust Fund
         Expenses withdrawn from the related Collection Account or the
         Distribution Account for such Distribution Date;

                  (xiii) the aggregate Certificate Principal Balance and
         Notional Amount, as applicable, of each Class of Certificates, after
         giving effect to the distributions, and allocations of Realized Losses,
         made on such Distribution Date, separately identifying any reduction
         thereof due to (a) the receipt of an Insured Amount in respect of
         principal (in the case of the Class A Certificates) or (b) allocations
         of Realized Losses;

                  (xiv) the Certificate Factor for each such Class of
         Certificates applicable to such Distribution Date;

                  (xv) the Interest Distribution Amount in respect of the Class
         A Certificates, the Mezzanine Certificates and the Class CE
         Certificates for such Distribution Date and the Interest Carry Forward
         Amount, if any, with respect to the Class A Certificates and the
         Mezzanine Certificates on such Distribution Date, and in the case of
         the Class A Certificates, the Mezzanine Certificates and the Class CE
         Certificates, separately identifying any reduction thereof due to
         allocations of Realized Losses, Prepayment Interest Shortfalls and
         Relief Act Interest Shortfalls;

                  (xvi) the aggregate amount of any Prepayment Interest
         Shortfall for such Distribution Date, to the extent not covered by
         payments by the Servicers pursuant to Section 3.24;

                  (xvii) the aggregate amount of Relief Act Interest Shortfalls
         for such Distribution Date;

                  (xviii) the Group I Overcollateralization Target Amount, the
         Group II Overcollateralization Target Amount and the Group III
         Overcollateralization Target Amount and the Group I Credit Enhancement
         Percentage, the Group II Credit Enhancement Percentage and the the
         Group I Credit Enhancement Percentage for such Distribution Date;

                  (xix) the Group I Overcollateralization Increase Amount, if
         any, for such Distribution Date, the Group II Overcollateralization
         Increase Amount, if any, for such Distribution Date and the Group III
         Overcollateralization Increase Amount, if any, for such Distribution
         Date;

                  (xx) the Group I Overcollateralization Reduction Amount, if
         any, for such Distribution Date, the Group II Overcollateralization
         Reduction Amount, if any, for such Distribution Date and the Group III
         Overcollateralization Reduction Amount, if any, for such Distribution
         Date;

                  (xxi) the respective Pass-Through Rates applicable to the
         Class A Certificates, the Mezzanine Certificates and the Class CE
         Certificates for such Distribution Date and the Pass-

                                     -144-
<PAGE>

         Through Rate applicable to the Class A Certificates and the Mezzanine
         Certificates for the immediately succeeding Distribution Date;

                  (xxii) the Net WAC Rate Carryover Amount for the Class A
         Certificates and the Mezzanine Certificates, if any, for such
         Distribution Date and the amount remaining unpaid after reimbursements
         therefor on such Distribution Date;

                  (xxiii) the amount of any Insured Amount for such Distribution
         Date, separately identifying the portion of such payment allocable to
         interest and principal;

                  (xxiv) the amount of the Reimbursement Amount for such
         Distribution Date and the amount received by the Certificate Insurer in
         respect thereof on such Distribution Date;

                  (xxv) the Guarantor Deficiency Amount, the Guarantor Payments
         and the Guarantor Reimbursement Amount for such Distribution Date;

                  (xxvi) the Guaranty Fee to be paid to the Guarantor with
         respect to the Guaranteed Certificates for such Distribution Date; and

                  (xxvii) such other information as the Guarantor or the
         Certificate Insurer may reasonably request in such format as reasonably
         required by the Guarantor or the Certificate Insurer and any other
         information that is required by the Code and regulations thereunder to
         be made available to Certificateholders.

                  The Trustee shall make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, each Servicer, the Certificate
Insurer, the Guarantor and the Rating Agencies via the Trustee's internet
website. The Trustee's internet website shall initially be located at
https://www.corporatetrust.db.com/invr and assistance in using the website can
be obtained by calling the Trustee's customer service desk at 1-800-735-7777.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first Class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way such statements are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes.

                  In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.

                  Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Regular Certificate a statement containing
the information set forth in subclauses (i) through (iii) above, aggregated for
such calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable

                                     -145-
<PAGE>

information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time are in force.

                  Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Residual Certificate a statement setting
forth the amount, if any, actually distributed with respect to the Residual
Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder.

                  The Trustee shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trustee's duties are limited to the extent
that the Trustee receives timely reports as required from each Servicer.

                  On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L. P. (" Bloomberg") CUSIP level factors for each Class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg.

                  On the fourth Business Day preceding each Distribution Date,
the Trustee shall deliver to the Guarantor (by electronic medium as specified in
the next sentence) a statement identifying the Certificate Factor for each Class
of Certificates. The Trustee shall deliver such statement on or before 12:00
noon (New York time) on such day via the internet using the following domain
name: bond_admin@fanniemae.com. If a Guarantor Payment will be payable on a
Distribution Date, all information required under Section 4.02 must also be
similarly delivered to Guarantor on such third Business Day proceeding such
Distribution Date. The second consecutive failure by the Trustee to deliver the
Certificate Factor (or to deliver an accurate Certificate Factor) to the
Guarantor shall constitute an event of default and permit the Guarantor, whether
or not the Guarantor is the Controlling Person at such time, to remove the
Trustee for cause; provided that the Servicers had delivered an accurate
Remittance Report for the related Distribution Date to the Trustee pursuant to
Section 4.03.

                  SECTION 4.03. Remittance Reports; P&I Advances.

                  (a) On the Business Day following each Determination Date,
each Servicer shall deliver to the Trustee, the Guarantor and the Certificate
Insurer by telecopy (or by such other means as the related Servicer, the
Trustee, the Guarantor or the Certificate Insurer, as the case may be, may agree
from time to time) a Remittance Report with respect to the related Distribution
Date. All such reports shall be delivered to the Guarantor as specified in the
Guarantor's Lender Guide, as amended from time to time. On the same date, each
Servicer shall electronically transmit (in a format acceptable to the Trustee),
a data file containing the information set forth in such Remittance Report with
respect to the related Distribution Date or if electronic transmission is not
available, the related Servicer shall forward to the Trustee by

                                     -146-
<PAGE>

overnight mail a computer readable magnetic tape. Such Remittance Report will
include (i) the amount of P&I Advances to be made by the related Servicer in
respect of the related Distribution Date, the aggregate amount of P&I Advances
outstanding after giving effect to such P&I Advances, and the aggregate amount
of Nonrecoverable P&I Advances in respect of such Distribution Date and (ii)
such other information with respect to the Mortgage Loans as the Trustee may
reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.01 and to prepare the statements to
Certificateholders contemplated by Section 4.02. Not later than each Servicer
Remittance Date (or, in the case of certain information, as agreed between the
Trustee and the related Servicer, not later than four Business Days after the
end of each Due Period), each Servicer shall deliver or cause to be delivered to
the Trustee in addition to the information provided on the Remittance Report,
such other information reasonably available to it with respect to the Mortgage
Loans as the Trustee may reasonably require to perform the calculations
necessary to make the distributions contemplated by Section 4.01 and to prepare
the statements to Certificateholders contemplated by Section 4.02. The Trustee
shall not be responsible to recompute, recalculate or verify any information
provided to it by either Servicer.

                  (b) The amount of P&I Advances to be made by each Servicer for
any Distribution Date shall equal, subject to Section 4.03(d), the sum of, with
respect to the Mortgage Loans serviced by such Servicer, (i) the aggregate
amount of Monthly Payments (with each interest portion thereof net of the
related Servicing Fee), due on the related Due Date in respect of the Mortgage
Loans, which Monthly Payments were delinquent as of the close of business on the
related Determination Date and (ii) with respect to each REO Property, which REO
Property was acquired during or prior to the related Prepayment Period and as to
which REO Property an REO Disposition did not occur during the related
Prepayment Period, an amount equal to the excess, if any, of the REO Imputed
Interest on such REO Property for the most recently ended calendar month, over
the net income from such REO Property transferred to the Distribution Account
pursuant to Section 3.23 for distribution on such Distribution Date; provided,
however, that neither Servicer shall not be required to make P&I Advances with
respect to Relief Act Interest Shortfalls or Prepayment Interest Shortfalls in
excess of their respective obligations under Section 3.24.

                  By 3:00 p.m. New York time on the Servicer Remittance Date,
each Servicer shall remit in immediately available funds to the Trustee for
deposit in the Distribution Account an amount equal to the aggregate amount of
P&I Advances, if any, to be made by such Servicer in respect of the Mortgage
Loans and REO Properties for the related Distribution Date either (i) from its
own funds or (ii) from the related Collection Account, to the extent of funds
held therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of the related Collection Account that amounts
held for future distribution have been, as permitted by this Section 4.03, used
by the related Servicer in discharge of any such P&I Advance) or (iii) in the
form of any combination of (i) and (ii) aggregating the total amount of P&I
Advances to be made by such Servicer with respect to the Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the applicable Servicer's records and replaced by
such Servicer by deposit in the related Collection Account on or before any
future Servicer Remittance Date to the extent that the Available Distribution
Amount for the related Distribution Date (determined without regard to P&I
Advances to be made on the Servicer Remittance Date) shall be less than the
total amount that would be distributed to the Classes of Certificateholders
pursuant to Section

                                     -147-
<PAGE>

4.01 on such Distribution Date if such amounts held for future distributions had
not been so used to make P&I Advances. The Trustee will provide notice to the
related Servicer, the Guarantor and the Certificate Insurer by telecopy by the
close of business on the Business Day prior to the Distribution Date (so long as
the Trustee receives the required remittance from the related Servicer) in the
event that the amount remitted by the Servicer to the Trustee on such date is
less than the amount required to be remitted by such Servicer as set forth in
the Remittance Report for the related Distribution Date.

                  (c) The obligation of each Servicer to make such P&I Advances
is mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.

                  (d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by either
Servicer if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively.
The determination by the related Servicer that it has made a Nonrecoverable P&I
Advance or a Nonrecoverable Servicing Advance or that any proposed P&I Advance
or Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officers' Certificate of such Servicer delivered to the Depositor, the
Certificate Insurer, the Guarantor and the Trustee.

                  SECTION 4.04. Allocation of Realized Losses.

                  (a) Prior to each Determination Date, each Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses; and (iii)
the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, each Servicer shall
also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (ii) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by a Servicer shall be evidenced by
an Officers' Certificate delivered to the Trustee, the Certificate Insurer and
the Guarantor by the related Servicer prior to the Determination Date
immediately following the end of (i) in the case of Bankruptcy Losses allocable
to interest, the Due Period during which any such Realized Loss was incurred,
and (ii) in the case of all other Realized Losses, the Prepayment Period during
which any such Realized Loss was incurred.

                  (b) All Realized Losses on the Group I Mortgage Loans shall be
allocated by the Trustee on each Distribution Date as follows: first, to the
Accrued Certificate Interest for the Class CE-I Certificates for the related
Interest Accrual Period; second, to the Accrued Certificate Interest for the
Class CE-II Certificates and the Class CE-III Certificates for the related
Interest Accrual Period, on a PRO RATA

                                     -148-
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basis based on the Accrued Certificate Interest for each such Class, third, to
the Class CE-I Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; fourth, to the Class CE-II Certificates and the Class
CE-III Certificates, on a PRO RATA basis based on the Certificate Principal
Balance of each such Class, fifth, to the Class B-I Certificates until the
Certificate Principal Balance thereof has been reduced to zero; sixth, to the
Class M-I-2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero and seventh, to the Class M-I-1 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.

                  All Realized Losses on the Group II Mortgage Loans shall be
allocated by the Trustee on each Distribution Date as follows: first, to the
Accrued Certificate Interest for the Class CE-II Certificates for the related
Interest Accrual Period; second, to the Accrued Certificate Interest for the
Class CE-I Certificates and the Class CE-III Certificates for the related
Interest Accrual Period, on a PRO RATA basis based on the Accrued Certificate
Interest for each such Class, third, to the Class CE-II Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; fourth, to the
Class CE-I Certificates and the Class CE-III Certificates, on a PRO RATA basis
based on the Certificate Principal Balance of each such Class, fifth, to the
Class B-II Certificates until the Certificate Principal Balance thereof has been
reduced to zero and sixth, to the Class M-II Certificates, until the Certificate
Principal Balance thereof has been reduced to zero.

                  All Realized Losses on the Group III Mortgage Loans shall be
allocated by the Trustee on each Distribution Date as follows: first, to the
Accrued Certificate Interest for the Class CE-III Certificates for the related
Interest Accrual Period; second, to the Accrued Certificate Interest for the
Class CE-I Certificates and the Class CE-II Certificates for the related
Interest Accrual Period, on a PRO RATA basis based on the Accrued Certificate
Interest for each such Class, third, to the Class CE-III Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; fourth, to the
Class CE-I Certificates and the Class CE-II Certificates, on a PRO RATA basis
based on the Certificate Principal Balance of each such Class, fifth, to the
Class B-III Certificates until the Certificate Principal Balance thereof has
been reduced to zero and sixth, to the Class M-III Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.

                  All Realized Losses to be allocated to the Certificate
Principal Balances of all Classes on any Distribution Date shall be so allocated
after the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.

                  Any allocation of Realized Losses to a Mezzanine Certificate
on any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated and any allocation of Realized Losses
to a Class CE Certificate shall be made by reducing the amount otherwise payable
in respect thereof pursuant to Section 4.01(a)(4). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or the Class P Certificates.

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<PAGE>

                  As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.

                  (c) All Realized Losses on the Group I Mortgage Loans shall be
allocated by the Trustee on (i) the 1st Distribution Date, to REMIC I-A Regular
Interest IA-LT1 until the Uncertificated Balance of such REMIC I-A Regular
Interest has been reduced to zero and (ii) any Distribution Date thereafter, to
REMIC I-A Regular Interest IA-LT1 and REMIC I-A Regular Interest IA-LT2 until
the Uncertificated Balance of such REMIC I-A Regular Interest has been reduced
to zero. All Realized Losses on the Group II Mortgage Loans shall be allocated
by the Trustee on (i) the 1st Distribution Date, to REMIC I-B Regular Interest
IB-LT1 until the Uncertificated Balance of such REMIC I-B Regular Interest has
been reduced to zero and (ii) any Distribution Date thereafter, to REMIC I-B
Regular Interest IB-LT1 and REMIC I-B Regular Interest IB-LT2 until the
Uncertificated Balance of such REMIC I-B Regular Interest has been reduced to
zero. All Realized Losses on the Group III Mortgage Loans shall be allocated by
the Trustee on (i) the 1st Distribution Date, to REMIC I-C Regular Interest
IC-LT1 until the Uncertificated Balance of such REMIC I-C Regular Interest has
been reduced to zero and (ii) any Distribution Date thereafter, to REMIC I-C
Regular Interest IC-LT1 and REMIC I-C Regular Interest IC- LT2 until the
Uncertificated Balance of such REMIC I-C Regular Interest has been reduced to
zero.

                  All Realized Losses on the Group I Mortgage Loans shall be
deemed to have been allocated in the specified percentages, as follows: first,
to interest payable to the REMIC II Regular Interest II-LTAA1 and REMIC II
Regular Interest II-LTZZ1 up to an aggregate amount equal to the REMIC II Group
I Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Balances of REMIC II Regular Interest II-LTAA1 and REMIC II
Regular Interest II-LTZZ1 up to an aggregate amount equal to the REMIC II Group
I Principal Loss Allocation Amount, 98% and 2%, respectively; third, to the
Uncertificated Balances of REMIC II Regular Interest II-LTAA1, REMIC II Regular
Interest II-LTB1 and REMIC II Regular Interest II-LTZZ1, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
II-LTB1 has been reduced to zero, fourth, to the Uncertificated Balances of
REMIC II Regular Interest II-LTAA1, REMIC II Regular Interest II-LTMI2 and REMIC
II Regular Interest II-LTZZ1, 98%, 1% and 1%, respectively, until the
Uncertificated Balance of REMIC II Regular Interest II-LTMI2 has been reduced to
zero and fifth, to the Uncertificated Balances of REMIC II Regular Interest
II-LTAA1, REMIC II Regular Interest II-LTMI1 and REMIC II Regular Interest
II-LTZZ1, 98%, 1% and 1%, respectively, until the Uncertificated Balance of
REMIC II Regular Interest II-LTMI1 has been reduced to zero.

                  All Realized Losses on the Group II Mortgage Loans shall be
deemed to have been allocated in the specified percentages, as follows: first,
to interest payable to the REMIC II Regular Interest II-LTAA2 and REMIC II
Regular Interest II-LTZZ2 up to an aggregate amount equal to the REMIC II Group
II Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Balances of REMIC II Regular Interest II-LTAA2 and REMIC II
Regular Interest II-LTZZ2 up to an

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<PAGE>

aggregate amount equal to the REMIC II Group II Principal Loss Allocation
Amount, 98% and 2%, respectively; third, to the Uncertificated Balances of REMIC
II Regular Interest II-LTAA2, REMIC II Regular Interest II-LTB2 and REMIC II
Regular Interest II-LTZZ2, 98%, 1% and 1%, respectively, until the
Uncertificated Balance of REMIC II Regular Interest II-LTB2 has been reduced to
zero and fourth, to the Uncertificated Balances of REMIC II Regular Interest
II-LTAA2, REMIC II Regular Interest II- LTM2 and REMIC II Regular Interest
II-LTZZ2, 98%, 1% and 1%, respectively, until the Uncertificated Balance of
REMIC II Regular Interest II-LTM2 has been reduced to zero.

                  All Realized Losses on the Group III Mortgage Loans shall be
deemed to have been allocated in the specified percentages, as follows: first,
to interest payable to the REMIC II Regular Interest II-LTAA3 and REMIC II
Regular Interest II-LTZZ3 up to an aggregate amount equal to the REMIC II Group
III Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Balances of REMIC II Regular Interest II-LTAA3 and REMIC II
Regular Interest II-LTZZ3 up to an aggregate amount equal to the REMIC II Group
III Principal Loss Allocation Amount, 98% and 2%, respectively; third, to the
Uncertificated Balances of REMIC II Regular Interest II-LTAA3, REMIC II Regular
Interest II-LTB3 and REMIC II Regular Interest II-LTZZ3, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
II-LTB3 has been reduced to zero and fourth, to the Uncertificated Balances of
REMIC II Regular Interest II-LTAA3, REMIC II Regular Interest II- LTM3 and REMIC
II Regular Interest II-LTZZ3, 98%, 1% and 1%, respectively, until the
Uncertificated Balance of REMIC II Regular Interest II-LTM3 has been reduced to
zero.

                  SECTION 4.05. Compliance with Withholding Requirements

                  Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.

                  SECTION 4.06. Exchange Commission; Additional Information.

                  (a) The Trustee shall reasonably cooperate with the Depositor
in connection with the Trust's satisfying the reporting requirements under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Trustee
shall prepare on behalf of the Trust any Forms 8-K and 10-K customary for
similar securities as required by the Exchange Act and the Rules and Regulations
of the Securities and Exchange Commission thereunder, and the Depositor shall
sign (or shall cause another entity acceptable to the Securities and Exchange
Commission to sign) and the Trustee shall file (via the Securities and Exchange
Commission's Electronic Data Gathering and Retrieval System) such forms on
behalf of the Depositor (or such other entity). The Depositor hereby grants to
the Trustee a limited power of attorney to execute any Form 8-K and file each
such document on behalf of the Depositor. Such power of attorney shall continue
until the earlier of (i) receipt by the Trustee from the Depositor of written
termination of such

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<PAGE>

power of attorney and (ii) the termination of the Trust. Notwithstanding
anything herein to the contrary, the Depositor, and not the Trustee, shall be
responsible for executing each Form 10-K filed on behalf of the Trust.

                  (b) Each Form 8-K shall be filed by the Trustee within 15 days
after each Distribution Date, with a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
March 30th of each year (or such earlier date as may be required by the Exchange
Act and the Rules and Regulations of the Securities and Exchange Commission),
the Trustee shall file a Form 10-K, in substance as required by applicable law
or applicable Securities and Exchange Commission staff's interpretations. Such
Form 10-K shall include as exhibits each Servicer's annual statement of
compliance described under Section 3.20 and the accountant's report with respect
to each Servicer described under Section 3.21, in each case to the extent they
have been timely delivered to the Trustee. If they are not so timely delivered,
the Trustee shall file an amended Form 10-K including such documents as exhibits
reasonably promptly after they are delivered to the Trustee. The Trustee shall
have no liability with respect to any failure to properly prepare or file such
periodic reports resulting from or relating to the Trustee's inability or
failure to obtain any information not resulting from its own negligence or
willful misconduct. The Form 10-K shall also include a certification in the form
attached hereto as Exhibit J-1 (the "Certification"), which shall be signed by
the senior officer of the Depositor in charge of securitization.

                  (c) In addition, (x) the Trustee shall sign a certification
(in the form attached hereto as Exhibit J-2) for the benefit of the Depositor
and its officers, directors and Affiliates regarding certain aspects of the
Certification (provided, however, that the Trustee shall not undertake an
analysis of the accountant's report attached as an exhibit to the Form 10-K) and
(y) each of the Servicers shall sign a certifiction (in the form attached hereto
as Exhibit J-3) for the benefit of the Depositor, the Trustee and their
officers, directors and Affiliates regarding certain aspects of the
Certification (the "Servicer Certification"). The Servicer Certification shall
be delivered to the Depositor and the Trustee no later than March 15th or if
such day is not a Business Day, the preceding Business Day, each year (subject
to Section 4.06(e) hereof). The Trustee's certification shall be delivered to
the Depositor by no later than March 19th of each year (or if such day is not a
Business Day, the immediately preceding Business Day) and the Depositor shall
deliver the Certification to the Trustee for filing no later than March 20th of
each year (or if such day is not a Business Day, the immediately preceding
Business Day).

                  In addition, (a) the Trustee shall indemnify and hold harmless
the Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Trustee's obligations under this Section 4.06(c) or
the Trustee's negligence, bad faith or willful misconduct in connection
therewith and (b) each Servicer shall indemnify and hold harmless the Depositor
and its officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of or based upon a
breach of such Servicer's obligations under this Section 4.06(c), any material
misstatement or omission contained in the Servicer's Certification or any
information correctly derived by the Trustee and included in a Form 8-K or Form
10-K from information provided to the Trustee by the Servicer under this
Agreement. The Depositor shall indemnify and hold harmless the Trustee and its

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<PAGE>

officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of or based upon a
breach of the Depositor's obligations under this Section 4.06 or the Depositor's
negligence, bad faith or willful misconduct in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then (i) 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 Depositor on the one hand and the Trustee on
the other and (ii) each Servicer 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 Depositor on the one hand and the related Servicer on the
other.

                  (d) Upon any filing with the Securities and Exchange
Commission, the Trustee shall promptly deliver to the Depositor a copy of any
executed report, statement or information.

                  (e) Prior to January 30 of the first year in which the Trustee
is able to do so under applicable law, the Trustee shall file a Form 15
Suspension Notification with respect to the Trust.

                  (f) To the extent that, following the Closing Date, the
Depositor certifies that reports and certifications differing from those
required under this Section 4.06 comply with the reporting requirements under
the Exchange Act, the Trustee hereby agrees that it will reasonably cooperate to
amend the provisions of this Section 4.06 (in accordance with Section 11.01) in
order to comply with such amended reporting requirements and such amendment of
this Section 4.06. Any such amendment may result in the reduction of the reports
filed by the Depositor under the Exchange Act. Notwithstanding the foregoing,
the Trustee shall not be obligated to enter into any amendment pursuant to this
Section that adversely affects its obligations and immunities under this
Agreement.

                  SECTION 4.07. Derivative Contracts for Benefit of Class R-X
                                Certificates.

                  At any time on or after the Closing Date, the Depositor shall
have the right to deposit into the Trust Fund, solely for the benefit of the
Holder of the Class R-X Certificates, a derivative contract or comparable
instrument. Any such instrument shall constitute a fully prepaid agreement. All
collections, proceeds and other amounts in respect of such an instrument shall
be distributed to the Class R-X Certificates on the Distribution Date following
receipt thereof by the Trustee. In no event shall such an instrument constitute
a part of any REMIC created hereunder. In addition, in the event any such
instrument is deposited, the Trust Fund shall be deemed to be divided into two
separate and discrete sub-Trust Funds. The assets of one such sub-Trust Fund
shall consist of all the assets of the Trust Fund other than the instrument and
the assets of the other sub-Trust Fund shall consist solely of such instrument.

                  SECTION 4.08. The Policy.

                  (a) If, based on the information provided by either Servicer
pursuant to Section 4.03, the Trustee determines that an Insured Amount to be
covered by the Policy will exist for the related

                                     -153-
<PAGE>

Distribution Date, the Trustee shall complete the notice in the form of Exhibit
A to the Policy (the "Notice") and submit such Notice in accordance with the
Policy to the Certificate Insurer no later than 12:00 P.M., New York City time,
on the second Business Day immediately preceding such Distribution Date, as a
claim for the amount of such Insured Amount.

                  (b) The Trustee shall establish and maintain the Insurance
Account on behalf of the Holders of the Insured Certificates over which the
Trustee shall have the exclusive control and sole right of withdrawal. Upon
receipt of an Insured Amount from the Certificate Insurer on behalf of the
Holders of the Insured Certificates, the Trustee shall deposit such Insured
Amount in the Insurance Account and distribute such amount only for purposes of
payment to the Insured Certificates of the Insured Amount for which a claim was
made and such amount may not be applied to satisfy any costs, expenses or
liabilities of either Servicer, the Seller, the Guarantor, the Depositor, the
Trustee or the Trust Fund or to pay any other Class of Certificates. Amounts
paid under the Policy, to the extent needed to pay the Insured Amount, shall be
transferred to the Distribution Account on the related Distribution Date and
disbursed by the Trustee to the holders of the Insured Certificates in
accordance with Section 4.01. It shall not be necessary for such payments to be
made by checks or wire transfers separate from the checks or wire transfers used
to pay other distributions to the holders of the Insured Certificates with other
funds available to make such payment. However, the amount of any payment of
principal or of interest on the Insured Certificates to be paid from funds
transferred from the Insurance Account shall be noted as provided in paragraph
(d) below and in the statement to be furnished to holders of the Insured
Certificates pursuant to Section 4.02. Funds held in the Insurance Account shall
not be invested. Any funds remaining in the Insurance Account on the first
Business Day following a Distribution Date shall be returned to the Certificate
Insurer pursuant to the written instructions of the Certificate Insurer by the
end of such Business Day.

                  (c) The Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Insured Certificate
from moneys received under the Policy. The Certificate Insurer shall have the
right to inspect such records at reasonable times during normal business hours
upon one Business Day's prior notice to the Trustee.

                  (d) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any Insured Amount has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Trustee shall so notify the Certificate Insurer, shall comply with the
provisions of the Policy to obtain payment by the Certificate Insurer of such
Preference Amount in the amount of such voided distribution constituting a
Preference Amount, and shall, at the time it provides notice to the Certificate
Insurer, notify, by mail the holders of the affected Insured Certificates that,
in the event any Holder's distribution is so recovered as a preference payment,
such Holder of an Insured Certificate will be entitled to payment constituting a
Preference Amount pursuant to the Policy, a copy of which shall be made
available through the Trustee, the Certificate Insurer or the Certificate
Insurer's fiscal agent, if any, and the Trustee shall furnish to the Certificate
Insurer or its fiscal agent, if any, its records evidencing the payments which
have been made by the Trustee and subsequently recovered from the holders of the
Insured Certificates, and dates on which such payments were made.

                                     -154-
<PAGE>

                  (e) The Trustee shall promptly notify the Certificate Insurer
and its fiscal agent of any proceeding or the institution of any action, of
which a Responsible Officer of the Trustee has actual knowledge, seeking the
avoidance as a preferential transfer under applicable bankruptcy, insolvency,
receivership or similar law (a "Preference Claim") of any distribution made with
respect to the Insured Certificates. Each holder of an Insured Certificate, by
its purchase of such Insured Certificate, each Servicer, the Guarantor the
Depositor and the Trustee agree that, the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedes or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Certificate Insurer shall be
subrogated to, and each holder of an Insured Certificate and the Trustee hereby
delegates and assigns to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Trustee and each holder of an Insured
Certificate in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to any adversary proceeding or action with
respect to any court order issued in connection with any such Preference Claim.

                  (f) The Trustee shall, upon retirement of the Insured
Certificates, furnish to the Certificate Insurer a notice of such retirement,
and, upon retirement of the Insured Certificates and the expiration of the term
of the Policy, surrender the Policy to the Certificate Insurer for cancellation.

                  (g) The Trustee will hold the Policy in trust as agent for the
holders of the Insured Certificates for the purpose of making claims thereon and
distributing the proceeds thereof. Neither the Policy nor the amounts paid on
the Policy will constitute part of the Trust Fund created by this Agreement.
Each Holder of the Insured Certificates, by accepting its Insured Certificates,
appoints the Trustee as attorney in fact for the purpose of making claims on the
Policy.

                  (h) Anything herein to the contrary notwithstanding, any
payment with respect to principal of or interest on the Insured Certificates
which is made with moneys received pursuant to the terms of the Policy shall not
be considered payment of the Insured Certificates from the Trust Fund. The
Depositor, each Servicer, the Guarantor and the Trustee acknowledge, and each
Holder by its acceptance of an Insured Certificate agrees, that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
either Servicer, the Guarantor or the Trustee (a) to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on the Insured Certificates to the holders of such Insured
Certificates, the Certificate Insurer will be fully subrogated to, and each
holder of an Insured Certificate, each Servicer, the Guarantor and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of such holders to receive such principal and
interest from the Trust Fund, including, without limitation, any amounts due to
the holders of the Insured Certificates in respect of securities law violations
arising from the offer and sale of the Insured Certificates, and (b) the
Certificate Insurer shall be paid such amounts from the sources and in the
manner provided herein for the payment of such amounts and as provided in this
Agreement. The Trustee, the Guarantor and each Servicer shall cooperate in all
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the holders
as otherwise set forth herein.

                                     -155-
<PAGE>

                  (i) By accepting its Insured Certificate, each holder of an
Insured Certificate agrees that, unless a Certificate Insurer Default exists,
the Certificate Insurer shall be deemed to be the holder of the Insured
Certificate for all purposes (other than with respect to the receipt of payment
on the Insured Certificates) and shall have the right to exercise all rights
(including, without limitation, voting rights) of the holders of the Insured
Certificates under this Agreement and under the Insured Certificates without any
further consent of the holders of the Insured Certificates. All notices,
statement reports, certificates or opinions required by this Agreement to be
sent to any holders of Insured Certificates shall also be sent to the
Certificate Insurer.

                  SECTION 4.09. The Guaranty.

                  On each Distribution Date following receipt (i) of a statement
(as set forth in Section 4.02) that indicates a Guarantor Deficiency Amount for
such Distribution Date and (ii) the Notice of Claim; the Guarantor shall
distribute to the Trustee a Guarantor Payment, in an aggregate amount equal to
the Guarantor Deficiency Amount for such Distribution Date directly to the
Holders of the Guaranteed Certificates, without first depositing such amount in
the Distribution Account, as follows: (i) the Guaranteed Interest Distribution
Amount shall be distributed as interest with respect to the Guaranteed
Certificates as provided in Section 4.01; and (ii) the Guaranteed Principal
Distribution Amount shall be distributed as principal with respect to the
Guaranteed Certificates as provided in Section 4.01.

                                     -156-
<PAGE>

                                    ARTICLE V

                                THE CERTIFICATES

                  SECTION 5.01. The Certificates.

                  (a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Fund.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-38. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

                  Upon original issue, the Certificates shall be executed,
authenticated and delivered by the Trustee upon the written order of the
Depositor. The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized signatory. Certificates bearing the
manual or facsimile signatures of individuals who were at any time the proper
officers of the Trustee shall bind the Trustee notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates. 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
herein executed by the Trustee by manual signature, and such certificate of
authentication 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.

                  (b) The Class A Certificates and the Mezzanine Certificates
shall initially be issued as one or more Certificates held by the Book-Entry
Custodian or, if appointed to hold such Certificates as provided below, the
Depository and registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be
transferred by the Trustee except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests
therein. The Certificate Owners shall hold their respective Ownership Interests
in and to such Certificates through the book-entry facilities of the Depository
and, except as provided below, shall not be entitled to definitive, fully
registered Certificates ("Definitive Certificates") in respect of such Ownership
Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trustee is hereby
initially appointed as the Book-Entry Custodian and hereby agrees to act as such
in accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and, if
it is no longer qualified to act as such, the Book-Entry Custodian shall,
appoint, by a written instrument delivered to the Depositor, each Servicer and,
if the Trustee is not

                                     -157-
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the Book-Entry Custodian, the Trustee, any other transfer agent (including the
Depository or any successor Depository) to act as Book-Entry Custodian under
such conditions as the predecessor Book-Entry Custodian and the Depository or
any successor Depository may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Depository. If the Trustee
resigns or is removed in accordance with the terms hereof, the Trustee, the
successor Trustee or, if it so elects, the Depository shall immediately succeed
to its predecessor's duties as Book-Entry Custodian. The Depositor shall have
the right to inspect, and to obtain copies of, any Certificates held as
Book-Entry Certificates by the Book-Entry Custodian.

                  The Trustee, each Servicer, the Certificate Insurer, the
Guarantor and the Depositor may for all purposes (including the making of
payments due on the Book-Entry Certificates) deal with the Depository as the
authorized representative of the Certificate Owners with respect to the
Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the Book-Entry Certificates shall be limited to those established by law and
agreements between such Certificate Owners and the Depository Participants and
brokerage firms representing such Certificate Owners. Multiple requests and
directions from, and votes of, the Depository as Holder of the Book-Entry
Certificates with respect to any particular matter shall not be deemed
inconsistent if they are made with respect to different Certificate Owners. The
Trustee may establish a reasonable record date in connection with solicitations
of consents from or voting by Certificateholders and shall give notice to the
Depository of such record date.

                  If (i)(A) the Depository or the Depositor advises the Trustee
in writing that the Depository is no longer willing, qualified or able to
properly discharge its responsibilities as Depository, and (B) the Depositor is
unable to locate a qualified successor or (ii) after the occurrence of a
Servicer Event of Default, Certificate Owners representing in the aggregate not
less than 51% of the Ownership Interests of the Book-Entry Certificates advise
the Trustee through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trustee shall notify all Certificate Owners, through
the Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Book-Entry
Custodian or the Depository, as applicable, accompanied by registration
instructions from the Depository for registration of transfer, the Trustee shall
cause the Definitive Certificates to be issued. Such Definitive Certificates
will be issued in minimum denominations of $25,000, except that any beneficial
ownership that was represented by a Book-Entry Certificate in an amount less
than $25,000 immediately prior to the issuance of a Definitive Certificate shall
be issued in a minimum denomination equal to the amount represented by such
Book-Entry Certificate. None of the Depositor, either Servicer or the Trustee
shall be liable for any delay in the 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 Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates, and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.

                  SECTION 5.02. Registration of Transfer and Exchange of
                                Certificates.

                                     -158-
<PAGE>

                  (a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.11, a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided.

                  (b) No transfer of any Class CE Certificate, Class P
Certificate or Residual Certificate (the "Private Certificates") shall be made
unless that transfer is made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "1933 Act"), and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of a Private Certificate is to be made without
registration or qualification (other than in connection with the initial
transfer of any such Certificate by the Depositor to an Affiliate of the
Depositor), the Trustee shall require receipt of: (i) if such transfer is
purportedly being made in reliance upon Rule 144A under the 1933 Act, written
certifications from the Certificateholder desiring to effect the transfer and
from such Certificateholder's prospective transferee, substantially in the forms
attached hereto as Exhibit F-1; and (ii) in all other cases, an Opinion of
Counsel satisfactory to it that such transfer may be made without such
registration (which Opinion of Counsel shall not be an expense of the Trust Fund
or of the Depositor, the Trustee, either Servicer in its capacity as such or any
Sub-Servicer), together with copies of the written certification(s) of the
Certificateholder desiring to effect the transfer and/or such
Certificateholder's prospective transferee upon which such Opinion of Counsel is
based, if any. Neither the Depositor nor the Trustee is obligated to register or
qualify any such Certificates under the 1933 Act or any other securities laws or
to take any action not otherwise required under this Agreement to permit the
transfer of such Certificates without registration or qualification. Any
Certificateholder desiring to effect the transfer of any such Certificate shall,
and does hereby agree to, indemnify the Trustee, the Depositor and each Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

                  (c) No transfer of a Private Certificate or any interest
therein shall be made to any Plan subject to ERISA or Section 4975 of the Code,
any Person acting, directly or indirectly, on behalf of any such Plan or any
Person acquiring such Certificates with "Plan Assets" of a Plan within the
meaning of the Department of Labor regulation promulgated at 29 C. F. R. ss.
2510.3-101 ("Plan Assets"), as certified by such transferee in the form of
Exhibit G, unless the Trustee is provided with an Opinion of Counsel addressed
to the Trustee, for the benefit of the Trustee, each Servicer and the Depositor
and on which they may rely, which establishes to the satisfaction of the Trustee
that the purchase of such Certificates is permissible under ERISA and the Code,
will not constitute or result in any non-exempt prohibited transaction under
ERISA or Section 4975 of the Code and will not subject the Depositor, either
Servicer, the Trustee or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Depositor, either Servicer, the Trustee or the
Trust Fund. Neither an Opinion of Counsel nor any certification will be required
in connection with the initial transfer of any such Certificate by the Depositor
to an Affiliate of the Depositor (in which case, the Depositor or any Affiliate
thereof shall have deemed to have represented that such Affiliate is not a Plan
or a Person investing Plan Assets) and the Trustee shall be entitled to
conclusively rely upon a representation (which, upon the request of the

                                     -159-
<PAGE>

Trustee, shall be a written representation) from the Depositor of the status of
such transferee as an affiliate of the Depositor.

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

                  If any Certificate or any interest therein is acquired or held
in violation of the provisions of the two preceding paragraphs, the next
preceding permitted beneficial owner will be treated as the beneficial owner of
that Certificate retroactive to the date of transfer to the purported beneficial
owner. Any purported beneficial owner whose acquisition or holding of any such
Certificate or interest therein was effected in violation of the provisions of
the preceding paragraph shall indemnify and hold harmless the Depositor, each
Servicer, the Trustee and the Trust Fund from and against any and all
liabilities, claims, costs or expenses incurred by those parties as a result of
that acquisition or holding.

                  (d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of Transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly subject
to the following provisions:

                           (A) Each Person holding or acquiring any Ownership
                  Interest in a Residual Certificate shall be a Permitted
                  Transferee and shall promptly notify the Trustee of any change
                  or impending change in its status as a Permitted Transferee.

                           (B) In connection with any proposed Transfer of any
                  Ownership Interest in a Residual Certificate, the Trustee
                  shall require delivery to it, and shall not register the
                  Transfer of any Residual Certificate until its receipt of, an
                  affidavit and agreement (a "Transfer Affidavit and Agreement,"
                  in the form attached hereto as Exhibit F-2) from the proposed
                  Transferee, in form and substance satisfactory to the Trustee,
                  representing and warranting, among other things, that such
                  Transferee is a Permitted Transferee, that it is not acquiring
                  its Ownership Interest in the Residual Certificate that is the
                  subject of the proposed Transfer as a nominee, trustee or
                  agent for any Person that is not a Permitted Transferee, that
                  for so long as it retains its Ownership Interest in a Residual
                  Certificate, it

                                     -160-
<PAGE>

                  will endeavor to remain a Permitted Transferee, and that it
                  has reviewed the provisions of this Section 5.02(d) and agrees
                  to be bound by them.

                           (C) Notwithstanding the delivery of a Transfer
                  Affidavit and Agreement by a proposed Transferee under clause
                  (B) above, if a Responsible Officer of the Trustee who is
                  assigned to this transaction has actual knowledge that the
                  proposed Transferee is not a Permitted Transferee, no Transfer
                  of an Ownership Interest in a Residual Certificate to such
                  proposed Transferee shall be effected.

                           (D) Each Person holding or acquiring any Ownership
                  Interest in a Residual Certificate shall agree (x) to require
                  a Transfer Affidavit and Agreement in the form attached hereto
                  as Exhibit F-2 from any other Person to whom such Person
                  attempts to transfer its Ownership Interest in a Residual
                  Certificate and (y) not to transfer its Ownership Interest
                  unless it provides a Transferor Affidavit (in the form
                  attached hereto as Exhibit F-2) to the Trustee stating that,
                  among other things, it has no actual knowledge that such other
                  Person is not a Permitted Transferee.

                           (E) Each Person holding or acquiring an Ownership
                  Interest in a Residual Certificate, by purchasing an Ownership
                  Interest in such Certificate, agrees to give the Trustee
                  written notice that it is a "pass-through interest holder"
                  within the meaning of temporary Treasury regulation Section
                  1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership
                  Interest in a Residual Certificate, if it is, or is holding an
                  Ownership Interest in a Residual Certificate on behalf of, a
                  "pass-through interest holder."

                  (ii) The Trustee will register the Transfer of any Residual
         Certificate only if it shall have received the Transfer Affidavit and
         Agreement and all of such other documents as shall have been reasonably
         required by the Trustee as a condition to such registration. In
         addition, no Transfer of a Residual Certificate shall be made unless
         the Trustee shall have received a representation letter from the
         Transferee of such Certificate to the effect that such Transferee is a
         Permitted Transferee.

                  (iii) (A) If any purported Transferee shall become a Holder of
         a Residual Certificate in violation of the provisions of this Section
         5.02(d), then the last preceding Permitted Transferee shall be
         restored, to the extent permitted by law, to all rights as holder
         thereof retroactive to the date of registration of such Transfer of
         such Residual Certificate. The Trustee shall be under no liability to
         any Person for any registration of Transfer of a Residual Certificate
         that is in fact not permitted by this Section 5.02(d) or for making any
         payments due on such Certificate to the holder thereof or for taking
         any other action with respect to such holder under the provisions of
         this Agreement.

                           (B) If any purported Transferee shall become a holder
                  of a Residual Certificate in violation of the restrictions in
                  this Section 5.02(d) and to the extent that the retroactive
                  restoration of the rights of the holder of such Residual
                  Certificate as described in clause (iii)(A) above shall be
                  invalid, illegal or unenforceable, then the Trustee shall have
                  the right,

                                     -161-
<PAGE>

                  but not the obligation, without notice to the holder or any
                  prior holder of such Residual Certificate, to sell such
                  Residual Certificate to a purchaser selected by the Trustee on
                  such terms as the Trustee may choose. Such purported
                  Transferee shall promptly endorse and deliver each Residual
                  Certificate in accordance with the instructions of the
                  Trustee. Such purchaser may be the Trustee itself or any
                  Affiliate of the Trustee. The proceeds of such sale, net of
                  the commissions (which may include commissions payable to the
                  Trustee or its Affiliates), expenses and taxes due, if any,
                  will be remitted by the Trustee to such purported Transferee.
                  The terms and conditions of any sale under this clause
                  (iii)(B) shall be determined in the sole discretion of the
                  Trustee, and the Trustee shall not be liable to any Person
                  having an Ownership Interest in a Residual Certificate as a
                  result of its exercise of such discretion.

                  (iv) The Trustee shall make available to the Internal Revenue
         Service and those Persons specified by the REMIC Provisions all
         information necessary to compute any tax imposed (A) as a result of the
         Transfer of an Ownership Interest in a Residual Certificate to any
         Person who is a Disqualified Organization, including the information
         described in Treasury regulations sections 1.860D-1(b)(5) and
         1.860E-2(a)(5) with respect to the "excess inclusions" of such Residual
         Certificate and (B) as a result of any regulated investment company,
         real estate investment trust, common trust fund, partnership, trust,
         estate or organization described in Section 1381 of the Code that holds
         an Ownership Interest in a Residual Certificate having as among its
         record holders at any time any Person which is a Disqualified
         Organization. Reasonable compensation for providing such information
         may be accepted by the Trustee.

                  (v) The provisions of this Section 5.02(d) set forth prior to
         this subsection (v) may be modified, added to or eliminated, provided
         that there shall have been delivered to the Trustee at the expense of
         the party seeking to modify, add to or eliminate any such provision the
         following:

                           (A) written notification from each Rating Agency to
                  the effect that the modification, addition to or elimination
                  of such provisions will not cause such Rating Agency to
                  downgrade its then-current ratings of any Class of
                  Certificates; and

                           (B) an Opinion of Counsel, in form and substance
                  satisfactory to the Trustee, to the effect that such
                  modification of, addition to or elimination of such provisions
                  will not cause any Trust REMIC to cease to qualify as a REMIC
                  and will not cause any Trust REMIC to be subject to an
                  entity-level tax caused by the Transfer of any Residual
                  Certificate to a Person that is not a Permitted Transferee or
                  a Person other than the prospective transferee to be subject
                  to a REMIC-tax caused by the Transfer of a Residual
                  Certificate to a Person that is not a Permitted Transferee.

                  (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee shall
execute, authenticate and deliver, in the name of the designated Transferee or
Transferees, one or more new Certificates of the same Class of a like aggregate
Percentage Interest.

                                     -162-
<PAGE>

                  (f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute, authenticate and deliver,
the Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Trustee) be duly endorsed by, or be accompanied by
a written instrument of transfer in the form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing. In
addition, (i) with respect to each Class R-I Certificate, the Holder thereof may
exchange, in the manner described above, such Class R-I Certificate for a
separate Certificate representing such Holder's respective Percentage Interest
in the Class R-I Certificate being exchanged, (ii) with respect to each Class
R-II Certificate, the Holder thereof may exchange, in the manner described
above, such Class R-II Certificate for a separate Certificate representing such
Holder's respective Percentage Interest in the Class R-II Certificate being
exchanged, (iii) with respect to each Class R-III Certificate, the Holder
thereof may exchange, in the manner described above, such Class R-III
Certificate for a separate Certificate representing such Holder's respective
Percentage Interest in the Class R-III Certificate being exchanged and (iv) with
respect to each Class R-X Certificate, the Holder thereof may exchange, in the
manner described above, such Class R-X Certificate for two separate
Certificates, each representing such Holder's respective Percentage Interest in
the Class R-II Interest and the Class R-III Interest, respectively, in each case
that was evidenced by the Class R-X Certificate being exchanged.

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

                  (h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trustee in accordance with its customary
procedures.

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

                  If (i) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (ii) there is delivered to
the Trustee such security or indemnity as may be required by it to save it
harmless, then, in the absence of actual knowledge by the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the same
Class and of like denomination and Percentage Interest. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the applicable REMIC created hereunder, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.

                                     -163-
<PAGE>

                  SECTION 5.04. Persons Deemed Owners.

                  The Depositor, each Servicer, the Trustee, the Certificate
Insurer, the Guarantor and any agent of any of them may treat the Person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.01 and for all
other purposes whatsoever, and none of the Depositor, either Servicer, the
Trustee, the Certificate Insurer, the Guarantor or any agent of any of them
shall be affected by notice to the contrary.

                  SECTION 5.05. Certain Available Information.

                  On or prior to the date of the first sale of any Private
Certificate to an Independent third party, the Depositor shall provide to the
Trustee ten copies of any private placement memorandum or other disclosure
document used by the Depositor in connection with the offer and sale of such
Certificates. In addition, if any such private placement memorandum or
disclosure document is revised, amended or supplemented at any time following
the delivery thereof to the Trustee, the Depositor promptly shall inform the
Trustee of such event and shall deliver to the Trustee ten copies of the private
placement memorandum or disclosure document, as revised, amended or
supplemented. The Trustee shall maintain at its Corporate Trust Office and shall
make available free of charge during normal business hours for review by any
Holder of a Certificate, a Certificate Owner or any Person identified to the
Trustee as a prospective transferee of a Certificate, originals or copies of the
following items: (i) in the case of a Holder, a Certificate Owner or prospective
transferee of a Private Certificate, the related private placement memorandum or
other disclosure document relating to such Class of Certificates, in the form
most recently provided to the Trustee; and (ii) in all cases, (A) this Agreement
and any amendments hereof entered into pursuant to Section 11.01, (B) all
monthly statements required to be delivered to Certificateholders of the
relevant Class pursuant to Section 4.02 since the Closing Date, and all other
notices, reports, statements and written communications delivered to the
Certificateholders of the relevant Class pursuant to this Agreement since the
Closing Date, (C) all certifications delivered by a Responsible Officer of the
Trustee since the Closing Date pursuant to Section 10.01(h), (D) any and all
Officers' Certificates delivered to the Trustee by the related Servicer since
the Closing Date to evidence such Servicer's determination that any P&I Advance
or Servicing Advance was, or if made, would be, a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, and (E) any and all Officers'
Certificates delivered to the Trustee by either Servicer since the Closing Date
pursuant to Section 4.04(a). Copies and mailing of any and all of the foregoing
items will be available from the Trustee upon request at the expense of the
Person requesting the same.

                                     -164-
<PAGE>

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICERS

                  SECTION 6.01. Liability of the Depositor and the Servicers.

                  The Depositor and each Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor and a
Servicer and undertaken hereunder by the Depositor and each Servicer herein.

                  SECTION 6.02. Merger or Consolidation of the Depositor or the
                                Servicers.

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

                  The Depositor or either Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets to
any Person, in which case any Person resulting from any merger or consolidation
to which the Depositor or such Servicer shall be a party, or any Person
succeeding to the business of the Depositor or either Servicer, shall be the
successor of the Depositor or such Servicer, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to either Servicer
shall be qualified to service mortgage loans on behalf of Fannie Mae or Freddie
Mac; and provided further that the Rating Agencies' ratings of the Class A
Certificates, the Class A-IO Certificates and the Mezzanine Certificates in
effect immediately prior to such merger or consolidation will not be qualified,
reduced or withdrawn as a result thereof (as evidenced by a letter to such
effect from the Rating Agencies).

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

                  None of the Depositor, either Servicer, the Guarantor or any
of the directors, officers, employees or agents of the Depositor, either
Servicer or the Guarantor shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, either
Servicer, the Guarantor or any such person against any breach of warranties,
representations or covenants made herein, or against any specific liability
imposed on the Depositor, such Servicer or the Guarantor pursuant hereto, or
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties hereunder. The Depositor, each
Servicer, the

                                     -165-
<PAGE>

Guarantor and any director, officer, employee or agent of the Depositor, either
Servicer or the Guarantor may rely in good faith on any document of any kind
which, PRIMA FACIE, is properly executed and submitted by any Person respecting
any matters arising hereunder. The Depositor, each Servicer, the Guarantor and
any director, officer, employee or agent of the Depositor, either Servicer or
the Guarantor shall be indemnified and held harmless by the Trust Fund against
any loss, liability or expense incurred in connection with (i) any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense relating to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement), any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder and (ii) the
breach of any representation or warranty of NC Capital under the Mortgage Loan
Purchase Agreement (but only to the extent of amounts paid by NC Capital to the
Trust Fund pursuant to its obligations under Section 7 of the Mortgage Loan
Purchase Agreement). None of the Depositor, either Servicer or the Guarantor
shall be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement;
provided, however, that each of the Depositor, each Servicer and the Guarantor
may in its discretion undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom (except any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder) shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor, each
Servicer and the Guarantor shall be entitled to be reimbursed therefor from the
related Collection Account as and to the extent provided in Section 3.11, any
such right of reimbursement being prior to the rights of the Certificateholders
to receive any amount in the related Collection Account.

         Each Servicer (except the Trustee to the extent it has succeeded the
Master Servicer as required hereunder) shall indemnify and hold the Trustee, the
Depositor, the Guarantor and the Trust Fund harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor, the Guarantor, the Certificate Insurer or the Trust Fund may sustain
in any way related to the failure of such Servicer to perform its duties and
service the Mortgage Loans in compliance with the terms of this Agreement. Each
Servicer shall immediately notify the Trustee, the Certificate Insurer, the
Guarantor and the Depositor if a claim is made that may result in such claims,
losses, penalties, fines, forfeitures, legal fees or related costs, judgments,
or any other costs, fees and expenses, and the related Servicer shall assume
(with the consent of the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against such Servicer, the Trustee, the Depositor, the Guarantor and/or the
Trust Fund in respect of such claim. The provisions of this paragraph shall
survive the termination of this Agreement, the payment of the outstanding
Certificates and the resignation or removal of the Trustee

                  SECTION 6.04. Limitation on Resignation of the Servicers.

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                  Neither Servicer shall resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder are
no longer permissible under applicable law and (ii) with the written consent of
the Trustee and the Controlling Person (as provided in Section 1.03). Any such
determination pursuant to the preceding sentence permitting the resignation of
either Servicer shall be evidenced by an Opinion of Counsel to such effect
obtained at the expense of the related Servicer and delivered to the Trustee,
the Certificate Insurer and the Guarantor. No resignation of either Servicer
shall become effective until the Trustee or a successor servicer reasonably
acceptable to the Controlling Person shall have assumed the related Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.

                  Except as expressly provided herein, neither Servicer shall
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by such Servicer hereunder. The foregoing prohibition on assignment
shall not prohibit either Servicer from designating a Sub-Servicer as payee of
any indemnification amount payable to the related Servicer hereunder; provided,
however, that as provided in Section 3.06 hereof, no Sub-Servicer shall be a
third- party beneficiary hereunder and the parties hereto shall not be required
to recognize any Sub-Servicer as an indemnitee under this Agreement. If,
pursuant to any provision hereof, the duties of either Servicer are transferred
to a successor Servicer, the entire amount of the Servicing Fee and other
compensation payable to the related Servicer pursuant hereto shall thereafter be
payable to such successor Servicer.

                  SECTION 6.05. Rights of the Depositor in Respect of the
                                Servicers.

                  Each Servicer shall afford (and any Sub-Servicing Agreement
shall provide that each Sub- Servicer shall afford) the Depositor, the
Certificate Insurer, the Guarantor and the Trustee, upon reasonable advance
notice, during normal business hours, at the office designated by the related
Servicer access to all records maintained by the related Servicer (and any such
Sub-Servicer) in respect of the related Servicer's rights and obligations with
respect to the related Mortgage Loans hereunder and access to officers of the
related Servicer (and those of any such Sub-Servicer) responsible for such
obligations. Upon reasonable advance notice, each Servicer shall furnish to the
Depositor, the Certificate Insurer, the Guarantor and the Trustee its (and any
such Sub-Servicer's) most recent financial statements and such other information
relating to such Servicer's capacity to perform its obligations under this
Agreement as it possesses (and that any such Sub-Servicer possesses). To the
extent such information is not otherwise available to the public, the Depositor,
the Certificate Insurer, the Guarantor and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without such
Servicer's written consent, except as required pursuant to this Agreement or to
the extent that it is appropriate to do so (i) in working with legal counsel,
auditors, taxing authorities or other governmental agencies or (ii) pursuant to
any law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Depositor, the
Certificate Insurer, the Guarantor, the Trustee or the Trust Fund, and in any
case, the Depositor, the Certificate Insurer, the Guarantor or the Trustee as
the case may be, (iii) disclosure of any and all information that is or becomes
publicly known, or information obtained by the Trustee from sources other than
the Depositor or the related Servicer, (iv) disclosure as required pursuant to
this Agreement or (v) disclosure of any and all information(A) in any
preliminary or final offering circular,

                                     -167-
<PAGE>

registration statement or contract or other document pertaining to the
transactions contemplated by the Agreement approved in advance by the Depositor
or the related Servicer or (B) to any affiliate, independent or internal
auditor, agent, employee or attorney of the Trustee having a need to know the
same, provided that the Trustee advises such recipient of the confidential
nature of the information being disclosed, shall use its best efforts to assure
the confidentiality of any such disseminated non-public information. The
Depositor may, but is not obligated to, enforce the obligations of each Servicer
under this Agreement and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of either Servicer under this
Agreement or exercise the rights of either Servicer under this Agreement;
provided that such Servicer shall not be relieved of any of its obligations
under this Agreement by virtue of such performance by the Depositor or its
designee. The Depositor shall not have any responsibility or liability for any
action or failure to act by either Servicer and is not obligated to supervise
the performance of the Servicers under this Agreement or otherwise.

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<PAGE>

                                   ARTICLE VII

                                     DEFAULT

                  SECTION 7.01. Servicer Events of Default.

                  (a) "Servicer Event of Default," wherever used herein, means
         any one of the following events, provided, however, that no Servicer
         shall be obligated or liable for any default by the other Servicer:

                  (i) any failure by either Servicer to remit to the Trustee for
         distribution to the Certificateholders or the Guarantor any payment
         (other than a P&I Advance required to be made from its own funds on any
         Servicer Remittance Date pursuant to Section 4.03) required to be made
         under the terms of the Certificates and this Agreement which continues
         unremedied for a period of one Business Day after the date upon which
         written notice of such failure, requiring the same to be remedied,
         shall have been given to such Servicer by the Depositor or the Trustee
         (in which case notice shall be provided by telecopy), or to such
         Servicer, the Depositor and the Trustee by the Guarantor or the Holders
         of Certificates entitled to at least 25% of the Voting Rights; or

                  (ii) any failure on the part of either Servicer duly to
         observe or perform in any material respect any other of the covenants
         or agreements on the part of such Servicer contained in this Agreement,
         or the breach by either Servicer of any representation and warranty
         contained in Section 2.05, which continues unremedied for a period of
         30 days (or if such failure or breach cannot be remedied within 30
         days, then such remedy shall have been commenced within 30 days and
         diligently pursued thereafter; provided, however, that in no event
         shall such failure or breach be allowed to exist for a period of
         greater than 90 days) after the earlier of (i) the date on which
         written notice of such failure, requiring the same to be remedied,
         shall have been given to such Servicer by the Depositor, the Trustee or
         to such Servicer, the Depositor and the Trustee by the Guarantor or th
         eHolders of Certificates entitled to at least 25% of the Voting Rights
         and (ii) actual knowledge of such failure by a Servicing Officer of the
         related Servicer; or

                  (iii) a decree or order of a court or agency or supervisory
         authority having jurisdiction in the premises in an involuntary case
         under any present or future federal or state bankruptcy, insolvency or
         similar law or the appointment of a conservator or receiver or
         liquidator in any insolvency, readjustment of debt, marshalling of
         assets and liabilities or similar proceeding, or for the winding-up or
         liquidation of its affairs, shall have been entered against either
         Servicer and such decree or order shall have remained in force
         undischarged or unstayed for a period of 90 days; or

                  (iv) either Servicer shall consent to the appointment of a
         conservator or receiver or liquidator in any insolvency, readjustment
         of debt, marshalling of assets and liabilities or similar proceedings
         of or relating to it or of or relating to all or substantially all of
         its property; or

                                     -169-
<PAGE>

                  (v) either Servicer shall admit in writing its inability to
         pay its debts generally as they become due, file a petition to take
         advantage of any applicable insolvency or reorganization statute, make
         an assignment for the benefit of its creditors, or voluntarily suspend
         payment of its obligations; or

                  (vi) either Servicer ceases to be an approved seller or
         servicer of Fannie Mae;

                  (vii) any failure by GMAC of the Servicer Termination Test;

                  (viii) any withdrawal or downgrade of two or more levels
         (i.e., from "Above Average" to "Below Average" or the equivalent) of
         the servicer rating, as of the Closing Date, of a Servicer by any
         Rating Agency which results in a downgrade, qualification or withdrawal
         of the rating assigned to any Class of Certificates by any Rating
         Agency; or

                  (ix) any failure of either Servicer to make any P&I Advance on
         any Servicer Remittance Date required to be made from its own funds
         pursuant to Section 4.03 which continues unremedied until 3:00 p.m. New
         York time on the Business Day immediately following the Servicer
         Remittance Date.

                  If a Servicer Event of Default described in clauses (i)
through (viii) of this Section shall occur, then, and in each and every such
case, so long as such Servicer Event of Default shall not have been remedied,
the Trustee may, and at the written direction of the Controlling Person (as
provided in Section 1.03) or the Holders of Certificates entitled to at least
51% of Voting Rights, the Trustee shall, by notice in writing to the defaulting
Servicer, the Depositor, the Guarantor and the Certificate Insurer, terminate
all of the rights and obligations of such Servicer in its capacity as a Servicer
under this Agreement, to the extent permitted by law, and in and to the Mortgage
Loans and the proceeds thereof. If a Servicer Event of Default described in
clause (ix) hereof shall occur, the Trustee shall, by notice in writing to the
defaulting Servicer, the Depositor, the Guarantor and the Certificate Insurer,
terminate all of the rights and obligations of such Servicer in its capacity as
a Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof. On or after the receipt by the defaulting Servicer of such
written notice, all authority and power of such Servicer under this Agreement,
whether with respect to the Certificates (other than as a Holder of any
Certificate) or the Mortgage Loans or otherwise, shall pass to and be vested in
the Trustee pursuant to and under this Section, and, without limitation, the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise, to
execute and deliver, on behalf of and at the expense of the defaulting Servicer,
any and all documents and other instruments and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The defaulting Servicer
agrees promptly (and in any event no later than ten Business Days subsequent to
such notice) to provide the Trustee with all documents and records requested by
it to enable it to assume such Servicer's functions under this Agreement, and to
cooperate with the Trustee in effecting the termination of such Servicer's
responsibilities and rights under this Agreement, including, without limitation,
the transfer within one Business Day to the Trustee for administration by it of
all cash amounts which at the time shall be or should have been credited by such
Servicer to the related Collection Account held by or

                                     -170-
<PAGE>

on behalf of such Servicer, the Distribution Account or any REO Account or
Servicing Account held by or on behalf of such Servicer or thereafter be
received with respect to the Mortgage Loans or any REO Property serviced by such
Servicer (provided, however, that such Servicer shall continue to be entitled to
receive all amounts accrued or owing to it under this Agreement on or prior to
the date of such termination, whether in respect of P&I Advances, Servicing
Advances or otherwise, and shall continue to be entitled to the benefits of
Section 6.03, notwithstanding any such termination, with respect to events
occurring prior to such termination). For purposes of this Section 7.01, the
Trustee shall not be deemed to have knowledge of a Servicer Event of Default
unless a Responsible Officer of the Trustee assigned to and working in the
Trustee's Corporate Trust Office has actual knowledge thereof or unless written
notice of any event which is in fact such a Servicer Event of Default is
received by the Trustee and such notice references the Certificates, the Trust
Fund or this Agreement.

                  SECTION 7.02. Trustee to Act; Appointment of Successor.

                  (a)(1) On and after the time a defaulting Servicer receives a
notice of termination, the Trustee shall be the successor in all respects to
such Servicer in its capacity as a Servicer under this Agreement and the
transactions set forth or provided for herein, and all the responsibilities,
duties and liabilities relating thereto and arising thereafter shall be assumed
by the Trustee (except for any representations or warranties of such Servicer
under this Agreement, the responsibilities, duties and liabilities contained in
Section 2.05 and the obligation to deposit amounts in respect of losses pursuant
to Section 3.12) by the terms and provisions hereof including, without
limitation, such Servicer's obligations to make P&I Advances pursuant to Section
4.03; provided, however, that if the Trustee is prohibited by law or regulation
from obligating itself to make advances regarding delinquent mortgage loans,
then the Trustee shall not be obligated to make P&I Advances pursuant to Section
4.03; and provided further, that any failure to perform such duties or
responsibilities caused by the defaulting Servicer's failure to provide
information required by Section 7.01 shall not be considered a default by the
Trustee as successor to such Servicer hereunder. As compensation therefor, the
Trustee shall be entitled to the Servicing Fee and all funds relating to the
Mortgage Loans to which the defaulting Servicer would have been entitled if it
had continued to act hereunder. Notwithstanding the above and subject to Section
7.02(a)(2) below, the Trustee may, if it shall be unwilling to so act, or shall,
if it is unable to so act or if it is prohibited by law from making advances
regarding delinquent mortgage loans or if the Controlling Person or the Holders
of Certificates entitled to at least 51% of the Voting Rights so request in
writing to the Trustee, promptly appoint or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution
acceptable to each Rating Agency and having a net worth of not less than
$15,000,000 and reasonably acceptable to the Controlling Person (as provided in
Section 1.03), as the successor to the defaulting Servicer under this Agreement
in the assumption of all or any part of the responsibilities, duties or
liabilities of such Servicer under this Agreement.

                  The Trustee or other successor Servicer shall be entitled to
be reimbursed by the defaulting Servicer (or by the Trust Fund if the defaulting
Servicer is unable to fulfill its obligations hereunder) for all reasonable
out-of-pocket costs (such expenses of the Trustee to be documented by the
Trustee to the extent possible) associated with the transfer of servicing from
the predecessor Servicer, including without limitation, any such costs or
expenses associated with the complete transfer of all servicing data and the

                                     -171-
<PAGE>

completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Mortgage Loans properly and
effectively.

                  (2) No appointment of a successor to the defaulting Servicer
under this Agreement shall be effective until the assumption by the successor of
all of such Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
defaulting Servicer as such hereunder. The Depositor, the Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Pending appointment of a successor
to the defaulting Servicer under this Agreement, the Trustee shall act in such
capacity as hereinabove provided.

                  SECTION 7.03. Notification to Certificateholders.

                  (a) Upon any termination of either Servicer pursuant to
Section 7.01 above or any appointment of a successor to such Servicer pursuant
to Section 7.02 above, the Trustee shall give prompt written notice thereof to
the Certificate Insurer, the Guarantor and the Certificateholders at their
respective addresses appearing in the Certificate Register.

                  (b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to the Guarantor, the Certificate Insurer and all
Holders of Certificates notice of each such occurrence, unless such default or
Servicer Event of Default shall have been cured or waived.

                  SECTION 7.04. Waiver of Servicer Events of Default.

                  The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Servicer
Event of Default hereunder may waive such default or Servicer Event of Default;
provided, however, that a default or Servicer Event of Default under clause (i)
or (vii) of Section 7.01 may be waived only by all of the Holders of the Regular
Certificates and the Controlling Person (as provided in Section 1.03) as
evidenced by the written consent of the Controlling Person. Upon any such waiver
of a default or Servicer Event of Default, such default or Servicer Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other
default or Servicer Event of Default or impair any right consequent thereon
except to the extent expressly so waived.

                                     -172-
<PAGE>

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

                  SECTION 8.01. Duties of Trustee.

                  The Trustee, prior to the occurrence of a Servicer Event of
Default and after the curing of all Servicer Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Servicer Event of Default,
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. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.

                  The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement. If any such
instrument is found not to conform on its face to the requirements of this
Agreement in a material manner, the Trustee shall take such action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to its satisfaction, will provide notice thereof to the
Certificateholders, the Guarantor and the Certificate Insurer.

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

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

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

                  (iii) The Trustee shall not be personally liable with respect
         to any action taken, suffered or omitted to be taken by it in good
         faith in accordance with the direction of the Holders of Certificates
         entitled to at least 25% of the Voting Rights, the Guarantor or the
         Certificate Insurer

                                     -173-
<PAGE>

         relating to the time, method and place of conducting any proceeding for
         any remedy available to the Trustee or exercising any trust or power
         conferred upon it, under this Agreement.

                  SECTION 8.02. Certain Matters Affecting the Trustee.

                  (a) Except as otherwise provided in Section 8.01:

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

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

                  (iii) 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 at the request, order or direction of any of the
         Certificateholders, the Certificate Insurer or the Guarantor, pursuant
         to the provisions of this Agreement, unless such Certificateholders,
         the Certificate Insurer or the Guarantor shall have offered to the
         Trustee security or indemnity reasonably satisfactory to it against the
         costs, expenses and liabilities which may be incurred therein or
         thereby; nothing contained herein shall, however, relieve the Trustee
         of the obligation, upon the occurrence of a Servicer Event of Default
         (which has not been cured or waived), to exercise such of the rights
         and powers vested in it by this Agreement, and to use the same degree
         of care and skill in their exercise as a prudent person would exercise
         or use under the circumstances in the conduct of such person's own
         affairs;

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

                  (v) Prior to the occurrence of a Servicer Event of Default
         hereunder and after the curing of all Servicer Events of Default which
         may have occurred, the Trustee shall not be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, approval, bond or other paper or document, unless
         requested in writing to do so by the Certificate Insurer, the Guarantor
         or the Holders of Certificates entitled to at least 25% of the Voting
         Rights; provided, however, that if the payment within a reasonable time
         to the Trustee of the costs, expenses or liabilities likely to be
         incurred by it in the making of such investigation is, in the opinion
         of the Trustee not reasonably assured to the Trustee by the Certificate
         Insurer, the Guarantor or such Certificateholders, the

                                     -174-
<PAGE>

         Trustee may require reasonable indemnity against such expense or
         liability from the Certificate Insurer, the Guarantor or such
         Certificateholders as a condition to taking any such action;

                  (vi) The Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents, accountants or attorneys, and the Trustee shall not be
         responsible for any misconduct or negligence on the part of any agents,
         accountants or attorneys appointed with due care by it hereunder; and

                  (vii) The Trustee shall have no obligation to invest and
         reinvest any cash held in the absence of timely and specific written
         investment direction from either Servicer or the Depositor. In no event
         shall the Trustee be liable for the selection of investments or for
         investment losses incurred thereon. The Trustee shall have no liability
         in respect of losses incurred as a result of the liquidation of any
         investment incurred as a result of the liquidation of any investment
         prior to its stated maturity or the failure of either Servicer or the
         Depositor to provide timely written investment direction.

                  (b) All rights of action under this Agreement or under any of
         the Certificates, enforceable by the Trustee, may be enforced by it
         without the possession of any of the Certificates, or the production
         thereof at the trial or other proceeding relating thereto, and any such
         suit, action or proceeding instituted by the Trustee shall be brought
         in the name of the Trustee for the benefit of all the Holders of such
         Certificates, subject to the provisions of this Agreement. In order to
         comply with its duties under the U.S.A. Patriot Act, the Trustee shall
         obtain and verify certain information and documentation from the other
         parties hereto including but not limited to such parties' name,
         address, and other identifying information.

                  SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
                                Loans.

                  The recitals contained herein and in the Certificates (other
than the signature of the Trustee, the authentication of the Certificate
Registrar on the Certificates, the acknowledgments of the Trustee contained in
Article II and the representations and warranties of the Trustee in Section
8.13) shall be taken as the statements of the Depositor and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth with respect to such party in Section 8.13) or of the
Certificates (other than the signature of the Trustee and authentication of the
Certificate Registrar on the Certificates) or of any Mortgage Loan or related
document. The Trustee shall not be accountable for the use or application by the
Depositor of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Depositor or either Servicer
in respect of the Mortgage Loans or deposited in or withdrawn from the related
Collection Account by such Servicer, other than any funds held by or on behalf
of the Trustee and any amounts held by or on behalf of the Trustee in accordance
with Section 3.10.

                  SECTION 8.04. Trustee May Own Certificates.

                  The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Certificates with the same rights it would
have if it were not Trustee.

                                     -175-
<PAGE>

                  SECTION 8.05. Trustee's Fees and Expenses.

                  (a) The Trustee shall withdraw from the Distribution Account
on each Distribution Date and pay to itself the Trustee Fee. The Trustee, or any
director, officer, employee or agent of the Trustee shall be indemnified by
REMIC I and held harmless against any loss, liability or expense (not including
expenses, disbursements and advances incurred or made by the Trustee including
the compensation and the expenses and disbursements of its agents and counsel,
in the ordinary course of the Trustee's performance in accordance with the
provisions of this Agreement) incurred by the Trustee in connection with any
Servicer Event of Default (not including expenses, disbursements and advances
incurred or made by the Trustee in its capacity as a successor Servicer),
default, claim or legal action or any pending or threatened claim or legal
action arising out of or in connection with the acceptance or administration of
its obligations and duties under this Agreement or any document executed in
connection herewith, other than any loss, liability or expense (i) resulting
from a breach of either Servicer's obligations and duties under this Agreement
and the Mortgage Loans (for which such Servicer shall indemnify pursuant to
Section 8.05(b)), (ii) for the expenses of preparing and filing Tax Returns
pursuant to Section 10.01(d) or (iii) any loss, liability or expense incurred by
reason of its willful misfeasance, bad faith or negligence in the performance of
its duties hereunder or by reason of reckless disregard of its respective
obligations and duties hereunder. Any amounts payable to the Trustee, or any
director, officer, employee or agent of the Trustee in respect of the
indemnification provided by this paragraph (a), or pursuant to any other right
of reimbursement from the Trust Fund that the Trustee, or any director, officer,
employee or agent of the Trustee, may have hereunder in its capacity as such,
may be withdrawn by the Trustee from the Distribution Account at any time.

                  (b) New Century Mortgage Corporation and the Trustee have
entered into a fee letter governing the terms of reimbursement of certain
expenses of the Trustee not otherwise reimbursable to the Trustee from the Trust
Fund as set forth above. Furthermore, each Servicer agrees to indemnify the
Trustee from, and hold it harmless against, any loss, liability or expense
resulting from the negligence or willful misconduct of such Servicer in the
performance of its duties hereunder or a breach of such Servicer's obligations
and duties under this Agreement. Such indemnity shall survive the termination or
discharge of this Agreement and the resignation or removal of the Trustee. Any
payment hereunder made by either Servicer to the Trustee shall be from such
Servicer's own funds, without reimbursement from the Trust Fund therefor.

                  (c) The Servicer shall pay any annual rating agency fees of
the Rating Agencies for ongoing surveillance from its own funds without right of
reimbursement.

                  The provisions of this Section 8.05 shall survive the
termination of this Agreement or the earlier resignation or removal of the
Trustee.

                  SECTION 8.06. Eligibility Requirements for Trustee.

                  The Trustee hereunder shall at all times be a corporation or
an association (other than the Depositor, the Seller, each Servicer or any
Affiliate of the foregoing) organized and doing business under

                                     -176-
<PAGE>

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 at least $50,000,000 and subject to supervision or examination by federal or
state authority. If such corporation or association publishes reports of
conditions 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 association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07.

                  SECTION 8.07. Resignation and Removal of the Trustee.

                  The Trustee may at any time resign and be discharged from the
trust hereby created by giving written notice thereof to the Depositor, each
Servicer, the Certificate Insurer, the Guarantor and the Certificateholders.
Upon receiving such notice of resignation of the Trustee, the Depositor shall
promptly appoint a successor trustee acceptable to the Controlling Person (as
provided in Section 1.03) by written instrument, in duplicate, which instrument
shall be delivered to the resigning Trustee and to the successor trustee. A copy
of such instrument shall be delivered to the Certificateholders, the Certificate
Insurer, the Guarantor, the Trustee and each Servicer by the Depositor. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation or removal, the
Certificate Insurer may appoint a successor Trustee, and if the Certificate
Insurer fails to do so within 30 days, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.

                  If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor or the Controlling Person, or if at
any time the Trustee shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor or the Controlling Person may remove the Trustee
and the Depositor may appoint a successor trustee acceptable to the Controlling
Person (as provided in Section 1.03) by written instrument, in duplicate, which
instrument shall be delivered to the Trustee so removed and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateholders,
the Certificate Insurer, the Guarantor and each Servicer by the Depositor. If no
successor Trustee shall have been so appointed and having accepted appointment
within 30 days after the giving of such notice of resignation, then the
Controlling Person (as provided in Section 1.03) may appoint a successor
Trustee.

                  The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders, the Guarantor and each Servicer by
the Depositor.

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                  Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.

                  SECTION 8.08. Successor Trustee.

                  Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor, the Certificate
Insurer, the Guarantor 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 the
like effect as if originally named as Trustee herein. The predecessor trustee
shall deliver to the successor trustee all Mortgage Files and related documents
and statements, as well as all moneys, held by it hereunder (other than any
Mortgage Files at the time held by a custodian, which custodian shall become the
agent of any successor trustee hereunder), and the Depositor and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties and obligations.

                  No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor trustee shall not result in a downgrading of any Class of Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.

                  Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to the Certificate Insurer and all Holders of
Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Depositor.

                  Notwithstanding anything to the contrary contained herein, so
long as no Certificate Insurer Default exists, the appointment of any successor
Trustee pursuant to any provision of this Agreement will be subject to the prior
written consent of the Certificate Insurer.

                  SECTION 8.09. Merger or Consolidation of Trustee.

                  Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to the
business of the Trustee shall be the successor of the Trustee hereunder,
provided such corporation or association shall be eligible under the provisions
of Section 8.06, 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.

                                     -178-
<PAGE>

                  SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.

                  Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the same may at the time be located, the
applicable Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee and the Controlling Person (as provided in Section 1.03)
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of REMIC I-A, REMIC I-B or
REMIC I-C, and to vest in such Person or Persons, in such capacity, such title
to REMIC I-A, REMIC I-B or REMIC I-C, as applicable, or any part thereof, and,
subject to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the applicable Servicer and the Trustee may
consider necessary or desirable. Any such co-trustee or separate trustee shall
be subject to the written approval of each Servicer. If the applicable Servicer
shall not have joined in such appointment or the Controlling Person (as provided
in Section 1.03) shall not have approved such appointment within 15 days after
the receipt by it of a request so to do, or in case a Servicer Event of Default
shall have occurred and be continuing, the Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
8.06 hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.

                  In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed by the Trustee (whether
as Trustee hereunder or as successor to a defaulting Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.

                  Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trust conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Depositor and each Servicer.

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

                                     -179-
<PAGE>

shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

                  SECTION 8.11. [Reserved].

                  SECTION 8.12. Appointment of Office or Agency.

                  The Trustee will designate an office or agency in the City of
New York where the Certificates may be surrendered for registration of transfer
or exchange, and presented for final distribution, and where notices and demands
to or upon the Trustee in respect of the Certificates and this Agreement may be
delivered. As of the Closing Date, the Trustee designates the office of its
agent located c/o DTC Transfer Agent Services, 55 Water Street, Jeanette Park
Entrance, New York, NY 10041 for such purposes.

                  SECTION 8.13. Representations and Warranties of the Trustee.

                  The Trustee hereby represents and warrants, solely as to
itself, to each Servicer, the Certificate Insurer and the Guarantor and the
Depositor, as of the Closing Date, that:

                  (i) It is a national banking association duly organized,
         validly existing and in good standing under the laws of the United
         States.

                  (ii) The execution and delivery of this Agreement by it, and
         the performance and compliance with the terms of this Agreement by it,
         will not violate its charter or bylaws.

                  (iii) It has the full power and authority to enter into and
         consummate all transactions contemplated by this Agreement, has duly
         authorized the execution, delivery and performance of this Agreement,
         and has duly executed and delivered this Agreement.

                  (iv) This Agreement, assuming due authorization, execution and
         delivery by the other parties hereto, constitutes a valid, legal and
         binding obligation of it, enforceable against it in accordance with the
         terms hereof, subject to (A) applicable bankruptcy, insolvency,
         receivership, reorganization, moratorium and other laws affecting the
         enforcement of creditors' rights generally, and (B) general principles
         of equity, regardless of whether such enforcement is considered in a
         proceeding in equity or at law.

                                     -180-
<PAGE>

                                   ARTICLE IX

                                   TERMINATION

                  SECTION 9.01 Termination Upon Repurchase or Liquidation of All
                               Mortgage Loans.

                  (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Guarantor, each
Servicer and the Trustee (other than the obligations of each Servicer to the
Trustee pursuant to Section 8.05 and of each Servicer to make remittances to the
Trustee and the Trustee to make payments in respect of the REMIC Regular
Interests and the Classes of Certificates as hereinafter set forth) shall
terminate upon the latest of (A) the payment in full of all amounts owing to the
Guarantor hereunder unless the Guarantor shall otherwise consent, (B) the
payment in full of all amounts owing to the Certificate Insurer hereunder and
under the Insurance Agreement unless the Certificate Insurer shall otherwise
consent and (C) payment to the Certificateholders and the deposit of all amounts
held by or on behalf of the Trustee and required hereunder to be so paid or
deposited on the Distribution Date coinciding with or following the earlier to
occur of (i) the purchase by the Terminator (as defined below) of all Mortgage
Loans and each REO Property remaining in REMIC I-A, REMIC I-B or REMIC I-C, as
applicable, and (ii) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in REMIC I;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof. Subject to Section 3.10
hereof, the purchase by the Terminator of all Mortgage Loans and each REO
Property remaining in REMIC I-A, REMIC I-B or REMIC I-C, as applicable, shall be
at a price equal to the greater of (i) the Stated Principal Balance of the
Mortgage Loans and the appraised value of any REO Properties, such appraisal to
be conducted by an Independent appraiser mutually agreed upon by the Terminator
and the Trustee in their reasonable discretion and (ii) the fair market value of
the Mortgage Loans and the REO Properties (as determined by the Terminator and,
to the extent that the Class A Certificates or a Class of Mezzanine Certificates
will not receive all amounts owed to it as a result of the termination, the
Trustee (it being understood and agreed that any determination by the Trustee
shall be made solely in reliance on an appraisal by an Independent appraiser as
provided above), as of the close of business on the third Business Day next
preceding the date upon which notice of any such termination is furnished to the
related Certificateholders pursuant to Section 9.01(c)), in each case plus
accrued and unpaid interest thereon at the weighted average of the Mortgage
Rates through the end of the Due Period preceding the final Distribution Date
plus unreimbursed Servicing Advances, P&I Advances, any unpaid Servicing Fees
allocable to such Mortgage Loans and REO Properties, any unpaid Guarantor
Reimbursement Amount, Guaranty Fees, Certificate Insurer premiums and
Reimbursement Amounts and any accrued and unpaid Net WAC Rate Carryover Amounts
(the "Termination Price"); provided, however, such option may only be exercised
if the Termination Price is sufficient to pay all interest accrued on, as well
as amounts necessary to retire the principal balance of, each class of notes
issued pursuant to the Indenture. If the determination of the fair market value
of the Mortgage Loans and REO Properties shall be required to be made by the
Terminator and an Independent appraiser as provided above, (A) such appraisal
shall be obtained at no expense to the Trustee and (B) the Trustee may

                                     -181-
<PAGE>

conclusively rely on, and shall be protected in relying on, such appraisal. The
consent of the Certificate Insurer shall be required prior to a termination
pursuant to this Section 9.01(a). In addition, if a termination pursuant to this
Section 9.01(a) will result in a draw on the Guaranty, the consent of the
Guarantor shall be required prior to the Terminator exercising such option.

                  (b) With respect to the Group I Mortgage Loans and the Group
II Mortgage Loans, the majority holder of the related Class CE Certificates or
if the majority holder of the related Class CE Certificates fails to exercise
such option, the related Servicer and with respect to the Group III Mortgage
Loans, the related Servicer (in each case, with the consent of the Certificate
Insurer) shall have the right (the party exercising such right, the
"Terminator"), to purchase all of the Mortgage Loans and each REO Property
remaining in REMIC I-A, REMIC I-B or REMIC I-C, as applicable, pursuant to
clause (i) of the preceding paragraph no later than the Determination Date in
the month immediately preceding the Distribution Date on which the Certificates
will be retired; provided, however, that the Terminator may elect to purchase
all of the Mortgage Loans and each REO Property remaining in REMIC I-A, REMIC
I-B or REMIC I-C, as applicable, pursuant to clause (i) of the preceding
paragraph only if the aggregate Stated Principal Balance of the Mortgage Loans
and each REO Property remaining in REMIC I-A, REMIC I-B or REMIC I-C, as
applicable, at the time of such election is reduced to less than 10% of the sum
of the aggregate Stated Principal Balance of the Mortgage Loans in REMIC I-A,
REMIC I-B or REMIC I-C, as applicable, as of the Cut-off Date and the Initial
Deposit. The Terminator shall not be entitled to exercise a purchase right under
this Section 9.01, without the Guarantor's consent, if the distribution of the
Termination Price according to such priorities would result in the Guarantor
being required to make a Guarantor Payment on the applicable Distribution Date.
By acceptance of the Residual Certificates, the Holder of the Residual
Certificates agrees, in connection with any termination hereunder, to assign and
transfer any amounts in excess of par, and to the extent received in respect of
such termination, to pay any such amounts to the Holders of the related Class CE
Certificates.

                  (c) Notice of the liquidation of the related Certificates
shall be given promptly by the Trustee by letter to Certificateholders and the
Certificate Insurer mailed (a) in the event such notice is given in connection
with the purchase of the Mortgage Loans and each REO Property by the Terminator,
not earlier than the 15th day and not later than the 25th day of the month next
preceding the month of the final distribution on the Certificates or (b)
otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which a Loan Group will terminate and the final payment in respect of
the REMIC I-A Regular Interests, the REMIC I-B Regular Interests or the REMIC
I-C Regular Interests, as applicable, and the related Certificates will be made
upon presentation and surrender of the related Certificates at the office of the
Trustee therein designated, (ii) the amount of any such final payment, (iii)
that no interest shall accrue in respect of the the REMIC I-A Regular Interests,
the REMIC I-B Regular Interests or the REMIC I-C Regular Interests, as
applicable, or the related Certificates from and after the Interest Accrual
Period relating to the final Distribution Date therefor and (iv) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Trustee. In the event such notice is given in connection with the
purchase of all of the Mortgage Loans and each REO Property remaining in REMIC
I-A, REMIC I-B or REMIC I-C by the Terminator, the Terminator shall deliver to
the Trustee for deposit in the Distribution Account not later than the last

                                     -182-
<PAGE>

Business Day of the month next preceding the month of the final distribution on
the Certificates an amount in immediately available funds equal to the
above-described purchase price. The Trustee shall remit to each Servicer from
such funds deposited in the Distribution Account (i) any amounts which such
Servicer would be permitted to withdraw and retain from the related Collection
Account pursuant to Section 3.11 and (ii) any other amounts otherwise payable by
the Trustee to the Servicers from amounts on deposit in the Distribution Account
pursuant to the terms of this Agreement, in each case prior to making any final
distributions pursuant to Section 10.01(d) below. Upon certification to the
Trustee by the Terminator of the making of such final deposit, the Trustee shall
promptly release to the Terminator the Mortgage Files for the remaining Mortgage
Loans, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.

                  Immediately following the deposit of funds in trust hereunder
in respect of all of the Certificates, the Trust Fund shall terminate.

                  SECTION 9.02 Additional Termination Requirements.

                  (a) In the event that the Terminator purchases all the
         Mortgage Loans and each REO Property or the final payment on or other
         liquidation of the last Mortgage Loan or REO Property remaining in
         REMIC I-A, REMIC I-B or REMIC I-C, as applicable, pursuant to Section
         9.01, the related Loan Group shall be terminated in accordance with the
         following additional requirements:

                  (i) The Trustee shall specify the first day in the 90-day
         liquidation period in a statement attached to each Trust REMIC's final
         Tax Return pursuant to Treasury regulation Section 1.860F- 1 and shall
         satisfy all requirements of a qualified liquidation under Section 860F
         of the Code and any regulations thereunder, as evidenced by an Opinion
         of Counsel obtained at the expense of the Terminator;

                  (ii) During such 90-day liquidation period and, at or prior to
         the time of making of the final payment on the Certificates, the
         Trustee shall sell all of the assets of REMIC I-A, REMIC I-B or REMIC
         I-C, as applicable, to the Terminator for cash; and

                  (iii) At the time of the making of the final payment on the
         Certificates, the Trustee shall distribute or credit, or cause to be
         distributed or credited, to the Holders of the related Residual
         Certificates all cash on hand in REMIC I-A, REMIC I-B or REMIC I-C, as
         applicable, (other than cash retained to meet claims), and REMIC I-A,
         REMIC I-B or REMIC I-C, as applicable, shall terminate at that time.

                  (b) At the expense of the requesting Terminator (or, if REMIC
         I-A, REMIC I-B or REMIC I-C, as applicable, is being terminated as a
         result of the occurrence of the event described in clause (ii) of the
         first paragraph of Section 9.01, at the expense of the related Servicer
         without the right of reimbursement from the Trust Fund), the Trustee
         shall prepare or cause to be prepared documentation required, if any,
         in connection with the adoption of a plan of liquidation of each Trust
         REMIC pursuant to this Section 9.02.

                                     -183-
<PAGE>

                  (c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.

                                     -184-
<PAGE>

                                   ARTICLE X

                                REMIC PROVISIONS

                  SECTION 10.01. REMIC Administration.

                  (a) The Trustee shall elect to treat each Trust REMIC as a
REMIC under the Code and, if necessary, under applicable state law. Each such
election will be made by the Trustee on Form 1066 or other appropriate federal
tax or information return or any appropriate state return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued. For the purposes of the REMIC election in respect of REMIC I-A, the
REMIC I-A Regular Interests shall be designated as the Regular Interests in
REMIC I-A and the Class R-I Certificates shall be designated as the Residual
Interest in REMIC I-A. For the purposes of the REMIC election in respect of
REMIC I-B, the REMIC I-B Regular Interests shall be designated as the Regular
Interests in REMIC I-B and the Class R-II Certificates shall be designated as
the Residual Interest in REMIC I-B. For the purposes of the REMIC election in
respect of REMIC I-C, the REMIC I-C Regular Interests shall be designated as the
Regular Interests in REMIC I-C and the Class R-III Certificates Interest shall
be designated as the Residual Interest in REMIC I-C. For the purposes of the
REMIC election in respect of REMIC II, the REMIC II Regular Interests shall be
designated as the Regular Interests in REMIC II and the Class R-II Interest
shall be designated as the Residual Interest in REMIC II. The Group I Class A
Certificates, the Group II Class A Certificates, the Group III Class A
Certificates, each of the Mezzanine Certificates, the Class CE Certificates and
the Class P Certificates (other than the right to receive amounts, if any, from
the Net WAC Rate Carryover Reserve Accounts) shall be designated as the Regular
Interests in REMIC III and the Class R-III Interest shall be designated as the
Residual Interest in REMIC III. The Trustee shall not permit the creation of any
"interests" in any Trust REMIC (within the meaning of Section 860G of the Code)
other than the REMIC I-A Regular Interests, the REMIC I-B Regular Interests, the
REMIC I-C Regular Interests, the REMIC II Regular Interests and the interests
represented by the Certificates.

                  (b) The Closing Date is hereby designated as the "Startup Day"
of each Trust REMIC within the meaning of Section 860G(a)(9) of the Code.

                  (c) The Trustee shall be reimbursed for any and all expenses
relating to any tax audit of the Trust Fund (including, but not limited to, any
professional fees or any administrative or judicial proceedings with respect to
any Trust REMIC that involve the Internal Revenue Service or state tax
authorities), including the expense of obtaining any tax related Opinion of
Counsel required to be obtained hereunder. The Trustee, as agent for each Trust
REMIC's tax matters person shall (i) act on behalf of the Trust Fund in relation
to any tax matter or controversy involving any Trust REMIC and (ii) represent,
after consultation with the Guarantor and upon accommodation of the Guarantor's
reasonable requests, the Trust Fund in any administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority with
respect thereto. The holder of the largest Percentage Interest of Class R-I
Certificates shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of REMIC I-A created hereunder. The
holder of the largest Percentage Interest of Class R-II Certificates shall be
designated, in the manner

                                     -185-
<PAGE>

provided under Treasury regulations section 1.860F-4(d) and Treasury regulations
section 301.6231(a)(7)- 1, as the tax matters person of REMIC I-B created
hereunder. The holder of the largest Percentage Interest of Class R-III
Certificates shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of REMIC I-C created hereunder. The
holder of the largest Percentage Interest of Class R-X Certificates shall be
designated, in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1, as the tax
matters person of REMIC II and REMIC III created hereunder. By their acceptance
thereof, the holder of the largest Percentage Interest of the Residual
Certificates hereby agrees to irrevocably appoint the Trustee or an Affiliate as
its agent to perform all of the duties of the tax matters person for the Trust
Fund.

                  (d) The Trustee shall prepare, sign and file all of the Tax
Returns (including Form 8811, which must be filed within 30 days following the
Closing Date) in respect of each Trust REMIC created hereunder. The expenses of
preparing and filing such returns shall be borne by the Trustee without any
right of reimbursement therefor.

                  (e) The Trustee shall perform on behalf of each Trust 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, as required by the Code, the REMIC Provisions or other
such compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate such information as is necessary for the application of any
tax relating to the transfer of a Residual Certificate to any Person who is not
a Permitted Transferee, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption as required) and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of each Trust REMIC. The Depositor shall provide or
cause to be provided to the Trustee, within ten (10) days after the Closing
Date, all information or data that the Trustee reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

                  (f) The Trustee shall take such action and shall cause each
Trust REMIC created hereunder to take such action as shall be necessary to
create or maintain the status thereof as a REMIC under the REMIC Provisions. The
Trustee shall not take any action or cause the Trust Fund 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 Trust REMIC as a REMIC or (ii) result in the imposition of a tax
upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee has received an Opinion of
Counsel, addressed to the Trustee, the Guarantor and the Certificate Insurer (at
the expense of the party seeking to take such action but in no event at the
expense of the Trustee) to the effect that the contemplated action will not,
with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor shall either Servicer take or fail to take any
action (whether or not

                                     -186-
<PAGE>

authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action; provided that each Servicer may
conclusively rely on such Opinion of Counsel and shall incur no liability for
its action or failure to act in accordance with such Opinion of Counsel. In
addition, prior to taking any action with respect to any Trust REMIC or the
respective assets of each, or causing any Trust REMIC to take any action, which
is not contemplated under the terms of this Agreement, each Servicer will
consult with the Trustee or its designee, in writing, with respect to whether
such action could cause an Adverse REMIC Event to occur with respect to any
Trust REMIC and neither Servicer shall take any such action or cause any Trust
REMIC to take any such action as to which the Trustee has advised it in writing
that an Adverse REMIC Event could occur; provided that each Servicer may
conclusively rely on such writing and shall incur no liability for its action or
failure to act in accordance with such writing. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee. At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets of REMIC I-A, REMIC I-B and REMIC I-C will consist of "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code, to the extent such
obligations are within the Trustee's control and not otherwise inconsistent with
the terms of this Agreement.

                  (g) In the event that any tax is imposed on "prohibited
transactions" of any Trust REMIC created hereunder as defined in Section
860F(a)(2) of the Code, on the "net income from foreclosure property" of such
Trust REMIC as defined in Section 860G(c) of the Code, on any contributions to
any such REMIC after the Startup Day therefor pursuant to Section 860G(d) of the
Code, or any other tax is imposed by the Code or any applicable provisions of
state or local tax laws, such tax shall be charged (i) to the Trustee pursuant
to Section 10.03 hereof, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Article X, (ii) to the
applicable Servicer pursuant to Section 10.03 hereof, if such tax arises out of
or results from a breach by such Servicer of any of its obligations under
Article III or this Article X, or (iii) against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.

                  (h) On or before April 15th of each calendar year, commencing
April 15, 2005, each Servicer shall deliver to the Guarantor, the Certificate
Insurer and each Rating Agency an Officers' Certificate (which may be the
Officer's Certificate required by Section 3.20) of the Servicer stating the
Servicer's compliance with this Article X.

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

                  (j) Following the Startup Day, neither Servicer nor the
Trustee shall accept any contributions of assets to any Trust REMIC other than
in connection with any Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03 unless it shall have received an Opinion of Counsel
to the effect that the inclusion of such assets in the Trust Fund will not cause
the related Trust REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject such Trust

                                     -187-
<PAGE>

REMIC to any tax under the REMIC Provisions or other applicable provisions of
federal, state and local law or ordinances.

                  (k) Neither the Trustee nor any Servicer shall enter into any
arrangement by which any Trust REMIC will receive a fee or other compensation
for services nor knowingly permit either REMIC to receive any income from assets
other than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code.

                  SECTION 10.02. Prohibited Transactions and Activities.

                  None of the Depositor, the Servicers or the Trustee shall
sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of REMIC I-A, REMIC I-B or REMIC I-C,
(iii) the termination of REMIC I-A, REMIC I-B or REMIC I-Cpursuant to Article IX
of this Agreement, (iv) a substitution pursuant to Article II of this Agreement
or (v) a purchase of Mortgage Loans pursuant to Article II or III of this
Agreement), acquire any assets for any Trust REMIC (other than REO Property
acquired in respect of a defaulted Mortgage Loan), sell or dispose of any
investments in the related Collection Account or the Distribution Account for
gain, or accept any contributions to any Trust REMIC after the Closing Date
(other than a Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.03), unless it has received an Opinion of Counsel, addressed to the
Trustee, the Guarantor and the Certificate Insurer (at the expense of the party
seeking to cause such sale, disposition, substitution, acquisition or
contribution but in no event at the expense of the Trustee) that such sale,
disposition, substitution, acquisition or contribution will not (a) affect
adversely the status of any Trust REMIC as a REMIC or (b) cause any Trust REMIC
to be subject to a tax on "prohibited transactions" or "contributions" pursuant
to the REMIC Provisions.

                  SECTION 10.03. Servicer and Trustee Indemnification.

                  (a) The Trustee agrees to indemnify the Trust Fund, the
Depositor and each Servicer for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or either Servicer, as a result of a breach of the Trustee's
covenants set forth in this Article X.

                  (b) Each Servicer agrees to indemnify the Trust Fund, the
Depositor and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Trustee, as a result of a breach of the applicable Servicer's
covenants set forth in Article III or this Article X.

                                     -188-
<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

                  SECTION 11.01. Amendment.

                  This Agreement may be amended from time to time by the
Depositor, each Servicer, the Guarantor and the Trustee without the consent of
any of the Certificateholders, but only with the prior written consent of the
Certificate Insurer, (i) to cure any ambiguity or defect, (ii) to correct,
modify or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or (iii) to make any other provisions with
respect to matters or questions arising under this Agreement or the Policy which
shall not be inconsistent with the provisions of this Agreement, provided that
such actions shall not, adversely affect in any material respect the interests
of any Certificateholder, as evidenced by either (i) an Opinion of Counsel
delivered to the Servicers, the Guarantor, the Certificate Insurer and the
Trustee or (ii) confirmation from the Rating Agencies that such amendment will
not result in the reduction or withdrawal of the rating of any outstanding Class
of Certificates (without regard to the Policy). No amendment shall be deemed to
adversely affect in any material respect the interests of any Certificateholder
who shall have consented thereto, and no Opinion of Counsel or confirmation from
the Rating Agencies shall be required to address the effect of any such
amendment on any such consenting Certificateholder.

                  This Agreement may also be amended from time to time by the
Depositor, each Servicer, the Guarantor and the Trustee with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights and the
Certificate Insurer for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates (as evidenced by either (i) an Opinion of
Counsel delivered to the Trustee, the Guarantor and the Certificate Insurer or
(ii) written notice to the Depositor, each Servicer, the Guarantor, the
Certificate Insurer and the Trustee from the Rating Agencies that such action
will not result in the reduction or withdrawal of the rating of any outstanding
Class of Certificates with respect to which it is a Rating Agency) in a manner,
other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least 66% of the Voting Rights
allocated to such Class, or (iii) modify the consents required by the
immediately preceding clauses (i) and (ii) without the consent of the Holders of
all Certificates then outstanding. Notwithstanding any other provision of this
Agreement, for purposes of the giving or withholding of consents pursuant to
this Section 11.01, Certificates registered in the name of the Depositor or
either Servicer or any Affiliate thereof shall be entitled to Voting Rights with
respect to matters affecting such Certificates.

                  No amendment shall be deemed to adversely affect in any
material respect the interests of any Certificateholder who shall have consented
thereto, and no Opinion of Counsel or Rating Agency confirmation shall be
required to address the effect of any such amendment on any such consenting
Certificateholder.

                                     -189-
<PAGE>

                  Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment (i)
will not result in the imposition of any tax on any Trust REMIC pursuant to the
REMIC Provisions or cause any Trust REMIC to fail to qualify as a REMIC at any
time that any Certificates are outstanding and (ii) is authorized or permitted
hereunder.

                  Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder, the Guarantor
and the Certificate Insurer.

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

                  The cost of any Opinion of Counsel to be delivered pursuant to
this Section 11.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee.

                  Notwithstanding the foregoing, any modification of the
provisions of Section 5.02(d) shall be made in accordance with the provisions
thereof and without the consent of the Certificateholders.

                  The Trustee may, but shall not be obligated to, enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.

                  SECTION 11.02. Recordation of Agreement; Counterparts.

                  To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by either Servicer at the expense of the Certificateholders, but only
upon direction of the Certificate Insurer or Certificateholders accompanied by
an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificate Insurer or the
Certificateholders.
                  For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.

                                     -190-
<PAGE>

                  SECTION 11.03. Limitation on Rights of Certificateholders.

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

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

                  No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee and the Certificate Insurer a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates entitled to at least 25%
of the Voting Rights shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 15 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding. It is understood and intended, and expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner whatsoever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.

                  SECTION 11.04. 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 the
conflicts of laws provisions thereof

                  SECTION 11.05. Notices.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to (a) in
the case of the

                                     -191-
<PAGE>

Depositor, 18400 Von Karman, Suite 1000, Irvine, California 92612, Attention:
Kevin Cloyd (telecopy number: (949) 440-7033), or such other address or telecopy
number as may hereafter be furnished to the parties hereto in writing by the
Depositor, (b) in the case of Countrywide, 190 Congress Park Drive, Suite 100,
Delray Beach, Florida 33445, Attention: Loan Sale Servicing Section, (telecopy:
(561) 330- 2019), or such other address or telecopy number as may hereafter be
furnished to the parties hereto in writing by Countrywide, (c) in the case of
GMAC, 100 Witmer Road, Horsham, Pennsylvania 19044, Attention: Senior Vice
President, Capital Markets, or such other address or telecopy number as may
hereafter be furnished to the parties hereto in writing by GMAC, (d) in the case
of the Trustee, Deutsche Bank National Trust Company, 1761 East St. Andrew
Place, Santa Ana, California 92705-4934, Attention: Trust Administration-NC040A
(telecopy number: (714) 247-6329), or such other address or telecopy number as
may hereafter be furnished to the parties hereto in writing by the Trustee, (e)
in the case of Guarantor, Fannie Mae, Special Products Group, Mail Stop
5H-5W-03, 13150 Worldgate Drive, Herndon, Virginia 20170, Attention: Director
(telecopy number: (703) 833-1816), or such other addresses or telecopy number as
may be furnished to the other parties thereto in writing by the Guarantor and
(f) in the case of the Certificate Insurer, 125 Park Avenue, New York, New York
10017, Attention: Chief Risk Officer, with a copy to General Counsel, or such
other address as may be furnished to the parties hereto in writing by the
Certificate Insurer. Any notice required or permitted to be given to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the manner
set forth above.

                  SECTION 11.06. Severability of Provisions.

                  If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof or
the rights of the Certificate Insurer.

                  SECTION 11.07. Notice to Rating Agencies, the Certificate
                                 Insurer and the Guarantor.

                  The Trustee shall use its best efforts promptly to provide
notice to the Rating Agencies, the Guarantor and the Certificate Insurer with
respect to each of the following of which it has actual knowledge:

                  1. Any material change or amendment to this Agreement;

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

                  3. The resignation or termination of either Servicer or the
         Trustee;

                                     -192-
<PAGE>

                  4. The repurchase or substitution of Mortgage Loans pursuant
         to or as contemplated by Section 2.03;

                  5. The final payment to the Holders of any Class of
         Certificates;

                  6. Any change in the location of either Collection Account or
         the Distribution Account; and

                  7. Any event that would result in the inability of the
         Trustee, as a successor Servicer, to make advances regarding delinquent
         Mortgage Loans.

                  In addition, the Trustee shall promptly furnish to each Rating
Agency, the Guarantor and the Certificate Insurer copies of each report to
Certificateholders described in Section 4.02 and each Servicer shall promptly
furnish to each Rating Agency, the Guarantor and the Certificate Insurer copies
of the following:

                  1. Each annual statement as to compliance described in Section
         3.20; and

                  2. Each annual independent public accountants' servicing
         report described in Section 3.21.

                  Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Moody's Investors Service, 99 Church Street, New York, New York 10007 and to
Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies,
Inc., 55 Water Street, New York, New York 10007 or such other addresses as the
Rating Agencies may designate in writing to the parties hereto.

                  SECTION 11.08. Article and Section References.

                  All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.

                  SECTION 11.09. Grant of Security Interest.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee, be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then, (a)
it is the express intent of the parties that such conveyance be deemed a pledge
of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New

                                     -193-
<PAGE>

York; (2) the conveyance provided for in Section 2.01 hereof shall be deemed to
be a grant by the Depositor to the Trustee of a security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Accounts and the Distribution Account,
whether in the form of cash, instruments, securities or other property; (3) the
obligations secured by such security agreement shall be deemed to be all of the
Depositor's obligations under this Agreement, including the obligation to
provide to the Certificateholders the benefits of this Agreement relating to the
Mortgage Loans and the Trust Fund; and (4) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. Accordingly, the Depositor hereby grants to the Trustee a
security interest in the Mortgage Loans and all other property described in
clause (2) of the preceding sentence, for the purpose of securing to the Trustee
the performance by the Depositor of the obligations described in clause (3) of
the preceding sentence. Notwithstanding the foregoing, the parties hereto intend
the conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.

                  SECTION 11.10. Waiver of Jury Trial.

                  EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY,
WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND
AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.

                  SECTION 11.11. Rights of the Certificate Insurer.

                  (a) The Certificate Insurer is an express third-party
beneficiary of this Agreement.

                  (b) On each Distribution Date the Trustee shall make available
to the Certificate Insurer a copy of the reports furnished to the
Certificateholders on such Distribution Date.

                  (c) The Trustee or the Depositor, as applicable, shall provide
to the Certificate Insurer copies of any report, notice, Opinion of Counsel,
Officers' Certificate, request for consent or request for amendment to any
document related hereto promptly upon the Trustee's or the Depositor's
production or receipt thereof, but only to the extent that such item is required
to be delivered to the Certificate Insurer hereunder.

                                     -194-
<PAGE>

                  (d) Unless a Certificate Insurer Default exists, the Trustee,
each Servicer, the Guarantor and the Depositor shall not agree to any amendment
to this Agreement without first having obtained the prior written consent of the
Certificate Insurer.

                  (e) So long as there does not exist a failure by the
Certificate Insurer to make a required payment under the Policy, the Certificate
Insurer shall have the right to exercise all rights of the Holders of the
Insured Certificates under this Agreement without any consent of such Holders,
and such Holders may exercise such rights only with the prior written consent of
the Certificate Insurer, except as provided herein.

                  (f) The Certificate Insurer shall not be entitled to exercise
any of its rights hereunder so long as there exists a failure by the Certificate
Insurer to make a required payment under the Policy.

                                     -195-
<PAGE>

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

                                      NEW CENTURY MORTGAGE SECURITIES INC.,
                                        as Depositor

                                      By: /s/ Patrick Flanagan
                                          ----------------------------------
                                      Name:   Patrick Flanagan
                                      Title:  President

                                      COUNTRYWIDE HOME LOANS SERVICING LP,
                                        as a Servicer

                                      By: /s/ Michael Schloessmann
                                          ----------------------------------
                                      Name:   Michael Schloessmann
                                      Title:  Senior Vice President

                                      GMAC MORTGAGE CORPORATION
                                        as a Servicer

                                      By: /s/ William Petersohn
                                         ----------------------------------
                                      Name:   William Petersohn
                                      Title:  VP - Bulk Acquisitions

                                      DEUTSCHE BANK NATIONAL TRUST
                                      COMPANY,
                                        as Trustee

                                      By: /s/ Eiko Akiyama
                                         ----------------------------------
                                      Name:   Eiko Akiyama
                                      Title:  Associate

                                      By: /s/ Barbara Campbell
                                         ----------------------------------
                                      Name:   Barbara Campbell
                                      Title:  Asst. Vice President

                                      FEDERAL NATIONAL MORTGAGE
                                      ASSOCIATION,
                                        as Guarantor (with respect to the Class
                                      A-I-A Certificates)

                                      By: /s/  Andrew McCormick
                                         ----------------------------------
                                      Name:    Andrew McCormick
                                      Title:   SVP- Portfolio Transactions

<PAGE>

STATE OF ______________)
                       ) ss.:
COUNTY OF ____________ )

                  On the th day of July 2004, before me, a notary public in and
for said State, personally appeared ________________, known to me to be a
___________________ of New Century Mortgage Securities Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

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

                                                        ____________________
                                                            Notary Public

[Notarial Seal]

<PAGE>

STATE OF ______________)
                       ) ss.:
COUNTY OF ____________ )

                  On the ____ day of July 2004, before me, a notary public in
and for said State, personally appeared _____________________, known to me to be
__________________ of Countrywide Home Loans Servicing, LP, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

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

                                                        ____________________
                                                            Notary Public

[Notarial Seal]

<PAGE>

STATE OF ______________)
                       ) ss.:
COUNTY OF ____________ )

                  On the ____ day of July 2004, before me, a notary public in
and for said State, personally appeared _____________________, known to me to be
__________________ of GMAC Mortgage Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

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

                                                        ____________________
                                                            Notary Public

[Notarial Seal]

<PAGE>

STATE OF ______________)
                       ) ss.:
COUNTY OF ____________ )

                  On the ____ day of July 2004, before me, a notary public in
and for said State, personally appeared _______________, known to me to be a
______________ of Deutsche Bank National Trust Company, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

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

                                                        ____________________
                                                            Notary Public

[Notarial Seal]

<PAGE>

STATE OF ______________)
                       ) ss.:
COUNTY OF ____________ )

                  On the ____ day of July 2004, before me, a notary public in
and for said State, personally appeared _____________________, known to me to be
__________________ of Federal National Mortgage Association, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

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

                                                        ____________________
                                                            Notary Public

[Notarial Seal]

<PAGE>

                                   EXHIBIT A-1
                                   -----------

                         FORM OF CLASS A-I-1 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-1 Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $161,966,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $161,966,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                           GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HE 4
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-1-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-1 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-1 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-1 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-1-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-1-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-1-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-1-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-1-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-1-7

<PAGE>

                                   EXHIBIT A-2
                                   -----------

                         FORM OF CLASS A-I-2 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-2 Certificates as of the Issue Date:
Pass-Through Rate: 3.930%                          $50,274,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $50,274,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HF 1
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-2-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-2 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-2 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-2 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-2-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-2-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-2-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-2-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-2-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-2-7

<PAGE>

                                   EXHIBIT A-3
                                   -----------

                         FORM OF CLASS A-I-3 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-3 Certificates as of the Issue Date:
Pass-Through Rate: 4.420% per annum                $97,679,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $97,679,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HG 9
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-3-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-3 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-3 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-3 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-3-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-3-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-3-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-3-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-3-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-3-7

<PAGE>

                                   EXHIBIT A-4
                                   -----------

                         FORM OF CLASS A-I-4 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-4 Certificates as of the Issue Date:
Pass-Through Rate: 4.800%                          $38,048,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $38,048,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HH 7
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-4-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-4 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-4 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-4 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-4-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-4-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-4-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-4-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-4-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-1-7

<PAGE>

                                   EXHIBIT A-5
                                   -----------

                         FORM OF CLASS A-I-5 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-5 Certificates as of the Issue Date:
Pass-Through Rate: 5.170%                          $54,747,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $54,747,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HJ 3
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-5-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-5 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-5 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-5 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-5-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-5-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-5-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-5-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-5-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-1-7

<PAGE>

                                   EXHIBIT A-6
                                   -----------

                         FORM OF CLASS A-I-6 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-6 Certificates as of the Issue Date:
Pass-Through Rate: 5.640%                          $50,372,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $50,372,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HK 0
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-6-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-6 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-6 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-6 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-6-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-6-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-6-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-6-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-6-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-1-7

<PAGE>

                                   EXHIBIT A-7
                                   -----------

                         FORM OF CLASS A-I-7 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-7 Certificates as of the Issue Date:
Pass-Through Rate: 5.650%                          $36,901,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $36,901,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HL 8
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-7-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-7 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-7 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-7 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-7-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-7-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-7-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-7-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-7-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-1-7

<PAGE>

                                   EXHIBIT A-8
                                   -----------

                         FORM OF CLASS A-I-8 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-8 Certificates as of the Issue Date:
Pass-Through Rate: 5.650%                          $73,135,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $73,135,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HM 6
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-8-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-8 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-8 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-8 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-8-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-8-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-8-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-8-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-8-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-8-7

<PAGE>

                                   EXHIBIT A-9
                                   -----------

                         FORM OF CLASS A-I-9 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-I-9 Certificates as of the Issue Date:
Pass-Through Rate: 5.450%                          $62,569,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $62,569,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HN 4
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                      A-9-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-I-9 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-I-9 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-I-9 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                      A-9-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                      A-9-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-9-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                      A-9-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                      A-9-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                      A-1-7

<PAGE>

                                  EXHIBIT A-10
                                  ------------

                        FORM OF CLASS A-II-1 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-1 Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $105,759,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $105,759,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GN 5
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-10-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-1 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 1Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-1 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-10-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-10-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-10-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-10-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-10-6

<PAGE>

                                  EXHIBIT A-11
                                  ------------

                        FORM OF CLASS A-II-2 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-2 Certificates as of the Issue Date:
Pass-Through Rate: 3.930% per annum                $32,918,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $32,918,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GP 0
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-11-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-2 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 2 Certificates in REMIC III created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-2 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-11-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-11-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-11-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-11-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-11-6

<PAGE>

                                  EXHIBIT A-12
                                  ------------

                        FORM OF CLASS A-II-3 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-3 Certificates as of the Issue Date:
Pass-Through Rate: 4.450% per annum                $63,881,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $63,881,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GQ 8
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-12-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-3 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 3 Certificates in REMIC III created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-3 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-12-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-12-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-12-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-12-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-12-6

<PAGE>

                                  EXHIBIT A-13
                                  ------------

                        FORM OF CLASS A-II-4 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-4 Certificates as of the Issue Date:
Pass-Through Rate: 4.860% per annum                $25,302,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $25,302,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GR 6
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-13-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-4 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 4Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-4 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-13-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-13-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-13-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-13-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-13-6

<PAGE>

                                  EXHIBIT A-14
                                  ------------

                        FORM OF CLASS A-II-5 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-5 Certificates as of the Issue Date:
Pass-Through Rate: 5.250% per annum                $43,020,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $43,020,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GS 4
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-14-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-4 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 4Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-1 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-14-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-14-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-14-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-14-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-14-6

<PAGE>

                                  EXHIBIT A-15
                                  ------------

                        FORM OF CLASS A-II-6 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-6 Certificates as of the Issue Date:
Pass-Through Rate: 5.650% per annum                $44,977,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $44,977,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GT 2
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-15-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-6 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 6Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-6 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-15-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-15-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-15-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-15-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-15-6

<PAGE>

                                  EXHIBIT A-16
                                  ------------

                        FORM OF CLASS A-II-7 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-7 Certificates as of the Issue Date:
Pass-Through Rate: 5.650% per annum                $30,825,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $30,825,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GU 9
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-16-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-7 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 7 Certificates in REMIC III created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-7 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-16-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-16-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-16-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-16-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-16-6

<PAGE>

                                  EXHIBIT A-17
                                  ------------

                        FORM OF CLASS A-II-8 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-8 Certificates as of the Issue Date:
Pass-Through Rate: 5.650% per annum                $60,496,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $60,496,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GV 7
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-17-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-8 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 8 Certificates in REMIC III created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-8 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus 0.170%,
in the case of each Distribution Date and (ii) the Net WAC Pass-Through Rate for
such Distribution Date.

                                     A-17-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but

                                     A-17-3

<PAGE>

does not require, the party designated in the Agreement to purchase from REMIC
II all the Mortgage Loans and all property acquired in respect of any Mortgage
Loan at a price determined as provided in the Agreement. The exercise of such
right will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-17-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-17-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-17-6

<PAGE>

                                     A-17-7

<PAGE>

                                  EXHIBIT A-18
                                  ------------

                        FORM OF CLASS A-II-9 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-II-9 Certificates as of the Issue Date:
Pass-Through Rate: 5.470%  per annum               $45,242,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $45,242,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GW 5
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-18-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-II-9 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-II- 9 Certificates in REMIC III created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-II-9 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-18-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-18-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-18-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-18-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-18-6

<PAGE>

                                  EXHIBIT A-19
                                  ------------

                        FORM OF CLASS A-III-A CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-III-A Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $194,330,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $194,330,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GZ 8
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-19-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-III- A
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-III-ACertificates in REMIC III created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to the
Group I Class A Certificates) and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-III-A Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-19-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-19-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-19-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-19-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-19-6

<PAGE>

                                  EXHIBIT A-20
                                  ------------

                       FORM OF CLASS A-III-B1 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-III-B1 Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $173,427,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $173,427,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HA 2
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-20-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-III- B1
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-III-B1Certificates in REMIC III created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to the
Group I Class A Certificates) and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-III-B1 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-20-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-20-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-20-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-20-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-20-6

<PAGE>

                                  EXHIBIT A-21
                                  ------------

                       FORM OF CLASS A-III-B2 CERTIFICATE

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

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class A-III-B2 Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $84,078,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $84,078,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HB 0
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-21-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-III- B2
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-III-B2Certificates in REMIC III created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to the
Group I Class A Certificates) and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-III-B2 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                                     A-21-2

<PAGE>

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the

                                     A-21-3

<PAGE>

Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC II all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan at a price determined as provided in the Agreement.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-21-4

<PAGE>

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

Dated: August  __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                                     as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-21-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-21-5

<PAGE>

                                  EXHIBIT A-22
                                  ------------

                         FORM OF CLASS M-I-1 CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES OF
         THE RELATED GROUP TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class M-I-1 Certificates as of the Issue Date:
Pass-Through Rate: 5.650% per annum                $65,479,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $65,479,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GK 1
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

         EACH BENEFICIAL OWNER OF THIS CERTIFICATE OR ANY INTEREST
         THEREIN SHALL BE DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS
         ACQUISITION OR HOLDING OF THIS CERTIFICATE OR INTEREST THEREIN,
         THAT EITHER (I) IT IS NOT A PLAN OR INVESTING WITH "PLAN
         ASSETS", (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE
         IN RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 2002-41 AS
         AMENDED ("EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE
         CERTAIN CONDITIONS TO THE AVAILABILITY OF THE EXEMPTION,
         INCLUDING THAT THIS CERTIFICATE MUST BE RATED, AT THE TIME OF
         PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY FITCH,
         S&P OR MOODY'S, AND THE CERTIFICATE IS SO RATED OR (III) (1) IT
         IS AN INSURANCE COMPANY, (2) THE SOURCE OF FUNDS USED TO
         ACQUIRE OR HOLD THE CERTIFICATE OR INTEREST THEREIN IS AN
         "INSURANCE COMPANY

                                     A-22-1

<PAGE>

         GENERAL ACCOUNT," AS SUCH TERM IS DEFINED IN PROHIBITED
         TRANSACTION CLASS EXEMPTION ("PTCE") 95-60, AND (3) THE
         CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN
         SATISFIED. ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-I-1 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-I- 1 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to the Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-I-1 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the

                                     A-22-2

<PAGE>

denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

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

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all

                                     A-22-3

<PAGE>

purposes, and none of the Depositor, the Servicers, the Trustee nor any such
agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-22-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-22-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-22-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-22-7

<PAGE>

                                  EXHIBIT A-23
                                  ------------

                         FORM OF CLASS M-I-2 CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES OF
         THE RELATED GROUP TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class M-I-2 Certificates as of the Issue Date:
Pass-Through Rate: 5.650% per annum                $7,275,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $7,275,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GL 9
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

         EACH BENEFICIAL OWNER OF THIS CERTIFICATE OR ANY INTEREST
         THEREIN SHALL BE DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS
         ACQUISITION OR HOLDING OF THIS CERTIFICATE OR INTEREST THEREIN,
         THAT EITHER (I) IT IS NOT A PLAN OR INVESTING WITH "PLAN
         ASSETS", (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE
         IN RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 2002-41 AS
         AMENDED ("EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE
         CERTAIN CONDITIONS TO THE AVAILABILITY OF THE EXEMPTION,
         INCLUDING THAT THIS CERTIFICATE MUST BE RATED, AT THE TIME OF
         PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY FITCH,
         S&P OR MOODY'S, AND THE CERTIFICATE IS SO RATED OR (III) (1) IT
         IS AN INSURANCE COMPANY, (2) THE SOURCE OF FUNDS USED TO
         ACQUIRE OR HOLD THE CERTIFICATE OR INTEREST THEREIN IS AN
         "INSURANCE COMPANY GENERAL ACCOUNT," AS SUCH TERM IS DEFINED IN
         PROHIBITED

                                     A-23-1

<PAGE>

         TRANSACTION CLASS EXEMPTION ("PTCE") 95-60, AND (3) THE
         CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN
         SATISFIED.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-I-2 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-I- 2 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement),the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to Group I Class A
Certificates) and the Trustee, a summary of certain of the pertinent provisions
of which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-I-2 Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the

                                     A-23-2

<PAGE>

denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

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

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all

                                     A-23-3

<PAGE>

purposes, and none of the Depositor, the Servicers, the Trustee nor any such
agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-23-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-23-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-23-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-23-7

<PAGE>

                                  EXHIBIT A-24
                                  ------------

                         FORM OF CLASS M-II CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES OF
         THE RELATED GROUP TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class M-II Certificates as of the Issue Date:
Pass-Through Rate: 5.650% per annum                $4,763,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $4,763,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GX 3
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

         EACH BENEFICIAL OWNER OF THIS CERTIFICATE OR ANY INTEREST
         THEREIN SHALL BE DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS
         ACQUISITION OR HOLDING OF THIS CERTIFICATE OR INTEREST THEREIN,
         THAT EITHER (I) IT IS NOT A PLAN OR INVESTING WITH "PLAN
         ASSETS", (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE
         IN RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 2002-41 AS
         AMENDED ("EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE
         CERTAIN CONDITIONS TO THE AVAILABILITY OF THE EXEMPTION,
         INCLUDING THAT THIS CERTIFICATE MUST BE RATED, AT THE TIME OF
         PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY FITCH,
         S&P OR MOODY'S, AND THE CERTIFICATE IS SO RATED OR (III) (1) IT
         IS AN INSURANCE COMPANY, (2) THE SOURCE OF FUNDS USED TO
         ACQUIRE OR HOLD THE CERTIFICATE OR INTEREST THEREIN IS AN
         "INSURANCE COMPANY

                                     A-24-1

<PAGE>

         GENERAL ACCOUNT," AS SUCH TERM IS DEFINED IN PROHIBITED
         TRANSACTION CLASS EXEMPTION ("PTCE") 95-60, AND (3) THE
         CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN
         SATISFIED.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-II Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-II Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement),the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to Group I Class A
Certificates) and the Trustee, a summary of certain of the pertinent provisions
of which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-II Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and

                                     A-24-2

<PAGE>

representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

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

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all

                                     A-24-3

<PAGE>

purposes, and none of the Depositor, the Servicers, the Trustee nor any such
agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-24-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-24-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-24-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-24-7

<PAGE>

                                  EXHIBIT A-25
                                  ------------

                         FORM OF CLASS M-III CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES OF
         THE RELATED GROUP TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class M-III Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $9,512,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $9,512,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HC 8
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

         EACH BENEFICIAL OWNER OF THIS CERTIFICATE OR ANY INTEREST
         THEREIN SHALL BE DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS
         ACQUISITION OR HOLDING OF THIS CERTIFICATE OR INTEREST THEREIN,
         THAT EITHER (I) IT IS NOT A PLAN OR INVESTING WITH "PLAN
         ASSETS", (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE
         IN RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 2002-41 AS
         AMENDED ("EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE
         CERTAIN CONDITIONS TO THE AVAILABILITY OF THE EXEMPTION,
         INCLUDING THAT THIS CERTIFICATE MUST BE RATED, AT THE TIME OF
         PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY FITCH,
         S&P OR MOODY'S, AND THE CERTIFICATE IS SO RATED OR (III) (1) IT
         IS AN INSURANCE COMPANY, (2) THE SOURCE OF FUNDS USED TO
         ACQUIRE OR HOLD THE CERTIFICATE OR INTEREST THEREIN IS AN
         "INSURANCE COMPANY

                                     A-25-1

<PAGE>

         GENERAL ACCOUNT," AS SUCH TERM IS DEFINED IN PROHIBITED
         TRANSACTION CLASS EXEMPTION ("PTCE") 95-60, AND (3) THE
         CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN
         SATISFIED.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-I- III
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class M-III Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement),the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to Group I
Class A Certificates) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-III Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and

                                     A-25-2

<PAGE>

representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

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

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all

                                     A-25-3

<PAGE>

purposes, and none of the Depositor, the Servicers, the Trustee nor any such
agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-25-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-25-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-25-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-25-7

<PAGE>

                                  EXHIBIT A-26
                                  ------------

                          FORM OF CLASS B-I CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND
         THE CLASS M CERTIFICATES OF THE RELATED GROUP TO THE EXTENT
         DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class B-I Certificates as of the Issue Date:
Pass-Through Rate: 5.650% per annum                $7,276,000

Cut-off Date and date of Pooling and Servicing     Denomination: $7,276,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GM 7
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-26-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B-I Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class B-I Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement),the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to Group I Class A
Certificates) and the Trustee, a summary of certain of the pertinent provisions
of which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B-I Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the

                                     A-26-2

<PAGE>

denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the

                                     A-26-3

<PAGE>

Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate Principal Balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-26-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-26-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-26-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-26-7

<PAGE>

                                  EXHIBIT A-27
                                  ------------

                         FORM OF CLASS B-II CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND
         THE CLASS M CERTIFICATES OF THE RELATED GROUP TO THE EXTENT
         DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class B-II Certificates as of the Issue Date:
Pass-Through Rate: 5.650% per annum                $4,762,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $4,762,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V GY 1
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-27-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B-II Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class B-II Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement),the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to Group I Class A
Certificates) and the Trustee, a summary of certain of the pertinent provisions
of which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B-II Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-27-2

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of

                                     A-27-3

<PAGE>

purchase being less than 10% of the aggregate Principal Balance of the Mortgage
Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-27-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-27-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-27-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-27-7

<PAGE>

                                  EXHIBIT A-28
                                  ------------

                         FORM OF CLASS B-III CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND
         THE CLASS M CERTIFICATES OF THE RELATED GROUP TO THE EXTENT
         DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class B-III Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $7,134,000.00

Cut-off Date and date of Pooling and Servicing     Denomination: $7,134,000.00
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004

                                                   CUSIP: 64352V HD 6
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-28-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that Cede & Co is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B-III Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class B-III Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement),the Servicers, Federal
National Mortgage Association (the "Guarantor", with respect to Group I Class A
Certificates) and the Trustee, a summary of certain of the pertinent provisions
of which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B-III Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the

                                     A-28-2

<PAGE>

denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the

                                     A-28-3

<PAGE>

Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate Principal Balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-28-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Signatory

                                     A-28-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-28-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-28-7

<PAGE>

                                  EXHIBIT A-29
                                  ------------

                         FORM OF CLASS CE-I CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES,
         THE MEZZANINE CERTIFICATES AND THE CLASS B CERTIFICATES OF THE
         RELATED GROUP TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class CE-I Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $21,827,003.28

Cut-off Date and date of Pooling and Servicing     Denomination: $21,827,003.28
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE

                                     A-29-1

<PAGE>

         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-29-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class CE-I
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE-I Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to the
Group I Class A Certificates) and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE-I Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-29-3

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-29-4

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-29-5

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-29-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-29-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-29-8

<PAGE>

                                  EXHIBIT A-30
                                  ------------

                         FORM OF CLASS CE-II CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES,
         THE MEZZANINE CERTIFICATES AND THE CLASS B CERTIFICATES OF THE
         RELATED GROUP TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class CE-II Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $14,287,074.02

Cut-off Date and date of Pooling and Servicing     Denomination: $14,287,074.02
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE

                                     A-30-1

<PAGE>

         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-30-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class CE-II
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE-II Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to the
Group I Class A Certificates) and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE-II Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-30-3

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-30-4

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-30-5

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-30-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-30-7

<PAGE>

                                     A-30-8

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-30-9

<PAGE>

                                  EXHIBIT A-31
                                  ------------

                        FORM OF CLASS CE-III CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES,
         THE MEZZANINE CERTIFICATES AND THE CLASS B CERTIFICATES OF THE
         RELATED GROUP TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class CE-III Certificates as of the Issue Date:
Pass-Through Rate: Variable                        $7,135,259.13

Cut-off Date and date of Pooling and Servicing     Denomination: $7,135,259.13
Agreement: July 1, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
First Distribution Date: August 25, 2004                            GMAC Mortgage Corporation

No. 1                                              Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE

                                     A-31-1

<PAGE>

         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-31-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class CE-III
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE-III Certificates in REMIC III created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to the
Group I Class A Certificates) and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE-III Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-31-3

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-31-4

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-31-5

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-31-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-31-7

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-31-8

<PAGE>

                                  EXHIBIT A-32
                                  ------------

                          FORM OF CLASS P-I CERTIFICATE

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

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class P-I Certificates as of the Issue Date:
Cut-off Date and date of Pooling and Servicing     $100.00
Agreement: July 1, 2004
                                                   Denomination: $100.00
First Distribution Date: August 25, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
No. 1 GMAC Mortgage Corporation

                                                   Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-32-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P-I
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P-I Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor" with respect to the Group
I Class A Certificate) and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P-I Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-32-2

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-32-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-32-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-32-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-32-6

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-32-7

<PAGE>

                                  EXHIBIT A-33
                                  ------------

                         FORM OF CLASS P-II CERTIFICATE

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

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                  <C>
Series 2004-A                                        Aggregate Certificate Principal Balance of the
                                                     Class P-II Certificates as of the Issue Date:
Cut-off Date and date of and Servicing Agreement:    $100.00
July 1, 2004
                                                     Denomination: $100.00
First Distribution Date: August 25, 2004
                                                     Servicers: Countrywide Home Loans Servicing LP
No. 1 GMAC Mortgage Corporation

                                                     Trustee: Deutsche Bank National Trust Company

                                                     Issue Date: August 4, 2004
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-33-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P-II
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P-II Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to the
Group I Class A Certificates) and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P-II Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-33-2

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-33-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-33-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-33-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-33-6

<PAGE>

                                     A-33-7

<PAGE>

                                  EXHIBIT A-34
                                  ------------

                         FORM OF CLASS P-III CERTIFICATE

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

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Certificate Principal Balance of the
                                                   Class P-III Certificates as of the Issue Date:
Cut-off Date and date of Pooling and Servicing     $100.00
Agreement: July 1, 2004
                                                   Denomination: $100.00
First Distribution Date: August 25, 2004
                                                   Servicers: Countrywide Home Loans Servicing LP
No. 1 GMAC Mortgage Corporation

                                                   Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
         OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
         ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE
         HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS
         THE DENOMINATION OF THIS CERTIFICATE.

                                     A-34-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P-III
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P-III Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicers,
Federal National Mortgage Association (the "Guarantor", with respect to the
Group I Class A Certificates) and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P-III Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-34-2

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicers, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicers in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-34-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Servicers, the Trustee and any agent of the
Depositor, the Servicers or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-34-4

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-34-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-34-6

<PAGE>

                                  EXHIBIT A-35
                                  ------------

                          FORM OF CLASS R-I CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
         PERSON.

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

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
         MAY BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION
         5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
         MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN
         AFFIDAVIT TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1)
         THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR
         POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
         INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF
         ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
         COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
         EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS
         SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511
         OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION
         1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
         FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED
         TO AS A "DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF A
         DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER
         IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH
         TRANSFEREE SATISFIES CERTAIN

                                     A-34-7

<PAGE>

         ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
         THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN
         THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER
         DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION
         OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION
         SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER
         AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
         FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE
         RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF
         THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
         CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
         PROVISIONS OF SECTION 5.02(d) OF THE POOLING AND SERVICING
         AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
         ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP
         OF THIS CERTIFICATE.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Percentage Interest of the Class R-I
                                                   Certificates as of the Issue Date: 100.00%
Cut-off Date and date of Pooling and Servicing
Agreement: July 1, 2004                            Percentage Interest: 100.00%

First Distribution Date: August 25, 2004           Servicers: Countrywide Home Loans Servicing LP
                                                                    GMAC Mortgage Corporation
No. 1
                                                   Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

                                     A-34-8

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of the Percentage Interest specified above in that certain beneficial
ownership interest evidenced by all the Class R-I Certificates in REMIC III
created pursuant to a Pooling and Servicing Agreement, dated as specified above
(the "Agreement"), among New Century Mortgage Securities, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Servicers, Federal National Mortgage Association (the
"Guarantor", with respect to the Group I Class A Certificates) and the Trustee,
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-I Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-34-9

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicer in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-34-10

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-I Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-I Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                  The Depositor, the Servicer, the Trustee and any agent of the
Depositor, the Servicer or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicer, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                                     A-34-11

<PAGE>

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-34-12

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-34-13

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-34-14

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-34-15

<PAGE>

                                  EXHIBIT A-36
                                  ------------

                         FORM OF CLASS R-II CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
         PERSON.

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

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
         MAY BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION
         5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
         MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN
         AFFIDAVIT TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1)
         THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR
         POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
         INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF
         ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
         COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
         EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS
         SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511
         OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION
         1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
         FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED
         TO AS A "DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF A
         DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER
         IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH
         TRANSFEREE SATISFIES CERTAIN

                                     A-36-1

<PAGE>

         ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
         THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN
         THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER
         DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION
         OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION
         SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER
         AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
         FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE
         RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF
         THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
         CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
         PROVISIONS OF SECTION 5.02(d) OF THE POOLING AND SERVICING
         AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
         ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP
         OF THIS CERTIFICATE.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Percentage Interest of the Class R-II
                                                   Certificates as of the Issue Date: 100.00%
Cut-off Date and date of Pooling and Servicing
Agreement: July 1, 2004                            Percentage Interest: 100.00%

First Distribution Date: August 25, 2004           Servicers: Countrywide Home Loans Servicing LP
                                                                    GMAC Mortgage Corporation
No. 1
                                                   Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

                                     A-36-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of the Percentage Interest specified above in that certain beneficial
ownership interest evidenced by all the Class R-II Certificates in REMIC III
created pursuant to a Pooling and Servicing Agreement, dated as specified above
(the "Agreement"), among New Century Mortgage Securities, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Servicers, Federal National Mortgage Association (the
"Guarantor", with respect to the Group I Class A Certificates) and the Trustee,
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-II Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-36-3

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicer in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-36-4

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-II Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-II Certificates. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                  The Depositor, the Servicer, the Trustee and any agent of the
Depositor, the Servicer or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicer, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                                     A-36-5

<PAGE>

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-36-6

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-36-7

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-36-8

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-36-9

<PAGE>

                                  EXHIBIT A-37
                                  ------------

                         FORM OF CLASS R-III CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
         PERSON.

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

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
         MAY BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION
         5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
         MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN
         AFFIDAVIT TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1)
         THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR
         POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
         INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF
         ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
         COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
         EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS
         SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511
         OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION
         1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
         FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED
         TO AS A "DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF A
         DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER
         IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH
         TRANSFEREE SATISFIES CERTAIN

                                     A-37-1

<PAGE>

         ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
         THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN
         THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER
         DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION
         OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION
         SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER
         AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
         FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE
         RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF
         THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
         CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
         PROVISIONS OF SECTION 5.02(d) OF THE POOLING AND SERVICING
         AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
         ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP
         OF THIS CERTIFICATE.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Percentage Interest of the Class R-III
                                                   Certificates as of the Issue Date: 100.00%
Cut-off Date and date of Pooling and
Servicing Agreement: July 1, 2004                  Percentage Interest: 100.00%

First Distribution Date: August 25, 2004           Servicers: Countrywide Home Loans Servicing LP
                                                                    GMAC Mortgage Corporation
No. 1
                                                   Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

                                     A-37-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of the Percentage Interest specified above in that certain beneficial
ownership interest evidenced by all the Class R-III Certificates in REMIC III
created pursuant to a Pooling and Servicing Agreement, dated as specified above
(the "Agreement"), among New Century Mortgage Securities, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Servicers, Federal National Mortgage Association (the
"Guarantor", with respect to the Group I Class A Certificates) and the Trustee,
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-III Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-37-3

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicer in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-37-4

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-I Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-I Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                  The Depositor, the Servicer, the Trustee and any agent of the
Depositor, the Servicer or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicer, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                                     A-37-5

<PAGE>

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-37-6

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-37-7

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-37-8

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-37-9

<PAGE>

                                  EXHIBIT A-38
                                  ------------

                          FORM OF CLASS R-X CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
         PERSON.

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

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
         MAY BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION
         5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
         REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR
         TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION
         UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
         TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02
         OF THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
         OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
         REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
         HEREIN.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
         MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN
         AFFIDAVIT TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1)
         THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR
         POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
         INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF
         ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
         COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
         EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS
         SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511
         OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION
         1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
         FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED
         TO AS A "DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF A
         DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER
         IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH
         TRANSFEREE SATISFIES CERTAIN

                                     A-38-1

<PAGE>

         ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
         THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN
         THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER
         DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION
         OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION
         SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER
         AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
         FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE
         RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF
         THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
         CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
         PROVISIONS OF SECTION 5.02(d) OF THE POOLING AND SERVICING
         AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
         ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP
         OF THIS CERTIFICATE.

<TABLE>
<CAPTION>
<S>                                                <C>
Series 2004-A                                      Aggregate Percentage Interest of the Class R-X
                                                   Certificates as of the Issue Date: 100.00%
Cut-off Date and date of Pooling and
Servicing Agreement: July 1, 2004                  Percentage Interest: 100.00%

First Distribution Date: August 25, 2004           Servicers: Countrywide Home Loans Servicing LP
                                                                    GMAC Mortgage Corporation
No. 1
                                                   Trustee: Deutsche Bank National Trust Company

                                                   Issue Date: August 4, 2004
</TABLE>

                                     A-38-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien and second lien mortgage loans (the
"Mortgage Loans") formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
         INTEREST IN NEW CENTURY MORTGAGE SECURITIES, INC., THE
         SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
         STATES.

                  This certifies that NC Capital Corporation is the registered
owner of the Percentage Interest specified above in that certain beneficial
ownership interest evidenced by all the Class R-X Certificates in REMIC III
created pursuant to a Pooling and Servicing Agreement, dated as specified above
(the "Agreement"), among New Century Mortgage Securities, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Servicers, Federal National Mortgage Association (the
"Guarantor", with respect to the Group I Class A Certificates) and the Trustee,
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-X Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                                     A-38-3

<PAGE>

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Servicer in their respective capacities as such), together with copies of
the written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such Opinion
of Counsel is based. Neither the Depositor nor the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                                     A-38-4

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-X Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-X Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                  The Depositor, the Servicer, the Trustee and any agent of the
Depositor, the Servicer or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Servicer, the Trustee nor any such agent shall be affected by
notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC II and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC II of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC II all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                                     A-38-5

<PAGE>

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-38-6

<PAGE>

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

Dated: August __, 2004

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:______________________________
                                                     Authorized Signatory

                                     A-38-7

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT - CUSTODIAN
                                                             ------------
TEN ENT - as tenants by the entireties                      (Cust) (Minor)
                                                             under Uniform
JT TEN - as joint tenants with right                         Gifts to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                     (State)

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                                     A-38-8

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________ for the
account of _______________________________, account number ____________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

                                     A-38-9

<PAGE>

                                    EXHIBIT B
                                    ---------

               Copy of Policy with respect to Insured Certificates

                             Available Upon Request

                                  See Tab [__]

                                     A-38-10

<PAGE>

                                   EXHIBIT C-1
                                   -----------

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                       [Date]

New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

New Century Mortgage Corporation
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

                  Re:      Pooling and Servicing Agreement, dated as of July 1,
                           2004, among New Century Mortgage Securities, Inc. as
                           depositor, Countrywide Home Loans Servicing LP and
                           GMAC Mortgage Corporation as servicers, Federal
                           National Mortgage Association with respect to the
                           Group I Class A Certificates and Deutsche Bank
                           National Trust Company as Trustee, Asset Backed
                           Pass-Through Certificates, Series 2004-A
                           -----------------------------------------------------

Ladies and Gentlemen:

                  Pursuant to Section 2.01 of the Pooling and Servicing
Agreement, dated as of July 1, 2004 (the "Agreement"), among New Century
Mortgage Securities, Inc. as Depositor, Countrywide Home Loans Servicing LP and
GMAC Mortgage Corporation, as Servicers, Federal National Mortgage Association
with respect to the Group I Class A Certificates and Deutsche Bank National
Trust Company as trustee, we hereby acknowledge that as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full,
any Delayed Delivery Group I Mortgage Loan or any Mortgage Loan specifically
identified in the exception report annexed thereto as not being covered by such
certification) (i) all documents constituting part of such Mortgage File (other
than such documents described in Section 2.01(v)) required to be delivered to it
pursuant to the Agreement are in its possession, (ii) such documents have been
reviewed by it and appear regular on their face and relate to such Mortgage Loan
and (iii) based on its examination and only as to the foregoing, the information
set forth in the Mortgage Loan Schedule that corresponds to items (i) through
(iii), (vi),(xi), (xii), (xv), (xvii), (xviii), (xx) through (xxiii) and (xxv)
of the definition of "Mortgage Loan Schedule" accurately reflects information
set forth in the Mortgage File.

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement.

                  The Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan, or (iii) whether any Mortgage File
included any of the documents specified in clause (v) of Section 2.01 of the
Agreement.

                                      C-1-1

<PAGE>

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY

                                            By:______________________________
                                            Name:
                                            Title:

                                      C-1-2

<PAGE>

                                   EXHIBIT C-2
                                   -----------

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                                      [Date]

New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

New Century Mortgage Corporation
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

                  Re:      Pooling and Servicing Agreement, dated as of July 1,
                           2004, among New Century Mortgage Securities, Inc. as
                           depositor, Countrywide Home Loans Servicing LP and
                           GMAC Mortgage Corporation as servicers, Federal
                           National Mortgage Association with respect to the
                           Group I Class A Certificates and Deutsche Bank
                           National Trust Company as Trustee, Asset Backed
                           Pass-Through Certificates, Series 2004-A
                           -----------------------------------------------------

Ladies and Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attachment hereto), it or a
Custodian on its behalf has received:

                  (i) the original recorded Mortgage, and the original recorded
         power of attorney, if the Mortgage was executed pursuant to a power of
         attorney, or a certified copy thereof in those instances where the
         public recording office retains the original or where the original has
         been lost; and

                  (ii) an original Assignment in ______________ or a recorded
         Assignment to the Trustee together with the original recorded
         Assignment or Assignments showing a complete chain of assignment from
         the originator, or a certified copy of such Assignments in those
         instances where the public recording retains the original or where
         original has been lost; and

                  (iii) the original lender's title insurance policy.

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in the Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.

                                      C-2-3

<PAGE>

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST COMPANY

                                            By:________________________________
                                            Name:
                                            Title:

                                      C-2-4

<PAGE>

                                    EXHIBIT D
                                    ---------

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

                                       D-1

<PAGE>

                        MORTGAGE LOAN PURCHASE AGREEMENT

                  This is a Mortgage Loan Purchase Agreement (this "Agreement"),
dated August 2, 2004, between NC Capital Corporation, a California corporation
(the "Seller") and New Century Mortgage Securities, Inc., a Delaware corporation
(the "Purchaser").

                              Preliminary Statement
                              ---------------------

                  The Seller intends to sell the Mortgage Loans (as hereinafter
identified) and the Cap Contracts (as defined in the Pooling and Servicing
Agreement) to the Purchaser on the terms and subject to the conditions set forth
in this Agreement. The Purchaser intends to deposit the Mortgage Loans and the
Cap Contracts into a mortgage pool comprising the Trust Fund. The Trust Fund
will be evidenced by a single series of mortgage pass-through certificates
designated as Series 2004-A (the "Certificates"). The Certificates will consist
of thirty-eight classes of certificates. The Class CE Certificates, the Class P
Certificates and the Residual Certificates (collectively, the "NC Capital
Certificates") will be delivered to the Seller or its designee as partial
consideration for the Mortgage Loans as further described below. The
Certificates will be issued pursuant to a Pooling and Servicing Agreement for
Series 2004-A, dated as of July 1, 2004 (the "Pooling and Servicing Agreement"),
among the Purchaser as depositor, Countrywide Home Loans Servicing, LP and GMAC
Mortgage Corporation, as servicers (the "Servicers"), Federal National Mortgage
Association as guarantor with respect to the Group I Class A Certificates (the
"Guarantor") and Deutsche Bank National Trust Company as trustee (the
"Trustee"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Pooling and Servicing Agreement.

                  The parties hereto agree as follows:

                  SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell
and the Purchaser agrees to purchase, on or before August 4, 2004 (the "Closing
Date"), certain fixed-rate and adjustable-rate conventional, one- to
four-family, residential mortgage loans (the "Mortgage Loans"), having an
aggregate principal balance as of the close of business on July 1, 2004, (the
"Cut-off Date") of $1,679,396,636.43 (the "Closing Balance"), after giving
effect to all payments due on the Mortgage Loans on or before the Cut-off Date,
whether or not received including the right to any Prepayment Charges payable by
the related Mortgagors in connection with any Principal Prepayments on the
Mortgage Loans.

                  SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the
Seller have agreed upon which of the mortgage loans owned by the Seller are to
be purchased by the Purchaser pursuant to this Agreement and the Seller will
prepare or cause to be prepared on or prior to the Closing Date a final schedule
(the "Closing Schedule") that shall describe such Mortgage Loans and set forth
all of the Mortgage Loans to be purchased under this Agreement, including the
Prepayment Charges. The Closing Schedule will conform to the requirements set
forth in this Agreement and to the definition of "Mortgage Loan Schedule" under
the Pooling and Servicing Agreement. The Closing Schedule shall be used as the
Mortgage Loan Schedule under the Pooling and Servicing Agreement.

<PAGE>

                  SECTION 3. CONSIDERATION.

                  (a) In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall, as described in Section 8, (i) pay to or upon
the order of the Seller in immediately available funds an amount (the "Mortgage
Loan Purchase Price") equal to the net sale proceeds of the Class A Certificates
and the Mezzanine Certificates and (ii) will have delivered the NC Capital
Certificates to the Seller or its designee.

                  (b) The Purchaser or any assignee, transferee or designee of
the Purchaser shall be entitled to all scheduled payments of principal due after
the Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.

                  (c) Pursuant to the Pooling and Servicing Agreement, the
Purchaser will assign all of its right, title and interest in and to the
Mortgage Loans, together with its rights under this Agreement, to the Trustee
for the benefit of the Certificateholders.

                  SECTION 4. TRANSFER OF THE MORTGAGE LOANS.

                  (a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
         and in connection therewith hereby assigns to the Purchaser, effective
         as of the Closing Date, without recourse but subject to the terms of
         this Agreement, all of its right, title and interest in, to and under
         the Mortgage Loans, including the related Prepayment Charges. The
         contents of each Mortgage File not delivered to the Purchaser or to any
         assignee, transferee or designee of the Purchaser on or prior to the
         Closing Date are and shall be held in trust by the Seller for the
         benefit of the Purchaser or any assignee, transferee or designee of the
         Purchaser. Upon the sale of the Mortgage Loans, the ownership of each
         Mortgage Note, the related Mortgage and the other contents of the
         related Mortgage File is vested in the Purchaser and the ownership of
         all records and documents with respect to the related Mortgage Loan
         prepared by or that come into the possession of the Seller on or after
         the Closing Date shall immediately vest in the Purchaser and shall be
         delivered immediately to the Purchaser or as otherwise directed by the
         Purchaser.

                  (b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on
         or prior to the Closing Date, deliver or cause to be delivered to the
         Purchaser or any assignee, transferee or designee of the Purchaser each
         of the following documents for each Mortgage Loan:

                  (i) the original Mortgage Note, endorsed in blank or in the
         following form "Pay to the order of Deutsche Bank National Trust
         Company, as Trustee under the applicable agreement, without recourse,"
         with all prior and intervening endorsements showing a complete chain of
         endorsement from the originator to the Person so endorsing to the
         Trustee;

                                       -2-

<PAGE>

                  (ii) the original Mortgage with evidence of recording thereon,
         and the original recorded power of attorney, if the Mortgage was
         executed pursuant to a power of attorney, with evidence of recording
         thereon;

                  (iii) an original Assignment in blank;

                  (iv) the original recorded Assignment or Assignments showing a
         complete chain of assignment from the originator to the Person
         assigning the Mortgage to the Trustee as contemplated by the
         immediately preceding clause (iii);

                  (v) the original or copies of each assumption, modification,
         written assurance or substitution agreement, if any; and

                  (vi) the original lender's title insurance policy or, if the
         original title policy has not been issued, the irrevocable commitment
         to issue the same.

                  The Seller promptly shall (within sixty Business Days
following the later of the Closing Date and the date of the receipt by the
Seller of the recording information for a Mortgage but in no event later than
ninety days following the Closing Date) submit or cause to be submitted for
recording, at no expense to the Purchaser (or the Trust Fund or the Trustee
under the Pooling and Servicing Agreement), in the appropriate public office for
real property records, each Assignment referred to in clauses (b)(iii) and
(b)(iv) of this Section 4 and shall execute each original Assignment in the
following form: "Deutsche Bank National Trust Company, as Trustee under the
applicable agreement." In the event that any such Assignment is lost or returned
unrecorded because of a defect therein, the Seller promptly shall prepare a
substitute Assignment or cure such defect, as the case may be, and thereafter
cause each such Assignment to be duly recorded.

                  With respect to a maximum of approximately 2.0% of the
Mortgage Loans, by outstanding principal balance of the Mortgage Loans as of the
Cut-off Date, if any original Mortgage Note referred to in Section 4(b)(i) above
cannot be located, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon delivery to the Purchaser of a photocopy of such
Mortgage Note, if available, with a lost note affidavit substantially in the
form of Exhibit I to the Pooling and Servicing Agreement. If any of the original
Mortgage Notes for which a lost note affidavit was delivered to the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser within three Business Days.

                  Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignments shall not be required to be submitted for recording (except with
respect to any Mortgage Loan located in Maryland, Florida, Hawaii or
Mississippi) unless such failure to record would result in a withdrawal or a
downgrading by any Rating Agency of the rating on any Class of Certificates
(which in the case of the Insured Certificates shall be without regard to the
Policy); PROVIDED, HOWEVER, each Assignment shall be submitted for recording by
the Seller in the manner described above, at no expense to the Purchaser, upon
the earliest to occur of: (i) reasonable direction by Holders of Certificates
entitled to at least 25% of the Voting Rights, (ii) the occurrence of a Servicer

                                       -3-

<PAGE>

Event of Termination with respect to the applicable Servicer, (iii) the
occurrence of a bankruptcy, insolvency or foreclosure relating to the applicable
Servicer, (iv) the occurrence of a servicing transfer as described in Section
7.02 of the Pooling and Servicing Agreement, (v) with respect to any one
Assignment, the occurrence of a bankruptcy, insolvency or foreclosure relating
to the Mortgagor under the related Mortgage and (vi) any Mortgage Loan that is
90 days or more Delinquent. Upon (a) receipt of written notice that recording of
the Assignments is required pursuant to one or more of the conditions (excluding
condition (vi) above) set forth in the preceding sentence or (b) upon the
occurrence of condition (vi) in the preceding sentence, the Seller shall be
required to deliver such Assignments within 30 days following receipt of such
notice.

                  If any of the documents referred to in Sections 4(b)(ii),
(iii) or (iv) above has, as of the Closing Date, been submitted for recording
but either (x) has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained the original
of such document, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Purchaser or its assignee,
transferee or designee of a copy of each such document certified by the
Originator in the case of (x) above or the applicable public recording office in
the case of (y) above to be a true and complete copy of the original that was
submitted for recording and (2) if such copy is certified by the Originator,
delivery to the Purchaser or its assignee, transferee or designee promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Trustee and the Rating Agencies by the
Seller if delivery pursuant to clause (2) above will be made more than 180 days
after the Closing Date. If the original lender's title insurance policy was not
delivered pursuant to Section 4(b)(vi) above, the Seller shall deliver or cause
to be delivered to the Purchaser or its assignee, transferee or designee
promptly after receipt thereof, the original lender's title insurance policy.
The Seller shall deliver or cause to be delivered to the Purchaser or its
assignee, transferee or designee promptly upon receipt thereof any other
original documents constituting a part of a Mortgage File received with respect
to any Mortgage Loan, including, but not limited to, any original documents
evidencing an assumption or modification of any Mortgage Loan.

                  Each original document relating to a Mortgage Loan which is
not delivered to the Purchaser or its assignee, transferee or designee, if held
by the Seller, shall be so held for the benefit of the Purchaser, its assignee,
transferee or designee.

                  (c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered
pursuant to Section 4(b) hereof shall be reviewed by the Purchaser or any
assignee, transferee or designee of the Purchaser at any time before or after
the Closing Date (and with respect to each document permitted to be delivered
after the Closing Date, within seven days of its delivery) to ascertain that all
required documents have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule.

                  (d) TRANSFER OF INTEREST IN AGREEMENT. The Purchaser has the
right to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller, and the assignee shall succeed to
the

                                       -4-

<PAGE>

rights and obligations hereunder of the Purchaser. Any expense reasonably
incurred by or on behalf of the Purchaser or the Trustee in connection with
enforcing any obligations of the Seller under this Agreement will be promptly
reimbursed by the Seller.

                  (e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date,
the Seller shall either (i) deliver in escrow to the Purchaser, or to any
assignee, transferee or designee of the Purchaser for examination, the Mortgage
File pertaining to each Mortgage Loan or (ii) make such Mortgage Files available
to the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser or the Trustee, and
their respective designees, upon reasonable notice to the Seller during normal
business hours before the Closing Date and within 60 days after the Closing
Date. If any such person makes such examination prior to the Closing Date and
identifies any Mortgage Loans that do not conform to the requirements of the
Purchaser as described in this Agreement, such Mortgage Loans shall be deleted
from the Closing Schedule. The Purchaser may, at its option and without notice
to the Seller, purchase all or part of the Mortgage Loans without conducting any
partial or complete examination. The fact that the Purchaser or any person has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the rights of the Purchaser or any assignee,
transferee or designee of the Purchaser to demand repurchase or other relief as
provided herein or under the Pooling and Servicing Agreement.

                  SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                             SELLER

                  The Seller hereby represents and warrants to the Purchaser, as
of the date hereof and as of the Closing Date, and covenants, that:

                  (1) The Seller is duly organized, validly existing and in good
standing as a corporation under the laws of the State of California with full
corporate power and authority to conduct its business as presently conducted by
it to the extent material to the consummation of the transactions contemplated
herein. The Seller has the full corporate power and authority to own the
Mortgage Loans and to transfer and convey the Mortgage Loans to the Purchaser
and has the full corporate power and authority to execute and deliver, engage in
the transactions contemplated by, and perform and observe the terms and
conditions of this Agreement.

                  (2) The Seller has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
Purchaser, constitutes a legal, valid and binding obligation of the Seller,
enforceable against it in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency or reorganization or by general
principles of equity.

                  (3) The execution, delivery and performance of this Agreement
by the Seller (x) does not conflict and will not conflict with, does not breach
and will not result in a breach of and does not constitute and will not
constitute a default (or an event, which with notice or lapse of time or both,
would constitute a default) under (A) any terms or provisions of the articles of
incorporation or by-laws of the Seller, (B) any term or provision of any
material agreement, contract, instrument or indenture, to which the

                                       -5-

<PAGE>

Seller is a party or by which the Seller or any of its property is bound or (C)
any law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Seller or any of
its property and (y) does not create or impose and will not result in the
creation or imposition of any lien, charge or encumbrance which would have a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans.

                  (4) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Seller to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Seller of, or compliance by the Seller with, this Agreement or the consummation
by the Seller of any other transaction contemplated hereby and by the Pooling
and Servicing Agreement; provided, however, that the Seller makes no
representation or warranty regarding federal or state securities laws in
connection with the sale or distribution of the Certificates.

                  (5) This Agreement does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained herein not misleading. The written statements, reports and other
documents prepared and furnished or to be prepared and furnished by the Seller
pursuant to this Agreement or in connection with the transactions contemplated
hereby taken in the aggregate do not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein not misleading.

                  (6) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Seller or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder.

                  (7) The Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement.

                  (8) Immediately prior to the sale of the Mortgage Loans to the
Purchaser as herein contemplated, the Seller will be the owner of the related
Mortgage and the indebtedness evidenced by the related Mortgage Note, and, upon
the payment to the Seller of the Mortgage Loan Purchase Price, in the event that
the Seller retains or has retained record title, the Seller shall retain such
record title to each Mortgage, each related Mortgage Note and the related
Mortgage Files with respect thereto in trust for the Purchaser as the owner
thereof from and after the date hereof.

                  (9) There are no actions or proceedings against, or
investigations known to it of, the Seller before any court, administrative or
other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Seller or the
consummation of

                                       -6-

<PAGE>

the transactions contemplated by this Agreement or (C) that might prohibit or
materially and adversely affect the performance by the Seller of its obligations
under, or validity or enforceability of, this Agreement.

                  (10) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller are not subject to the bulk transfer or any similar statutory
provisions.

                  (11) Neither the Seller nor the Originator has dealt with any
broker, investment banker, agent or other person, except for the Purchaser or
any of its affiliates, that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans (except that an entity that
previously financed the Seller's ownership of the Mortgage Loans may be entitled
to a fee to release its security interest in the Mortgage Loans, which fee shall
have been paid and which security interest shall have been released on or prior
to the Closing Date).

                  (12) There is no litigation, action, suit, proceeding or
investigation currently pending or, to the best of the Seller's knowledge
without independent investigation, threatened against the Seller or the
Originator that would reasonably be expected to adversely affect the transfer of
the Mortgage Loans, the issuance of the Certificates or the execution, delivery,
performance or enforceability of this Agreement, or that would result in a
material adverse change in the financial condition of the Seller.

                  SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER
                             RELATING TO THE MORTGAGE LOANS.

                  REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE
LOANS. The Seller hereby represents and warrants to the Purchaser that as to
each Mortgage Loan as of the Closing Date:

                  (1) The information set forth in the Mortgage Loan Schedule,
including the field concerning any related Prepayment Charge, is complete, true
and correct as of the Cut-off Date;

                  (2) [intentionally omitted]

                  (3) (a) All payments required to be made on or before the
first day of the month prior to the month of the Closing Date, with respect to
such Mortgage Loan under the terms of the Mortgage Note have been made; (b)
neither the Seller nor the Originator has advanced funds, or induced, solicited
or knowingly received any advance of funds from a party other than the owner of
the related Mortgaged Property, directly or indirectly, for the payment of any
amount required by the Mortgage Note or Mortgage and (c) as of August 1, 2004,
the payment required under any Mortgage Loan will not and has not been 30 or
more days delinquent more than once during the last twelve months;

                  (4) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold payments,
including assessments payable in future installments or other outstanding
charges affecting the related Mortgaged Property;

                                       -7-

<PAGE>

                  (5) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage and which has been delivered to the
Trustee; the substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the related policy, and
is reflected on the Mortgage Loan Schedule. No instrument of waiver, alteration
or modification has been executed by the Seller or the Originator or any other
person in the chain of title from the Originator to the Seller to the Purchaser,
and no Mortgagor has been released, in whole or in part, except in connection
with an assumption agreement approved by the title insurer, to the extent
required by the policy, and the terms of which are reflected in the Mortgage
Loan Schedule and which assumption agreement is part of the Mortgage Loan file
delivered to the Trustee;

                  (6) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto. As of the Closing Date, no Mortgager was a debtor in any state
or federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;

                  (7) All buildings or other improvements upon the Mortgaged
Property are insured by a generally acceptable insurer against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located, pursuant to insurance policies
conforming to the requirements of the Pooling and Servicing Agreement. All such
insurance policies contain a standard mortgagee clause naming the Originator,
its successors and assigns as mortgagee and all premiums thereon have been paid.
If upon origination of the Mortgage Loan, the Mortgaged Property was in an area
identified on a Flood Hazard Map or Flood Insurance Rate Map issued by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect which policy conforms to the requirements of Fannie Mae and Freddie
Mac. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor. The hazard insurance policy is the valid and binding obligation of
the insurer, is in full force and effect, and will be in full force and effect
and inure to the benefit of the Trustee upon the consummation of the
transactions contemplated by this Agreement. The Seller has not engaged in, and
has no knowledge of the Mortgagor's having engaged in, any act or omission which
would impair the coverage of any such policy, the benefits of the endorsement
provided for herein, or the validity and binding effect of either, including,
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by the Seller;

                  (8) Any and all requirements of any federal, state or local
law including, without limitation, all applicable predatory and abusive lending
laws, usury, truth in lending, real estate settlement

                                       -8-

<PAGE>

procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the origination and servicing of the Mortgage Loan,
including, without limitation, any provisions therein relating to Prepayment
Charges have been complied with. Any and all statements or acknowledgments
required to be made by the Seller relating to such requirements are and will
remain in the Mortgage File;

                  (9) The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release. The Seller has not waived
the performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Seller waived any default resulting from any action or inaction by the
Mortgagor;

                  (10) The Mortgage is a valid, existing and enforceable first
or second lien on the Mortgaged Property, including all improvements on the
Mortgaged Property subject only to (a) the lien of current real property taxes
and assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording being acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and which do not adversely
affect the appraised value of the Mortgaged Property, (c) other matters to which
like properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property and (d) the
first lien on the Mortgaged Property, in the case of the Mortgages that are
second liens. Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, existing and enforceable first or second lien and first or
second priority security interest, as applicable, on the property described
therein and the Seller had full right to contribute and assign the same to the
Purchaser. The Mortgaged Property was not, as of the date of origination of the
Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or
other security instrument creating a lien subordinate to the lien of the
Mortgage;

                  (11) The Mortgage Note and the related Mortgage and any other
agreement executed and delivered by a Mortgagor in connection with a Mortgage
Loan are genuine and each is the legal, valid and binding obligation of the
maker thereof, enforceable in accordance with its terms;

                  (12) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been
duly and properly executed by such parties. The Mortgagor is a natural person
who is a party to the Mortgage Note and the Mortgage is in an individual
capacity or family trust that is guaranteed by a natural person;

                  (13) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the Mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or

                                       -9-

<PAGE>

closing the Mortgage Loan and the recording of the Mortgage have been paid, and
the Mortgagor is not entitled to any refund of any amounts paid or due to the
Mortgagee pursuant to the Mortgage Note or Mortgage;

                  (14) As of the Closing Date and prior to the sale of the
Mortgage Loan to the Purchaser, the Seller was the sole legal, beneficial and
equitable owner of the Mortgage Note and the Mortgage and has full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;

                  (15) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located;

                  (16) The Mortgage Loan is covered by an ALTA lender's title
insurance policy, and with respect to each adjustable-rate Mortgage Loan, an
adjustable rate mortgage endorsement in an amount at least equal to the balance
of the Mortgage Loan as of the Cut-off Date, such endorsement substantially in
the form of ALTA Form 6.0 or 6.1, acceptable to Fannie Mae or Freddie Mac,
issued by a title insurer acceptable to Fannie Mae and Freddie Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring (subject to the exceptions contained in (x)(a) and (b) above) the
Originator, its successors and assigns as to the first or second priority lien
of the Mortgage in the original principal amount of the Mortgage Loan and
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for adjustment in the
Mortgage Rate and monthly payment in case of a Group III Mortgage Loan.
Additionally, such lender's title insurance policy affirmatively insures ingress
and egress to and from the Mortgaged Property, and against encroachments by or
upon the Mortgaged Property or any interest therein. The Originator is the sole
insured of such lender's title insurance policy, and such lender's title
insurance policy is valid and remains in full force and effect and will be in
full force and effect upon the consummation of the transactions contemplated by
this Agreement. No claims have been made under such lender's title insurance
policy, and no prior holder of the related Mortgage, including the Originator,
the Seller, has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy including, without limitation,
no unlawful fee, commission, kickback or other unlawful compensation or value of
any kind has been or will be received, retained or realized by any attorney,
firm or other person or entity, and no such unlawful items have been received,
retained or realized by the Purchaser or the Seller;

                  (17) Other than as specified in paragraph (3) above, if
applicable, there is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration, and
neither the Originator nor the Seller has waived any default, breach, violation
or event of acceleration;

                                      -10-

<PAGE>

                  (18) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;

                  (19) All improvements which were considered in determining the
Value of the related Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property, and no improvements on
adjoining properties encroach upon the Mortgaged Property. As of the date of
origination, there are no improvements located on or being part of the Mortgaged
Property in violation of any applicable zoning law or regulation. Each appraisal
has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;

                  (20) The Mortgage Loan was (i) originated by the Originator or
by a savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD or (ii)
acquired by the Originator directly through loan brokers or correspondents such
that (a) the Mortgage Loan was originated in conformity with the Originator's
underwriting guidelines, (b) the Originator approved the Mortgage Loan prior to
funding and (c) the Originator provided the funds used to originate the Mortgage
Loan and acquired the Mortgage Loan on the date of origination thereof. All
Mortgage Loans have Due Dates on the first day of each month except as specified
on the Mortgage Loan Schedule. Each Mortgage Note is payable in equal monthly
installments of principal and interest, which installments of interest, with
respect to adjustable rate Mortgage Loans, are subject to change due to the
adjustments to the Mortgage Rate on each interest rate adjustment date, with
interest calculated and payable in arrears and is not calculated on a simple
interest basis. The monthly principal payments on each Mortgage Loan is
sufficient to amortize the Mortgage Loan fully by the stated maturity date, over
an original term of not more than thirty years from commencement of
amortization. There is no negative amortization allowed in the terms of any
Mortgage Note. None of the Mortgage Loans allows for negative amortization or
the conversion of the interest rate thereon from an adjustable rate to a fixed
rate or from a fixed rate to an adjustable rate.;

                  (21) Principal payments on the Mortgage Loan commenced no more
than two months after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loan bears interest at the Mortgage Rate. With respect to the Group III
Mortgage Loans, the Mortgage Note is payable on the first day of each month in
Monthly Payments which are changed on each Adjustment Date to an amount which
will amortize the Stated Principal Balance of the Mortgage Loan over its
remaining term at the Mortgage Rate. Interest on the Mortgage Loan is calculated
on the basis of a 360-day year consisting of twelve 30-day months. The Mortgage
Note does not permit negative amortization. No Group III Mortgage Loan permits
the Mortgagor to convert the Mortgage Rate thereon to a fixed Mortgage Rate. All
Mortgage Rate adjustments have been made in strict compliance with state and
federal law and the terms of the related Mortgage Note. If, pursuant to the
terms of the Mortgage Note, another index was selected for determining the
Mortgage Rate, the same index was used with respect to each Mortgage Note which
required a new index to be selected, and such selection did not conflict with
the terms of the related Mortgage Note. The Seller or an affiliate executed and
delivered any and all notices required under

                                      -11-

<PAGE>

applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Rate and the monthly payment adjustments. Any interest required to
be paid pursuant to state, federal and local law has been properly paid and
credited;

                  (22) The origination and collection practices used by the
Originator with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been serviced in accordance with the
terms of the Mortgage Note. With respect to escrow deposits and Escrow Payments,
if any, all such payments are in the possession of, or under the control of, the
related Servicer and there exist no deficiencies in connection therewith for
which customary arrangements for repayment thereof have not been made. No escrow
deposits or Escrow Payments or other charges or payments due the related
Servicer have been capitalized under any Mortgage or the related Mortgage Note;

                  (23) The Mortgaged Property is free of damage, waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty so as
to affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended and each Mortgaged
Property is in good repair. There have not been any condemnation proceedings
with respect to the Mortgaged Property and the Seller has no knowledge of any
such proceedings in the future. There is no proceeding pending for the total or
partial condemnation thereof;

                  (24) The Mortgage and related Mortgage Note contain customary
and enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and (b) otherwise by
judicial foreclosure. Since the date of origination of the Mortgage Loan, the
Mortgaged Property has not been subject to any bankruptcy proceeding or
foreclosure proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage. To the best
of the Seller's knowledge, the Mortgagor has not notified the Originator of any
relief requested or allowed to the Mortgagor under the Servicemembers Civil
Relief Act and, to the best of the Seller's knowledge, no such request has been
made or allowance granted.

                  (25) The related Mortgaged Property is not a leasehold estate
or, if such Mortgaged Property is a leasehold estate, the remaining term of such
lease is at least ten (10) years greater than the remaining term of the related
Mortgage Note;

                  (26) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (10) above;

                  (27) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Mortgage Loan
application, by a qualified appraiser, approved by the Originator or the Seller,
who had no interest, direct or indirect in the Mortgaged Property or in any loan

                                      -12-

<PAGE>

made on the security thereof, whose compensation is not affected by the approval
or disapproval of the Mortgage Loan and who met the minimum qualifications of
Fannie Mae and Freddie Mac;

                  (28) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;

                  (29) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Originator, the Seller, the Mortgagor, or
anyone on behalf of the Mortgagor, (b) paid by any source other than the
Mortgagor or (c) contains any other similar provisions which may constitute a
"buydown" provision. The Mortgage Loans are not graduated payment mortgage loans
and the Mortgage Loans do not have shared appreciation or other contingent
interest features;

                  (30) The Mortgagor has executed a statement to the effect that
the Mortgagor has received all disclosure materials required by applicable law
with respect to the making of mortgage loans; and if the Mortgage Loan is a
Refinanced Mortgage Loan, the Mortgagor has received all disclosure and
rescission materials required by applicable law with respect to the making of a
Refinanced Mortgage Loan, and evidence of such receipt is and will remain in the
Mortgage File;

                  (31) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;

                  (32) All Mortgage Loans have a credit score and no Mortgage
Loan has a credit score below 500;

                  (33) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the appropriate
authorities;

                  (34) No error, omission, misrepresentation, negligence, fraud
or similar occurrence with respect to a Mortgage Loan has taken place on the
part of any person, including, without limitation, the Mortgagor, any appraiser,
any builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;

                  (35) Each Assignment is in recordable form and is acceptable
for recording under the laws of the jurisdiction in which the Mortgaged Property
is located;

                  (36) Any principal advances made to the Mortgagor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage

                                      -13-

<PAGE>

securing the consolidated principal amount is expressly insured as having first
or second lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title evidence
acceptable to Fannie Mae and Freddie Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan;

                  (37) No Mortgage Loan has a balloon payment feature;

                  (38) If the Residential Dwelling on the Mortgaged Property is
a condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project meets Fannie Mae's eligibility requirements;

                  (39) Except with respect to approximately 7.43% of the Group I
Mortgage Loans, approximately 7.34% of the Group II Mortgage Loans,
approximately 34.31% of the Group III-A Mortgage Loans and approximately 32.47%
of the Group III-B Mortgage Loans (by aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date), neither the Originator nor any affiliate
of the Originator has made a mortgage on any Mortgaged Property other than the
Mortgage Loan;

                  (40) Each Group I Mortgage Loan had a principal balance at
origination that conformed to Fannie Mae's then loan limits;

                  (41) The Mortgage Loan was not intentionally selected in a
manner intended to adversely affect the interest of the Purchaser;

                  (42) Each Group I Mortgage Loan is secured by a first lien on
the related Mortgaged Property;

                  (43) The Mortgaged Property consists of a parcel of real
property of not more than ten acres with a one family residence erected thereon,
or a two to four-family dwelling, or an individual condominium unit in a
low-rise or high-rise condominium project, or an individual unit in a planned
unit development. The Mortgaged Property is improved with a Residential
Dwelling. Without limiting the foregoing, the Mortgaged Property does not
consist of any of the following property types: (a) co-operative units, (b) log
homes, (c) earthen homes, (d) underground homes, (e) mobile homes and (f)
manufactured homes (as defined in the Fannie Mae Originator-Servicer's Guide),
except when the appraisal indicates that the home is of comparable construction
to a stick or beam construction home, is readily marketable, has been
permanently affixed to the site and is not in a mobile home "park." The
Mortgaged Property is either a fee simple estate or a long-term residential
lease. If the Mortgage Loan is secured by a long-term residential lease, unless
otherwise specifically disclosed in the Mortgage Loan Schedule, (A) the terms of
such lease expressly permit the mortgaging of the leasehold estate, the
assignment of the lease without the lessor's consent (or the lessor's consent
has been obtained and such consent is the Mortgage File) and the acquisition by
the holder of the Mortgage of the rights of the lessee upon foreclosure or
assignment in lieu of foreclosure or provide the holder of the Mortgage with
substantially similar protection; (B) the terms of such lease do not (x) allow
the termination thereof upon the lessee's default without the holder of the
Mortgage being entitled to receive written notice of, and opportunity to cure,
such default or (y) prohibit

                                      -14-

<PAGE>

the holder of the Mortgage from being insured under the hazard insurance policy
relating to the Mortgaged Property; (C) the original term of such lease is not
less than 15 years; (D) the term of such lease does not terminate earlier than
ten years after the maturity date of the Mortgage Note; and (E) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates for
residential properties is an accepted practice;

                  (44) At the time of origination, the Loan-To-Value Ratio of
the Mortgage Loan was not greater than 100.00%;

                  (45) The Mortgage, and if required by applicable law the
related Mortgage Note, contains a provision for the acceleration of the payment
of the unpaid Stated Principal Balance of the Mortgage Loan in the event that
the Mortgaged Property is sold or transferred without the prior written consent
of the Mortgagee, at the option of the Mortgagee;

                  (46) The Mortgage Loan either contains a customary due-on-sale
clause or may be assumed by a creditworthy purchaser of the related Mortgaged
Property;

                  (47) As of any Adjustment Date for any Group III Mortgage
Loan, the Index applicable to the determination of the Mortgage Rate on such
Mortgage Loan will be the average of the interbank offered rates for six-month
or one-month United States dollar deposits in the London market, generally as
published in THE WALL STREET JOURNAL and as most recently available as of either
(i) the first business day 45 days prior to such Adjustment Date or (ii) the
first business day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note;

                  (48) Each Mortgage Loan is a "qualified mortgage loan" within
the meaning of the Section 860G(a)(3) of the Code;

                  (49) No Mortgage Loan has a mortgage rate of greater than 13%;

                  (50) The Originator is a HUD approved mortgagee pursuant to
Section 203 and Section 211 of the National Housing Act. No event has occurred,
including but not limited to a change in insurance coverage, that would make the
Originator unable to comply with HUD eligibility requirements or that would
require notification to HUD;

                  (51) No Mortgage Loan is covered by the Home Ownership and
Equity Protection Act of 1994 ("HOEPA") and no Mortgage Loan is in violation of
any comparable state or local law;

                  (52) No Mortgage Loan is a "High Cost Home Loan" as defined in
the Georgia Fair Lending Act, as amended (the "Georgia Act"). No Mortgage Loan
subject to the Georgia Act and secured by owner occupied real property or an
owner occupied manufactured home located in the State of Georgia was originated
(or modified) on or after October 1, 2002 through and including March 6, 2003;

                                      -15-

<PAGE>

                  (53) (a) No Mortgage Loan is a "high cost home," "covered,"
(excluding home loans defined as "covered home loans" pursuant to clause (1) of
the definition of that term in the New Jersey Home Ownership Security Act of
2002), "high risk home" or "predatory" loan under any other applicable state,
federal or local law (or a similarly classified loan using different terminology
under a law imposing heightened regulatory scrutiny or additional legal
liability for residential mortgage loans having high interest rates, points
and/or fees);

                  (54) No proceeds from any Mortgage Loan were used to finance
single-premium credit insurance policies;

                  (55) No Mortgage Loan originated on or after October 1, 2002
will impose a Prepayment Charge for a term in excess of three years. Any
Mortgage Loans originated prior to such date will not impose Prepayment Charges
in excess of five years;

                  (56) Each Mortgage Loan at the time it was made complied in
all material respects with applicable local, state, and federal laws, including,
but not limited to, all applicable predatory and abusive lending laws;

                  (57) Each Prepayment Charge is enforceable and was originated
in compliance with all applicable federal, state and local laws (except to the
extent that the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws affecting creditor's rights
generally or the collectability thereof may be limited due to acceleration in
connection with a foreclosure);

                  (58) No Mortgage Loan is a high cost loan or a covered loan,
as applicable (as such terms are defined in Standard & Poor's LEVELS Version 5.6
Glossary Revised, Appendix E;

                  (59) Each Group I Mortgage Loan is in compliance with the
anti-predatory lending eligibility standards for purchase requirements of Fannie
Mae's Selling Guide;

                  (60) No borrower was encouraged or required to select a Group
I Mortgage Loan product offered by the Originator which is a higher cost product
designed for less creditworthy borrowers, unless at the time of the Group I
Mortgage Loan's origination, such borrower did not qualify taking into account
credit history and debt to income ratios for a lower cost credit product then
offered by the Originator or any affiliate of the Originator. If, at the time of
loan application, the borrower may have qualified for a for a lower cost credit
product then offered by any mortgage lending affiliate of the Originator, the
Originator referred the borrower's application to such affiliate for
underwriting consideration;

                  (61) The methodology used in underwriting the extension of
credit for each Group I Mortgage Loan employs objective mathematical principles
which relate the borrower's income, assets and liabilities to the proposed
payment and such underwriting methodology does not rely on the extent of the
borrower's equity in the collateral as the principal determining factor in
approving such credit extension.

                                      -16-

<PAGE>

Such underwriting methodology confirmed that at the time of origination
(application/approval) the borrower had a reasonable ability to make timely
payments on the Group I Mortgage Loan;

                  (62) With respect to any Group I Mortgage Loan that contains a
provision permitting imposition of a premium upon a prepayment prior to
maturity: (i) prior to the loan's origination, the borrower agreed to such
premium in exchange for a monetary benefit, including but not limited to a rate
or fee reduction, (ii) prior to the loan's origination, the borrower was offered
the option of obtaining a mortgage loan that did not require payment of such a
premium, (iii) the prepayment premium is disclosed to the borrower in the loan
documents pursuant to applicable state and federal law, and (iv) notwithstanding
any state or federal law to the contrary, neither Servicer shall impose such
prepayment premium in any instance when the mortgage debt is accelerated as the
result of the borrower's default in making the loan payments;

                  (63) No borrower was required to purchase any credit life,
disability, accident or health insurance product as a condition of obtaining the
extension of credit. No borrower obtained a prepaid single premium credit life,
disability, accident or health insurance policy in connection with the
origination of the Group I Mortgage Loan. No proceeds from any Group I Mortgage
Loan were used to purchase single premium credit insurance policies as part of
the origination of, or as a condition to closing, such Group I Mortgage Loan;

                  (64) All points and fees related to each Group I Mortgage Loan
were disclosed in writing to the borrower in accordance with applicable state
and federal law and regulation. Except in the case of a Group I Mortgage Loan in
an original principal amount of less than $60,000 which would have resulted in
an unprofitable origination, no borrower was charged "points and fees" (whether
or not financed) in an amount greater than 5% of the principal amount of such
loan, such 5% limitation is calculated in accordance with Fannie Mae's
anti-predatory lending requirements as set forth in the Fannie Mae Selling
Guide; and

                  (65) All fees and charges (including finance charges) and
whether or not financed, assessed, collected or to be collected in connection
with the origination and servicing of each Group I Mortgage Loan has been
disclosed in writing to the borrower in accordance with applicable state and
federal law and regulation.

                  (66) Type of Mortgaged Property. As of the date of
origination, no portion of the Mortgaged Property was used for commercial
purposes, and since the date of origination, no portion of the Mortgaged
Property has been used for commercial purposes; provided, that Mortgaged
Properties which contain a home office shall not be considered as being used for
commercial purposes as long as the Mortgaged Property has not been altered for
commercial purposes and is not storing any chemicals or raw materials other than
those commonly used for homeowner repair, maintenance and/or household purposes.
With respect to any Mortgage Loan secured by a Mortgaged Property improved by
manufactured housing, (i) such Mortgage Loan conforms with the applicable Fannie
Mae or Freddie Mac requirements regarding mortgage loans related to manufactured
dwellings, (ii) the related manufactured housing unit is permanently affixed to
the land, (iii) the related manufactured housing unit and the related land are
subject to a Mortgage

                                      -17-

<PAGE>

properly filed in the appropriate public recording office and naming the
Purchaser as mortgagee, and (iv) the applicable laws of the jurisdiction in
which the related Mortgaged Property is located will deem the manufactured
dwelling located on such Mortgaged Property to be a part of the real property on
which such dwelling is located;

                  (67) NO VIOLATION OF ENVIRONMENTAL LAWS. There is no pending
action or proceeding directly involving the Mortgaged Property in which
compliance with any environmental law, rule or regulation is an issue; there is
no violation of any environmental law, rule or regulation with respect to the
Mortgaged Property; and nothing further remains to be done to satisfy in full
all requirements of each such law, rule or regulation constituting a
prerequisite to use and enjoyment of said property;

                  (68) NO DEFENSE TO INSURANCE COVERAGE. No action has been
taken or failed to be taken, no event has occurred and no state of facts exists
or has existed on or prior to the Closing Date (whether or not known to the
Seller on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any primary mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured) whether arising out
of actions, representations, errors, omissions, negligence, or fraud of the
Seller, the related Mortgagor or any party involved in the application for such
coverage, including the appraisal, plans and specifications and other exhibits
or documents submitted therewith to the insurer under such insurance policy, or
for any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay;

                  (68) CONFORMANCE WITH AGENCY AND UNDERWRITING STANDARDS. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines.
The Mortgage Note and Mortgage are on forms acceptable to Freddie Mac or Fannie
Mae and neither the Seller nor any affiliate has made any representations to a
Mortgagor that are inconsistent with the mortgage instruments used;

                  (69) CONVERSION TO FIXED INTEREST RATE. With respect to each
adjustable rate Mortgage Loan, the Mortgage Loan is not a convertible Mortgage
Loan;

                  SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION
                             AND FOR BREACH OF REPRESENTATION AND WARRANTY.

                  (a) The representations and warranties contained in Section 6
shall not be impaired by any review and examination of loan files or other
documents evidencing or relating to the Mortgage Loans or any failure on the
part of the Purchaser to review or examine such documents and shall inure to the
benefit of any assignee, transferee or designee of the Purchaser, including the
Trustee for the benefit of holders of the Certificates and the Certificate
Insurer. With respect to the representations and warranties contained herein as
to which the Seller has no knowledge, if it is discovered that the substance of
any such representation and warranty was inaccurate as of the date such
representation and warranty was made or deemed to be made, and such inaccuracy
materially and adversely affects the value of the related Mortgage

                                      -18-

<PAGE>

Loan or the interest therein of the Purchaser or the Purchaser's assignee,
transferee or designee, then notwithstanding the lack of knowledge by the Seller
with respect to the substance of such representation and warranty being
inaccurate at the time the representation and warranty was made, the Seller
shall take such action described in the following paragraph in respect of such
Mortgage Loan.

                  Upon discovery by the Purchaser or any assignee, transferee or
designee of the Purchaser of any materially defective document in, or that a
document was not transferred by the Seller (as listed on the Trustee's
preliminary exception report) as part of any Mortgage File, or of a breach of
any of the representations and warranties contained in Section 6 that materially
and adversely affects the value of any Mortgage Loan or the interest therein of
the Certificateholders or the Certificate Insurer, the Purchaser or the
Purchaser's assignee, transferee or designee, the party discovering such breach
shall give prompt written notice to the Seller. Within sixty (60) days of its
discovery or its receipt of notice of any such missing documentation that was
not transferred by the Seller as described above, or of materially defective
documentation, or of any such breach of a representation and warranty, the
Seller promptly shall deliver such missing document or cure such defect or
breach in all material respects or, in the event the Seller cannot deliver such
missing document or cannot cure such defect or breach, the Seller shall, within
ninety (90) days of its discovery or receipt of notice, either (i) repurchase
the affected Mortgage Loan at the Purchase Price (as such term is defined in the
Pooling and Servicing Agreement) or (ii) pursuant to the provisions of the
Pooling and Servicing Agreement, cause the removal of such Mortgage Loan from
the Trust Fund and substitute one or more Qualified Substitute Mortgage Loans.
The Seller shall amend the Closing Schedule to reflect the withdrawal of such
Mortgage Loan from the terms of this Agreement and the Pooling and Servicing
Agreement. The Seller shall deliver to the Purchaser such amended Closing
Schedule and shall deliver such other documents as are required by this
Agreement or the Pooling and Servicing Agreement within five (5) days of any
such amendment. Any repurchase pursuant to this Section 7(a) shall be
accomplished by transfer to an account designated by the Purchaser of the amount
of the Purchase Price (as such term is defined in the Pooling and Servicing
Agreement) in accordance with Section 2.03 of the Pooling and Servicing
Agreement. Any repurchase required by this Section 7(a) shall be made in a
manner consistent with Section 2.03 of the Pooling and Servicing Agreement.

                  (b) It is understood and agreed that the obligations of the
Seller set forth in this Section 7 to cure or repurchase a defective Mortgage
Loan constitute the sole remedies of the Purchaser against the Seller respecting
a missing document or a breach of the representations and warranties contained
in Section 6.

                  SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The
closing of the purchase and sale of the Mortgage Loans shall be held at the New
York City office of Thacher Proffitt & Wood LLP at 10:00 a.m. New York City time
on the Closing Date.

                  The closing shall be subject to each of the following
conditions:

                  (a)      All of the representations and warranties of the
                           Seller under this Agreement shall be true and correct
                           in all material respects as of the date as of which
                           they are

                                      -19-

<PAGE>

                           made and no event shall have occurred which, with
                           notice or the passage of time, would constitute a
                           default under this Agreement;

                  (b)      The Purchaser shall have received, or the attorneys
                           of the Purchaser shall have received in escrow (to be
                           released from escrow at the time of closing), all
                           Closing Documents as specified in Section 9 of this
                           Agreement, in such forms as are agreed upon and
                           acceptable to the Purchaser, duly executed by all
                           signatories other than the Purchaser as required
                           pursuant to the respective terms thereof;

                  (d)      The Seller shall have delivered or caused to be
                           delivered and released to the Purchaser or to its
                           designee, all documents (including without
                           limitation, the Mortgage Loans) required to be so
                           delivered by the Purchaser pursuant to Section 2.01
                           of the Pooling and Servicing Agreement; and

                  (e)      All other terms and conditions of this Agreement and
                           the Pooling and Servicing Agreement shall have been
                           complied with.

                  Subject to the foregoing conditions, the Purchaser shall
deliver or cause to be delivered to the Seller on the Closing Date, against
delivery and release by the Seller to the Trustee of all documents required
pursuant to the Pooling and Servicing Agreement, the consideration for the
Mortgage Loans as specified in Section 3 of this Agreement, by delivery to the
Seller of the Mortgage Loan Purchase Price in immediately available funds and
the NC Capital Certificates.

                  SECTION 9. CLOSING DOCUMENTS. Without limiting the generality
of Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:

                  (a)      An Officers' Certificate of the Seller, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Purchaser, Bear, Stearns & Co. Inc.
                           "Representative") and the Certificate Insurer may
                           rely, and attached thereto copies of the certificate
                           of incorporation, by-laws and certificate of good
                           standing of the Seller under the laws of California;

                  (b)      An Opinion of Counsel of the Seller, dated the
                           Closing Date, in form satisfactory to and addressed
                           to the Purchaser, the Certificate Insurer and the
                           Representative;

                  (c)      Such opinions of counsel as the Rating Agencies, the
                           Certificate Insurer or the Trustee may request in
                           connection with the sale of the Mortgage Loans by the
                           Seller to the Purchaser or the Seller's execution and
                           delivery of, or performance under, this Agreement;

                  (d)      An Officers' Certificate of each Servicer, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Purchaser, the Certificate Insurer and the

                                      -20-

<PAGE>

                           Representative may rely, and attached thereto copies
                           of the certificate of incorporation, by-laws and
                           certificate of good standing of each Servicer;

                  (e)      An Officers' Certificate of each Servicer, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Purchaser, the Certificate Insurer and the
                           Representative may rely, stating that on the Closing
                           Date the representations and warranties of the
                           Servicer contained in the Pooling and Servicing
                           Agreement will be true and correct and no event has
                           occurred with respect to either Servicer that would
                           constitute an Event of Default thereunder;

                  (f)      An Opinion of Counsel of each Servicer, dated the
                           Closing Date, in form satisfactory to and addressed
                           to the Purchaser, the Certificate Insurer and the
                           Representative;

                  (g)      (i) A letter from KPMG L.L.P., certified public
                           accountants, to the effect that they have performed
                           certain specified procedures as a result of which
                           they determined that certain information of an
                           accounting, financial or statistical nature set forth
                           in the Prospectus Supplement relating to the Offered
                           Certificates contained under the captions
                           "Summary--The Mortgage Loans," "Risk Factors," (to
                           the extent of information concerning the Mortgage
                           Loans contained therein) and "The Mortgage Pool"
                           agrees with the records of the Seller and the
                           information contained under the caption "The
                           Originator" agrees with the records of the
                           Originator; and

                  (h)      Such further information, certificates, opinions and
                           documents as the Purchaser or the Representative may
                           reasonably request.

                  SECTION 10. COSTS. The Seller shall pay (or shall reimburse
the Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments, the fees and expenses of the Seller's
accountants and attorneys, the costs and expenses incurred in connection with
producing the Servicers' or any Subservicer's loan loss, foreclosure and
delinquency experience, and the costs and expenses incurred in connection with
obtaining the documents referred to in Sections 9, the costs and expenses of
printing (or otherwise reproducing) and delivering this Agreement, the Pooling
and Servicing Agreement, the Certificates, the prospectus and Prospectus
Supplement, and any private placement memorandum relating to the Certificates
and other related documents, the initial fees, costs and expenses of the
Trustee, the fees and expenses of the Purchaser's counsel in connection with the
preparation of all documents relating to the securitization of the Mortgage
Loans, the filing fee charged by the Securities and Exchange Commission for
registration of the Certificates and the fees charged by any rating agency to
rate the Certificates. All other costs and expenses in connection with the
transactions contemplated hereunder shall be borne by the party incurring such
expense.

                  SECTION 11. [RESERVED].

                                      -21-

<PAGE>

                  SECTION 12. INDEMNIFICATION. The Seller shall indemnify and
hold harmless each of (i) the Purchaser, (ii) the Underwriter, (iii) the Person,
if any, to which the Purchaser assigns its rights in and to a Mortgage Loan and
each of their respective successors and assigns and (iv) each person, if any,
who controls the Purchaser within the meaning of Section 15 of the Securities
Act of 1933, as amended (the "1933 Act") ((i) through (iv) collectively, the
"Indemnified Party") against any and all losses, claims, expenses, damages or
liabilities to which the Indemnified Party may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, expenses, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (a)
any untrue statement or alleged untrue statement of any material fact contained
in the Prospectus Supplement or any private placement memorandum relating to the
offering by the Purchaser or an affiliate thereof, of the Class CE Certificates
or the Class P Certificates, or the omission or the alleged omission to state
therein the material fact necessary in order to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with (i) information furnished in writing to
the Purchaser or any of its affiliates by the Seller or any of its affiliates
specifically for use therein, which shall include, with respect to the
Prospectus Supplement, the information set forth under the captions
"Summary--The Mortgage Loans," "Risk Factors" (to the extent of information
concerning the Mortgage Loans contained therein), "The Mortgage Pool" and, with
respect to any private placement memorandum, any information of a comparable
nature, or (ii) the data files containing information with respect to the
Mortgage Loans as transmitted by modem to the Purchaser by the Seller or any of
its affiliates (as such transmitted information may have been amended in writing
by the Seller or any of its affiliates with the written consent of the Purchaser
subsequent to such transmission), (b) any representation, warranty or covenant
made by the Seller or any affiliate of the Seller herein or in the Pooling and
Servicing Agreement, on which the Purchaser has relied, being, or alleged to be,
untrue or incorrect or (c) any updated collateral information provided by any
Underwriter to a purchaser of the Certificates derived from the data contained
in clause (ii) and the Remittance Report or a current collateral tape obtained
from the Seller or an affiliate of the Seller, including the current Stated
Principal Balances of the Mortgage Loans; provided, however, that to the extent
that any such losses, claims, expenses, damages or liabilities to which the
Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the Seller
described in clause (a), (b) or (c) above and (2) any other factual basis, the
Seller shall indemnify and hold harmless the Indemnified Party only to the
extent that the losses, claims, expenses, damages, or liabilities of the person
or persons asserting the claim are determined to rise from or be based upon
matters set forth in clause (1) above and do not result from the gross
negligence or willful misconduct of such Indemnified Party. This indemnity shall
be in addition to any liability that the Seller may otherwise have.

                  SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.
The sale and delivery on the Closing Date of the Mortgage Loans described on the
Mortgage Loan Schedule in accordance with the terms and conditions of this
Agreement is mandatory. It is specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Purchaser for the losses
and damages incurred by the Purchaser in the event of the Seller's failure to
deliver the Mortgage Loans on or before the Closing Date. The Seller hereby
grants to the Purchaser a lien on and a continuing security interest in the
Seller's interest in each Mortgage Loan and each document and instrument
evidencing each such Mortgage Loan to secure the performance

                                      -22-

<PAGE>

by the Seller of its obligation hereunder, and the Seller agrees that it holds
such Mortgage Loans in custody for the Purchaser, subject to the Purchaser's (i)
right, prior to the Closing Date, to reject any Mortgage Loan to the extent
permitted by this Agreement, and (ii) obligation to deliver or cause to be
delivered the consideration for the Mortgage Loans pursuant to Section 8 hereof.
Any Mortgage Loans rejected by the Purchaser shall concurrently therewith be
released from the security interest created hereby. All rights and remedies of
the Purchaser under this Agreement are distinct from, and cumulative with, any
other rights or remedies under this Agreement or afforded by law or equity and
all such rights and remedies may be exercised concurrently, independently or
successively.

                  Notwithstanding the foregoing, if on the Closing Date, each of
the conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Mortgage Loan Purchase
Price, or any such condition shall not have been waived or satisfied and the
Purchaser determines not to pay or cause to be paid the Mortgage Loan Purchase
Price, the Purchaser shall immediately effect the redelivery of the Mortgage
Loans, if delivery to the Purchaser has occurred, and the security interest
created by this Section 13 shall be deemed to have been released.

                  SECTION 14. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by fax and, receipt of which is confirmed by telephone, if to the
Purchaser, addressed to the Purchaser at 18400 Von Karman, Suite 1000, Irvine,
California 92612, fax (949) 440-7033, or such other address as may hereafter be
furnished to the Seller in writing by the Purchaser and if to the Seller,
addressed to the Seller at 18400 Von Karman, Suite 1000, Irvine, California
92612, fax (949) 440-7033, or to such other address as the Seller may designate
in writing to the Purchaser.

                  SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

                  SECTION 16. AGREEMENT OF PARTIES. The Seller and the Purchaser
each agree to execute and deliver such instruments and take such actions as
either of the others may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement and the
Pooling and Servicing Agreement.

                  SECTION 17. SURVIVAL. (a) The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the

                                      -23-

<PAGE>

Seller herein or in any such certificate or other instrument shall survive the
delivery of and payment for the Mortgage Loans and shall continue in full force
and effect, notwithstanding any restrictive or qualified endorsement on the
Mortgage Notes and notwithstanding subsequent termination of this Agreement, the
Pooling and Servicing Agreement or the Trust Fund.

                  SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS,
DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AGREEMENT.

                  SECTION 19. MISCELLANEOUS. This Agreement may be executed in
two or more counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Seller to the Purchaser as provided in
Section 4 hereof be, and be construed as, a sale of the Mortgage Loans by the
Seller to the Purchaser and not as a pledge of the Mortgage Loans by the Seller
to the Purchaser to secure a debt or other obligation of the Seller. However, in
the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans and
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account whether in the form of cash,
instruments, securities or other property; (3) the possession by the Purchaser
or its agent of Mortgage Notes, the related Mortgages and such other items of
property that constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession" by the secured party for purposes of
perfecting the security interest pursuant to the New York Uniform Commercial
Code; and (4) notifications to persons holding such property and
acknowledgments, receipts or confirmations from persons holding such property
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Purchaser for the

                                      -24-

<PAGE>

purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Purchaser pursuant to Section 4(d) hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement and the Pooling and Servicing Agreement.

         Section 20. RIGHTS OF THE CERTIFICATE INSURER. The Certificate Insurer
is an express third-party beneficiary of this Agreement.

         Section 21. RIGHTS OF FANNIE MAE. The Guarantor is an express
third-party beneficiary of this Agreement.

                                      -25-

<PAGE>

                  IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed by their respective officers thereunto duly authorized
as of the date first above written.

                                        NEW CENTURY MORTGAGE SECURITIES, INC.

                                        By:________________________________
                                        Name:
                                        Title:

                                        NC CAPITAL CORPORATION

                                        By:________________________________
                                        Name:
                                        Title:

                                      -26-

<PAGE>

                                    EXHIBIT E
                                    ---------

                               REQUEST FOR RELEASE
                                  (for Trustee)

LOAN INFORMATION

         Name of Mortgagor:         ______________________________

         Servicer
         Loan No.:                  ______________________________

TRUSTEE

         Name:                      ______________________________

         Address:                   ______________________________

                                    ______________________________

         Trustee Mortgage
         File No.:                  ______________________________

DEPOSITOR

         Name:             NEW CENTURY MORTGAGE SECURITIES, INC.

         Address:                   ______________________________

         Certificates:              Asset-Backed Pass-Through
                                    Certificates, Series 2004-A.

                           The undersigned Servicer hereby acknowledges that it
has received from _______________________, as Trustee for the Holders of
Asset-Backed Pass-Through Certificates, Series 2004-A, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement, dated as of July 1, 2004, among the Trustee, the Depositor,
the Guarantor with respect to the Group I Class A Certificates and the Servicers
(the "Pooling and Servicing Agreement").

(  )     Promissory Note dated _______________, 20__, in the original
         principal sum of $__________, made by _____________________, payable
         to, or endorsed to the order of, the Trustee.

(  )     Mortgage recorded on _________________________ as instrument no.
         ____________________ in the County Recorder's Office of the County of
         _______________, State of __________________ in
         book/reel/docket_________________ of official records at page/image
         _____________.

                                       E-1

<PAGE>

( )      Deed of Trust recorded on ___________________ as instrument no.
         ________________ in the County Recorder's Office of the County of
         _________________, State of ____________________ in book/reel/docket
         _________________ of official records at page/image ______________.

( )      Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
         __________________ as instrument no. _________ in the County Recorder's
         Office of the County of _______________, State of
         _______________________ in book/reel/docket ____________ of official
         records at page/image ____________.

( )      Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.

( )      ______________________________________________

( )      ______________________________________________

( )      ______________________________________________

( )      ______________________________________________

                                       E-2

<PAGE>

                           The undersigned Servicer hereby acknowledges and
agrees as follows:

                           (1) The Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.

                           (2) The Servicer shall not cause or permit the
Documents to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the
Servicer assert or seek to assert any claims or rights of setoff to or against
the Documents or any proceeds thereof.

                           (3) The Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the Documents
has been liquidated and the proceeds thereof have been remitted to the
Collection Account and except as expressly provided in the Agreement.

                           (4) The Documents and any proceeds thereof, including
any proceeds of proceeds, coming into the possession or control of the Servicer
shall at all times be earmarked for the account of the Trustee, and the Servicer
shall keep the Documents and any proceeds separate and distinct from all other
property in the Servicer's possession, custody or control.

Dated:

                                            [Servicer]

                                            By:  ______________________________
                                            Name:
                                            Title:

                                       E-3

<PAGE>

                                   EXHIBIT F-1
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                        [Date]

Deutsche Bank National Trust Company
1761 East St. Andrews Place
Santa Ana, CA 92705-4935

                  Re:   New Century Home Equity Loan Trust, Series
                  2004-A, Asset Backed Pass-Through Certificates, Class
                  ___, representing a ___% Class ___ Percentage Interest
                  ------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferor hereby certifies
as follows:

                  Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of July
1, 2004, among New Century Mortgage Securities, Inc. as depositor, Countrywide
Home Loans Servicing LP and GMAC Mortgage Corporation as servicers, Federal
National Mortgage Association as guarantor with respect to the Group I Class A
Certificates and Deutsche Bank National Trust Company as trustee (the "Pooling
and Servicing Agreement"), pursuant to which Pooling and Servicing Agreement the
Certificates were issued.

                                      F-1-1

<PAGE>

                  Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.

                                                   Very truly yours,

                                                   [Transferor]

                                                   By:__________________________
                                                   Name:
                                                   Title:

                                      F-1-2

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                     [Date]

Deutsche Bank National Trust Company
1761 East St. Andrews Place
Santa Ana, CA 92705-4935

                  Re:      New Century Home Equity Loan Trust, Series 2004-A,
                           Asset Backed Pass-Through Certificates, Class ___,
                           representing a ___% Percentage Interest
                           --------------------------------------------------

Ladies and Gentlemen:

                  In connection with the purchase from ______________________
(the "Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

                  1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933 (the
"1933 Act") and has completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. The Transferee is aware that the
sale to it is being made in reliance on Rule 144A. The Transferee is acquiring
the Certificates for its own account or for the account of a qualified
institutional buyer, and understands that such Certificate may be resold,
pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the 1933 Act.

                  2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and Servicing
Agreement referred to below, and (d) any credit enhancement mechanism associated
with the Certificates, that it has requested.

                  All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of July 1, 2004, among New Century Mortgage Securities, Inc.
as depositor, Countrywide Home Loans Servicing LP and GMAC Mortgage Corporation
as Servicers, Federal National Mortgage Association as Guarantor with respect to
the Group I Class A Certificates and Deutsche Bank National Trust Company as
trustee (the "Pooling and Servicing Agreement"), pursuant to which the
Certificates were issued.

                                      F-1-3

<PAGE>

                                                [TRANSFEREE]

                                                By:__________________________
                                                Name:
                                                Title:

                                      F-1-4

<PAGE>

                                                          ANNEX 1 TO EXHIBIT F-1
                                                          ----------------------

               QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE
               ---------------------------------------------------
                   144A [For Transferees Other Than Registered
                              Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Deutsche Bank National Trust Company as
trustee, with respect to the mortgage pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $______________________1 in
securities (except for the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.

         ___ CORPORATION, ETC. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986.

         ___ BANK. The Transferee (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of Columbia,
the business of which is substantially confined to banking and is supervised by
the State or territorial banking commission or similar official or is a foreign
bank or equivalent institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial statements, a copy of
which is attached hereto.

         ___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined by a State
or Federal authority having supervision over any such institutions or is a
foreign savings and loan association or equivalent institution and (b) has an
audited net worth of at least

         ___ BROKER-DEALER. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.

         ___ INSURANCE COMPANY. The Transferee is an insurance company whose
primary and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance

-------------------------
         1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities. $25,000,000 as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.

                                      F-1-5

<PAGE>

companies and which is subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the District of Columbia.

         ___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the benefit of
its employees.

         ___ ERISA PLAN. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974.

         ___ INVESTMENT ADVISOR. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.

                  3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.

                  4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.

                  5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.

         ___      ___      Will the Transferee be purchasing the Certificates
         Yes      No       only for the Transferee's own account?

                  6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.

                                      F-1-5

<PAGE>

                  7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.

Dated:

                                            ____________________________________
                                            Print Name of Transferee

                                            By:_________________________________
                                            Name:
                                            Title:

                                      F-1-5

<PAGE>

                                                          ANNEX 2 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Deutsche Bank National Trust Company as
trustee, with respect to the mortgage pass- through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.

         ____     The Transferee owned $___________________ in securities (other
                  than the excluded securities referred to below) as of the end
                  of the Transferee's most recent fiscal year (such amount being
                  calculated in accordance with Rule 144A).

         ____     The Transferee is part of a Family of Investment Companies
                  which owned in the aggregate $______________ in securities
                  (other than the excluded securities referred to below) as of
                  the end of the Transferee's most recent fiscal year (such
                  amount being calculated in accordance with Rule 144A).

                  3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).

                  4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.

                  5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one

                                      F-1-8

<PAGE>

or more sales to the Transferee will be in reliance on Rule 144A. In addition,
the Transferee will only purchase for the Transferee's own account.

                  6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:

                                            ____________________________________
                                            Print Name of Transferee or Advisor

                                            By:________________________________
                                            Name:
                                            Title:

                                            IF AN ADVISER:

                                            ____________________________________
                                            Print Name of Transferee

                                      F-1-9

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER
                    ----------------------------------------

                  The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:

                  1. I am an executive officer of the Purchaser.

                  2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933, as
amended.

                  3. As of the date specified below (which is not earlier than
the last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on a
discretionary basis by the Purchaser was in excess of $100,000,000.

                                                    Name of Purchaser

                                                    ____________________________

                                                    By:_________________________
                                                    Name:
                                                    Title:

Date of this certificate:

Date of information provided in paragraph 3

                                     F-1-10

<PAGE>

                                   EXHIBIT F-2
                                   -----------

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF ______________ )
COUNTY _______________)

                  __________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ______________________ of
____________________________ (the "Owner") a corporation duly organized and
existing under the laws of ______________, the record owner of New Century Home
Equity Loan Trust, Series 2004-A, Asset Backed Mortgage Pass-Through
Certificates, Series 2004-A, Class R Certificates, (the "Class R Certificates"),
on behalf of whom I make this affidavit and agreement. Capitalized terms used
but not defined herein have the respective meanings assigned thereto in the
Pooling and Servicing Agreement pursuant to which the Class R Certificates were
issued.

                  2. The Owner (i) is and will be a "Permitted Transferee" as of
____________, 20__ and (ii) is acquiring the Class R Certificates for its own
account or for the account of another Owner which is a permitted transferee from
which it has received an affidavit in substantially the same form as this
affidavit. A "Permitted Transferee" is any person other than a "disqualified
organization" or a possession of the United States. For this purpose, a
"disqualified organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income. The Owner will endeavor to
remain a Permitted Transferee for so long as it retains its Ownership Interest
in a Residual Certificate

                  3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person includes a broker,
nominee or middleman) for a non-Permitted Transferee, on the agent; (iii) that
the person otherwise liable for the tax shall be relieved of liability for the
tax if the transferee furnishes to such person an affidavit that the transferee
is a Permitted Transferee and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that each of the
Class R Certificates may be a "noneconomic residual interest" within the meaning
of proposed Treasury regulations promulgated under the Code and that the
transferor of a "noneconomic residual interest" will remain liable for any taxes
due with respect to the income on such residual interest, unless no significant
purpose of the transfer is to impede the assessment or collection of tax.

                  4. The Owner is aware of the tax imposed on a "pass-through
entity" holding the Class R Certificates if, at any time during the taxable year
of the pass-through entity, a non-Permitted Transferee is the record holder of
an interest in such entity. (For this purpose, a "pass-through entity" includes
a regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

                                      F-2-1

<PAGE>

                  5. The Owner is aware that the Trustee will not register the
transfer of any Class R Certificate unless the transferee, or the transferee's
agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.

                  6. The Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is a Permitted Transferee.

                  7. The Owner's taxpayer identification number is
_________________.

                  8. The Owner has reviewed the restrictions set forth on the
face of the Class R Certificates and the provisions of Section 5.02(d) of the
Pooling and Servicing Agreement under which the Class R Certificates were issued
(in particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.

                  9. The Owner is not acquiring and will not transfer the Class
R Certificates in order to impede the assessment or collection of any tax.

                  10. The Owner anticipates that it will, so long as it holds
the Class R Certificates, have sufficient assets to pay any taxes owed by the
holder of such Class R Certificates, and hereby represents to and for the
benefit of the person from whom it acquired the Class R Certificates that the
Owner intends to pay taxes associated with holding such Class R Certificates as
they become due, fully understanding that it may incur tax liabilities in excess
of any cash flows generated by the Class R Certificates.

                  11. The Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds the
Class R Certificates.

                  12. The Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.

                  13. The Owner is not acquiring the Class R Certificates with
the intent to transfer the Class R Certificates to any person or entity that
will not have sufficient assets to pay any taxes owed by the holder of such
Class R Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.

                  14. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class R Certificate were issued and will not
consummate any such transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.

                  15. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, deliver to the Trustee an affidavit, which
represents and warrants that it is not transferring the Class R Certificates to
impede the assessment or collection of any tax and that it has no actual
knowledge that the proposed transferee: (i) has insufficient assets to pay any
taxes owed by such transferee as holder

                                      F-2-2

<PAGE>

of the Class R Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Class R Certificates remains
outstanding; and (iii) is not a "Permitted Transferee".

                  16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States may be included in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.

                  17. The Owner of the Class R Certificate, hereby agrees that
in the event that the Trust Fund created by the Pooling and Servicing Agreement
is terminated pursuant to Section 9.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class CE Certificates any amounts in excess of
par received in connection with such termination. Accordingly, in the event of
such termination, the Trustee is hereby authorized to withhold any such amounts
in excess of par and to pay such amounts directly to the Holders of the Class CE
Certificates. This agreement shall bind and be enforceable against any
successor, transferee or assigned of the undersigned in the Class R Certificate.
In connection with any transfer of the Class R Certificate, the Owner shall
obtain an agreement substantially similar to this clause from any subsequent
owner.

                                      F-2-3

<PAGE>

                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 20__.

                                                     [OWNER]

                                                     By:________________________
                                                     Name:
                                                     Title:   [Vice] President

ATTEST:

By:_________________________________
Name:
Title:     [Assistant] Secretary

                  Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, 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 Owner.

                  Subscribed and sworn before me this ____ day of __________,
20___.

                                                    ____________________________
                                                             Notary Public

                                                    County of __________________
                                                    State of ___________________

                                                    My Commission expires:

                                      F-2-4

<PAGE>

                          FORM OF TRANSFEROR AFFIDAVIT
                          ----------------------------

STATE OF ______________)

COUNTY OF ____________)

                  __________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ____________________ of ____________________________
(the "Owner"), a corporation duly organized and existing under the laws of
______________, on behalf of whom I make this affidavit.

                  2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.

                  3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

                  4. The Owner understands that the Purchaser has delivered to
the Trustee a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit F-2. The Owner does not know or
believe that any representation contained therein is false.

                  5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.

                  6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.

                                      F-2-5

<PAGE>

                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 20__.

                                                  [OWNER]

                                                  By:___________________________
                                                  Name:
                                                  Title:   [Vice] President

ATTEST:

By:______________________________
Name:
Title:   [Assistant] Secretary

                  Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, 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 Owner.

                  Subscribed and sworn before me this ____ day of __________,
20___.

                                                  ____________________________
                                                           Notary Public

                                                  County of __________________
                                                  State of ___________________

                                                  My Commission expires:

                                      F-2-5

<PAGE>

                                    EXHIBIT G
                                    ---------

            FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE

                                                  _____________, 20__
New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

Deutsche Bank National Trust Company
1761 East St. Andrew Place
Santa Ana, CA 92705-4935

New Century Mortgage Corporation
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

                  Re: New Century Home Equity Loan Trust, Series 2004-A, Asset
                  Backed Pass-Through Certificates, Class ___
                  -------------------------------------------

Dear Sirs:
                  _______________________ (the "Transferee") intends to acquire
from _____________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of New Century Home Equity Loan Trust, Series 2004-A, Asset
Backed Pass-Through Certificates, Class [B] [CE] [P] [R] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of July 1, 2004 among New Century Mortgage Securities, Inc.
as depositor (the "Depositor"), Countrywide Home Loans Servicing LP and GMAC
Mortgage Corporation as Servicers (the "Servicers"), Federal National Mortgage
Association as guarantor with respect to the Group I Class A Certificates (the
"Guarantor") and Deutsche Bank National Trust Company as trustee (the
"Trustee"). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned thereto in the Pooling and Servicing Agreement. The
Transferee hereby certifies, represents and warrants to, and covenants with the
Depositor, the Trustee and the Servicer the following:

                  The Certificates (i) are not being acquired by, and will not
be transferred to, any employee benefit plan within the meaning of section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
other retirement arrangement, including individual retirement accounts and
annuities, Keogh plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101,
and (iii) will not be transferred to any entity that is deemed to be investing
in plan assets within the meaning of the DOL regulation at 29
C.F.R.ss.2510.3-101.

                                                  Very truly yours,

                                                  ______________________________

                                                  By:___________________________
                                                  Name:

                                       G-1

<PAGE>

                                                              Title:

                                    EXHIBIT H

                     FORM OF REPORT PURSUANT TO SECTION 4.06

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

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                                     Form 10-K

                                                   Annual Report

                     Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934 (Fee Required)

                     For fiscal year ended ________________

                       Commission file number: 333-_______

                      NEW CENTURY MORTGAGE SECURITIES, INC.
            (as depositor under the Pooling and Servicing Agreement,
             dated as of July 1, 2004, providing for the issuance of
             Asset Backed Pass-Through Certificates, Series 2004-A)

                      New Century Mortgage Securities, Inc.
                      -------------------------------------

             (Exact name of registrant as specified in its charter)
--------------------------------------------------------------------------------

           DELAWARE                                       33-0852169
 ----------------------------------                       ----------------------
(State or Other Jurisdiction                              (I.R.S. Employer
of Incorporation)                                         Identification Number)

18400 Von Karman, Suite 1000
IRVINE, CALIFORNIA                                        92612
-------------------------------------------               -----
(Address of Principal Executive Offices)                  (Zip Code)

Registrant's telephone number, including area code:  (949) 863-7243
                                                     --------------

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

                                       H-2

<PAGE>

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate whether the Registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                                                     X YES    ___No
Item 1.  Business:

Not applicable

Item 2.  Properties:

Not applicable

Item 3.  Legal Proceedings:

None

Item 4.  Submission of Matters to a Vote of Security-Holders

None

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

To the best knowledge of the registrant there is no established public trading
market for the certificates.

There are approximately _____ holders of record as of the end of the reporting
year.

Item 6.  Selected Financial Data.

Not applicable.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

Not applicable

Item 8.  Financial Statements and Supplementary Data.

Not applicable.

                                       H-3

<PAGE>

Item 9.  Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

None

Item 10.

Not applicable

Item 11.  Executive Compensation

Not applicable

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Not applicable

Item 13.  Certain Relationships and Related Transactions

Not applicable

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

         a)       The company filed on Form 8-K, separately for each
                  distribution date, the distribution of funds related to the
                  trust for each of the following distribution
         dates:

                           Distribution Date           Form 8-K Filing Date
                           -----------------           --------------------
                           _________________           ____________________
                           _________________           ____________________
                           _________________           ____________________

         b)       99.1     Annual Report of Independent Public Accountants'
                           as to master servicing activities or servicing
                           activities, as applicable, of:

                           (a) New Century Mortgage Corporation, as Servicer

                  99.2     Annual Statement of Compliance with obligations under
                  the Pooling and Servicing Agreement or servicing agreement, as
                  applicable, of:

                           (a) New Century Mortgage Corporation, as Servicer

Such document (i) is not filed herewith since such document was not received by
the Reporting Person at least three business days prior to the due date of this
report; and (ii) will be included in an amendment to this report on Form 10-K/A
to be filed within 30 days of the Reporting Person's receipt of such document.

                                   Signatures

                                       H-4

<PAGE>

                  Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

Date: ___________

                                       New Century Mortgage Securities, Inc., by
                                       Deutsche Bank National Trust Company as
                                       Trustee for New Century Home Equity Loan
                                       Trust, Series 2004-A, Asset Backed
                                       Pass-Through Certificates.

                                       By: _____________________________________
                                       Name:
                                       Title:
                                       Company:

                                       H-5

<PAGE>

                                    EXHIBIT I

                           FORM OF LOST NOTE AFFIDAVIT

Loan #: ____________
Borrower: _____________

                               LOST NOTE AFFIDAVIT

                  I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by ____________________, a _________________ corporation
as Seller on behalf of New Century Mortgage Securities, Inc. (the "Purchaser"),
_____________________ (the "Deponent"), being duly sworn, deposes and says that:

         1. The Seller's address is: _____________________
                                     _____________________
                                     _____________________

         2.       The Seller previously delivered to the Purchaser a signed
                  Initial Certification with respect to such Mortgage and/or
                  Assignment of Mortgage.

         3.       Such Mortgage Note and/or Assignment of Mortgage was assigned
                  or sold to the Purchaser by ________________________, a
                  ____________ corporation pursuant to the terms and provisions
                  of a Mortgage Loan Purchase Agreement dated as of
                  __________ __, ____.

         4.       Such Mortgage Note and/or Assignment of Mortgage is not
                  outstanding pursuant to a request for release of Documents.

         5.       Aforesaid Mortgage Note and/or Assignment of Mortgage (the
                  "Original") has been lost.

         6.       Deponent has made or caused to be made a diligent search for
                  the Original and has been unable to find or recover same.

         7.       The Seller was the Seller of the Original at the time of the
                  loss.

         8.       Deponent agrees that, if said Original should ever come into
                  Seller's possession, custody or power, Seller will immediately
                  and without consideration surrender the Original to the
                  Purchaser.

         9.       Attached hereto is a true and correct copy of (i) the Note,
                  endorsed in blank by the Mortgagee and (ii) the Mortgage or
                  Deed of Trust (strike one) which secures the Note, which
                  Mortgage or Deed of Trust is recorded in the county where the
                  property is located.

         10.      Deponent hereby agrees that the Seller (a) shall indemnify and
                  hold harmless the Purchaser, its successors and assigns,
                  against any loss, liability or damage, including reasonable

                                       I-1

<PAGE>

                  attorney's fees, resulting from the unavailability of any
                  Notes, including but not limited to any loss, liability or
                  damage arising from (i) any false statement contained in this
                  Affidavit, (ii) any claim of any party that has already
                  purchased a mortgage loan evidenced by the Lost Note or any
                  interest in such mortgage loan, (iii) any claim of any
                  borrower with respect to the existence of terms of a mortgage
                  loan evidenced by the Lost Note on the related property to the
                  fact that the mortgage loan is not evidenced by an original
                  note and (iv) the issuance of a new instrument in lieu thereof
                  (items (i) through (iv) above hereinafter referred to as the
                  "Losses") and (b) if required by any Rating Agency in
                  connection with placing such Lost Note into a Pass-Through
                  Transfer, shall obtain a surety from an insurer acceptable to
                  the applicable Rating Agency to cover any Losses with respect
                  to such Lost Note.

         11.      This Affidavit is intended to be relied upon by the Purchaser,
                  its successors and assigns. _____________________, a
                  ______________ corporation represents and warrants that is has
                  the authority to perform its obligations under this Affidavit
                  of Lost Note.

Executed this ____ day, of ___________ ______.

                                                  SELLER

                                                  By:______________________
                                                  Name:
                                                  Title:

                  On this _____ day of ________, _____, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.

                                             Signature:

                                             [Seal]

                                       I-2

<PAGE>

                                   EXHIBIT J-1

        FORM CERTIFICATION TO BE PROVIDED BY THE DEPOSITOR WITH FORM 10-K

                                  Certification

                  1. I have reviewed this annual report on Form 10-K, and all
reports on Form 8-K containing distribution or servicing reports filed in
respect of periods included in the year covered by this annual report, of New
Century Home Equity Loan Trust 2004-A, Asset Backed Notes, Series 2004-A;

                  2. Based on my knowledge, the information in these reports,
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading as of
the last day of the period covered by this annual report;

                  3. Based on my knowledge, the distribution or servicing
information required to be provided to the trustee by the servicer under the
pooling and servicing, or similar, agreement, for inclusion in these reports is
included in these reports;

                  4. Based on my knowledge and upon the annual compliance
statement included in the report and required to be delivered to the trustee in
accordance with the terms of the pooling and servicing, or similar, agreement,
and except as disclosed in the reports, the servicer has fulfilled its
obligations under the servicing agreement; and

                  5. The reports disclose all significant deficiencies relating
to the servicer's compliance with the minimum servicing standards based upon the
report provided by an independent public accountant, after conducting a review
in compliance with the Uniform Single Attestation Program for Mortgage Bankers
or similar procedure, as set forth in the pooling and servicing, or similar,
agreement, that is included in these reports.

                  In giving the certifications above, I have reasonably relied
on information provided to me by the following unaffiliated parties: Deutsche
Bank National Trust Company.

                                        NEW CENTURY MORTGAGE SECURITIES, INC.

                                        By:_________________________________
                                        Name:
                                        Title:
                                        Date:

                                      J-1-1

<PAGE>

                                   EXHIBIT J-2

                            FORM CERTIFICATION TO BE
                      PROVIDED TO DEPOSITOR BY THE TRUSTEE

                  Re:      New Century Home Equity Loan Trust 2004-A
                           Asset-Backed Notes, Series 2004-A

                  I, [identify the certifying individual], a [title] of Deutsche
Bank National Trust Company, as Trustee, hereby certify to New Century Mortgage
Securities, Inc. (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 annual report on Form 10-K for the
fiscal year 2004, and all reports on Form 8-K containing distribution reports
filed in respect of periods included in the year covered by that annual report,
of the Depositor relating to the above-referenced trust;

                  2. Based on my knowledge, the information in these
distribution reports prepared by the Trustee, taken as a whole, does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading as of the last day of the period
covered by that annual report; and

                  3. Based on my knowledge, the distribution information
required to be provided by the Trustee under the Pooling and Servicing Agreement
is included in these distribution reports.

                  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Pooling and Servicing Agreement, dated July 1,
2004 (the "Pooling and Servicing Agreement"), among the Depositor, Countrywide
Home Loans Servicing LP and GMAC Mortgage Corporation as Servicers, Federal
National Mortgage Association as Guarantor with respect to the Group I Class A
Certificates and Deutsche Bank National Trust Company, as trustee.

                                                  DEUTSCHE BANK NATIONAL TRUST
                                                  COMPANY, as Trustee

                                                  By:__________________________
                                                  Name:
                                                  Title:
                                                  Date:

                                      J-2-1

<PAGE>

                                   EXHIBIT J-3

                            FORM CERTIFICATION TO BE
                     PROVIDED TO DEPOSITOR BY THE SERVICERS

                  Re:      New Century Home Equity Loan Trust 2004-A
                           Asset-Backed Notes, Series 2004-A

         I, [identify the certifying individual], a [title] of [Countrywide Home
Loans Servicing LP/GMAC Mortgage Corporation], as Servicer, hereby certify to
New Century Mortgage Securities, Inc. (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 annual report on Form 10-K for the
fiscal year 2004, and all reports on Form 8-K containing distribution reports
filed in respect of periods included in the year covered by that annual report,
of the Depositor relating to the above-referenced trust;

                  2. Based on my knowledge, the distribution or servicing
information required to be provided to the trustee by the servicer under the
pooling and servicing, or similar, agreement, for inclusion in these reports is
included in these reports;

                  4. Based on my knowledge and upon the annual compliance
statement included in the report and required to be delivered to the trustee in
accordance with the terms of the pooling and servicing, or similar, agreement,
and except as disclosed in the reports, the servicer has fulfilled its
obligations under the pooling and servicing agreement; and

                  5. The reports disclose all significant deficiencies relating
to the annual compliance statement with the minimum servicing standards based
upon the report provided by an independent public accountant, after conducting a
review in compliance with the Uniform Single Attestation Program for Mortgage
Bankers or similar procedure, as set forth in the pooling and servicing, or
similar, agreement, that is included in these reports.

         Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated July 1, 2004 (the
"Pooling and Servicing Agreement"), among the Depositor, Countrywide Home Loans
Servicing LP and GMAC Mortgage Corporation as Servicers, Federal National
Mortgage Association as Guarantor with respect to the Group I Class A
Certificates and Deutsche Bank National Trust Company, as trustee.

Date: __________________

                                                  ______________________
                                                  [Signature]
                                                  [Title]

                                       K-1

<PAGE>

                                       K-2

<PAGE>

                                    EXHIBIT K
                                    ---------

                                   [RESERVED]

                                       K-3

<PAGE>

                                    EXHIBIT L
                                    ---------

                    FORM OF ANNUAL STATEMENT AS TO COMPLIANCE

                New Century Home Equity Loan Trust, Series 2004-A
                     Asset Backed Pass-Through Certificates

                  I, _____________________, hereby certify that I am a duly
appointed __________________________ of [Countrywide Home Loans Servicing
LP/GMAC Mortgage Corporation] (the "Servicer"), and further certify as follows:

                  1. This certification is being made pursuant to the terms of
the Pooling and Servicing Agreement, dated as of July 1, 2004, (the
"Agreement"), among New Century Mortgage Securities, Inc., as depositor,
Countrywide Home Loans Servicing LP and GMAC Mortgage Corporation, as servicers,
Federal National Mortgage Association as guarantor with respect to the Group I
Class A Certificates and Deutsche Bank National Trust Company, as trustee.

                  2. I have reviewed the activities of the Servicer during the
preceding year and the Servicer's performance under the Agreement and to the
best of my knowledge, based on such review, the Servicer has fulfilled all of
its obligations under the Agreement throughout the year.

                  Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreement.

Dated: _____________

                                       L-4

<PAGE>

                  IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of ____________________.

                                                  By: __________________________
                                                  Name:
                                                  Title:

                  I, _________________________, a (an) __________________ of the
Servicer, hereby certify that _________________ is a duly elected, qualified,
and acting _______________________ of the Servicer and that the signature
appearing above is his/her genuine signature.

                  IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of ____________________.

                                                  By: __________________________
                                                  Name:
                                                  Title:

                                       L-5

<PAGE>

                                   Schedule 1

                             MORTGAGE LOAN SCHEDULE

                                [FILED BY PAPER]

                                  Schedule 1-1

<PAGE>

                                   Schedule 2

                         SCHEDULE OF PREPAYMENT CHARGES

                            [AVAILABLE UPON REQUEST]

                                  Schedule 2-1

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