Document:

NOMURA ASSET ACCEPTANCE CORPORATION,

                                    Depositor

                         NOMURA CREDIT & CAPITAL, INC.,

                                     Seller

                            GMAC MORTGAGE CORPORATION

                                    Servicer

                                       and

                              JPMORGAN CHASE BANK,

                              Trustee and Custodian

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

                         POOLING AND SERVICING AGREEMENT

                            Dated as of June 1, 2004

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

                       NOMURA ASSET ACCEPTANCE CORPORATION

               MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AP2

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
                                                      ARTICLE I
<S>                                                                                                            <C>
    Section 1.01  DEFINED TERMS...................................................................................9
    Section 1.02  ALLOCATION OF CERTAIN INTEREST SHORTFALLS......................................................48

                                                     ARTICLE II

    Section 2.01  CONVEYANCE OF TRUST FUND.......................................................................50
    Section 2.02  ACCEPTANCE OF THE MORTGAGE LOANS...............................................................51
    Section 2.03  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER AND THE SELLER.......................53
    Section 2.04  Representations and Warranties of the Depositor................................................59
    Section 2.05  DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH SUBSTITUTIONS AND REPURCHASES................60
    Section 2.06  ISSUANCE OF THE REMIC I REGULAR INTERESTS AND THE CLASS R-1 INTEREST...........................61
    Section 2.07  CONVEYANCE OF THE REMIC I REGULAR INTERESTS; ACCEPTANCE OF REMIC II BY THE TRUSTEE.............61
    Section 2.08  CONVEYANCE OF THE REMIC II REGULAR INTERESTS; ACCEPTANCE OF REMIC III BY THE TRUSTEE...........61
    Section 2.09  ISSUANCE OF CLASS R CERTIFICATES...............................................................62
    Section 2.10  ESTABLISHMENT OF TRUST.........................................................................62

                                                     ARTICLE III

    Section 3.01  The Servicer to Act as Servicer................................................................63
    Section 3.02  DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.....................................................64
    Section 3.03  SUBSERVICERS...................................................................................65
    Section 3.04  DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF THE SERVICER TO BE HELD FOR TRUSTEE..............66
    Section 3.05  MAINTENANCE OF HAZARD INSURANCE................................................................67
    Section 3.06  PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS...............................................68
    Section 3.07  MAINTENANCE OF INSURANCE POLICIES..............................................................68
    Section 3.08  RESERVED.......................................................................................69
    Section 3.09  REALIZATION  UPON DEFAULTED  MORTGAGE  LOANS;  DETERMINATION  OF EXCESS  LIQUIDATION  PROCEEDS
                    AND REALIZED  LOSSES; REPURCHASES OF CERTAIN MORTGAGE LOANS..................................69
    Section 3.10  SERVICING COMPENSATION.........................................................................71
    Section 3.11  REO PROPERTY...................................................................................71
    Section 3.12  LIQUIDATION REPORTS............................................................................72
    Section 3.13  ANNUAL CERTIFICATE AS TO COMPLIANCE............................................................72
    Section 3.14  ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' SERVICING REPORT..............................73
    Section 3.15  BOOKS AND RECORDS..............................................................................73
    Section 3.16  TRUSTEE........................................................................................74
    Section 3.17  REMIC-Related Covenants........................................................................74
    Section 3.18  Reimbursement of Costs and Expenses............................................................75
    Section 3.19  Release of Mortgage Files......................................................................75
    Section 3.20  Documents, Records and Funds in Possession of the Servicer to be held for Trustee..............76
</TABLE>

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<TABLE>
<CAPTION>
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<S>                                                                                                            <C>
    Section 3.21  Possession of Certain Insurance Policies and Documents.........................................76
    Section 3.22  ANNUAL CERTIFICATE AS TO COMPLIANCE............................................................76
    Section 3.23  UCC............................................................................................78
    Section 3.24  Optional Purchase of Defaulted Mortgage Loans..................................................78

                                                     ARTICLE IV

    Section 4.01  COLLECTION OF MORTGAGE LOAN PAYMENTS; CUSTODIAL ACCOUNT........................................79
    Section 4.02  PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT...............................................81
    Section 4.03  REPORTS TO TRUSTEE.............................................................................82
    Section 4.04  COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS; ESCROW ACCOUNTS............................83
    Section 4.05  Reserved.......................................................................................84
    Section 4.06  Distribution Account...........................................................................84
    Section 4.07  PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION ACCOUNT..............................85

                                                      ARTICLE V

    Section 5.01  ADVANCES; ADVANCE FACILITY.....................................................................87
    Section 5.02  COMPENSATING INTEREST PAYMENTS.................................................................90
    Section 5.03  REMIC DISTRIBUTIONS............................................................................90
    Section 5.04  DISTRIBUTIONS..................................................................................90
    Section 5.05  ALLOCATION OF REALIZED LOSSES..................................................................94
    Section 5.06  MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.......................................................96
    Section 5.07  REMIC  DESIGNATIONS AND REMIC I ALLOCATIONS....................................................98
    Section 5.08  REMIC II ALLOCATIONS...........................................................................99
    Section 5.09  Class P Certificate Account...................................................................101
    Section 5.10  Net WAC Reserve Fund..........................................................................101

                                                     ARTICLE VI

    Section 6.01  THE CERTIFICATES..............................................................................103
    Section 6.02  CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES...................103
    Section 6.03  MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.............................................107
    Section 6.04  PERSONS DEEMED OWNERS.........................................................................107
    Section 6.05  ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.....................................107
    Section 6.06  BOOK-ENTRY CERTIFICATES.......................................................................108
    Section 6.07  NOTICES TO DEPOSITORY.........................................................................109
    Section 6.08  DEFINITIVE CERTIFICATES.......................................................................109
    Section 6.09  MAINTENANCE OF OFFICE OR AGENCY...............................................................109

                                                     ARTICLE VII

    Section 7.01  LIABILITIES OF THE DEPOSITOR AND THE SERVICER.................................................111
    Section 7.02  Merger or Consolidation of the Depositor or the Servicer......................................111
    Section 7.03  Indemnification of Depositor and the Servicer.................................................111
    Section 7.04  Limitations on Liability of the Depositor, the Servicer and Others............................112
    Section 7.05  Servicer Not to Resign........................................................................113
    Section 7.06  Termination of Servicer Without Cause; Appointment of Special Servicer........................113

                                                    ARTICLE VIII

    Section 8.01  SERVICER DEFAULT..............................................................................115
</TABLE>

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<TABLE>
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<S>                                                                                                            <C>
    Section 8.02  TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR......................................................116
    Section 8.03  NOTIFICATION TO CERTIFICATEHOLDERS............................................................117
    Section 8.04  WAIVER OF SERVICER DEFAULTS...................................................................118

                                                     ARTICLE IX

    Section 9.01  DUTIES OF TRUSTEE.............................................................................119
    Section 9.02  CERTAIN MATTERS AFFECTING THE TRUSTEE.........................................................120
    Section 9.03  TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.........................................122
    Section 9.04  TRUSTEE MAY OWN CERTIFICATES..................................................................123
    Section 9.05  TRUSTEE'S COMPENSATION AND EXPENSES; INDEMNIFICATION..........................................123
    Section 9.06  ELIGIBILITY REQUIREMENTS FOR TRUSTEE..........................................................124
    Section 9.07  INSURANCE.....................................................................................124
    Section 9.08  RESIGNATION AND REMOVAL OF TRUSTEE............................................................124
    Section 9.09  SUCCESSOR TRUSTEE.............................................................................125
    Section 9.10  MERGER OR CONSOLIDATION OF TRUSTEE............................................................125
    Section 9.11  APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.................................................125
    Section 9.12  TAX MATTERS...................................................................................127
    Section 9.13  CUSTODIAN'S FEES AND EXPENSES.................................................................129
    Section 9.14  INDEMNIFICATION OF CUSTODIAN..................................................................129
    Section 9.15  RELIANCE OF CUSTODIAN.........................................................................129

                                                      ARTICLE X

    Section 10.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL MORTGAGE LOANS..............................132
    Section 10.02 FINAL DISTRIBUTION ON THE CERTIFICATES........................................................132
    Section 10.03 ADDITIONAL TERMINATION REQUIREMENTS...........................................................133

                                                     ARTICLE XI

    Section 11.01 AMENDMENT.....................................................................................135
    Section 11.02 RECORDATION OF AGREEMENT; COUNTERPARTS........................................................136
    Section 11.03 GOVERNING LAW.................................................................................136
    Section 11.04 INTENTION OF PARTIES..........................................................................136
    Section 11.05 NOTICES.......................................................................................137
    Section 11.06 SEVERABILITY OF PROVISIONS....................................................................138
    Section 11.07 ASSIGNMENT....................................................................................138
    Section 11.08 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS....................................................138
    Section 11.09 CERTIFICATES NONASSESSABLE AND FULLY PAID.....................................................139
</TABLE>

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<PAGE>

EXHIBITS

Exhibit A-1       Form of Class A-[1][2][3A][3B][4][5][6] Certificates
Exhibit A-2       Form of Class A-IO Certificates
Exhibit A-3       Form of Class M-[1][2][3] Certificates
Exhibit A-4       Form of Class C Certificates
Exhibit A-5       Form of Class P Certificates
Exhibit A-6       Form of Class R Certificates
Exhibit B         Mortgage Loan Schedule
Exhibit C-1       Form of Initial Certification
Exhibit C-2       Form of Interim Certification
Exhibit C-3       Form of Final Certification
Exhibit D         Form of Transfer Affidavit
Exhibit E         Form of Transferor Certificate
Exhibit F         Form of Investment Letter (Non-Rule 144A)
Exhibit G         Form of Rule 144A Investment Letter
Exhibit H         Form of Request for Release
Exhibit I         DTC Letter of Representations
Exhibit J         Schedule of Mortgage Loans with Lost Notes
Exhibit K         Prepayment Charge Schedule
Exhibit L         Form of Servicer's Certification
Exhibit M         Form of Trustee's Certification
Exhibit N         Appendix E of the Standard & Poor's Glossary For File
                  Format For LEVELS(R) Version 5.6 Revised

                                     - 5 -
<PAGE>

         POOLING AND SERVICING AGREEMENT, dated as of June 1, 2004, among NOMURA
ASSET  ACCEPTANCE  CORPORATION,  a  Delaware  corporation,   as  depositor  (the
"Depositor"),  NOMURA CREDIT & CAPITAL, INC., a Delaware corporation,  as seller
(in such capacity,  the  "Seller"),  GMAC MORTGAGE  CORPORATION,  a Pennsylvania
corporation,  as servicer (the  "Servicer")  and JPMORGAN CHASE BANK, a New York
banking corporation,  not in its individual capacity, but solely as trustee (the
"Trustee") and as custodian (the "Custodian").

                              PRELIMINARY STATEMENT

         The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates.

                                     REMIC I

         As  provided  herein,  the  Trustee  will make an election to treat the
segregated  pool of assets  consisting  of the Mortgage  Loans and certain other
related assets subject to this  Agreement as a real estate  mortgage  investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated  as "REMIC I." The Class R-1 Interest  will  represent
the sole class of  "residual  interests"  in REMIC I for  purposes  of the REMIC
Provisions (as defined herein) under federal income tax law. The following table
irrevocably sets forth the designation,  the Uncertificated REMIC I Pass-Through
Rate, the Initial  Uncertificated  Principal 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 Regular  Interests.  None of the REMIC I
Regular Interests will be certificated.
<TABLE>
<CAPTION>
                                     Initial Uncertificated     Uncertificated REMIC I     Assumed Final Maturity
           Designation                 Principal Balance           Pass-Through Rate              Date(1)
------------------------------    ----------------------------  -----------------------    -----------------------
<S>                                    <C>                            <C>                      <C>
              LTI-1                    $   199,650,246.92             Variable(2)              July 25, 2034
            LTI-IO-A                   $     6,022,000.00             Variable(2)              July 25, 2034
            LTI-IO-B                   $     2,250,000.00             Variable(2)              July 25, 2034
            LTI-IO-C                   $     3,375,000.00             Variable(2)              July 25, 2034
            LTI-IO-D                   $     3,375,000.00             Variable(2)              July 25, 2034
            LTI-IO-E                   $     2,250,000.00             Variable(2)              July 25, 2034
            LTI-IO-F                   $     2,250,000.00             Variable(2)              July 25, 2034
            LTI-IO-G                   $     3,150,000.00             Variable(2)              July 25, 2034
            LTI-IO-H                   $     5,850,000.00             Variable(2)              July 25, 2034
              LTI-P                    $           100.00                 (3)                  July 25, 2034
</TABLE>
-------------------

(1)   Solely  for  purposes  of  Section  1.860G-1(a)(4)(iii)  of  the  Treasury
      regulations,  the  Distribution  Date in the month  following the maturity
      date  for the  Mortgage  Loan  with  the  latest  maturity  date  has been
      designated  as the  "latest  possible  maturity  date"  for each  Class of
      Certificates  that  represents  one or more of the "regular  interests" in
      REMIC I.

(2)   Calculated in accordance  with the definition of  "Uncertificated  REMIC I
      Pass-Through Rate" herein.

                                     - 6 -
<PAGE>

                                    REMIC II

         As provided herein, the Trustee will elect to treat the segregated pool
of assets  consisting  of the REMIC I 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-2  Interest  will be the  sole  class  of  "residual
interests" in REMIC II for purposes of the REMIC Provisions. The following table
irrevocably sets forth the designation, the Uncertificated REMIC II Pass-Through
Rate, the Initial  Uncertificated  Principal 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>
                                  Initial                     Uncertificated
                               Uncertificated                    REMIC II               Assumed Final Maturity
       Designation           Principal Balance               Pass-Through Rate               Date(1)
------------------------- -----------------------     ------------------------------  -----------------------
<S>                        <C>                               <C>                          <C>
         LTII-AA          $  223,608,801.98                     Variable(2)               July 25, 2034
         LTII-A1          $         834,990.00                  Variable(2)               July 25, 2034
         LTII-A2          $         182,780.00                  Variable(2)               July 25, 2034
        LTII-A3A          $          70,000.00                  Variable(2)               July 25, 2034
        LTII-A3B          $         372,060.00                  Variable(2)               July 25, 2034
         LTII-A4          $         258,040.00                  Variable(2)               July 25, 2034
         LTII-A5          $         198,780.00                  Variable(2)               July 25, 2034
         LTII-A6          $         228,170.00                  Variable(2)               July 25, 2034
         LTII-M1          $          50,190.00                  Variable(2)               July 25, 2034
         LTII-M2          $          38,780.00                  Variable(2)               July 25, 2034
         LTII-M3          $          30,800.00                  Variable(2)               July 25, 2034
         LTII-ZZ          $       2,298,855.94                  Variable(2)               July 25, 2034
        LTII-IO-A                  N/A(3)                        1.00%(4)                 July 25, 2034
        LTII-IO-B                  N/A(5)                        3.50%(6)                 July 25, 2034
         LTII-P           $             100.00                  Variable(2)               July 25, 2034
</TABLE>
-------------------
(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date in the month 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 "Uncertificated REMIC
         II Pass-Through Rate" herein.

(3)      REMIC II Regular Interest LTII-IO-A will not have an Uncertificated
         Principal Balance, but will accrue interest on its Uncertificated
         Notional Amount, as defined herein.

(4)      REMIC II Regular Interest LTII-IO-A will accrue interest at a rate of
         (i) for the first twelve Distribution Dates, 1.00% and (ii) thereafter,
         0.00%.

(5)      REMIC II Regular Interest LTII-IO-B will not have an Uncertificated
         Principal Balance, but will accrue interest on its Uncertificated
         Notional Amount, as defined herein.

(6)      REMIC II Regular Interest LTII-IO-B will accrue interest at a rate of
         (i) for the first twenty-four Distribution Dates, 3.50% and (ii)
         thereafter, 0.00%.

                                    REMIC III

         As  provided  herein,  the  Trustee  will make an election 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-3 Interest

                                     - 7 -
<PAGE>

will represent the sole class of "residual  interests" in REMIC III for purposes
of the REMIC  Provisions.  The following table  irrevocably sets forth the Class
designation,  Pass-Through  Rate and Initial  Certificate  Principal Balance for
each  Class  of  Certificates  that  represents  one or  more  of  the  "regular
interests" in REMIC III created hereunder:
<TABLE>
<CAPTION>
        Class             Initial Certificate                                      Assumed Final
     Designation          Principal Balance             Pass-Through Rate         Maturity Date(1)
--------------------    ----------------------    -----------------------------  ------------------
<S>                       <C>                     <C>                              <C>
      Class A-1           $     83,499,000        Class A-1 Pass-Through Rate      July 25, 2034
      Class A-2           $     18,278,000        Class A-2 Pass-Through Rate      July 25, 2034
     Class A-3A           $      7,000,000        Class A-3A Pass-Through Rate     July 25, 2034
     Class A-3B           $     37,206,000        Class A-3B Pass-Through Rate     July 25, 2034
      Class A-4           $     25,804,000        Class A-4 Pass-Through Rate      July 25, 2034
      Class A-5           $     19,878,000        Class A-5 Pass-Through Rate      July 25, 2034
      Class A-6           $     22,817,000        Class A-6 Pass-Through Rate      July 25, 2034
     Class A-IO                   N/A(2)          Class A-IO Pass-Through Rate     July 25, 2034
      Class M-1           $      5,019,000        Class M-1 Pass-Through Rate      July 25, 2034
      Class M-2           $      3,878,000        Class M-2 Pass-Through Rate      July 25, 2034
      Class M-3           $      3,080,000        Class M-3 Pass-Through Rate      July 25, 2034
       Class C            $      1,713,346.92(3)  Class C Pass-Through Rate        July 25, 2034
       Class P            $            100.00                  N/A(4)              July 25, 2034
</TABLE>
-------------------
(1)      Solely for  purposes  of Section  1.860G-1(a)(4)(iii)  of the  Treasury
         regulations,  the Distribution Date in the month following the maturity
         date for the  Mortgage  Loan  with the  latest  maturity  date has been
         designated  as the "latest  possible  maturity  date" for each Class of
         Certificates.

(2)      The Class A-IO  Certificates  will  accrue  interest  at the Class A-IO
         Pass-Through Rate on the Certificate Notional Balance of the Class A-IO
         Certificates   calculated   in  accordance   with  the   definition  of
         "Certificate Notional Balance" herein. The Class A-IO Certificates will
         not be entitled to distributions  in respect of principal.  For federal
         income  tax  purposes,  the  Class  A-IO  Certificates  will not have a
         Notional Amount, but will be entitled to 100% of amounts distributed on
         REMIC II  Regular  Interest  LTII-IO-A  and REMIC II  Regular  Interest
         LTII-IO-B.

(3)      The Class C Certificates  will not accrue interest on their Certificate
         Principal Balance, but will accrue interest at the Class C Pass-Through
         Rate on the  Certificate  Notional  Balance of the Class C Certificates
         outstanding  from time to time which shall equal the  aggregate  of the
         Uncertificated  Principal  Balances  of the REMIC II Regular  Interests
         (other than REMIC II Regular Interest LTII-P). The Class C Certificates
         will not accrue interest on their Certificate Principal Balance.

(4)      The Class P Certificates  are not entitled to  distributions in respect
         of interest.

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

                                     - 8 -
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01      DEFINED TERMS.

         In addition to those terms  defined in Section  1.02,  whenever used in
this Agreement,  the following words and phrases,  unless the context  otherwise
requires, shall have the following meanings:

         ACCOUNT: Either the Distribution Account or the Custodial Account.

         ACCRUAL PERIOD:  With respect to the Certificates (other than the Class
A-1, Class P and Class R Certificates)  and any Distribution  Date, the calendar
month immediately  preceding such  Distribution  Date. With respect to the Class
A-1 Certificates  and any  Distribution  Date, the period from and including the
25th day of the  calendar  month  preceding  the  calendar  month in which  such
Distribution  Date  occurs (or with  respect to the first  Accrual  Period,  the
Closing Date) to and including the 24th day of the calendar  month in which such
Distribution  Date  occurs.  All  calculations  of interest on the  Certificates
(other than the Class A-1, Class P and Class R Certificates)  will be based on a
360-day year consisting of twelve 30-day months. All calculations of interest on
the Class A-1  Certificates  will be made based on a 360-day year and the actual
number of days elapsed in the related Accrual Period.

         ADVANCE:  An advance of delinquent payments of principal or interest in
respect of a Mortgage  Loan  required  to be made by the  Servicer  pursuant  to
Section 5.01 or by the Trustee in its capacity as Successor Servicer pursuant to
Section 5.01.

         ADVANCE FACILITY: As defined in Section 5.01(b)(i).

         ADVANCE FACILITY NOTICE: As defined in Section 5.01(b)(ii).

         ADVANCE FINANCING PERSON: As defined in Section 5.01(b)(i).

         ADVANCE REIMBURSEMENT AMOUNT: As defined in Section 5.01(b)(ii).

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

         AMOUNT HELD FOR FUTURE  DISTRIBUTION:  As to any Distribution Date, the
aggregate  amount held in the Custodial  Account at the close of business on the
immediately  preceding  Determination  Date  on  account  of (i)  all  Scheduled
Payments or portions thereof received in respect of the Mortgage Loans due after
the related Due Period and (ii) Principal  Prepayments and Liquidation  Proceeds
received  in respect of such  Mortgage  Loans  after the last day of the related
Prepayment Period.

         APPRAISED  VALUE:  With  respect to any  Mortgage  Loan  originated  in
connection  with a refinancing,  the appraised  value of the Mortgaged  Property
based upon the appraisal made at the time of such  refinancing  or, with respect
to any  other  Mortgage  Loan,  the  lesser  of (x) the

                                     - 9 -
<PAGE>

appraised value of the Mortgaged Property based upon the appraisal made by a fee
appraiser at the time of the origination of the Mortgage Loan, and (y) the sales
price of the Mortgaged Property at the time of such origination.

         AUTHORIZED  SERVICER  REPRESENTATIVE:  Those Servicer  representatives,
authorized  to execute a Request  for Release on behalf of the  Servicer,  whose
name and facsimile  signature  appear on a list  furnished to the Trustee by the
Servicer on the Closing  Date  pursuant to this  Agreement,  as such list may be
amended by the Servicer from time-to-time.

         AVAILABLE  DISTRIBUTION AMOUNT: The sum of Interest Funds and Principal
Funds  with  respect to the  Mortgage  Loans less  amounts  reimbursable  to the
Servicer, the Trustee and the Custodian pursuant to this Agreement to the extent
not previously reimbursed and exclusive of amounts pursuant to Section 5.09.

         BANKRUPTCY CODE: Title 11 of the United States Code.

         BOOK-ENTRY  CERTIFICATES:   Any  of  the  Certificates  that  shall  be
registered in the name of the Depository or its nominee,  the ownership of which
is  reflected  on the  books  of the  Depository  or on the  books  of a  person
maintaining  an  account  with  the  Depository  (directly,   as  a  "Depository
Participant",  or indirectly,  as an indirect participant in accordance with the
rules of the  Depository  and as described in Section  6.06).  As of the Closing
Date,  each  Class  of  Publicly  Offered  Certificates  constitutes  a Class of
Book-Entry Certificates.

         BUSINESS DAY: Any day other than (i) a Saturday or a Sunday,  or (ii) a
day on  which  banking  institutions  in The City of New  York,  New  York,  the
Commonwealth  of  Pennsylvania,  the city in which the Corporate Trust Office of
the  Trustee  is  located  or the  States  in  which  the  Servicer's  servicing
operations are located are authorized or obligated by law or executive  order to
be closed.

         CERTIFICATE:  Any one of the  certificates  of any Class  executed  and
authenticated  by the  Trustee in  substantially  the forms  attached  hereto as
Exhibits A-1 through A-6.

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

CERTIFICATE  NOTIONAL  BALANCE:  With respect to the Class A-IO Certificates and
any Distribution Date, the lesser of (a)(i)  $28,522,000,  for each Distribution
Date from the  Distribution  Date in July 2004 to and including the Distribution
Date in December 2004, (ii)  $22,817,000,  for each  Distribution  Date from the
Distribution  Date in January 2005 to and  including  the  Distribution  Date in
April 2005, (iii) $20,536,000,  for each Distribution Date from the Distribution
Date in May 2005 to and  including  the  Distribution  Date in July  2005,  (iv)
$17,113,000,  for the Distribution Date in August 2005 and the Distribution Date
in  September  2005,  (v)  $13,690,000,  for  each  Distribution  Date  from and
including  the   Distribution   Date  in  October  2005  to  and  including  the
Distribution Date in January 2006, (vi) $11,409,000 for the Distribution Date in
February 2006 and the Distribution  Date in March 2006, (vii) $9,127,000 for the
Distribution  Date in April 2006 and the Distribution  Date in May 2006,  (viii)
$5,932,000  for the  Distribution  Date in June  2006  and  (ix)  $0,  for  each
Distribution  Date thereafter and (b) the aggregate Stated

                                     - 10 -
<PAGE>

Principal  Balance of the Mortgage  Loans.  For United States federal income tax
purposes,  the Class  A-IO  Certificates  will not have a  Certificate  Notional
Balance, but will be entitled to 100% of amounts distributed on REMIC II Regular
Interest LTII-IO-A and REMIC II Regular Interest LTII-IO-B.  With respect to the
Class C Certificates,  immediately prior to any Distribution Date, the aggregate
of the  Uncertificated  Principal  Balances  of the REMIC II  Regular  Interests
(other  than  REMIC II Regular  Interest  LTII-IO-A,  REMIC II Regular  Interest
LTII-IO-B and REMIC II Regular Interest LTII-P).

         CERTIFICATE  PRINCIPAL  BALANCE:  As to any Certificate (other than any
Class A-IO, Class C or Class R Certificate) and as of any Distribution Date, the
Initial  Certificate  Principal  Balance of such Certificate plus any Subsequent
Recoveries  added  to the  Certificate  Principal  Balance  of such  Certificate
pursuant to Section  5.05(f)  less the sum of (i) all amounts  distributed  with
respect to such  Certificate in reduction of the Certificate  Principal  Balance
thereof on previous  Distribution  Dates pursuant to Section 5.04, and (ii) with
respect  to the  Mezzanine  Certificates,  any  reductions  in  the  Certificate
Principal Balance of such Certificate deemed to have occurred in connection with
the allocations of Realized Losses, if any. References herein to the Certificate
Principal  Balance  of a  Class  of  Certificates  shall  mean  the  Certificate
Principal Balances of all Certificates in such Class.

         CERTIFICATE REGISTER: The register maintained pursuant to Section 6.02.

         CERTIFICATEHOLDER  OR HOLDER: The person in whose name a Certificate is
registered in the Certificate  Register  (initially,  Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).

         CLASS: All Certificates bearing the same Class designation as set forth
in Section 6.01.

         CLASS A-1  CERTIFICATE:  Any  Certificate  designated  as a "Class  A-1
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-1  hereto,
representing the right to the Percentage Interest of distributions  provided for
the Class A-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS A-1  PASS-THROUGH  RATE: With respect to any  Distribution  Date,
One-Month LIBOR plus 0.20% per annum, subject to a cap equal to the Net WAC Rate
Cap for such Distribution Date.

         CLASS A-2  CERTIFICATE:  Any  Certificate  designated  as a "Class  A-2
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-1  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class A-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS A-2  PASS-THROUGH  RATE: With respect to any  Distribution  Date,
4.099%  per  annum,  subject  to a cap  equal  to the Net WAC  Rate Cap for such
Distribution Date.

         CLASS A-3A  CERTIFICATE:  Any  Certificate  designated as a "Class A-3A
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-1  hereto,
representing the right to its Percentage Interest of

                                     - 11 -
<PAGE>

distributions  provided for the Class A-3A  Certificates as set forth herein and
evidencing a Regular Interest in REMIC III.

         CLASS A-3A  PASS-THROUGH  RATE: With respect to any Distribution  Date,
7.000%  per  annum,  subject  to a cap  equal  to the Net WAC  Rate Cap for such
Distribution Date.

         CLASS A-3B  CERTIFICATE:  Any  Certificate  designated as a "Class A-3B
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-1  hereto,
representing the right to its Percentage Interest of distributions  provided for
the  Class  A-3B  Certificates  as set forth  herein  and  evidencing  a Regular
Interest in REMIC III.

         CLASS A-3B  PASS-THROUGH  RATE: With respect to any Distribution  Date,
4.863%  per  annum,  subject  to a cap  equal  to the Net WAC  Rate Cap for such
Distribution Date.

         CLASS A-4  CERTIFICATE:  Any  Certificate  designated  as a "Class  A-4
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-1  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class A-4 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS A-4  PASS-THROUGH  RATE: With respect to any  Distribution  Date,
5.801%  per  annum,  subject  to a cap  equal  to the Net WAC  Rate Cap for such
Distribution Date.

         CLASS A-5  CERTIFICATE:  Any  Certificate  designated  as a "Class  A-5
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-1  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class A-5 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS  A-5  PASS-THROUGH  RATE:  Shall  mean (i) with  respect  to each
Distribution  Date which  occurs on or prior to the Optional  Termination  Date,
6.000% per annum and (ii) with  respect to each  Distribution  Date which occurs
thereafter, 6.500% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.

         CLASS A-6  CERTIFICATE:  Any  Certificate  designated  as a "Class  A-6
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-1  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class A-6 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS A-6 LOCKOUT PRINCIPAL  DISTRIBUTION  AMOUNT:  With respect to any
Distribution  Date,  an amount  equal to the lesser of (i) the Senior  Principal
Distribution  Amount for such  Distribution  Date and (ii) the Class A-6 Lockout
Distribution  Percentage for such Distribution Date multiplied by the product of
(x) a fraction,  the numerator of which is the Certificate  Principal Balance of
the  Class  A-6  Certificates  and the  denominator  of which  is the  aggregate
Certificate  Principal Balance of all of the Senior  Certificates,  in each case
immediately  prior  to such  Distribution  Date  and (y)  the  Senior  Principal
Distribution Amount for such Distribution Date.

                                     - 12 -
<PAGE>

         CLASS  A-6  LOCKOUT  DISTRIBUTION  PERCENTAGE:  With  respect  to  each
Distribution Date, the applicable percentage set forth below:

                                                                     CLASS A-6
                                                                       LOCKOUT
                                                                    DISTRIBUTION
                           DISTRIBUTION DATES                        PERCENTAGE
                           ------------------                        ----------
July 2004 through and including June 2007........................        0%
July 2007 through and including June 2009........................        45%
July 2009 through and including June 2010........................        80%
July 2010 through and including June 2011........................       100%
July 2011 and thereafter.........................................       300%

         CLASS  A-6  PASS-THROUGH  RATE:  Shall  mean (i) with  respect  to each
Distribution  Date which  occurs on or prior to the Optional  Termination  Date,
5.603% per annum and (ii) with  respect to each  Distribution  Date which occurs
thereafter, 6.103% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.

         CLASS A-IO  CERTIFICATE:  Any  Certificate  designated as a "Class A-IO
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-2  hereto,
representing the right to its Percentage Interest of distributions  provided for
the  Class  A-IO  Certificates  as set forth  herein  and  evidencing  a Regular
Interest in REMIC III.

         CLASS  A-IO  PASS-THROUGH  RATE:  Shall  mean (i) for the first  twelve
Distribution  Dates,  4.50% per annum,  subject  to a cap equal to the  weighted
average  of the Net  Mortgage  Rates on the  Mortgage  Loans,  (ii) for the next
twelve  Distribution  Dates,  3.50%  per  annum,  subject  to a cap equal to the
weighted  average of the Net Mortgage  Rates on the Mortgage Loans and (iii) for
any  Distribution  Date  thereafter,  0.00%.  For federal  income tax  purposes,
however,  the Class A-IO  Certificates  will not have a Class A-IO  Pass-Through
Rate, and the Interest  Distribution  Amount for the Class A-IO Certificates and
any  Distribution  Date will be deemed to be 100% of the amount  distributed  on
REMIC II Regular Interest  LTII-IO-A and REMIC II Regular Interest LTII-IO-B for
such Distribution Date.

         CLASS  C  CERTIFICATE:   Any  Certificate  designated  as  a  "Class  C
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-4  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class C Certificates herein and evidencing a Regular Interest in REMIC III.

         CLASS C DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
sum of (i) the Interest  Distribution  Amount for the Class C  Certificates  for
such Distribution Date and (ii) any  Overcollateralization  Reduction Amount for
such  Distribution Date remaining after payments pursuant to items 1 though 6 of
clause  THIRD  of  Section  5.04;  provided,  however  that  on  and  after  the
Distribution Date on which the Certificate Principal Balance of the Certificates
has been reduced to zero,  the Class C  Distribution  Amount  shall  include the
Overcollateralization Amount.

                                     - 13 -
<PAGE>

         CLASS C PASS-THROUGH  RATE: On any Distribution  Date, a per annum rate
equal to the percentage equivalent of a fraction,  the numerator of which is the
sum of the amounts calculated pursuant to clauses (A) through (L) below, and the
denominator of which is the aggregate of the  Uncertificated  Principal Balances
of the REMIC II Regular Interests (other than REMIC II Regular Interest LTII-P).
For purposes of calculating the Pass-Through  Rate for the Class C Certificates,
the numerator is equal to the sum of the following components:

          (A) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-AA  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-AA;

          (B) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-A1  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A1;

          (C) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-A2  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A2;

          (D) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-A3A  minus the Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A3A;

          (E) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-A3B  minus the Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A3B;

          (F) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-A4  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A4;

          (G) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-A5  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A5;

          (H) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-A6  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A6;

          (I) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-M1  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-M1;

          (J) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-M2  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-M2;

                                     - 14 -
<PAGE>

          (K) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-M3  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-M3; and

          (L) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest  LTII-ZZ  minus the  Marker  Rate,  applied  to an amount  equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-ZZ.

         CLASS M-1  CERTIFICATE:  Any  Certificate  designated  as a "Class  M-1
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-3  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class M-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS  M-1  PASS-THROUGH  RATE:  Shall  mean (i) with  respect  to each
Distribution  Date which  occurs on or prior to the Optional  Termination  Date,
6.000% per annum and (ii) with  respect to each  Distribution  Date which occurs
thereafter, 6.500% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.

         CLASS  M-1  PRINCIPAL   DISTRIBUTION   AMOUNT:   With  respect  to  any
Distribution Date which occurs (i) prior to the Stepdown Date or on or after the
Stepdown Date if a Trigger Event is in effect for that  Distribution  Date,  the
Principal  Distribution  Amount  for  that  Distribution  Date  remaining  after
distribution of the Senior Principal Distribution Amount or (ii) on or after the
Stepdown  Date if a Trigger Event is not in effect for that  Distribution  Date,
the lesser of:

         the Principal  Distribution Amount for that Distribution Date remaining
         after distribution of the Senior Principal Distribution Amount; and

         the excess of (A) the aggregate  Certificate  Principal  Balance of the
         Class M-1 Certificates immediately prior to that Distribution Date over
         (B) the positive  difference between (i) the aggregate Stated Principal
         Balance of the  Mortgage  Loans as of the last day of the  related  Due
         Period (after reduction for Realized Losses incurred during the related
         Prepayment  Period) and (ii) the sum of (x) the  aggregate  Certificate
         Principal Balance of the Senior Certificates (after taking into account
         the  payment  of the  Senior  Principal  Distribution  Amount  for such
         Distribution  Date) and (y) the  product  of (a) the  aggregate  Stated
         Principal  Balance  of the  Mortgage  Loans  as of the  last day of the
         related Due Period (after reduction for Realized Losses incurred during
         the  related  Prepayment  Period)  and  (b) the  sum of  6.10%  and the
         Required Overcollateralization Percentage.

         CLASS M-2  CERTIFICATE:  Any  Certificate  designated  as a "Class  M-2
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-3  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class M-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS  M-2  PASS-THROUGH  RATE:  Shall  mean (i) with  respect  to each
Distribution  Date which  occurs on or prior to the Optional  Termination  Date,
6.000% per annum and (ii) with  respect to each  Distribution  Date which occurs
thereafter, 6.500% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.

                                     - 15 -
<PAGE>

         CLASS  M-2  PRINCIPAL   DISTRIBUTION   AMOUNT:   With  respect  to  any
Distribution Date which occurs (i) prior to the Stepdown Date or on or after the
Stepdown Date if a Trigger Event is in effect for that  Distribution  Date,  the
Principal  Distribution  Amount  for  that  Distribution  Date  remaining  after
distribution  of the  Senior  Principal  Distribution  Amount  and the Class M-1
Principal Distribution Amount or (ii) on or after the Stepdown Date if a Trigger
Event is not in effect for that Distribution Date, the lesser of:

         the Principal  Distribution Amount for that Distribution Date remaining
         after distribution of the Senior Principal  Distribution Amount and the
         Class M-1 Principal Distribution Amount; and

         the excess of (A) the aggregate  Certificate  Principal  Balance of the
         Class M-2 Certificates immediately prior to that Distribution Date over
         (B) the positive  difference between (i) the aggregate Stated Principal
         Balance of the  Mortgage  Loans as of the last day of the  related  Due
         Period (after reduction for Realized Losses incurred during the related
         Prepayment  Period) and (ii) the sum of (x) the  aggregate  Certificate
         Principal  Balance  of  the  Senior  Certificates  and  the  Class  M-1
         Certificates  (after  taking  into  account  the  payment of the Senior
         Principal  Distribution Amount and the Class M-1 Principal Distribution
         Amount  for such  Distribution  Date)  and (y) the  product  of (a) the
         aggregate Stated Principal Balance of the Mortgage Loans as of the last
         day of the related Due Period  (after  reduction  for  Realized  Losses
         incurred during the related Prepayment Period) and (b) the sum of 2.70%
         and the Required Overcollateralization Percentage.

         CLASS M-3  CERTIFICATE:  Any  Certificate  designated  as a "Class  M-3
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-3  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class M-3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS  M-3  PASS-THROUGH  RATE:  Shall  mean (i) with  respect  to each
Distribution  Date which  occurs on or prior to the Optional  Termination  Date,
6.000% per annum and (ii) with  respect to each  Distribution  Date which occurs
thereafter, 6.500% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.

         CLASS  M-3  PRINCIPAL   DISTRIBUTION   AMOUNT:   With  respect  to  any
Distribution Date which occurs (i) prior to the Stepdown Date or on or after the
Stepdown Date if a Trigger Event is in effect for that  Distribution  Date,  the
Principal  Distribution  Amount  for  that  Distribution  Date  remaining  after
distribution  of  the  Senior  Principal  Distribution  Amount,  the  Class  M-1
Principal Distribution Amount and the Class M-2 Principal Distribution Amount or
(ii) on or after the Stepdown  Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:

         the Principal  Distribution Amount for that Distribution Date remaining
         after  distribution of the Senior Principal  Distribution  Amount,  the
         Class M-1  Principal  Distribution  Amount and the Class M-2  Principal
         Distribution Amount; and

         the excess of (A) the aggregate  Certificate  Principal  Balance of the
         Class M-3 Certificates immediately prior to that Distribution Date over
         (B) the positive  difference between (i) the aggregate Stated Principal
         Balance of the  Mortgage  Loans as of the last

                                     - 16 -
<PAGE>

         day of the related Due Period  (after  reduction  for  Realized  Losses
         incurred during the related  Prepayment Period) and (ii) the sum of (x)
         the aggregate Certificate Principal Balance of the Senior Certificates,
         the Class M-1 Certificates and the Class M-2 Certificates (after taking
         into account the payment of the Senior Principal  Distribution  Amount,
         the Class M-1 Principal Distribution Amount and the Class M-2 Principal
         Distribution  Amount for such Distribution Date) and (y) the product of
         (a) the aggregate Stated Principal  Balance of the Mortgage Loans as of
         the last day of the related Due Period  (after  reduction  for Realized
         Losses  incurred  during the  related  Prepayment  Period)  and (b) the
         Required Overcollateralization Percentage.

         CLASS  P  CERTIFICATE:   Any  Certificate  designated  as  a  "Class  P
Certificate"  on  the  face  thereof,   in  the  form  of  Exhibit  A-5  hereto,
representing the right to its Percentage Interest of distributions  provided for
the Class P Certificates  as set forth herein and evidencing a Regular  Interest
in REMIC III.

         CLASS P  CERTIFICATE  ACCOUNT:  The Eligible  Account  established  and
maintained by the Trustee pursuant to Section 5.09.

         CLASS R CERTIFICATE: Any Certificate designated a "Class R Certificate"
on the face thereof,  in substantially the form set forth in Exhibit A-6 hereto,
evidencing the Class R-1 Interest, Class R-2 Interest and Class R-3 Interest.

         CLASS R-1 INTEREST: The uncertificated residual interest in REMIC I.

         CLASS R-2 INTEREST: The uncertificated residual interest in REMIC II.

         CLASS R-3 INTEREST: The uncertificated residual interest in REMIC III.

         CLOSING DATE:  June 25, 2004.

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

         COMPENSATING  INTEREST:  An amount to be deposited in the  Distribution
Account by the Servicer to offset a Prepayment  Interest Shortfall on a Mortgage
Loan  subject  to  this  Agreement;   provided,   however  that  the  amount  of
Compensating  Interest required to be paid in respect of any Mortgage Loan shall
not exceed the Servicing Fee payable to the Servicer.

         CORPORATE TRUST OFFICE:  The designated  office of the Trustee where at
any particular  time its corporate trust business with respect to this Agreement
shall  be  administered,  which  office  at the  date of the  execution  of this
Agreement is located at 4 New York Plaza,  6th Floor,  New York, New York 10004,
Attention:  Institutional  Trust  Services/Global  Debt, Nomura Asset Acceptance
Corporation,  Alternative Loan Trust, Series 2004-AP2,  or at such other address
as the Trustee may designate from time to time.

         CORRESPONDING CERTIFICATE: With respect to:

         (i)  REMIC II Regular Interest LTII-A1, the Class A-1 Certificates,

                                     - 17 -
<PAGE>

         (ii)   REMIC II Regular Interest LTII-A2, the Class A-2 Certificates;

         (iii)  REMIC II Regular Interest LTII-A3A, the Class A-3A Certificates;

         (iv)   REMIC II Regular Interest LTII-A3B, the Class A-3B Certificates;

         (v)    REMIC II Regular Interest LTII-A4, the Class A-4 Certificates;

         (vi)   REMIC II Regular Interest LTII-A5, the Class A-5 Certificates;

         (vii)  REMIC II Regular Interest LTII-A6, the Class A-6 Certificates;

         (viii) REMIC II Regular Interest LTII-M1, the Class M-1 Certificates;

         (ix)   REMIC II Regular Interest LTII-M2, the Class M-2 Certificates;

         (x)    REMIC II Regular Interest LTII-M3, the Class M-3 Certificates;
                and

         (xi)   REMIC II Regular Interest LTII-P, the Class P Certificates.

         CREDIT  ENHANCEMENT  PERCENTAGE:  With respect to any Distribution Date
and any Class of  Publicly  Offered  Certificates,  the  percentage  obtained by
dividing (x) the sum of (i) the aggregate  Certificate  Principal Balance of the
Class or Classes of Publicly Offered  Certificates  subordinate thereto and (ii)
the  Overcollateralization  Amount by (y) the aggregate Stated Principal Balance
of the Mortgage Loans,  calculated  after taking into account  distributions  of
principal on the Mortgage Loans and  distribution of the Principal  Distribution
Amount to the holders of the  Certificates  then  entitled to  distributions  of
principal on such Distribution Date.

         CUSTODIAL  ACCOUNT:  The  account  established  and  maintained  by the
Servicer with respect to receipts on the Mortgage Loans and related REO Property
in accordance with Section 4.01.

         CUSTODIAN: JPMorgan Chase Bank, a New York banking corporation.

         CUT-OFF DATE:  June 1, 2004.

         CUT-OFF DATE  PRINCIPAL  BALANCE:  As to any Mortgage  Loan, the unpaid
principal  balance thereof as of the close of business on the Cut-off Date after
application of all Principal  Prepayments received prior to the Cut-off Date and
scheduled  payments of principal due on or before the Cut-off  Date,  whether or
not  received,  but  without  giving  effect to any  installments  of  principal
received in respect of Due Dates after the Cut-off Date.

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

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

         DEFINITIVE CERTIFICATES: As defined in Section 6.06.

                                     - 18 -
<PAGE>

         DELETED  MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

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

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

         DEPOSITOR: Nomura Asset Acceptance Corporation, a Delaware corporation,
or its successor in interest.

         DEPOSITORY:  The  initial  Depository  shall  be The  Depository  Trust
Company ("DTC"),  the nominee of which is Cede & Co., or any other  organization
registered  as a "clearing  agency"  pursuant  to Section 17A of the  Securities
Exchange  Act of  1934,  as  amended.  The  Depository  shall  initially  be the
registered  Holder of the Book-Entry  Certificates.  The Depository shall at all
times be a  "clearing  corporation"  as defined in  Section  8-102(a)(5)  of the
Uniform Commercial Code of the State of New York.

         DEPOSITORY   AGREEMENT:   With  respect  to  the  Class  of  Book-Entry
Certificates,  the agreement  among the  Depositor,  the Trustee and the initial
Depository,  dated as of the Closing Date,  substantially in the form of Exhibit
I.

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

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

         DISTRIBUTION   ACCOUNT:  The  separate  Eligible  Account  created  and
maintained  by the Trustee  pursuant to Section  4.06 in the name of the Trustee
for the benefit of the  Certificateholders  and designated "JPMorgan Chase Bank,
in trust for  registered  holders of Nomura  Asset  Acceptance  Corp.,  Mortgage
Pass-Through  Certificates,  Series 2004-AP2". Funds in the Distribution Account
shall be held in trust for the  Certificateholders for the uses and purposes set
forth in this Agreement.

         DISTRIBUTION  DATE:  The  25th day of each  calendar  month  after  the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in July 2004.

                                     - 19 -
<PAGE>

         DUE DATE: As to any Mortgage  Loan, the date in each month on which the
related Scheduled Payment is due, as set forth in the related Mortgage Note.

         DUE PERIOD:  With respect to any Distribution Date, the period from the
second day of the calendar  month  preceding  the  calendar  month in which such
Distribution  Date  occurs  through  close of  business  on the first day of the
calendar month in which such Distribution Date occurs.

         ELIGIBLE ACCOUNT:  Any of (i) an account or accounts  maintained with a
federal  or  state  chartered  depository  institution  or  trust  company,  the
long-term  unsecured debt obligations and short-term  unsecured debt obligations
of which are rated by each Rating Agency in one of its two highest long-term and
its highest short-term rating categories  respectively,  at the time any amounts
are held on deposit  therein,  or (ii) an account or  accounts  in a  depository
institution  or trust company in which such accounts are insured by the FDIC (to
the limits established by the FDIC) and the uninsured deposits in which accounts
are otherwise secured such that, as evidenced by an Opinion of Counsel delivered
to the Trustee and to each Rating Agency,  the  Certificateholders  have a claim
with respect to the funds in such account or a perfected first priority security
interest   against  any   collateral   (which  shall  be  limited  to  Permitted
Investments)  securing  such  funds  that is  superior  to  claims  of any other
depositors or creditors of the depository  institution or trust company in which
such account is maintained,  or (iii) a 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 having capital and
surplus of not less than $50,000,000,  acting in its fiduciary  capacity or (iv)
any other account  acceptable to the Rating  Agencies as evidenced in writing by
the Rating Agencies.  Eligible Accounts may bear interest,  and may include,  if
otherwise qualified under this definition, accounts maintained with the Trustee.

         ESCROW  ACCOUNT:  Shall  mean an  account  maintained  by the  Servicer
pursuant to Section 4.04. The Escrow Account shall be an Eligible Account.

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

         ERISA RESTRICTED CERTIFICATE: Each of the Class C, Class P and Residual
Certificates.

         EXCESS  LIQUIDATION  PROCEEDS:  To the extent not required by law to be
paid to the related Mortgagor,  the excess, if any, of any Liquidation  Proceeds
with  respect  to a  Mortgage  Loan over the  Stated  Principal  Balance of such
Mortgage  Loan and accrued and unpaid  interest  at the  related  Mortgage  Rate
through  the  last  day of the  month  in  which  the  Mortgage  Loan  has  been
liquidated.

         EXEMPTION: Prohibited Transaction Exemption 93-32, as amended from time
to time.

         EXTRA PRINCIPAL  DISTRIBUTION  AMOUNT: With respect to any Distribution
Date,  the lesser of (x) the Net Monthly Excess  Cashflow for such  Distribution
Date and (y) the  Overcollateralization  Increase  Amount for such  Distribution
Date.

         FANNIE  MAE:   Fannie  Mae   (formerly,   Federal   National   Mortgage
Association), or any successor thereto.

                                     - 20 -
<PAGE>

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

         FINAL  CERTIFICATION:  The  certification  of the Custodian in the form
attached hereto as Exhibit C-3.

         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 or the Depositor pursuant to or as contemplated by Section 2.03(c)
or  Section  10.01),  a  determination  made by the  Servicer  pursuant  to this
Agreement that all Insurance Proceeds,  Liquidation  Proceeds and other payments
or recoveries which the Servicer, in its reasonable good faith judgment, expects
to be finally recoverable in respect thereof have been so recovered. The Trustee
shall maintain records, based solely on information provided by the Servicer, of
each Final Recovery Determination made thereby.

         FIRREA: The Financial  Institutions Reform,  Recovery,  and Enforcement
Act of 1989, as amended.

         FREDDIE MAC: Federal Home Loan Mortgage  Corporation,  or any successor
thereto.

         INDEMNIFIED PERSONS: The Trustee, the Servicer (including any successor
to the Servicer), the Custodian,  the Trust Fund and their officers,  directors,
agents and employees and, with respect to the Trustee,  any separate  co-trustee
and its officers, directors, agents and employees.

         INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to any Certificate,
the  Certificate  Principal  Balance  of  such  Certificate  or any  predecessor
Certificate on the Closing Date.

         INITIAL  CERTIFICATION:  The certification of the Custodian in the form
attached hereto as Exhibit C-1.

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

         INSURANCE  PROCEEDS:  Proceeds  paid in respect of the  Mortgage  Loans
pursuant  to any  Insurance  Policy or any other  insurance  policy  covering  a
Mortgage  Loan, to the extent such  proceeds are payable to the mortgagee  under
the  Mortgage,  the Servicer or the trustee  under the deed of trust and are not
applied to the restoration of the related Mortgaged  Property or released to the
Mortgagor in accordance  with the  servicing  standard set forth in Section 3.01
other than any amount included in such Insurance  Proceeds in respect of Insured
Expenses.

         INSURED EXPENSES: Expenses covered by any Insurance Policy with respect
to the Mortgage Loans.

         INTEREST   CARRY  FORWARD   AMOUNT:   With  respect  to  any  Class  of
Certificates  (other than the Class P Certificates and Class R Certificates) and
any Distribution  Date, the amount,  if any, by which the Interest  Distribution
Amount for that Class of Certificates for the immediately preceding Distribution
Date exceeded the actual amount distributed on such Class in respect of interest
on the immediately preceding Distribution Date, together with any Interest Carry

                                     - 21 -
<PAGE>

Forward  Amount with  respect to such Class  remaining  unpaid from the previous
Distribution  Date, plus interest  accrued  thereon at the related  Pass-Through
Rate for the most recently ended Accrual Period.

         INTEREST  DETERMINATION  DATE: Shall mean the second LIBOR Business Day
preceding the commencement of each Accrual Period.

         INTEREST DISTRIBUTION AMOUNT: With respect to any Class of Certificates
(other  than  the  Class  P  Certificates  and  Class  R  Certificates)  and any
Distribution  Date, an amount equal to the interest  accrued  during the related
Accrual Period at the applicable  Pass-Through Rate on the Certificate Principal
Balance (or Certificate Notional Balance) of such Certificate  immediately prior
to such  Distribution  Date less such  Certificate's  share of any Net  Interest
Shortfall and the interest  portion of any Realized Losses on the Mortgage Loans
allocated  to  such   Certificate   pursuant  to  Section  1.02.   The  Interest
Distribution  Amount with respect to each class of Certificates  (other than the
Class A-1  Certificates) is calculated on the basis of a 360-day year consisting
of twelve 30-day months.  The Interest  Distribution  Amount with respect to the
Class A-1  Certificates  is  calculated  on the basis of a 360-day  year and the
actual  number of days  elapsed  in the  related  Accrual  Period.  No  Interest
Distribution  Amount will be payable with  respect to any Class of  Certificates
after the  Distribution  Date on which  the  outstanding  Certificate  Principal
Balance of such Certificate has been reduced to zero.

         INTEREST  FUNDS:  With respect to any  Distribution  Date, (i) the sum,
without duplication, of (a) all scheduled interest during the related Due Period
with respect to the Mortgage Loans less the Servicing Fee and the fee payable to
any  provider  of  lender-paid  mortgage  insurance,  if any,  (b) all  Advances
relating to interest with respect to the Mortgage  Loans made on or prior to the
related  Remittance  Date,  (c) all  Compensating  Interest  with respect to the
Mortgage  Loans and  required to be remitted  by the  Servicer  pursuant to this
Agreement with respect to such Distribution  Date, (d) Liquidation  Proceeds and
Subsequent  Recoveries with respect to the Mortgage Loans  collected  during the
related  Prepayment  Period  (to  the  extent  such  Liquidation   Proceeds  and
Subsequent Recoveries relate to interest),  (e) all amounts relating to interest
with  respect  to each  Mortgage  Loan  repurchased  by the Seller  pursuant  to
Sections  2.02 and 2.03 and (f) all amounts in respect of  interest  paid by the
Depositor  pursuant to Section  10.01 to the extent  remitted by the Servicer to
the  Distribution  Account  pursuant  to this  Agreement  minus (ii) all amounts
relating to interest required to be reimbursed  pursuant to Sections 4.02, 4.04,
4.06, 4.07 and 9.05 or as otherwise set forth in this Agreement.

         INTEREST REMITTANCE AMOUNT: With respect to any Distribution Date, that
portion of the Available  Distribution  Amount for such  Distribution Date which
represents Interest Funds with respect to the Mortgage Loans.

         INTEREST  SHORTFALL:   With  respect  to  any  Distribution  Date,  the
aggregate shortfall, if any, in collections of interest (adjusted to the related
Net Mortgage Rates) on Mortgage Loans  resulting from (a) Principal  Prepayments
in full received during the related  Prepayment  Period,  (b) partial  Principal
Prepayments  received during the related Prepayment Period to the extent applied
prior to the Due Date in the  month of the  Distribution  Date and (c)  interest
payments  on  certain  of the  Mortgage  Loans  being  limited  pursuant  to the
provisions of the Relief Act.

                                     - 22 -
<PAGE>

         INTERIM  CERTIFICATION:  The certification of the Custodian in the form
attached hereto as Exhibit C-3.

         LAST  SCHEDULED  DISTRIBUTION  DATE:  With respect to the  Certificates
(other than the Class A-IO Certificates), the Distribution Date in July 2034 and
with respect to the Class A-IO Certificates, the Distribution Date in June 2006.

         LATEST  POSSIBLE  MATURITY  DATE: The  Distribution  Date following the
final scheduled  maturity date of the Mortgage Loan in the Trust Fund having the
latest  scheduled  maturity  date as of the Cut-off  Date.  For  purposes of the
Treasury  Regulations  under Code section 860A through 860G, the latest possible
maturity date of each regular interest issued by REMIC I, REMIC II and REMIC III
shall be the Latest Possible Maturity Date.

         LIBOR  BUSINESS  DAY:  Shall  mean a day on  which  banks  are open for
dealing in foreign currency and exchange in London and New York City.

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

         LIQUIDATION PROCEEDS:  Amounts, other than Insurance Proceeds, received
in  connection  with the partial or  complete  liquidation  of a Mortgage  Loan,
whether through trustee's sale, foreclosure sale or otherwise,  or in connection
with any  condemnation or partial release of a Mortgaged  Property and any other
proceeds  received  with  respect  to an REO  Property,  less the sum of related
unreimbursed Advances, Servicing Fees and Servicing Advances and all expenses of
liquidation,  including  property  protection  expenses and foreclosure and sale
costs, including court and reasonable attorneys fees.

         LOAN-TO-VALUE  RATIO:  The  fraction,  expressed as a  percentage,  the
numerator of which is the original  principal  balance of the Mortgage  Loan and
the  denominator  of  which is the  Appraised  Value  of the  related  Mortgaged
Property.

         MAJORITY CLASS C  CERTIFICATEHOLDER:  The Holder of a 50.01% or greater
Percentage Interest in the Class C Certificates.

         MARKER  RATE:  With  respect  to  the  Class  C  Certificates  and  any
Distribution  Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated  REMIC II Pass-Through Rates for REMIC II Regular Interest
LTII-A1,  REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3A,
REMIC II Regular Interest LTII-A3B,  REMIC II Regular Interest LTII-A4, REMIC II
Regular Interest LTII-A5,  REMIC II Regular Interest  LTII-A6,  REMIC II Regular
Interest LTII-M1,  REMIC II Regular Interest LTII-M2,  REMIC II Regular Interest
LTII-M3 and REMIC II Regular Interest LTII-ZZ, with the rate on REMIC II Regular
Interest  LTII-A1  subject to a cap equal to the lesser of (x)  One-Month  LIBOR
plus  0.20%  per  annum  and (y) the Net WAC  Rate Cap for the  purpose  of this
calculation; with the rate on REMIC II Regular Interest LTII-A2 subject to a cap
equal to the lesser of (x) 4.099% per annum and (y) the Net WAC Rate Cap for the
purpose of this calculation; with the rate on REMIC II Regular Interest LTII-A3A
subject to a cap equal to the lesser of (x) 7.000% per annum and (y) the Net WAC
Rate Cap for the purpose of this calculation;  with the rate on

                                     - 23 -
<PAGE>

REMIC II Regular  Interest  LTII-3B  subject to a cap equal to the lesser of (x)
4.863%  per  annum  and  (y)  the Net WAC  Rate  Cap  for  the  purpose  of this
calculation; with the rate on REMIC II Regular Interest LTII-A4 subject to a cap
equal to the lesser of (x) 5.801% per annum and (y) the Net WAC Rate Cap for the
purpose of this calculation;  with the rate on REMIC II Regular Interest LTII-A5
subject  to a cap  equal to (A) in the case of any  Distribution  Date up to and
including the Optional  Termination Date, the lesser of (x) 6.000% per annum and
(y) the Net WAC Rate Cap and (B) in the case of any Distribution  Date after the
Optional  Termination  Date,  the lesser of (x) 6.500% per annum and (y) the Net
WAC  Rate Cap for the  purpose  of this  calculation;  with the rate on REMIC II
Regular  Interest  LTII-A6  subject  to a cap  equal  to (A) in the  case of any
Distribution Date up to and including the Optional  Termination Date, the lesser
of (x)  5.603% per annum and (y) the Net WAC Rate Cap and (B) in the case of any
Distribution Date after the Optional  Termination Date, the lesser of (x) 6.103%
per annum and (y) the Net WAC Rate Cap for the purpose of this calculation; with
the rate on REMIC II Regular  Interest  LTII-M1 subject to a cap equal to (A) in
the case of any Distribution  Date up to and including the Optional  Termination
Date, the lesser of (x) 6.000% per annum and (y) the Net WAC Rate Cap and (B) in
the case of any  Distribution  Date after the  Optional  Termination  Date,  the
lesser of (x) 6.500%  per annum and (y) the Net WAC Rate Cap for the  purpose of
this calculation;  with the rate on REMIC II Regular Interest LTII-M2 subject to
a cap equal to (A) in the case of any Distribution  Date up to and including the
Optional  Termination  Date,  the lesser of (x) 6.000% per annum and (y) the Net
WAC Rate Cap and (B) in the case of any  Distribution  Date  after the  Optional
Termination  Date,  the  lesser of (x) 6.500% per annum and (y) the Net WAC Rate
Cap for the  purpose  of this  calculation;  with the  rate on REMIC II  Regular
Interest  LTII-M3 subject to a cap equal to (A) in the case of any  Distribution
Date up to and including the Optional Termination Date, the lesser of (x) 6.000%
per annum  and (y) the Net WAC Rate Cap and (B) in the case of any  Distribution
Date after the Optional Termination Date, the lesser of (x) 6.500% per annum and
(y) the Net WAC Rate Cap for the purpose of this calculation;  and with the rate
on REMIC II Regular Interest LTII-ZZ subject to a cap of zero for the purpose of
this calculation;  provided,  however, that for this purpose, the calculation of
the  Uncertificated  REMIC II Pass-Through Rate and the related cap with respect
to REMIC II Regular  Interest  LTII-A1 shall be  multiplied  by a fraction,  the
numerator  of which is the actual  number of days in the Accrual  Period and the
denominator of which is 30.

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

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

         MEZZANINE CERTIFICATES:  Shall mean, collectively, the Class M-1, Class
M-2 and Class M-3 Certificates.

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

                                     - 24 -
<PAGE>

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

         MONTHLY STATEMENT:  The statement  delivered to the  Certificateholders
pursuant to Section 5.06.

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

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

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

         MORTGAGE LOANS:  Such of the Mortgage Loans transferred and assigned to
the Trustee pursuant to the provisions  hereof, as from time to time are held as
a part of the Trust Fund  (including  any REO  Property),  the mortgage loans so
held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property.

         MORTGAGE LOAN PURCHASE AGREEMENT:  The Mortgage Loan Purchase Agreement
dated as of June 25, 2004,  between the Seller, as seller and the Depositor,  as
purchaser.

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

         MORTGAGE  LOAN  SCHEDULE:  The list of Mortgage  Loans (as from time to
time amended by the Servicer to reflect the deletion of Deleted  Mortgage  Loans
and the addition of  Replacement  Mortgage  Loans  pursuant to the provisions of
this  Agreement)  transferred  to the Trustee as part of the Trust Fund and from
time to time subject to this Agreement, the initial Mortgage Loan Schedule being
attached  hereto as Exhibit B-1,  setting forth the following  information  with
respect to each Mortgage Loan:

                  (i)      the loan number;

                  (ii)     the Mortgage Rate in effect as of the Cut-off Date;

                  (iii)    the Servicing Fee Rate;

                  (iv)     the Net  Mortgage  Rate in effect  as of the  Cut-off
                           Date;

                  (v)      the maturity date;

                  (vi)     the original principal balance;

                  (vii)    the Cut-off Date Principal Balance;

                                     - 25 -
<PAGE>

                  (viii)   the original term;

                  (ix)     the remaining term;

                  (x)      the property type;

                  (xi)     with respect to each MOM Loan, the related MIN;

                  (xii)    the Servicer; and

                  (xiii)   a  code  indicating  whether  the  Mortgage  Loan  is
                           subject  to a  Prepayment  Charge,  the  term of such
                           Prepayment  Charge and the amount of such  Prepayment
                           Charge.

Such schedule shall also set forth the aggregate  Cut-off Date Principal Balance
for all of the Mortgage Loans.

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

         MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note.

         MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan.

         MORTGAGOR: The obligors on a Mortgage Note.

         NET INTEREST SHORTFALLS: Shall mean Interest Shortfalls net of payments
by the Servicer in respect of Compensating Interest.

         NET MONTHLY EXCESS CASHFLOW: With respect to any Distribution Date, the
sum of (a) any Overcollateralization  Reduction Amount and (b) the excess of (x)
the Available  Distribution  Amount for such  Distribution Date over (y) the sum
for such  Distribution  Date of (A) the  aggregate  amount  of  Senior  Interest
Distribution  Amounts  payable  to the  Senior  Certificates  and  the  Interest
Distribution Amounts payable to the Mezzanine Certificates and (B) the Principal
Remittance Amount.

         NET MORTGAGE  RATE: As to each Mortgage  Loan, and at any time, the per
annum rate equal to the related  Mortgage Rate less the sum of (i) the Servicing
Fee  Rate  and  (ii)  the rate at  which  the fee  payable  to any  provider  of
lender-paid mortgage insurance is calculated, if applicable.

         NET WAC RATE CAP: With respect to the Senior  Certificates  (other than
the  Class  A-IO  Certificates)  and the  Mezzanine  Certificates,  (i) from and
including  the  Distribution  Date  in  July  2004  through  and  including  the
Distribution  Date in June 2005,  (a) the  weighted  average of the Net Mortgage
Rates of the 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  minus  4.50% per annum  times  (b) a  fraction,  the
numerator  of  which is the  Certificate  Notional  Balance  of the  Class  A-IO
Certificates  and the  denominator  of which is the aggregate  Stated  Principal
Balance  of the  Mortgage  Loans  as of the  first  day  of the  calendar  month
preceding  the  month in which  the  Distribution  Date  occurs,  (ii)  from and
including  the  Distribution  Date  in  July  2005  through  and  including  the
Distribution  Date in June 2006,  (a) the  weighted  average of the Net Mortgage
Rates of the Mortgage Loans,  weighted based on their Stated Principal  Balances
as of the  first  day of the  calendar  month

                                     - 26 -
<PAGE>

preceding the month in which the Distribution  Date occurs minus 3.50% per annum
times (b) a fraction, the numerator of which is the Certificate Notional Balance
of the Class A-IO  Certificates  and the  denominator  of which is the aggregate
Stated  Principal  Balance  of the  Mortgage  Loans as of the  first  day of the
calendar  month  preceding the month in which the  Distribution  Date occurs and
(iii) thereafter, the weighted average of the Net Mortgage Rates of the 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;
provided  that the Net WAC Rate Cap with  respect to the Class A-1  Certificates
shall  be  multiplied  by a  fraction,  the  numerator  of  which  is 30 and the
denominator of which is the actual number of days in the Accrual Period.

For  federal  income tax  purposes,  the Net WAC Rate Cap,  with  respect to any
Distribution   Date,   shall  be  expressed  as  the  weighted  average  of  the
Uncertificated  REMIC II  Pass-Through  Rates on each REMIC II Regular  Interest
(other than REMIC II Regular  Interest  LTII-IO-A and REMIC II Regular  Interest
LTII-IO-B) weighted on the basis of the Uncertificated  Principal Balance of the
REMIC II Regular Interests.

         NET WAC RATE  CARRYOVER  AMOUNT:  With respect the Senior  Certificates
(other than the Class A-IO Certificates) and the Mezzanine  Certificates and any
Distribution  Date on which the related  Pass-Through Rate is reduced by the Net
WAC Rate Cap, an amount  equal to the sum of (i) the excess of (x) the amount of
interest  such Class would have been  entitled  to receive on such  Distribution
Date if the  Pass-Through  Rate  applicable  to such  Class  would not have been
reduced by the Net WAC Rate Cap on such Distribution Date over (y) the amount of
interest  paid on such  Distribution  Date  plus (ii) the  related  Net WAC Rate
Carryover Amount for the previous Distribution Date not previously distributed.

         NET WAC RESERVE FUND:  Shall mean the segregated  non-interest  bearing
trust account  created and  maintained  by the Trustee  pursuant to Section 5.10
hereof.

         NON-BOOK-ENTRY  CERTIFICATE:  Any  Certificate  other than a Book-Entry
Certificate.

         NONRECOVERABLE  ADVANCE: Any portion of an Advance or Servicing Advance
previously  made  or  proposed  to be  made  by the  Servicer  pursuant  to this
Agreement or the Trustee as Successor Servicer, that, in the good faith judgment
of the Servicer or the Trustee as Successor  Servicer,  will not or, in the case
of a proposed Advance or Servicing Advance, would not, be ultimately recoverable
by it from  the  related  Mortgagor,  related  Liquidation  Proceeds,  Insurance
Proceeds or otherwise.

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

                                     - 27 -
<PAGE>

familiarity  with a  particular  subject)  or  (ii),  if  provided  for in  this
Agreement,  signed by a Authorized Servicer Representative,  as the case may be,
and delivered to the Depositor,  the Seller and/or the Trustee,  as the case may
be, as required by this Agreement.

         ONE-MONTH  LIBOR:  With  respect  to  any  Accrual  Period,   the  rate
determined  by the Trustee on the  related  Interest  Determination  Date on the
basis of the rate for  U.S.  dollar  deposits  for one  month  that  appears  on
Telerate  Screen  Page  3750 as of 11:00  a.m.  (London  time) on such  Interest
Determination  Date; provided that the parties hereto acknowledge that One-Month
LIBOR for the first  Accrual  Period  shall equal 1.10% per annum.  If such rate
does not  appear on such page (or such other  page as may  replace  that page on
that service,  or if such service is no longer  offered,  such other service for
displaying  One-Month LIBOR or comparable rates as may be reasonably selected by
the Trustee),  One-Month  LIBOR for the  applicable  Accrual  Period will be the
Reference Bank Rate. If no such quotations can be obtained by the Trustee and no
Reference  Bank Rate is  available,  One-Month  LIBOR  will be  One-Month  LIBOR
applicable to the preceding Accrual Period. The establishment of One-Month LIBOR
on each Interest Determination Date by the Trustee and the Trustee's calculation
of the rate of interest applicable to the Class A-1 Certificates for the related
Accrual Period shall, in the absence of manifest error, be final and binding.

         OPINION OF COUNSEL:  A written  opinion of counsel,  who may be counsel
for the Seller,  the  Depositor or the Servicer,  reasonably  acceptable to each
addressee of such opinion;  provided that with respect to Section 2.05,  7.05 or
11.01,  or the  interpretation  or  application  of the REMIC  Provisions,  such
counsel  must  (i) in fact  be  independent  of the  Seller,  Depositor  and the
Servicer,  (ii) not have any direct financial interest in the Seller,  Depositor
or the Servicer or in any affiliate of either,  and (iii) not be connected  with
the  Seller,  Depositor  or the  Servicer  as an  officer,  employee,  promoter,
underwriter, trustee, partner, director or person performing similar functions.

         OPTIONAL  TERMINATION:  The  termination  of  the  Trust  Fund  created
hereunder as a result of the  purchase of all of the Mortgage  Loans and any REO
Property pursuant to the last sentence of Section 10.01.

         OPTIONAL  TERMINATION  DATE: The first  Distribution  Date on which the
Trust Fund may be  terminated  at the option of the  Depositor  as  described in
Section 10.01.

         OTS: The Office of Thrift Supervision or any successor thereto.

         OUTSTANDING:  With  respect  to  the  Certificates  as of any  date  of
determination,  all Certificates  theretofore  executed and authenticated  under
this Agreement except:

                  (a)  Certificates  theretofore  canceled  by  the  Trustee  or
delivered to the Trustee for cancellation; and

                  (b)  Certificates  in  exchange  for which or in lieu of which
other  Certificates  have been executed and delivered by the Trustee pursuant to
this Agreement.

         OUTSTANDING MORTGAGE LOAN: As of any date of determination,  a Mortgage
Loan with a Stated Principal  Balance greater than zero that was not the subject
of a Principal  Prepayment in

                                     - 28 -
<PAGE>

full, and that did not become a Liquidated Loan, prior to the end of the related
Prepayment Period.

         OVERCOLLATERALIZATION  AMOUNT:  With respect to any Distribution  Date,
the  excess,  if any,  of (a) the  aggregate  Stated  Principal  Balances of the
Mortgage  Loans  as of the  last  day of the  related  Due  Period  over (b) the
aggregate  Certificate  Principal  Balance  of the Senior  Certificates  and the
Mezzanine  Certificates on such Distribution Date (after taking into account the
payment of 100% of the Principal Remittance Amount on such Distribution Date).

         OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any Distribution
Date, the excess, if any, of (a) the Required  Overcollateralization Amount over
(b) the Overcollateralization Amount on such Distribution Date.

         OVERCOLLATERALIZATION   REDUCTION   AMOUNT:   With   respect   to   any
Distribution  Date, the lesser of (x) the Principal  Remittance  Amount for such
Distribution Date and (y) the excess,  if any, of (i) the  Overcollateralization
Amount for such Distribution  Date over (ii) the Required  Overcollateralization
Amount for such Distribution Date.

         OWNERSHIP  INTEREST:  As to any Certificate,  any ownership interest in
such  Certificate  including  any  interest  in such  Certificate  as the Holder
thereof and any other interest  therein,  whether  direct or indirect,  legal or
beneficial.

         PASS-THROUGH  RATE:  With  respect to each Class of  Certificates,  the
applicable  Pass-Through  Rate for each  Class as set  forth in the  Preliminary
Statement.

         PERCENTAGE  INTEREST:  With respect to any  Certificate  of a specified
Class,  the Percentage  Interest set forth on the face thereof or the percentage
obtained by dividing the  Denomination  of such  Certificate by the aggregate of
the Denominations of all Certificates of such Class.

         PERMITTED  INVESTMENTS:  At any time,  any one or more of the following
obligations and securities:

                  (i) direct  obligations of, or obligations fully guaranteed as
         to timely  payment of principal  and interest by, the United  States or
         any agency  thereof,  provided  such  obligations  are  unconditionally
         backed by the full faith and credit of the United States;

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

                  (iii) [Reserved];

                  (iv)  commercial  or  finance  company  paper  which  is  then
         receiving  the highest  commercial  or finance  company paper rating of
         each  Rating  Agency,  or such  lower  rating as will not result in the
         downgrading   or  withdrawal  of  the  ratings  then  assigned  to  the

                                     - 29 -
<PAGE>

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

                  (v)  certificates  of  deposit,  demand or time  deposits,  or
         bankers'  acceptances  issued by any  depository  institution  or trust
         company  incorporated  under  the laws of the  United  States or of any
         state thereof and subject to  supervision  and  examination  by federal
         and/or  state  banking  authorities   (including  the  Trustee  in  its
         commercial banking capacity), provided that the commercial paper and/or
         long term unsecured debt obligations of such depository  institution or
         trust  company are then rated one of the two highest  long-term and the
         highest  short-term  ratings  of  each  such  Rating  Agency  for  such
         securities, or such lower ratings as will not result in the downgrading
         or withdrawal of the rating then  assigned to the  Certificates  by any
         Rating  Agency,  as  evidenced  by a signed  writing  delivered by each
         Rating Agency;

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

                  (vii) guaranteed  reinvestment  agreements issued by any bank,
         insurance company or other corporation  containing,  at the time of the
         issuance  of such  agreements,  such terms and  conditions  as will not
         result in the  downgrading or withdrawal of the rating then assigned to
         the  Certificates  by any such Rating Agency,  as evidenced by a signed
         writing delivered by each Rating Agency;

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

                  (ix) securities  (other than stripped bonds,  stripped coupons
         or  instruments  sold at a purchase price in excess of 115% of the face
         amount  thereof)  bearing  interest or sold at a discount issued by any
         corporation  incorporated  under the laws of the  United  States or any
         state thereof which,  at the time of such  investment,  have one of the
         two  highest  long term  ratings of each Rating  Agency,  or such lower
         rating  as will not  result in the  downgrading  or  withdrawal  of the
         rating  then  assigned to the  Certificates  by any Rating  Agency,  as
         evidenced by a signed writing delivered by each Rating Agency;

                  (x)  units  of  money  market  funds   registered   under  the
         Investment  Company Act of 1940  including  funds managed or advised by
         the Trustee or an affiliate  thereof  having a rating by S&P of AAAm-G,
         AAA-m, or AA-m, and if rated by Moody's, rated Aaa, Aa1 or Aa2;

                  (xi)  short  term  investment  funds  sponsored  by any  trust
         company  or  banking  association  incorporated  under  the laws of the
         United States or any state thereof  (including any such fund managed or
         advised by the Trustee or any affiliate  thereof)  which on the date of
         acquisition  has been rated by each Rating  Agency in their  respective
         highest  applicable  rating  category or such lower  rating as will not
         result in the

                                     - 30 -
<PAGE>

         downgrading   or  withdrawal  of  the  ratings  then  assigned  to  the
         Certificates  by each Rating  Agency,  as evidenced by a signed writing
         delivered by each Rating Agency; and

                  (xii)  such  other  investments   having  a  specified  stated
         maturity and bearing interest or sold at a discount  acceptable to each
         Rating  Agency as will not result in the  downgrading  or withdrawal of
         the rating then assigned to the  Certificates by any Rating Agency,  as
         evidenced  by a signed  writing  delivered  by each Rating  Agency,  as
         evidenced by a signed writing delivered by each Rating Agency;

provided,  however, that no instrument described hereunder shall evidence either
the  right  to  receive  (a)  only  interest  with  respect  to the  obligations
underlying such instrument or (b) both principal and interest  payments  derived
from  obligations  underlying  such  instrument  and the interest and  principal
payments  with  respect to such  instrument  provide a yield to  maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.

         PERMITTED TRANSFEREE:  Any person other than (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,  (ii)  a  foreign
government,  International  Organization  or any  agency or  instrumentality  of
either  of  the  foregoing,  (iii)  an  organization  (except  certain  farmers'
cooperatives  described  in  section  521 of the Code)  that is exempt  from tax
imposed by Chapter 1 of the Code  (including  the tax  imposed by section 511 of
the Code on unrelated  business  taxable  income) on any excess  inclusions  (as
defined  in  section  860E(c)(1)  of the  Code)  with  respect  to any  Residual
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership (other than a partnership that has any
direct or indirect  foreign  partners) or other entity (treated as a corporation
or a partnership  for federal income tax  purposes),  created or organized in or
under the laws of the  United  States,  any state  thereof  or the  District  of
Columbia,  an estate  whose  income from  sources  without the United  States is
includible  in gross  income  for United  States  federal  income  tax  purposes
regardless of its connection  with the conduct of a trade or business within the
United  States,  or a trust  if a court  within  the  United  States  is able to
exercise  primary  supervision over the  administration  of the trust and one or
more United States persons have authority to control all  substantial  decisions
of the trustor and (vi) any other Person based upon an Opinion of Counsel (which
shall not be an expense of the  Trustee)  that  states  that the  Transfer of an
Ownership  Interest in a Residual  Certificate to such Person may cause REMIC I,
REMIC  II or  REMIC  III to fail to  qualify  as a REMIC  at any  time  that any
Certificates   are   Outstanding.   The  terms  "United   States,"  "State"  and
"International  Organization"  shall have the meanings set forth in section 7701
of the Code or successor  provisions.  A  corporation  will not be treated as an
instrumentality  of the United  States or of any State or political  subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the  exception  of  Freddie  Mac, a majority  of its board of  directors  is not
selected by such government unit.

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

                                     - 31 -
<PAGE>

         PREPAYMENT ASSUMPTION:  The assumed rate of prepayment, as described in
the  Prospectus   Supplement   relating  to  each  Class  of  Publicly   Offered
Certificates.

         PREPAYMENT  CHARGE:  With  respect  to any  Principal  Prepayment,  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 Mortgage Loans
providing  for a  Prepayment  Charge  included  in the Trust  Fund on such date,
attached hereto as Exhibit K (including the prepayment  charge summary  attached
thereto).  The Depositor  shall deliver or cause the delivery of the  Prepayment
Charge  Schedule  to the  Servicer  and the  Trustee on the  Closing  Date.  The
Prepayment  Charge  Schedule  shall  set forth the  following  information  with
respect to each Prepayment Charge:

                  (i)   the Mortgage Loan identifying number;

                  (ii)  a code indicating the type of Prepayment Charge;

                  (iii) the date on which the first  Monthly  Payment was due on
                        the related Mortgage Loan;

                  (iv)  the term of the related Prepayment Charge;

                  (v)   the  original  Stated  Principal  Balance of the related
                        Mortgage Loan; and

                  (vi)  the Stated  Principal  Balance of the  related  Mortgage
                        Loan as of the Cut- off Date.

         PREPAYMENT INTEREST  SHORTFALL:  With respect to any Distribution Date,
for each  Mortgage  Loan that was the subject of a Principal  Prepayment in full
during the related Prepayment Period, (other than a Principal Prepayment in full
resulting  from the purchase of a Mortgage Loan pursuant to Section 2.02,  2.03,
3.26 or 10.01 hereof),  the amount, if any, by which (i) one month's interest at
the  applicable  Net  Mortgage  Rate on the  Stated  Principal  Balance  of such
Mortgage Loan  immediately  prior to such prepayment  exceeds (ii) the amount of
interest paid or collected in connection with such Principal Prepayment less the
sum of (a) the related  Servicing Fee and (b) the fee payable to any provider of
lender-paid mortgage insurance, if any.

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

         PRINCIPAL  DISTRIBUTION AMOUNT: With respect to each Distribution Date,
the sum of (i) the principal  portion of all scheduled  monthly  payments on the
Mortgage Loans due during the related Due Period,  whether or not received on or
prior to the  related  Determination  Date;  (ii) the  principal  portion of all
proceeds  received in respect of the  repurchase  of a Mortgage Loan (or, in the
case of a  substitution,  certain amounts  representing a principal  adjustment)
during the related Prepayment  Period;  (iii) the principal portion of all other
unscheduled  collections,  including

                                     - 32 -
<PAGE>

Insurance Proceeds,  condemnation  proceeds,  Liquidation  Proceeds,  Subsequent
Recoveries and all full and partial principal  prepayments,  received during the
related  Prepayment  Period, to the extent applied as recoveries of principal on
the  Mortgage  Loans,  (iv) the Extra  Principal  Distribution  Amount  for such
Distribution  Date MINUS (v) the amount of any  Overcollateralization  Reduction
Amount  for such  Distribution  Date and any  amounts  payable  or  reimbursable
therefrom to the Servicer or the Trustee  prior to  distributions  being made on
the  Certificates.  In no event  will the  Principal  Distribution  Amount  with
respect to any  Distribution  Date be (x) less than zero or (y) greater than the
then outstanding aggregate Certificate Principal Balance of the Publicly Offered
Certificates.

         PRINCIPAL FUNDS:  With respect to any  Distribution  Date, (i) the sum,
without duplication, of (a) all scheduled principal collected during the related
Due  Period,  (b) all  Advances  relating to  principal  made on or prior to the
Distribution  Account  Deposit  Date or,  with  respect  to the  Trustee  on the
Distribution Date, (c) Principal  Prepayments exclusive of prepayment charges or
penalties  collected  during the  related  Prepayment  Period,  (iii) the Stated
Principal  Balance  of each  Mortgage  Loan that was  repurchased  by the Seller
pursuant to Sections 2.02, 2.03 and 3.26, (d) the aggregate of all  Substitution
Adjustment  Amounts for the related  Determination  Date in connection  with the
substitution  of  Mortgage  Loans  pursuant to Section  2.03(b),  (e) amounts in
respect of principal paid by the Depositor  pursuant to Section  10.01,  (f) all
Liquidation  Proceeds and  Subsequent  Recoveries  collected  during the related
Prepayment  Period (to the  extent  such  Liquidation  Proceeds  and  Subsequent
Recoveries  relate to  principal),  in each case to the extent  remitted  by the
Servicer to the  Distribution  Account  pursuant to this  Agreement  and (g) all
Subsequent  Recoveries minus (ii) all amounts required to be reimbursed pursuant
to Sections 4.02,  4.05,  4.07,  5.08 and 9.05 or as otherwise set forth in this
Agreement.

         PRINCIPAL  PREPAYMENT:  Any Mortgagor  payment or other recovery of (or
proceeds  with  respect  to)  principal  on a  Mortgage  Loan  (including  loans
purchased or repurchased  under Sections 2.02, 2.03, 3.26 and 10.01 hereof) that
is received in advance of its  scheduled Due Date and is not  accompanied  by an
amount as to interest representing scheduled interest due on any Due Date in any
month or  months  subsequent  to the  month  of  prepayment.  Partial  Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.

         PRINCIPAL REMITTANCE AMOUNT: With respect to any Distribution Date, the
sum of the  amounts  listed in clauses (i) through  (iii) of the  definition  of
Principal  Distribution  Amount  net  of any  amounts  payable  or  reimbursable
therefrom to the Servicer, the Trustee or the Custodian.

         PRIVATE  CERTIFICATE:  Each  of  the  Class  C,  Class  P and  Class  R
Certificates.

         PROSPECTUS  SUPPLEMENT:  The Prospectus  Supplement dated June 23, 2004
relating to the offering of the Publicly Offered Certificates.

         PUBLICLY  OFFERED   CERTIFICATES:   The  Senior  Certificates  and  the
Mezzanine Certificates.

         PUD: A planned unit development.

                                     - 33 -
<PAGE>

         PURCHASE  PRICE:  With  respect to any  Mortgage  Loan  required  to be
repurchased  by the  Seller  pursuant  to  Section  2.02 or 2.03  hereof  and as
confirmed by an Officer's  Certificate from the Seller to the Trustee, an amount
equal  to the  sum of (i)  100%  of the  outstanding  principal  balance  of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable  Mortgage Rate through the first day of the month in which the
Purchase  Price  is to be  distributed  to  Certificateholders,  reduced  by any
portion of the Servicing  Fee,  Servicing  Advances and Advances  payable to the
purchaser  of the  Mortgage  Loan plus (iii) any costs and  damages of the Trust
Fund in  connection  with any  violation by such Mortgage Loan of any abusive or
predatory  lending  law,  including  any  expenses  incurred by the Trustee with
respect to such Mortgage Loan prior to the purchase thereof.

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

         REALIZED  LOSS:  With respect to each Mortgage Loan as to which a Final
Recovery  Determination  has been made,  an amount (not less than zero) equal to
(i) the Stated 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,  minus (iii) 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 Servicer pursuant to this Agreement.

         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
Stated  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,  minus (iii) the aggregate of
all unreimbursed Advances and Servicing Advances.

         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.

                                     - 34 -
<PAGE>

         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.

         In addition,  to the extent the 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  Subsequent  Recoveries
are  applied  to  reduce  the  Certificate  Principal  Balance  of any  Class of
Certificates on any Distribution Date.

         RECORD DATE: With respect to the Certificates (other than the Class A-1
Certificates)  and any  Distribution  Date,  the close of  business  on the last
Business Day of the month  preceding the month in which such  Distribution  Date
occurs. With respect to the Class A-1 Certificates and any Distribution Date, so
long as the Class A-1 Certificates are Book-Entry Certificates, the Business Day
preceding such  Distribution  Date, and otherwise,  the close of business on the
last Business Day of the month  preceding  the month in which such  Distribution
Date occurs.

         REFERENCE  BANKS:  Shall mean leading banks selected by the Trustee and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) which have been
designated  as  such  by the  Trustee  and  (iii)  which  are  not  controlling,
controlled by, or under common  control with,  the Depositor,  the Seller or the
Servicer.

         REFERENCE BANK RATE:  With respect to any Accrual Period shall mean the
arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple of
0.03125%,  of the offered rates for United States dollar  deposits for one month
that are quoted by the Reference  Banks as of 11:00 a.m., New York City time, on
the related Interest  Determination  Date to prime banks in the London interbank
market  for a  period  of one  month  in an  amount  approximately  equal to the
aggregate  Certificate  Principal Balance of the Class A-1 Certificates for such
Accrual  Period,  provided that at least two such  Reference  Banks provide such
rate. If fewer than two offered rates  appear,  the Reference  Bank Rate will be
the  arithmetic  mean,  rounded  upwards,  if  necessary,  to the nearest  whole
multiple of 0.03125%, of the rates quoted by one or more major banks in New York
City,  selected by the Trustee,  as of 11:00 a.m.,  New York City time,  on such
date for loans in United States  dollars to leading  European banks for a period
of one  month  in  amounts  approximately  equal  to the  aggregate  Certificate
Principal Balance of the Class A-1 Certificates for such Accrual Period.

         REGULAR CERTIFICATE: Any Certificate other than a Residual Certificate.

         RELIEF ACT: The  Servicemembers  Civil Relief Act, as amended from time
to time.

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

         REMIC I: 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

                                     - 35 -
<PAGE>

be made,  consisting  of (i) the Mortgage  Loans and all  interest  accruing and
principal  due with  respect  thereto  after the Cut-off  Date to the extent not
applied  in  computing  the  Cut-off  Date  Principal  Balance  thereof  and all
Prepayment Charges;  (ii) the Mortgage Files, (iii) the Custodial Account (other
than any amounts  representing any Servicer  Prepayment  Charge Payment Amount),
the Distribution  Account,  the Class P Certificate Account and such assets that
are  deposited  therein  from time to time,  together  with any and all  income,
proceeds  and  payments  with  respect  thereto;  (iv)  property  that secured a
Mortgage Loan and has been acquired by foreclosure,  deed in lieu of foreclosure
or  otherwise;  (v) the  mortgagee's  rights under the  Insurance  Policies with
respect to the Mortgage Loans;  (vi) the rights under the Mortgage Loan Purchase
Agreement,  and (vii) all  proceeds  of the  foregoing,  including  proceeds  of
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property.  Notwithstanding the foregoing,  however,  REMIC I specifically
excludes all payments and other collections of principal and interest due on the
Mortgage Loans on or before the Cut-off Date and all Prepayment  Charges payable
in connection with Principal Prepayments made before the Cut-off Date.

         REMIC I REGULAR  INTEREST LTI-1:  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I  Regular  Interest  LTI-1  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR INTEREST LTI-IO-A: One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  LTI-IO-A  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR INTEREST LTI-IO-B: One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  LTI-IO-B  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR INTEREST LTI-IO-C: One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  LTI-IO-C  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR INTEREST LTI-IO-D: One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  LTI-IO-D  shall  accrue
interest at the related  Uncertificated REMIC

                                     - 36 -
<PAGE>

I  Pass-Through  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  Principal  Balance as set
forth in the Preliminary Statement hereto.

         REMIC I REGULAR INTEREST LTI-IO-E: One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  LTI-IO-E  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR INTEREST LTI-IO-F: One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  LTI-IO-F  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR INTEREST LTI-IO-G: One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  LTI-IO-G  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR INTEREST LTI-IO-H: One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  LTI-IO-H  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR  INTEREST LTI-P:  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I  Regular  Interest  LTI-P  shall  accrue
interest at the related  Uncertificated REMIC I Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC I REGULAR  INTERESTS:  REMIC I Regular  Interest  LTI-1,  REMIC I
Regular Interest LTI-IO-A,  REMIC I Regular Interest  LTI-IO-B,  REMIC I Regular
Interest LTI-IO-C,  REMIC I Regular Interest LTI-IO-D,  REMIC I Regular Interest
LTI-IOE,  REMIC I Regular Interest LTI-IO-F,  REMIC I Regular Interest LTI-IO-G,
REMIC I Regular Interest LTI-IO-H and REMIC I Regular Interest LTI-P.

         REMIC II: The segregated pool of assets  consisting of all of the REMIC
I Regular Interests  conveyed in trust to the Trustee,  for the benefit of REMIC
III,  as holder of the REMIC

                                     - 37 -
<PAGE>

II Regular  Interests,  and the Class R-2 Interest pursuant to Section 2.07, and
all amounts deposited  therein,  with respect to which a separate REMIC election
is to be made.

         REMIC  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  Mortgage  Loans  and  REO  Properties  then
outstanding and (ii) the REMIC II Remittance Rate for REMIC II Regular  Interest
II-LTAA minus the Marker Rate, divided by (b) 12.

         REMIC II  OVERCOLLATERALIZATION  AMOUNT:  With  respect  to any date of
determination,  (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC II  Regular  Interests  minus  (ii) the  aggregate  of the  Uncertificated
Principal  Balances  of REMIC II  Regular  Interest  LTII-A1,  REMIC II  Regular
Interest LTII-A2, REMIC II Regular Interest LTII-A3A,  REMIC II Regular Interest
LTII-A3B,  REMIC II Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5,
REMIC II Regular Interest LTII-A6,  REMIC II Regular Interest LTII-M1,  REMIC II
Regular Interest LTII-M2, REMIC II Regular Interest LTII-M3 and REMIC II Regular
Interest LTII-P, in each case as of such date of determination.

         REMIC  II  PRINCIPAL  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  Mortgage  Loans  and  REO  Properties  then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated  Principal Balances of REMIC II Regular Interest
LTII-A1,  REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3A,
REMIC II Regular Interest LTII-A3B,  REMIC II Regular Interest LTII-A4, REMIC II
Regular Interest LTII-A5,  REMIC II Regular Interest  LTII-A6,  REMIC II Regular
Interest  LTII-M1,  REMIC II  Regular  Interest  LTII-M2  and  REMIC II  Regular
Interest  LTII-M3  and  the  denominator  of  which  is  the  aggregate  of  the
Uncertificated Principal Balances of REMIC II Regular Interest LTII-A1, REMIC II
Regular Interest LTII-A2,  REMIC II Regular Interest LTII-A3A,  REMIC II Regular
Interest LTII-A3B,  REMIC II Regular Interest LTII-A4, REMIC II Regular Interest
LTII-A5,  REMIC II Regular Interest LTII-A6,  REMIC II Regular Interest LTII-M1,
REMIC II Regular Interest  LTII-M2,  REMIC II Regular Interest LTII-M3 and REMIC
II Regular Interest LTII-ZZ.

         REMIC II REGULAR INTERESTS: REMIC II Regular Interest LTII-AA, REMIC II
Regular Interest LTII-A1,  REMIC II Regular Interest  LTII-A2,  REMIC II Regular
Interest LTII-A3A, REMIC II Regular Interest LTII-A3B, REMIC II Regular Interest
LTII-A4,  REMIC II Regular Interest LTII-A5,  REMIC II Regular Interest LTII-A6,
REMIC II Regular Interest LTII-M1,  REMIC II Regular Interest LTII-M2,  REMIC II
Regular Interest LTII-M3, REMIC II Regular Interest LTII-IO-A,  REMIC II Regular
Interest  LTII-IO-B,  REMIC II  Regular  Interest  LTII-ZZ  and REMIC II Regular
Interest LTII-P.

         REMIC II REGULAR INTEREST LTII-AA: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-AA  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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

                                     - 38 -
<PAGE>

equal  to its  initial  Uncertificated  Principal  Balance  as set  forth in the
Preliminary Statement hereto.

         REMIC II REGULAR INTEREST LTII-A1: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-A1  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC II REGULAR INTEREST LTII-A2: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-A2  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC   II   REGULAR   INTEREST   LTII-A3A:   One   of   the   separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest LTII-A3A
shall accrue interest at the related  Uncertificated  REMIC II Pass-Through 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  Principal  Balance  as set  forth in the
Preliminary Statement hereto.

         REMIC   II   REGULAR   INTEREST   LTII-A3B:   One   of   the   separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest LTII-A3B
shall accrue interest at the related  Uncertificated  REMIC II Pass-Through 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  Principal  Balance  as set  forth in the
Preliminary Statement hereto.

         REMIC II REGULAR INTEREST LTII-A4: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-A4  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC II REGULAR INTEREST LTII-A5: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-A5  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

                                     - 39 -
<PAGE>

         REMIC II REGULAR INTEREST LTII-A6: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-A6  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC   II   REGULAR   INTEREST   LTII-IO-A:   One  of   the   separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated  as a  Regular  Interest  in  REMIC  II.  REMIC II  Regular  Interest
LTII-IO-A  shall accrue interest as provided herein and shall not be entitled to
distributions of principal.

         REMIC   II   REGULAR   INTEREST   LTII-IO-B:   One  of   the   separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated  as a  Regular  Interest  in  REMIC  II.  REMIC II  Regular  Interest
LTII-IO-B  shall accrue interest as provided herein and shall not be entitled to
distributions of principal.

         REMIC II REGULAR INTEREST LTII-M1: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-M1  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC II REGULAR INTEREST LTII-M2: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-M2  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC II REGULAR INTEREST LTII-M3: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-M3  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC II REGULAR INTEREST LTII-P: One of the separate  non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II.  REMIC II Regular  Interest  LTII-P  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

                                     - 40 -
<PAGE>

         REMIC II REGULAR INTEREST LTII-ZZ: One of the separate non-certificated
beneficial  ownership interests in REMIC II issued hereunder and designated as a
Regular  Interest in REMIC II. REMIC II Regular  Interest  LTII-ZZ  shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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  Principal  Balance  as set  forth in the  Preliminary  Statement
hereto.

         REMIC II REGULAR  INTEREST  LTII-ZZ MAXIMUM  INTEREST  DEFERRAL AMOUNT:
With respect to any Distribution Date, the excess of (i) accrued interest at the
Uncertificated  REMIC II  Pass-Through  Rate  applicable  to  REMIC  II  Regular
Interest  LTII-ZZ  for  such  Distribution  Date  on  a  balance  equal  to  the
Uncertificated  Principal Balance of REMIC II Regular Interest LTII-ZZ minus the
REMIC II Overcollateralization  Amount, in each case for such Distribution Date,
over (ii) Uncertificated  Accrued Interest on REMIC II Regular Interest LTII-A1,
REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3A,  REMIC II
Regular Interest LTII-A3B,  REMIC II Regular Interest LTII-A4,  REMIC II Regular
Interest LTII-A5,  REMIC II Regular Interest LTII-A6,  REMIC II Regular Interest
LTII-M1, REMIC II Regular Interest LTII-M2 and REMIC II Regular Interest LTII-M3
for such Distribution Date, with the rate on each such REMIC II Regular Interest
subject to a cap equal to the related Pass-Through Rate.

         REMIC II  REQUIRED  OVERCOLLATERALIZATION  AMOUNT:  1% of the  Required
Overcollateralization 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
REMIC III Certificateholders pursuant to Section 2.09, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.

         REMIC III CERTIFICATE: Any Regular Certificate or Class R Certificate.

         REMIC III CERTIFICATEHOLDER: The Holder of any REMIC III Certificate.

         REMIC OPINION:  Shall mean an Opinion of Counsel to the effect that the
proposed action will not have an adverse affect on any REMIC created hereunder.

         REMIC PROVISIONS:  Provisions of the federal income tax law relating to
real estate mortgage investment conduits,  which appear at sections 860A through
860G of  Subchapter  M of Chapter 1 of the Code,  and  related  provisions,  and
proposed,  temporary and final  regulations and published  rulings,  notices and
announcements  promulgated  thereunder,  as the  foregoing may be in effect from
time to time as well as provisions of applicable state laws.

         REMIC REGULAR INTEREST:  A REMIC I Regular  Interest,  REMIC II Regular
Interest or a Regular Certificate.

         REMITTANCE  DATE:  Shall mean the 18th day of the month and if such day
is not a Business Day, the immediately succeeding Business Day.

                                     - 41 -
<PAGE>

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

         REPLACEMENT  MORTGAGE  LOAN: A Mortgage  Loan or Mortgage  Loans in the
aggregate  substituted by the Seller for a Deleted Mortgage Loan, which must, on
the date of such substitution, as confirmed in a Request for Release, (i) have a
Stated  Principal  Balance,  after  deduction  of the  principal  portion of the
Scheduled  Payment due in the month of  substitution,  not in excess of, and not
less than 90% of, the Stated  Principal  Balance of the Deleted  Mortgage  Loan;
(ii) have a fixed  Mortgage  Rate not less than or more than 1% per annum higher
than the  Mortgage  Rate of the Deleted  Mortgage  Loan;  (iii) have the same or
higher credit quality  characteristics  than that of the Deleted  Mortgage Loan;
(iv) have a  Loan-to-Value  Ratio no higher  than that of the  Deleted  Mortgage
Loan;  (v) have a remaining  term to maturity no greater than (and not more than
one  year  less  than)  that of the  Deleted  Mortgage  Loan;  (vi)  not  permit
conversion of the Mortgage Rate from a fixed rate to a variable  rate;  (vii) be
secured by a first lien on the related Mortgaged Property; (viii) constitute the
same occupancy type as the Deleted Mortgage Loan or be owner occupied;  and (ix)
comply with each  representation  and warranty  set forth in the  Mortgage  Loan
Purchase Agreement.

         REQUEST FOR  RELEASE:  The Request for Release to be  submitted  by the
Seller or the Servicer to the Custodian  substantially in the form of Exhibit H.
Each  Request  for  Release  furnished  to the  Custodian  by the  Seller or the
Servicer  shall be in  duplicate  and shall be  executed  by an  officer of such
Person or a Authorized Servicer Representative (or, if furnished  electronically
to the  Custodian,  shall be deemed to have been sent and executed by an officer
of such Person or a Authorized Servicer Representative) of the Servicer.

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

         REQUIRED OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution
Date following the Closing Date, an amount equal to $1,711,292.

         REQUIRED   OVERCOLLATERALIZATION   PERCENTAGE:   With  respect  to  any
Distribution Date, a percentage equal to (a) the Required  Overcollateralization
Amount  divided by (b) the aggregate  Stated  Principal  Balance of the Mortgage
Loans as of the last day of the  related  Due  Period  (after  giving  effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced,  and unscheduled  collections of principal received during
the related  Prepayment Period, and after reduction for Realized Losses incurred
during the related Prepayment Period).

         RESIDUAL CERTIFICATES: Any one of the Class R Certificates.

         RESPONSIBLE  OFFICER:  With respect to the Trustee, any Vice President,
any Assistant Vice President,  the Secretary, any Assistant Secretary, any Trust
Officer,  any other officer  customarily  performing  functions similar to those
performed  by any of the above  designated  officers  or other  officers  of the
Trustee  specified  by  the  Trustee  having  direct  responsibility  over  this
Agreement and customarily performing functions similar to those performed by any
one of the designated

                                     - 42 -
<PAGE>

officers,  as to whom,  with  respect to a  particular  matter,  such  matter is
referred  because  of such  officer's  knowledge  of and  familiarity  with  the
particular subject.

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

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

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

         SELLER: Nomura Credit & Capital, Inc., a Delaware corporation,  and its
successors  and assigns,  in its capacity as seller of the Mortgage Loans to the
Depositor.

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

         SENIOR INTEREST  DISTRIBUTION  AMOUNT: With respect to any Distribution
Date will be equal to the  Interest  Distribution  Amount for such  Distribution
Date for the Senior  Certificates and the Interest Carry Forward Amount, if any,
for such Distribution Date for the Senior Certificates.

         SENIOR PRINCIPAL  DISTRIBUTION AMOUNT: With respect to any Distribution
Date which  occurs (i) prior to the  Stepdown  Date or on or after the  Stepdown
Date if a Trigger Event is in effect, the Principal  Distribution Amount or (ii)
on or after  the  Stepdown  Date if a Trigger  Event is not in  effect  for that
Distribution Date, the lesser of:

         the Principal Distribution Amount for that Distribution Date; and

         the excess of (A) the aggregate  Certificate  Principal  Balance of the
Senior  Certificates  immediately  prior to that  Distribution Date over (B) the
positive  difference  between (i) the aggregate Stated Principal  Balance of the
Mortgage Loans as of the last day of the related Due Period (after reduction for
Realized  Losses  incurred  during the related  Prepayment  Period) and (ii) the
product of (x) the aggregate Stated  Principal  Balance of the Mortgage Loans as
of the last day of the related Due Period (after  reduction for Realized  Losses
incurred during the related Prepayment Period) and (y) the sum of 10.50% and the
Required Overcollateralization Percentage.

         SERVICER:  GMAC Mortgage Corporation or any successor thereto appointed
hereunder in connection  with the servicing and  administration  of the Mortgage
Loans.

         SERVICER'S ASSIGNEE: As defined in Section 5.01(b)(ii).

         SERVICER DEFAULT: As defined in Section 8.01.

         SERVICER  PREPAYMENT  CHARGE PAYMENT AMOUNT:  The amount payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.01.

                                     - 43 -
<PAGE>

         SERVICING  ADVANCES:  All  customary,  reasonable and necessary "out of
pocket" costs and expenses  (including  reasonable  legal fees)  incurred in the
performance by the Servicer of its servicing obligations  hereunder,  including,
but not limited to, the cost of (i) the preservation,  restoration,  inspection,
valuation  and  protection  of a Mortgaged  Property,  (ii) any  enforcement  or
judicial  proceedings,   including  foreclosures,  and  including  any  expenses
incurred in relation to any such  proceedings that result from the Mortgage Loan
being registered in the MERS(R) System,  (iii) the management and liquidation of
any REO Property (including,  without limitation,  realtor's commissions),  (iv)
compliance with any obligations  under Section 3.07 hereof to cause insurance to
be maintained and (v) payment of taxes.

         SERVICING FEE: As to each Mortgage Loan and any  Distribution  Date, an
amount  equal to 1/12th  of the  Servicing  Fee Rate  multiplied  by the  Stated
Principal  Balance of such  Mortgage  Loan as of the last day of the related Due
Period or, in the event of any payment of interest that  accompanies a Principal
Prepayment  in  full  during  the  related  Due  Period  made  by the  Mortgagor
immediately prior to such prepayment,  interest at the Servicing Fee Rate on the
same  Stated  Principal  Balance of such  Mortgage  Loan used to  calculate  the
payment of interest on such Mortgage Loan.

         SERVICING FEE RATE:  0.25% per annum.

         STARTUP DAY: The Startup Day for each REMIC formed  hereunder  shall be
the Closing Date.

         STATED PRINCIPAL BALANCE:  With respect to any Mortgage Loan or related
REO Property and any  Distribution  Date,  the Cut-off  Date  Principal  Balance
thereof minus the sum of (i) the principal portion of the Scheduled Payments due
with respect to such  Mortgage  Loan during each Due Period ending prior to such
Distribution Date (and  irrespective of any delinquency in their payment),  (ii)
all Principal  Prepayments  with respect to such Mortgage Loan received prior to
or during the related  Prepayment  Period,  and all Liquidation  Proceeds to the
extent  applied by the Servicer as recoveries  of principal in  accordance  with
Section 3.09 of this  Agreement  with respect to such Mortgage  Loan,  that were
received  by the  Servicer  as of the close of  business  on the last day of the
Prepayment  Period  related  to such  Distribution  Date and (iii) any  Realized
Losses on such Mortgage Loan incurred during the related  Prepayment Period. The
Stated Principal Balance of a Liquidated Loan equals zero.

         STEPDOWN  DATE:  The earlier to occur of (1) the  Distribution  Date on
which the aggregate Certificate Principal Balance of the Senior Certificates has
been reduced to zero and (2) the later to occur of (x) the Distribution  Date in
July 2007 and (y) the first  Distribution  Date on which the Credit  Enhancement
Percentage of the Senior  Certificates  (calculated  for this purpose only after
taking into account  distributions of principal on the Mortgage Loans, but prior
to any distribution of the Principal  Distribution  Amount to the holders of the
Certificates  then entitled to  distributions  of principal on the  Distribution
Date) is greater than or equal to approximately 12.00%.

         SUBSEQUENT  RECOVERIES:  Shall mean all amounts in respect of principal
received  by the  Servicer  on a  Mortgage  Loan for which a  Realized  Loss was
previously incurred.

                                     - 44 -
<PAGE>

         SUBSERVICING AGREEMENT: Any agreement entered into between the Servicer
and a subservicer  with respect to the subservicing of any Mortgage Loan subject
to this Agreement by such subservicer.

         SUBSTITUTION  ADJUSTMENT  AMOUNT:  The  meaning  ascribed  to such term
pursuant to Section 2.03(d).

         SUCCESSOR  SERVICER:  The  Trustee  or any  successor  to the  Servicer
appointed pursuant to Section 8.02 after the occurrence of a Servicer Default or
upon the resignation of the Servicer pursuant to this Agreement.

         TAX MATTERS  PERSON:  The person  designated as "tax matters person" in
the manner  provided under Treasury  regulation  ss.  1.860F-4(d)  and temporary
Treasury regulation ss. 301.6231(a)(7)-1T. The holder of the greatest Percentage
Interest in a Class of Residual Certificates shall be the Tax Matters Person for
the related REMIC.  The Trustee,  or any successor  thereto or assignee  thereof
shall  serve as tax  administrator  hereunder  and as agent for the  related Tax
Matters Person.

         TRANSFER AFFIDAVIT: As defined in Section 6.02(c).

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

         TRIGGER EVENT:  With respect to any Distribution  Date, a Trigger Event
is in effect if (x) the percentage obtained by dividing (i) the aggregate Stated
Principal  Balance  of  Mortgage  Loans  delinquent  60 days or more  (including
Mortgage  Loans in  foreclosure or discharged in bankruptcy or any REO Property)
by (ii) the aggregate  Stated  Principal  Balance of the Mortgage Loans, in each
case,  as of the last day of the  previous  calendar  month,  exceeds 60% of the
Credit  Enhancement   Percentage  of  the  Senior  Certificates  for  the  prior
Distribution Date, or (y) the aggregate amount of Realized Losses incurred since
the Cut-off Date  through the last day of the related Due Period  divided by the
aggregate Stated Principal  Balance of the Mortgage Loans as of the Cut-off Date
exceeds  the  applicable  percentages  set  forth  below  with  respect  to such
Distribution Date:

                     DISTRIBUTION DATE                              PERCENTAGE
                     -----------------                              ----------

July 2007 to June 2008..................................              0.90%
July 2008 to June 2009..................................              1.15%
July 2009 to June 2010..................................              1.45%
July 2010 to June 2011..................................              1.65%
July 2011 and thereafter................................              1.85%

         TRUST FUND:  Collectively,  the assets of REMIC I, REMIC II,  REMIC III
and the Net WAC Reserve Fund.

         TRUSTEE:  JPMorgan Chase Bank, a New York banking  corporation,  not in
its individual  capacity,  but solely in its capacity as trustee for the benefit
of the Certificateholders  under this Agreement,  and any successor thereto, and
any corporation or national banking association

                                     - 45 -
<PAGE>

resulting  from or  surviving  any  consolidation  or  merger to which it or its
successors may be a party and any successor  trustee as may from time to time be
serving as successor trustee hereunder.

         UNCERTIFICATED  ACCRUED INTEREST:  With respect to each  Uncertificated
REMIC Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related  Uncertificated  Pass-Through Rate on the Uncertificated
Principal  Balance or  Uncertificated  Notional Amount,  as applicable,  of such
REMIC Regular Interest.  In each case,  Uncertificated  Accrued Interest will be
reduced by any Prepayment  Interest  Shortfalls  and  shortfalls  resulting from
application of the Relief Act (allocated to such REMIC Regular  Interests as set
forth in Sections 1.02 and 5.07).

         UNCERTIFICATED  NOTIONAL  AMOUNT:  With  respect  to REMIC  II  Regular
Interest  LTII-IO-A  and  REMIC  II  Regular  Interest  LTII-IO-B  and (i)  each
Distribution  Date from and including the 1st  Distribution to and including the
6th Distribution Date, the aggregate  Uncertificated Principal Balances of REMIC
I Regular Interest LTI-IO-A through REMIC I Regular Interest LTI-IO-H, (ii) each
Distribution  Date from and including the 7th  Distribution to and including the
10th Distribution Date, the aggregate Uncertificated Principal Balances of REMIC
I Regular Interest  LTI-IO-B through REMIC I Regular  Interest  LTI-IO-H,  (iii)
each  Distribution  Date from and  including the 11th  Distribution  Date to and
including the 13th  Distribution  Date, the aggregate  Uncertificated  Principal
Balances of REMIC I Regular  Interest  LTI-IO-C through REMIC I Regular Interest
LTI-IO-H,  (iv) each  Distribution Date from and including the 14th Distribution
Date to and including the 15th Distribution  Date, the aggregate  Uncertificated
Principal  Balances of REMIC I Regular Interest LTI-IO-D through REMIC I Regular
Interest  LTI-IO-H,  (v) each  Distribution  Date  from and  including  the 16th
Distribution  to  and  including  the  19th  Distribution  Date,  the  aggregate
Uncertificated  Principal  Balances of REMIC I Regular Interest LTI-IO-E through
REMIC I  Regular  Interest  LTI-IO-H,  (vi)  each  Distribution  Date  from  and
including the 20th Distribution to and including the 21st Distribution Date, the
aggregate Uncertificated Principal Balances of REMIC I Regular Interest LTI-IO-F
through REMIC I Regular Interest LTI-IO-H, (vii) each Distribution Date from and
including the 22nd Distribution to and including the 23rd Distribution Date, the
aggregate Uncertificated Principal Balances of REMIC I Regular Interest LTI-IO-G
and REMIC I Regular Interest  LTI-IO-H,  and (viii) the 24th Distribution  Date,
the  aggregate  Uncertificated  Principal  Balance  of REMIC I Regular  Interest
LTI-IO-H, and (ix) each Distribution Date thereafter, $0.

         UNCERTIFICATED  PRINCIPAL  BALANCE:  With respect to each REMIC Regular
Interest  (other than REMIC II Regular  Interest  LTII-IO-A and REMIC II Regular
Interest  LTII-IO-B),  the  principal  amount  of such  REMIC  Regular  Interest
outstanding  as of any  date  of  determination.  As of the  Closing  Date,  the
Uncertificated  Principal  Balance of each REMIC  Regular  Interest  (other than
REMIC I Regular  Interest  LTII-IO-A  and REMIC II Regular  Interest  LTII-IO-B)
shall  equal the amount  set forth in the  Preliminary  Statement  hereto as its
initial  Uncertificated  Principal  Balance.  On  each  Distribution  Date,  the
Uncertificated Principal Balance of each REMIC Regular Interest shall be reduced
by all  distributions  of principal made on such REMIC Regular  Interest on such
Distribution  Date  pursuant to Sections 5.07 and 5.08 and, if and to the extent
necessary and appropriate, shall be further reduced on such Distribution Date by
Realized  Losses as  provided  in  Sections  5.07 and 5.08.  The  Uncertificated
Principal  Balance of each

                                     - 46 -
<PAGE>

REMIC Regular  Interest shall never be less than zero.  REMIC I Regular Interest
LTII-IO will not have an Uncertificated Principal Balance.

         UNCERTIFICATED REMIC I PASS-THROUGH RATE: A per annum rate equal to the
average of the Net Mortgage  Rates of the Mortgage  Loans as of the first day of
the related Due Period,  weighted on the basis of the Stated Principal  Balances
as of the first day of the related Due Period.

UNCERTIFICATED  REMIC II  PASS-THROUGH  RATE:  With  respect to REMIC II Regular
Interest LTII-AA,  REMIC II Regular Interest LTII-A1,  REMIC II Regular Interest
LTII-A2,  REMIC  II  Regular  Interest  LTII-A3A,   REMIC  II  Regular  Interest
LTII-A-3B, REMIC II Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5,
REMIC II Regular Interest LTII-A6,  REMIC II Regular Interest LTII-M1,  REMIC II
Regular Interest LTII-M2, REMIC II Regular Interest LTII-M3 and REMIC II Regular
Interest  LTII-ZZ,  a per  annum  rate  (but not less  than  zero)  equal to the
weighted  average of: (x) with respect to REMIC I Regular  Interest  LTI-1,  the
Uncertificated  REMIC I Pass-Through  Rate for such REMIC I Regular Interest for
each such  Distribution  Date, and (y) with respect to REMIC I Regular  Interest
LTI-IO-A through REMIC I Regular Interest  LTI-IO-H for each  Distribution  Date
listed below, the weighted average of the rates listed below for each such REMIC
I Regular  Interest  listed below,  weighted on the basis of the  Uncertificated
Principal Balance of each such REMIC I Regular Interest:
<TABLE>
<CAPTION>
-------------------- -------------------------------- -------------------------------------------------------

 DISTRIBUTION DATE      REMIC I REGULAR INTERESTS                              RATE

-------------------- -------------------------------- -------------------------------------------------------
<S>                  <C>                              <C>
         1           LTI-IO-A through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
         2           LTI-IO-A through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
         3           LTI-IO-A through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
         4           LTI-IO-A through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
         5           LTI-IO-A through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
         6           LTI-IO-A through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
         7           LTI-IO-B through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A                         Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
         8           LTI-IO-B through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A                         Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
         9           LTI-IO-B through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A                         Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        10           LTI-IO-B through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A                         Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        11           LTI-IO-C through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A and LTI-IO-B            Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        12           LTI-IO-C through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      4.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A and LTI-IO-B            Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        13           LTI-IO-C through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A and LTI-IO-B            Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        14           LTI-IO-D through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-C        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        15           LTI-IO-D through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-C        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        16           LTI-IO-E through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-D        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        17           LTI-IO-B5 through LTI-IO-H       (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-D        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        18           LTI-IO-E through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-D        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        19           LTI-IO-F through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-E        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        20           LTI-IO-F through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-E        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
</TABLE>

                                     - 47 -
<PAGE>

<TABLE>
<CAPTION>
-------------------- -------------------------------- -------------------------------------------------------

 DISTRIBUTION DATE      REMIC I REGULAR INTERESTS                              RATE

-------------------- -------------------------------- -------------------------------------------------------
<S>                  <C>                              <C>
        21           LTI-IO-F through LTI-IO-H        (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-E        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        22           LTI-IO-G and LTI-IO-H            (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-F        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        23           LTI-IO-G and LTI-IO-H            (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-F        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
        24           LTI-IO-H                         (a) Uncertificated  REMIC I Pass-Through Rate over (b)
                                                      3.50%
-------------------- -------------------------------- -------------------------------------------------------
                     LTI-IO-A through LTI-IO-G        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
 25 and thereafter   LTI-IO-A through LTI-IO-H        Uncertificated REMIC I Pass-Through Rate
-------------------- -------------------------------- -------------------------------------------------------
</TABLE>

With respect to REMIC II Regular  Interest  LTII-IO-A,  (i) for the first twelve
distribution  dates, 1.00% and (ii) thereafter,  0.00%. With respect to REMIC II
Regular Interest  LTII-IO-B,  (i) for the first twenty-four  distribution dates,
3.50% and (ii) thereafter, 0.00%.

         UNCERTIFICATED  REMIC REGULAR  INTEREST:  The REMIC I Regular Interests
and the REMIC II Regular Interests.

         VOTING RIGHTS: The portion of the voting rights of all the Certificates
that is  allocated  to any  Certificate  for  purposes of the voting  provisions
hereunder.  Voting Rights shall be allocated (i) 93% to the Certificates  (other
than the Class A-IO, Class C, Class P and the Residual Certificates), (ii) 3% to
the Class C Certificates,  (iii) 1% to the Class P Certificates,  (iv) 1% to the
Class R  Certificates  and  (v) 2% to the  Class  A-IO  Certificates  until  the
Distribution  Date in June 2006 and thereafter  such percentage of voting rights
shall be allocated to the  remaining  Classes of Publicly  Offered  Certificates
with the allocation among the  Certificates  other than the Class A-IO, Class C,
Class  P and  Class  R  Certificates  to be in  proportion  to  the  Certificate
Principal Balance of each Class relative to the Certificate Principal Balance of
all other such Classes.  Voting Rights will be allocated among the  Certificates
of each such Class in accordance with their respective Percentage Interests.

         Section 1.02      ALLOCATION OF CERTAIN INTEREST SHORTFALLS.

         For purposes of  calculating  the amount of the  Interest  Distribution
Amount  for  the  Senior  Certificates,   Mezzanine  Certificates  and  Class  C
Certificates  for any  Distribution  Date,  (1) the aggregate  amount of any Net
Interest  Shortfalls in respect of the Mortgage Loans for any Distribution  Date
shall shall first reduce the Interest  Distribution  Amount payable to the Class
M-3 Certificates, second, reduce the Interest Distribution Amount payable to the
Class M-2 Certificates,  third, reduce the Interest  Distribution Amount payable
to the Class M-1  Certificates  and  fourth,  reduce the  Interest  Distribution
Amount payable to the Senior 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,  as applicable of each such  Certificate and (2) the aggregate amount of
any Realized  Losses  allocated to the Mezzanine  Certificates  and Net WAC Rate
Carryover  Amount  paid to the Senior  Certificates  (other  than the Class A-IO
Certificates), and the Mezzanine Certificates incurred for any Distribution Date
shall be allocated to the Class C  Certificates  based on, and to the extent of,
one month's interest at the then applicable respective  Pass-Through Rate on the
Certificate Principal Balance thereof on any Distribution Date.

                                     - 48 -
<PAGE>

         For  purposes  of  calculating  the  amount of  Uncertificated  Accrued
Interest  for the REMIC I  Regular  Interests  for any  Distribution  Date,  the
aggregate  amount of any Net  Interest  Shortfalls  incurred  in  respect of the
Mortgage Loans for any  Distribution  Date shall be allocated  first, to REMIC I
Regular  Interest LTI-1 and REMIC I Regular Interest LTI-P, to the extent of one
month's  interest  at the  then  applicable  respective  Uncertificated  REMIC I
Pass-Through Rate on the  Uncertificated  Principal Balance of each such REMIC I
Regular  Interest;  and then,  to REMIC I  Regular  Interest  LTI-IO-A,  REMIC I
Regular Interest LTI-IO-B,  REMIC I Regular Interest  LTI-IO-C,  REMIC I Regular
Interest LTI-IO-D,  REMIC I Regular Interest LTI-IO-E,  REMIC I Regular Interest
LTI-IO-F,  REMIC I  Regular  Interest  LTI-IO-G  and  REMIC I  Regular  Interest
LTI-IO-H,  in each  case to the  extent  of one  month's  interest  at the  then
applicable respective Uncertificated REMIC I Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC I Regular Interest.

         For  purposes  of  calculating  the  amount of  Uncertificated  Accrued
Interest  for the REMIC II Regular  Interests  for any  Distribution  Date,  the
aggregate  amount of any Net  Interest  Shortfalls  incurred  in  respect of the
Mortgage  Loans  for  any  Distribution   Date  shall  be  allocated  first,  to
Uncertificated Accrued Interest payable to REMIC II Regular Interest LTII-AA and
REMIC II Regular  Interest  LTII-ZZ up to an aggregate amount equal to the REMIC
II Interest Loss Allocation  Amount,  98% and 2%,  respectively,  and thereafter
among REMIC II Regular  Interest  LTII-A1,  REMIC II Regular  Interest  LTII-A2,
REMIC II Regular Interest LTII-A3A, REMIC II Regular Interest LTII-A3B, REMIC II
Regular Interest LTII-A4,  REMIC II Regular Interest  LTII-A5,  REMIC II Regular
Interest LTII-A6,  REMIC II Regular Interest LTII-M1,  REMIC II Regular Interest
LTII-M2,  REMIC II  Regular  Interest  LTII-M3  and  REMIC II  Regular  Interest
LTII-ZZ,  pro rata based on, and to the extent of, one  month's  interest at the
then applicable  respective  Uncertificated  REMIC II  Pass-Through  Rate on the
respective  Uncertificated  Principal  Balance  of each  such  REMIC II  Regular
Interest.

                                     - 49 -
<PAGE>

                                   ARTICLE II

                            CONVEYANCE OF TRUST FUND
                         REPRESENTATIONS AND WARRANTIES

         Section 2.01      CONVEYANCE OF TRUST FUND.

                  The Seller hereby  sells,  transfers,  assigns,  sets over and
otherwise conveys to the Depositor,  without recourse,  all the right, title and
interest of the Seller in and to the assets in the Trust Fund.

                  The Seller has entered into this  Agreement  in  consideration
for the purchase of the Mortgage  Loans by the  Depositor and has agreed to take
the actions specified herein.

                  The  Depositor,  concurrently  with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders, without recourse, all
the right, title and interest of the Depositor in and to the Trust Fund.

                  In connection  with such sale, the Depositor has delivered to,
and deposited  with, the Trustee or the Custodian,  as its agent,  the following
documents or instruments with respect to each Mortgage Loan so assigned: (i) the
original Mortgage Note, including any riders thereto,  endorsed without recourse
to the order of  "JPMorgan  Chase  Bank,  as Trustee for  certificateholders  of
Nomura Asset Acceptance Corporation,  Mortgage Pass-Through Certificates, Series
2004-AP2,"  and showing to the extent  available to the Seller an unbroken chain
of  endorsements  from the original payee thereof to the Person  endorsing it to
the Trustee,  (ii) the original  Mortgage and, if the related Mortgage Loan is a
MOM Loan,  noting the  presence  of the MIN and  language  indicating  that such
Mortgage Loan is a MOM Loan,  which shall have been recorded (or if the original
is not available, a copy), with evidence of such recording indicated thereon (or
if clause (x) in the proviso below applies,  shall be in recordable form), (iii)
unless the Mortgage Loan is a MOM Loan, the assignment  (either an original or a
copy,  which  may be in the form of a blanket  assignment  if  permitted  in the
jurisdiction  in which the Mortgaged  Property is located) to the Trustee of the
Mortgage with respect to each Mortgage Loan in the name of "JPMorgan Chase Bank,
as  Trustee  for  certificateholders  of Nomura  Asset  Acceptance  Corporation,
Mortgage  Pass-Through  Certificates,  Series  2004-AP2,"  which shall have been
recorded (or if clause (x) in the proviso below applies,  shall be in recordable
form) (iv) an original or a copy of all intervening assignments of the Mortgage,
if any, to the extent  available  to the  Seller,  with  evidence  of  recording
thereon,  (v) the original policy of title insurance or mortgagee's  certificate
of title insurance or commitment or binder for title insurance, if available, or
a copy thereof,  or, in the event that such original title  insurance  policy is
unavailable,  a photocopy thereof,  or in lieu thereof, a current lien search on
the related  Mortgaged  Property and (vi)  originals or copies of all  available
assumption,  modification or substitution agreements, if any; provided, however,
that in lieu of the foregoing,  the Seller may deliver the following  documents,
under the circumstances set forth below: (x) if any Mortgage, assignment thereof
to the Trustee or  intervening  assignments  thereof have been  delivered or are
being delivered to recording offices for recording and have not been returned in
time to permit

                                     - 50 -
<PAGE>

their delivery as specified above, the Depositor may deliver a true copy thereof
with a  certification  by the Seller or the title company issuing the commitment
for  title  insurance,  on the  face of such  copy,  substantially  as  follows:
"Certified  to be a true  and  correct  copy of the  original,  which  has  been
transmitted  for  recording";  and (y) in lieu of the Mortgage Notes relating to
the Mortgage Loans  identified in the list set forth in Exhibit J, the Depositor
may deliver a lost note affidavit and indemnity and a copy of the original note,
if available;  and provided,  further,  that in the case of Mortgage Loans which
have been prepaid in full after the Cut-Off Date and prior to the Closing  Date,
the  Depositor,  in lieu of delivering the above  documents,  may deliver to the
Trustee a certification of a Authorized  Servicer  Representative to such effect
and in such case shall  deposit  all  amounts  paid in respect of such  Mortgage
Loans,  in the  Distribution  Account on the  Closing  Date.  In the case of the
documents  referred to in clause (x) above,  the  Depositor  shall  deliver such
documents  to the Trustee  promptly  after they are  received.  The Seller shall
cause, at its expense, the Mortgage and intervening assignments,  if any, and to
the extent  required in accordance  with the  foregoing,  the  assignment of the
Mortgage to the Trustee to be submitted for recording promptly after the Closing
Date;  provided that the Seller need not cause to be recorded any assignment (a)
in any  jurisdiction  under the laws of which,  as  evidenced  by an  Opinion of
Counsel  delivered  by the Seller to the  Trustee and the Rating  Agencies,  the
recordation  of such  assignment  is not  necessary  to  protect  the  Trustee's
interest  in the  related  Mortgage  Loan or (b) if MERS  is  identified  on the
Mortgage or on a properly  recorded  assignment  of the Mortgage as mortgagee of
record solely as nominee for Seller and its successors and assigns. In the event
that the Seller or the  Depositor  gives  written  notice to the Trustee  that a
court has  recharacterized  the sale of the Mortgage  Loans as a financing,  the
Seller shall submit or cause to be submitted  for  recording as specified  above
or, should the Seller fail to perform such obligations,  the Trustee shall cause
each such  previously  unrecorded  assignment  to be submitted  for recording as
specified  above at the expense of the Trust  pursuant to Section  9.05.  In the
event a Mortgage  File is  released  to the  Servicer as a result of such Person
having completed a Request for Release,  the Trustee shall, if not so completed,
complete  the  assignment  of the related  Mortgage in the manner  specified  in
clause (iii) above.

                  In  connection  with  the  assignment  of  any  Mortgage  Loan
registered on the MERS(R) System,  the Seller further agrees that it will cause,
at the Seller's own expense,  within 30 days after the Closing Date, the MERS(R)
System to indicate that such Mortgage  Loans have been assigned by the Seller to
the  Depositor  and by the  Depositor  to the  Trustee in  accordance  with this
Agreement for the benefit of the  Certificateholders  by including (or deleting,
in the case of Mortgage  Loans which are  repurchased  in  accordance  with this
Agreement) in such computer files (a) the code in the field which identifies the
specific Trustee and (b) the code in the field "Pool Field" which identifies the
series of the  Certificates  issued in connection with such Mortgage Loans.  The
Seller  further  agrees  that it will not,  and will not permit any  Servicer to
alter the codes  referenced in this  paragraph with respect to any Mortgage Loan
during  the term of this  Agreement  unless  and  until  such  Mortgage  Loan is
repurchased in accordance with the terms of this Agreement.

         Section 2.02      ACCEPTANCE OF THE MORTGAGE LOANS.

                  (a) Based on the Initial Certification received by it from the
Custodian,  the Trustee  acknowledges  receipt of, subject to the further review
and exceptions  reported by the Custodian  pursuant to the procedures  described
below, the documents (or certified  copies

                                     - 51 -
<PAGE>

thereof)  delivered to the Trustee or the  Custodian  on its behalf  pursuant to
Section 2.01 and declares  that it holds and will  continue to hold  directly or
through  a  custodian  those  documents  and  any  amendments,  replacements  or
supplements  thereto and all other  assets of the Trust Fund  delivered to it in
trust  for the  use  and  benefit  of all  present  and  future  Holders  of the
Certificates.  On the Closing Date,  the Custodian on the Trustee's  behalf will
deliver an Initial  Certification  in the form  annexed  hereto as Exhibit  C-1,
confirming  whether or not it has received the Mortgage  File for each  Mortgage
Loan, but without review of such Mortgage File,  except to the extent  necessary
to confirm  whether such Mortgage File contains the original  Mortgage Note or a
lost note  affidavit and indemnity in lieu thereof.  No later than 90 days after
the Closing Date, the Custodian on the Trustee's  behalf shall,  for the benefit
of the Certificateholders, review each Mortgage File delivered to it and execute
and deliver to the Seller and the Trustee an Interim Certification substantially
in the form  annexed  hereto as Exhibit  C-2. In  conducting  such  review,  the
Custodian on the Trustee's behalf will ascertain whether all required  documents
have been executed and received and whether those documents  relate,  determined
on the basis of the Mortgagor name,  original principal balance and loan number,
to the Mortgage Loans identified in Exhibit B to this Agreement, as supplemented
(provided, however, that with respect to those documents described in subclauses
(iv) and (vi) of Section 2.01, such  obligations  shall extend only to documents
actually delivered pursuant to such subclauses).  In performing any such review,
the  Custodian  may  conclusively  rely  on  the  purported  due  execution  and
genuineness  of  any  such  document  and on the  purported  genuineness  of any
signature thereon. If the Custodian finds any document  constituting part of the
Mortgage File not to have been  executed or received,  or to be unrelated to the
Mortgage  Loans  identified  in  Exhibit  B,  determined  on  the  basis  of the
Mortgagor's  name, the original  principal balance and the Mortgage Loan number,
or to appear to be  defective  on its face,  the  Custodian  shall  include such
information in the exception report attached to the Interim  Certification.  The
Seller  shall  correct  or cure any such  defect  or, if prior to the end of the
second  anniversary  of the  Closing  Date,  the Seller may  substitute  for the
related Mortgage Loan a Replacement  Mortgage Loan, which  substitution shall be
accomplished  in the manner and subject to the  conditions  set forth in Section
2.03 or shall  deliver to the  Trustee an Opinion of Counsel to the effect  that
such  defect  does not  materially  or  adversely  affect the  interests  of the
Certificateholders  in such Mortgage Loan within 60 days from the date of notice
from the  Trustee of the  defect and if the Seller  fails to correct or cure the
defect or deliver such opinion within such period,  the Seller will,  subject to
Section 2.03,  within 90 days from the notification of the Trustee purchase such
Mortgage  Loan at the Purchase  Price;  provided,  however,  that if such defect
relates  solely  to the  inability  of  the  Seller  to  deliver  the  Mortgage,
assignment  thereof to the  Trustee,  or  intervening  assignments  thereof with
evidence of recording  thereon  because such  documents  have been submitted for
recording and have not been returned by the applicable jurisdiction,  the Seller
shall not be required to purchase such Mortgage Loan if the Seller delivers such
documents  promptly upon receipt,  but in no event later than 360 days after the
Closing Date.

                  (b) No  later  than 180  days  after  the  Closing  Date,  the
Custodian  on  the  Trustee's  behalf  will  review,  for  the  benefit  of  the
Certificateholders,  the Mortgage Files and will execute and deliver or cause to
be executed and delivered to the Seller and the Trustee,  a Final  Certification
substantially  in the form  annexed  hereto as Exhibit C-3. In  conducting  such
review,  the  Custodian  on the  Trustee's  behalf will  ascertain  whether each
document  required to be recorded has been returned  from the  recording  office
with evidence of recording thereon and the Custodian on the Trustee's behalf has
received  either an original  or a copy  thereof,  as  required in

                                     - 52 -
<PAGE>

Section 2.01 (provided,  however, that with respect to those documents described
in subclauses (iv) and (vi) of Section 2.01, such obligations  shall extend only
to documents actually  delivered pursuant to such subclauses).  If the Custodian
finds any document with respect to a Mortgage Loan has not been received,  or to
be unrelated,  determined on the basis of the Mortgagor name, original principal
balance and loan number,  to the Mortgage  Loans  identified  in Exhibit B or to
appear  defective  on its face,  the  Custodian  shall  note such  defect in the
exception  report  attached to the Final  Certification  and the  Trustee  shall
promptly notify the Seller. The Seller shall correct or cure any such defect or,
if prior to the end of the second  anniversary  of the Closing Date,  the Seller
may substitute for the related Mortgage Loan a Replacement  Mortgage Loan, which
substitution  shall be  accomplished in the manner and subject to the conditions
set forth in Section 2.03 or shall  deliver to the Trustee an Opinion of Counsel
to the effect that such  defect  does not  materially  or  adversely  affect the
interests of  Certificateholders  in such  Mortgage Loan within 60 days from the
date of notice from the Trustee of the defect and if the Seller is unable within
such  period to  correct  or cure such  defect,  or to  substitute  the  related
Mortgage Loan with a Replacement  Mortgage Loan or to deliver such opinion,  the
Seller shall,  subject to Section 2.03,  within 90 days from the notification of
the  Trustee,  purchase  such  Mortgage  Loan at the Purchase  Price;  provided,
however,  that if such defect  relates  solely to the inability of the Seller to
deliver  the  Mortgage,   assignment  thereof  to  the  Trustee  or  intervening
assignments  thereof with evidence of recording thereon,  because such documents
have not been returned by the applicable  jurisdiction,  the Seller shall not be
required to purchase such Mortgage  Loan, if the Seller  delivers such documents
promptly  upon  receipt,  but in no event  later than 360 days after the Closing
Date.

                  (c) In the event  that a  Mortgage  Loan is  purchased  by the
Seller in accordance with subsections  2.02(a) or (b) above or Section 2.03, the
Seller shall remit the  applicable  Purchase Price to the Trustee for deposit in
the  Distribution  Account  and shall  provide  written  notice  to the  Trustee
detailing the components of the Purchase Price, signed by an authorized officer.
Upon deposit of the Purchase Price in the Distribution  Account and upon receipt
of a Request for Release with respect to such  Mortgage  Loan,  the Trustee will
release to the Seller the related  Mortgage  File and the Trustee  shall execute
and  deliver  all  instruments  of transfer  or  assignment,  without  recourse,
furnished to it by the Seller,  as are  necessary to vest in the Seller title to
and  rights  under the  Mortgage  Loan.  Such  purchase  shall be deemed to have
occurred  on the date on which the  deposit  into the  Distribution  Account was
made. The Trustee shall promptly notify the Rating Agencies of such  repurchase.
The obligation of the Seller to cure,  repurchase or substitute for any Mortgage
Loan as to which a defect in a  constituent  document  exists  shall be the sole
remedies  respecting such defect available to the  Certificateholders  or to the
Trustee on their behalf. The Seller shall promptly reimburse the Trustee for any
expenses  incurred by the Trustee in respect of enforcing  the remedies for such
breach.

                  (d) The Seller  shall  deliver  to the  Trustee,  and  Trustee
agrees to accept the Mortgage Note and other documents constituting the Mortgage
File with respect to any  Replacement  Mortgage  Loan,  which the Custodian will
review as  provided  in  subsections  2.02(a) and  2.02(b),  provided,  that the
Closing Date  referred to therein  shall  instead be the date of delivery of the
Mortgage File with respect to each Replacement Mortgage Loan.

         Section 2.03 REPRESENTATIONS,  WARRANTIES AND COVENANTS OF THE SERVICER
AND THE SELLER.

                                     - 53 -
<PAGE>

                  (a) The  Servicer  hereby  represents  and  warrants  to,  and
covenants with, the Seller, the Depositor and the Trustee as follows,  as of the
Closing Date:

                  (i) It is duly  organized and is validly  existing and in good
         standing under the laws of the Commonwealth of Pennsylvania and is duly
         authorized and qualified to transact any and all business  contemplated
         by  this  Agreement  to be  conducted  by it 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 service the Mortgage Loans in
         accordance  with the terms of this  Agreement and to perform any of its
         other  obligations  under this  Agreement in accordance  with the terms
         hereof.

                  (ii) It has the full corporate  power and authority to service
         each Mortgage Loan, and to execute,  deliver and perform,  and to enter
         into and consummate the transactions contemplated by this Agreement and
         has duly authorized by all necessary  corporate  action on its part the
         execution,  delivery  and  performance  of  this  Agreement;  and  this
         Agreement,  assuming  the due  authorization,  execution  and  delivery
         hereof by the other parties hereto,  constitutes  its legal,  valid and
         binding  obligation,  enforceable  against  it in  accordance  with its
         terms,  except  that (a) the  enforceability  hereof  may be limited by
         bankruptcy, insolvency, moratorium, receivership and other similar laws
         relating to creditors'  rights generally and (b) the remedy of specific
         performance  and injunctive and other forms of equitable  relief may be
         subject to equitable defenses and to the discretion of the court before
         which any  proceeding  therefor  may be brought and further  subject to
         public  policy  with  respect  to  indemnity  and  contribution   under
         applicable securities law.

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

                  (iv) It is an approved servicer of conventional mortgage loans
         for  Fannie  Mae or  Freddie  Mac and is a  mortgagee  approved  by the
         Secretary of Housing and Urban Development pursuant to sections 203 and
         211 of the National Housing Act.

                                     - 54 -
<PAGE>

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

                  (vi) No consent, approval, authorization or order of any court
         or governmental agency or body is required for its execution,  delivery
         and  performance  of,  or  compliance   with,  this  Agreement  or  the
         consummation of the transactions  contemplated  hereby,  or if any such
         consent, approval,  authorization or order is required, it has obtained
         the same.

                  (vii) The Servicer has accurately and fully reported, and will
         continue to  accurately  and fully report its borrower  credit files to
         each of the  credit  repositories  in a  timely  manner  materially  in
         accordance  with the Fair  Credit  Reporting  Act and its  implementing
         legislation.

                  (viii) The Servicer is a member of MERS in good standing,  and
         will comply in all material  respects with the rules and  procedures of
         MERS in connection  with the servicing of the GMAC Mortgage  Loans that
         are registered with MERS.

                  (ix) The Servicer  will not waive any  Prepayment  Charge with
         respect to a Mortgage Loan unless it is waived in  accordance  with the
         standard set forth in Section 3.01.

If the  covenant  of the  Servicer  set forth in  Section  2.03(a)(ix)  above is
breached  by the  Servicer,  the  Servicer  will pay the  amount of such  waived
Prepayment  Charge,  for the benefit of the Holders of the Class P Certificates,
by  depositing  such amount  into the  Custodial  Account  within 90 days of the
earlier of  discovery  by the  Servicer or receipt of notice by the  Servicer of
such  breach.  Notwithstanding  the  foregoing,  or  anything  to  the  contrary
contained in this  Agreement,  the Servicer shall have no liability for a waiver
of any Prepayment Charge in the event that the Servicer's  determination to make
such a waiver was made by the  Servicer  in  reliance  on  information  properly
received by the Servicer  from any Person in  accordance  with the terms of this
Agreement.

                  (b) The Seller hereby represents and warrants to and covenants
with, the Depositor,  the Servicer and the Trustee as follows, as of the Closing
Date:

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

                                     - 55 -
<PAGE>

                  (ii) The Seller has the full corporate  power and authority to
         sell each Mortgage  Loan, and to execute,  deliver and perform,  and to
         enter  into  and  consummate  the  transactions  contemplated  by  this
         Agreement and has duly authorized by all necessary  corporate action on
         the part of the Seller the execution,  delivery and performance of this
         Agreement;   and  this  Agreement,   assuming  the  due  authorization,
         execution and delivery hereof by the other parties hereto,  constitutes
         a legal,  valid  and  binding  obligation  of the  Seller,  enforceable
         against the Seller in  accordance  with its terms,  except that (a) the
         enforceability  hereof  may  be  limited  by  bankruptcy,   insolvency,
         moratorium,  receivership and other similar laws relating to creditors'
         rights  generally  and (b)  the  remedy  of  specific  performance  and
         injunctive  and other  forms of  equitable  relief  may be  subject  to
         equitable  defenses and to the discretion of the court before which any
         proceeding therefor may be brought and further subject to public policy
         with respect to indemnity and contribution under applicable  securities
         law.

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

                  (iv) The Seller is an approved seller of conventional mortgage
         loans for Fannie Mae or Freddie Mac and is a mortgagee  approved by the
         Secretary of Housing and Urban Development pursuant to sections 203 and
         211 of the National Housing Act.

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

                  (vi) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution,  delivery
         and  performance  by the Seller of, or  compliance  by the Seller with,
         this Agreement or the  consummation  of the  transactions  contemplated
         hereby,  or if any such consent,  approval,  authorization  or order is
         required, the Seller has obtained the same.

                                     - 56 -
<PAGE>

                  (vii) The  representations and warranties set forth in Section
         8 of the Mortgage  Loan  Purchase  Agreement are true and correct as of
         the Closing Date.

                  (viii) No Mortgage  Loan is subject to the Home  Ownership and
         Equity  Protection  Act of 1994 or any  comparable  law and no Mortgage
         Loan is classified  and/or defined as a "high cost",  "covered",  "high
         risk home" or "predatory" loan under any other state,  federal or local
         law or regulation or ordinance  (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).

                  (ix)  No  loan  is a  High  Cost  Loan  or  Covered  Loan,  as
         applicable  (as such terms are defined in Appendix E of the  Standard &
         Poor's  Glossary  For File  Format For  LEVELS(R)  Version  5.6 Revised
         (attached  hereto as Exhibit N.) and no mortgage loan  originated on or
         after  October 1, 2002 through March 6, 2003 is governed by the Georgia
         Fair Lending Act.

                  (x) Any and all  requirements  of any federal,  state or local
         law including, without limitation, usury, truth in lending, real estate
         settlement  procedures,   consumer  credit  protection,   equal  credit
         opportunity,  fair housing,  predatory,  abusive  lending or disclosure
         laws  applicable to the origination and servicing of the Mortgage Loans
         have been complied with in all material respects.

                  (c) Upon discovery by any of the parties hereto of a breach of
a  representation  or warranty set forth in Section  2.03(b)(viii)  and (ix) and
Section 8 of the Mortgage Loan Purchase  Agreement that materially and adversely
affects the interests of the  Certificateholders in any Mortgage Loan, the party
discovering  such breach shall give prompt  written  notice thereof to the other
parties.  The Seller hereby  covenants with respect to the  representations  and
warranties  set forth in  Section  2.03(b)(viii)  and (ix) and  Section 8 of the
Mortgage  Loan  Purchase  Agreement,  that within 90 days of the  discovery of a
breach of any  representation  or warranty set forth therein that materially and
adversely affects the interests of the  Certificateholders in any Mortgage Loan,
it shall cure such breach in all material respects and, if such breach is not so
cured,  (i) prior to the second  anniversary  of the Closing  Date,  remove such
Mortgage Loan (a "Deleted  Mortgage Loan") from the Trust Fund and substitute in
its  place a  Replacement  Mortgage  Loan,  in the  manner  and  subject  to the
conditions set forth in this Section;  or (ii) repurchase the affected  Mortgage
Loan or Mortgage  Loans from the Trustee at the Purchase Price in the manner set
forth  below;  provided  that any such  substitution  pursuant  to (i)  above or
repurchase pursuant to (ii) above shall not be effected prior to the delivery to
the Trustee of an Opinion of Counsel if  required  by Section  2.05 and any such
substitution pursuant to (i) above shall not be effected prior to the additional
delivery to the  Trustee of a Request for  Release.  The Seller  shall  promptly
reimburse  the Trustee for any  expenses  reasonably  incurred by the Trustee in
respect of enforcing  the  remedies  for such breach.  To enable the Servicer to
amend the Mortgage Loan Schedule,  the Seller shall, unless it cures such breach
in a timely fashion  pursuant to this Section 2.03,  promptly notify the Trustee
whether it intends either to repurchase, or to substitute for, the Mortgage Loan
affected by such breach.  With respect to the  representations and warranties in
Section 8 of the Mortgage Loan Purchase  Agreement  that are made to the best of
the Seller's knowledge, if it is discovered by any of the Depositor, the Seller

                                     - 57 -
<PAGE>

or the  Trustee  that the  substance  of such  representation  and  warranty  is
inaccurate and such inaccuracy materially and adversely affects the value of the
related  Mortgage  Loan,  notwithstanding  the Seller's  lack of knowledge  with
respect to the substance of such  representation  or warranty,  the Seller shall
nevertheless  be required to cure,  substitute  for or  repurchase  the affected
Mortgage Loan in accordance with the foregoing.

                  With respect to any  Replacement  Mortgage Loan or Loans,  the
Seller  shall  deliver to the Trustee for the benefit of the  Certificateholders
such documents and  agreements as are required by Section 2.01. No  substitution
will be made in any calendar month after the Determination  Date for such month.
Scheduled  Payments due with respect to  Replacement  Mortgage  Loans in the Due
Period  related  to the  Distribution  Date on  which  such  proceeds  are to be
distributed  shall not be part of the  Trust  Fund and will be  retained  by the
Seller. For the month of substitution,  distributions to Certificateholders will
include the Scheduled  Payment due on any Deleted  Mortgage Loan for the related
Due Period and  thereafter  the Seller  shall be  entitled to retain all amounts
received in respect of such Deleted  Mortgage Loan. The Servicer shall amend the
Mortgage Loan Schedule for the benefit of the  Certificateholders to reflect the
removal of such Deleted  Mortgage Loan and the  substitution  of the Replacement
Mortgage Loan or Loans and shall  deliver the amended  Mortgage Loan Schedule to
the Trustee.  Upon such  substitution,  the  Replacement  Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects,  and the Seller
shall be deemed to have made with respect to such  Replacement  Mortgage Loan or
Loans, as of the date of substitution,  the  representations  and warranties set
forth in Section 8 of the Mortgage Loan Purchase  Agreement with respect to such
Mortgage Loan. Upon any such  substitution and the deposit into the Distribution
Account of the amount  required to be deposited  therein in connection with such
substitution as described in the following  paragraph and receipt by the Trustee
of a Request for Release for such  Mortgage  Loan,  the Trustee shall release to
the Seller the Mortgage File relating to such Deleted Mortgage Loan and held for
the  benefit of the  Certificateholders  and shall  execute  and  deliver at the
Seller's  direction  such  instruments  of transfer or  assignment  as have been
prepared by the Seller, in each case without recourse,  as shall be necessary to
vest in the Seller, or its respective designee,  title to the Trustee's interest
in any Deleted  Mortgage Loan substituted for pursuant to this Section 2.03. The
Trustee shall not have any further  responsibility  with regard to such Mortgage
File.

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

                  In the event that the Seller shall have repurchased a Mortgage
Loan,  the Purchase  Price  therefor  shall be deposited  into the  Distribution
Account   maintained  by  the  Trustee,   on  the  Determination  Date  for  the
Distribution  Date in the month  following  the month  during  which the  Seller
became  obligated  to  repurchase  or replace such  Mortgage  Loan and upon such
deposit of

                                     - 58 -
<PAGE>

the Purchase Price, the delivery of an Opinion of Counsel if required by Section
2.05 and the receipt of a Request for  Release,  the Trustee  shall  release the
related  Mortgage  File held for the  benefit of the  Certificateholders  to the
Seller, and the Trustee shall execute and deliver at such Person's direction the
related  instruments of transfer or assignment  prepared by the Seller,  in each
case without recourse,  as shall be necessary to transfer title from the Trustee
for the benefit of the Certificateholders and transfer the Trustee's interest to
the Seller to any Mortgage Loan  purchased  pursuant to this Section 2.03. It is
understood and agreed that the obligation  under this Agreement of the Seller to
cure,  repurchase or replace any Mortgage Loan as to which a breach has occurred
and is  continuing  shall  constitute  the  sole  remedies  against  the  Seller
respecting  such breach  available to  Certificateholders,  the Depositor or the
Trustee.

                  (d) The  representations  and  warranties set forth in Section
2.03 shall survive delivery of the respective  Mortgage Loans and Mortgage Files
to the Trustee or the Custodian for the benefit of the Certificateholders.

         Section 2.04      REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.

                  The  Depositor   hereby   represents   and  warrants  to,  and
covenants,  with the Servicer,  the Seller and the Trustee as follows, as of the
date hereof and as of the Closing Date:

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

                  (ii) The Depositor has the full corporate  power and authority
         to execute,  deliver and perform,  and to enter into and consummate the
         transactions  contemplated  by, this Agreement and has duly authorized,
         by all necessary corporate action on its part, the execution,  delivery
         and performance of this Agreement; and this Agreement, assuming the due
         authorization,  execution  and  delivery  hereof by the  other  parties
         hereto,  constitutes  a legal,  valid  and  binding  obligation  of the
         Depositor,  enforceable  against the Depositor in  accordance  with its
         terms,  subject, as to enforceability,  to (i) bankruptcy,  insolvency,
         moratorium  receivership  and other similar laws relating to creditors'
         rights  generally  and (ii) the  remedy  of  specific  performance  and
         injunctive  and other  forms of  equitable  relief  may be  subject  to
         equitable  defenses and to the discretion of the court before which any
         proceeding therefor may be brought and further subject to public policy
         with respect to indemnity and contribution under applicable  securities
         law.

                  (iii) The  execution  and  delivery of this  Agreement  by the
         Depositor,  the consummation of the  transactions  contemplated by this
         Agreement,  and the  fulfillment of or compliance with the terms hereof
         are in the ordinary  course of business of the  Depositor  and will not
         (A) result in a material breach of any term or provision of the charter
         or by-laws of the Depositor or (B) materially  conflict with, result in
         a  material  breach,  violation  or  acceleration  of,  or  result in a
         material  default under,  the terms of any other material  agreement or
         instrument  to  which  the  Depositor  is a party or by which it may be
         bound or (C) constitute a material  violation of any statute,  order or
         regulation

                                     - 59 -
<PAGE>

         applicable   to  the   Depositor   of  any  court,   regulatory   body,
         administrative agency or governmental body having jurisdiction over the
         Depositor;  and the  Depositor  is not in  breach or  violation  of any
         material  indenture or other material  agreement or  instrument,  or in
         violation of any statute, order or regulation of any court,  regulatory
         body,  administrative  agency or governmental body having  jurisdiction
         over it which breach or violation may materially impair the Depositor's
         ability to perform or meet any of its obligations under this Agreement.

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

                  (v) No consent, approval,  authorization or order of any court
         or governmental agency or body is required for the execution,  delivery
         and  performance  by the  Depositor  of, or compliance by the Depositor
         with,  this  Agreement  or  the   consummation   of  the   transactions
         contemplated hereby, or if any such consent, approval, authorization or
         order is required, the Depositor has obtained the same.

                  The Depositor hereby represents and warrants to the Trustee as
of the Closing Date,  following the transfer of the Mortgage  Loans to it by the
Seller,  the  Depositor  had good title to the  Mortgage  Loans and the  related
Mortgage Notes were subject to no offsets, claims, defenses or counterclaims.

                  It is  understood  and  agreed  that the  representations  and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee or the Custodian for the benefit of the Certificateholders.
Upon discovery by the Depositor, the Servicer or the Trustee of a breach of such
representations  and warranties,  the party  discovering  such breach shall give
prompt written notice to the others and to each Rating Agency.

         Section 2.05      DELIVERY  OF OPINION OF  COUNSEL IN  CONNECTION  WITH
                           SUBSTITUTIONS AND REPURCHASES.

                  (a)  Notwithstanding any contrary provision of this Agreement,
with respect to any Mortgage  Loan that is not in default or as to which default
is not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made  unless the Seller  delivers to the Trustee an Opinion of Counsel,
addressed to the Trustee,  to the effect that such  repurchase  or  substitution
would not (i) result in the imposition of the tax on  "prohibited  transactions"
of REMIC I, REMIC II or REMIC III or  contributions  after the Closing  Date, as
defined in sections  860F(a)(2)  and 860G(d) of the Code,  respectively  or (ii)
cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any
time  that any  Certificates  are  outstanding.  Any  Mortgage  Loan as to which
repurchase  or  substitution  was delayed  pursuant to this  paragraph  shall be
repurchased or the substitution therefor shall occur (subject to compliance with
Sections  2.02 or 2.03) upon the earlier of (a) the  occurrence  of a default or
imminent  default  with  respect to such  Mortgage  Loan and (b)  receipt by the
Trustee  of an  Opinion  of  Counsel  to the  effect  that  such  repurchase  or
substitution,  as applicable,  will not result in the events described in clause
(i) or clause (ii) of the preceding sentence.

                                     - 60 -
<PAGE>

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

         Section 2.06  ISSUANCE OF THE REMIC I REGULAR  INTERESTS  AND THE CLASS
                       R-1 INTEREST.

                  The Trustee  acknowledges the assignment to it of the Mortgage
Loans and the delivery to the  Custodian  on its behalf 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, the receipt of which
is hereby  acknowledged.  The  interests  evidenced  by the Class R-1  Interest,
together with the REMIC I Regular  Interests,  constitute the entire  beneficial
ownership  interest  in REMIC I. The  rights  of the  Holders  of the  Class R-1
Interest  and REMIC I (as  holder of the REMIC I Regular  Interests)  to receive
distributions  from the proceeds of REMIC I in respect of the Class R-1 Interest
and the REMIC I Regular  Interests,  respectively,  and all ownership  interests
evidenced  or  constituted  by the  Class R-1  Interest  and the REMIC I Regular
Interests, shall be as set forth in this Agreement.

         Section 2.07 CONVEYANCE OF THE REMIC I 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 Regular  Interests  for the benefit of the Class R-2 Interest
and  REMIC  II (as  holder  of the  REMIC  I  Regular  Interests).  The  Trustee
acknowledges receipt of the REMIC I 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  Holders  of the Class R-2  Interest  and REMIC II (as holder of the
REMIC I Regular Interests).  The rights of the Holders of the Class R-2 Interest
and  REMIC  II  (as  holder  of  the  REMIC  I  Regular  Interests)  to  receive
distributions from the proceeds of REMIC II in respect of the Class R-2 Interest
and  REMIC II  Regular  Interests,  respectively,  and all  ownership  interests
evidenced  or  constituted  by the Class R-2  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

                                     - 61 -
<PAGE>

R-3  Interest 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  Holders of the Class R-3  Interest  and REMIC III (as
holder of the REMIC II Regular Interests). The rights of the Holder of the Class
R-3  Interest  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-3
Interest  and REMIC  III  Regular  Interests,  respectively,  and all  ownership
interests  evidenced or  constituted by the Class R-3 Interest and the REMIC III
Regular  Interests,  shall be as set  forth in this  Agreement.  The  Class  R-3
Interest  and the  REMIC III  Regular  Interests  shall  constitute  the  entire
beneficial ownership interest in REMIC III.

         Section 2.09      ISSUANCE OF CLASS R CERTIFICATES.

                  The Trustee  acknowledges  the assignment to it of the REMIC I
Regular Interests and the REMIC II 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 Class R Certificates in
authorized  denominations.  The Class R Certificates  evidence  ownership in the
Class R-1 Interest, the Class R-2 Interest and the Class R-3 Interest.

         Section 2.10      ESTABLISHMENT OF TRUST.

                  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 to be known,  for convenience,  as "Nomura Asset  Acceptance  Corporation,
Alternative Loan Trust,  Series 2004-AP2" and does hereby appoint JPMorgan Chase
Bank, as Trustee in accordance with the provisions of this Agreement.

                                     - 62 -
<PAGE>

                                   ARTICLE III

               ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

         Section 3.01      THE SERVICER TO ACT AS SERVICER.

                  The Servicer  shall service and  administer the Mortgage Loans
on behalf of the Trust and in the best  interest  of and for the  benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance  with the terms of this  Agreement and the Mortgage  Loans and to the
extent consistent with such terms and in accordance with and exercising the same
care in performing  those  practices that the Servicer  customarily  employs and
exercises  in servicing  and  administering  mortgage  loans for its own account
(including, compliance with all applicable federal, state and local laws).

                  To the extent  consistent  with the  foregoing,  the  Servicer
shall seek the timely and  complete  recovery of  principal  and interest on the
Mortgage Notes related to the Mortgage Loans and shall waive a Prepayment Charge
only  under  the  following  circumstances:  (i) such  waiver  is  standard  and
customary in servicing similar mortgage loans and (ii) either (A) such waiver is
related  to a default  or  reasonably  foreseeable  default  and  would,  in the
reasonable judgement of the Servicer, maximize recovery of total proceeds taking
into account the value of such Prepayment  Charge and the related  Mortgage Loan
and,  if such waiver is made in  connection  with a  refinancing  of the related
Mortgage  Loan,  such  refinancing  is  related  to a  default  or a  reasonably
foreseeable  default or (B) such waiver is made in connection with a refinancing
of the related Mortgage Loan unrelated to a default or a reasonably  foreseeable
default where (x) the related  Mortgagor has stated to the Servicer an intention
to refinance the related Mortgage Loan and (y) the Servicer has concluded in its
reasonable judgement that the waiver of such Prepayment Charge would induce such
Mortgagor  to  refinance  with the  Servicer  or (iii) the  Servicer  reasonably
believes such Prepayment  Charge is  unenforceable in accordance with applicable
law or the collection of such related  Prepayment Charge would otherwise violate
applicable law. If a Prepayment Charge is waived as permitted by meeting both of
the standards  described in clauses (i) and (ii)(B) above,  then the Servicer is
required  to pay the amount of such  waived  Prepayment  Charge  (the  "Servicer
Prepayment Charge Payment Amount"),  for the benefit of the Holders of the Class
P Certificates,  by depositing such amount into the Custodial  Account within 90
days of notice or  discovery  of such waiver  meeting the  standard set forth in
both clauses (i) and (ii)(B) above;  provided,  however, that the Servicer shall
not waive  more  than 5% of the  Prepayment  Charges  (by  number of  Prepayment
Charges) set forth on the Prepayment  Charge Schedule in accordance with clauses
(i) and (ii)(B) above.  Notwithstanding  any other provisions of this Agreement,
any payments  made by the Servicer in respect of any waived  Prepayment  Charges
pursuant to clauses (i) and (ii)(B)  above and the preceding  sentence  shall be
deemed to be paid outside of the Trust Fund.

                  Subject  only  to  the  above-described  applicable  servicing
standards (the "Accepted  Servicing  Practices") and the terms of this Agreement
and of the  respective  Mortgage  Loans,  the Servicer shall have full power and
authority, acting alone and/or through subservicers as

                                     - 63 -
<PAGE>

provided in Section  3.03,  to do or cause to be done any and all things that it
may  deem  necessary  or  desirable  in  connection   with  such  servicing  and
administration,  including but not limited to, the power and authority,  subject
to  the  terms   hereof  (i)  to  execute   and   deliver,   on  behalf  of  the
Certificateholders  and the  Trustee,  customary  consents  or waivers and other
instruments and documents, (ii) to consent to transfers of any related Mortgaged
Property and  assumptions of the Mortgage Notes and related  Mortgages (but only
in the manner  provided  herein),  (iii) to collect any  Insurance  Proceeds and
other  Liquidation  Proceeds,  and (iv) subject to Section  3.09,  to effectuate
foreclosure  or other  conversion  of the  ownership of the  Mortgaged  Property
securing any Mortgage Loan.

                  Without   limiting  the  generality  of  the  foregoing,   the
Servicer,  in its own name or in the name of the  Trust,  the  Depositor  or the
Trustee,  is hereby authorized and empowered by the Trust, the Depositor and the
Trustee,  when the Servicer believes it appropriate in its reasonable  judgment,
to  execute  and  deliver,  on  behalf  of  the  Trustee,  the  Depositor,   the
Certificateholders  or any of them, any and all  instruments of  satisfaction or
cancellation,  or of  partial  or  full  release  or  discharge  and  all  other
comparable instruments,  with respect to the Mortgage Loans, and with respect to
the related Mortgaged Properties held for the benefit of the Certificateholders.
The Servicer shall prepare and deliver to the Depositor  and/or the Trustee such
documents  requiring  execution  and  delivery  by any or  all  of  them  as are
necessary or  appropriate  to enable the Servicer to service and  administer the
Mortgage Loans. Upon receipt of such documents, the Depositor and/or the Trustee
shall execute such documents and deliver them to the Servicer. In addition,  the
Trustee shall execute,  at the written  request of the Servicer,  and furnish to
the Servicer any special or limited powers of attorney  agreeable to the Trustee
and its counsel  for each  county in which a  Mortgaged  Property is located and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative  duties hereunder,  provided such limited powers of
attorney or other  documents  shall be prepared by the Servicer and submitted to
the Trustee for review prior to execution.

                  In  accordance  with the  standards of the first  paragraph of
this Section 3.01,  the Servicer  shall advance or cause to be advanced funds as
necessary for the purpose of effecting the payment of taxes and  assessments  on
the Mortgaged Properties relating to the Mortgage Loans in order to preserve the
lien on the Mortgaged  Property,  which  advances shall be  reimbursable  in the
first instance from related  collections from the Mortgagors pursuant to Section
4.04,  and  further as  provided  in Section  4.02.  All costs  incurred  by the
Servicer, if any, in effecting the payments of such taxes and assessments on the
related Mortgaged  Properties and related insurance  premiums shall not, for the
purpose of calculating monthly distributions to the Certificateholders, be added
to  the  Stated   Principal   Balance   under  the   related   Mortgage   Loans,
notwithstanding that the terms of such Mortgage Loans so permit.

         Section 3.02      DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.

                  (a) Except as otherwise  provided in this Section  3.02,  when
any Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall to the extent that it has knowledge of such  conveyance,  enforce
any due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent
permitted under  applicable law and  governmental  regulations,  but only to the
extent that such enforcement  will not adversely  affect or jeopardize  coverage
under any Required Insurance Policy. Notwithstanding the foregoing, the Servicer
shall

                                     - 64 -
<PAGE>

not be required to exercise  such rights with respect to a Mortgage  Loan if the
Person to whom the related  Mortgaged  Property has been conveyed or is proposed
to be conveyed satisfies the terms and conditions contained in the Mortgage Note
and  Mortgage  related  thereto  and the  consent  of the  mortgagee  under such
Mortgage Note or Mortgage is not otherwise so required  under such Mortgage Note
or Mortgage as a condition to such  transfer.  In the event that the Servicer is
prohibited by law from  enforcing any such  due-on-sale  clause,  or if coverage
under  any  Required  Insurance  Policy  would  be  adversely  affected,  or  if
nonenforcement  is otherwise  permitted  hereunder,  the Servicer is authorized,
subject to Section 3.02(b), to take or enter into an assumption and modification
agreement  from or with the person to whom such property has been or is about to
be  conveyed,  pursuant to which such person  becomes  liable under the Mortgage
Note and,  unless  prohibited  by applicable  state law, the  Mortgagor  remains
liable  thereon,  provided that the related  Mortgage Loan shall  continue to be
covered  (if so covered  before  the  Servicer  enters  such  agreement)  by the
applicable  Required  Insurance  Policies.  The  Servicer,  subject  to  Section
3.02(b),  is also  authorized  with the prior approval of the insurers under any
Required Insurance Policies to enter into a substitution of liability  agreement
with such  Person,  pursuant to which the original  Mortgagor  is released  from
liability and such Person is  substituted  as Mortgagor and becomes liable under
the Mortgage  Note.  Notwithstanding  the  foregoing,  the Servicer shall not be
deemed to be in default under this Section  3.02(a) by reason of any transfer or
assumption  that the Servicer  reasonably  believes it is restricted by law from
preventing.

                  (b) Subject to the Servicer's  duty to enforce any due-on-sale
clause  to the  extent  set  forth in  Section  3.02(a),  in any case in which a
related  Mortgaged  Property has been  conveyed to a Person by a Mortgagor,  and
such Person is to enter into an assumption  agreement or modification  agreement
or  supplement  to the Mortgage  Note or Mortgage that requires the signature of
the Trustee,  or if an instrument  of release  signed by the Trustee is required
releasing  the  Mortgagor  from  liability  on the related  Mortgage  Loan,  the
Servicer  shall prepare and deliver or cause to be prepared and delivered to the
Trustee for signature and shall direct,  in writing,  the Trustee to execute the
assumption  agreement  with the Person to whom the  Mortgaged  Property is to be
conveyed and such  modification  agreement or supplement to the Mortgage Note or
Mortgage or other  instruments  as are  reasonable or necessary to carry out the
terms  of the  Mortgage  Note or  Mortgage  or  otherwise  to  comply  with  any
applicable laws regarding  assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption,  no material term of the
Mortgage Note  (including,  but not limited to, the Mortgage Rate, the amount of
the  Scheduled  Payment  and any other  term  affecting  the amount or timing of
payment  on  the  related  Mortgage  Loan)  may be  changed.  In  addition,  the
substitute  Mortgagor  and the  Mortgaged  Property  must be  acceptable  to the
Servicer in accordance  with the  servicing  standard set forth in Section 3.01.
The Servicer shall notify the Trustee that any such  substitution  or assumption
agreement  has been  completed by forwarding to the Trustee the original of such
substitution or assumption agreement, which in the case of the original shall be
added to the related Mortgage File and shall, for all purposes,  be considered a
part of such  Mortgage  File to the  same  extent  as all  other  documents  and
instruments  constituting a part thereof.  Any fee collected by the Servicer for
entering into an  assumption  or  substitution  of liability  agreement  will be
retained by the Servicer as additional servicing compensation.

         Section 3.03      SUBSERVICERS.

                                     - 65 -
<PAGE>

                  The   Servicer    shall   perform   all   of   its   servicing
responsibilities  hereunder  or may  cause a  subservicer  to  perform  any such
servicing  responsibilities  on its  behalf,  but the use by the  Servicer  of a
subservicer shall not release the Servicer from any of its obligations hereunder
with respect to the related  Mortgage Loans.  The Servicer shall pay all fees of
each of its subservicers  from its own funds, and a subservicer's  fee shall not
exceed the Servicing Fee payable to the Servicer hereunder.

                  At the cost and expense of the Servicer,  without any right of
reimbursement  from the  Custodial  Account,  the Servicer  shall be entitled to
terminate the rights and  responsibilities  of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer; provided,
however,  that nothing  contained  herein shall be deemed to prevent or prohibit
the Servicer, at its option, from electing to service the related Mortgage Loans
itself. In the event that the Servicer's  responsibilities and duties under this
Agreement are terminated pursuant to Section 8.03, the Servicer shall at its own
cost and expense terminate the rights and  responsibilities  of each subservicer
with respect to the Mortgage  Loans  effective as of the date of the  Servicer's
termination. The Servicer shall pay all fees, expenses or penalties necessary in
order to terminate the rights and  responsibilities of each subservicer from the
Servicer's own funds without reimbursement from the Trust Fund.

                  Notwithstanding  the  foregoing,  the  Servicer  shall  not be
relieved of its  obligations  hereunder  with respect to the Mortgage  Loans and
shall be obligated to the same extent and under the same terms and conditions as
if it alone were servicing and  administering  the Mortgage Loans.  The Servicer
shall  be  entitled  to  enter  into  an  agreement   with  a  subservicer   for
indemnification of the Servicer by the subservicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.

                  Any  subservicing  agreement  and any  other  transactions  or
services  relating to the Mortgage Loans involving a subservicer shall be deemed
to be between such subservicer and the the Servicer alone, and the Trustee shall
not have any obligations, duties or liabilities with respect to such subservicer
including  any  obligation,  duty  or  liability  of the  Trustee  to  pay  such
subservicer's  fees  and  expenses  or any  differential  in the  amount  of the
servicing fee paid  hereunder  and the amount  necessary to induce any successor
servicer to act as successor  servicer under this Agreement and the transactions
provided  for in this  Agreement.  For  purposes of  remittances  to the Trustee
pursuant to this  Agreement,  the  Servicer  shall be deemed to have  received a
payment on a Mortgage Loan when a subservicer has received such payment.

         Section 3.04      DOCUMENTS,  RECORDS  AND  FUNDS  IN POSSESSION OF THE
                           SERVICER TO BE HELD FOR TRUSTEE.

                  Notwithstanding  any other  provisions of this Agreement,  the
Servicer  shall  transmit  to the  Trustee as  required  by this  Agreement  all
documents and instruments in respect of a related  Mortgage Loan coming into the
possession  of the  Servicer  from time to time and shall  account  fully to the
Trustee for any funds  received by the Servicer or that  otherwise are collected
by the Servicer as Liquidation  Proceeds or Insurance Proceeds in respect of any
such Mortgage Loan. All Mortgage Files and funds  collected or held by, or under
the control of, the Servicer in respect of any Mortgage Loans,  whether from the
collection  of principal  and interest  payments or from  Liquidation  Proceeds,
including  but not  limited to, any funds on deposit in the  Custodial

                                     - 66 -
<PAGE>

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

         Section 3.05      MAINTENANCE OF HAZARD INSURANCE.

                  (a)  The  Servicer  shall  cause  to be  maintained  for  each
Mortgage Loan hazard insurance with extended coverage on the Mortgaged  Property
in an amount  which is at least equal to the lesser of (i) the Stated  Principal
Balance of such Mortgage Loan and (ii) 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
hazard 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 REO Property and (ii) the Stated Principal
Balance of the related Mortgage Loan at the time it became an REO Property.  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 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 and in accordance with the servicing standard set forth in Section
3.01)  shall be  deposited  in the  Custodial  Account,  subject  to  withdrawal
pursuant to Section 4.02. 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 Stated  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 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  shall 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 Stated 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 B:VI or better
in Best's Key Rating  Guide (or such

                                     - 67 -
<PAGE>

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 3.05, 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 3.05, and there shall have been one
or more losses  which  would have been  covered by such  policy,  deposit to the
Custodial  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) The  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 or  Freddie  Mac if it were the  purchaser  of the
related  Mortgage  Loans,  unless  the  Servicer  has  obtained a waiver of such
requirements  from Fannie Mae or Freddie  Mac. The  Servicer  shall  provide the
Trustee, upon request, with copies of such insurance policies and fidelity bond.
The  Servicer  shall also  maintain a fidelity  bond in the form and amount that
would meet the  requirements  of Fannie Mae or Freddie Mac,  unless the Servicer
has obtained a waiver of such  requirements  from Fannie Mae or Freddie Mac. 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.  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 its subservicers to
maintain a policy of insurance covering errors and omissions and a fidelity bond
which would meet such requirements.

         Section 3.06      PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.

                  The  Servicer  shall  prepare  and  present  on  behalf of the
Trustee and the  Certificateholders  all claims under the Insurance Policies and
take  such  actions  (including  the  negotiation,   settlement,  compromise  or
enforcement  of the insured's  claim) as shall be necessary to realize  recovery
under such Insurance Policies. Any proceeds disbursed to the Servicer in respect
of such Insurance  Policies shall,  within two Business Days of its receipt,  be
deposited  in the  Custodial  Account  upon  receipt,  except  that any  amounts
realized  that are to be  applied to the repair or  restoration  of the  related
Mortgaged Property as a condition precedent to the presentation of claims on the
related Mortgage Loan to the insurer under any applicable  Insurance Policy need
not be so deposited (or remitted).

         Section 3.07      MAINTENANCE OF INSURANCE POLICIES.

                  The  Servicer  shall not take any action that would  result in
noncoverage under any applicable Insurance Policy of any loss which, but for the
actions of the Servicer would have been covered  thereunder.  The Servicer shall
use its best efforts to keep in force and effect (to the extent that the related
Mortgage Loan requires the Mortgagor to maintain such insurance), any

                                     - 68 -
<PAGE>

applicable  Insurance  Policy.  The Servicer shall not cancel or refuse to renew
any  Insurance  Policy that is in effect at the date of the initial  issuance of
the Mortgage Note and is required to be kept in force hereunder.

         Section 3.08      RESERVED.

         Section 3.09      REALIZATION    UPON   DEFAULTED    MORTGAGE    LOANS;
                           DETERMINATION  OF  EXCESS  LIQUIDATION  PROCEEDS  AND
                           REALIZED  LOSSES;  REPURCHASES  OF  CERTAIN  MORTGAGE
                           LOANS.

                  (a) The  Servicer  shall use  reasonable  efforts to foreclose
upon or otherwise  comparably convert the ownership of properties  securing such
of the  Mortgage  Loans as come into and  continue in default and as to which no
satisfactory  arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion,  the Servicer shall follow
such  practices and  procedures  as it shall deem  necessary or advisable and as
shall be normal and usual in its general mortgage  servicing  activities and the
requirements of the insurer under any Required  Insurance Policy;  provided that
the Servicer  shall not be required to expend its own funds in  connection  with
any  foreclosure  or towards the  restoration  of any  property  unless it shall
determine  (i) that  such  restoration  and/or  foreclosure  will  increase  the
proceeds of  liquidation  of the related  Mortgage Loan after  reimbursement  to
itself of such expenses and (ii) that such expenses  will be  recoverable  to it
through  Liquidation  Proceeds  (respecting  which it shall  have  priority  for
purposes of withdrawals from the Custodial Account pursuant to Section 4.02). If
the Servicer reasonably  believes that Liquidation  Proceeds with respect to any
such  Mortgage  Loan would not be increased as a result of such  foreclosure  or
other  action,  such  Mortgage  Loan  will be  charged-off  and  will  become  a
Liquidated  Loan.  The Servicer  will give notice of any such  charge-off to the
Trustee.  The  Servicer  shall be  responsible  for all other costs and expenses
incurred by it in any such  proceedings;  provided  that such costs and expenses
shall be  Servicing  Advances  and that it shall be  entitled  to  reimbursement
thereof from the proceeds of liquidation of the related Mortgaged  Property,  as
contemplated  in Section 4.02.  If the Servicer has  knowledge  that a Mortgaged
Property  that the  Servicer is  contemplating  acquiring in  foreclosure  or by
deed-in-lieu of foreclosure is located within a one-mile radius of any site with
environmental  or  hazardous  waste risks known to the  Servicer,  the  Servicer
shall, prior to acquiring the Mortgaged  Property,  consider such risks and only
take action in accordance with its established environmental review procedures.

                  With respect to any REO Property,  the deed or  certificate of
sale  shall  be  taken  in the  name  of the  Trustee  for  the  benefit  of the
Certificateholders    (or   the    Trustee's    nominee   on   behalf   of   the
Certificateholders). The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee hereunder and not in its individual capacity. The
Servicer  shall  ensure  that the  title to such REO  Property  references  this
Agreement and the Trustee's capacity hereunder.  Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary  in the locality  where such REO Property is located
and may,  incident to its  conservation  and  protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best  interest  of the  Servicer  and the  Certificateholders  for the
period prior to the sale of such REO  Property.  The Servicer  shall prepare for
and deliver to the Trustee a statement  with respect to each REO  Property  that
has

                                     - 69 -
<PAGE>

been rented  showing the  aggregate  rental  income  received  and all  expenses
incurred in connection  with the management and maintenance of such REO Property
at such times as is necessary to enable the Trustee to comply with the reporting
requirements  of the REMIC  Provisions.  The net monthly rental income,  if any,
from such REO Property shall be deposited in the Custodial Account no later than
the close of business on each Determination Date. The Servicer shall perform the
tax  reporting  and  withholding  related  to  foreclosures,   abandonments  and
cancellation  of indebtedness  income as specified by Sections 6050H,  6050J and
6050P of the Code by preparing and filing such tax and information  returns,  as
may be required.

                  In the  event  that the  Trust  Fund  acquires  any  Mortgaged
Property as  aforesaid or  otherwise  in  connection  with a default or imminent
default  on a Mortgage  Loan,  the  Servicer  shall  dispose  of such  Mortgaged
Property prior to three years after its acquisition by the Trust Fund or, at the
expense of the Trust Fund,  request from the Internal  Revenue Service more than
60 days prior to the day on which such three-year period would otherwise expire,
an extension of the three-year grace period.  The Trustee shall be supplied with
an Opinion of Counsel  (such  opinion not to be an expense of the Trustee or the
Trust Fund) to the effect  that the holding by the Trust Fund of such  Mortgaged
Property  subsequent to such three-year period will not result in the imposition
of taxes on  "prohibited  transactions"  of  REMIC I,  REMIC II or REMIC  III as
defined in section  860F of the Code or cause  either REMIC I, REMIC II or REMIC
III to  fail to  qualify  as a REMIC  at any  time  that  any  Certificates  are
outstanding,  in which case the Trust Fund may  continue to hold such  Mortgaged
Property  (subject to any  conditions  contained  in such  Opinion of  Counsel).
Notwithstanding  any other  provision of this Agreement,  no Mortgaged  Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust Fund
in such a manner or  pursuant  to any terms that would (i) cause such  Mortgaged
Property  to fail to qualify as  "foreclosure  property"  within the  meaning of
section 860G(a)(8) of the Code or (ii) subject any of REMIC I, REMIC II or REMIC
III to the imposition of any federal,  state or local income taxes on the income
earned  from  such  Mortgaged  Property  under  section  860G(c)  of the Code or
otherwise,  unless the Servicer has agreed to  indemnify  and hold  harmless the
Trust Fund with respect to the imposition of any such taxes.

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

                                     - 70 -
<PAGE>

                  The  Liquidation  Proceeds from any  liquidation of a Mortgage
Loan, net of any payment to the Servicer as provided  above,  shall be deposited
in the Custodial  Account on the next  succeeding  Determination  Date following
receipt thereof for distribution on the related  Distribution  Date, except that
any Excess Liquidation  Proceeds shall be retained by the Servicer as additional
servicing compensation.

                  The proceeds of any  Liquidated  Loan, as well as any recovery
resulting from a partial  collection of Liquidation  Proceeds or any income from
an REO Property, shall be applied in the following order of priority:  first, to
reimburse  the  Servicer  for any related  unreimbursed  Servicing  Advances and
Servicing  Fees,  pursuant to Section  4.02 or this  Section  3.09;  second,  to
reimburse the Servicer for any unreimbursed  Advances,  pursuant to Section 4.02
or this Section 3.09;  third,  to accrued and unpaid  interest (to the extent no
Advance  has been made for such  amount) on the  Mortgage  Loan or  related  REO
Property,  at the Net Mortgage  Rate to the first day of the month in which such
amounts are required to be distributed;  and fourth,  as a recovery of principal
of the Mortgage Loan.

                  (b) On each  Determination  Date, the Servicer shall determine
the respective  aggregate  amounts of Excess  Liquidation  Proceeds and Realized
Losses,  if any,  with respect to any Mortgage  Loan for the related  Prepayment
Period.

                  (c) The  Servicer  has no intent to  foreclose on any Mortgage
Loan based on the delinquency  characteristics as of the Closing Date; provided,
however,  that the  foregoing  does not prevent  the  Servicer  from  initiating
foreclosure  proceedings on any date hereafter if the facts and circumstances of
such Mortgage  Loans  including  delinquency  characteristics  in the Servicer's
discretion so warrant such action.

         Section 3.10      SERVICING COMPENSATION.

                  As  compensation  for its activities  hereunder,  the Servicer
shall be entitled to retain or withdraw from the  Custodial  Account out of each
payment of interest on each  Mortgage  Loan included in the Trust Fund an amount
equal to the  Servicing  Fee. In  addition,  the  Servicer  shall be entitled to
recover unpaid Servicing Fees out of Liquidation Proceeds, Insurance Proceeds or
condemnation proceeds to the extent permitted by Section 4.02.

                  Additional  servicing  compensation  with  respect to Mortgage
Loans in the form of any Excess  Liquidation  Proceeds,  assumption  fees,  late
payment charges,  insufficient  funds charges and ancillary income to the extent
such fees or charges are  received by the  Servicer,  all income and gain net of
any losses  realized  from  Permitted  Investments  with  respect to funds in or
credited to the  Custodial  Account  shall be  retained  by the  Servicer to the
extent not required to be deposited in the Custodial Account pursuant to Section
4.02.  The  Servicer  shall be  required to pay all  expenses  incurred by it in
connection with its servicing  activities  hereunder  (including  payment of any
premiums for hazard  insurance,  as required by Section 3.05 and  maintenance of
the other forms of insurance coverage required by Section 3.07) and shall not be
entitled to  reimbursement  therefor except as specifically  provided in Section
4.02.

         Section 3.11      REO PROPERTY.

                                     - 71 -
<PAGE>

                  (a) In the event the Trust Fund acquires  ownership of any REO
Property in respect of any related  Mortgage  Loan,  the deed or  certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Servicer shall sell any REO Property as expeditiously as
possible and in accordance  with the provisions of this  Agreement.  Pursuant to
its efforts to sell such REO Property,  the Servicer  shall protect and conserve
such REO Property in the manner and to the extent required herein, in accordance
with the REMIC Provisions.

                  (b)  The  Servicer  shall  deposit  all  funds  collected  and
received in connection with the operation of any REO Property into the Custodial
Account.

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

         Section 3.12      LIQUIDATION REPORTS.

                  Upon  the  foreclosure  of  any  Mortgaged   Property  or  the
acquisition thereof by the Trust Fund pursuant to a deed-in-lieu of foreclosure,
the Servicer shall submit a liquidation  report to the Trustee  containing  such
information as shall be mutually acceptable to the Servicer and the Trustee with
respect to such Mortgaged Property.

         Section 3.13      ANNUAL CERTIFICATE AS TO COMPLIANCE.

                  (a)  The  Servicer  shall  deliver  to the  Depositor  and the
Trustee not later than March 15th of each year  commencing  in 2005 (or, in each
case,  if such day is not a Business  Day, the  immediately  preceding  Business
Day), a certificate of a Authorized Servicer  Representative 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  officers'  supervision,  and (ii) to the best of such officers'
knowledge,  based  on  such  review,  the  Servicer  has  fulfilled  all  of its
obligations  under this Agreement  throughout such year, or, if there has been a
default in the fulfillment of any such obligation,  specifying each such default
known to such  officers  and the  nature  and  status  thereof  except  for such
defaults as such officer in its good faith judgment believe to be immaterial.

                  (b) (i) The Servicer  shall  deliver to the  Depositor and the
Trustee,   on  or  before  March  15th  of  each  year  commencing  in  2005,  a
certification   containing  the   information  set  forth  in  Exhibit  L.  Such
certification  shall be signed by the senior  officer in charge of  servicing of
the Servicer.  In addition,  the Servicer  shall provide such other  information
with respect to the related Mortgage Loans and the servicing and  administration
thereof within the control of the Servicer which shall be required to enable the
Depositor  and the  Trustee to comply  with the  reporting  requirements  of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act").

                                     - 72 -
<PAGE>

                                    (ii) The Servicer  shall  indemnify and hold
harmless the Depositor,  the Trustee and their respective  officers,  directors,
agents and affiliates from and against any losses,  damages,  penalties,  fines,
forfeitures,  reasonable legal fees and related costs, judgments and other costs
and expenses to the extent arising out of or based upon a breach by the Servicer
or any of its officers, directors, agents or affiliates of its obligations under
this  Section  3.13(b),  or a  breach  in  any  of  the  representations  in the
certification delivered pursuant to clause (b)(i) above, or the Servicer's gross
negligence,  bad faith or willful  misconduct  in connection  therewith.  If the
indemnification  provided for herein is  unavailable  to the  Depositor  and the
Trustee as a result of a court of law or other administrative or regulatory body
with authority holding such  indemnification  void on the basis of public policy
or similar  reason,  then the Servicer  agrees that it shall  contribute  to the
amount  paid or  payable  by the  Depositor  and the  Trustee as a result of the
losses,  claims,  damages or liabilities of the Depositor or the Trustee in such
proportion as is appropriate to reflect the relative fault of the Trustee or the
Depositor  on the one hand and the  Servicer on the other in  connection  with a
breach  of  the  Servicer's  obligations  under  this  Section  3.13(b)  or  the
Servicer's  gross  negligence,  bad faith or  wilful  misconduct  in  connection
therewith  or a  breach  of  any  of the  representations  in the  certification
delivered pursuant to clause (b)(i) above with respect to the matters covered by
this Section 3.13(b)(ii).

         Section 3.14      ANNUAL   INDEPENDENT   CERTIFIED  PUBLIC ACCOUNTANTS'
                           SERVICING REPORT.

                  Not later than March  15th of each year,  commencing  in 2005,
the  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  fiscal  or  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
subservicers,  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  subservicers.  Promptly upon receipt of such report,  the Servicer  shall
furnish a copy of such  report to the  Depositor,  the  Trustee  and each Rating
Agency.  Copies  of such  statement  shall be  provided  by the  Trustee  to any
Certificateholder  upon request at the  Servicer's  expense,  provided that such
statement is delivered by the Servicer to the Trustee.

         Section 3.15      BOOKS AND RECORDS.

                  The Servicer shall be responsible for  maintaining,  and shall
maintain,  a complete  set of books and records for the related  Mortgage  Loans
which shall be  appropriately  identified in the Servicer's  computer  system to
clearly  reflect the ownership of the related  Mortgage  Loans by the Trust.  In
particular,  the  Servicer  shall  maintain  in its  possession,  available  for
inspection

                                     - 73 -
<PAGE>

by the Trustee and shall  deliver to the Trustee upon  reasonable  prior request
and during normal business hours, evidence of compliance with all federal, state
and local laws, rules and regulations. To the extent that original documents are
not required for purposes of realization  of  Liquidation  Proceeds or Insurance
Proceeds,  documents  maintained by the Servicer may be in the form of microfilm
or microfiche or such other  reliable  means of recreating  original  documents,
including,  but  not  limited  to,  optical  imagery  techniques  so long as the
Servicer complies with the requirements of Accepted Servicing Practices.

                  The  Servicer  shall  maintain  with  respect to each  related
Mortgage Loan and shall upon reasonable prior request and during normal business
hours make  available for  inspection by the Trustee the related  servicing file
during the time such Mortgage Loan is subject to this  Agreement and  thereafter
in accordance with applicable law.

         Section 3.16      THE TRUSTEE.

                  The  Trustee  shall  furnish the  Servicer  with any powers of
attorney and other  documents in form as mutually  agreed upon and  necessary or
appropriate  to enable the Servicer to service and administer the Mortgage Loans
and REO Properties.

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

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

         Section 3.17      REMIC-RELATED COVENANTS.

                  For as long as each REMIC shall exist,  the Trustee  shall act
in accordance herewith to assure continuing  treatment of such REMIC as a REMIC,
and the Trustee  shall comply with any  directions of the Seller or the Servicer
to assure such continuing  treatment.  In particular,  the Trustee shall not (a)
knowingly sell or permit the sale of all or any portion of the Mortgage Loans or
of any investment of deposits in an Account unless such sale is as a result of a
repurchase of the Mortgage  Loans  pursuant to this Agreement or the Trustee has
received a REMIC  Opinion  prepared at the  expense of the Trust  Fund;  and (b)
other than with respect to a substitution pursuant to the Mortgage Loan Purchase
Agreement  or  Section  2.04  of  this

                                     - 74 -
<PAGE>

Agreement, as applicable, accept any contribution to any REMIC after the Startup
Day without receipt of a REMIC Opinion.

         Section 3.18      REIMBURSEMENT OF COSTS AND EXPENSES .

                  (a) To the extent  that the costs and  expenses of the Trustee
related to any termination of the Servicer,  appointment of a Successor Servicer
or the transfer and  assumption of servicing by the Trustee with respect to this
Agreement (including,  without limitation,  (i) all legal costs and expenses and
all due  diligence  costs and  expenses  associated  with an  evaluation  of the
potential termination of the Servicer as a result of an event of default by such
Person and (ii) all costs and expenses  associated with the complete transfer of
servicing,  including  all  servicing  files  and  all  servicing  data  and the
completion, correction or manipulation of such servicing data as may be required
by the  Successor  Servicer  to  correct  any errors or  insufficiencies  in the
servicing  data or  otherwise  to enable the  successor  service to service  the
related  Mortgage  Loans in accordance  with this  Agreement)  are not fully and
timely   reimbursed  by  the   Servicer,   the  Trustee  shall  be  entitled  to
reimbursement of such costs and expenses from the Distribution Account.

                  (b)  If  the  Trustee  acts  as a  Successor  Servicer  to the
Servicer, it will not assume liability for the representations and warranties of
the Servicer contained herein.

         Section 3.19      RELEASE OF MORTGAGE FILES.

                  (a) Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification  that payment in full has
been  escrowed  in  a  manner   customary  for  such  purposes  for  payment  to
Certificateholders  on the next  Distribution  Date,  the Servicer will promptly
furnish to the Trustee and the Custodian,  on behalf of the Trustee,  two copies
of a  certification  substantially  in the form of Exhibit H hereto  signed by a
Authorized Servicer  Representative or in a mutually agreeable electronic format
which will,  in lieu of a signature  on its face,  originate  from a  Authorized
Servicer  Representative  (which  certification shall include a statement to the
effect  that all amounts  received  in  connection  with such  payment  that are
required to be deposited  in the  Custodial  Account  pursuant to Article V have
been or will be so deposited) and shall request that the Custodian, on behalf of
the Trustee,  deliver to the Servicer the related Mortgage File. Within five (5)
Business Days of receipt of such  certification and request,  the Custodian,  on
behalf of the Trustee,  shall release the related  Mortgage File to the Servicer
and the Trustee and Custodian shall have no further  responsibility  with regard
to such  Mortgage  File.  Upon  any  such  payment  in  full,  the  Servicer  is
authorized,  to give,  as agent  for the  Trustee,  as the  mortgagee  under the
Mortgage that secured the related  Mortgage Loan, an instrument of  satisfaction
(or assignment of mortgage without  recourse)  regarding the Mortgaged  Property
subject to the Mortgage, which instrument of satisfaction or assignment,  as the
case may be,  shall be  delivered  to the  Person or  Persons  entitled  thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses  incurred  in  connection  with  such  instrument  of  satisfaction  or
assignment, as the case may be, shall be chargeable to the Custodial Account.

         (b)  From  time  to  time  and as  appropriate  for  the  servicing  or
foreclosure  of any Mortgage Loan and in  accordance  with this  Agreement,  the
Trustee shall  execute such

                                     - 75 -
<PAGE>

documents as shall be prepared and  furnished to the Trustee by the Servicer (in
form  reasonably  acceptable  to  the  Trustee)  and  as  are  necessary  to the
prosecution of any such  proceedings.  The Custodian,  on behalf of the Trustee,
shall, upon the written request of the Servicer,  and delivery to the Custodian,
on behalf of the  Trustee,  of two copies of a request for  release  signed by a
Authorized Servicer Representative substantially in the form of Exhibit H (or in
a mutually agreeable electronic format which will, in lieu of a signature on its
face, originate from a Authorized Servicer Representative),  release the related
Mortgage File held in its  possession  or control to the Servicer.  Such request
for release  shall  obligate  the  Servicer to return the  Mortgage  File to the
Custodian  on behalf of the  Trustee,  when the need  therefor by such Person no
longer exists unless the Mortgage Loan shall be liquidated,  in which case, upon
receipt of a certificate of a Authorized Servicer Representative similar to that
hereinabove specified,  the Mortgage File shall be released by the Custodian, on
behalf of the Trustee, to the Servicer.

         Section 3.20 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF THE SERVICER
TO BE HELD FOR TRUSTEE.

                  (a) The  Servicer (to the extent  required by this  Agreement)
shall  transmit to the Trustee or to Custodian  such  documents and  instruments
coming into the  possession  of such Person from time to time as are required by
the terms  hereof to be  delivered  to the Trustee or the  Custodian.  Any funds
received by the Servicer in respect of any Mortgage Loan or which  otherwise are
collected  by the  Servicer as  Liquidation  Proceeds or  Insurance  Proceeds in
respect of any  Mortgage  Loan shall be held for the  benefit of the Trustee and
the  Certificateholders  subject  to the right of the  Servicer  to  retain  its
Servicing Fee and other amounts as provided in this Agreement.

         Section 3.21    POSSESSION OF CERTAIN INSURANCE POLICIES AND DOCUMENTS.

                  The  Servicer  shall  retain  possession  and  custody  of the
originals (to the extent available) of any Insurance Policies, or certificate of
insurance if applicable,  and any certificates of renewal as to the foregoing as
may be issued from time to time as  contemplated  by this  Agreement.  Until all
amounts  distributable in respect of the  Certificates  have been distributed in
full,  the Trustee (or the  Custodian,  as directed by the Trustee) shall retain
possession  and custody of each Mortgage File in accordance  with and subject to
the terms and conditions of this Agreement.

         Section 3.22    ANNUAL CERTIFICATE AS TO COMPLIANCE.

                  (a) The  Depositor  shall  prepare  and file or  caused  to be
prepared and filed the initial Form 8-K. Within 15 days after each  Distribution
Date, the Trustee shall,  in accordance with industry  standards,  file with the
Commission via the Electronic Data Gathering and Retrieval System  ("EDGAR"),  a
Form 8-K with a copy of the  statement  to be  furnished  by the  Trustee to the
Certificateholders  for such Distribution  Date as an exhibit thereto.  Prior to
January 30, 2005, the Trustee shall, in accordance with industry standards, file
a Form 15 Suspension  Notice with respect to the Trust Fund.  Prior to March 30,
2005 and  annually  thereafter,  if  required,  the  Trustee  shall,  subject to
subsection  (d) below,  file a Form 10-K,  in substance  conforming  to industry
standards,  with respect to the Trust Fund. Such Form 10K shall be signed by the
Depositor  and shall  include,  to the extent  available,  as  exhibits  (i) the
Servicer's  annual

                                     - 76 -
<PAGE>

statement of compliance described under Section 3.13 hereof, (ii) the Servicer's
accountants  report  described  under  Section  3.14 and  (iii)  the  Form  10-K
certification  signed  by the  Depositor.  If items  (i),  (ii) and (iii) in the
preceding  sentence are not 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  Depositor  hereby  grants to the Trustee a
limited  power of  attorney to execute and file each Form 8-K and the Form 15 on
behalf of the Depositor.  Such power of attorney shall continue until either the
earlier of (i) receipt by the Trustee from the Depositor of written  termination
of such  power of  attorney  and (ii) the  termination  of the Trust  Fund.  The
Depositor  agrees to  promptly  furnish to the  Trustee,  from time to time upon
request,  such further information,  reports and financial statements within its
control  related  to  this  Agreement  and the  Mortgage  Loans  as the  Trustee
reasonably deems appropriate to prepare and file a Form 8-K and the Form 15 with
the  Commission.  The Trustee will  reasonably  cooperate  with the Depositor in
connection  with any  additional  filings  with respect to the Trust Fund as the
Depositor deems necessary under the Exchange Act. Copies of all reports filed by
the Trustee under the Exchange Act shall be sent to the Depositor.

                  (b) In connection with the filing of any 10-K  hereunder,  the
Trustee shall sign a certification (in the form attached hereto as Exhibit M) on
behalf of the Depositor regarding certain aspects of the Form 10-K certification
signed  by the  Depositor,  provided,  however,  that the  Trustee  shall not be
required to  undertake  an analysis of any  accountant's  report  attached as an
exhibit to the Form 10-K.

                  (c) (i) 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 3.22 or the
Trustee's negligence, bad faith or willful misconduct in connection therewith.

                           (ii) The Depositor  shall indemnify and hold harmless
the Trustee 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  obligations of the Depositor under this Section 3.22
or the  Depositor's  negligence,  bad faith or willful  misconduct in connection
therewith.

                            (iii) If the indemnification  provided for herein is
unavailable or  insufficient  to hold harmless the Depositor or the Trustee,  as
applicable,  then the other party, in connection with a breach of its respective
obligations under this Section 3.22 or its respective  negligence,  bad faith or
willful misconduct in connection  therewith,  agrees that it shall contribute to
the amount paid or payable by the other party as a result of the losses, claims,
damages or liabilities  of the other party in such  proportion as is appropriate
to reflect the relative  fault and the relative  benefit of the Depositor on the
one hand and the Trustee on the other.

                  (d) Nothing shall be construed from the foregoing  subsections
(a),  (b) and (c) to require the Trustee or any  officer,  director or Affiliate
thereof  to  sign  any  Form  10-K  or  any  certification   contained  therein.
Furthermore, the inability of the Trustee to file a Form 10-K as a result of the
lack of  required  information  as set  forth in  Section  3.22(a)  or  required
signatures on

                                     - 77 -
<PAGE>

 such Form 10-K or any certification contained therein shall not be
regarded as a breach by the Trustee of any obligation under this Agreement.

                  (e)      Notwithstanding the provisions of Section 11.01, this
Section 3.22 may be amended  without the consent of the Certificateholders.

         Section 3.23      UCC.

                  The Seller agrees to execute and file continuation  statements
for any  Uniform  Commercial  Code  financing  statements  which the  Seller has
informed  the Trustee  were filed on the  Closing  Date in  connection  with the
Trust.  The  Seller  shall  file any  financing  statements  or  amendments  and
continuation statements thereto required by any change in the Uniform Commercial
Code.

         Section 3.24      OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.

                  With respect to any  Mortgage  Loans which as of the first day
of a Calendar  Quarter is  delinquent in payment by 91 days or more or is an REO
Property,  the Seller shall have the right to purchase such Mortgage Loan or REO
Property from the Trust at a price equal to the Purchase Price.

                  If at any time the Seller  remits to the Trustee a payment for
deposit in the  Distribution  Account  covering the amount of the Purchase Price
for such a Mortgage Loan,  then the Trustee shall execute the assignment of such
Mortgage Loan at the request of the Seller without  recourse to the Seller which
shall  succeed to all the  Trustee's  right,  title and  interest in and to such
Mortgage Loan, and all security and documents relative thereto.  Such assignment
shall be an assignment outright and not for security.  The Seller will thereupon
own such  Mortgage,  and all such  security and  documents,  free of any further
obligation to the Trustee or the Certificateholders with respect thereto.

                                     - 78 -
<PAGE>

                                   ARTICLE IV

                                    ACCOUNTS

         Section 4.01   COLLECTION OF MORTGAGE LOAN PAYMENTS; CUSTODIAL ACCOUNT.

                  (a) The Servicer shall make  reasonable  efforts in accordance
with Accepted  Servicing  Practices to collect all payments called for under the
terms and provisions of the related Mortgage Loans to the extent such procedures
shall be  consistent  with this  Agreement  and the terms and  provisions of any
related Required Insurance Policy.  Consistent with the foregoing,  the Servicer
may in its  discretion (i) waive any late payment charge and (ii) extend the due
dates for payments due on a Mortgage  Note for a Mortgage  Loan for a period not
greater than 180 days;  provided,  however no such extension shall be materially
adverse to the  Certificateholders.  In the event of any such  arrangement,  the
Servicer  shall make Advances on the related  Mortgage Loan during the scheduled
period in  accordance  with the  amortization  schedule  of such  Mortgage  Loan
without  modification  thereof  by  reason  of such  arrangements,  and shall be
entitled to reimbursement therefor in accordance with Section 5.01. The Servicer
shall not be  required  to  institute  or join in  litigation  with  respect  to
collection of any payment (whether under a Mortgage,  Mortgage Note or otherwise
or against  any public or  governmental  authority  with  respect to a taking or
condemnation)  if it  reasonably  believes  that  enforcing the provision of the
Mortgage  or other  instrument  pursuant  to which such  payment is  required is
prohibited by applicable law. In addition,  if (x) a Mortgage Loan is in default
or default is  imminent  or (y) the  Servicer  delivers  to the  Trustee a REMIC
Opinion,  the Servicer  may, (A) amend the related  Mortgage  Note to reduce the
Mortgage Rate applicable thereto, provided that such reduced Mortgage Rate shall
in no event be lower than 4.50% with respect to any Mortgage  Loan and (B) amend
any Mortgage Note for a Mortgage Loan to extend to the maturity thereof.

                  (b) The  Servicer  shall  establish  and maintain a segregated
Custodial  Account  (which  shall at all times be an  Eligible  Account)  with a
depository  institution  in the  name of the  Servicer  for the  benefit  of the
Trustee on behalf of the Certificateholders and designated "JPMorgan Chase Bank,
as trustee  for  registered  holders  of Nomura  Asset  Acceptance  Corporation,
Mortgage  Pass-Through  Certificates,  Series 2004-AP2".  On behalf of the Trust
Fund,  the  Servicer  shall  deposit or cause to be  deposited  in the  clearing
account in which it  customarily  deposits  payments and  collection 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 Servicer's receipt thereof,
and shall thereafter deposit in the Custodial Account, in no event more than two
Business  Days  after  the  Servicer's  receipt  thereof,  except  as  otherwise
specifically provided herein, the following payments and collections remitted by
subservicers  or  received  by it in  respect  of  the  related  Mortgage  Loans
subsequent  to the Cut-off Date (other than in respect of principal and interest
due on the  related  Mortgage  Loans on or  before  the  Cut-off  Date)  and the
following amounts required to be deposited hereunder:

                  (i) all payments on account of principal,  including Principal
         Prepayments and Subsequent Recoveries, on the related Mortgage Loans;

                  (ii) all  payments  on  account  of  interest  on the  related
         Mortgage Loans net of the related Servicing Fee permitted under Section
         3.10;

                                     - 79 -
<PAGE>

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

                  (iv) any  amount  required  to be  deposited  by the  Servicer
         pursuant to Section  4.01(c) in connection with any losses on Permitted
         Investments;

                  (v) any  amounts  required  to be  deposited  by the  Servicer
         pursuant to Section 3.05;

                  (vi)  any  amounts  paid by an  Advance  Financing  Person  in
         respect of Advances or Servicing Advances;

                  (vii) any  Prepayment  Charges  collected  by the  Servicer in
         connection  with the Principal  Prepayment of any of the Mortgage Loans
         and any Servicer Prepayment Charge Payment Amounts; and

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

                  The  foregoing  requirements  for deposit by the Servicer into
the Custodial  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 or assumption  fees, if collected,  need not be deposited by the
Servicer.  In the event that the Servicer  shall deposit any amount not required
to be deposited  and not  otherwise  subject to  withdrawal  pursuant to Section
4.02,  it may at any time  withdraw or direct the  institution  maintaining  the
Custodial  Account,  to withdraw  such amount from the  Custodial  Account,  any
provision herein to the contrary  notwithstanding.  Such withdrawal or direction
may be  accomplished  by delivering  written notice  thereof to the  institution
maintaining the Custodial Account, that describes the amounts deposited in error
in the Custodial  Account.  The Servicer  shall maintain  adequate  records with
respect to all withdrawals made pursuant to this Section. All funds deposited in
the Custodial  Account shall be held in trust for the  Certificateholders  until
withdrawn in accordance with Section 4.02.

                  (c) The  institution  that maintains the Custodial  Account or
other authorized entity shall invest the funds in the Custodial Account,  in the
manner directed by the Servicer, in Permitted Investments which shall mature not
later than the next succeeding Remittance Date and shall not be sold or disposed
of prior to its maturity.  All such Permitted  Investments  shall be made in the
name of the Trustee, for the benefit of the  Certificateholders.  All income and
gain  net of any  losses  realized  from any  such  investment  shall be for the
benefit of the  Servicer as servicing  compensation  and shall be remitted to it
monthly as provided  herein.  The amount of any losses incurred in the Custodial
Account in respect of any such  investments  shall be  deposited by the Servicer
into the Custodial Account, out of its own funds.

                  (d) The Servicer shall give at least 30 days advance notice to
the Trustee,  the Seller,  each Rating  Agency and the Depositor of any proposed
change of location of the Custodial Account prior to any change thereof.

                                     - 80 -
<PAGE>

         Section 4.02      PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.

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

                  (i) to pay itself (to the  extent  not  previously  paid to or
         withheld by the Servicer), as servicing compensation in accordance with
         Section  3.10,  that portion of any payment of interest that equals the
         Servicing  Fee for the  period  with  respect  to which  such  interest
         payment was made,  and, as  additional  servicing  compensation,  those
         other amounts set forth in Section 3.10;

                  (ii) to reimburse the Servicer or an Advance  Financing Person
         for (A) any  unreimbursed  Advances  to the extent of amounts  received
         which  represent  late  recoveries  of  payments  of  principal  and/or
         interest (net of the related Servicing Fees),  Liquidation Proceeds and
         Insurance  Proceeds on the  Mortgage  Loans with  respect to which such
         Advances were made in accordance  with the  provisions of Section 5.01;
         and (B) any unreimbursed Advances with respect to the final liquidation
         of a Mortgage Loan that are  Nonrecoverable  Advances,  but only to the
         extent that late recoveries of payments of principal  and/or  interest,
         Liquidation  Proceeds and Insurance  Proceeds  received with respect to
         such  Mortgage  Loan are  insufficient  to reimburse the Servicer or an
         Advance Financing Person for such unreimbursed  Advances or (C) subject
         to Section 4.02(b), any unreimbursed  Advances to the extent of Amounts
         Held For Future  Distribution  funds held in the Custodial Account that
         were  not  included  in  the  Available  Distribution  Amount  for  the
         preceding Distribution Date;

                  (iii) to reimburse the Servicer or an Advance Financing Person
         for any Nonrecoverable Advances;

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

                  (v) to pay the  Servicer  any  unpaid  Servicing  Fees  and to
         reimburse  it or any  Advance  Financing  Person  for any  unreimbursed
         Servicing  Advances,  provided,  however,  that the  Servicer's or such
         Advance  Financing   Person's  right  to  reimbursement  for  Servicing
         Advances  pursuant to this  subclause  (v) with respect to any Mortgage
         Loan  shall be  limited  to amounts  received  on  particular  Mortgage
         Loan(s)  (including,  for this purpose,  late recoveries of payments of
         principal and/or interest,  Liquidation  Proceeds,  Insurance Proceeds,
         condemnation  proceeds  and  purchase  and  repurchase  proceeds)  that
         represent  late  recoveries  of the payments  for which such  Servicing
         Advances were made;

                  (vi) to pay to the  Seller or the  Depositor  with  respect to
         each  Mortgage  Loan or property  acquired in respect  thereof that has
         been  purchased  pursuant to Section  2.02,  2.03 or 3.24,  all amounts
         received  thereon and not taken into account in determining the related
         Stated Principal Balance of such repurchased Mortgage Loan;

                  (vii) to pay any expenses recoverable by the Servicer pursuant
         to Section 7.04;

                                     - 81 -
<PAGE>

                  (viii) to  withdraw  any  amount  deposited  in the  Custodial
         Account and not required to be deposited therein; and

                  (ix)   to  clear  and t erminate  the  Custodial  Account upon
         termination of this Agreement  pursuant to Section 10.01 hereof.

                  In  addition,  no later  than  3:00 p.m.  Eastern  time on the
Remittance  Date,  the Servicer  shall  withdraw from the Custodial  Account and
remit to the Trustee (a) all amounts  deposited in the  Custodial  Account as of
the close of  business on the last day of the related Due Period (net of charges
against or  withdrawals  from the  Custodial  Account  pursuant to this  Section
4.02),  plus (b) all Advances,  if any,  which the Servicer is obligated to make
pursuant  to Section  5.01,  minus (c) any  amounts  attributable  to  Principal
Prepayments,  Liquidation Proceeds,  Insurance Proceeds or condemnation proceeds
received after the applicable Prepayment Period, which amounts shall be remitted
on the  following  Remittance  Date,  together  with any  Compensating  Interest
required  to be  deposited  in the  Custodial  Account in  connection  with such
Principal  Prepayment in accordance with Section 5.02, and minus (d) any amounts
attributable to Scheduled  Payments collected but due on a Due Date or Due Dates
subsequent to the first day of the month in which such  Remittance  Date occurs,
which amounts shall be remitted on the Remittance  Date next  succeeding the Due
Date related to such Scheduled Payment.

                  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 Custodial  Account  pursuant to subclauses (i), (ii),  (iv),
(v) and (vi) above.  Prior to making any withdrawal  from the Custodial  Account
pursuant  to  subclause  (iii),  the  Servicer  shall  deliver to the Trustee an
Officer's  Certificate of a Authorized  Servicer  Representative  indicating the
amount of any previous Advance or Servicing  Advance  determined by the Servicer
to be a Nonrecoverable Advance and identifying the related Mortgage Loan(s), and
their respective portions of such Nonrecoverable Advance.

                  (b) Notwithstanding the foregoing, any Amounts Held For Future
Distribution  withdrawn by the Servicer as permitted in Section  4.02(a)(ii)  in
reimbursement of Advances previously made by the Servicer shall be appropriately
reflected in the  Servicer's  records and replaced by the Servicer by deposit in
the  Custodial  Account,  no later  than the  close of  business  on any  future
Remittance Date on which the funds on deposit in the Custodial  Account shall be
less than the amount  required to be  remitted  to the Trust on such  Remittance
Date;  provided,  however  that if the  rating of the  Servicer  (including  any
Successor  Servicer)  is less than  "BBB",  the  Servicer  shall be  required to
replace  such funds by deposit to the  Distribution  Account,  no later than the
close of business on the Remittance Date immediately following the Due Period or
Prepayment Period for which such amounts relate.

         Section 4.03      REPORTS TO TRUSTEE.

         On or before the tenth  calendar day of each month,  the Servicer shall
furnish to the Trustee  electronically in a format reasonably  acceptable to the
Trustee loan accounting reports in the investor's  assigned loan number order to
document the payment  activity on each Mortgage

                                     - 82 -
<PAGE>

Loan on an individual mortgage loan basis. With respect to each month, such loan
accounting reports shall contain the following:

                  (i) With respect to each Scheduled  Payment (on both an actual
         and  scheduled  basis with respect to mortgage  loan balances and on an
         actual basis with respect to  paid-through  dates),  the amount of such
         remittance  allocable to principal  (including a separate  breakdown of
         any  Principal  Prepayment,  including  the  amount  of any  Prepayment
         Interest Shortfall);

                  (ii) with respect to each Monthly Payment,  the amount of such
         remittance allocable to scheduled interest;

                  (iii) the amount of any  Prepayment  Charges  collected by the
         Servicer;

                  (iv) the  amount of  servicing  compensation  received  by the
         Servicer during the prior calendar month;

                  (v) the  aggregate  Stated  Principal  Balance of the Mortgage
         Loans;

                  (vi) the  aggregate  amount of Advances  made by the  Servicer
         pursuant to Section 5.01;

                  (vii) the aggregate of any expenses reimbursed to the Servicer
         during the prior calender month pursuant to Section 4.02; and

                  (viii) the number and aggregate outstanding principal balances
         of Mortgage  Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days,
         (3) 90 days or more; (b) as to which foreclosure has commenced; and (c)
         as to which REO Property has been acquired.

         Section 4.04      COLLECTION OF TAXES;  ASSESSMENTS AND  SIMILAR ITEMS;
                           ESCROW ACCOUNTS.

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

                  Withdrawals of amounts so collected  from the Escrow  Accounts
may be made  only  to  effect  timely  payment  of  taxes,  assessments,  hazard
insurance premiums, condominium or PUD association dues, or comparable items, to
reimburse  the Servicer out of related  collections  for any payments  made with
respect to each  Mortgage  Loan  pursuant to Section 3.01 (with respect to taxes
and assessments and insurance premiums) and Section 3.05 (with respect to hazard
insurance),  to refund to any  Mortgagors  any sums as may be  determined  to be
overages,  to pay  interest,  if  required  by law or the  terms of the  related
Mortgage or Mortgage Note, to such Mortgagors on balances in the Escrow Account,
to remove  amounts  deposited  in error or to clear  and  terminate  the  Escrow
Account at the  termination of this  Agreement in

                                     - 83 -
<PAGE>

accordance with Section 10.01 thereof. The Escrow Account shall not be a part of
the Trust Fund.

         Section 4.05      RESERVED.

         Section 4.06      DISTRIBUTION ACCOUNT.

                  (a) The Trustee  shall  establish  and maintain in the name of
the Trustee, for the benefit of the Certificateholders, the Distribution Account
as a segregated non-interest bearing trust account or accounts. The Trustee will
deposit in the Distribution Account as identified by the Trustee and as received
by the Trustee, the following amounts:

                           (i)  All  payments  and   recoveries  in  respect  of
principal  on the  Mortgage  Loans,  including,  without  limitation,  Principal
Prepayments,  Subsequent Recoveries,  Liquidation Proceeds,  Insurance Proceeds,
condemnation  proceeds and all payments and recoveries in respect of interest on
the Mortgage  Loans  withdrawn by the Servicer  from the  Custodial  Account and
remitted by the Servicer to the Trustee;

                           (ii)  Any  Advance  and  any  Compensating   Interest
Payments;

                           (iii) Any   Prepayment   Charges   collected  by  the
Servicer in  connection  with the  Principal  Prepayment  of any of the Mortgage
Loans (including any Servicer Prepayment Charge Payment Amounts);

                           (iv)  Any Insurance Proceeds or Liquidation  Proceeds
received  by or on  behalf  of the  Trustee  or which  were not  deposited  in a
Custodial Account;

                           (v)   The   Repurchase   Price  with respect  to  any
Mortgage  Loans  purchased  by the Seller or Section  2.02 or 2.03,  any amounts
which are to be  treated  pursuant  to  Section  2.04 of this  Agreement  as the
payment of such a Repurchase  Price,  the  Repurchase  Price with respect to any
Mortgage  Loans  purchased by the Depositor  pursuant to Section  3.26,  and all
proceeds  of any  Mortgage  Loans or  property  acquired  with  respect  thereto
repurchased by the Depositor or its designee pursuant to Section 10.01;

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

                           (vii) Any other  amounts  received by or on behalf of
the Trustee and required to be deposited in the Distribution Account pursuant to
this Agreement.(Ii)a

                  (b) All amounts deposited to the Distribution Account shall be
held by the  Trustee in the name of the  Trustee in trust for the benefit of the
Certificateholders   in  accordance  with  the  terms  and  provisions  of  this
Agreement.  The  requirements  for crediting the  Distribution  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 or assumption,
tax service, statement account or payoff,  substitution,  satisfaction,  release
and other like fees and  charges,  need not be credited  by the  Servicer to the
Distribution Account.

                                     - 84 -
<PAGE>

                  (c)  The  amount  at any  time  credited  to the  Distribution
Account shall be held uninvested.

         Section 4.07  PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION
                       ACCOUNT.

                  (a) The  Trustee  will,  from time to time make or cause to be
made such  withdrawals or transfers from the  Distribution  Account  pursuant to
this Agreement for the following purposes:

                           (i) On an ongoing basis,  Trustee to pay any expenses
recoverable by the Trustee pursuant to this Agreement.

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

                           (iii) to reimburse  the Trustee or the Servicer  from
Insurance  Proceeds or Liquidation  Proceeds  relating to a particular  Mortgage
Loan for amounts  expended by the Trustee as Successor  Servicer or the Servicer
in good  faith in  connection  with the  restoration  of the  related  Mortgaged
Property  which was  damaged by an  uninsured  cause or in  connection  with the
liquidation of such Mortgage Loan;

                           (iv) to reimburse  the Trustee as Successor  Servicer
or the Servicer from Insurance  Proceeds relating to a particular  Mortgage Loan
for  insured  expenses  incurred  with  respect  to such  Mortgage  Loan  and to
reimburse  the Trustee as Successor  Servicer or the Servicer  from  Liquidation
Proceeds from a particular Mortgage Loan for Liquidation  Expenses incurred with
respect to such Mortgage Loan;

                           (v) to reimburse the Trustee as Successor Servicer or
the Servicer for advances of funds pursuant to this Agreement,  and the right to
reimbursement  pursuant to this subclause  being limited to amounts  received on
the related  Mortgage  Loan  (including,  for this purpose,  the Purchase  Price
therefor,  Insurance Proceeds,  Liquidation Proceeds and condemnation  proceeds)
which  represent  late  recoveries  of the payments for which such advances were
made;

                           (vi) to reimburse  the Trustee as Successor  Servicer
or the  Servicer  for any  Advance or  advance,  after a Realized  Loss has been
allocated  with respect to the related  Mortgage  Loan if the Advance or advance
has not been reimbursed pursuant to clauses (ii) and (v);

                           (vii)    Reserved;

                           (viii) to reimburse the Trustee for  expenses,  costs
and  liabilities  incurred by and  reimbursable to it pursuant to this Agreement
(including  the  expenses  of the  Trustee  in

                                     - 85 -
<PAGE>

connection  with  a  tax  audit  in  connection  with  the  performance  of  its
obligations pursuant to Section 9.12);

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

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

                           (xi) to reimburse  the Trustee for expenses  incurred
in the transfer of servicing  responsibilities  of the terminated Servicer after
the occurrence and  continuance of a Servicer  Default to the extent not paid by
the terminated Servicer;

                           (xii)  after the  occurrence  of an event of  default
under the Advance  Facility,  to reimburse any Advance  Financing Person for any
Advances or Servicing Advances made by such Advance Financing Person pursuant to
Section 5.01(b) and not reimbursed to such Advance  Financing Person pursuant to
Section 4.02;

                           (xiii) to reimburse the Custodian for expenses, costs
and liabilities incurred or reimbursable to it pursuant to this Agreement;

                           (xiv) to remove amounts deposited in error; and

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

                  (b) The Trustee shall keep and maintain  separate  accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution  Account pursuant to subclauses (ii) through
(v),  inclusive,  and (vii) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Trustee
without being deposited in the Distribution Account under Section 4.07.

                  (c) On each  Distribution  Date, the Trustee shall  distribute
the Available  Distribution Amount in the Distribution Account to the holders of
the Certificates in accordance with Section 5.04.

                                     - 86 -
<PAGE>

                                    ARTICLE V

                           ADVANCES AND DISTRIBUTIONS

         Section 5.01      ADVANCES; ADVANCE FACILITY.

                  (a) The  Servicer  shall make an Advance  with  respect to any
Mortgage Loan and deposit such Advance in the Distribution Account no later than
3:00 p.m.  Eastern time on the Remittance Date in immediately  available  funds.
The Servicer shall be obligated to make any such Advance only to the extent that
such advance would not be a Nonrecoverable  Advance.  If the Servicer shall have
determined that it has made a Nonrecoverable  Advance or that a proposed Advance
or a lesser portion of such Advance would constitute a  Nonrecoverable  Advance,
the  Servicer  shall  deliver  (i)  to  the  Trustee  for  the  benefit  of  the
Certificateholders  funds constituting the remaining portion of such Advance, if
applicable,  and (ii) to the  Depositor,  each Rating  Agency and the Trustee an
Officer's Certificate setting forth the basis for such determination.

                  In lieu of making  all or a portion of such  Advance  from its
own funds,  the  Servicer may (i) cause to be made an  appropriate  entry in its
records  relating to the  Custodial  Account  that any  Amounts  Held for Future
Distribution  has been used by the Servicer in discharge  of its  obligation  to
make any such Advance and (ii)  transfer  such funds from the related  Custodial
Account to the Distribution  Account. Any funds so applied and transferred shall
be replaced by the  Servicer by deposit in the  Distribution  Account,  no later
than the close of business on any future  Remittance  Date on which the funds on
deposit in the Custodial  Account  shall be less than the amount  required to be
remitted to the Trust on such  Remittance  Date;  provided,  however that if the
rating of the Servicer  (including  any Successor  Servicer) is less than "BBB",
the  Servicer  shall  be  required  to  replace  such  funds by  deposit  to the
Distribution Account, no later than the close of business on the Remittance Date
immediately following the Due Period or Prepayment Period for which such amounts
relate.

                  The  Servicer  shall be  entitled  to be  reimbursed  from the
Custodial  Account  for all  Advances  of its own funds  made  pursuant  to this
Section as  provided in Section  4.02.  The  obligation  to make  Advances  with
respect to any Mortgage Loan shall  continue until such Mortgage Loan is paid in
full or the  related  Mortgaged  Property  or  related  REO  Property  has  been
liquidated  or  until  the  purchase  or  repurchase  thereof  (or  substitution
therefor)  from the Trust Fund  pursuant  to any  applicable  provision  of this
Agreement, except as otherwise provided in this Section 5.01.

                  Subject to and in  accordance  with the  provisions of Article
VIII hereof, in the event that the Servicer fails to make such Advance, then the
Trustee, as a Successor  Servicer,  shall be obligated to make such Advance only
to the extent such  Advance,  if made,  would not  constitute  a  Nonrecoverable
Advance, subject to the provisions of Sections 5.01 and 8.02.

                  (b)(i)  The  Servicer  is hereby  authorized  to enter  into a
financing or other facility (any such arrangement,  an "Advance Facility"),  the
documentation for which complies with Section  5.01(b)(v) below, under which (1)
the Servicer assigns or pledges its rights under this

                                     - 87 -
<PAGE>

Agreement to be reimbursed for any or all Advances and/or Servicing  Advances to
(i) a  Person,  which  may be a  special-purpose  bankruptcy-remote  entity  (an
"SPV"), (ii) a Person, which may simultaneously  assign or pledge such rights to
an SPV or (iii) a lender (a "Lender"),  which,  in the case of any Person or SPV
of the type  described  in  either of the  preceding  clauses  (i) or (ii),  may
directly  or through  other  assignees  and/or  pledgees,  assign or pledge such
rights to a Person,  which may include a trustee  acting on behalf of holders of
debt  instruments  (any such Person or any such  Lender,  an "Advance  Financing
Person"), and/or (2) an Advance Financing Person agrees to fund all the Advances
and/or Servicing  Advances  required to be made by the Servicer pursuant to this
Agreement.  No consent of the  Trustee,  Certificateholders  or any other  party
shall be required  before the  Servicer  may enter into an Advance  Facility nor
shall the Trustee or the  Certificateholders be a third party beneficiary of any
obligation of an Advance Financing Person to the Servicer.  Notwithstanding  the
existence of any Advance Facility under which an Advance Financing Person agrees
to fund Advances and/or  Servicing  Advances,  (A) the Servicer (i) shall remain
obligated  pursuant to this Agreement to make Advances and/or Servicing Advances
pursuant to and as required by this  Agreement and (ii) shall not be relieved of
such  obligations by virtue of such Advance Facility and (B) neither the Advance
Financing Person nor any Servicer's Assignee (as hereinafter defined) shall have
any right to proceed against or otherwise  contact any Mortgagor for the purpose
of collecting  any payment that may be due with respect to any related  Mortgage
Loan or enforcing any covenant of such Mortgagor under the related Mortgage Loan
documents.

                  (ii) If the  Servicer  enters  into an Advance  Facility,  the
Servicer and the related Advance  Financing  Person shall deliver to the Trustee
at the  address  set forth in Section  11.05  hereof no later than the  Servicer
Remittance  Date  immediately  following  the  effective  date of  such  Advance
Facility a written  notice  (an  "Advance  Facility  Notice"),  stating  (a) the
identity of the Advance Financing Person and (b) the identity of the Person (the
"Servicer's  Assignee") that will, subject to Section  5.01(b)(iii) hereof, have
the right to make  withdrawals  from the Custodial  Account  pursuant to Section
4.02 hereof to  reimburse  previously  unreimbursed  Advances  and/or  Servicing
Advances ("Advance  Reimbursement  Amounts").  Advance Reimbursement Amounts (i)
shall consist solely of amounts in respect of Advances and/or Servicing Advances
for which the Servicer would be permitted to reimburse itself in accordance with
Section  4.02 hereof,  assuming  the  Servicer  had made the related  Advance(s)
and/or  Servicing  Advance(s) and (ii) shall not consist of amounts payable to a
successor  Servicer  in  accordance  with  Section  4.02  hereof  to the  extent
permitted under Section 5.01(b)(v) below.

                  (iii)  Notwithstanding  the existence of an Advance  Facility,
the  Servicer,  on behalf of the  Advance  Financing  Person and the  Servicer's
Assignee,  shall be  entitled  to  receive  reimbursements  of  Advances  and/or
Servicing Advances in accordance with Section 4.02 hereof, which entitlement may
be terminated by the Advance  Financing  Person  pursuant to a written notice to
the Trustee in the manner set forth in Section  11.05  hereof.  Upon  receipt of
such  written  notice,  the  Servicer  shall no longer be  entitled  to  receive
reimbursement for any Advance  Reimbursement Amounts and the Servicer's Assignee
shall  immediately  have the right to receive  from the  Custodial  Account  all
Advance  Reimbursement  Amounts.  Notwithstanding  the  foregoing,  and  for the
avoidance of doubt,  (i) the Servicer and/or the Servicer's  Assignee shall only
be entitled to reimbursement  of Advance  Reimbursement  Amounts  hereunder from
withdrawals  from  the  Custodial  Account  pursuant  to  Section  4.02  of this
Agreement  and shall

                                     - 88 -
<PAGE>

not otherwise be entitled to make  withdrawals or receive  amounts that shall be
deposited in the Distribution  Account pursuant to Section 4.06 hereof, and (ii)
none of the  Trustee  or the  Certificateholders  shall  have any  right  to, or
otherwise be entitled to, receive any Advance Reimbursement Amounts to which the
Servicer or Servicer's  Assignee,  as applicable,  shall be entitled pursuant to
Section 4.02 hereof.  An Advance Facility may be terminated by the joint written
direction of the  Servicer and the related  Advance  Financing  Person.  Written
notice of such  termination  shall be delivered to the Trustee in the manner set
forth in Section 11.05 hereof.  None of the Depositor or the Trustee shall, as a
result of the existence of any Advance  Facility,  have any  additional  duty or
liability   with  respect  to  the   calculation   or  payment  of  any  Advance
Reimbursement Amount, nor, as a result of the existence of any Advance Facility,
shall the Depositor or the Trustee have any additional  responsibility  to track
or monitor the  administration of the Advance Facility or the payment of Advance
Reimbursement  Amounts to Servicer's Assignee.  The Servicer shall indemnify the
Depositor, the Trustee, any successor Servicer and the Trust Fund for any claim,
loss,  liability  or damage  resulting  from any claim by the related  Advancing
Financing  Person,  except to the extent that such  claim,  loss,  liability  or
damage  resulted  from or  arose  out of  negligence,  recklessness  or  willful
misconduct on the part of the Depositor,  the Trustee or any successor Servicer,
as the case may be, or failure by the successor Servicer or the Trustee,  as the
case may be, to remit funds as required by this  Agreement or the  commission of
an act or omission to act by the successor Servicer or the Trustee,  as the case
may be, and the passage of any  applicable  cure or grace  period,  such that an
Event of  Default  under  this  Agreement  occurs or such  entity is  subject to
termination  for cause under this  Agreement.  The Servicer  shall  maintain and
provide to any successor  Servicer  and,  upon  request,  the Trustee a detailed
accounting  on a  loan-by-loan  basis as to  amounts  advanced  by,  pledged  or
assigned to, and  reimbursed to any Advancing  Financing  Person.  The successor
Servicer  shall be  entitled  to rely on any such  information  provided  by the
Servicer,  and the successor Servicer shall not be liable for any errors in such
information.

                  (iv) An Advance Financing Person who receives an assignment or
pledge  of  rights  to  receive  Advance   Reimbursement  Amounts  and/or  whose
obligations  are limited to the funding of Advances  and/or  Servicing  Advances
pursuant to an Advance  Facility  shall not be required to meet the criteria for
qualification as the Servicer.

                  (v) As between the Servicer and its Advance  Financing Person,
on the one hand, and a successor  Servicer and its Advance  Financing Person, if
any, on the other hand,  Advance  Reimbursement  Amounts on a loan-by-loan basis
with  respect  to each  Mortgage  Loan as to which an Advance  and/or  Servicing
Advance  shall  have  been  made  and be  outstanding  shall be  allocated  on a
"first-in,  first out" basis.  In the event the  Servicer's  Assignee shall have
received  some or all of an Advance  Reimbursement  Amount  related to  Advances
and/or Servicing  Advances that were made by a Person other than the Servicer or
its related  Advance  Financing  Person in error,  then the Servicer's  Assignee
shall be required to remit any portion of such Advance  Reimbursement  Amount to
each  Person  entitled to such  portion of such  Advance  Reimbursement  Amount.
Without  limiting the  generality of the  foregoing,  the Servicer  shall remain
entitled to be  reimbursed  by the  Advance  Financing  Person for all  Advances
and/or  Servicing  Advances  funded by the  Servicer  to the extent the  related
Advance  Reimbursement Amounts have not been assigned or pledged to such Advance
Financing Person or Servicer's Assignee.

                                     - 89 -
<PAGE>

                  (vi) For purposes of any Officer's Certificate of the Servicer
delivered pursuant to Section 5.01(a),  any  Nonrecoverable  Advance referred to
therein may have been made by the Servicer. In making its determination that any
Advance  or  Servicing  Advance  theretofore  made has  become a  Nonrecoverable
Advance, the Servicer shall apply the same criteria in making such determination
regardless of whether such Advance or Servicing  Advance shall have been made by
the Servicer.

                  (vii) Any  amendment to this  Section  5.01(b) 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  5.01(b),
including amendments to add provisions relating to a successor Servicer,  may be
entered into by the Trustee,  the Depositor and the Servicer without the consent
of any  Certificateholder,  provided such amendment  complies with Section 11.01
hereof.  All reasonable costs and expenses  (including  attorneys' fees) of each
party hereto of any such  amendment  shall be borne solely by the Servicer.  The
parties  hereto  hereby  acknowledge  and agree that:  (a) the  Advances  and/or
Servicing  Advances  financed by and/or pledged to an Advance  Financing  Person
under any Advance  Facility are  obligations  owed to the Servicer  payable only
from the cash flows and proceeds received under this Agreement for reimbursement
of Advances and/or Servicing  Advances only to the extent provided  herein,  and
the Trustee and the Trust are not, as a result of the  existence  of any Advance
Facility,  obligated or liable to repay any Advances and/or  Servicing  Advances
financed by the Advance Financing  Person;  (b) the Servicer will be responsible
for remitting to the Advance  Financing Person the applicable  amounts collected
by it as  reimbursement  for Advances  and/or  Servicing  Advances funded by the
Advance Financing Person,  subject to the provisions of this Agreement;  and (c)
the  Trustee  shall  not  have  any  responsibility  to  track  or  monitor  the
administration of the financing arrangement between the Servicer and any Advance
Financing Person.

         Section 5.02      COMPENSATING INTEREST PAYMENTS.

         In the event that there is a Prepayment Interest Shortfall arising from
a  voluntary  Principal  Prepayment  in part or in  full by the  Mortgagor  with
respect to any Mortgage Loan, the Servicer shall, to the extent of the Servicing
Fee for such  Distribution  Date,  deposit into the Distribution  Account,  as a
reduction of and to the extent of, the Servicing Fee for such Distribution Date,
no later than the close of business on the Remittance Date immediately preceding
such Distribution  Date, an amount equal to the Prepayment  Interest  Shortfall;
and in case of such deposit,  the Servicer shall not be entitled to any recovery
or reimbursement from the Depositor,  the Trustee, the Seller, the Trust Fund or
the Certificateholders.

         Section 5.03      REMIC DISTRIBUTIONS.

                  On each  Distribution  Date the  Trustee,  shall be  deemed to
allocate distributions to the REMIC I Regular Interests and the REMIC II Regular
Interests in accordance with Section 5.07 hereof.

         Section 5.04      DISTRIBUTIONS.

                                     - 90 -
<PAGE>

                  (a) On each  Distribution  Date,  the  Available  Distribution
Amount for such  Distribution  Date  shall be  withdrawn  by the  Trustee to the
extent of funds on  deposit  in the  Distribution  Account  and  distributed  as
directed in accordance with the Remittance Report for such Distribution Date, in
the following order of priority:

              FIRST, to pay interest on the  Certificates in the following order
of priority:

                  1.  FIRST, to the extent of the Interest Remittance Amount, to
                      the  holders  of  the  Senior  Certificates,   the  Senior
                      Interest  Distribution  Amount for each such Class and for
                      such Distribution Date, then, SECOND, to the extent of the
                      remaining Available Distribution Amount, to the holders of
                      the Senior Certificates,  the Senior Interest Distribution
                      Amount not previously  distributed in FIRST above, to each
                      such Class and for such  Distribution  Date, in each case,
                      on a pro rata basis, based on the entitlement of each such
                      Class;

                  2.  to the extent of the Interest  Remittance Amount remaining
                      after  distribution  of the Senior  Interest  Distribution
                      Amount to the holders of the Senior  Certificates,  to the
                      holders  of  the  Class  M-1  Certificates,  the  Interest
                      Distribution  Amount for such Class for such  Distribution
                      Date;

                  3.  to the extent of the Interest  Remittance Amount remaining
                      after  distribution  of the Senior  Interest  Distribution
                      Amount to the holders of the Senior  Certificates  and the
                      Interest  Distribution  Amount to holders of the Class M-1
                      Certificates,   to   the   holders   of  the   Class   M-2
                      Certificates,  the Interest  Distribution  Amount for such
                      Class for such Distribution Date; and

                  4.  to the extent of the Interest  Remittance Amount remaining
                      after  distribution  of the Senior  Interest  Distribution
                      Amount to the  holders  of the  Senior  Certificates,  the
                      Interest  Distribution  Amount to the holders of the Class
                      M-1 Certificates and the Interest  Distribution  Amount to
                      the holders of the Class M-2 Certificates,  to the holders
                      of the Class M-3 Certificates,  the Interest  Distribution
                      Amount for such Class for such Distribution Date.

         SECOND,  to pay  principal  on the  Certificates,  to the extent of the
Principal  Distribution  Amount for each  Distribution  Date,  in the  following
amount and order of priority:

                  1.       The  Senior  Principal  Distribution  Amount for such
                           Distribution  Date will be  distributed to the Senior
                           Certificates (other than the Class A-IO Certificates)
                           as follows:

                           FIRST, to the Class A-6 Certificates, in an amount up
                           to  the  Class  A-6  Lockout  Principal  Distribution
                           Amount  for  such   Distribution   Date,   until  the
                           Certificate   Principal   Balance  thereof  has  been
                           reduced to zero; and

                           SECOND,  any remaining Senior Principal  Distribution
                           Amount  after the  distribution  described  in clause
                           first above, sequentially:

                                     - 91 -
<PAGE>

                           o  to  the   Class   A-1   Certificates,   until  the
                              Certificate  Principal  Balance  thereof  has been
                              reduced to zero;

                           o  to  the   Class   A-2   Certificates,   until  the
                              Certificate  Principal  Balance  thereof  has been
                              reduced to zero;

                           o  to the Class A-3A  Certificates and the Class A-3B
                              Certificates,  on a pro rata  basis,  based on the
                              Certificate  Principal Balance of each such Class,
                              until the Certificate  Principal  Balances thereof
                              have been reduced to zero;

                           o  to  the   Class   A-4   Certificates,   until  the
                              Certificate  Principal  Balance  thereof  has been
                              reduced to zero;

                           o  to  the   Class   A-5   Certificates,   until  the
                              Certificate  Principal  Balance  thereof  has been
                              reduced to zero; and

                           o  to  the   Class   A-6   Certificates,   until  the
                              Certificate  Principal  Balance  thereof  has been
                              reduced to zero.

                  2.       To the extent of any  Principal  Distribution  Amount
                           remaining after  distribution of the Senior Principal
                           Distribution  Amount  to the  holders  of the  Senior
                           Certificates (other than the Class A-IO Certificates)
                           on  such   Distribution   Date,   to  the  Class  M-1
                           Certificates,  in an  amount  equal to the  Class M-1
                           Principal  Distribution  Amount for such Distribution
                           Date, until the Certificate Principal Balance thereof
                           has been reduced to zero.

                  3.       To the extent of any  Principal  Distribution  Amount
                           remaining after  distribution of the Senior Principal
                           Distribution  Amount  to the  holders  of the  Senior
                           Certificates (other than the Class A-IO Certificates)
                           on such Distribution Date and the distribution of the
                           Class  M-1  Principal   Distribution  Amount  to  the
                           holders  of  the  Class  M-1   Certificates  on  such
                           Distribution Date, to the Class M-2 Certificates,  in
                           an  amount   equal  to  the   Class   M-2   Principal
                           Distribution Amount for such Distribution Date, until
                           the  Certificate  Principal  Balance thereof has been
                           reduced to zero.

                  4.       To the extent of any  Principal  Distribution  Amount
                           remaining after  distribution of the Senior Principal
                           Distribution  Amount  to the  holders  of the  Senior
                           Certificates (other than the Class A-IO Certificates)
                           on such  Distribution  Date, the  distribution of the
                           Class M-1 Principal  Distribution Amount to the Class
                           M-1  Certificates on such  Distribution  Date and the
                           distribution of the Class M-2 Principal  Distribution
                           Amount to the  holders of the Class M-2  Certificates
                           on  such   Distribution   Date,   to  the  Class  M-3
                           Certificates  in an  amount  equal to the  Class  M-3
                           Principal  Distribution  Amount for such Distribution
                           Date, until the Certificate Principal Balance thereof
                           has been reduced to zero.

                                     - 92 -
<PAGE>

         THIRD,  after the payment of interest and principal to the Certificates
as described in clauses FIRST and SECOND above,  any Net Monthly Excess Cashflow
for such Distribution Date will be distributed as follows:

                  1.       To the holders of the Publicly  Offered  Certificates
                           (other than the Class A-IO Certificates) in an amount
                           equal to any Extra Principal  Distribution Amount for
                           such  Distribution  Date,  payable to such holders as
                           part  of  the   Principal   Distribution   Amount  in
                           accordance with clause SECOND above;

                  2.       To the holders of the Class M-1 Certificates, then to
                           the holders of the Class M-2 Certificates and then to
                           the  holders  of  the  Class  M-3  Certificates,  the
                           related   Interest   Carry  Forward  Amount  on  such
                           Distribution Date;

                  3.       To the Net WAC Reserve Fund, in respect of the Senior
                           Certificates    (other    than   the    Class    A-IO
                           Certificates),  the Net WAC Rate Carryover Amount for
                           each  such  Class for such  Distribution  Date or any
                           prior Distribution Dates to the extent unpaid;

                  4.       To the Net WAC Reserve  Fund, in respect of the Class
                           M-1  Certificates,  the Net WAC Rate Carryover Amount
                           for  such  Class  for such  Distribution  Date or any
                           prior Distribution Dates to the extent unpaid;

                  5.       To the Net WAC Reserve  Fund, in respect of the Class
                           M-2  Certificates,  the Net WAC Rate Carryover Amount
                           for  such  Class  for such  Distribution  Date or any
                           prior Distribution Dates to the extent unpaid;

                  6.       To the Net WAC Reserve  Fund, in respect of the Class
                           M-3  Certificates,  the Net WAC Rate Carryover Amount
                           for  such  Class  for such  Distribution  Date or any
                           prior Distribution Dates to the extent unpaid;

                  7.       To the holders of the Class C Certificates, the Class
                           C Distribution Amount; and

                  8.       To  the  Holders  of the  Class  R  Certificates,  in
                           respect  of the Class  R-3  Interest,  any  remaining
                           amounts.

         On each  Distribution  Date,  the  Trustee,  after  making the required
distributions  of interest  and  principal to the  Certificates  as described in
clauses  FIRST and SECOND  above and after the  distribution  of the Net Monthly
Excess  Cashflow as described in clause THIRD above,  will withdraw from the Net
WAC Reserve Fund the amounts on deposit  therein and distribute  such amounts to
the  Senior  Certificates  (other  than the  Class  A-IO  Certificates)  and the
Mezzanine  Certificates in respect of any Net WAC Rate Carryover  Amounts due to
each  such  Class  in  the  following  manner  and  order  of  priority:  first,
concurrently to the Senior Certificates, other than the Class A-IO Certificates,
on a pro rata basis,  based on the  entitlement of each such Class,  the related
Net WAC Rate Carryover  Amount for such  Distribution  Date for each such Class;

                                     - 93 -
<PAGE>

second, to the Class M-1 Certificates, the related Net WAC Rate Carryover Amount
for such Distribution Date for such Class; third, to the Class M-2 Certificates,
the related Net WAC Rate Carryover  Amount for such  Distribution  Date for such
Class;  and  fourth,  to the Class M-3  Certificates,  the  related Net WAC Rate
Carryover Amount for such Distribution Date for such Class.

                  (b)  On  each  Distribution  Date,  all  amounts  representing
Prepayment  Charges in respect of the Mortgage Loans received during the related
Prepayment  Period and deposited in the  Distribution  Account will be withdrawn
from the Distribution  Account and distributed by the Trustee in accordance with
the Remittance Report to the Class P Certificates and shall not be available for
distribution to the holders of any other Class of  Certificates.  The payment of
such Prepayment  Charges shall not reduce the Certificate  Principal  Balance of
the Class P Certificates.

                  (c)  Subject  to Section  10.02  hereof  respecting  the final
distribution,  on each Distribution Date the Trustee shall make distributions to
each  Certificateholder  of record on the  preceding  Record Date either by wire
transfer in immediately  available funds to the account of such holder at a bank
or other entity having appropriate  facilities therefor,  if (i) such Holder has
so  notified  the Trustee at least 5 Business  Days prior to the related  Record
Date and (ii)  such  Holder  shall  hold  Regular  Certificates  with  aggregate
principal  denominations  of not less than $1,000,000 or evidencing a Percentage
Interest aggregating 10% or more with respect to such Class or, if not, by check
mailed by first  class  mail to such  Certificateholder  at the  address of such
holder appearing in the Certificate Register. Notwithstanding the foregoing, but
subject to Section 10.02 hereof respecting the final distribution, distributions
with respect to  Certificates  registered  in the name of a Depository  shall be
made to such Depository in immediately available funds.

                  (d) On each  Distribution  Date, the Trustee shall prepare the
Monthly Statement to  Certificateholders  for the related Distribution Date (the
"Monthly Statement").

         Section 5.05      ALLOCATION OF REALIZED LOSSES.

                  (a) On or prior to each Determination  Date, the Trustee shall
determine  the amount of any Realized Loss in respect of each Mortgage Loan that
occurred during the immediately preceding calendar month.

                  (b) The interest portion of Realized Losses shall be allocated
to the Certificates as described in Section 1.02 hereof.

                  (c)  The  principal  portion  of all  Realized  Losses  on the
Mortgage  Loans  allocated to any REMIC I Regular  Interest  pursuant to Section
5.05 (d) shall be allocated on each Distribution Date as follows:  first, to Net
Monthly  Excess  Cashflow;  second,  to the  Class  C  Certificates,  until  the
Certificate  Principal  Balance thereof has been reduced to zero;  third, to the
Class M-3 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero;  fourth, to the Class M-2  Certificates,  until the Certificate
Principal  Balance thereof has been reduced to zero; and fifth, to the Class M-1
Certificates, until the Certificate

                                     - 94 -
<PAGE>

Principal  Balance thereof has been reduced to zero. All such 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 the principal  portion 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; any allocation
of  Realized  Losses to a Class C  Certificates  shall be made by  reducing  the
amount  otherwise  payable in respect thereof pursuant to Section 5.04(a) clause
THIRD.  No allocations of any Realized  Losses shall be made to the  Certificate
Principal Balances of the Senior Certificates or Class P Certificates.

                  All such 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.

                  (d)  The  principal  portion  of all  Realized  Losses  on the
Mortgage Loans shall be allocated on each  Distribution  Date first,  to REMIC I
Regular  Interest  LTI-1  and  REMIC  I  Regular   Interest  LTI-P,   until  the
Uncertificated  Principal Balances have been reduced to zero and then to REMIC I
Regular Interest LTI-IO-A,  REMIC I Regular Interest  LTI-IO-B,  REMIC I Regular
Interest LTI-IO-C,  REMIC I Regular Interest LTI-IO-D,  REMIC I Regular Interest
LTI-IO-E,  REMIC I Regular Interest LTI-IO-F,  REMIC I Regular Interest LTI-IO-G
and REMIC I  Regular  Interest  LTI-IO-H,  until  the  Uncertificated  Principal
Balances have been reduced to zero.

                  (e) All Realized Losses on the REMIC I Regular Interests shall
be  allocated  on each  Distribution  Date to the  following  REMIC  II  Regular
Interests in the specified  percentages,  as follows:  first, to  Uncertificated
Accrued  Interest  payable to the REMIC II Regular Interest LTII-AA and REMIC II
Regular  Interest  LTII-ZZ  up to an  aggregate  amount  equal  to the  REMIC II
Interest  Loss  Allocation  Amount,  98% and 2%,  respectively;  second,  to the
Uncertificated  Principal  Balances of the REMIC II Regular Interest LTII-AA and
REMIC II Regular  Interest  LTII-ZZ up to an aggregate amount equal to the REMIC
II Principal Loss Allocation  Amount,  98% and 2%,  respectively;  third, to the
Uncertificated Principal Balances of REMIC II Regular Interest LTII-AA, REMIC II
Regular Interest LTII-M3 and REMIC II Regular Interest LTII-ZZ,  98%, 1% and 1%,
respectively,  until the  Uncertificated  Principal  Balance of REMIC II Regular
Interest  LTII-M3  has been  reduced  to  zero;  fourth,  to the  Uncertificated
Principal  Balances  of REMIC II  Regular  Interest  LTII-AA,  REMIC II  Regular
Interest  LTII-M2  and  REMIC  II  Regular  Interest  LTII-ZZ,  98%,  1% and 1%,
respectively,  until the  Uncertificated  Principal  Balance of REMIC II Regular
Interest  LTII-M2 has been  reduced to zero;  and fifth,  to the  Uncertificated
Principal  Balances  of REMIC II  Regular  Interest  LTII-AA,  REMIC II  Regular
Interest  LTII-M1  and  REMIC  II  Regular  Interest  LTII-ZZ,  98%,  1% and 1%,
respectively,  until the  Uncertificated  Principal  Balance of REMIC II Regular
Interest LTII-M1 has been reduced to zero.

                                     - 95 -
<PAGE>

                  (f) Notwithstanding anything to the contrary contained herein,
if on any Distribution Date the Trustee  discovers,  based solely on the reports
delivered by the Servicer under this  Agreement  that any Subsequent  Recoveries
have been  collected by the Servicer  with  respect to the Mortgage  Loans,  the
amount of such Subsequent Recoveries will be applied to increase the Certificate
Principal  Balance  of the  Class of  Mezzanine  Certificates  with the  highest
payment  priority to which Realized Losses have been allocated,  but not by more
than the  amount  of  Realized  Losses  previously  allocated  to that  Class of
Mezzanine  Certificates  pursuant  to  this  Section  5.05.  The  amount  of any
remaining  Subsequent  Recoveries will be applied to  sequentially  increase the
Certificate Principal Balance of the Mezzanine Certificates,  beginning with the
Class of Mezzanine  Certificates with the next highest payment  priority,  up to
the  amount  of such  Realized  Losses  previously  allocated  to such  Class of
Certificates  pursuant to this Section 5.05.  Holders of such  Certificates will
not be entitled  to any payment in respect of current  interest on the amount of
such increases for any Accrual Period preceding the  Distribution  Date on which
such increase  occurs.  Any such increases  shall be applied to the  Certificate
Principal Balance of each Mezzanine Certificate of such Class in accordance with
its respective Percentage Interest.

         Section 5.06      MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.

                  (a) Not later than each Distribution  Date, the Trustee shal l
prepare and make  available to each Holder of  Certificates  via its website and
the Depositor a statement setting forth for the Certificates:

                  (i) the amount of the related  distribution to Holders of each
         Class allocable to principal,  separately identifying (A) the aggregate
         amount of any Principal Prepayments included therein, (B) the aggregate
         of all scheduled payments of principal included therein,  (C) the Extra
         Principal Distribution Amount (if any) and (D) the amount of Prepayment
         Charges distributed to the Class P Certificates;

                  (ii) the amount of such  distribution to Holders of each Class
         allocable to interest;

                  (iii)  the  Certificate   Principal   Balance  or  Certificate
         Notional  Balance  of  each  Class  after  giving  effect  (i)  to  all
         distributions allocable to principal on such Distribution Date and (ii)
         the allocation of any Realized Losses for such Distribution Date;

                  (iv) the aggregate of the Stated Principal  Balances of all of
         the Mortgage Loans for the following Distribution Date;

                  (v) the amount of the  Servicing  Fees paid to or  retained by
         the Servicer for the related Due Period;

                  (vi) the Pass-Through Rate for each Class of Certificates with
         respect to the current Accrual Period and, if applicable,  whether such
         Pass-Through Rate was limited by the Net WAC Rate Cap;

                  (vii) the cumulative amount of Realized Losses to date and, in
         addition,  if the  Certificate  Principal  Balances  of  the  Mezzanine
         Certificates  have all been reduced to

                                     - 96 -
<PAGE>

         zero, the  cumulative  amount of any Realized Losses that have not been
         allocated to any Certificates;

                  (viii) the number and aggregate  principal amounts of Mortgage
         Loans in (A) Delinquent (exclusive of Mortgage Loans in foreclosure and
         bankruptcy)  (1) 31 to 60  days,  (2) 61 to 90 days  and (3) 91 or more
         days, (B) in foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90
         days and (3) 91 or more days and (C) in bankruptcy  and  delinquent (1)
         31 to 60 days,  (2) 61 to 90 days and (3) 91 or more days, in each case
         as of the  close of  business  on the last  day of the  calendar  month
         preceding such Distribution Date;

                  (ix) with  respect to any  Mortgage  Loan that was  liquidated
         during  the  preceding  calendar  month,  the loan  number  and  Stated
         Principal  Balance of, and Realized  Loss on, such  Mortgage Loan as of
         the  close  of  business  on  the  Determination  Date  preceding  such
         Distribution Date;

                  (x) the total number and principal  balance of any real estate
         owned  or  REO   Properties   as  of  the  close  of  business  on  the
         Determination Date preceding such Distribution Date;

                  (xi) the three month rolling average of the percent equivalent
         of a fraction, the numerator of which is the aggregate stated Principal
         Balance of the Mortgage  Loans that are 60 days or more  delinquent  or
         are in  bankruptcy  or  foreclosure  or are  REO  Properties,  and  the
         denominator of which is the aggregate Stated  Principal  Balance of all
         of the Mortgage Loans as of the last day of such Distribution Date;

                  (xii) the Realized Losses during the related Prepayment Period
         and the  cumulative  Realized  Losses  through the end of the preceding
         month; and

                  (xiii)  the Net WAC Rate  Carryover  Amount  for each Class of
         Certificates and the amount on deposit in the Net WAC Reserve Fund.

                  The Trustee may make the foregoing  monthly statement (and, at
its  option,  any  additional  files  containing  the  same  information  in  an
alternative format) available each month to Certificateholders via the Trustee's
internet website.  The Trustee's  internet website shall initially be located at
"www.jpmorgan.com/sfr".  Assistance  in using the  website  can be  obtained  by
calling the Trustee's customer service desk at (877) 722-1095.  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  may  change  the  way  monthly  statements  are
distributed  in  order  to  make  such  distributions  more  convenient  or more
accessible to the above parties.

                  (b)  The  Trustee's   responsibility   for  making  the  above
information available to the  Certificateholders is limited to the availability,
timeliness  and accuracy of the  information  derived from the Depositor and the
Servicer.  The Trustee  will make  available a copy of each  statement  provided
pursuant to this Section 5.06 to each Rating Agency.

                                     - 97 -
<PAGE>

                  (c) Within a  reasonable  period of time after the end of each
calendar  year,  the Trustee  shall cause to be  furnished  upon request to each
Person  who at any time  during the  calendar  year was a  Certificateholder,  a
statement  containing the information set forth in clauses (a)(i) and (a)(ii) of
this  Section 5.06  aggregated  for such  calendar  year or  applicable  portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that  substantially
comparable  information  shall  be  provided  by  the  Trustee  pursuant  to any
requirements of the Code as from time to time in effect.

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

                  (i) The original  projected  principal and interest cash flows
         on the  Closing  Date on each Class of regular and  residual  interests
         created  hereunder and on the Mortgage  Loans,  based on the Prepayment
         Assumption;

                  (ii) The projected remaining principal and interest cash flows
         as of the end of any  calendar  quarter  with  respect to each Class of
         regular and  residual  interests  created  hereunder  and the  Mortgage
         Loans, based on the Prepayment Assumption;

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

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

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

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

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

                  The information  pursuant to clauses (i), (ii), (iii) and (iv)
above shall be provided by the Depositor pursuant to Section 9.12.

         Section 5.07      REMIC  DESIGNATIONS AND REMIC I ALLOCATIONS.

                  (a) The Trustee shall elect that each of REMIC I, REMIC II and
REMIC III and shall be treated as a REMIC under  Section  860D of the Code.  Any
inconsistencies or

                                     - 98 -
<PAGE>

ambiguities in this Agreement or in the  administration  of this Agreement shall
be resolved in a manner that preserves the validity of such REMIC elections. The
REMIC I Regular  Interests shall constitute the assets of REMIC II. The REMIC II
Regular Interests shall constitute the assets of REMIC III.

                  (b) On each  Distribution  Date,  the  Available  Distribution
Amount, in the following order of priority and in accordance with the Remittance
Report,  shall be  distributed  by REMIC I to REMIC II on account of the REMIC I
Regular Interests or withdrawn from the Distribution  Account and distributed to
the Holders of the Class R Certificates, as the case may be:

                  (i)  first,  to  the  Holders  of  REMIC  I  Regular  Interest
LTI-IO-A,  REMIC I Regular Interest LTI-IO-B, REMIC I Regular Interest LTI-IO-C,
REMIC I Regular Interest LTI-IO-D,  REMIC I Regular Interest  LTI-IO-E,  REMIC I
Regular Interest LTI-IO-F, REMIC I Regular Interest LTI-IO-G and REMIC I Regular
Interest LTI-IO-H in an amount equal to (A) the Uncertificated  Accrued Interest
for such  Distribution  Date, plus (B) any amounts in respect thereof  remaining
unpaid from previous  Distribution  Dates and second,  to the Holders of REMIC I
Regular  Interest  LTI-1, in an amount equal to (A) the  Uncertificated  Accrued
Interest for such  Distribution  Date,  plus (B) any amounts in respect  thereof
remaining unpaid from previous Distribution Dates;

                  (ii) to the Holders of the REMIC I Regular  Interest LTI-P, on
the Distribution Date in May 2009 or any Distribution Date thereafter until $100
has been distributed pursuant to this clause;

                  (iii)  on  each  Distribution   Date,  the  remainder  of  the
Available Distribution Amount for such Distribution Date after the distributions
made  pursuant  to clause (i) and clause (ii)  above,  first,  to the Holders of
REMIC I Regular  Interest LTI-1 until the  Uncertificated  Principal  Balance of
such REMIC I Regular Interest is reduced to zero, and second,  to the Holders of
REMIC I Regular Interest LTI-IO-A,  REMIC I Regular Interest  LTI-IO-B,  REMIC I
Regular Interest LTI-IO-C,  REMIC I Regular Interest  LTI-IO-D,  REMIC I Regular
Interest LTI-IO-E,  REMIC I Regular Interest LTI-IO-F,  REMIC I Regular Interest
LTI-IO-G  and  REMIC  I  Regular  Interest  LTI-IO-H,  sequentially,  until  the
Uncertificated  Principal  Balance  of each  such  REMIC I Regular  Interest  is
reduced to zero; and

                  (iv) to the Holders of the Class R  Certificates,  any amounts
remaining after the distributions pursuant to clauses (i) through (iii) above.

                  On each Distribution Date, all amounts representing Prepayment
Charges in respect of the Mortgage Loans received during the related  Prepayment
Period will be distributed by REMIC I to the Holders of REMIC I Regular Interest
LTI-P.  The payment of the  foregoing  amounts to the Holders of REMIC I Regular
Interest LTI-P shall not reduce the Uncertificated Principal Balance thereof.

         Section 5.08      REMIC II ALLOCATIONS.

                                     - 99 -
<PAGE>

                  (a) On each  Distribution  Date,  the  Available  Distribution
Amount, in the following order of priority and in accordance with the Remittance
Report, shall 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 Certificates, as the case may be:

                  (i)  first,  to the  Holders  of  REMIC  II  Regular  Interest
LTII-IO-A and REMIC II Regular Interest LTII-IO-B, in an amount equal to (A) the
Uncertificated  Accrued  Interest  for such REMIC II Regular  Interest  for such
Distribution Date, plus (B) any amounts in respect thereof remaining unpaid from
previous  Distribution  Dates and then to Holders  of REMIC II Regular  Interest
LTII-AA,  REMIC Regular Interest  LTII-A1,  REMIC II Regular  Interest  LTII-A2,
REMIC II Regular Interest LTII-A3A, REMIC II Regular Interest LTII-A3B, REMIC II
Regular Interest LTII-A4,  REMIC II Regular Interest  LTII-A5,  REMIC II Regular
Interest LTII-A6,  REMIC II Regular Interest LTII-M1,  REMIC II Regular Interest
LTII-M2,  REMIC II  Regular  Interest  LTII-M3  and  REMIC II  Regular  Interest
LTII-ZZ, pro rata, in an amount equal to (A) the Uncertificated Accrued Interest
for each such REMIC II Regular Interest for such Distribution Date, plus (B) any
amounts in respect thereof  remaining unpaid from previous  Distribution  Dates.
Amounts  payable  as  Uncertificated  Accrued  Interest  in  respect of REMIC II
Regular  Interest  LTII-ZZ  shall be  reduced  and  deferred  when the  REMIC II
Overcollateralization    Amount   is   less   than   the   REMIC   II   Required
Overcollateralization Amount, by the lesser of (x) the amount of such difference
and (y) the REMIC II Regular Interest  LTII-ZZ Maximum Interest  Deferral Amount
and such  amount  will be  payable  to the  Holders  of REMIC  Regular  Interest
LTII-A1,  REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3A,
REMIC II Regular Interest LTII-A3B,  REMIC II Regular Interest LTII-A4, REMIC II
Regular Interest LTII-A5,  REMIC II Regular Interest  LTII-A6,  REMIC II Regular
Interest  LTII-M1,  REMIC II  Regular  Interest  LTII-M2  and  REMIC II  Regular
Interest  LTII-M3 in the same proportion as the  Overcollateralization  Increase
Amount is allocated to the  Corresponding  Certificates  and the  Uncertificated
Principal  Balance of REMIC II Regular  Interest  LTII-ZZ  shall be increased by
such amount;

                  (ii) second, to the Holders of REMIC II Regular Interests,  in
an amount equal to the remainder of the Available  Distribution  Amount for such
Distribution  Date after the  distributions  made  pursuant to clause (i) above,
allocated as follows:

                  (a) to the  Holders of REMIC II Regular  Interest  LTII-AA and
REMIC II Regular Interest  LTII-P,  98.00% of such remainder (other than amounts
payable under clause (d) below),  until the Uncertificated  Principal Balance of
such REMIC II Regular Interest is reduced to zero, provided,  however,  that the
Uncertificated  Principal  Balance of REMIC II Regular Interest LTII-P shall not
be reduced  until the  Distribution  Date in May 2009 or any  Distribution  Date
thereafter,  at which point such amount shall be distributed to REMIC II Regular
Interest LTII-P, until $100 has been distributed pursuant to this clause;

                  (b) to the Holders of REMIC Regular Interest LTII-A1, REMIC II
Regular Interest LTII-A2,  REMIC II Regular Interest LTII-A3A,  REMIC II Regular
Interest LTII-A3B,  REMIC II Regular Interest LTII-A4, REMIC II Regular Interest
LTII-A5,  REMIC II Regular Interest LTII-A6,  REMIC II Regular Interest LTII-M1,
REMIC II Regular Interest LTII-M2 and REMIC II Regular Interest  LTII-M3,  1.00%
of such remainder  (other than amounts  payable

                                    - 100 -
<PAGE>

under  clause (d) below),  in the same  proportion  as  principal  payments  are
allocated to the Corresponding Certificates,  until the Uncertificated Principal
Balances of such REMIC II Regular Interests are reduced to zero;

                  (c) to the Holders of REMIC II Regular Interest LTII-ZZ, 1.00%
of such remainder  (other than amounts payable under the proviso  below),  until
the  Uncertificated  Principal  Balance  of such REMIC II  Regular  Interest  is
reduced to zero; then

                  (d)  any  remaining  amount  to the  Holders  of the  Class  R
Certificates; and

                  (iii)    third, to REMIC II Regular Interest  LTII-P,  100% of
the amount paid in respect of REMIC I Regular Interest LTI-P;

                  provided,  however,  that (i)  98.00%  and  (ii)  2.00% of any
principal payments that are attributable to an  Overcollateralization  Reduction
Amount shall be allocated  to Holders of (i) REMIC II Regular  Interest  LTII-AA
and REMIC II Regular  Interest  LTII-P,  in that order and (ii) REMIC II Regular
Interest LTII-ZZ,  respectively;  provided that REMIC II Regular Interest LTII-P
shall not be reduced  until the  Distribution  Date in May 2009,  at which point
such amount shall be distributed to REMIC II Regular Interest LTII-P, until $100
has been distributed pursuant to this clause.

         Section 5.09      Class P Certificate Account.

         The  Trustee  shall  establish  and  maintain  with  itself a separate,
segregated   trust  account   titled  "Nomura  Asset   Acceptance   Corporation,
Alternative  Loan Trust  2004-AP2 Class P Certificate  Account".  On the Closing
Date,  the  Depositor  will  deposit,  or cause to be  deposited  in the Class P
Certificate  Account  $100.00.  The amount on deposit in the Class P Certificate
Account shall be held uninvested. On the May 2009 Distribution Date, the Trustee
shall withdraw the amount on deposit in the Class P Certificate  Account,  cause
such funds to be included in the  Available  Distribution  Amount and remit such
amount  to  the  Holders  of the  Class  P  Certificates,  in  reduction  of the
Certificate Principal Balance thereof.

         Section 5.10      NET WAC RESERVE FUND.

                  (a) The Trustee  shall  establish  a Net WAC  Reserve  Fund on
behalf of the holders of the Publicly Offered Certificates (other than the Class
A-IO  Certificates).  The Net WAC Reserve Fund must be an Eligible Account.  The
Net WAC Reserve Fund shall be entitled  "Net WAC Reserve  Fund,  JPMorgan  Chase
Bank  as  Trustee  for  the  benefit  of  holders  of  Nomura  Asset  Acceptance
Corporation,  Mortgage Pass-Through  Certificates,  Series 2004-AP2,  Class A-1,
Class A-2, Class A-3A,  Class A-3B,  Class A-4, Class A-5, Class A-6, Class M-1,
Class M-2 and Class M-3". On the Closing Date,  the Depositor  will deposit,  or
cause  to  be  deposited,  into  the  Net  WAC  Reserve  Fund  $5,000.  On  each
Distribution  Date as to which there is a Net WAC Rate Carryover  Amount payable
to any Class of Certificates,  the Trustee shall deposit the amounts pursuant to
paragraphs  3, 4, 5 and 6 of clause  THIRD of Section  5.04(a)  into the Net WAC
Reserve Fund and the Trustee has been directed by the Class C  Certificateholder
to distribute such amounts to the Holders of the Publicly  Offered  Certificates
(other than the Class A-IO Certificates) in the amounts and priorities set forth
in clause THIRD of Section 5.04(a).

                                    - 101 -
<PAGE>

                  (b) The Net WAC  Reserve  Fund is an  "outside  reserve  fund"
within the meaning of Treasury  Regulation  ss.1.860G-2(h) and shall be an asset
of the Trust  Fund but not an asset of any REMIC.  The  Trustee on behalf of the
Trust  shall be the  nominal  owner of the Net WAC  Reserve  Fund.  The  Class C
Certificateholders  shall be the beneficial  owners of the Net WAC Reserve Fund,
subject to the power of the Trustee to transfer  amounts under Section  5.04(a).
Amounts in the Net WAC Reserve Fund shall be held either  uninvested  in a trust
or deposit  account of the  Trustee  with no  liability  for  interest  or other
compensation  thereof  or, at the  written  direction  of the  Majority  Class C
Certificateholder,  be invested in  Permitted  Investments  that mature no later
than the Business Day prior to the next  succeeding  Distribution  Date. All net
income and gain from such investments shall be distributed to the Majority Class
C  Certificateholder,  not as a  distribution  in respect of any interest in any
REMIC,  on such  Distribution  Date. All amounts earned on amounts on deposit in
the  Net  WAC  Reserve   Fund  shall  be  taxable  to  the   Majority   Class  C
Certificateholder.  Any losses on such investments shall be deposited in the Net
WAC Reserve Fund by the Majority Class C Certificateholder  out of its own funds
immediately   as   realized.   In  the   event   that  the   Majority   Class  C
Certificateholder  shall fail to provide investment instructions to the Trustee,
the amounts on deposit in the Net WAC Reserve Fund shall be held uninvested.

                  (c) For  federal  tax return and  information  reporting,  the
amount   allocated  to  the  right  of  the  holders  of  the  Publicly  Offered
Certificates  (other than the Class A-IO  Certificates) to receive payments from
the Net WAC Reserve Fund in respect of any Net WAC Rate Carryover  Amount may be
obtained from the Trustee upon written request.

                                    - 102 -
<PAGE>

                                   ARTICLE VI

                                THE CERTIFICATES

         Section 6.01      THE CERTIFICATES.

                  The Certificates  shall be substantially in the forms attached
hereto as  Exhibits  A-1  through  A-6.  The  Certificates  shall be issuable in
registered form, in the minimum dollar denominations,  integral dollar multiples
in excess thereof  (except that one Certificate of each Class may be issued in a
different  amount  which  must be in excess  of the  applicable  minimum  dollar
denomination)  and aggregate dollar  denominations as set forth in the following
table:
<TABLE>
<CAPTION>
                   MINIMUM      INTEGRAL MULTIPLE IN  ORIGINAL CERTIFICATE
    CLASS        DENOMINATION    EXCESS OF MINIMUM      PRINCIPAL BALANCE          PASS-THROUGH RATE
------------   ---------------  ---------------------  --------------------  -----------------------------
<S>               <C>                    <C>             <C>                 <C>
     A-1          $25,000                $1              $  83,499,000       Class A-1 Pass-Through Rate
     A-2          $25,000                $1              $  18,278,000       Class A-2 Pass-Through Rate
    A-3A          $25,000                $1              $   7,000,000       Class A-3A Pass-Through Rate
    A-3B          $25,000                $1              $  37,206,000       Class A-3B Pass-Through Rate
     A-4          $25,000                $1              $  25,804,000       Class A-4 Pass-Through Rate
     A-5          $25,000                $1              $  19,878,000       Class A-5 Pass-Through Rate
     A-6          $25,000                $1              $  22,817,000       Class A-6 Pass-Through Rate
    A-IO          $25,000                $1                   N/A            Class A-IO Pass-Through Rate
     M-1          $25,000                $1              $   5,019,000       Class M-1 Pass-Through Rate
     M-2          $25,000                $1              $   3,878,000       Class M-2 Pass-Through Rate
     M-3          $25,000                $1              $   3,080,000       Class M-3 Pass-Through Rate
</TABLE>
                  The  Certificates  shall be  executed  by manual or  facsimile
signature  on behalf of the Trustee by an  authorized  officer  upon the written
order of the Depositor.  Certificates bearing the manual or facsimile signatures
of  individuals  who  were,  at the time  when  such  signatures  were  affixed,
authorized   to  sign  on  behalf  of  the  Trustee   shall  bind  the  Trustee,
notwithstanding  that  such  individuals  or any of them  have  ceased  to be so
authorized prior to the  authentication and delivery of such Certificates or did
not hold  such  offices  at the date of such  authentication  and  delivery.  No
Certificate  shall be entitled to any benefit under this Agreement,  or be valid
for any purpose,  unless there appears on such Certificate the  countersignature
of  the  Trustee  by  manual  signature,  and  such  countersignature  upon  any
Certificate  shall be  conclusive  evidence,  and the only  evidence,  that such
Certificate  has  been  duly   countersigned   and  delivered   hereunder.   All
Certificates shall be dated the date of their  countersignature.  On the Closing
Date,  the  Trustee  shall  authenticate  the  Certificates  to be issued at the
written direction of the Depositor, or any affiliate thereof.

                  The Depositor shall provide,  or cause to be provided,  to the
Trustee  on a  continuous  basis,  an  adequate  inventory  of  Certificates  to
facilitate transfers.

         Section 6.02      CERTIFICATE REGISTER; REGISTRATION  OF  TRANSFER  AND
                           EXCHANGE OF CERTIFICATES.

                                    - 103 -
<PAGE>

                  (a) The Trustee shall  maintain,  or cause to be maintained in
accordance  with the provisions of Section 6.09, a Certificate  Register for the
Trust Fund in which,  subject to the provisions of subsections (b) and (c) below
and to such  reasonable  regulations  as it may  prescribe,  the  Trustee  shall
provide for the  registration of Certificates  and of Transfers and exchanges of
Certificates as herein provided.  Upon surrender for registration of Transfer of
any Certificate,  the Trustee shall authenticate and deliver, in the name of the
designated  transferee or transferees,  one or more new Certificates of the same
Class and of like aggregate Percentage Interest.

                  At the  option  of a  Certificateholder,  Certificates  may be
exchanged for other  Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest upon surrender of the
Certificates  to be exchanged  at the office or agency of the Trustee.  Whenever
any  Certificates  are so surrendered  for exchange,  the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive.  Every Certificate presented or surrendered for
registration  of  Transfer  or  exchange  shall  be  accompanied  by  a  written
instrument of Transfer in form  satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.

                  No service charge to the Certificateholders  shall be made for
any registration of Transfer or exchange of  Certificates,  but payment of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection with any Transfer or exchange of Certificates may be required.

                  All  Certificates  surrendered for registration of Transfer or
exchange  shall  be  canceled  and  subsequently  destroyed  by the  Trustee  in
accordance with the Trustee's customary procedures.

                  (b) No Transfer of a Private  Certificate shall be made unless
such Transfer is made pursuant to an effective  registration statement under the
Securities Act and any applicable  state  securities  laws or is exempt from the
registration  requirements  under the Securities  Act and such state  securities
laws.  In the event that a Transfer is to be made in reliance  upon an exemption
from the  Securities Act and such laws, in order to assure  compliance  with the
Securities  Act and such laws,  the  Certificateholder  desiring  to effect such
Transfer and such Certificateholder's  prospective transferee shall each certify
to the Trustee in writing the facts  surrounding  the Transfer in  substantially
the forms set forth in Exhibit E (the "Transferor  Certificate") and (x) deliver
a letter in substantially the form of either Exhibit F (the "Investment Letter")
or Exhibit G (the "Rule 144A  Letter")  or (y) there shall be  delivered  to the
Trustee an Opinion  of  Counsel,  at the  expense of the  transferor,  that such
Transfer may be made pursuant to an exemption  from the  Securities  Act,  which
Opinion of Counsel  shall not be an expense of the  Depositor,  the Seller,  the
Trustee  or the Trust  Fund.  The  Depositor  shall  provide  to any Holder of a
Private  Certificate  and any  prospective  transferee  designated  by any  such
Holder,  information  regarding the related  Certificates and the Mortgage Loans
and such other  information  as shall be necessary  to satisfy the  condition to
eligibility  set forth in Rule  144A(d)(4) for Transfer of any such  Certificate
without   registration   thereof  under  the  Securities  Act  pursuant  to  the
registration  exemption  provided by Rule 144A. The Trustee shall cooperate with
the Depositor in providing the Rule 144A information referenced in the preceding
sentence,  including  providing to the Depositor such information  regarding the
Certificates,  the Mortgage Loans and other matters

                                    - 104 -
<PAGE>

regarding the Trust Fund as the Depositor shall  reasonably  request to meet its
obligation under the preceding  sentence.  Each Holder of a Private  Certificate
desiring to effect such Transfer shall,  and does hereby agree to, indemnify the
Trustee,  the Depositor and the Seller  against any liability that may result if
the Transfer is not so exempt or is not made in accordance with such federal and
state laws.

                  No Transfer of an ERISA Restricted  Certificate  shall be made
unless the Trustee  shall have  received  either (i) a  representation  from the
transferee  of  such  Certificate  acceptable  to  and  in  form  and  substance
satisfactory  to the  Trustee  to the  effect  that  such  transferee  is not an
employee  benefit  plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code, or a Person acting on behalf of any such plan or using
the  assets of any such plan,  or (ii) in the case of any such ERISA  Restricted
Certificate  presented for  registration in the name of an employee benefit plan
subject to ERISA,  or a plan subject to Section 4975 of the Code (or  comparable
provisions of any subsequent  enactments),  or a trustee of any such plan or any
other  person  acting  on  behalf  of any  such  plan,  an  Opinion  of  Counsel
satisfactory  to the Trustee for the benefit of the Trustee,  the  Depositor and
the  Servicer  and on which they may rely to the effect  that the  purchase  and
holding of such ERISA  Restricted  Certificate is permissible  under  applicable
law, will not result in any prohibited  transactions under ERISA or Section 4975
of the Code and will not subject the Trustee,  the  Depositor or any Servicer to
any  obligation in addition to those  expressly  undertaken  in this  Agreement,
which Opinion of Counsel  shall not be an expense of the Trustee,  the Depositor
or any  Servicer.  Notwithstanding  anything  else to the contrary  herein,  any
purported  transfer  of an ERISA  Restricted  Certificate  to or on behalf of an
employee  benefit  plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code other than in compliance  with the  foregoing  shall be
void and of no effect;  provided that the restriction set forth in this sentence
shall not be applicable if there has been delivered to the Trustee an Opinion of
Counsel  meeting the  requirements  of clause (ii) of the first sentence of this
paragraph.  The Trustee  shall not be under any  liability to any Person for any
registration of transfer of any ERISA Restricted Certificate that is in fact not
permitted  by this  Section  6.02(b)  or for  making  any  payments  due on such
Certificate  to the Holder  thereof or taking any other  action with  respect to
such  Holder  under the  provisions  of this  Agreement.  The  Trustee  shall be
entitled, but not obligated,  to recover from any Holder of any ERISA Restricted
Certificate  that was in fact an employee benefit plan subject to Section 406 of
ERISA or a plan subject to Section 4975 of the Code or a Person acting on behalf
of any such plan at the time it became a Holder or, at such  subsequent  time as
it became such a plan or Person  acting on behalf of such a plan,  all  payments
made on such ERISA  Restricted  Certificate  at and after either such time.  Any
such  payments so  recovered by the Trustee  shall be paid and  delivered by the
Trustee to the last preceding Holder of such Certificate that is not such a plan
or Person acting on behalf of a plan.

                  Each  beneficial  owner of a Class M-1, Class M-2 or Class M-3
Certificate  or any interest  therein  shall be deemed to have  represented,  by
virtue of its  acquisition or holding of that  certificate or interest  therein,
that either (i) it is not a Plan or investing  with "Plan  Assets",  (ii) it has
acquired and is holding such certificate in reliance on the Exemption,  and that
it  understands  that there are certain  conditions to the  availability  of the
Exemption,  including  that  the  certificate  must  be  rated,  at the  time of
purchase,  not lower than "BBB-" (or its equivalent) by S&P or Moody's,  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

                                    - 105 -
<PAGE>

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.

                  (c) 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 the rights of each Person  acquiring  any  Ownership  Interest in a Residual
Certificate are expressly subject to the following provisions:

                  (i) Each Person holding or acquiring any Ownership Interest in
         a  Residual  Certificate  shall be a  Permitted  Transferee  and  shall
         promptly  notify the Trustee of any change or  impending  change in its
         status as a Permitted Transferee.

                  (ii) No Ownership  Interest in a Residual  Certificate  may be
         registered  on the  Closing  Date or  thereafter  transferred,  and the
         Trustee  shall not register  the  Transfer of any Residual  Certificate
         unless, in addition to the certificates required to be delivered to the
         Trustee  under  subparagraph  (b) above,  the  Trustee  shall have been
         furnished  with an affidavit (a  "Transfer  Affidavit")  of the initial
         owner or the proposed transferee in the form attached hereto as Exhibit
         D.

                  (iii) Each Person holding or acquiring any Ownership  Interest
         in a  Residual  Certificate  shall  agree  (A)  to  obtain  a  Transfer
         Affidavit  from any  other  Person  to whom  such  Person  attempts  to
         Transfer  its  Ownership  Interest  in a Residual  Certificate,  (B) to
         obtain a Transfer  Affidavit  from any  Person for whom such  Person is
         acting as nominee,  trustee or agent in connection with any Transfer of
         a Residual  Certificate and (C) not to Transfer its Ownership  Interest
         in a Residual  Certificate  or to cause the  Transfer  of an  Ownership
         Interest in a Residual Certificate to any other Person if it has actual
         knowledge that such Person is not a Permitted Transferee.

                  (iv) Any  attempted  or  purported  Transfer of any  Ownership
         Interest in a Residual  Certificate  in violation of the  provisions of
         this Section  6.02(c) shall be absolutely  null and void and shall vest
         no rights in the  purported  Transferee.  If any  purported  transferee
         shall  become a Holder of a Residual  Certificate  in  violation of the
         provisions of this Section 6.02(c),  then the last preceding  Permitted
         Transferee   shall  be  restored  to  all  rights  as  Holder   thereof
         retroactive  to the date of  registration  of Transfer of such 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 Section 6.02(b) and this Section 6.02(c) or for making
         any payments due on such  Certificate  to the Holder  thereof or taking
         any other action with respect to such Holder  under the  provisions  of
         this Agreement so long as the Transfer was registered  after receipt of
         the related Transfer  Affidavit.  The Trustee shall be entitled but not
         obligated to recover from any Holder of a Residual Certificate that was
         in fact not a Permitted  Transferee  at the time it became a Holder or,
         at such subsequent time as it became other than a Permitted Transferee,
         all payments made on such Residual Certificate at and after either such
         time.  Any such  payments so recovered by the Trustee shall be paid and
         delivered by the Trustee to the last preceding Permitted  Transferee of
         such Certificate.

                                    - 106 -
<PAGE>

                  The  restrictions  on Transfers of a Residual  Certificate set
forth in this Section 6.02(c) shall cease to apply (and the applicable  portions
of the  legend  on a  Residual  Certificate  may be  deleted)  with  respect  to
Transfers  occurring  after  delivery  to the  Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee or the Seller to
the effect that the  elimination  of such  restrictions  will not cause REMIC I,
REMIC II and/or REMIC III, as  applicable,  to fail to qualify as a REMIC at any
time that the  Certificates  are  outstanding or result in the imposition of any
tax on the Trust  Fund,  a  Certificateholder  or another  Person.  Each  Person
holding or acquiring any  ownership  Interest in a Residual  Certificate  hereby
consents to any amendment of this Agreement that, based on an Opinion of Counsel
furnished to the Trustee, is reasonably  necessary (a) to ensure that the record
ownership  of, or any  beneficial  interest  in, a Residual  Certificate  is not
transferred,  directly  or  indirectly,  to a  Person  that  is not a  Permitted
Transferee  and (b) to provide for a means to compel the  Transfer of a Residual
Certificate  that is held by a Person  that is not a Permitted  Transferee  to a
Holder that is a Permitted Transferee.

                  (d) The  preparation  and  delivery  of all  certificates  and
opinions  referred to above in this  Section 6.02 shall not be an expense of the
Trust Fund, the Trustee, the Depositor or the Seller.

         Section 6.03      MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

                  If  (a)  any  mutilated  Certificate  is  surrendered  to  the
Trustee,   or  the  Trustee  receives   evidence  to  its  satisfaction  of  the
destruction,  loss or theft of any Certificate and of the ownership  thereof and
(b) there is  delivered  to the Trustee  such  security or  indemnity  as may be
required by them to save each of them  harmless,  then, in the absence of notice
to the Trustee that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute,  authenticate and deliver, in exchange for or in lieu
of any such mutilated,  destroyed, lost or stolen Certificate, a new Certificate
of like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 6.03, the Trustee may require the payment
of a sum  sufficient to cover any tax or other  governmental  charge that may be
imposed in  relation  thereto  and any other  expenses  (including  the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant  to this  Section  6.03  shall  constitute  complete  and  indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the  lost,  stolen or  destroyed  Certificate  shall be found at any  time.  All
Certificates  surrendered  to the Trustee  under the terms of this  Section 6.03
shall be canceled and destroyed by the Trustee in  accordance  with its standard
procedures without liability on its part.

         Section 6.04      PERSONS DEEMED OWNERS.

                  The  Trustee and any agent of the Trustee may treat the person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever,  and neither the Trustee nor any agent of the Trustee
shall be affected by any notice to the contrary.

         Section 6.05      ACCESS  TO   LIST OF  CERTIFICATEHOLDERS'  NAMES  AND
                           ADDRESSES.

                                    - 107 -
<PAGE>

                  If  three  or  more   Certificateholders   (a)  request   such
information in writing from the Trustee, (b) state that such  Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this  Agreement or under the  Certificates,  and (c) provide a copy of the
communication  that  such  Certificateholders  propose  to  transmit  or if  the
Depositor shall request such  information in writing from the Trustee,  then the
Trustee  shall,  within ten  Business  Days after the  receipt of such  request,
provide the Depositor or such Certificateholders at such recipients' expense the
most  recent  list  of the  Certificateholders  of the  Trust  Fund  held by the
Trustee,  if any. The  Depositor and every  Certificateholder,  by receiving and
holding a Certificate,  agree that the Trustee shall not be held  accountable by
reason  of the  disclosure  of  any  such  information  as to  the  list  of the
Certificateholders   hereunder,   regardless  of  the  source  from  which  such
information was derived.

         Section 6.06      BOOK-ENTRY CERTIFICATES.

                  The Regular  Certificates,  upon original  issuance,  shall be
issued  in the form of one or more  typewritten  Certificates  representing  the
Book- Entry  Certificates,  to be delivered to the Depository by or on behalf of
the  Depositor.   Such  Certificates   shall  initially  be  registered  on  the
Certificate  Register  in the  name of the  Depository  or its  nominee,  and no
Certificate  Owner of such  Certificates  will receive a definitive  certificate
representing such Certificate  Owner's interest in such Certificates,  except as
provided  in  Section  6.08.  Unless  and  until  definitive,  fully  registered
Certificates  ("Definitive  Certificates")  have been issued to the  Certificate
Owners of such Certificates pursuant to Section 6.08:

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

                  (b) the Depositor and the Trustee may deal with the Depository
and the  Depository  Participants  for all  purposes  (including  the  making of
distributions) as the authorized  representative  of the respective  Certificate
Owners of such Certificates;

                  (c)  registration  of the Book-Entry  Certificates  may not be
transferred by the Trustee except to another Depository;

                  (d) the rights of the  respective  Certificate  Owners of such
Certificates  shall be exercised  only through the Depository and the Depository
Participants  and shall be limited to those  established  by law and  agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants.  Pursuant to the Depository Agreement, unless and until Definitive
Certificates  are issued  pursuant to Section  6.08,  the  Depository  will make
book-entry transfers among the Depository  Participants and receive and transmit
distributions  of  principal  and interest on the related  Certificates  to such
Depository Participants;

                  (e) the Depository  may collect its usual and customary  fees,
charges and expenses from its Depository Participants;

                  (f) the  Trustee  may rely and  shall  be fully  protected  in
relying  upon  information  furnished  by the  Depository  with  respect  to its
Depository Participants; and

                  (g) to the extent that the provisions of this Section conflict
with any other  provisions  of this  Agreement,  the  provisions of this Section
shall control.

                                    - 108 -
<PAGE>

                  For purposes of any provision of this  Agreement  requiring or
permitting   actions   with  the   consent   of,   or  at  the   direction   of,
Certificateholders  evidencing a specified  percentage of the  aggregate  unpaid
principal amount of any Class of Certificates,  such direction or consent may be
given by Certificate  Owners  (acting  through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.

         Section 6.07      NOTICES TO DEPOSITORY.

                  Whenever any notice or other  communication  is required to be
given  to  Certificateholders  of a  Class  with  respect  to  which  Book-Entry
Certificates have been issued,  unless and until Definitive  Certificates  shall
have been issued to the related  Certificate  Owners, the Trustee shall give all
such notices and communications to the Depository.

         Section 6.08      DEFINITIVE CERTIFICATES.

                  If,  after  Book-Entry  Certificates  have  been  issued  with
respect to any  Certificates,  (a) the Depositor or the  Depository  advises the
Trustee that the Depository is no longer  willing or able to discharge  properly
its  responsibilities  under  the  Depository  Agreement  with  respect  to such
Certificates  and the Trustee or the  Depositor  is unable to locate a qualified
successor,  (b) the Depositor,  at its sole option,  advises the Trustee that it
elects to terminate  the  book-entry  system with  respect to such  Certificates
through the Depository or (c) after the occurrence and  continuation of an Event
of Default,  Certificate Owners of such Book-Entry  Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry  Certificates
advise  the  Trustee  and the  Depository  in  writing  through  the  Depository
Participants  that the  continuation  of a  book-entry  system  with  respect to
Certificates  of such Class  through the  Depository  (or its  successor)  is no
longer in the best interests of the Certificate  Owners of such Class,  then the
Trustee shall notify all Certificate  Owners of such  Certificates,  through the
Depository,  of the  occurrence  of any such  event and of the  availability  of
Definitive  Certificates to applicable  Certificate  Owners requesting the same.
The  Depositor  shall  provide  the  Trustee  with  an  adequate   inventory  of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon  surrender  to the  Trustee  of any such  Certificates  by the  Depository,
accompanied by registration  instructions  from the Depository for registration,
the Trustee shall countersign and deliver such Definitive Certificates.  Neither
the  Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions  and each may  conclusively  rely on,  and  shall be  protected  in
relying  on,  such   instructions.   Upon  the   issuance  of  such   Definitive
Certificates,  all  references  herein  to  obligations  imposed  upon  or to be
performed by the Depository  shall be deemed to be imposed upon and performed by
the  Trustee,   to  the  extent  applicable  with  respect  to  such  Definitive
Certificates  and the Trustee  shall  recognize  the Holders of such  Definitive
Certificates as Certificateholders hereunder.

         Section 6.09      MAINTENANCE OF OFFICE OR AGENCY.

                  The Trustee  will  maintain or cause to be  maintained  at its
expense an office or offices or agency or  agencies  at 2001 Bryan  Street,  8th
Floor, Dallas, Texas, 75201,  Attention:  ITS Transfer Department,  Nomura Asset
Acceptance  Corporation,  2004-AP2 where  Certificates

                                    - 109 -
<PAGE>

may be surrendered for  registration  of transfer or exchange.  The Trustee will
give  prompt  written  notice to the  Certificateholders  of any  change in such
location of any such office or agency.

                                    - 110 -
<PAGE>

                                   ARTICLE VII

                         THE DEPOSITOR AND THE SERVICER

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

         Section 7.02  MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE SERVICER.

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

                  (b) Any Person into which the Depositor or any Servicer may be
merged  or  consolidated,  or any  corporation  resulting  from  any  merger  or
consolidation  to which the Depositor or the Servicer  shall be a party,  or any
Person  succeeding to the business of the Depositor or the Servicer shall be the
successor of the Depositor or the Servicer  hereunder,  without the execution or
filing of any paper or  further  act on the part of any of the  parties  hereto,
anything herein to the contrary notwithstanding.

         Section 7.03      INDEMNIFICATION OF DEPOSITOR AND THE SERVICER.

                  (a) The Depositor agrees to indemnify the Indemnified  Persons
for,  and to  hold  them  harmless  against,  any  loss,  liability  or  expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection  with,  arising out of, or relating to,
any claim or legal action  (including  any pending or threatened  claim or legal
action)  relating  to this  Agreement  or the  Certificates  (i)  related to the
Depositor's  failure to perform  its duties in  compliance  with this  Agreement
(except as any such loss,  liability or expense shall be otherwise  reimbursable
pursuant  to this  Agreement)  or (ii)  incurred  by reason  of the  Depositor's
willful misfeasance,  bad faith or gross negligence in the performance of duties
hereunder  or  by  reason  of  reckless  disregard  of  obligations  and  duties
hereunder.  This indemnity  shall survive the resignation and the termination of
this Agreement.

                  (b) The Servicer agrees to indemnify the  Indemnified  Persons
for,  and to  hold  them  harmless  against,  any  loss,  liability  or  expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection  with,  arising out of, or relating to,
any claim or legal action  (including  any pending or threatened  claim or legal
action)  relating to the Servicer's  gross  negligence in the performance of its
duties under this Agreement or failure to service the Mortgage Loans in material
compliance  with the terms of this  Agreement  and for a material  breach of any
representation,  warranty or  covenant of the  Servicer  contained  herein.  The
Servicer  shall  immediately  notify  the  Trustee if a claim is made by a third
party with respect to this  Agreement or the  Mortgage  Loans,  assume (with the
consent of the

                                    - 111 -
<PAGE>

Trustee and with counsel reasonably  satisfactory to the Trustee) the defense of
any such claim and pay all expenses in connection  therewith,  including counsel
fees, and promptly  appeal or pay,  discharge and satisfy any judgment or decree
which may be  entered  against it or any  Indemnified  Person in respect of such
claim but  failure to so notify  the  Servicer  shall not limit its  obligations
hereunder. The Servicer agrees that it will not enter into any settlement of any
such claim without the consent of the Indemnified Persons unless such settlement
includes an unconditional release of such Indemnified Persons from all liability
that is the subject matter of such claim. The provisions of this Section 7.03(b)
shall survive termination of this Agreement.

         Section 7.04  LIMITATIONS ON LIABILITY OF THE  DEPOSITOR,  THE SERVICER
AND OTHERS.  Subject to the  obligation  of the  Depositor  and the  Servicer to
indemnify the Indemnified Persons pursuant to Section 7.03:

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

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

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

                  (d) Neither the Depositor nor the Servicer  shall be under any
obligation  to appear  in,  prosecute  or defend  any legal  action  that is not
incidental  to its  duties  under this  Agreement  and that in its  opinion  may
involve it in any expense or liability;  provided,  however,  the Trustee may in
its  discretion,  undertake  any such  action  which it may  deem  necessary  or

                                    - 112 -
<PAGE>

desirable  with  respect  to this  Agreement  and the  rights  and duties of the
parties hereto and the interests of the  Certificateholders  hereunder.  In such
event,  the legal expenses and costs of such action and any liability  resulting
therefrom  shall be expenses,  costs and  liabilities of the Trust Fund, and the
Trustee  shall be entitled to be  reimbursed  therefor  out of the  Distribution
Account as provided by Section 4.05.  Nothing in this  Subsection  7.04(d) shall
affect the Trustee's  obligation to take such actions as are necessary to ensure
the  servicing  and  administration  of the  Mortgage  Loans  pursuant  to  this
Agreement.

                  (e) In taking or recommending any course of action pursuant to
this  Agreement,  unless  specifically  required  to  do  so  pursuant  to  this
Agreement,   the  Trustee  shall  not  be  required  to   investigate   or  make
recommendations  concerning potential liabilities which the Trust might incur as
a result of such course of action by reason of the  condition  of the  Mortgaged
Properties.

                  (f) The Trustee  shall not be liable for any acts or omissions
of the Servicer, the Depositor or the Custodian.

         Section 7.05      SERVICER NOT TO RESIGN.

                  The Servicer shall not resign from the  obligations and duties
hereby imposed on it except upon the determination that its duties hereunder are
no longer permissible under applicable law or the performance of such duties are
no longer possible in order to comply with applicable law and such incapacity or
impossibility cannot be cured by the Servicer. Any determination  permitting the
resignation  of the Servicer shall be evidenced by an Opinion of Counsel to such
effect  delivered to the Trustee  which  Opinion of Counsel shall be in form and
substance  acceptable  to the  Trustee.  No  appointment  of a successor  to the
Servicer  shall be  effective  hereunder  unless  (a) the Rating  Agencies  have
confirmed  in writing  that such  appointment  will not  result in a  downgrade,
qualification  or  withdrawal  of  the  then  current  ratings  assigned  to the
Certificates,  (b) such successor  shall have  represented  that it is meets the
eligibility criteria set forth in Section 8.02 and (c) such successor has agreed
to  assume  the  obligations  of the  Servicer  hereunder  to the  extent of the
Mortgage Loans. The Servicer shall provide a copy of the written confirmation of
the Rating Agencies and the agreement executed by such successor to the Trustee.
No such resignation  shall become  effective until a Qualified  Successor or the
Trustee  shall have  assumed the  Servicer's  responsibilities  and  obligations
hereunder.  The Servicer shall notify the Trustee and the Rating Agencies of its
resignation.

         Section 7.06      TERMINATION OF SERVICER WITHOUT CAUSE; APPOINTMENT OF
                           SPECIAL SERVICER.

                  (a) The Seller  may, at its option,  terminate  the  servicing
responsibilities of GMAC Mortgage Corporation as Servicer hereunder with respect
to the Mortgage Loans without cause. No such termination  shall become effective
unless  and until a  successor  to GMAC  Mortgage  Corporation  shall  have been
appointed to service and administer  the related  Mortgage Loans pursuant to the
terms and conditions of this Agreement. No appointment shall be effective unless
(i) such successor to GMAC Mortgage  Corporation meets the eligibility  criteria
contained  in  Section  8.02,  (ii) the  Trustee  shall have  consented  to such
appointment,  (iii) the Rating  Agencies  have  confirmed  in writing  that such
appointment  will not result in a downgrade,  qualification or withdrawal of the
then current  ratings  assigned to the  Certificates,  (iv) such

                                    - 113 -
<PAGE>

successor  has agreed to assume the  obligations  of GMAC  Mortgage  Corporation
hereunder to the extent of the Mortgage  Loans and (v) all amounts  reimbursable
to GMAC Mortgage  Corporation pursuant to the terms of this Agreement shall have
been paid to GMAC Mortgage  Corporation by the successor  appointed  pursuant to
the terms of this Section 7.06 or by the Seller  including  without  limitation,
all  unreimbursed   Advances  and  Servicing  Advances  made  by  GMAC  Mortgage
Corporation and all out-of-pocket expenses of GMAC Mortgage Corporation incurred
in connection with the transfer of servicing to such successor. The Seller shall
provide  a copy of the  written  confirmation  of the  Rating  Agencies  and the
agreement executed by such successor to the Trustee.

                  (b) In  addition,  the Seller may,  at its  option,  appoint a
special  servicer with respect to certain of the Mortgage Loans.  The Seller and
GMAC  Mortgage  Corporation  shall  negotiate  in good faith  with any  proposed
special  servicer  with  respect to the duties and  obligations  of such special
servicer  with respect to any such Mortgage  Loan.  Any  subservicing  agreement
shall contain terms and provisions  acceptable to the Trustee and shall obligate
the special  servicer to service such Mortgage Loans in accordance with Accepted
Servicing Practices. The fee payable to the special servicer for the performance
of such duties and  obligations  will paid from the  Servicing  Fee collected by
GMAC  Mortgage  Corporation  with respect to each such Mortgage Loan and will be
remitted to such special servicer by GMAC Mortgage Corporation.

                                    - 114 -
<PAGE>

                                  ARTICLE VIII

                        DEFAULT; TERMINATION OF SERVICER

         Section 8.01      SERVICER DEFAULT.

                  In case one or more of the following  events of default by the
Servicer (each, a "Servicer Default") shall occur and be continuing,  that is to
say:

                  (i) any failure to remit to the  Trustee any payment  required
to be made under the terms of this Agreement  which  continues  unremedied for a
period of three Business Days; or

                  (ii)  failure  duly to  observe  or  perform  in any  material
respect any other of the  covenants or agreements  set forth in this  Agreement,
the breach of which has a material adverse effect and which continue  unremedied
for a period  of sixty  days  after  the date on which  written  notice  of such
failure,  requiring  the  same to be  remedied,  shall  have  been  given to the
Servicer by the Trustee; or

                  (iii) a decree or order of a court or  agency  or  supervisory
authority  having  jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets  and  liabilities  or  similar  proceedings,  or for  the  winding-up  or
liquidation  of its affairs,  shall have been  entered  against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or

                  (iv)  the  Servicer  shall  consent  to the  appointment  of a
conservator   or  receiver  or   liquidator  in  any   insolvency,   bankruptcy,
readjustment   of  debt,   marshaling  of  assets  and  liabilities  or  similar
proceedings  of or  relating  to  the  Servicer  or of or  relating  to  all  or
substantially all of its property; or

                  (v) the Servicer  shall admit in writing its  inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable  insolvency or  reorganization  statute,  make an assignment  for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or

                  (vi) the  Servicer  attempts to assign its right to  servicing
compensation  hereunder or the Servicer attempts to sell or otherwise dispose of
all or  substantially  all of its property or assets or to assign this Agreement
or the servicing  responsibilities hereunder or to delegate its duties hereunder
or any portion thereof except, in each case as otherwise permitted herein; or

                  (vii) the Servicer ceases to be qualified to transact business
in any jurisdiction  where it is currently so qualified,  but only to the extent
such  non-qualification  materially and adversely affects the Servicer's ability
to perform its obligations hereunder; or

         then,  and in each and every such case,  so long as a Servicer  Default
shall not have been remedied,  the Trustee, by notice in writing to the Servicer
shall with  respect to a payment  default by the  Servicer  pursuant  to Section
8.01(i) and, upon the occurrence and continuance of any

                                    - 115 -
<PAGE>

other Servicer Default, may, and, at the written direction of Certificateholders
evidencing not less than 25% of the Voting Rights shall, in addition to whatever
rights the Trustee on behalf of the  Certificateholders  may have under  Section
7.03 and at law or equity to damages,  including  injunctive relief and specific
performance, terminate all the rights and obligations of the Servicer under this
Agreement  and in and to the  Mortgage  Loans and the proceeds  thereof  without
compensating  the Servicer for the same. On or after the receipt by the Servicer
of such written  notice,  all  authority  and power of the  Servicer  under this
Agreement whether with respect to the Mortgage Loans or otherwise, shall pass to
and be vested  in the  Trustee.  Upon  written  request  from the  Trustee,  the
Servicer  shall  prepare,  execute and deliver,  any and all documents and other
instruments,  place in the Trustee's  possession  all Mortgage Files relating to
the  related  Mortgage  Loans,  and 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,  at the Servicer's sole expense. The
defaulting   Servicer  shall   cooperate  with  the  Trustee  in  effecting  the
termination of its  responsibilities  and rights  hereunder  including,  without
limitation,  the transfer to such successor for administration by it of all cash
amounts  which shall at the time be credited by the  defaulting  Servicer to the
Custodial  Account or Escrow Account or thereafter  received with respect to the
Mortgage  Loans  or any  related  REO  Property  (provided,  however,  that  the
defaulting 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 Advances, Servicing Advances, accrued and unpaid Servicing
Fees or otherwise,  and shall continue to be entitled to the benefits of Section
7.04,  notwithstanding  any such  termination,  with respect to events occurring
prior to such  termination).  The Trustee shall not have knowledge of a Servicer
Default  unless a  Responsible  Officer of the Trustee has actual  knowledge  or
unless written notice of any Servicer  Default is received by the Trustee at its
Corporate Trust Office and such notice  references the  Certificates,  the Trust
Fund or this Agreement.

         Section 8.02      TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

                  On and  after  the  time the  Servicer  receives  a notice  of
termination pursuant to Section 8.01, the Trustee shall automatically become the
successor to the Servicer with respect to the transactions set forth or provided
for  herein  and after a  transition  period  (not to exceed 90 days),  shall be
subject to all the  responsibilities,  duties and liabilities  relating  thereto
placed on the Servicer by the terms and  provisions  hereof and  applicable  law
including the  obligation to make Advances  pursuant to Article VI hereof except
as otherwise provided herein;  provided,  however, that the Trustee's obligation
to make Advances in its capacity as Successor  Servicer  shall not be subject to
such 90 day  transition  period and the Trustee in such  capacity  will make any
Advance required to be made by the predecessor Servicer on the Distribution Date
on which the predecessor  Servicer was required to make such Advance.  Effective
on the date of such notice of termination, as compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage Loans
that the terminated  Servicer would have been entitled to if it had continued to
act hereunder,  provided,  however, that the Trustee shall not be (i) liable for
any  acts or  omissions  of the  terminated  Servicer,  (ii)  obligated  to make
Advances if it is prohibited  from doing so under  applicable  law or determines
that such Advance,  if made, would constitute a  Nonrecoverable  Advance,  (iii)
responsible for expenses of the terminated  Servicer pursuant to Section 2.03 or
(iv)  obligated to deposit  losses on any Permitted  Investment  directed by the
terminated Servicer. Notwithstanding the foregoing, the Trustee may, if it shall
be

                                    - 116 -
<PAGE>

unwilling to so act, or shall, if it is prohibited by applicable law from making
Advances pursuant to Article VI or if it is otherwise unable to so act, appoint,
or  petition a court of  competent  jurisdiction  to  appoint,  any  established
mortgage loan servicing  institution the appointment of which does not adversely
affect the then current rating of the  Certificates by each Rating Agency as the
successor to the Servicer  hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Any Successor
Servicer  shall  (i) be an  institution  that is a Fannie  Mae and  Freddie  Mac
approved  seller/servicer  in good  standing,  that has a net  worth of at least
$15,000,000  and (ii) be willing to act as  successor  servicer of any  Mortgage
Loans  under  this  Agreement  and shall  have  executed  and  delivered  to the
Depositor and the Trustee an agreement accepting such delegation and assignment,
that  contains  an  assumption  by such Person of the  rights,  powers,  duties,
responsibilities,  obligations and liabilities of the terminated Servicer (other
than  any  liabilities  of the  terminated  Servicer  hereof  incurred  prior to
termination  of the  Servicer  under  Section  8.01),  with  like  effect  as if
originally named as a party to this Agreement,  provided that each Rating Agency
shall have acknowledged in writing that its rating of the Certificates in effect
immediately  prior to such  assignment and  delegation  will not be qualified or
reduced as a result of such  assignment and  delegation.  If the Trustee assumes
the duties and  responsibilities of the Servicer in accordance with this Section
8.02,  the Trustee shall not resign as Servicer  until a Successor  Servicer has
been  appointed  and has accepted such  appointment.  Pending  appointment  of a
successor to the terminated Servicer hereunder,  the Trustee, unless the Trustee
is prohibited by law from so acting,  shall, subject to Section 4.04 hereof, act
in such capacity as hereinabove  provided.  In connection with such  appointment
and assumption,  the Trustee may make such  arrangements for the compensation of
such  successor  out of payments on Mortgage  Loans or  otherwise as it and such
successor shall agree;  provided that no such compensation shall be in excess of
that permitted the terminated Servicer hereunder. The Trustee and such successor
shall take such action,  consistent with this Agreement as shall be necessary to
effectuate  any such  succession.  Neither the  Trustee nor any other  Successor
Servicer shall be deemed to be in default  hereunder by reason of any failure to
make, or any delay in making, any distribution  hereunder or any portion thereof
or  any  failure  to  perform,  or  any  delay  in  performing,  any  duties  or
responsibilities hereunder, in either case caused by the failure of the Servicer
to  deliver or  provide,  or any delay in  delivering  or  providing,  any cash,
information, documents or records to it.

                  The costs and expenses of the Trustee in  connection  with the
termination  of the  Servicer,  appointment  of a  Successor  Servicer  and,  if
applicable, any transfer of servicing,  including, without limitation, all costs
and expenses associated with the complete transfer of all servicing data and the
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 or the  Successor  Servicer  to  service  the
Mortgage  Loans  properly  and  effectively,  to  the  extent  not  paid  by the
terminated  Servicer as may be required herein,  shall be payable to the Trustee
from the  Distribution  Account  pursuant to Section 4.07.  Any successor to the
terminated Servicer as successor servicer under this Agreement shall give notice
to the  applicable  Mortgagors of such change of servicer and shall,  during the
term of its  service  as  successor  servicer  maintain  in force the  policy or
policies  that the  terminated  Servicer is  required  to  maintain  pursuant to
Section 3.04.

         Section 8.03      NOTIFICATION TO CERTIFICATEHOLDERS.

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                  (a) Upon any  termination  of or appointment of a successor to
the  Servicer,   the  Trustee  shall  give  prompt  written  notice  thereof  to
Certificateholders and to each Rating Agency.

                  (b)  Within  60 days  after  the  occurrence  of any  Servicer
Default, the Trustee shall transmit by mail to all Certificateholders  notice of
each the Servicer  Default  hereunder known to the Trustee,  unless such default
shall have been cured or waived.

         Section 8.04      WAIVER OF SERVICER DEFAULTS.

                  The   Trustee   may  waive   only  by  written   notice   from
Certificateholders  evidencing  66-2/3 of the Voting Rights (unless such default
materially  and  adversely  affects  all  Certificateholders,  in which case the
written  direction shall be from all of the  Certificateholders)  any default by
the  Servicer  in  the  performance  of  its   obligations   hereunder  and  its
consequences.  Upon any such waiver of a past default,  such default shall cease
to exist,  and any Servicer  Default  arising  therefrom shall be deemed to have
been remedied for every purpose of this  Agreement.  No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived in writing.

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                                   ARTICLE IX

                    CONCERNING THE TRUSTEE AND THE CUSTODIAN

         Section 9.01      DUTIES OF TRUSTEE.

                  (a)  The  Trustee,  prior  to  the  occurrence  of a  Servicer
Default, and after the curing or waiver of all Servicer Defaults, which may have
occurred  undertakes  to  perform  such  duties  and  only  such  duties  as are
specifically set forth in this Agreement as duties of the Trustee. If a Servicer
Default  has  occurred  and has not been  cured or  waived,  the  Trustee  shall
exercise such of the rights and powers vested in it by this  Agreement,  and the
same  degree of care and skill in their  exercise,  as a  prudent  person  would
exercise under the circumstances in the conduct of such Person's own affairs.

                  (b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be  furnished  to the  Trustee  pursuant  to any  provision  of this
Agreement,  the Trustee shall examine them to determine  whether they are in the
form required by this Agreement;  provided,  however, that the Trustee shall not
be  responsible  for the  accuracy  or content of any  resolution,  certificate,
statement, opinion, report, document, order or other instrument furnished by the
Servicer.

                  (c) On each Distribution  Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the  Distribution  Account as  provided  in  Sections  5.04 and 10.01  based the
applicable Remittance Report.

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

                  (i) Prior to the  occurrence  of a Servicer  Default and after
         the  curing  or  waiver  of all the  Servicer  Defaults  which may have
         occurred with respect to the Trustee, 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 their  respective  duties and  obligations as are  specifically  set
         forth in this Agreement,  no implied  covenants or obligations shall be
         read into this Agreement against the Trustee and, in the absence of bad
         faith on the part of the Trustee, the Trustee may conclusively rely and
         shall be fully protected in acting or refraining from acting, as to the
         truth of the statements and the  correctness of the opinions  expressed
         therein, upon any certificates or opinions furnished to the Trustee and
         conforming to the requirements of this Agreement;

                  (ii)  The  Trustee  shall  not be  liable  in  its  individual
         capacity 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;

                  (iii) The  Trustee  shall not be liable  with  respect  to any
         action  taken,  suffered or omitted to be taken by it in good faith and
         believed  by it  to be  authorized  or  within  the

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         rights or powers  conferred  upon it by this Agreement or in accordance
         with the directions of the Holders of Certificates  evidencing not less
         than 25% of the aggregate  Voting Rights of the  Certificates,  if such
         action  or  non-action  relates  to  the  time,  method  and  place  of
         conducting any  proceeding  for any remedy  available to the Trustee or
         exercising  any trust or other power  conferred  upon the Trustee under
         this Agreement;

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

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

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

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

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

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

         Section 9.02      CERTAIN MATTERS AFFECTING THE TRUSTEE.

                  (a) Except as otherwise provided in Section 9.01:

                  (i) The  Trustee  may  conclusively  rely  and  shall be fully
         protected  in acting or  refraining  from  acting  in  reliance  on any
         resolution or certificate of the Seller, the Depositor or the Servicer,
         any  certificates  of  auditors  or any other  certificate,  statement,
         instrument,   opinion,   report,  notice,   request,   consent,  order,
         appraisal, bond or other paper or document believed by it to be genuine
         and to have been signed or presented by the proper party or parties;

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

                  (iii)  The  Trustee  shall  not be  under  any  obligation  to
         exercise  any of the trusts or powers  vested in it by this  Agreement,
         other than its obligation to give notices  pursuant to this  Agreement,
         or to  institute,  conduct or defend  any  litigation  hereunder  or in
         relation  hereto  at the  request,  order  or  direction  of any of the
         Certificateholders pursuant to the provisions of this Agreement, unless
         such  Certificateholders  shall have offered to the Trustee  reasonable
         security or indemnity  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  Default  of  which a  Responsible
         Officer of the Trustee has actual  knowledge  (which has not been cured
         or waived),  to exercise  such of the rights and powers vested in it by
         this  Agreement,  and to use the same degree of care and skill in their
         exercise, as a prudent person would exercise under the circumstances in
         the conduct of his own affairs;

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

                  (v) 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 Holders of  Certificates  evidencing  not less than
         25% of the  aggregate  Voting Rights of the  Certificates  and provided
         that 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 reasonably assured
         to the  Trustee  by the  security  afforded  to it by the terms of this
         Agreement.  The Trustee may require  reasonable  indemnity against such
         expense or  liability  as a condition  to taking any such  action.  The
         reasonable  expense  of  every  such  examination  shall be paid by the
         Certificateholders requesting the investigation;

                  (vi) The  Trustee  may  execute  any of the  trusts  or powers
         hereunder or perform any duties  hereunder  either  directly or through
         Affiliates,  nominees,  custodians,  agents or  attorneys.  The Trustee
         shall not be liable or responsible  for the misconduct or negligence of
         any of the  Trustee's  agents or attorneys  or paying  agent  appointed
         hereunder by the Trustee with due care;

                  (vii)  Should  the  Trustee  deem  the  nature  of any  action
         required  on its part to be unclear,  the Trustee may require  prior to
         such  action  that it be  provided  by the  Depositor  with  reasonable
         further  instructions;   the  right  of  the  Trustee  to  perform  any
         discretionary  act enumerated in this Agreement  shall not be construed
         as a duty, and the Trustee shall not be accountable  for other than its
         negligence or willful misconduct in the performance of any such act;

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                  (viii) The  Trustee  shall not be required to give any bond or
         surety with respect to the execution of the trust created hereby or the
         powers granted hereunder;

                  (ix) The  Trustee  shall  not have  any  duty to  conduct  any
         affirmative  investigation  as  to  the  occurrence  of  any  condition
         requiring the repurchase of any Mortgage Loan by any Person pursuant to
         this Agreement, or the eligibility of any Mortgage Loan for purposes of
         this Agreement; and

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

         Section 9.03     TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.

                  The recitals  contained herein and in the Certificates  (other
than the signature and authentication of the Trustee on the Certificates)  shall
be taken as the statements of the Depositor,  and the Trustee shall not have any
responsibility   for  their   correctness.   The  Trustee   does  not  make  any
representation as to the validity or sufficiency of the Certificates (other than
the signature and  authentication  of the Trustee on the Certificates) or of any
Mortgage Loan except as expressly provided in Sections 2.02 and 2.06;  provided,
however, that the foregoing shall not relieve the Custodian of the obligation to
review the Mortgage Files pursuant to Sections 2.02 and 2.05 of this  Agreement.
The Trustee's  signature and  authentication (or authentication of its agent) on
the  Certificates  shall be  solely in its  capacity  as  Trustee  and shall not
constitute the  Certificates an obligation of the Trustee in any other capacity.
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  with  respect  to the
Mortgage Loans. The Trustee (other than in its capacity as Custodian and on such
capacity,  subject to the  provisions of Section 2.06) shall not be  responsible
for the legality or validity of this  Agreement  or any  document or  instrument
relating to this  Agreement,  the validity of the execution of this Agreement or
of any supplement  hereto or instrument of further  assurance,  or the validity,
priority,  perfection or sufficiency of the security for the Certificates issued
hereunder or intended to be issued hereunder.  The Trustee shall not at any time
have any  responsibility  or  liability  for or with  respect  to the  legality,
validity  and  enforceability  of any  Mortgage  or any  Mortgage  Loan,  or the
perfection  and  priority  of any  Mortgage  or  the  maintenance  of  any  such
perfection and priority,  or for or with respect to the sufficiency of the Trust
Fund  or  its  ability  to  generate   the   payments  to  be   distributed   to
Certificateholders,  under  this  Agreement.  The  Trustee  shall  not  have any
responsibility for filing any financing or continuation  statement in any public
office at any time or to  otherwise  perfect or maintain the  perfection  of any
security interest or lien granted to it hereunder or to record this Agreement.

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         Section 9.04      TRUSTEE MAY OWN CERTIFICATES.

                  The  Trustee in its  individual  capacity  or in any  capacity
other  than as  Trustee  hereunder  may  become  the  owner  or  pledgee  of any
Certificates  with the same  rights it would have if it were not the Trustee and
may otherwise deal with the parties hereto.

         Section 9.05      TRUSTEE'S COMPENSATION AND EXPENSES; INDEMNIFICATION.

                  (a) As  compensation  for the  performance of its  obligations
under this  Agreement,  the  Trustee  shall be  entitled  to all income and gain
realized from any investment of funds in the Distribution Account.

                  In addition,  the Trustee will be entitled to recover from the
Distribution  Account  pursuant  to Section  4.07 all  reasonable  out-of-pocket
expenses,  disbursements  and  advances  and  the  expenses  of the  Trustee  in
connection with the performance of its duties and obligations hereunder or under
any related documents, any Servicer Default, any breach of this Agreement or any
claim or legal  action  (including  any  pending  or  threatened  claim or legal
action)  incurred  or made by the  Trustee in the  administration  of the trusts
hereunder (including the reasonable compensation,  expenses and disbursements of
its counsel) except any such expense,  disbursement or advance as may arise from
its negligence or intentional  misconduct.  If funds in the Distribution Account
are  insufficient  therefor,  the Trustee  shall  recover such expenses from the
Seller.  Such compensation and reimbursement  obligation shall not be limited by
any  provision of law in regard to the  compensation  of a trustee of an express
trust.  The rights of the  Trustee  under this  Section  9.05 shall  survive the
termination of this Agreement and the resignation or removal of the Trustee.

                  (b)  The  Trustee  and its  directors,  officers,  agents  and
employees  shall be indemnified  and held harmless by the Trust Fund against any
and  all  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits,  costs,  expenses  or  disbursements  of any  kind or  nature
whatsoever,  including  reasonable  attorney's  fees,  that may be  imposed  on,
incurred by or  asserted  against it or them in any way  directly or  indirectly
relating to or arising out of the transactions contemplated by this Agreement or
any other  agreement  entered into in connection  herewith,  including,  but not
limited to, the Mortgage Loan Purchase  Agreement assigned to the Trust pursuant
to this Agreement or any action taken or not taken by it or them hereunder or in
connection  herewith except to the extent caused by the Trustee's  negligence or
willful  misconduct.  The  indemnification  provided for under this Section 9.05
shall survive the  termination of this Agreement and the  resignation or removal
of the Trustee.

                  The Trustee and its directors,  officers, agents and employees
shall be  indemnified  and held  harmless by the Trust Fund from and against any
and  all  claims,  demands,  losses,  penalties,  liabilities,  costs,  damages,
injuries and expenses, including, without limitation, reasonable attorneys' fees
and  expenses,  suffered  or  sustained  by  the  Trustee,  either  directly  or
indirectly, relating to or arising out of any environmental law or regulation of
the United  States or any state  thereof,  including,  without  limitation,  any
judgment,  award, settlement,  reasonable attorneys' fees and expenses and other
costs or  expenses  incurred  in  connection  with the  defense of any actual or
threatened action, proceeding or claim.

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         Section 9.06      ELIGIBILITY REQUIREMENTS FOR TRUSTEE.

                  The Trustee and any successor  Trustee shall during the entire
duration  of this  Agreement  be a state  bank or trust  company  or a  national
banking  association  organized and doing  business under the laws of a state or
the United States of America,  authorized under such laws to exercise  corporate
trust powers,  having a combined capital and surplus and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee,  $50,000,000,  subject
to supervision or examination by federal or state  authority and, in the case of
the  Trustee,  rated  "BBB" or higher by Fitch  Ratings  with  respect  to their
long-term  rating and rated  "A-1" or higher by  Standard & Poor's and "Baa2" or
higher  by  Moody's  with  respect  to  any  outstanding   long-term   unsecured
unsubordinated debt, and, in the case of a successor Trustee other than pursuant
to Section 9.10,  rated in one of the two highest  long-term debt categories of,
or  otherwise  acceptable  to,  each  of the  Rating  Agencies.  If the  Trustee
publishes  reports of  condition  at least  annually,  pursuant to law or to the
requirements of the aforesaid  supervising or examining authority,  then for the
purposes  of  this  Section  9.06  the  combined  capital  and  surplus  of such
corporation shall be deemed to be its total equity capital (combined capital and
surplus) as set forth in its most recent  report of condition so  published.  In
case at any time the Trustee shall cease to be eligible in  accordance  with the
provisions of this Section 9.06,  the Trustee  shall resign  immediately  in the
manner and with the effect specified in Section 9.08.

         Section 9.07      INSURANCE.

                  The  Custodian  hereunder,  at its own  expense,  shall at all
times maintain and keep in full force and effect such insurance in amounts, with
standard  coverage and subject to  deductibles,  as are  customary for insurance
typically maintained by banks which act as custodians but, in any event not less
than that required by Fannie Mae.  Evidence of such insurance shall be furnished
to any Certificateholder upon reasonable written request.

         Section 9.08      RESIGNATION AND REMOVAL OF TRUSTEE.

                  The Trustee may at any time resign and be discharged  from the
Trust hereby  created by giving  written notice thereof to the Depositor and the
Seller,  with a copy to the  Rating  Agencies.  Upon  receiving  such  notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument,  in triplicate,  one copy of which  instrument shall be delivered to
the resigning trustee and the successor  trustee.  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  resigning  or removed
Trustee may petition any court of competent  jurisdiction for the appointment of
a successor trustee.

                  If at any time (i) the  Trustee  shall cease to be eligible in
accordance  with the  provisions of Section 9.06 hereof and shall fail to resign
after written  request  thereto by the Depositor,  (ii) the Trustee shall become
incapable  of acting,  or shall be  adjudged  as  bankrupt  or  insolvent,  or a
receiver of the Trustee or of its  property  shall be  appointed,  or any public
officer  shall  take  charge or control of the  Trustee  or of its  property  or
affairs for the  purpose of  rehabilitation,  conservation  or  liquidation,  or
(iii)(A) a tax is imposed  with  respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located,  (B) the  imposition of such tax would
be avoided by the  appointment of a different  trustee and (C) the Trustee fails
to

                                    - 124 -
<PAGE>

indemnify  the Trust Fund against such tax,  then the  Depositor  may remove the
Trustee  and  appoint a  successor  trustee by written  instrument,  in multiple
copies,  a copy of which  instrument  shall be  delivered to the Trustee and the
successor trustee.

                  The Holders  evidencing  at least 51% of the Voting  Rights of
each Class of  Certificates  may at any time  remove the  Trustee  and appoint a
successor  trustee by written  instrument or  instruments,  in multiple  copies,
signed by such Holders or their attorneys-in-fact duly authorized,  one complete
set of which  instruments  shall be  delivered by the  successor  trustee to the
Trustee so removed and the successor trustee so appointed. Notice of any removal
of the Trustee  shall be given to each Rating Agency by the Trustee or successor
trustee.

                  Any resignation or removal of the Trustee and appointment of a
successor  trustee  pursuant to any of the provisions of this Section 9.08 shall
become  effective upon  acceptance of  appointment  by the successor  trustee as
provided in Section 10.09 hereof.

         Section 9.09      SUCCESSOR TRUSTEE.

                  Any  successor  trustee  appointed as provided in Section 9.08
hereof  shall  execute,  acknowledge  and  deliver to the  Depositor  and to its
predecessor  trustee an  instrument  accepting  such  appointment  hereunder and
thereupon the  resignation  or removal of the  predecessor  trustee shall become
effective  and  such  successor  trustee,  without  any  further  act,  deed  or
conveyance,  shall become fully vested with all the rights,  powers,  duties and
obligations of its predecessor hereunder,  with the like effect as if originally
named as trustee herein.

                  No successor  trustee shall accept  appointment as provided in
this Section 9.09 unless at the time of such acceptance  such successor  trustee
shall  be  eligible  under  the  provisions  of  Section  9.07  hereof  and  its
appointment   shall  not  adversely  affect  the  then  current  rating  of  the
Certificates.

                  Upon  acceptance  of  appointment  by a  successor  trustee as
provided in this Section 9.09,  the  successor  trustee shall mail notice of the
succession  of such  trustee  hereunder to all Holders of  Certificates.  If the
successor  trustee fails to mail such notice within ten days after acceptance of
appointment,  the Depositor  shall cause such notice to be mailed at the expense
of the Trust Fund.

         Section 9.10      MERGER OR CONSOLIDATION OF TRUSTEE.

                  Any corporation,  state bank or national  banking  association
into  which  the  Trustee  may be merged or  converted  or with  which it may be
consolidated  or any  corporation,  state bank or national  banking  association
resulting  from any merger,  conversion  or  consolidation  to which the Trustee
shall be a party, or any corporation, state bank or national banking association
succeeding to  substantially  all of the corporate trust business of the Trustee
or  shall  be the  successor  of  the  Trustee  hereunder,  provided  that  such
corporation  shall be eligible  under the provisions of Section 9.06 without the
execution  or  filing  of any  paper  or  further  act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

         Section 9.11      APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

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                  Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal  requirements of any  jurisdiction in
which any part of the Trust Fund or property  securing any Mortgage  Note may at
the time be  located,  the  Trustee  shall have the power and shall  execute and
deliver all  instruments to appoint one or more Persons  approved by the Trustee
to act as  co-trustee  or  co-trustees  jointly  with the  Trustee,  or separate
trustee or separate trustees,  of all or any part of the Trust Fund, and to vest
in such  Person  or  Persons,  in such  capacity  and  for  the  benefit  of the
Certificateholders,  such title to the Trust Fund or any part thereof, whichever
is applicable,  and,  subject to the other provisions of this Section 9.11, such
powers,  duties,  obligations,  rights and trusts as the  Trustee  may  consider
necessary or desirable.  No co-trustee or separate  trustee  hereunder  shall be
required to meet the terms of eligibility  as a successor  trustee under Section
9.06 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 9.09.

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

                  (i) All rights,  powers,  duties and obligations  conferred or
         imposed upon the Trustee,  except for the  obligation of the Trustee as
         Successor  Servicer  under this Agreement to advance funds on behalf of
         the  terminated  Servicer,  shall  be  conferred  or  imposed  upon and
         exercised  or  performed  by the Trustee and such  separate  trustee or
         co-trustee  jointly (it being  understood that such separate trustee or
         co-trustee  is not  authorized  to act  separately  without the Trustee
         joining  in such act),  except to the extent  that under any law of any
         jurisdiction  in which any  particular  act or acts are to be performed
         (whether a Trustee hereunder or as a Successor Servicer hereunder), the
         Trustee  shall be  incompetent  or  unqualified  to perform such act or
         acts,  in which  event such  rights,  powers,  duties  and  obligations
         (including  the  holding  of title  to the  Trust  Fund or any  portion
         thereof in any such  jurisdiction)  shall be  exercised  and  performed
         singly  by such  separate  trustee  or  co-trustee,  but  solely at the
         direction of the Trustee;

                  (ii) No trustee  hereunder shall be held personally  liable by
         reason of any act or omission of any other trustee hereunder; and

                  (iii) The Trustee may at any time accept the resignation of or
         remove any separate trustee or co-trustee.

                  Any  notice,  request or other  writing  given to the  Trustee
shall be deemed to have been  given to each of the then  separate  trustees  and
co-trustees,  as  effectively  as if  given to each of  them.  Every  instrument
appointing any separate  trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. Each separate  trustee and  co-trustee,  upon
its  acceptance  of the trusts  conferred,  shall be vested  with the estates or
property  specified in its  instrument of  appointment,  either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this  Agreement,  specifically  including  every  provision of this Agreement
relating to the conduct of, affecting the liability of, or affording  protection
to, the  Trustee.  Every such  instrument  shall be filed with the Trustee and a
copy thereof given to the Depositor.  The Trust Fund shall pay  associated  fees
and expenses.

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<PAGE>

                  Any  separate   trustee  or  co-trustee   may,  at  any  time,
constitute  the  Trustee  its agent or  attorney-in-fact,  with  full  power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co- trustee shall die, become incapable of acting,  resign or be removed, all
of its  estates,  properties,  rights,  remedies and trusts shall vest in and be
exercised  by  the  Trustee,  to  the  extent  permitted  by  law,  without  the
appointment of a new or successor trustee.

         Section 9.12      TAX MATTERS.

                  It is intended that the Trust Fund shall constitute,  and that
the  affairs  of the Trust  Fund shall be  conducted  so that each REMIC  formed
hereunder  qualifies as, a "real estate mortgage  investment conduit" as defined
in and  in  accordance  with  the  REMIC  Provisions.  In  furtherance  of  such
intention,  the Trustee covenants and agrees that it shall act as agent (and the
Trustee is hereby  appointed  to act as agent) on behalf of the Trust Fund.  The
Trustee,  as agent on behalf of the Trust Fund,  shall do or refrain from doing,
as applicable,  the following:  (a) the Trustee shall prepare and file, or cause
to be  prepared  and  filed,  in a timely  manner,  U.S.  Real  Estate  Mortgage
Investment  Conduit  Income Tax Returns (Form 1066 or any successor form adopted
by the  Internal  Revenue  Service) and prepare and file or cause to be prepared
and filed with the Internal  Revenue  Service and applicable  state or local tax
authorities income tax or information returns for each taxable year with respect
to each  such  REMIC  containing  such  information  and at the times and in the
manner as may be required  by the Code or state or local tax laws,  regulations,
or  rules,  and  furnish  or cause to be  furnished  to  Certificateholders  the
schedules,  statements or information at such times and in such manner as may be
required  thereby;  (b) the Trustee  shall apply for an employer  identification
number with the  Internal  Revenue  Service via a Form SS-4 or other  comparable
method for each REMIC that is or  becomes a taxable  entity,  and within  thirty
days of the  Closing  Date,  furnish or cause to be  furnished  to the  Internal
Revenue Service,  on Forms 8811 or as otherwise may be required by the Code, the
name, title, address, and telephone number of the person that the holders of the
Certificates  may contact for tax information  relating  thereto,  together with
such  additional  information  as may be required by such Form,  and update such
information  at the  time or times in the  manner  required  by the Code for the
Trust Fund; (c) the Trustee shall make or cause to be made elections,  on behalf
of each REMIC  formed  hereunder  to be treated  as a REMIC on the  federal  tax
return of such  REMIC for its first  taxable  year  (and,  if  necessary,  under
applicable state law); (d) the Trustee shall prepare and forward, or cause to be
prepared and forwarded,  to the  Certificateholders  and to the Internal Revenue
Service and, if necessary,  state tax authorities,  all information  returns and
reports as and when required to be provided to them in accordance with the REMIC
Provisions,  including without limitation, the calculation of any original issue
discount  using  the  Prepayment  Assumption;  (e)  the  Trustee  shall  provide
information  necessary for the  computation  of tax imposed on the transfer of a
Residual Certificate to a Person that is not a Permitted Transferee, or an agent
(including  a broker,  nominee  or other  middleman)  of a Person  that is not a
Permitted  Transferee,  or a pass-through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing  such  information  may be charged to the Person liable
for such tax); (f) the Trustee shall,  to the extent under its control,  conduct
the affairs of the Trust Fund at all times that any Certificates are outstanding
so as to maintain the status of each REMIC formed hereunder as a REMIC under the
REMIC Provisions;  (g) the Trustee shall not knowingly or intentionally take any
action or omit to take any action that would cause the  termination of the REMIC
status of

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<PAGE>

any  REMIC  formed  hereunder;  (h) the  Trustee  shall  pay,  from the  sources
specified in the last paragraph of this Section 9.12, the amount of any federal,
state and local  taxes,  including  prohibited  transaction  taxes as  described
below,  imposed on any REMIC formed  hereunder  prior to the  termination of the
Trust Fund when and as the same shall be due and  payable  (but such  obligation
shall not prevent the Trustee or any other  appropriate  Person from  contesting
any such tax in appropriate  proceedings  and shall not prevent the Trustee from
withholding  payment of such tax, if  permitted  by law,  pending the outcome of
such  proceedings);  (i) the Trustee  shall sign or cause to be signed  federal,
state or local income tax or information  returns or any other document prepared
by the Trustee  pursuant to this Section 9.12  requiring a signature  thereon by
the  Trustee;  (j) the Trustee  shall  maintain  records  relating to each REMIC
formed hereunder including but not limited to the income,  expenses,  assets and
liabilities  of each such REMIC and  adjusted  basis of the Trust Fund  property
determined at such intervals as may be required by the Code, as may be necessary
to prepare the foregoing returns, schedules,  statements or information; (k) the
Trustee shall, for federal income tax purposes,  maintain books and records with
respect  to the  REMICs on a  calendar  year and on an  accrual  basis;  (l) the
Trustee shall not enter into any arrangement not otherwise  provided for in this
Agreement  by which the  REMICs  will  receive a fee or other  compensation  for
services  nor permit the REMICs 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; and (m) as and when
necessary and  appropriate,  the Trustee  shall  represent the Trust Fund in any
administrative  or judicial  proceedings  relating to an examination or audit by
any governmental  taxing authority,  request an administrative  adjustment as to
any taxable year of any REMIC formed hereunder, enter into settlement agreements
with any governmental taxing agency,  extend any statute of limitations relating
to any tax item of the Trust  Fund,  and  otherwise  act on behalf of each REMIC
formed hereunder in relation to any tax matter involving any such REMIC.

                  In order to enable the  Trustee  to perform  its duties as set
forth  herein,  the Depositor  shall  provide,  or cause to be provided,  to the
Trustee  within 10 days after the Closing Date all  information or data that the
Trustee  requests in writing and  determines  to be relevant for tax purposes to
the  valuations  and offering  prices of the  Certificates,  including,  without
limitation,  the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee  promptly  upon written  request  therefor,  any such  additional
information or data that the Trustee may, from time to time, request in order to
enable the  Trustee to perform  its duties as set forth  herein.  The  Depositor
hereby indemnifies the Trustee for any losses,  liabilities,  damages, claims or
expenses  of the  Trustee  arising  from any  errors or  miscalculations  of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.

                  In  the  event  that  any  tax  is   imposed  on   "prohibited
transactions"  of any of REMIC I,  REMIC II or REMIC III as  defined  in Section
860F(a)(2)  of the Code,  on the "net income from  foreclosure  property" of the
Trust Fund as defined in Section 860G(c) of the Code, on any contribution to any
of REMIC I,  REMIC II or REMIC III after the  startup  day  pursuant  to Section
860G(d) of the Code, or any other tax is imposed, including, without limitation,
any  federal,  state or local tax or minimum  tax  imposed  upon any of REMIC I,
REMIC II or REMIC III,  and is not paid as otherwise  provided for herein,  such
tax shall be paid by (i) the  Trustee,  if any such  other tax  arises out of or
results  from a breach  by the  Trustee  of any of its  obligations

                                    - 128 -
<PAGE>

under this Section, (ii) any party hereto (other than the Trustee) to the extent
any such other tax arises out of or results from a breach by such other party of
any of its  obligations  under this Agreement or (iii) in all other cases, or in
the event that any liable party hereto fails to honor its obligations  under the
preceding  clauses  (i) or (ii),  any such tax will be paid first  with  amounts
otherwise to be distributed to the Class R  Certificateholders,  and second with
amounts  otherwise  to be  distributed  to all other  Certificateholders  in the
following order of priority:  first, to the Class M-3  Certificates,  second, to
the Class M-2 Certificates, third, to the Class M-1 Certificates, and fourth, to
the the Senior  Certificates  (pro rata based on the amounts to be distributed).
Notwithstanding  anything to the contrary  contained  herein, to the extent that
such tax is  payable by the Holder of any  Certificates,  the  Trustee is hereby
authorized to retain on any  Distribution  Date, from the Holders of the Class R
Certificates  (and,  if  necessary,  second,  from  the  Holders  of  the  other
Certificates  in the  priority  specified  in  the  preceding  sentence),  funds
otherwise distributable to such Holders in an amount sufficient to pay such tax.
The  Trustee  shall  include  in  its  Remittance  Report   instructions  as  to
distributions  to such parties taking into account the  priorities  described in
the second preceding sentence.  The Trustee agrees to promptly notify in writing
the party liable for any such tax of the amount thereof and the due date for the
payment thereof.

         Section 9.13      CUSTODIAN'S FEES AND EXPENSES.

                  The Seller covenants and agrees to pay the Custodian from time
to time, and the Custodian shall be entitled to reasonable  compensation for all
services rendered by it in the exercise and performance of any of the powers and
duties of the  Custodian  hereunder,  and the Seller will pay or  reimburse  the
Custodian  upon its  request  for all  reasonable  expenses,  disbursements  and
advances  incurred  or made  by the  Custodian  in  accordance  with  any of the
provisions of this  Agreement  (including the  reasonable  compensation  and the
expenses and  disbursements  of its counsel and of all persons not  regularly in
its employ), except any such expense,  disbursement or advance as may arise from
its  negligence  or bad faith or to the  extent  that such  cost or  expense  is
indemnified by the Depositor pursuant to this Agreement.

         Section 9.14      INDEMNIFICATION OF CUSTODIAN.

                  The  Custodian  and  its  directors,   officers,   agents  and
employees  shall be indemnified  and held harmless by the Trust Fund against any
and  all  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits,  costs,  expenses  or  disbursements  of any  kind or  nature
whatsoever,  including  reasonable  attorney's  fees,  that may be  imposed  on,
incurred by or asserted against it or them in any way relating to or arising out
of this  Agreement  or any  action  taken or not  taken by it or them  hereunder
except to the extent caused by the Custodian's negligence or willful misconduct.
If funds in the  Trust  Fund are  insufficient  therefor,  the  Custodian  shall
recover such expenses from the Seller.  The  indemnification  provided for under
this  Section  9.14 shall  survive the  termination  of this  Agreement  and the
resignation or removal of the Custodian.

         Section 9.15      RELIANCE OF CUSTODIAN.

                  (a) The  Custodian may  conclusively  rely, as to the truth of
the statements and the correctness of the opinions expressed  therein,  upon any
request,  instructions,   direction,

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<PAGE>

certificate,  opinion or other document  furnished to the Custodian,  reasonably
believed by the  Custodian to be genuine and to have been signed or presented by
the  proper  party  or  parties  and  conforming  to the  requirements  of  this
Agreement;

                  (b) The  Custodian  shall  have no duties or  responsibilities
except those that are  specifically  set forth in this Agreement.  The Custodian
shall have no  responsibility  nor duty with respect to any Mortgage  File while
such  Mortgage  File  is not  in  its  possession.  If  the  Custodian  requests
instructions  from the Trustee with respect to any act, action or failure to act
in connection  with this  Agreement,  the Custodian shall be entitled to refrain
from  acting  unless  and  until  the  Custodian  shall  have  received  written
instructions  from the Trustee with respect to a Mortgage File without incurring
any liability therefor to the Trustee or any other Person;

                  (c) The Custodian shall not be liable for an error of judgment
made in good faith by a  Responsible  Officer  or  Responsible  Officers  of the
Custodian  unless  it shall  be  proved  that the  Custodian  was  negligent  in
ascertaining the pertinent facts;

                  (d)    Anything   in   this    Agreement   to   the   contrary
notwithstanding,  in no  event  shall  the  Custodian  be  liable  for  special,
indirect,  punitive  or  consequential  loss or  damage  of any kind  whatsoever
(including  but not limited to lost  profits),  even if the  Custodian  has been
advised of the  likelihood of such loss or damage and  regardless of the form of
action and whether or not any such damages were foreseeable or contemplated;

                  (e) The Custodian  shall not be required to expend or risk its
own funds or  otherwise  incur  financial  liability  (other  than  expenses  or
liabilities  otherwise  required to be  incurred  by the  express  terms of this
Agreement) in the  performance  of any of its duties  hereunder if it shall have
reasonable  grounds for believing  that the repayment of such funds or indemnity
satisfactory to it is not reasonably assured to it;

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

                  (g)  The  Custodian  makes  no  representations   and  has  no
responsibilities   as   to   (i)   the   validity,   legality,   enforceability,
recordability,  sufficiency,  due  authorization  or  genuineness  of any of the
documents  contained in the Mortgage  Files or any of the Mortgage Loans or (ii)
the  collectability,  insurability,  effectiveness  or  suitability  of any such
Mortgage Loan;

                  (h) Neither the Custodian nor any of this directors, officers,
agents or employees shall be liable for any action taken, suffered or omitted to
be taken by it in good faith and believed by it to be  authorized  or within the
rights or powers  conferred upon it by this  Agreement.  The  obligations of the
Custodian  or any of its  directors,  officers,  agents  or  employees  shall be
determined   solely  by  the   express   provisions   of  this   Agreement.   No
representation,  warranty,  covenant,  agreement,  obligation  or  duty  of  the
Custodian  or any of its  directors,  officers,  agents  or  employees  shall be
implied with respect to this Agreement or the Custodian's services hereunder;

                                    - 130 -
<PAGE>

                  (i) The Custodian, its directors, officers and employees shall
be under no duty or obligation to inspect,  review or examine the Mortgage Files
to determine that the contents  thereof are genuine,  enforceable or appropriate
for the  represented  purpose or that they have been  actually  recorded or that
they are other than what they purport to be on their face;

                  (j) Any corporation  into which the Custodian may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or  consolidation to which the Custodian shall be a
party, or any  corporation  succeeding to the business of the Custodian shall be
the successor of the Custodian  hereunder without the execution or filing of any
paper with any party hereto or any further act on the part of any of the parties
hereto  except where an  instrument of transfer or assignment is required by law
to effect such succession, anything to the contrary herein notwithstanding.

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<PAGE>

                                    ARTICLE X

                                   TERMINATION

         Section 10.01     TERMINATION  UPON  LIQUIDATION  OR  REPURCHASE OF ALL
                           MORTGAGE LOANS.

                  Subject to Section 10.03, the obligations and responsibilities
of the Depositor,  the Seller and the Trustee created hereby with respect to the
Trust Fund shall terminate upon the earlier of (a) the purchase by the Depositor
of all of the Mortgage Loans (and REO Properties) remaining in the Trust Fund at
a price (the "Mortgage Loan Purchase Price") equal to the sum of (i) 100% of the
Stated  Principal  Balance of each  Mortgage  Loan (other than in respect of REO
Property), (ii) accrued interest thereon at the applicable Mortgage Rate to, but
not including,  the first day of the month of such purchase, (iii) the appraised
value of any REO Property in the Trust Fund (up to the Stated Principal  Balance
of the related  Mortgage  Loan),  such appraisal to be conducted by an appraiser
mutually  agreed upon by the  Depositor  and the  Trustee and (iv)  unreimbursed
out-of  pocket  costs of the  Servicer or the  Trustee,  including  unreimbursed
servicing advances and the principal portion of any unreimbursed Advances,  made
on the Mortgage Loans prior to the exercise of such repurchase right and (v) any
unreimbursed  costs and expenses of the Trustee payable pursuant to Section 9.05
and (b) the later of (i) the maturity or other  liquidation (or any Advance with
respect  thereto) of the last Mortgage Loan  remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to  Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable.  In no event shall the trusts  created  hereby  continue  beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the  descendants of Joseph P. Kennedy,  the late Ambassador of the United States
to the  Court of St.  James,  living  on the  date  hereof  and (ii) the  Latest
Possible Maturity Date.

                  The right to repurchase  all Mortgage Loans and REO Properties
pursuant to clause (a) in the preceding  paragraph  shall be  exercisable  on or
after the Distribution  Date in June 2006 if the Stated Principal Balance of all
of the Mortgage Loans in the Trust Fund, at the time of any such repurchase,  is
less than ten percent of the aggregate  Cut-off Date Principal Balance of all of
the Mortgage Loans.

         Section 10.02     FINAL DISTRIBUTION ON THE CERTIFICATES.

                  If on any Determination Date, (i) the Trustee determines based
on the reports  delivered by the Servicer under this Agreement that there are no
Outstanding  Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the  Distribution  Account,  the Trustee shall to send a final
distribution  notice  promptly  to each  Certificateholder  or (ii) the  Trustee
determines  that a  Class  of  Certificates  shall  be  retired  after  a  final
distribution  on such Class,  the Trustee  shall  notify the  Certificateholders
within  five (5)  Business  Days  after such  Determination  Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the immediately  following  Distribution  Date. Any final  distribution  made
pursuant  to  the  immediately   preceding  sentence  will  be  made  only  upon
presentation  and  surrender  of the related  Certificates  at the office of the
Trustee set forth herein.  If the  Depositor  elects to terminate the Trust Fund
pursuant  to Section  10.01,  at least 20 days prior to the date

                                    - 132 -
<PAGE>

notice is to be mailed to the Certificateholders, the Depositor shall notify the
Trustee of the date the  Depositor  intends to  terminate  the Trust  Fund.  The
Depositor  shall remit the Mortgage  Loan  Purchase  Price to the Trustee on the
Business Day prior to the Distribution Date for such Optional Termination by the
Depositor.

                  Notice of any  termination  of the Trust Fund,  specifying the
Distribution Date on which  Certificateholders  may surrender their Certificates
for payment of the final distribution and cancellation,  shall be given promptly
by the Trustee by letter to Certificateholders  mailed not earlier than the 10th
day and no later than the 15th day of the month immediately  preceding the month
of such final  distribution.  Any such notice shall specify (a) the Distribution
Date  upon  which  final  distribution  on the  Certificates  will be made  upon
presentation and surrender of Certificates at the office therein designated, (b)
the amount of such final distribution,  (c) the location of the office or agency
at which such  presentation  and surrender  must be made and (d) that the Record
Date  otherwise   applicable  to  such  Distribution  Date  is  not  applicable,
distributions   being  made  only  upon   presentation   and  surrender  of  the
Certificates at the office therein specified.  The Trustee will give such notice
to each Rating Agency at the time such notice is given to Certificateholders.

                  In the event such notice is given, the Depositor shall deposit
in the  Distribution  Account  on  the  Business  Day  prior  to the  applicable
Distribution Date in an amount equal to the final distribution in respect of the
Certificates.  Upon such final  deposit  with  respect to the Trust Fund and the
receipt by the  Trustee of a Request  for Release  therefor,  the Trustee  shall
promptly  release to the  Depositor,  as applicable  the Mortgage  Files for the
Mortgage Loans and any documents necessary to transfer any REO Property.

                  Upon  presentation  and  surrender  of the  Certificates,  the
Trustee shall cause to be  distributed to  Certificateholders  of each Class the
amounts allocable to such  Certificates held in the Distribution  Account in the
order and priority  set forth in Section  5.04 hereof on the final  Distribution
Date and in proportion to their respective Percentage Interests.

                  In the event that any  affected  Certificateholders  shall not
surrender  Certificates  for  cancellation  within  six  months  after  the date
specified in the above mentioned written notice, the Trustee shall give a second
written  notice  to  the  remaining   Certificateholders   to  surrender   their
Certificates for cancellation  and receive the final  distribution  with respect
thereto.  If within  six  months  after the  second  notice  all the  applicable
Certificates  shall not have been surrendered for cancellation,  the Trustee may
take appropriate  steps, or may appoint an agent to take  appropriate  steps, to
contact  the  remaining   Certificateholders   concerning   surrender  of  their
Certificates,  and the cost  thereof  shall be paid out of the  funds  and other
assets  that  remain a part of the Trust  Fund.  If within  two years  after the
second notice all Certificates shall not have been surrendered for cancellation,
the Class R  Certificateholders  shall be  entitled to all  unclaimed  funds and
other assets of the Trust Fund that remain  subject hereto and the Trustee shall
release such funds upon written direction.

         Section 10.03     ADDITIONAL TERMINATION REQUIREMENTS.

                  (a) Upon exercise by the  Depositor of its purchase  option as
provided in Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional

                                    - 133 -
<PAGE>

requirements,  unless the Trustee has been  supplied with an Opinion of Counsel,
at the  expense of the  Depositor,  to the effect  that the failure of the Trust
Fund to comply with the  requirements  of this Section 11.03 will not (i) result
in the  imposition of taxes on  "prohibited  transactions"  of a REMIC,  or (ii)
cause any REMIC to fail to qualify as a REMIC at any time that any  Certificates
are outstanding:

                  (1) The Depositor shall establish a 90-day  liquidation period
and notify the Trustee thereof,  and the Trustee shall in turn specify the first
day of such period in a  statement  attached to the tax return for each of REMIC
I, REMIC II and REMIC III pursuant to Treasury Regulation Section 1.860F-1.  The
Depositor shall satisfy all the  requirements of a qualified  liquidation  under
Section  860F of the Code and any  regulations  thereunder,  as  evidenced by an
Opinion of Counsel obtained at the expense of the Depositor;

                  (2) During such 90-day liquidation  period, and at or prior to
the time of making the final payment on the  Certificates,  the Depositor  shall
sell all of the assets of REMIC I, REMIC II and REMIC III for cash; and

                  (3) 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 Residual Certificates all cash on hand (other
than cash retained to meet claims), and REMIC I shall terminate at that time.

                  (b) By  their  acceptance  of the  Certificates,  the  Holders
thereof hereby authorize the Depositor to specify the 90-day  liquidation period
for REMIC I, REMIC II and REMIC III, which  authorization  shall be binding upon
all successor Certificateholders.

                  (c) The Trustee as agent for each REMIC hereby agrees to adopt
and sign such a plan of complete  liquidation  upon the  written  request of the
Depositor,  and the  receipt of the  Opinion of Counsel  referred  to in Section
10.03(a)(1)  and to take such other  action in  connection  therewith  as may be
reasonably requested by the Depositor.

                                    - 134 -
<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

         Section 11.01     AMENDMENT.

                  This  Agreement  may be  amended  from time to time by parties
hereto,  without  the  consent  of any of the  Certificateholders  to  cure  any
ambiguity,  to correct or supplement any provisions herein, to change the manner
in which the  Distribution  Account  maintained  by the Trustee or the Custodial
Account is maintained or to make such other  provisions  with respect to matters
or questions  arising under this Agreement as shall not be inconsistent with any
other provisions  herein if such action shall not, as evidenced by an Opinion of
Counsel,  adversely  affect  in  any  material  respect  the  interests  of  any
Certificateholder;  provided  that any such  amendment  shall be  deemed  not to
adversely affect in any material respect the interests of the Certificateholders
and no such Opinion of Counsel shall be required if the Person  requesting  such
amendment  obtains a letter from each Rating Agency  stating that such amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Certificates.

                  Notwithstanding  the  foregoing,  without  the  consent of the
Certificateholders,  the  parties  hereto  may at any time and from time to time
amend this  Agreement to modify,  eliminate or add to any of its  provisions  to
such extent as shall be necessary or appropriate  to maintain the  qualification
of each of REMIC I, REMIC II and REMIC III as a REMIC under the Code or to avoid
or minimize the risk of the imposition of any tax on any of REMIC I, REMIC II or
REMIC III  pursuant  to the Code that would be a claim  against  any of REMIC I,
REMIC  II or  REMIC  III at  any  time  prior  to the  final  redemption  of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel,
which  opinion shall be an expense of the party  requesting  such opinion but in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or appropriate to maintain such  qualification  or
to avoid or minimize the risk of the imposition of such a tax.

                  This  Agreement  may also be amended  from time to time by the
parties hereto and the Holders of each Class of  Certificates  affected  thereby
evidencing  over 50% of the  Voting  Rights  of such  Class or  Classes  for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the  provisions of this Agreement or of modifying in any manner the rights of
the Holders of Certificates; provided that no such amendment shall (i) reduce in
any  manner the amount  of, or delay the  timing  of,  payments  required  to be
distributed  on any  Certificate  without  the  consent  of the  Holder  of such
Certificate,  (ii)  cause  any of  REMIC I,  REMIC  II or REMIC  III to cease to
qualify as a REMIC or (iii) reduce the aforesaid  percentages of Certificates of
each Class the Holders of which are  required  to consent to any such  amendment
without  the  consent  of the  Holders  of all  Certificates  of such Class then
outstanding.

                  Notwithstanding any contrary provision of this Agreement,  the
Trustee  shall not consent to any  amendment to this  Agreement  unless it shall
have first received an Opinion of Counsel,  which opinion shall be an expense of
the party  requesting  such amendment but in any case shall not be an expense of
the Trustee, to the effect that such amendment will not (other

                                    - 135 -
<PAGE>

than an  amendment  pursuant  to clause  (ii) of, and in  accordance  with,  the
preceding  paragraph)  cause the  imposition  of any tax on REMIC I, REMIC II or
REMIC III or the  Certificateholders  or cause REMIC I, REMIC II or REMIC III to
cease to qualify as a REMIC at any time that any  Certificates  are outstanding.
Further,  nothing in this  Agreement  shall require the Trustee to enter into an
amendment without  receiving an Opinion of Counsel,  satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement and
(ii) that all requirements for amending this Agreement (including any consent of
the applicable Certificateholders) have been complied with.

                  Promptly   after  the  execution  of  any  amendment  to  this
Agreement requiring the consent of Certificateholders, the Trustee shall furnish
written   notification   of  the   substance   of   such   amendment   to   each
Certificateholder and each Rating Agency.

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

         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 of the counties or other comparable jurisdictions in which any or
all of the  Mortgaged  Properties  are  situated,  and in any other  appropriate
public recording  office or elsewhere.  The Seller or the Depositor shall effect
such  recordation  at the  Trust's  expense  upon the  request  in  writing of a
Certificateholder,  but only if such  direction is  accompanied by an Opinion of
Counsel   (provided   at  the  expense  of  the   Certificateholder   requesting
recordation)  to  the  effect  that  such   recordation   would  materially  and
beneficially  affect the interests of the  Certificateholders  or is required by
law.

                  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.

         Section 11.03     GOVERNING LAW.

                  THIS  AGREEMENT  SHALL BE  CONSTRUED  IN  ACCORDANCE  WITH AND
GOVERNED  BY THE  SUBSTANTIVE  LAWS  OF THE  STATE  OF NEW  YORK  APPLICABLE  TO
AGREEMENTS  MADE  AND  TO BE  PERFORMED  IN  THE  STATE  OF  NEW  YORK  AND  THE
OBLIGATIONS,   RIGHTS   AND   REMEDIES   OF   THE   PARTIES   HERETO   AND   THE
CERTIFICATEHOLDERS  SHALL BE  DETERMINED  IN  ACCORDANCE  WITH SUCH LAWS WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

         Section 11.04     INTENTION OF PARTIES.

                                    - 136 -
<PAGE>

                  It is the  express  intent  of the  parties  hereto  that  the
conveyance of the Mortgage  Notes,  Mortgages,  assignments of Mortgages,  title
insurance   policies  and  any   modifications,   extensions  and/or  assumption
agreements  and private  mortgage  insurance  policies  relating to the Mortgage
Loans by the Seller to the Depositor, and by the Depositor to the Trust Fund be,
and be  construed  as, an absolute  sale  thereof to the  Depositor or the Trust
Fund, as applicable.  It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Seller to the Depositor,  or by the
Depositor to the Trust Fund.  However,  in the event that,  notwithstanding  the
intent of the parties,  such assets are held to be the property of the Seller or
the Depositor, as applicable,  or if for any other reason this Agreement is held
or deemed to create a security interest in such assets,  then (i) this Agreement
shall be deemed to be a security  agreement  within the  meaning of the  Uniform
Commercial Code of the State of New York and (ii) each  conveyance  provided for
in this Agreement  shall be deemed to be an assignment and a grant by the Seller
or the Depositor, as applicable, for the benefit of the Certificateholders, of a
security  interest in all of the assets that constitute the Trust Fund,  whether
now owned or hereafter acquired.

                  The Depositor for the benefit of the Certificateholders shall,
to the  extent  consistent  with this  Agreement,  take such  actions  as may be
necessary to ensure  that,  if this  Agreement  were deemed to create a security
interest in the assets of the Trust Fund, such security interest would be deemed
to be a perfected  security  interest of first priority under applicable law and
will be maintained as such throughout the term of the Agreement.

         Section 11.05     NOTICES.

                  (a) The Trustee shall use its best efforts to promptly provide
notice to each Rating  Agency with respect to each of the  following of which it
has actual knowledge:

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

                  (ii) The  occurrence  of any  Servicer of Default that has not
         been cured;

                  (iii) The  resignation  or  termination of the Servicer or the
         Trustee and the appointment of any successor; and

                  (iv) The final payment to Certificateholders.

                  In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:

                  (i) Each  report to  Certificateholders  described  in Section
         5.05;

                  (ii) Each  annual  statement  as to  compliance  described  in
         Section 3.16; and

                  (iii) Each annual  independent public  accountants'  servicing
         report described in Section 4.17.

                  (b) All directions,  demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when  delivered at or mailed
by registered mail, return receipt

                                    - 137 -
<PAGE>

requested,  postage prepaid, or by recognized overnight courier, or by facsimile
transmission to a number  provided by the  appropriate  party if receipt of such
transmission  is  confirmed  to (i) in the case of the  Depositor,  Nomura Asset
Acceptance Corp., 2 World Financial Center, Building B, New York, New York 10281
Attention:  Nomura Asset Acceptance Corporation,  Alternative Loan Trust, Series
2004-AP2; (ii) in the case of the Seller, Nomura Credit & Capital, Inc., 2 World
Financial Center, Building B, New York, New York 10281, Attention:  Nomura Asset
Acceptance  Corporation,  Alternative Loan Trust,  Series 2004-AP2 or such other
address as may be hereafter  furnished to the other parties hereto by the Seller
in  writing;  (iii)  in the case of the  Servicer,  GMAC  Mortgage  Corporation,
________________,  Attention: _____________; (iv) in the case of the Trustee, at
each  Corporate  Trust Office or such other address as the Trustee may hereafter
furnish to the other parties hereto; (v) in the case of the Rating Agencies, (x)
Standard & Poor's,  55 Water  Street,  41st  Floor,  New York,  New York  10041,
Attention:  Mortgage Surveillance Group and (y) Moody's Investors Service, Inc.,
99 Church Street, New York, New York 10007,  Attention:  Home Equity Monitoring.
Any notice  delivered to the Seller or the Trustee under this Agreement shall be
effective only upon receipt.  Any notice required or permitted to be mailed to a
Certificateholder,   unless  otherwise  provided  herein,   shall  be  given  by
first-class mail, postage prepaid, at the address of such  Certificateholder  as
shown  in the  Certificate  Register;  any  notice  so  mailed  within  the time
prescribed in this Agreement  shall be  conclusively  presumed to have been duly
given, whether or not the Certificateholder receives such notice.

         Section 11.06     SEVERABILITY OF PROVISIONS.

                  If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason  whatsoever  held invalid,  then
such covenants,  agreements,  provisions or terms shall be deemed severable from
the remaining covenants,  agreements,  provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.

         Section 11.07     ASSIGNMENT.

                  Notwithstanding  anything to the  contrary  contained  herein,
except as provided  pursuant to Section 7.02, this Agreement may not be assigned
by the Seller or the Depositor.

         Section 11.08     LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

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

                  No  Certificateholder  shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto,  nor shall anything
herein set forth or contained in the terms of the  Certificates  be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to

                                    - 138 -
<PAGE>

any third party by reason of any action  taken by the parties to this  Agreement
pursuant to any provision hereof.

                  No  Certificateholder  shall  have any  right by  virtue or by
availing  itself of any  provisions  of this  Agreement to  institute  any suit,
action or  proceeding  in equity or at law upon or under or with respect to this
Agreement,  unless such Holder  previously  shall have given to the  Trustee,  a
written  notice  of a  Servicer  Default  and of  the  continuance  thereof,  as
hereinbefore provided, the Holders of Certificates  evidencing not less than 25%
of the Voting Rights evidenced by the Certificates  shall also have made written
request to the Trustee to institute  such action,  suit or proceeding in its own
name as Trustee,  hereunder and shall have offered to the Trustee such indemnity
satisfactory  to  it  as  it  may  require  against  the  costs,  expenses,  and
liabilities  to be incurred  therein or thereby,  and the Trustee or for 60 days
after its  receipt of such  notice,  request and offer of  indemnity  shall have
neglected or refused to institute any such action, suit or proceeding;  it being
understood   and   intended,    and   being   expressly   covenanted   by   each
Certificateholder  with every other  Certificateholder  and the Trustee, that no
one or more Holders of Certificates  shall have any right in any manner whatever
by  virtue  or by  availing  itself  or  themselves  of any  provisions  of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates,  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 common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 11.08, each
and every  Certificateholder  or the Trustee shall be entitled to such relief as
can be given either at law or in equity.

         Section 11.09     CERTIFICATES NONASSESSABLE AND FULLY PAID.

                  It is the intention of the Depositor  that  Certificateholders
shall not be  personally  liable for  obligations  of the Trust  Fund,  that the
interests  in  the  Trust  Fund  represented  by  the   Certificates   shall  be
nonassessable for any reason  whatsoever,  and that the  Certificates,  upon due
authentication thereof by the Trustee pursuant to this Agreement,  are and shall
be deemed fully paid.

                                      * * *

                                    - 139 -
<PAGE>

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

                                      NOMURA ASSET ACCEPTANCE CORPORATION,
                                          as Depositor

                                      By:
                                         ---------------------------------------
                                      Name:  Jay Gracin
                                      Title: Assistant Secretary

                                      NOMURA CREDIT & CAPITAL, INC.,
                                          as a Seller

                                      By:
                                         ---------------------------------------
                                      Name: N. Dante LaRocca
                                      Title: Managing Director

                                      GMAC MORTGAGE CORPORATION,
                                          as Servicer

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

                                      JPMORGAN CHASE BANK
                                          as Trustee

                                      By:
                                         ---------------------------------------
                                      Name:  Andrew M. Cooper
                                      Title: Assistant Vice President

                                       JPMORGAN CHASE BANK
                                          as Custodian

                                      By:
                                         ---------------------------------------
                                      Name:  Cassandra Fields
                                      Title: Assistant Vice President

<PAGE>

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

                  On this ___ day of June 2004,  before  me, a notary  public in
and for said State, appeared JAY GRACIN,  personally known to me on the basis of
satisfactory  evidence  to be  an  authorized  representative  of  Nomura  Asset
Acceptance  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
such  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 NEW YORK          )
                           ) ss.:
COUNTY OF NEW YORK         )

                  On this ____ day of June 2004,  before me, a notary  public in
and for said State,  appeared N. Dante  LaRocca,  personally  known to me on the
basis of  satisfactory  evidence to be an  authorized  representative  of Nomura
Credit & Capital,  Inc., that executed the within instrument,  and also known to
me to be  the  person  who  executed  it on  behalf  of  such  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 NEW YORK   )
                    ) ss.:
COUNTY OF NEW YORK  )

                  On this ____ day of June 2004,  before me, a notary  public in
and for said State,  appeared  _________________,  personally known to me on the
basis  of  satisfactory  evidence  to be an  authorized  representative  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
such  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 this ____ day of June 2004,  before me, a notary  public in
and for said  State,  appeared  _______________,  personally  known to me on the
basis of satisfactory  evidence to be an authorized  representative  of JPMorgan
Chase Bank that executed the within  instrument,  and also known to me to be the
person who executed it on behalf of such  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-[1][2][3A][3B][4][5][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 (THE "CODE").

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

                  UNLESS  THIS   CERTIFICATE   IS  PRESENTED  BY  AN  AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY  CERTIFICATE  ISSUED IS
REGISTERED  IN THE NAME OF CEDE & CO.  OR SUCH  OTHER  NAME AS  REQUESTED  BY AN
AUTHORIZED  REPRESENTATIVE  OF THE  DEPOSITORY  TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO.,  ANY  TRANSFER,  PLEDGE  OR OTHER  USE  HEREOF  FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  SINCE THE  REGISTERED  OWNER  HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

<TABLE>
<S>                                                        <C>
Certificate No. __                                         Pass-Through Rate:  [Variable][____%]

Class A-[1][2][3A][3B][4][5][6] Senior

Date of Pooling and Servicing Agreement                    Aggregate Initial Certificate Principal Balance of this
 and Cut-off Date: June 1, 2004                            Certificate as of the Cut-off Date:
                                                           $

Trustee: JPMorgan Chase Bank

First Distribution Date: July 25, 2004                     Initial Certificate Principal Balance of this
                                                           Certificate as of the Cut-off Date:
                                                           $

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

<PAGE>

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AP2

         evidencing  a  fractional   undivided  interest  in  the  distributions
         allocable  to the  Class  A-[1][2][3A][3B][4][5][6]  Certificates  with
         respect to a Trust Fund consisting  primarily of a pool of conventional
         one- to  four-family  fixed interest rate mortgage loans sold by NOMURA
         ASSET ACCEPTANCE CORPORATION

                  This  Certificate  is  payable  solely  from the assets of the
Trust Fund,  and does not represent an obligation of or interest in Nomura Asset
Acceptance Corporation ("NAAC") or the Trustee or any of their affiliates or any
other person.  Neither this  Certificate  nor the underlying  Mortgage Loans are
guaranteed  or insured by any  governmental  entity or by NAAC or the Trustee or
any of their affiliates or any other person. None of NAAC, the Trustee or any of
their  affiliates  will have any obligation  with respect to any  certificate or
other obligation secured by or payable from payments on the Certificates.

                  This certifies that Cede & Co. is the registered  owner of the
Percentage  Interest  evidenced hereby in the beneficial  ownership  interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally  consisting of  conventional  first lien,  fixed rate  mortgage  loans
secured by one- to four- family  residences,  units in planned unit developments
and individual  condominium units  (collectively,  the "Mortgage Loans") sold by
NAAC.  The  Mortgage  Loans  were sold by Nomura  Credit &  Capital,  Inc.  (the
"Seller")  to NAAC.  The Trust Fund was  created  pursuant  to the  Pooling  and
Servicing   Agreement  dated  as  of  the  Cut-off  Date  specified  above  (the
"Agreement"), among NAAC, as depositor (the "Depositor"), the Seller, as seller,
GMAC Mortgage Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the
"Trustee"),  a summary of certain of the  pertinent  provisions  of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning  ascribed to them in the Agreement.  This  Certificate is
issued  under and is subject  to the terms,  provisions  and  conditions  of the
Agreement,  to which  Agreement the Holder of this  Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.

                  Interest on this  Certificate  will accrue  during [the period
beginning on the 25th day of the month immediately  preceding the month in which
the related  Distribution Date (as hereinafter defined) occurs (or, with respect
to the First  Distribution  specified  above, the Closing Date) to and including
the 24th day of the month in which the related  Distribution  Date occurs on the
Certificate  Principal  Balance  hereof at a per annum rate  equal to  One-Month
LIBOR  plus  0.20%  per  annum.][the  month  prior  to  the  month  in  which  a
Distribution Date (as hereinafter  defined) occurs on the Certificate  Principal
Balance  hereof at a per annum  rate  equal to the  Pass-Through  Rate set forth
above].  The Trustee will distribute on the 25th day of each month,  or, if such
25th day is not a Business Day, the immediately  following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the  Person in whose  name this  Certificate  is  registered  at the close of
business  on the  [last  day (or if such  last day is not a  Business  Day,  the
Business  Day  immediately  preceding  such  last  day)  of the  calendar  month
immediately preceding the month in which the Distribution Date occurs][ Business
Day  immediately  preceding  such  Distribution  Date],  an amount  equal to the
product of

                                      -2-
<PAGE>

the  Percentage  Interest  evidenced  by this  Certificate  and the  amount  (of
interest and  principal,  if any) required to be  distributed  to the Holders of
Certificates  of  the  same  Class  as  this  Certificate.   The  Assumed  Final
Distribution  Date is the  Distribution  Date in the month  following the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Certificate  Principal  Balance of this Class of Certificates  will be
reduced to zero.

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

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

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

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

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations of the Depositor and the rights of the Certificateholders  under the
Agreement  from time to time by the  parties  thereto  with the  consent  of the
Holders of the Classes or Classes of Certificates  affected  thereby  evidencing
over 50% of the Voting Rights of such Class or Classes.  Any such consent by the
Holder of this  Certificate  shall be conclusive  and binding on such Holder and
upon all future Holders of this  Certificate and of any Certificate  issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances,  without the consent of the Holders of any of the
Certificates.

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

                                     - 3 -
<PAGE>

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

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

                  The  obligations  created by the  Agreement and the Trust Fund
created   thereby   (other   than   the   obligations   to  make   payments   to
Certificateholders  with  respect to the  termination  of the  Agreement)  shall
terminate  upon  the  earlier  of (i) the  later  of (A) the  maturity  or other
liquidation  (or  Advance  with  respect  thereto)  of the  last  Mortgage  Loan
remaining  in the Trust  Fund and  disposition  of all  property  acquired  upon
foreclosure  or deed in lieu of  foreclosure  of any  Mortgage  Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the  Agreement of all the Mortgage  Loans and other assets
of the Trust Fund in accordance  with the terms of the Agreement.  Such optional
repurchase may be made only on or after the Distribution Date in June 2006 if on
such  Distribution  Date the aggregate Stated Principal  Balance of the Mortgage
Loans is less than the  percentage of the  aggregate  Stated  Principal  Balance
specified  in the  Agreement  of the  Mortgage  Loans at the Cut-off  Date.  The
exercise of such right will effect the early retirement of the Certificates.  In
no event,  however, will the Trust Fund created by the Agreement continue beyond
the expiration of 21 years after the death of certain persons  identified in the
Agreement.

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

                                     - 4 -
<PAGE>

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

Dated:                          JPMORGAN CHASE BANK,
                                not in its individual capacity but solely as
                                Trustee

                                By:
                                     ---------------------------------------
                                             Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

                  This   is   one   of   the   Class   A-[1][2][3A][3B][4][5][6]
Certificates referred to in the within-mentioned Agreement.

                               JPMORGAN CHASE BANK
                               Authorized signatory of JPMorgan Chase
                               Bank, not in its individual capacity but
                               solely as Trustee

                               By:
                                    ----------------------------------------
                                             Authorized Signatory

<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

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

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

<PAGE>

                                   EXHIBIT A-2

                         FORM OF CLASS A-IO CERTIFICATE

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

                  UNLESS  THIS   CERTIFICATE   IS  PRESENTED  BY  AN  AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY  CERTIFICATE  ISSUED IS
REGISTERED  IN THE NAME OF CEDE & CO.  OR SUCH  OTHER  NAME AS  REQUESTED  BY AN
AUTHORIZED  REPRESENTATIVE  OF THE  DEPOSITORY  TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO.,  ANY  TRANSFER,  PLEDGE  OR OTHER  USE  HEREOF  FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  SINCE THE  REGISTERED  OWNER  HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

<TABLE>
<S>                                                        <C>
Certificate No. ___                                        Pass-Through Rate: 4.50%

Class A-IO Senior

Date of Pooling and Servicing Agreement and                Aggregate Initial Certificate Notional Balance of the
Cut-off Date: June 1, 2004                                 Class A-IO Certificates as of the Cut-off Date:
                                                           $_______________

First Distribution Date:                                   Initial Certificate Notional Balance of this
July 25, 2004                                              Certificate as of the Cut-off Date:
                                                           $_______________
Trustee:  JPMorgan Chase Bank

Final Scheduled Distribution Date:
June 25, 2006                                              CUSIP: ______________
</TABLE>

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AP2

         evidencing  a  fractional   undivided  interest  in  the  distributions
         allocable to the Class A-IO  Certificates  with respect to a Trust Fund
         consisting  primarily  of a

<PAGE>

         pool of  conventional  one- to four-family fixed interest rate mortgage
         loans sold by NOMURA ASSET ACCEPTANCE CORPORATION.

                  This  Certificate  is  payable  solely  from the assets of the
Trust Fund,  and does not represent an obligation of or interest in Nomura Asset
Acceptance Corporation ("NAAC") or the Trustee or any of their affiliates or any
other person.  Neither this  Certificate  nor the underlying  Mortgage Loans are
guaranteed  or insured by any  governmental  entity or by NAAC or the Trustee or
any of their affiliates or any other person. None of NAAC, the Trustee or any of
their  affiliates  will have any obligation  with respect to any  certificate or
other obligation secured by or payable from payments on the Certificates.

                  This certifies that Cede & Co. is the registered  owner of the
Percentage  Interest  evidenced hereby in the beneficial  ownership  interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally  consisting of  conventional  first lien,  fixed rate  mortgage  loans
secured by one- to four- family  residences,  units in planned unit developments
and individual  condominium units  (collectively,  the "Mortgage Loans") sold by
NAAC.  The  Mortgage  Loans  were sold by Nomura  Credit &  Capital,  Inc.  (the
"Seller")  to NAAC.  The Trust Fund was  created  pursuant  to the  Pooling  and
Servicing   Agreement  dated  as  of  the  Cut-off  Date  specified  above  (the
"Agreement"), among NAAC, as depositor (the "Depositor"), the Seller, as seller,
GMAC Mortgage Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the
"Trustee"),  a summary of certain of the  pertinent  provisions  of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning  ascribed to them in the Agreement.  This  Certificate is
issued  under and is subject  to the terms,  provisions  and  conditions  of the
Agreement,  to which  Agreement the Holder of this  Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.

                  Interest  on this  Certificate  will  accrue  during the month
prior to the month in which a Distribution Date (as hereinafter  defined) occurs
on the  Certificate  Notional  Balance  hereof at a per annum  rate equal to the
Pass-Through  Rate set forth above.  The Trustee will distribute on the 25th day
of each  month,  or, if such 25th day is not a  Business  Day,  the  immediately
following  Business Day (each, a "Distribution  Date"),  commencing on the First
Distribution  Date specified above, to the Person in whose name this Certificate
is  registered  at the close of business on the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
calendar month  immediately  preceding the month in which the Distribution  Date
occurs, an amount equal to the product of the Percentage  Interest  evidenced by
this  Certificate  and the amount of interest  required to be distributed to the
Holders of Certificates of the same Class as this Certificate.

                  Distributions  on this Certificate will be made by the Trustee
by check mailed to the address of the Person  entitled  thereto as such name and
address shall appear on the Certificate  Register or, if such Person so requests
by  notifying   the  Trustee  in  writing  as   specified   in  the   Agreement.
Notwithstanding  the above,  the final  distribution on this Certificate will be
made after due notice by the Trustee of the  pendency of such  distribution  and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that  purpose and  designated  in such notice.  The
initial Certificate Notional Balance of this Certificate is set forth above.

                                     -2-
<PAGE>

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

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

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

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations of the Depositor and the rights of the Certificateholders  under the
Agreement  from time to time by the  parties  thereto  with the  consent  of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the  Voting  Rights of such  Class or  Classes.  Any such  consent by the
Holder of this  Certificate  shall be conclusive  and binding on such Holder and
upon all future Holders of this  Certificate and of any Certificate  issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances,  without the consent of the Holders of any of the
Certificates.

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

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

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

                  The  obligations  created by the  Agreement and the Trust Fund
created thereby

                                      -3-
<PAGE>

(other than the obligations to make payments to Certificateholders  with respect
to the termination of the Agreement) shall terminate upon the earlier of (i) the
later of (A) the maturity or other liquidation (or Advance with respect thereto)
of the last Mortgage  Loan  remaining in the Trust Fund and  disposition  of all
property  acquired  upon  foreclosure  or deed in  lieu  of  foreclosure  of any
Mortgage Loan and (B) the  remittance of all funds due under the  Agreement,  or
(ii) the  optional  repurchase  by the party named in the  Agreement  of all the
Mortgage  Loans and other assets of the Trust Fund in accordance  with the terms
of the  Agreement.  Such  optional  repurchase  may be made only on or after the
Distribution Date in June 2006 if on such Distribution Date the aggregate Stated
Principal  Balance  of the  Mortgage  Loans is less than the  percentage  of the
aggregate  Stated Principal  Balance  specified in the Agreement of the Mortgage
Loans at the  Cut-off  Date.  The  exercise  of such right will effect the early
retirement  of the  Certificates.  In no event,  however,  will the  Trust  Fund
created by the Agreement  continue  beyond the  expiration of 21 years after the
death of certain persons identified in the Agreement.

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

                                      -4-
<PAGE>

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

Dated:                              JPMORGAN CHASE BANK
                                    Not in its individual capacity but solely as
                                    Trustee

                                    By:
                                         ---------------------------------------
                                               Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

                                   JPMORGAN CHASE BANK, Authorized
                                   signatory of JPMorgan Chase Bank, not in
                                   its individual capacity but solely as Trustee

                                   By:
                                        ---------------------------------------
                                              Authorized Signatory

<PAGE>

                                 ASSIGNMENT

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

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

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

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

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

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

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

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

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

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

<PAGE>

                                   EXHIBIT A-3

                      FORM OF CLASS M-[1][2][3] CERTIFICATE

                  THIS  CERTIFICATE IS  SUBORDINATED  IN RIGHT OF PAYMENT TO THE
SENIOR  CERTIFICATES  [,/AND  THE  CLASS  M-1  CERTIFICATES][AND  THE  CLASS M-2
CERTIFICATES] AS DESCRIBED IN THE AGREEMENT (AS DEFINED BELOW).

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

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

                  EACH BENEFICIAL OWNER OF A CERTIFICATE OR ANY INTEREST THEREIN
SHALL BE DEEMED TO HAVE REPRESENTED,  BY VIRTUE OF ITS ACQUISITION OR HOLDING OF
THAT  CERTIFICATE  OR  INTEREST  THEREIN,  THAT  EITHER  (I) IT IS NOT A PLAN OR
INVESTING  WITH  "PLAN  ASSETS",  (II)  IT  HAS  ACQUIRED  AND IS  HOLDING  SUCH
CERTIFICATE IN RELIANCE ON PROHIBITED  TRANSACTION  EXEMPTION 2002-41 AS AMENDED
("EXEMPTION"),  AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO THE
AVAILABILITY OF THE EXEMPTION,  INCLUDING THAT THE CERTIFICATE MUST BE RATED, AT
THE TIME OF PURCHASE,  NOT LOWER THAN "BBB-" (OR ITS  EQUIVALENT)  BY S&P, FITCH
RATINGS  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.

                  UNLESS  THIS   CERTIFICATE   IS  PRESENTED  BY  AN  AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY  CERTIFICATE  ISSUED IS
REGISTERED  IN THE NAME OF CEDE & CO.  OR SUCH  OTHER  NAME AS  REQUESTED  BY AN
AUTHORIZED  REPRESENTATIVE  OF THE  DEPOSITORY  TRUST COMPANY AND ANY

<PAGE>

PAYMENT  IS MADE TO CEDE & CO.,  ANY  TRANSFER,  PLEDGE OR OTHER USE  HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  SINCE THE  REGISTERED  OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

<TABLE>
<S>                                              <C>
Certificate No. __                               Pass-Through Rate: ___%

Class M-[1][2][3] Subordinate

Date of Pooling and Servicing Agreement          Aggregate Initial Certificate Principal Balance
 and Cut-off Date: June 1, 2004                  of this Certificate as of the Cut-off Date:
                                                 $_______________

Trustee: JPMorgan Chase Bank

                                                 Initial Certificate Principal Balance of this
First Distribution Date:                         Certificate as of the Cut-off Date:
July 25, 2004                                    $________________

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

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AP2

         evidencing  a  fractional   undivided  interest  in  the  distributions
         allocable to the Class M-[1][2][3] Certificates with respect to a Trust
         Fund consisting primarily of a pool of conventional one- to four-family
         fixed  interest  rate  mortgage  loans sold by NOMURA ASSET  ACCEPTANCE
         CORPORATION.

                  This  Certificate  is  payable  solely  from the assets of the
Trust Fund,  and does not represent an obligation of or interest in Nomura Asset
Acceptance Corporation ("NAAC") or the Trustee or any of their affiliates or any
other person.  Neither this  Certificate  nor the underlying  Mortgage Loans are
guaranteed  or insured by any  governmental  entity or by NAAC or the Trustee or
any of their affiliates or any other person. None of NAAC, the Trustee or any of
their  affiliates  will have any obligation  with respect to any  certificate or
other obligation secured by or payable from payments on the Certificates.

                  This certifies that Cede & Co. is the registered  owner of the
Percentage  Interest  evidenced hereby in the beneficial  ownership  interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally  consisting of  conventional  first lien,  fixed rate  mortgage  loans
secured by one- to four- family  residences,  units in planned unit developments
and individual  condominium units  (collectively,  the "Mortgage Loans") sold by
NAAC.  The  Mortgage  Loans  were sold by Nomura  Credit &  Capital,  Inc.  (the
"Seller")  to NAAC.  The Trust Fund was  created  pursuant  to the  Pooling  and
Servicing   Agreement  dated  as  of  the  Cut-off  Date

                                      -2-
<PAGE>

specified above (the  "Agreement"),  among NAAC, as depositor (the "Depositor"),
the Seller,  as seller,  GMAC Mortgage  Corporation,  as servicer,  and JPMorgan
Chase Bank,  as trustee (the  "Trustee"),  a summary of certain of the pertinent
provisions of which is set forth  hereafter.  To the extent not defined  herein,
capitalized  terms used herein  shall have the  meaning  ascribed to them in the
Agreement.  This  Certificate  is issued  under  and is  subject  to the  terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of its  acceptance  hereof assents and by which such
Holder is bound.

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

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

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

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

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

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment

                                      -3-
<PAGE>

thereof and the  modification of the rights and obligations of the Depositor and
the rights of the  Certificateholders  under the Agreement  from time to time by
the parties  thereto  with the consent of the Holders of the Class or Classes of
Certificates  affected thereby  evidencing over 50% of the Voting Rights of such
Class or Classes.  Any such consent by the Holder of this  Certificate  shall be
conclusive  and  binding  on such  Holder  and upon all  future  Holders of this
Certificate  and of any  Certificate  issued upon the transfer hereof or in lieu
hereof  whether or not notation of such  consent is made upon this  Certificate.
The  Agreement  also  permits  the  amendment   thereof,   in  certain   limited
circumstances, without the consent of the Holders of any of the Certificates.

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

                  Each beneficial owner of a Certificate or any interest therein
shall be deemed to have represented,  by virtue of its acquisition or holding of
that  certificate  or  interest  therein,  that  either  (i) it is not a Plan or
investing  with  "Plan  Assets",  (ii)  it  has  acquired  and is  holding  such
certificate in reliance on the Exemption, and that it understands that there are
certain  conditions to the  availability  of the  Exemption,  including that the
certificate  must be rated,  at the time of purchase,  not lower than "BBB-" (or
its  equivalent)  by S&P,  Fitch Ratings 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.

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

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

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

                                      -4-
<PAGE>

optional  repurchase  by the party named in the  Agreement  of all the  Mortgage
Loans and other  assets of the Trust  Fund in  accordance  with the terms of the
Agreement.  Such optional  repurchase  may be made on or after the  Distribution
Date in June 2006 if on such  Distribution  Date the aggregate  Stated Principal
Balance  of the  Mortgage  Loans is less than the  percentage  of the  aggregate
Stated Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue  beyond the  expiration of 21 years after the death of certain  persons
identified in the Agreement.

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

                                      -5-
<PAGE>

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

Dated:                          JPMORGAN CHASE BANK,
                                not in its individual capacity but solely as
                                Trustee

                                By:
                                     ---------------------------------------
                                             Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Class M-[1][2][3]  Certificates referred to
in the within-mentioned Agreement.

                                JPMORGAN CHASE BANK
                                Authorized signatory of JPMorgan ChasE
                                Bank, not in its individual capacity but
                                solely as Trustee

                                By:
                                     ---------------------------------------
                                             Authorized Signatory

<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

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

                  This information is provided by    ______________________, the
assignee named above, or _______________________, as its agent.

<PAGE>

                                   EXHIBIT A-4

                           FORM OF CLASS C CERTIFICATE

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

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

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

<PAGE>

IN EACH CASE IN ACCORDANCE  WITH ALL  APPLICABLE  SECURITIES  LAWS OF THE UNITED
STATES AND ANY OTHER APPLICABLE JURISDICTION.

                  NO  TRANSFER  OF THIS  CERTIFICATE  MAY BE MADE TO ANY PERSON,
UNLESS  THE  TRANSFEREE  PROVIDES  EITHER A  CERTIFICATION  PURSUANT  TO SECTION
6.02(B) OF THE  AGREEMENT OR AN OPINION OF COUNSEL  SATISFACTORY  TO THE TRUSTEE
THAT  THE  PURCHASE  AND  HOLDING  OF  THIS  CERTIFICATE  IS  PERMISSIBLE  UNDER
APPLICABLE  LAW,  WILL NOT  CONSTITUTE  OR  RESULT  IN A  NON-EXEMPT  PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE  RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE,  THE  DEPOSITOR  OR THE  SERVICER TO ANY  OBLIGATION  OR  LIABILITY  IN
ADDITION TO THOSE  UNDERTAKEN IN THE AGREEMENT,  ALL IN ACCORDANCE  WITH SECTION
6.02(B) OF THE AGREEMENT.

<TABLE>
<S>                                                        <C>
Certificate No. __                                         Percentage Interest: ____

Class C                                                    Variable Pass-Through Rate

Date of Pooling and Servicing Agreement and                Initial Certificate Principal Balance of this
Cut-off Date: June 1, 2004                                 Certificate as of the Cut-off Date:

Trustee: JPMorgan Chase Bank
                                                           Initial Certificate Notional Balance of this
                                                           Certificate as of the Cut-off Date:
First Distribution Date: July 25, 2004                     $

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

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AP2

         evidencing  a  fractional   undivided  interest  in  the  distributions
         allocable  to the Class C  Certificates  with  respect  to a Trust Fund
         consisting  primarily  of a pool of  conventional  one- to  four-family
         fixed  interest  rate  mortgage  loans sold by NOMURA ASSET  ACCEPTANCE
         CORPORATION

                                      -2-
<PAGE>

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

                  This certifies that Nomura Securities  International,  Inc. is
the  registered  owner  of  the  Percentage  Interest  evidenced  hereby  in the
beneficial  ownership  interest  of  Certificates  of the  same  Class  as  this
Certificate in a trust (the "Trust Fund")  generally  consisting of conventional
first  lien,  fixed  rate  mortgage  loans  secured  by  one-  to  four-  family
residences,  units in planned unit developments and individual condominium units
(collectively,  the "Mortgage Loans") sold by NAAC. The Mortgage Loans were sold
by Nomura  Credit & Capital,  Inc.  (the  "Seller") to NAAC.  The Trust Fund was
created pursuant to the Pooling and Servicing  Agreement dated as of the Cut-off
Date  specified  above  (the   "Agreement"),   among  NAAC,  as  depositor  (the
"Depositor"), the Seller, as seller, GMAC Mortgage Corporation, as servicer, and
JPMorgan  Chase Bank,  as trustee (the  "Trustee"),  a summary of certain of the
pertinent provisions of which is set forth hereafter.  To the extent not defined
herein, capitalized terms used herein shall have the meaning ascribed to them in
the  Agreement.  This  Certificate  is issued under and is subject to the terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of its  acceptance  hereof assents and by which such
Holder is bound.

                  Interest  on this  Certificate  will  accrue  during the month
prior to the month in which a Distribution Date (as hereinafter  defined) occurs
on the  Certificate  Principal  Balance  hereof at a per annum rate equal to the
Pass-Through Rate as set forth in the Agreement.  The Trustee will distribute on
the 25th day of each  month,  or, if such 25th day is not a  Business  Day,  the
immediately following Business Day (each, a "Distribution Date"),  commencing on
the First  Distribution  Date specified  above, to the Person in whose name this
Certificate  is  registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such last
day) of the  calendar  month  immediately  preceding  the  month  in  which  the
Distribution  Date  occurs,  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  Certificates  of the same  Class as this  Certificate.  The
Assumed Final  Distribution Date is the Distribution Date in the month following
the latest scheduled maturity date of any Mortgage Loan.

                  Distributions  on this Certificate will be made by the Trustee
by check mailed to the address of the Person  entitled  thereto as such name and
address shall appear on the Certificate  Register or, if such Person so requests
by  notifying   the  Trustee  in  writing  as   specified   in  the   Agreement.
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

                                      -3-
<PAGE>

that purpose and designated in such notice.

                  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 E and either F
or G, as  applicable,  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 or the Trustee 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 Seller against any liability that may result
if the transfer is not so exempt or is not made in accordance  with such federal
and state laws.

                  No  transfer of this Class C  Certificate  will be made unless
the Trustee has received  either (i) an opinion of counsel  acceptable to and in
form  and   substance   satisfactory   to  the  Trustee   with  respect  to  the
permissibility  of such transfer under the Employee  Retirement  Income Security
Act of 1974, as amended ("ERISA"), and Section 4975 of the Internal Revenue Code
(the "Code") and stating, among other things, that the transferee's  acquisition
and holding of a Class C Certificate is permissible  under  applicable law, will
not constitute or result in a non-exempt  prohibited  transaction  under Section
406 of ERISA or Section 4975 of the Code and will not subject the  Trustee,  the
Depositor  or the Servicer to any  obligation  or liability in addition to those
undertaken  in the  Agreement,  all in  accordance  with Section  6.02(b) of the
Agreement  or (ii) a  representation  letter,  in the form as  described  by the
Agreement,  stating that the transferee is not an employee benefit or other plan
subject to the prohibited transaction provisions of ERISA or Section 4975 of the
Code (a "Plan"),  or any other person (including an investment  manager, a named
fiduciary or a trustee of any Plan) acting, directly or indirectly, on behalf of
or purchasing any Certificate with "plan assets" of any Plan.

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

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

                                      -4-
<PAGE>

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

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

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations of the Depositor and the rights of the Certificateholders  under the
Agreement  from time to time by the  parties  thereto  with the  consent  of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the  Voting  Rights of such  Class or  Classes.  Any such  consent by the
Holder of this  Certificate  shall be conclusive  and binding on such Holder and
upon all future Holders of this  Certificate and of any Certificate  issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances,  without the consent of the Holders of any of the
Certificates.

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

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

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

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

                                      -5-
<PAGE>

optional  repurchase  by the party named in the  Agreement  of all the  Mortgage
Loans and other  assets of the Trust  Fund in  accordance  with the terms of the
Agreement.   Such  optional  repurchase  may  be  made  only  on  or  after  the
Distribution Date in June 2006 if on such Distribution Date the aggregate Stated
Principal  Balance of the Mortgage  Loans is less than the 10% of the  aggregate
Stated Principal Balance of the Mortgage Loans at the Cut-off Date. The exercise
of such right will effect the early retirement of the Certificates. In no event,
however,  will the Trust  Fund  created  by the  Agreement  continue  beyond the
expiration  of 21 years  after the death of certain  persons  identified  in the
Agreement.

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

                                      -6-
<PAGE>

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

Dated:                              JPMORGAN CHASE BANK,
                                    not in its individual capacity but solely as
                                    Trustee

                                    By:
                                        ----------------------------------------
                                                Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the  Class C  Certificates  referred  to in the
within-mentioned Agreement.

                                    JPMORGAN CHASE BANK
                                    Authorized signatory of JPMorgan Chase
                                    Bank, not in its individual capacity but
                                    solely as Trustee

                                    By:
                                        ----------------------------------------
                                                Authorized Signatory

<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

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

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

<PAGE>

                                   EXHIBIT A-5

                           FORM OF CLASS P CERTIFICATE

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

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

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

<PAGE>

                  NO  TRANSFER  OF THIS  CERTIFICATE  MAY BE MADE TO ANY PERSON,
UNLESS  THE  TRANSFEREE  PROVIDES  EITHER A  CERTIFICATION  PURSUANT  TO SECTION
6.02(B) OF THE  AGREEMENT OR AN OPINION OF COUNSEL  SATISFACTORY  TO THE TRUSTEE
THAT  THE  PURCHASE  AND  HOLDING  OF  THIS  CERTIFICATE  IS  PERMISSIBLE  UNDER
APPLICABLE  LAW,  WILL NOT  CONSTITUTE  OR  RESULT  IN A  NON-EXEMPT  PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE  RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE,  THE  DEPOSITOR  OR THE  SERVICER TO ANY  OBLIGATION  OR  LIABILITY  IN
ADDITION TO THOSE  UNDERTAKEN IN THE AGREEMENT,  ALL IN ACCORDANCE  WITH SECTION
6.02(B) OF THE AGREEMENT.

                                      -2-
<PAGE>

<TABLE>
<S>                                                        <C>
Certificate No. ___                                        Percentage Interest: 100%

Class P

Date of Pooling and Servicing Agreement and                Aggregate Initial Certificate Principal Balance of this
Cut-off Date: June 1, 2004                                 Certificate as of the Cut-off Date: $100

First Distribution Date: July 25, 2005                     Initial Certificate Principal Balance of this
                                                           Certificate as of the Cut-off Date: $100

Trustee: JPMorgan Chase Bank                               CUSIP:

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

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AP2

         evidencing  a  fractional   undivided  interest  in  the  distributions
         allocable  to the Class P  Certificates  with  respect  to a Trust Fund
         consisting  primarily  of a pool of  conventional  one- to  four-family
         fixed  interest  rate  mortgage  loans sold by NOMURA ASSET  ACCEPTANCE
         CORPORATION

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

                  This certifies that Nomura Securities  International,  Inc. is
the  registered  owner  of  the  Percentage  Interest  evidenced  hereby  in the
beneficial  ownership  interest  of  Certificates  of the  same  Class  as  this
Certificate in a trust (the "Trust Fund")  generally  consisting of conventional
first  lien,  fixed  rate  mortgage  loans  secured  by  one-  to  four-  family
residences,  units in planned unit developments and individual condominium units
(collectively,  the "Mortgage Loans") sold by NAAC. The Mortgage Loans were sold
by Nomura  Credit & Capital,

                                      -3-
<PAGE>

Inc. (the "Seller") to NAAC. The Trust Fund was created  pursuant to the Pooling
and  Servicing  Agreement  dated as of the  Cut-off  Date  specified  above (the
"Agreement"), among NAAC, as depositor (the "Depositor"), the Seller, as seller,
GMAC Mortgage Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the
"Trustee"),  a summary of certain of the  pertinent  provisions  of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning  ascribed to them in the Agreement.  This  Certificate is
issued  under and is subject  to the terms,  provisions  and  conditions  of the
Agreement,  to which  Agreement the Holder of this  Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.

                  Distributions  on this Certificate will be made by the Trustee
by check mailed to the address of the Person  entitled  thereto as such name and
address shall appear on the Certificate  Register or, if such Person so requests
by  notifying   the  Trustee  in  writing  as   specified   in  the   Agreement.
Notwithstanding  the above,  the final  distribution on this Certificate will be
made after due notice by the Trustee of the  pendency of such  distribution  and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice.

                  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 E and either F
or G, as  applicable,  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 or the Trustee 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 Seller against any liability that may result
if the transfer is not so exempt or is not made in accordance  with such federal
and state laws.

                  No  transfer of this Class P  Certificate  will be made unless
the Trustee has received  either (i) an opinion of counsel  acceptable to and in
form  and   substance   satisfactory   to  the  Trustee   with  respect  to  the
permissibility  of such transfer under the Employee  Retirement  Income Security
Act of 1974, as amended ("ERISA"), and Section 4975 of the Internal Revenue Code
(the "Code") and stating, among other things, that the transferee's  acquisition
of a  Class P

                                       -4-
<PAGE>

Certificate,   will  not  constitute  or  result  in  a  non-exempt   prohibited
transaction  under Section 406 of ERISA or Section 4975 of the Code and will not
subject  the  Trustee,  the  Depositor  or the  Servicer  to any  obligation  or
liability in addition to those  undertaken in the  Agreement,  all in accordance
with Section 6.02(b) of the Agreement or (ii) a  representation  letter,  in the
form as  described  by the  Agreement,  stating  that the  transferee  is not an
employee benefit or other plan subject to the prohibited  transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"),  or any other person (including
an  investment  manager,  a named  fiduciary  or a trustee of any Plan)  acting,
directly or indirectly,  on behalf of or purchasing any  Certificate  with "plan
assets" of any Plan.

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

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

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

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations of the Depositor and the rights of the Certificateholders  under the
Agreement  from time to time by the  parties  thereto  with the  consent  of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the  Voting  Rights of such  Class or  Classes.  Any such  consent by the
Holder of this  Certificate  shall be conclusive  and binding on such Holder and
upon all future Holders of this  Certificate and of any Certificate  issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances,  without the consent of the Holders of any of the
Certificates.

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

                  The Certificates are issuable only as registered  Certificates
without coupons in the Classes and denominations  specified in the Agreement. As
provided in the Agreement and subject to certain  limitations therein set forth,
this Certificate is exchangeable for one or more

                                       -5-
<PAGE>

new Certificates  evidencing the same Class and in the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.

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

                  The  obligations  created by the  Agreement and the Trust Fund
created   thereby   (other   than   the   obligations   to  make   payments   to
Certificateholders  with  respect to the  termination  of the  Agreement)  shall
terminate  upon  the  earlier  of (i) the  later  of (A) the  maturity  or other
liquidation  (or  Advance  with  respect  thereto)  of the  last  Mortgage  Loan
remaining  in the Trust  Fund and  disposition  of all  property  acquired  upon
foreclosure  or deed in lieu of  foreclosure  of any  Mortgage  Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the  Agreement of all the Mortgage  Loans and other assets
of the Trust Fund in accordance  with the terms of the Agreement.  Such optional
repurchase may be made only on or after the Distribution Date in June 2006 if on
such  Distribution  Date the aggregate Stated Principal  Balance of the Mortgage
Loans is less than 10% of the aggregate Stated Principal Balance of the Mortgage
Loans at the  Cut-off  Date.  The  exercise  of such right will effect the early
retirement  of the  Certificates.  In no event,  however,  will the  Trust  Fund
created by the Agreement  continue  beyond the  expiration of 21 years after the
death of certain persons identified in the Agreement.

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

                                      -6-
<PAGE>

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

Dated:                            JPMORGAN CHASE BANK,
                                  not in its individual capacity but solely as
                                  Trustee

                                  By:
                                     -------------------------------------------
                                                Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the  Class P  Certificates  referred  to in the
within-mentioned Agreement.

                                  JPMORGAN CHASE BANK
                                  Authorized signatory of JPMorgan Chase
                                  Bank, not in its individual capacity but
                                  solely as Trustee

                                  By:
                                     -------------------------------------------
                                                 Authorized Signatory

<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

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

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

<PAGE>
                                   EXHIBIT A-6

                           FORM OF CLASS R CERTIFICATE

                  THIS  CERTIFICATE  MAY  NOT BE  HELD  BY OR  TRANSFERRED  TO A
NON-UNITED STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).

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

                  NO  TRANSFER  OF THIS  CERTIFICATE  MAY BE MADE TO ANY PERSON,
UNLESS  THE  TRANSFEREE  PROVIDES  EITHER A  CERTIFICATION  PURSUANT  TO SECTION
6.02(B) OF THE  AGREEMENT OR AN OPINION OF COUNSEL  SATISFACTORY  TO THE TRUSTEE
AND THAT THE  PURCHASE  AND HOLDING OF THIS  CERTIFICATE  IS  PERMISSIBLE  UNDER
APPLICABLE  LAW,  WILL NOT  CONSTITUTE  OR  RESULT  IN A  NON-EXEMPT  PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE  RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE,  THE  DEPOSITOR  OR THE  SERVICER TO ANY  OBLIGATION  OR  LIABILITY  IN
ADDITION TO THOSE  UNDERTAKEN IN THE AGREEMENT,  ALL IN ACCORDANCE  WITH SECTION
6.02(B) OF THE AGREEMENT.

                  ANY RESALE,  TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
TRUSTEE  THAT (1) SUCH  TRANSFEREE  IS NOT (A) 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), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY  OF EITHER OF THE FOREGOING,  (C) 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  UNLESS  SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING
THE TAX  IMPOSED  BY  SECTION  511 OF THE  CODE ON  UNRELATED  BUSINESS  TAXABLE
INCOME),  (D) RURAL  ELECTRIC AND  TELEPHONE  COOPERATIVES

<PAGE>

DESCRIBED  IN  SECTION   1381(A)(2)(C)  OF  THE  CODE,  (E)  AN  ELECTING  LARGE
PARTNERSHIP  UNDER SECTION 775(A) OF THE CODE (ANY SUCH PERSON  DESCRIBED IN THE
FOREGOING  CLAUSES  (A),  (B),  (C),  (D) OR (E) BEING  HEREIN  REFERRED TO AS A
"DISQUALIFIED  ORGANIZATION"),  OR (F) AN AGENT OF A DISQUALIFIED  ORGANIZATION,
(2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX
AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL  CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION
IN THE CERTIFICATE  REGISTER OR ANY TRANSFER,  SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE  TO A  DISQUALIFIED  ORGANIZATION  OR  AN  AGENT  OF A  DISQUALIFIED
ORGANIZATION,  SUCH  REGISTRATION  SHALL BE  DEEMED  TO BE OF NO LEGAL  FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A  CERTIFICATEHOLDER
FOR ANY  PURPOSE  HEREUNDER,  INCLUDING,  BUT NOT  LIMITED  TO,  THE  RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE  SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.

                                       -2-
<PAGE>

Certificate No.__

Class R                                Percentage Interest: ____

Date of Pooling and Servicing          Initial Certificate Principal Balance of
Agreement and Cut-off Date:            this Certificate as of the Cut-off Date:
June 1, 2004                           $______________

                                       Initial Certificate Notional Balance of
First Distribution Date:               this Certificate as of the Cut-off Date:
July 25, 2004                          $______________

Trustee: JPMorgan Chase Bank           CUSIP:

Assumed Final Distribution Date:
July 25, 2034

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AP2

         evidencing  a  fractional   undivided  interest  in  the  distributions
         allocable  to the Class R  Certificates  with  respect  to a Trust Fund
         consisting  primarily  of a pool of  conventional  one- to  four-family
         fixed  interest  rate  mortgage  loans sold by NOMURA ASSET  ACCEPTANCE
         CORPORATION.

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

                  This certifies that Nomura Securities  International,  Inc. is
the  registered  owner  of  the  Percentage  Interest  evidenced  hereby  in the
beneficial  ownership  interest  of  Certificates  of the  same  Class  as  this
Certificate in a trust (the "Trust Fund")  generally  consisting of conventional
first  lien,  fixed  rate  mortgage  loans  secured  by  one-  to  four-  family
residences,  units in planned unit developments and individual condominium units
(collectively,  the "Mortgage Loans") sold by NAAC. The Mortgage Loans were sold
by Nomura  Credit & Capital,

                                       -3-
<PAGE>

Inc. (the "Seller") to NAAC. The Trust Fund was created  pursuant to the Pooling
and  Servicing  Agreement  dated as of the  Cut-off  Date  specified  above (the
"Agreement"), among NAAC, as depositor (the "Depositor"), the Seller, as seller,
GMAC Mortgage Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the
"Trustee"),  a summary of certain of the  pertinent  provisions  of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning  ascribed to them in the Agreement.  This  Certificate is
issued  under and is subject  to the terms,  provisions  and  conditions  of the
Agreement,  to which  Agreement the Holder of this  Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.

                  Each Holder of this  Certificate will be deemed to have agreed
to be bound by the  restrictions  set forth in the  Agreement to the effect that
(i) each person holding or acquiring any Ownership  Interest in this Certificate
must be a United States Person and a Permitted Transferee,  (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the delivery
to the Trustee of, among other  things,  an affidavit to the effect that it is a
United States Person and Permitted Transferee,  (iii) any attempted or purported
transfer of any  Ownership  Interest in this  Certificate  in  violation of such
restrictions  will be  absolutely  null and void and will  vest no rights in the
purported  transferee,  and (iv) if any person other than a United States Person
and a Permitted  Transferee  acquires any Ownership Interest in this Certificate
in violation of such  restrictions,  then the Depositor will have the right,  in
its sole  discretion  and without notice to the Holder of this  Certificate,  to
sell this Certificate to a purchaser selected by the Depositor,  which purchaser
may be the  Depositor,  or any  affiliate  of the  Depositor,  on such terms and
conditions as the Depositor may choose.

                  The Trustee will distribute on the 25th day of each month, or,
if such 25th day is not a Business Day, the immediately  following  Business Day
(each,  a  "Distribution  Date"),  commencing  on the  First  Distribution  Date
specified  above, to the Person in whose name this  Certificate is registered at
the close of  business  on the last day (or if such  last day is not a  Business
Day, the Business Day immediately preceding such last day) of the calendar month
immediately preceding the month in which the Distribution Date occurs, an amount
equal to the product of the Percentage  Interest  evidenced by this  Certificate
and the amounts required to be distributed to the Holders of Certificates of the
same Class as this  Certificate.  The  Assumed  Final  Distribution  Date is the
Distribution  Date in the month following the latest scheduled  maturity date of
any Mortgage Loan.

                  Distributions  on this Certificate will be made by the Trustee
by check mailed to the address of the Person  entitled  thereto as such name and
address shall appear on the Certificate  Register or, if such Person so requests
by  notifying   the  Trustee  in  writing  as   specified   in  the   Agreement.
Notwithstanding  the above,  the final  distribution on this Certificate will be
made after due notice by the Trustee of the  pendency of such  distribution  and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice.

                  No  transfer of this Class R  Certificate  will be made unless
the Trustee has

                                       -4-
<PAGE>

received  either  (i) an  opinion  of  counsel  acceptable  to and in  form  and
substance satisfactory to the Trustee with respect to the permissibility of such
transfer under the Employee  Retirement  Income Security Act of 1974, as amended
("ERISA"),  and  Section  4975 of the  Internal  Revenue  Code (the  "Code") and
stating, among other things, that the transferee's  acquisition and holding of a
Class R Certificate is permissible  under applicable law, will not constitute or
result in a  non-exempt  prohibited  transaction  under  Section 406 of ERISA or
Section 4975 of the Code and will not subject the Trustee,  the Depositor or the
Servicer to any  obligation or liability in addition to those  undertaken in the
Agreement,  all in  accordance  with Section  6.02(b) of the Agreement or (ii) a
representation  letter, in the form as described by the Agreement,  stating that
the  transferee  is not  an  employee  benefit  or  other  plan  subject  to the
prohibited  transaction  provisions  of  ERISA  or  Section  4975 of the Code (a
"Plan"), or any other person (including an investment manager, a named fiduciary
or a trustee  of any  Plan)  acting,  directly  or  indirectly,  on behalf of or
purchasing any Certificate with "plan assets" of any Plan.

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

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

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

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations of the Depositor and the rights of the Certificateholders  under the
Agreement  from time to time by the  parties  thereto  with the  consent  of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the  Voting  Rights of such  Class or  Classes.  Any such  consent by the
Holder of this  Certificate  shall be conclusive  and binding on such Holder and
upon all future Holders of this  Certificate and of any Certificate  issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances,  without the consent of the Holders of any of the
Certificates.

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

                                       -5-
<PAGE>

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

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

                  The  obligations  created by the  Agreement and the Trust Fund
created   thereby   (other   than   the   obligations   to  make   payments   to
Certificateholders  with  respect to the  termination  of the  Agreement)  shall
terminate  upon  the  earlier  of (i) the  later  of (A) the  maturity  or other
liquidation  (or  Advance  with  respect  thereto)  of the  last  Mortgage  Loan
remaining  in the Trust  Fund and  disposition  of all  property  acquired  upon
foreclosure  or deed in lieu of  foreclosure  of any  Mortgage  Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the  Agreement of all the Mortgage  Loans and other assets
of the Trust Fund in accordance  with the terms of the Agreement.  Such optional
repurchase may be made only on or after the Distribution Date in June 2006 if on
such  Distribution  Date the aggregate Stated Principal  Balance of the Mortgage
Loans is less than 10% of the aggregate Stated Principal Balance of the Mortgage
Loans at the  Cut-off  Date.  The  exercise  of such right will effect the early
retirement  of the  Certificates.  In no event,  however,  will the  Trust  Fund
created by the Agreement  continue  beyond the  expiration of 21 years after the
death of certain persons identified in the Agreement.

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

                                       -6-
<PAGE>

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

Dated:                            JPMORGAN CHASE BANK,
                                  not in its individual capacity but solely as
                                  Trustee

                                  By:
                                       -----------------------------------------
                                                Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the  Class R  Certificates  referred  to in the
within-mentioned Agreement.

                                  JPMORGAN CHASE BANK
                                  Authorized signatory of JPMorgan Chase Bank,
                                  not in its individual capacity but solely as
                                  Trustee

                                  By:
                                       -----------------------------------------
                                                 Authorized Signatory

<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of  _________________________  account  number  _____________,  or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to  _____________________________________________.  This information is provided
by __________________, the assignee named above, or ________________________, as
its agent.

<PAGE>

                                                                       EXHIBIT B

                             MORTGAGE LOAN SCHEDULE

         The  Preliminary  and Final Mortgage Loan Schedules shall set forth the
following information with respect to each Mortgage Loan:

         (a) the loan number;

         (b) the Mortgage Rate in effect as of the Cut-off Date;

         (c) the Servicing Fee Rate;

         (d) the Net Mortgage Rate in effect as of the Cut-off Date;

         (e) the maturity date;

         (f) the original principal balance;

         (g) the Cut-off Date Principal Balance;

         (h) the original term;

         (i) the remaining term;

         (j) the property type;

         (k) the MIN with respect to each Mortgage Loan; and

         (l) the applicable Servicer.

                                      B-1
<PAGE>

                                                                     EXHIBIT C-1

                          FORM OF INITIAL CERTIFICATION

Nomura Asset Acceptance Corporation       JP Morgan Chase Bank
2 World Financial Center, Building B      4 New York Plaza, 6th Floor
New York, New York 10281                  New York, New York  10004
                                          Attention: ITS Structured Finance
                                          Services, Nomura Asset Acceptance
                                          Corp. 2004-AP2

          Re:  Pooling and Servicing Agreement,  dated as of June 1, 2004, among
               Nomura Asset Acceptance Corporation,  as depositor, Nomura Credit
               &  Capital,  Inc.,  as  seller,  GMAC  Mortgage  Corporation,  as
               servicer,   and  JPMorgan   Chase  Bank,   as  trustee,   issuing
               Mortgage-pass Through Certificates, Series 2004-AP2
               -----------------------------------------------------------

Ladies and Gentlemen:

         In  accordance  with  Section 2.02 of the  above-captioned  Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report,  that as to each Mortgage Loan listed on
the Mortgage Loan Schedule  (other than any Mortgage Loan paid in full or listed
on the  attachment  hereto) it has reviewed  the Mortgage  File and the Mortgage
Loan Schedule and has determined that: (i) all documents required to be included
in the Mortgage File pursuant to the Pooling and Servicing  Agreement are in its
possession;  (ii) such  documents have been reviewed by it and appear regular on
their face,  have, where  applicable,  been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such  documents,  the
information  set forth in the  Mortgage  Loan  Schedule  as to  Mortgagor  Name,
original  principal  balance and loan number  respecting  such  Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.

         The  undersigned  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  undersigned  makes no
representation  that any documents  specified in subclauses (iv) and (vi) of the
third  paragraph of Section 2.01 should be included in any  Mortgage  File.  The
undersigned  makes  no  representations  as  to:  (i)  the  validity,  legality,
enforceability,  recordability, sufficiency, due authorization or genuineness of
any of the  documents  contained  in each  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-1-1
<PAGE>

         Capitalized  words and phrases  used herein  shall have the  respective
meanings  assigned  to  them  in  the  above-captioned   Pooling  and  Servicing
Agreement.

                                  JPMORGAN CHASE BANK, as Custodian

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

                                      C-1-2

<PAGE>

                                                                     EXHIBIT C-2

                          FORM OF INTERIM CERTIFICATION

Nomura Asset Acceptance Corporation       JP Morgan Chase Bank
2 World Financial Center, Building B      4 New York Plaza, 6th Floor
New York, New York 10281                  New York, New York  10004
                                          Attention: ITS Structured Finance
                                          Services, Nomura Asset Acceptance
                                          Corp. 2004-AP2

          Re:  Pooling and Servicing Agreement,  dated as of June 1, 2004, among
               Nomura Asset Acceptance Corporation,  as depositor, Nomura Credit
               &  Capital,  Inc.,  as  seller,  GMAC  Mortgage  Corporation,  as
               servicer, and JPMorgan Chase Bank, as trustee,
               issuing Mortgage-pass Through Certificates, Series 2004-AP2
               -----------------------------------------------------------

Ladies and Gentlemen:

         In  accordance  with  Section 2.02 of the  above-captioned  Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report,  that as to each Mortgage Loan listed on
the Mortgage Loan Schedule  (other than any Mortgage Loan paid in full or listed
on the  attachment  hereto) it has reviewed  the Mortgage  File and the Mortgage
Loan Schedule and has determined that: (i) all documents required to be included
in the Mortgage File pursuant to the Pooling and Servicing  Agreement are in its
possession;  (ii) such  documents have been reviewed by it and appear regular on
their face,  have, where  applicable,  been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such  documents,  the
information  set forth in the  Mortgage  Loan  Schedule  as to  Mortgagor  Name,
original  principal  balance and loan number  respecting  such  Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.

         The  undersigned  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  undersigned  makes no
representation  that any documents  specified in subclauses (iv) and (vi) of the
third  paragraph of Section 2.01 should be included in any  Mortgage  File.  The
undersigned  makes  no  representations  as  to:  (i)  the  validity,  legality,
enforceability, recordabililty, sufficiency, due authorization or genuineness of
any of the  documents  contained  in each  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-2-1

<PAGE>

         Capitalized  words and phrases  used herein  shall have the  respective
meanings  assigned  to  them  in  the  above-captioned   Pooling  and  Servicing
Agreement.

                                  JPMORGAN CHASE BANK, as Custodian

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

                                      C-2-2

<PAGE>

                                                                     EXHIBIT C-3

                           FORM OF FINAL CERTIFICATION

Nomura Asset Acceptance Corporation       JP Morgan Chase Bank
2 World Financial Center, Building B      4 New York Plaza, 6th Floor
New York, New York 10281                  New York, New York 10004
                                          Attention: ITS Structured Finance
                                          Services, Nomura Asset Acceptance
                                          Corp. 2004-AP2

          Re:  Pooling and Servicing Agreement,  dated as of June 1, 2004, among
               Nomura Asset Acceptance Corporation,  as depositor, Nomura Credit
               &  Capital,  Inc.,  as  seller,  GMAC  Mortgage  Corporation,  as
               servicer, and JPMorgan Chase Bank, as trustee,
               issuing Mortgage-pass Through Certificates, Series 2004-AP2
               -----------------------------------------------------------

Ladies and Gentlemen:

         In  accordance  with  Section 2.02 of the  above-captioned  Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report,  that as to each Mortgage Loan listed on
the Mortgage Loan Schedule  (other than any Mortgage Loan paid in full or listed
on the  attachment  hereto) it has received the  documents  set forth in Section
2.01 and has  determined  that (i) all documents  required to be included in the
Mortgage  File  pursuant  to the  Pooling  and  Servicing  Agreement  are in its
possession;  (ii) such  documents have been reviewed by it and appear regular on
their face,  have, where  applicable,  been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such  documents,  the
information  set forth in the  Mortgage  Loan  Schedule  as to  Mortgagor  name,
original  principal  balance and loan number  respecting  such  Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.

         The  undersigned  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  undersigned  makes no
representation  that any documents  specified in subclauses (iv) and (vi) of the
third  paragraph of Section 2.01 should be included in any  Mortgage  File.  The
undersigned  makes  no  representations  as  to:  (i)  the  validity,  legality,
enforceability,  recordability, sufficiency, due authorization or genuineness of
any of the  documents  contained  in each  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-3-1

<PAGE>

         Capitalized  words and phrases  used herein  shall have the  respective
meanings  assigned  to  them  in  the  above-captioned   Pooling  and  Servicing
Agreement.

                                  JPMORGAN CHASE BANK, as Custodian

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

                                     C-3-2

<PAGE>

                                                                       EXHIBIT D

                           FORM OF TRANSFER AFFIDAVIT

                                    Affidavit  pursuant  to  Section  860E(e)(4)
                                    of the  Internal  Revenue  Code of 1986,  as
                                    amended, and for other purposes

STATE OF              )
                      )ss:
COUNTY OF             )

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

         1.  That  he/she  is  [Title of  Officer]  of [Name of  Investor]  (the
"Investor"),  a [savings institution]  [corporation] duly organized and existing
under the laws of [the State of _____] [the United  States],  on behalf of which
he makes this affidavit.

         2.  That  (i) the  Investor  is not a  "disqualified  organization"  as
defined in Section  860E(e)(5) of the Internal  Revenue Code of 1986, as amended
(the "Code"),  and will not be a disqualified  organization as of [Closing Date]
[date  of  purchase];  (ii) it is not  acquiring  the  Nomura  Asset  Acceptance
Corporation  Alternative Loan Trust, Mortgage Pass Through Certificates,  Series
2004-AP2,  Class R Certificates (the "Residual Certificates") for the account of
a disqualified  organization;  (iii) it consents to any amendment of the Pooling
and  Servicing  Agreement  that  shall  be  deemed  necessary  by  Nomura  Asset
Acceptance  Corporation  (upon  advice of counsel) to  constitute  a  reasonable
arrangement to ensure that the Residual  Certificates will not be owned directly
or indirectly by a disqualified organization; and (iv) it will not transfer such
Residual  Certificates  unless  (a) it  has  received  from  the  transferee  an
affidavit in substantially the same form as this affidavit containing these same
four  representations  and (b) as of the time of the transfer,  it does not have
actual knowledge that such affidavit is false.

         3. That the Investor is one of the following: (i) a citizen or resident
of the United States,  (ii) a corporation  or  partnership  (including an entity
treated as a corporation or partnership for federal income tax purposes) created
or organized in, or under the laws of, the United States or any state thereof or
the District of Columbia  (except,  in the case of a partnership,  to the extent
provided in  regulations),  provided that no partnership or other entity treated
as a partnership  for United States federal income tax purposes shall be treated
as a United  States  Person  unless all  persons  that own an  interest  in such
partnership  either directly or through any entity that is not a corporation for
United States  federal income tax purposes are United States  Persons,  (iii) an
estate whose income is subject to United States federal income tax regardless of
its source,  or (iv) a trust other than a "foreign trust," as defined in Section
7701 (a)(31) of the Code.

         4.   That   the   Investor's   taxpayer    identification   number   is
______________________.

                                      D-1
<PAGE>

         5. That no purpose of the  acquisition of the Residual  Certificates is
to avoid or impede the assessment or collection of tax.

         6. That the Investor  understands  that,  as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.

         7. That the Investor  intends to pay taxes  associated with holding the
Residual Certificates as they become due.

         IN WITNESS  WHEREOF,  the  Investor  has caused this  instrument  to be
executed on its behalf,  pursuant to authority of its Board of Directors, by its
[Title of Officer] this ____ day of _________, 20__.

                                     [NAME OF INVESTOR]

                                     By:
                                          --------------------------------------
                                          [Name of Officer]
                                          [Title of Officer]
                                          [Address of Investor for receipt of
                                          distributions]

                                          Address of Investor for receipt of tax
                                          information:

                                      D-2
<PAGE>

         Personally appeared before me the above-named [Name of Officer],  known
or proved to me to be the same person who executed the foregoing  instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he/she
executed  the same as his/her free act and deed and the free act and deed of the
Investor.

         Subscribed and sworn before me this ___ day of _________, 20___.

NOTARY PUBLIC

COUNTY OF

STATE OF

My commission expires the ___ day of ___________________, 20___.

                                      D-3
<PAGE>

                                                                       EXHIBIT E

                         FORM OF TRANSFEROR CERTIFICATE

                              ______________, 2004

Nomura Asset Acceptance Corporation
2 World Financial Center, Building B
New York, New York 10281

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004-2477
Attention: Nomura Asset Acceptance
 Corporation, Alternative Loan Trust, Series 2004-AP2

                Re:  Nomura Asset Acceptance Corporation
                     Mortgage Pass-through Certificates, Series 2004-Ap2, Class
                     ----------------------------------------------------------

Ladies and Gentlemen:

         In connection  with the sale by ___________  (the "Seller") to ________
(the  "Purchaser")  of  $_________  Initial  Certificate  Principal  Balance  of
Mortgage   Pass-Through   Certificates,   Series  2004-AP2,   Class  _____  (the
"Certificates"),  issued  pursuant to the Pooling and Servicing  Agreement  (the
"Pooling and Servicing Agreement"), dated as of June 1, 2004, among Nomura Asset
Acceptance Corporation, as depositor (the "Depositor"), Nomura Credit & Capital,
Inc., as seller,  GMAC Mortgage  Corporation,  as servicer,  and JPMorgan  Chase
Bank, as trustee (the "Trustee").  The Seller hereby  certifies,  represents and
warrants to, a covenants with, the Depositor and the Trustee that:

         Neither  the Seller 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, or
(e) has taken any other action,  that (as to any of (a) through (e) above) would
constitute a distribution of the  Certificates  under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section  5 of the  Act or any  state  securities  law,  or  that  would  require
registration or qualification  pursuant thereto.  The Seller will not act in any
manner set forth in the foregoing sentence with respect to any Certificate.  The
Seller has not and will not sell or otherwise  transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.

                                       E-1
<PAGE>

                                      Very truly yours,

                                      ------------------------------------------
                                      (Seller)

                                      By:
                                           -------------------------------------

                                      Name:
                                           -------------------------------------

                                      Title:
                                             -----------------------------------

                                       E-2

<PAGE>

                                                                       EXHIBIT F

             FORM OF INVESTOR REPRESENTATION LETTER (NON-RULE 144A)

                                ___________,2004

Nomura Asset Acceptance Corporation
2 World Financial Center
New York, New York 10281

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004

Attention: Nomura Asset Acceptance Corporation,
 Alternative Loan Trust, 2004-AP2

               Re:  Nomura Asset Acceptance Corporation, Alternative Loan Trust,
                    Mortgage Pass-through Certificates, Series 2004-AP2
                    ---------------------------------------------------

Ladies and Gentlemen:

         _______________ (the "Purchaser") intends to purchase from ____________
(the "Seller")  $_________  Initial  Certificate  Principal  Balance of Mortgage
Pass-Through  Certificates,  Series 2004-AP2,  Class _____ (the "Certificates"),
issued  pursuant  to the Pooling  and  Servicing  Agreement  (the  "Pooling  and
Servicing  Agreement"),  dated as of June 1, 2004, among Nomura Asset Acceptance
Corporation,  as depositor (the "Depositor"),  Nomura Credit & Capital, Inc., as
seller,  GMAC Mortgage  Corporation,  as servicer,  and JP Morgan Chase Bank, as
trustee (the "Trustee").  All terms used herein and not otherwise  defined shall
have the  meanings  set  forth  in the  Pooling  and  Servicing  Agreement.  The
Purchaser hereby certifies,  represents and warrants to, and covenants with, the
Depositor and the Trustee that:

                  1.       The Purchaser  understands  that (a) the Certificates
                           have not been and will not be registered or qualified
                           under the  Securities  Act of 1933,  as amended  (the
                           "Act") or any state securities law, (b) the Depositor
                           is  not  required  to  so  register  or  qualify  the
                           Certificates, (c) the Certificates may be resold only
                           if   registered   and   qualified   pursuant  to  the
                           provisions of the Act or any state securities law, or
                           if  an   exemption   from   such   registration   and
                           qualification  is  available,  (d)  the  Pooling  and
                           Servicing Agreement contains  restrictions  regarding
                           the  transfer  of  the   Certificates   and  (e)  the
                           Certificates  will  bear a  legend  to the  foregoing
                           effect.

                  2.       The Purchaser is acquiring the  Certificates  for its
                           own account for  investment  only and not with a view
                           to or for sale in  connection  with any  distribution
                           thereof in any manner  that would  violate the Act or
                           any applicable state securities laws.

                                      F-1
<PAGE>

                  3.       The  Purchaser  is (a) a  substantial,  sophisticated
                           institutional  investor  having  such  knowledge  and
                           experience in financial and business matters, and, in
                           particular,  in such  matters  related to  securities
                           similar to the Certificates,  such that it is capable
                           of  evaluating  the merits and risks of investment in
                           the Certificates, (b) able to bear the economic risks
                           of  such  an  investment   and  (c)  an   "accredited
                           investor"   within  the   meaning  of  Rule  501  (a)
                           promulgated pursuant to the Act.

                  4.       The Purchaser has been furnished with, and has had an
                           opportunity  to review (a) a copy of the  Pooling and
                           Servicing  Agreement  and (b) such other  information
                           concerning the  Certificates,  the Mortgage Loans and
                           the Depositor as has been  requested by the Purchaser
                           from the  Depositor  or the Seller and is relevant to
                           the    Purchaser's    decision   to   purchase    the
                           Certificates.  The  Purchaser  has had any  questions
                           arising from such review answered by the Depositor or
                           the Seller to the satisfaction of the Purchaser.

                  5.       The  Purchaser  has  not  and  will  not  nor  has it
                           authorized  or will it  authorize  any  person to (a)
                           offer, pledge, sell, dispose of or otherwise transfer
                           any  Certificate,  any interest in any Certificate or
                           any  other  similar  security  to any  person  in any
                           manner,  (b)  solicit any offer to buy or to accept a
                           pledge,   disposition   of  other   transfer  of  any
                           Certificate,  any interest in any  Certificate or any
                           other similar security from any person in any manner,
                           (c) otherwise  approach or negotiate  with respect to
                           any  Certificate,  any interest in any Certificate or
                           any other  similar  security  with any  person in any
                           manner, (d) make any general solicitation by means of
                           general  advertising  or in any  other  manner or (e)
                           take any other action, that (as to any of (a) through
                           (e) above)  would  constitute a  distribution  of any
                           Certificate  under the Act,  that  would  render  the
                           disposition of any Certificate a violation of Section
                           5 of the Act or any  state  securities  law,  or that
                           would require registration or qualification  pursuant
                           thereto.  The  Purchaser  will not sell or  otherwise
                           transfer   any  of  the   Certificates,   except   in
                           compliance  with the  provisions  of the  Pooling and
                           Servicing Agreement.

                                      F-2
<PAGE>

                                  Very truly yours,

                                  ----------------------------------------------
                                  (Purchaser)

                                  By:
                                      ------------------------------------------

                                  Name:
                                        ----------------------------------------

                                  Title:
                                         ---------------------------------------

                                      F-3
<PAGE>

                                                                       EXHIBIT G

                       FORM OF RULE 144A INVESTMENT LETTER

                                                                          [Date]

Nomura Credit & Capital, Inc.
2 World Financial Center, Building B
New York, New York 10281

Nomura Asset Acceptance Corporation
2 World Financial Center
New York, New York 10281

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004

          Re:  Nomura  Asset  Acceptance  Corporation,  Alternative  Loan Trust,
               Mortgage   Pass-Through   Certificates,   Series   2004-AP2  (the
               "Certificates"), including the Class Certificates  (the  "Private
               Certificates")
               --------------

Dear Ladies and Gentlemen:

         In  connection  with our purchase of Private  Certificates,  we confirm
that:

                  (i)      we understand that the Private  Certificates  are not
                           being registered under the Securities Act of 1933, as
                           amended   (the   "Act")  or  any   applicable   state
                           securities or "Blue Sky" laws,  and are being sold to
                           us  in  a   transaction   that  is  exempt  from  the
                           registration requirements of such laws;

                  (ii)     any    information   we   desired    concerning   the
                           Certificates, including the Private Certificates, the
                           trust in which the Certificates  represent the entire
                           beneficial  ownership  interest  (the "Trust") or any
                           other  matter we deemed  relevant to our  decision to
                           purchase Private Certificates has been made available
                           to us;

                  (iii)    we are able to bear the economic  risk of  investment
                           in  Private  Certificates;  we are  an  institutional
                           "accredited investor" as defined in Section 501(a) of
                           Regulation  D   promulgated   under  the  Act  and  a
                           sophisticated  institutional investor and we agree to
                           obtain a representation from any transferee that such
                           transferee is an institutional  "accredited investor"
                           so long as we are required to obtain a representation
                           letter regarding compliance with the Act;

                                      G-1
<PAGE>

                  (iv)     we are  acquiring  Private  Certificates  for our own
                           account, not as nominee for any other person, and not
                           with a  present  view to any  distribution  or  other
                           disposition of the Private Certificates;

                  (v)      we  agree  the  Private  Certificates  must  be  held
                           indefinitely  by us (and  may not be  sold,  pledged,
                           hypothecated  or  in  any  way  disposed  of)  unless
                           subsequently   registered   under  the  Act  and  any
                           applicable  state securities or "Blue Sky" laws or an
                           exemption from the  registration  requirements of the
                           Act and any applicable state securities or "Blue Sky"
                           laws is available;

                  (vi)     we agree that in the event that at some  future  time
                           we wish to dispose of or exchange  any of the Private
                           Certificates  (such disposition or exchange not being
                           currently  foreseen  or  contemplated),  we will  not
                           transfer or exchange any of the Private  Certificates
                           unless:

                           (A) (1)  the  sale is to an  Eligible  Purchaser  (as
                           defined  below),  (2) if  required by the Pooling and
                           Servicing  Agreement  (as defined  below) a letter to
                           substantially  the same  effect as either this letter
                           or,  if  the   Eligible   Purchaser  is  a  Qualified
                           Institutional Buyer as defined under Rule 144A of the
                           Act, the Rule 144A and Related Matters Certificate in
                           the  form  attached  to  the  Pooling  and  Servicing
                           Agreement   (as   defined   below)   (or  such  other
                           documentation as may be acceptable to the Trustee) is
                           executed  promptly by the  purchaser and delivered to
                           the   addressees   hereof   and  (3)  all  offers  or
                           solicitations  in connection  with the sale,  whether
                           directly or through  any agent  acting on our behalf,
                           are limited only to Eligible  Purchasers  and are not
                           made by means of any form of general  solicitation or
                           general advertising whatsoever; and

                           (B)  if the  Private  Certificate  is not  registered
                           under the Act (as to which we acknowledge you have no
                           obligation),  the  Private  Certificate  is sold in a
                           transaction that does not require  registration under
                           the Act and any applicable  state securities or "blue
                           sky" laws and, if JPMorgan Chase Bank (the "Trustee")
                           so  requests,  a  satisfactory  Opinion of Counsel is
                           furnished  to such effect,  which  Opinion of Counsel
                           shall  be  an  expense  of  the   transferor  or  the
                           transferee;

                  (vii)    we agree to be bound by all of the  terms  (including
                           those  relating to  restrictions  on transfer) of the
                           Pooling  and  Servicing,  pursuant to which the Trust
                           was formed; we have reviewed carefully and understand
                           the terms of the Pooling and Servicing Agreement;

                  (viii)   we  either:  (i)  are  not  acquiring  the  Privately
                           Offered Certificate  directly or indirectly by, or on
                           behalf  of,  an  employee   benefit   plan  or  other
                           retirement arrangement which is subject to Title I of
                           the Employee  Retirement Income Security Act of 1974,
                           as  amended,  and/or  section  4975  of the  Internal
                           Revenue  Code  of  1986,  as  amended,  or  (ii)  are
                           providing the opinion of counsel specified in Section
                           6.02(b) of the Agreement.

                                      G-2
<PAGE>

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

                           NO  TRANSFER OF THIS  CERTIFICATE  MAY BE MADE TO ANY
                           PERSON,  UNLESS  THE  TRANSFEREE  PROVIDES  EITHER  A
                           CERTIFICATION  PURSUANT  TO  SECTION  6.02(b)  OF THE
                           AGREEMENT  OR AN OPINION OF COUNSEL  SATISFACTORY  TO
                           THE  TRUSTEE  THAT THE  PURCHASE  AND HOLDING OF THIS
                           CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
                           NOT  CONSTITUTE OR RESULT IN A NON-EXEMPT  PROHIBITED
                           TRANSACTION   UNDER   SECTION  406  OF  THE  EMPLOYEE
                           RETIREMENT  INCOME  SECURITY ACT OF 1974,  AS AMENDED
                           ("ERISA"),  OR SECTION  4975 OF THE CODE AND WILL NOT

                                      G-3
<PAGE>

                           SUBJECT THE TRUSTEE, THE DEPOSITOR OR THE SERVICER TO
                           ANY  OBLIGATION  OR  LIABILITY  IN  ADDITION TO THOSE
                           UNDERTAKEN IN THE AGREEMENT,  ALL IN ACCORDANCE  WITH
                           SECTION 6.02(b) OF THE AGREEMENT.

         "ELIGIBLE  PURCHASER" means a corporation,  partnership or other entity
which  we have  reasonable  grounds  to  believe  and do  believe  (i) can  make
representations  with respect to itself to substantially  the same effect as the
representations  set forth herein, and (ii) is either a Qualified  Institutional
Buyer as  defined  under  Rule 144A of the Act or an  institutional  "Accredited
Investor" as defined under Rule 501 of the Act.

         Terms not otherwise  defined herein shall have the meanings assigned to
them in the Pooling and Servicing  Agreement,  dated as of June 1, 2004, between
Nomura Asset  Acceptance  Corporation,  as  depositor,  Nomura Credit & Capital,
Inc., as seller,  GMAC Mortgage  Corporation,  as servicer,  and JPMorgan  Chase
Bank, as Trustee (the "Pooling and Servicing Agreement').

         If the Purchaser  proposes that its  Certificates  be registered in the
name of a nominee on its behalf,  the  Purchaser  has  identified  such  nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.

Name of Nominee (if any):
                          ---------------------------

                                      G-4
<PAGE>

         IN WITNESS WHEREOF,  this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned  Eligible Purchaser
on the ___ day of ________, 20___.

                                  Very truly yours,

                                  [PURCHASER]

                                  By:
                                       -----------------------------------------
                                                    (Authorized Officer)

                                       [By:
                                           -------------------------------------
                                                Attorney-in-fact]

                                      G-5
<PAGE>

                             Nominee Acknowledgment

         The  undersigned  hereby   acknowledges  and  agrees  that  as  to  the
Certificates  being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser  identified above, for whom the undersigned is acting
as nominee.

                                  [NAME OF NOMINEE]

                                  By:
                                     -------------------------------------------
                                                    (Authorized Officer)

                                      [By:
                                            ------------------------------------
                                                   Attorney-in-fact]

                                      G-6
<PAGE>

                                                                       EXHIBIT H

                        REQUEST FOR RELEASE OF DOCUMENTS

To:      JPMorgan Chase Bank
         Institutional Trust Services
         4 New York Plaza, 6th Floor
         New York, New York 10004-2477

RE:      Pooling and Servicing  Agreement dated as of June 1, 2004, among Nomura
         Asset Acceptance  Corporation,  as depositor,  Nomura Credit & Capital,
         Inc., as seller, GMAC Mortgage Corporation,  as servicer,  and JPMorgan
         Chase Bank, as Trustee

         In connection with the administration of the Mortgage Loans held by you
pursuant to the above-captioned  Pooling and Servicing Agreement, we request the
release,  and hereby acknowledge  receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.

MORTGAGE LOAN NUMBER:

MORTGAGOR NAME, ADDRESS & ZIP CODE:

REASON FOR REQUESTING DOCUMENTS (CHECK ONE):

_____      1.    Mortgage Paid in Full and proceeds have been deposited into the
                 Custodial Account

_____      2.    Foreclosure

_____      3.    Substitution

_____      4.    Other Liquidation

_____      5.    Nonliquidation Reason: _____________________

_____      6.    Mortgage Loan paid in full

                                      By:
                                          --------------------------------------
                                               (authorized signer)

                                      Issuer:
                                               ---------------------------------

                                      Address:
                                                --------------------------------

                                      Date:
                                            ------------------------------------

                                      H-1
<PAGE>

                                                                       EXHIBIT I

                          DTC Letter of Representations
                             [provided upon request]

                                       I-1

<PAGE>

                                                                       EXHIBIT J

                   Schedule of Mortgage Loans with Lost Notes

                                     [None]

                                       J-1

<PAGE>

                                                                       EXHIBIT K

                           Prepayment Charge Schedule

                                       K-1

<PAGE>

                                                                       EXHIBIT L

                        FORM OF SERVICER'S CERTIFICATION

Re:      Pooling  and   Servicing   Agreement   (the   "POOLING  AND   SERVICING
         AGREEMENT"),  dated  as of June 1,  2004,  by and  among  Nomura  Asset
         Acceptance Corporation, as depositor (the "DEPOSITOR"), Nomura Credit &
         Capital,  Inc.,  as seller (the  "SELLER"),  JPMorgan  Chase  Bank,  as
         trustee  (the  "TRUSTEE"),  GMAC  Mortgage  Corporation,  as  servicer,
         ("GMAC")

I,  [identify  the  certifying  individual],  certify to the  Depositor  and the
Trustee,  and their officers,  directors and affiliates,  and with the knowledge
and  intent  that  they  will  rely  upon  this  certification,  that:

1.       I am responsible  for reviewing the activities  performed by GMAC under
         the Pooling and Servicing Agreement and based upon my knowledge and the
         annual  compliance  review  required  under the Pooling  and  Servicing
         Agreement,  and except as disclosed in the annual compliance  statement
         required to be delivered to the Trustee in accordance with the terms of
         the Pooling and Servicing Agreement (which has been so delivered to the
         Trustee),  GMAC has  fulfilled  its  obligations  under the Pooling and
         Servicing Agreement.  Based upon my knowledge,  the annual statement of
         compliance  delivered by GMAC under the Pooling and Servicing Agreement
         does not contain any untrue statement of material fact or omit to state
         a material fact necessary to make the statements  made, in light of the
         circumstances under which such statement was made, not misleading; and

2.       Based on my knowledge,  all significant deficiencies relating to GMAC's
         compliance  with the minimum  servicing  standards  for purposes of the
         report provided by an independent public accountant, after conducting a
         review  conducted in  compliance  with the Uniform  Single  Attestation
         Program for Mortgage Bankers or similar procedure,  as set forth in the
         Pooling and Servicing Agreement, have been disclosed to such accountant
         and are included in such reports.

Date:
      --------------------------------

--------------------------------------
[Signature]
[Title]

                                       L-1

<PAGE>

                                   EXHIBIT M

                         FORM OF TRUSTEE'S CERTIFICATION

[DEPOSITOR/ISSUER NAME]

Re:    [Transaction Name]

Reference is made to the Pooling and  Servicing  Agreement,  dated as of June 1,
2004 (the "Pooling and Servicing  Agreement"),  by and among JPMorgan Chase Bank
(the "Trustee"), GMAC Mortgage Corporation, as servicer,  ("GMAC"), Nomura Asset
Acceptance  Corporation,  as depositor  (the  "Depositor")  and Nomura  Credit &
Capital,  Inc., as seller (the "Seller").  The Trustee,  hereby certifies to the
Depositor,  and its officers,  directors and affiliates,  and with the knowledge
and intent that they will rely upon this certification, that:

         (i)      The Trustee has  reviewed  the annual  report on Form 10-K for
                  the fiscal  year [ ], and all  reports on Form 8-K  containing
                  distribution  reports filed in respect of periods  included in
                  the  year  covered  by that  annual  report,  relating  to the
                  above-referenced trust;

         (ii)     Based  solely  upon  the  information  provided  to us by  the
                  servicer,  the information set forth in the reports referenced
                  in (i) above does not contain any untrue statement of material
                  fact; and

         (iii)    Based on my knowledge,  the distribution  information required
                  to be provided by the Trustee  under the Pooling and Servicing
                  Agreement is included in these reports.

Date:

                                     JPMorgan Chase Bank, as Trustee

                                     By:
                                         ---------------------------------------

                                     Name:
                                           -------------------------------------

                                     Title:
                                            ------------------------------------

                                       M-1<PAGE>

                                                                    EXHIBIT 10.1

                              AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                               BIOMED REALTY, L.P.

            THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of __________, 2004, is entered into by and among BioMed Realty Trust, Inc., a
Maryland corporation (the "Company"), as the General Partner, and the Persons
whose names are set forth on Exhibit A attached hereto, as the Limited Partners,
together with any other Persons who become Partners in the Partnership as
provided herein.

            WHEREAS, the limited partnership was formed on April 30, 2004 and an
original agreement of limited partnership was entered into between the Company,
as general partner, and Bernardo Property Advisors, Inc., as limited partner;

            WHEREAS, the Company proposes to effect a public offering of its
common stock and to contribute the net proceeds from the public offering to the
Partnership, to cause the Partnership to acquire direct and indirect interests
in certain office and laboratory properties and other assets, and to cause the
Partnership to enter into certain financing transactions; and

            WHEREAS, the Partnership will issue Partnership Interests to the
Company and other persons in connection with the foregoing transactions.

            NOW, THEREFORE, BE IT RESOLVED, that for good and adequate
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:

                                   ARTICLE 1.
                                 DEFINED TERMS

Section 1.1 Definitions.

            The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.

            "Act" means the Maryland Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.

            "Additional Funds" shall have the meaning set forth in Section
4.3.A.

            "Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 and who is shown as
such on the books and records of the Partnership.

            "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:

            (i)   such deficit shall be decreased by any amounts which such
                  Partner is obligated to restore pursuant to this Agreement or
                  is deemed to be obligated to restore pursuant to Regulations
                  Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of
                  each of Regulations Sections 1.704-2(i)(5) and 1.704-2(g)(1);
                  and

<PAGE>

            (ii)  such deficit shall be increased by the items described in
                  Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

            The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. A positive
balance in a Partner's Capital Account, after giving effect to the adjustments
described above in clauses (i) and (ii), is referred to in this Agreement as an
"Adjusted Capital Account Balance."

            "Adjustment Date" means, with respect to any Capital Contribution,
the close of business on the Business Day last preceding the date of the Capital
Contribution, provided, that if such Capital Contribution is being made by the
General Partner in respect of the proceeds from the issuance of REIT Shares (or
the issuance of the General Partner's securities exercisable for, convertible
into or exchangeable for REIT Shares), then the Adjustment Date shall be as of
the close of business on the Business Day last preceding the date of the
issuance of such securities.

            "Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under common control with such
Person. Control of any 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.

            "Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit A and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit A; (ii) in the case of
any Contributed Property not set forth in Exhibit A and as of the time of its
contribution to the Partnership, the fair market value of such property or other
consideration as determined by the General Partner, reduced by any liabilities
either assumed by the Partnership upon such contribution or to which such
property is subject when contributed; and (iii) in the case of any property
distributed to a Partner by the Partnership, the fair market value of such
property as determined by the General Partner at the time such property is
distributed, reduced by any liabilities either assumed by such Partner upon such
distribution or to which such property is subject at the time of the
distribution as determined under Section 752 of the Code and the Regulations
thereunder.

            "Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended, modified, supplemented or restated from time
to time.

            "Appraisal" means with respect to any assets, the opinion of an
independent third party experienced in the valuation of similar assets, selected
by the General Partner in good faith; such opinion may be in the form of an
opinion by such independent third party that the value for such property or
asset as set by the General Partner is fair, from a financial point of view, to
the Partnership.

            "Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.

                                        2
<PAGE>

            "Available Cash" means, with respect to any period for which such
calculation is being made,

            (i) the sum of:

                  a. the Partnership's Net Income or Net Loss (as the case may
            be) for such period,

                  b. Depreciation and all other noncash charges deducted in
            determining Net Income or Net Loss for such period,

                  c. the amount of any reduction in reserves of the Partnership
            referred to in clause (ii)(f) below (including, without limitation,
            reductions resulting because the General Partner determines such
            amounts are no longer necessary),

                  d. the excess of the net proceeds from the sale, exchange,
            disposition, or refinancing of Partnership property for such period
            over the gain (or loss, as the case may be) recognized from any such
            sale, exchange, disposition, or refinancing during such period
            (excluding any sale or other disposition of all or substantially all
            of the assets of the Partnership or a related series of transactions
            that, taken together, result in the sale or other disposition of all
            or substantially all of the assets of the Partnership), and

                  e. all other cash received by the Partnership for such period
            that was not included in determining Net Income or Net Loss for such
            period;

            (ii)  less the sum of:

                  a. all principal debt payments made during such period by the
            Partnership,

                  b. capital expenditures made by the Partnership during such
            period,

                  c. investments in any entity (including loans made thereto) to
            the extent that such investments are not otherwise described in
            clauses (ii)(a) or (b),

                  d. all other expenditures and payments not deducted in
            determining Net Income or Net Loss for such period,

                  e. any amount included in determining Net Income or Net Loss
            for such period that was not received by the Partnership during such
            period,

                  f. the amount of any increase in reserves established during
            such period which the General Partner determines are necessary or
            appropriate in its sole and absolute discretion,

                                        3
<PAGE>

                  g. the amount of any working capital accounts and other cash
            or similar balances which the General Partner determines to be
            necessary or appropriate in its sole and absolute discretion, and

                  h. any amount paid in redemption of any Limited Partner
            Interest or Partnership Units, including any Cash Amount paid.

            Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.

            "Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to be closed.

            "Capital Account" means, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:

            (a) To each Partner's Capital Account there shall be added such
Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3, and the amount of any Partnership liabilities assumed by such
Partner or which are secured by any property distributed to such Partner.

            (b) From each Partner's Capital Account there shall be subtracted
the amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Net Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 6.3, and the amount of any liabilities
of such Partner assumed by the Partnership or which are secured by any property
contributed by such Partner to the Partnership (except to the extent already
reflected in the amount of such Partner's Capital Contribution).

            (c) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement (which does not result in a
termination of the Partnership for federal income tax purposes), the transferee
shall succeed to the Capital Account of the transferor to the extent it relates
to the transferred interest.

            (d) In determining the amount of any liability for purposes of
subsections (a) and (b) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.

            (e) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such

                                        4
<PAGE>

modification, provided that it is not likely to have a material effect on the
amounts distributable to any Person pursuant to Article 13 of this Agreement
upon the dissolution of the Partnership. The General Partner also shall (i) make
any adjustments that are necessary or appropriate to maintain equality between
the Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for book purposes, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any
appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Regulations Section 1.704-1(b) or
Section 1.704-2.

            "Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Partnership by such Partner (net of any liabilities
assumed by the Partnership relating to such property and any liability to which
such property is subject).

            "Cash Amount" means, with respect to any Partnership Units subject
to a Redemption, an amount of cash equal to the Deemed Partnership Interest
Value attributable to such Partnership Units.

            "Certificate" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the State Department of Assessments
and Taxation of Maryland on April 30, 2004, as amended from time to time in
accordance with the terms hereof and the Act.

            "Charter" means the Articles of Incorporation of the General Partner
filed with the Maryland State Department of Assessments and Taxation on April
30, 2004, as amended or restated from time to time.

            "Code" means the Internal Revenue Code of 1986, as amended from time
to time or any successor statute thereto. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.

            "Consent" means the consent to, approval of, or vote on a proposed
action by a Partner given in accordance with Article 14.

            "Consent of the Limited Partners" means the Consent of a Majority in
Interest of the Limited Partners, which Consent shall be obtained prior to the
taking of any action for which it is required by this Agreement and may be given
or withheld by a Majority in Interest of the Limited Partners, unless otherwise
expressly provided herein, in their sole and absolute discretion.

            "Consent of the Partners" means the Consent of Partners holding
Percentage Interests that in the aggregate are equal to or greater than fifty
percent (50%) of the aggregate Percentage Interests of all Partners, which
Consent shall be obtained prior to the taking of any action for which it is
required by this Agreement and may be given or withheld by such Partners, in
their sole and absolute discretion.

            "Constructively Own" means ownership under the constructive
ownership rules described in Exhibit C.

                                        5
<PAGE>

            "Contributed Property" means each property or other asset, in such
form as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (or, to the extent provided in applicable
Regulations, deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code).

            "Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds, guarantees and other similar instruments guaranteeing payment or
other performance of obligations by such Person; (iii) all indebtedness for
borrowed money or for the deferred purchase price of property or services
secured by any lien on any property owned by such Person, to the extent
attributable to such Person's interest in such property, even though such Person
has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person which, in accordance with generally accepted
accounting principles, should be capitalized.

            "Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interests of such class multiplied by the applicable Partner's
Percentage Interest of such class.

            "Deemed Value of the Partnership Interests" means, as of any date
with respect to any class or series of Partnership Interests, (i) the total
number of Partnership Units of the General Partner in such class or series of
Partnership Interests (as provided for in Sections 4.1 and 4.3.B) issued and
outstanding as of the close of business on such date multiplied by the Fair
Market Value determined as of such date of a share of capital stock of the
General Partner which corresponds to such class or series of Partnership
Interests, as adjusted (x) pursuant to Section 7.5 (in the event the General
Partner acquires material assets, other than on behalf of the Partnership) and
(y) for stock dividends and distributions, stock splits and subdivisions,
reverse stock splits and combinations, distribution of warrants or options and
distributions of evidences of indebtedness or assets not received by the General
Partner pursuant to a pro rata distribution by the Partnership; (ii) divided by
the Percentage Interest of the General Partner in such class or series of
Partnership Interests on such date; provided, that if no outstanding shares of
capital stock of the General Partner correspond to a class of series of
Partnership Interests, the Deemed Value of the Partnership Interests with
respect to such class or series shall be equal to an amount reasonably
determined by the General Partner.

            "Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.

                                        6
<PAGE>

            "Effective Date" means the date of closing of the initial public
offering of REIT Shares upon which date the contributions set forth on Exhibit A
shall become effective.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder and any successor statute thereto.

            "Fair Market Value" means, with respect to any share of capital
stock of the General Partner, the average of the daily market price for the ten
(10) consecutive trading days immediately preceding the date with respect to
which "Fair Market Value" must be determined hereunder or, if such date is not a
Business Day, the immediately preceding Business Day. The market price for each
such trading day shall be: (i) if such shares are listed or admitted to trading
on any securities exchange or the Nasdaq National Market, the closing price,
regular way, on such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices on such day, (ii) if such shares are
not listed or admitted to trading on any securities exchange or the Nasdaq
National Market, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on such day,
as reported by a reliable quotation source designated by the General Partner, or
(iii) if such shares are not listed or admitted to trading on any securities
exchange or the Nasdaq National Market and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than ten (10) days prior to the date in
question) for which prices have been so reported; provided that, if there are no
bid and asked prices reported during the ten (10) days prior to the date in
question, the Fair Market Value of such shares shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount for such shares includes rights that a holder of
such shares would be entitled to receive, then the Fair Market Value of such
rights shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate; and provided, further that, in connection with
determining the Deemed Value of the Partnership Interests for purposes of
determining the number of additional Partnership Units issuable upon a Capital
Contribution funded by an underwritten public offering of shares of capital
stock of the General Partner, the Fair Market Value of such shares shall be the
public offering price per share of such class of capital stock sold.
Notwithstanding the foregoing, the General Partner in its reasonable discretion
may use a different "Fair Market Value" for purposes of making the
determinations under subparagraph (b) of the definition of "Gross Asset Value"
and Section 4.3.C in connection with the contribution of Property or cash to the
Partnership by a third party, provided such value shall be based upon the value
per REIT Share (or per Partnership Unit) agreed upon by the General Partner and
such third party for purposes of such contribution.

            "General Partner" means the Company or its successor as general
partner of the Partnership.

                                        7
<PAGE>

            "General Partner Interest" means a Partnership Interest held by the
General Partner. A General Partner Interest may be expressed as a number of
Partnership Units.

            "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:

            (a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the General Partner (as set forth
on Exhibit A attached hereto, as such Exhibit may be amended from time to time);
provided, that if the contributing Partner is the General Partner, then, except
with respect to the General Partner's initial Capital Contribution which shall
be determined as set forth on Exhibit A, the determination of the fair market
value of the contributed asset shall be determined (i) by the price paid by the
General Partner if the asset is acquired by the General Partner
contemporaneously with its contribution to the Partnership, (ii) by Appraisal,
if otherwise acquired by the General Partner, (iii) by the amount of cash if the
asset is cash, and (iv) as reasonably determined by the General Partner if the
asset is REIT Shares or other shares of capital stock of the Company.

            (b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined by
the General Partner using such reasonable method of valuation as it may adopt,
provided, however, that for such purpose, the net value of all of the
Partnership assets, in the aggregate, shall be equal to the Deemed Value of the
Partnership Interests of all classes of Partnership Interests then outstanding,
regardless of the method of valuation adopted by the General Partner,
immediately prior to the times listed below:

            (i)   the acquisition of an additional interest in the Partnership
                  by a new or existing Partner in exchange for more than a de
                  minimis Capital Contribution, if the General Partner
                  reasonably determines that such adjustment is necessary or
                  appropriate to reflect the relative economic interests of the
                  Partners in the Partnership;

            (ii)  the distribution by the Partnership to a Partner of more than
                  a de minimis amount of Partnership property as consideration
                  for an interest in the Partnership if the General Partner
                  reasonably determines that such adjustment is necessary or
                  appropriate to reflect the relative economic interests of the
                  Partners in the Partnership;

            (iii) the liquidation of the Partnership within the meaning of
                  Regulations Section 1.704-1(b)(2)(ii)(g); and

            (iv)  at such other times as the General Partner shall reasonably
                  determine necessary or advisable in order to comply with
                  Regulations Sections 1.704-1(b) and 1.704-2.

            (c) The Gross Asset Value of any Partnership asset distributed to a
Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the General Partner, or if the
distributee and the General Partner cannot agree on such a determination, by
Appraisal.

                                        8
<PAGE>

            (d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to
the extent that the General Partner reasonably determines that an adjustment
pursuant to subparagraph (b) is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (d).

            (e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.

            "Holder" means either the Partner or Assignee owning a Partnership
Unit.

            "Immediate Family" means, with respect to any natural Person, such
natural Person's estate or heirs or current spouse or former spouse, parents,
parents-in-law, children (whether natural, adopted or by marriage), siblings and
grandchildren and any trust or estate, all of the beneficiaries of which consist
of such Person or such Person's spouse or former spouse, parents,
parents-in-law, children, siblings or grandchildren.

            "Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him or her incompetent to manage his or her Person or
his or her estate; (ii) as to any corporation which is a Partner, the filing of
a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f) any
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within 120 days after the commencement thereof, (g) the
appointment without the Partner's consent or acquiescence of a trustee, receiver
or liquidator has not been vacated or stayed within 90 days of such appointment,
or (h) an appointment referred to in clause (g) is not vacated within 90 days
after the expiration of any such stay.

                                        9
<PAGE>
            "Indemnitee" means (i) any Person subject to a claim or demand or
made or threatened to be made a party to, or involved or threatened to be
involved in, an action, suit or proceeding by reason of his or her status as (A)
the General Partner or (B) a director or officer of the Partnership or the
General Partner, and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.

            "IRS" means the United States Internal Revenue Service.

            "Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.

            "Limited Partner Interest" means a Partnership Interest of a Limited
Partner representing a fractional part of the Partnership Interests of all
Limited Partners and includes any and all benefits to which the Holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Limited Partner Interest may be expressed as a number of
Partnership Units.

            "Liquidating Event" shall have the meaning set forth in Section
13.1.

            "Liquidator" shall have the meaning set forth in Section 13.2.A.

            "Majority in Interest of the Limited Partners" means Limited
Partners holding in the aggregate Percentage Interests that are greater than
fifty percent (50%) of the aggregate Percentage Interests of all Limited
Partners.

            "Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:

            (a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Net Income or Net Loss
pursuant to this definition of Net Income or Net Loss shall be added to such
taxable income or loss;

            (b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income or Net Loss pursuant to this definition of Net Income or
Net Loss shall be subtracted from such taxable income or loss;

            (c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of
Gross Asset Value, the

                                       10
<PAGE>

amount of such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Net Income or Net Loss;

            (d) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;

            (e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year;

            (f) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and

            (g) Notwithstanding any other provision of this definition of Net
Income or Net Loss, any items which are specially allocated pursuant to Section
6.3 shall not be taken into account in computing Net Income or Net Loss. The
amounts of the items of Partnership income, gain, loss, or deduction available
to be specially allocated pursuant to Section 6.3 shall be determined by
applying rules analogous to those set forth in this definition of Net Income or
Net Loss.

            "New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or other shares of capital stock of the General Partner,
excluding in each case, grants under any Stock Plan, or (ii) any Debt issued by
the General Partner that provides any of the rights described in clause (i).

            "Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).

            "Nonrecourse Liability" shall have the meaning set forth in
Regulations Section 1.752-1(a)(2).

            "Notice of Redemption" means the Notice of Redemption substantially
in the form of Exhibit B to this Agreement.

            "Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.

            "Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner

                                       11
<PAGE>

Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704-2(i)(3).

            "Partner Nonrecourse Debt" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).

            "Partner Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).

            "Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.

            "Partnership Interest" means, an ownership interest in the
Partnership of either a Limited Partner or the General Partner and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. There may be
one or more classes or series of Partnership Interests as provided in Section
4.3. A Partnership Interest may be expressed as a number of Partnership Units.
Unless otherwise expressly provided for by the General Partner at the time of
the original issuance of any Partnership Interests, all Partnership Interests
(whether of a Limited Partner or a General Partner) shall be of the same class
or series.

            "Partnership Minimum Gain" shall have the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).

            "Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
which record date shall be the same as the record date established by the
General Partner for a distribution to its stockholders of some or all of its
portion of such distribution.

            "Partnership Unit" or "Unit" means, with respect to any class of
Partnership Interest, a fractional, undivided share of such class of Partnership
Interest issued pursuant to Sections 4.1 and 4.3. The ownership of Partnership
Units may be evidenced by a certificate for units substantially in the form of
Exhibit D hereto or as the General Partner may determine with respect to any
class of Partnership Units issued from time to time under Section 4.1 and 4.3.

            "Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.

            "Percentage Interest" means, as to a Partner holding a class or
series of Partnership Interests, its interest in such class or series as
determined by dividing the Partnership Units of such class or series owned by
such Partner by the total number of Partnership Units of such class then
outstanding as specified in Exhibit A attached hereto, as such Exhibit may be
amended from time to time. If the Partnership issues more than one class or
series of Partnership

                                       12
<PAGE>

Interests, the interest in the Partnership among the classes or series of
Partnership Interests shall be determined as set forth in the amendment to the
Partnership Agreement setting forth the rights and privileges of such additional
classes or series of Partnership Interest, if any, as contemplated by Section
4.3.D.

            "Person" means an individual, corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.

            "Plan Asset Regulation" means the regulations promulgated by the
United States Department of Labor in Title 29, Code of Federal Regulations, Part
2510, Section 101.3, and any successor regulations thereto.

            "Pledge" shall have the meaning set forth in Section 11.3.A.

            "Properties" means such interests in real property and personal
property including without limitation, fee interests, interests in ground
leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.

            "Qualified REIT Subsidiary" means any Subsidiary of the General
Partner that is a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.

            "Qualified Transferee" means an "Accredited Investor" as such term
is defined in Rule 501 promulgated under the Securities Act.

            "Redemption" shall have the meaning set forth in Section 8.6.A.

            "Regulations" means the Treasury Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

            "Regulatory Allocations" shall have the meaning set forth in Section
6.3.A(viii).

            "REIT" means a real estate investment trust, as defined under
Sections 856 through 860 of the Code.

            "REIT Requirements" shall have the meaning set forth in Section 5.1.

            "REIT Share" means a share of common stock, par value $0.01 per
share, of the General Partner.

            "REIT Shares Amount" means, as of any date, an aggregate number of
REIT Shares equal to the number of Tendered Units, as adjusted (x) pursuant to
Section 7.5 (in the event the General Partner acquires material assets, other
than on behalf of the Partnership) and (y) for stock dividends and
distributions, stock splits and subdivisions, reverse stock splits and
combinations, distributions of rights, warrants or options, and distributions of
evidences of indebtedness or assets relating to assets not received by the
General Partner pursuant to a pro rata distribution by the Partnership.

                                       13
<PAGE>

            "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder and any successor statute thereto.

            "Specified Redemption Date" means the day of receipt by the General
Partner of a Notice of Redemption.

            "Stock Plan" means any stock incentive, stock option, stock
ownership or employee benefits plan of the General Partner.

            "Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity of which a
majority of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests is owned, directly or indirectly, by such Person.

            "Subsidiary Partnership" means any partnership or limited liability
company that is a Subsidiary of the Partnership.

            "Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.

            "Surviving Partnership" shall have the meaning set forth in Section
11.2.B(2).

            "Tax Items" shall have the meaning set forth in Section 6.4.A.

            "Tenant" means any tenant from which the General Partner derives
rent either directly or indirectly through partnerships, including the
Partnership, or Qualified REIT Subsidiaries.

            "Tendered Units" shall have the meaning set forth in Section 8.6.A.

            "Tendering Partner" shall have the meaning set forth in Section
8.6.A.

            "Termination Transaction" shall have the meaning set forth in
Section 11.2.B.

Section 1.2 Rules of Construction

            Unless otherwise indicated, all references herein to "REIT," "REIT
Requirements," "REIT Shares" and "REIT Shares Amount" with respect to the
General Partner shall apply only with reference to the Company.

                                   ARTICLE 2.
                             ORGANIZATIONAL MATTERS

Section 2.1 Organization

            The Partnership is a limited partnership formed pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein, the rights and obligations of
the Partners and the administration and termination of the

                                       14
<PAGE>

Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.

Section 2.2 Name

            The name of the Partnership is BioMed Realty, L.P. The Partnership's
business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate
thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or
letters shall be included in the Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires. The
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.

Section 2.3 Registered Office and Agent; Principal Office

            The name and address of the registered office and registered agent
of the Partnership in the State of Maryland are James J. Hanks, Jr., care of
Venable LLP, 1800 Mercantile Bank & Trust Bldg., 2 Hopkins Plaza, Baltimore, MD
21201. The address of the principal office of the Partnership in the State of
Maryland is c/o Venable LLP at such address. The principal office of the
Partnership is located at 17140 Bernardo Center Drive, Suite 195, San Diego,
California 92128, or such other place as the General Partner may from time to
time designate by notice to the other Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Maryland as
the General Partner deems advisable.

Section 2.4 Power of Attorney

      A. Each Limited Partner and each Assignee constitutes and appoints the
General Partner, any Liquidator, and authorized officers and attorneys-in-fact
of each, and each of those acting singly, in each case with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead to:

            (1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate and all
amendments or restatements thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a partnership in
which the Limited Partners have limited liability) in the State of Maryland and
in all other jurisdictions in which the Partnership may conduct business or own
property; (b) all instruments that the General Partner or any Liquidator deems
appropriate or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms; (c) all conveyances
and other instruments or documents that the General Partner or any Liquidator
deems appropriate or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation; (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Articles 11, 12 or 13 or the Capital

                                       15
<PAGE>

Contribution of any Partner; and (e) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Partnership Interests; and

         (2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or necessary,
in the sole and absolute discretion of the General Partner or any Liquidator, to
make, evidence, give, confirm or ratify any vote, consent, approval, agreement
or other action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or necessary, in the
sole discretion of the General Partner or any Liquidator, to effectuate the
terms or intent of this Agreement.

Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
or as may be otherwise expressly provided for in this Agreement.

      B. The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, in recognition of the fact that each of
the Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or any Liquidator, within 15 days after receipt of the General
Partner's or Liquidator's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator, as the
case may be, deems necessary to effectuate this Agreement and the purposes of
the Partnership.

Section 2.5 Term

            The term of the Partnership commenced on April 30, 2004 and shall
continue until December 31, 2104 unless it is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.

                                   ARTICLE 3.
                                    PURPOSE

Section 3.1 Purpose and Business

            The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, (ii) to enter into any
partnership, joint venture or other similar arrangement to engage in any
business described in the foregoing clause (i) or to own interests in any entity
engaged, directly or indirectly, in any such business and (iii) to do anything
necessary or

                                       16
<PAGE>

incidental to the foregoing, provided, however, that such business shall be
limited to and conducted in such a manner as to permit the General Partner at
all times to be classified as a REIT for federal income tax purposes, unless the
General Partner ceases to qualify as a REIT for reasons other than the conduct
of the business of the Partnership. In connection with the foregoing, and
without limiting the General Partner's right in its sole discretion to cease
qualifying as a REIT, the Partners acknowledge that the General Partner's
current status as a REIT inures to the benefit of all the Partners and not
solely the General Partner.

Section 3.2 Powers

            The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, notwithstanding anything to the contrary in this Agreement,
the Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT, (ii) absent the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, could subject the General Partner
to any taxes under Section 857 or Section 4981 of the Code, or (iii) could
violate any law or regulation of any governmental body or agency having
jurisdiction over the General Partner or its securities, unless any such action
(or inaction) under the foregoing clauses (i), (ii) or (iii) shall have been
specifically consented to by the General Partner in writing.

Section 3.3 Partnership Only for Purposes Specified

            The Partnership shall be a partnership only for the purposes
specified in Section 3.1, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1. Except as otherwise provided in this Agreement, no Partner shall
have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall be
responsible or liable for any indebtedness or obligation of another Partner, nor
shall the Partnership be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.

Section 3.4 Representations and Warranties by the Parties

      A. Each Partner that is an individual represents and warrants to each
other Partner that (i) such Partner has the legal capacity to enter into this
Agreement and perform such

                                       17
<PAGE>

Partner's obligations hereunder, (ii) the consummation of the transactions
contemplated by this Agreement to be performed by such Partner will not result
in a breach or violation of, or a default under, any agreement by which such
Partner or any of such Partner's property is or are bound, or any statute,
regulation, order or other law to which such Partner is subject, (iii) such
Partner is a "United States person" within the meaning of Section 7701(a)(30) of
the Code, and (iv) this Agreement is binding upon, and enforceable against, such
Partner in accordance with its terms.

      B. Each Partner that is not an individual represents and warrants to each
other Partner that (i) its execution and delivery of this Agreement and all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
stockholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its certificate of limited partnership, partnership agreement, trust agreement,
limited liability company operating agreement, charter or bylaws, as the case
may be, any agreement by which such Partner or any of such Partner's properties
or any of its partners, beneficiaries, trustees or stockholders, as the case may
be, is or are bound, or any statute, regulation, order or other law to which
such Partner or any of such Partner's properties or any of its partners,
trustees, beneficiaries or stockholders, as the case may be, is or are subject,
(iii) such Partner is a "United States person" within the meaning of Section
7701(a)(30) of the Code and (iv) this Agreement is binding upon, and enforceable
against, such Partner in accordance with its terms.

      C. Each Partner represents, warrants, and agrees that it has acquired and
continues to hold its interest in the Partnership for its own account for
investment only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, nor with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment. Each Partner
represents, warrants and agrees that such Partner is an "accredited investor"
(as such term is defined in Rule 501(a) of Regulation D under the Securities
Act).

      D. Each Partner acknowledges that (i) the Partnership Units (and any REIT
Shares that might be exchanged therefor) have not been registered under the
Securities Act and may not be transferred unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available (it being understood that the Partnership has no intention of so
registering the Partnership Units), (ii) a restrictive legend in the form set
forth in Exhibit D shall be placed on the certificates representing the
Partnership Units, and (iii) a notation shall be made in the appropriate records
of the Partnership indicating that the Partnership Units are subject to
restrictions on transfer.

      E. Each Limited Partner further represents, warrants, covenants and agrees
as follows:

                                       18
<PAGE>

            (1) Except as provided in Exhibit E, at any time such Partner
actually or Constructively Owns a 25% or greater capital interest or profits
interest in the Partnership, it does not and will not, without the prior written
consent of the General Partner, actually own or Constructively Own (a) with
respect to any Tenant that is a corporation, any stock of such Tenant, and (b)
with respect to any Tenant that is not a corporation, any interests in either
the assets or net profits of such Tenant.

            (2) Except as provided in Exhibit F, at any time such Partner
actually or Constructively Owns a 25% or greater capital interest or profits
interest in the Partnership, it does not, and agrees that it will not without
the prior written consent of the General Partner, actually own or Constructively
Own, any stock in the General Partner, other than any REIT Shares or other
shares of capital stock of the General Partner such Partner may acquire (a) as a
result of an exchange of Tendered Units pursuant to Section 8.6 or (b) upon the
exercise of options granted or delivery of REIT Shares pursuant to any Stock
Plan, in each case subject to the ownership limitations set forth in the General
Partner's Charter.

            (3) Upon request of the General Partner, it will disclose to the
General Partner the amount of REIT Shares or other shares of capital stock of
the General Partner that it actually owns or Constructively Owns.

            (4) It understands that if, for any reason, (a) the representations,
warranties or agreements set forth in E(1) or (2) above are violated, or (b) the
Partnership's actual or Constructive Ownership of REIT Shares or other shares of
capital stock of the General Partner violates the limitations set forth in the
Charter, then (x) some or all of the Redemption rights of the Partners may
become non-exercisable, and (y) some or all of the REIT Shares owned by the
Partners may be automatically transferred to a trust for the benefit of a
charitable beneficiary, as provided in the Charter.

            (5) Without the consent of the General Partner, which may be given
or withheld in its sole discretion, no Partner shall take any action that would
cause the Partnership at any time to have more than 100 partners (including as
partners those persons indirectly owning an interest in the Partnership through
a partnership, limited liability company, S corporation or grantor trust (such
entity, a "flow through entity"), but only if substantially all of the value of
such person's interest in the flow through entity is attributable to the flow
through entity's interest (direct or indirect) in the Partnership).

      F. The representations and warranties contained in Sections 3.4 shall
survive the execution and delivery of this Agreement by each Partner and the
dissolution and winding-up of the Partnership.

      G. Each Partner hereby acknowledges that no representations as to
potential profit, cash flows, funds from operations or yield, if any, in respect
of the Partnership or the General Partner have been made by any Partner or any
employee or representative or Affiliate of any Partner, and that projections and
any other information, including, without limitation, financial and descriptive
information and documentation, which may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.

                                       19
<PAGE>

Section 3.5 Certain ERISA Matters

            Each Partner acknowledges that the Partnership is intended to
qualify as a "real estate operating company" (as such term is defined in the
Plan Asset Regulation). The General Partner may structure the investments in,
relationships with and conduct with respect to Properties and any other assets
of the Partnership so that the Partnership will be a "real estate operating
company" (as such term is defined in the Plan Asset Regulation).

                                   ARTICLE 4.
                              CAPITAL CONTRIBUTIONS

Section 4.1 Capital Contributions of the Partners

            At the time of their respective execution of this Agreement, the
Partners shall make or shall have made Capital Contributions as set forth in
Exhibit A to this Agreement. The Partners shall own Partnership Units of the
class or series and in the amounts set forth in Exhibit A and shall have a
Percentage Interest in the Partnership as set forth in Exhibit A, which
Percentage Interest shall be adjusted in Exhibit A from time to time by the
General Partner to the extent necessary to reflect accurately exchanges,
redemptions, Capital Contributions, the issuance of additional Partnership Units
or similar events having an effect on a Partner's Percentage Interest. Except as
required by law, as otherwise provided in Sections 4.3, 4.4 and 10.5, or as
otherwise agreed to by a Partner and the Partnership, no Partner shall be
required or permitted to make any additional Capital Contributions or loans to
the Partnership. Unless otherwise specified by the General Partner at the time
of the creation of any class of Partnership Interests, the corresponding class
or series of capital stock for any Partnership Units issued shall be REIT
Shares.

Section 4.2 Loans by Third Parties

            Subject to Section 4.3, the Partnership may incur Debt, or enter
into other similar credit, guarantee, financing or refinancing arrangements for
any purpose (including, without limitation, in connection with any further
acquisition of Properties) with any Person that is not the General Partner upon
such terms as the General Partner determines appropriate; provided that, the
Partnership shall not incur any Debt that is recourse to the General Partner,
except to the extent otherwise agreed to by the General Partner in its sole
discretion.

Section 4.3 Additional Funding and Capital Contributions

      A. General. The General Partner may, at any time and from time to time
determine that the Partnership requires additional funds ("Additional Funds")
for the acquisition of additional Properties or for such other Partnership
purposes as the General Partner may determine. Additional Funds may be raised by
the Partnership, at the election of the General Partner, in any manner provided
in, and in accordance with, the terms of this Section 4.3. No Person shall have
any preemptive, preferential or similar right or rights to subscribe for or
acquire any Partnership Interest, except as set forth in this Section 4.3.

      B. Issuance of Additional Partnership Interests. The General Partner, in
its sole and absolute discretion, may raise all or any portion of the Additional
Funds by accepting additional

                                       20
<PAGE>

Capital Contributions of cash. The General Partner may also accept additional
Capital Contributions of real property or any other non-cash assets. In
connection with any such additional Capital Contributions (of cash or property),
the General Partner is hereby authorized to cause the Partnership from time to
time to issue to Partners (including the General Partner) or other Persons
(including, without limitation, in connection with the contribution of property
to the Partnership) additional Partnership Units or other Partnership Interests
in one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers, and duties, including rights, powers, and duties senior to then
existing Limited Partner Interests, all as shall be determined by the General
Partner in its sole and absolute discretion subject to Maryland law, and as set
forth by amendment to this Agreement, including without limitation, (i) the
allocations of items of Partnership income, gain, loss, deduction, and credit to
such class or series of Partnership Interests; (ii) the right of each such class
or series of Partnership Interests to share in Partnership distributions; (iii)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; and (iv) the right to vote,
including, without limitation, the Limited Partner approval rights set forth in
Section 11.2.A; provided, that no such additional Partnership Units or other
Partnership Interests shall be issued to the General Partner unless either (a)
(1) the additional Partnership Interests are issued in connection with the
grant, award, or issuance of shares of the General Partner pursuant to Section
4.3.C below, which shares have designations, preferences, and other rights
(except voting rights) such that the economic interests attributable to such
shares are substantially similar to the designations, preferences and other
rights of the additional Partnership Interests issued to the General Partner in
accordance with this Section 4.3.B, and (2) the General Partner shall make a
Capital Contribution to the Partnership in an amount equal to the net proceeds
raised in connection with such issuance, or (b) the additional Partnership
Interests are issued to all Partners holding Partnership Interests in the same
class in proportion to their respective Percentage Interests in such class. The
General Partner's determination that consideration is adequate shall be
conclusive insofar as the adequacy of consideration relates to whether the
Partnership Interests are validly issued and paid. In the event that the
Partnership issues additional Partnership Interests pursuant to this Section
4.3.B, the General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Section 5.4, Section
6.2.C, and Section 8.6) as it determines are necessary to reflect the issuance
of such additional Partnership Interests. Without limiting the foregoing, the
General Partner is expressly authorized to cause the Partnership to issue
Partnership Units for no tangible value or for less than fair market value, so
long as the General Partner concludes in good faith that such issuance of
Partnership Interests is in the best interests of the Partnership.

      C. Issuance of REIT Shares or Other Securities by the General Partner. The
General Partner shall not issue any additional REIT Shares, other shares of
capital stock of the General Partner or New Securities (other than REIT Shares
issued pursuant to Section 8.6 or such shares, stock or securities pursuant to a
dividend or distribution (including any stock split) of REIT Shares to all of
its stockholders or all of its stockholders who hold a particular class of stock
of the General Partner) unless (i) the General Partner shall cause the
Partnership to issue to the General Partner, Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership
having designations, preferences and other rights, all such that the economic
interests thereof are substantially similar to those of the REIT Shares, other
shares of capital stock of the General Partner or New Securities issued by the
General Partner and (ii) the General Partner shall make a Capital Contribution
of the net proceeds from the issuance of such additional REIT Shares, other

                                       21
<PAGE>

shares of capital stock or New Securities, as the case may be, and from the
exercise of the rights contained in such additional New Securities, as the case
may be. Without limiting the foregoing, the General Partner is expressly
authorized to issue REIT Shares, other shares of capital stock of the General
Partner or New Securities for no tangible value or for less than fair market
value, and the General Partner is expressly authorized to cause the Partnership
to issue to the General Partner corresponding Partnership Interests, so long as
(x) the General Partner concludes in good faith that such issuance of
Partnership Interests is in the interests of the Partnership; and (y) the
General Partner contributes all proceeds, if any, from such issuance and
exercise to the Partnership.

            In connection with the General Partner's initial public offering of
REIT Shares, any other issuance of REIT Shares, other capital stock of the
General Partner or New Securities, the General Partner shall contribute to the
Partnership, any net proceeds raised in connection with such issuance; provided,
that the General Partner may use a portion of the net proceeds from any offering
to acquire Partnership Units or other assets (provided such other assets are
contributed to the Partnership pursuant to the terms of this Agreement); and
provided further that if the net proceeds actually received by the General
Partner are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other expenses paid or incurred in connection with
such issuance then, except to the extent such net proceeds are used to acquire
Partnership Units, the General Partner shall be deemed to have made a Capital
Contribution to the Partnership in the amount equal to the sum of the net
proceeds of such issuance plus the amount of such underwriter's discount and
other expenses paid by the General Partner (which discount and expense shall be
treated as an expense for the benefit of the Partnership for purposes of Section
7.4). In the case of issuances of REIT Shares, other capital stock of the
General Partner or New Securities pursuant to any Stock Plan at a discount from
fair market value or for no value, the amount of such discount representing
compensation to the employee, as determined by the General Partner, shall be
treated as an expense for the benefit of the Partnership for purposes of Section
7.4 and, as a result, the General Partner shall be deemed to have made a Capital
Contribution to the Partnership in an amount equal to the sum of any net
proceeds of such issuance plus the amount of such expense.

      D. Percentage Interest Adjustments in the Case of Capital Contributions
for Partnership Units. Upon the acceptance of additional Capital Contributions
in exchange for any class or series of Partnership Units, the Percentage
Interest in such class or series of Partnership Units shall be equal to a
fraction, the numerator of which is equal to the amount of cash and the Agreed
Value of the Property contributed as of the time such additional Capital
Contributions are made (an "Adjustment Date") and the denominator of which is
equal to the sum of (i) the Deemed Value of the Partnership Interests of such
class or series (computed as of the Business Day immediately preceding the
Adjustment Date) and (ii) the aggregate Agreed Value of additional Capital
Contributions contributed by all Partners and/or third parties to the
Partnership on such Adjustment Date in such class or series of Partnership
Interests. The Percentage Interest of each other Partner holding Partnership
Interests of such class or series not making a full pro rata Capital
Contribution shall be adjusted to equal a fraction, the numerator of which is
equal to the sum of (i) the Deemed Partnership Interest Value of such Limited
Partner in respect of such class or series (computed as of the Business Day
immediately preceding the Adjustment Date) and (ii) the Agreed Value of
additional Capital Contributions, if any, made by such Partner to the
Partnership in such class or series of Partnership Interests as of such
Adjustment Date, and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests of such class or series (computed as
of the Business Day immediately preceding the Adjustment Date), plus (ii) the
aggregate Agreed Value of additional Capital Contributions contributed by all
Partners and/or third parties to the

                                       22
<PAGE>

Partnership on such Adjustment Date in such class or series. Provided, however,
solely for purposes of calculating a Partner's Percentage Interest pursuant to
this Section 4.3.D, (i) in the case of cash Capital Contributions by the General
Partner funded by an offering of REIT Shares or other shares of capital stock of
the General Partner and (ii) in the case of the contribution of properties by
the General Partner which were acquired by the General Partner in exchange for
REIT Shares or other shares of capital stock of the General Partner immediately
prior to such contribution, the General Partner shall be issued a number of
Partnership Units equal and corresponding to the number of such shares issued by
the General Partner in exchange for such cash or Properties, the Partnership
Units held by the other Partners shall not be adjusted, and the Partners'
Percentage Interests shall be adjusted accordingly. The General Partner shall
promptly give each Partner written notice of its Percentage Interest, as
adjusted.

Section 4.4 Other Contribution Provisions

            In the event that any Partner is admitted to the Partnership and is
given (or is treated as having received) a Capital Account at the time of
admission in exchange for services rendered to the Partnership, such transaction
shall be treated by the Partnership and the affected Partner as if the
Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership. In addition, with the
consent of the General Partner, in its sole discretion, one or more Limited
Partners may enter into agreements with the Partnership, in the form of a
guarantee or contribution agreement, which have the effect of providing a
guarantee of certain obligations of the Partnership.

Section 4.5 No Preemptive Rights

            Except to the extent expressly granted by the Partnership pursuant
to another agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (i) providing funds to the Partnership or (ii)
issuance or sale of any Partnership Units or other Partnership Interests.

                                   ARTICLE 5.
                                  DISTRIBUTIONS

Section 5.1 Requirement and Characterization of Distributions

            The General Partner shall cause the Partnership to distribute
quarterly all, or such portion as the General Partner may in its discretion
determine, Available Cash generated by the Partnership to the Partners who are
Partners on the applicable Partnership Record Date with respect to such
distribution, (1) first, with respect to any class or series of Partnership
Interests that are entitled to any preference in distributions, in accordance
with the rights of such class or series of Partnership Interests (and within
such class or series, pro rata in proportion to the respective Percentage
Interests on the applicable Partnership Record Date), and (2) second, with
respect to any class or series of Partnership Interests that are not entitled to
any preference in distributions, pro rata to each such class or series in
accordance with the terms of such class or series to the Partners who are
Partners of such class or series on the Partnership Record Date with respect to
such distribution (and within each such class or series, pro rata in proportion
to the respective Percentage Interests on such Partnership Record Date). Unless
otherwise

                                       23
<PAGE>

expressly provided for herein or in an agreement, if any, entered into in
connection with the creation of a new class or series of Partnership Interests
created in accordance with Article 4, no Partnership Interest shall be entitled
to a distribution in preference to any other Partnership Interest. The General
Partner shall take such reasonable efforts, as determined by it in its sole and
absolute discretion and consistent with its qualification as a REIT, to cause
the Partnership to distribute sufficient amounts to enable the General Partner,
for so long as the General Partner has determined to qualify as a REIT, to pay
stockholder dividends that will (a) satisfy the requirements for qualifying as a
REIT under the Code and Regulations ("REIT Requirements"), and (b) except to the
extent otherwise determined by the General Partner, avoid the imposition of any
federal income or excise tax liability on the General Partner.

Section 5.2 Distributions in Kind

            Except as expressly provided herein, no right is given to any
Partner to demand and receive property other than cash. The General Partner may
determine, in its sole and absolute discretion, to make a distribution in-kind
to the Partners of Partnership assets, and such assets shall be distributed in
such a fashion as to ensure that the fair market value is distributed and
allocated in accordance with Articles 5, 6 and 10.

Section 5.3 Distributions Upon Liquidation

            Notwithstanding Section 5.1, proceeds from a Liquidating Event shall
be distributed to the Partners in accordance with Section 13.2.

Section 5.4 Distributions to Reflect Issuance of Additional Partnership
Interests

            In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Section 4.3.B or 4.3.C, the General Partner shall make such revisions to this
Article 5 as it determines are necessary to reflect the issuance of such
additional Partnership Interests. In the absence of any agreement to the
contrary, an Additional Limited Partner shall be entitled to the distributions
set forth in Section 5.1 (without regard to this Section 5.4) with respect to
the period during which the closing of its contribution to the Partnership
occurs, multiplied by a fraction the numerator of which is the number of days
from and after the date of such closing through the end of the applicable
period, and the denominator of which is the total number of days in such period.

                                   ARTICLE 6.
                                   ALLOCATIONS

Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss

            Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each Partnership Year of the Partnership as of the end
of each such year. Subject to the other provisions of this Article 6, an
allocation to a Partner of a share of Net Income or Net Loss shall be treated as
an allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.

                                       24
<PAGE>

Section 6.2 General Allocations

        A. Allocation of Net Income and Net Losses.

            (1)    Net Income. Except as otherwise provided in Section 6.3, Net
Income for any Partnership Year shall be allocated to the Partners in the
following manner and order of priority:

                  (a) First, to the General Partner in an amount equal to the
remainder, if any, of the cumulative Net Losses allocated to the General Partner
pursuant to Section 6.2.A.2(c) for all prior Partnership Years minus the
cumulative Net Income allocated to the General Partner pursuant to this Section
6.2.A.(1)(a) for all prior Partnership Years;

                  (b) Second, to each Limited Partner in an amount equal to the
remainder, if any, of the cumulative Net Losses allocated to each such Limited
Partner pursuant to Section 6.2.A.2(b) for all prior Partnership Years minus the
cumulative Net Income allocated to such Limited Partner pursuant to this Section
6.2.A.(1)(b) for all prior Partnership Years;

                  (c) Third, to the General Partner and the Limited Partners in
proportion, and in an amount equal, to the remainder, if any, of the cumulative
Net Losses allocated to each such Partner pursuant to Section 6.2.A.2(a) for all
prior Partnership Years minus the cumulative Net Income allocated to each
Partner pursuant to this Section 6.2.A.(1)(c) for all prior Partnership Years;

                  (d) Fourth, to each of the Partners in accordance with their
respective Percentage Interests.

            To the extent the allocations of Net Income set forth above in any
paragraph of this Section 6.2.A.(1) are not sufficient to entirely satisfy the
allocation set forth in such paragraph, such allocation shall be made in
proportion to the total amount that would have been allocated pursuant to such
paragraph without regard to such shortfall.

            (2) Net Losses. Except as otherwise provided in Section 6.3, Net
Losses for any Partnership Year shall be allocated to the Partners in the
following manner and order of priority:

                  (a) First, to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests (to the extent consistent
with this Section 6.2.A(2)(a)) until the Adjusted Capital Account Balance
(ignoring for this purpose any amounts a Partner is obligated to contribute to
the capital of the Partnership or is deemed obligated to contribute pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c)(2)) of each such Partner is zero;

                  (b) Second, to the Limited Partners to the extent of, and in
proportion to, their Adjusted Capital Account Balance; and

                  (c) Third, to the General Partner.

                                       25
<PAGE>

      B. Allocations to Reflect Issuance of Additional Partnership Interests. In
the event that the Partnership issues additional Partnership Interests to the
General Partner, a Limited Partner or any Additional Limited Partner pursuant to
Section 4.3, the General Partner shall make such revisions to this Section 6.2
as it determines are necessary to reflect the terms of the issuance of such
additional Partnership Interests, including making preferential allocations to
certain classes of Partnership Interests in accordance with any method selected
by the General Partner.

Section 6.3 Additional Allocation Provisions

            Notwithstanding the foregoing provisions of this Article 6:

        A. Regulatory Allocations.

                        (i) Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(f), notwithstanding the provisions of
Section 6.2, or any other provision of this Article 6, if there is a net
decrease in Partnership Minimum Gain during any Partnership Year, each Holder
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Holder's share
of the net decrease in Partnership Minimum Gain, as determined under Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each Holder
pursuant thereto. The items to be allocated shall be determined in accordance
with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.A(i)
is intended to qualify as a "minimum gain chargeback" within the meaning of
Regulation Section 1.704-2(f) which shall be controlling in the event of a
conflict between such Regulation and this Section 6.3.A(i).

                        (ii) Partner Minimum Gain Chargeback. Except as
otherwise provided in Regulations Section 1.704-2(i)(4), and notwithstanding the
provisions of Section 6.2, or any other provision of this Article 6 (except
Section 6.3.A(i)), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership Year, each
Holder who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Holder's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Holder
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
6.3.A(ii) is intended to qualify as a "chargeback of partner nonrecourse debt
minimum gain" within the meaning of Regulation Section 1.704-2(i) which shall be
controlling in the event of a conflict between such Regulation and this Section
6.3.A(ii).

                        (iii) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any Partnership Year shall be
specially allocated to the Holders in accordance with their respective
Percentage Interests. Any Partner

                                       26
<PAGE>

Nonrecourse Deductions for any Partnership Year shall be specially allocated to
the Holder(s) who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable,
in accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).

                        (iv) Qualified Income Offset. If any Holder unexpectedly
receives an adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
gain shall be allocated, in accordance with Regulations Section
1.704-1(b)(2)(ii)(d), to the Holder in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, the Adjusted Capital
Account Deficit of the Holder as quickly as possible provided that an allocation
pursuant to this Section 6.3.A(iv) shall be made if and only to the extent that
such Holder would have an Adjusted Capital Account Deficit after all other
allocations provided in this Article 6 have been tentatively made as if this
Section 6.3.A(iv) were not in this Agreement. It is intended that this Section
6.3.A(iv) qualify and be construed as a "qualified income offset" within the
meaning of Regulations 1.704-1(b)(2)(ii)(d), which shall be controlling in the
event of a conflict between such Regulations and this Section 6.3.A(iv).

                        (v) Gross Income Allocation. In the event any Holder has
a deficit Capital Account at the end of any Partnership Year which is in excess
of the sum of (1) the amount (if any) such Holder is obligated to restore to the
Partnership, and (2) the amount such Holder is deemed to be obligated to restore
pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
Holder shall be specially allocated items of Partnership income and gain in the
amount of such excess as quickly as possible, provided, that an allocation
pursuant to this Section 6.3.A(v) shall be made if and only to the extent that
such Holder would have a deficit Capital Account in excess of such sum after all
other allocations provided in this Article 6 have been tentatively made as if
this Section 6.3.A(v) and Section 6.3.A(iv) were not in this Agreement.

                        (vi) Limitation on Allocation of Net Loss. To the extent
any allocation of Net Loss would cause or increase an Adjusted Capital Account
Deficit as to any Holder, such allocation of Net Loss shall be reallocated among
the other Holders in accordance with their respective Percentage Interests,
subject to the limitations of this Section 6.3.A(vi).

                        (vii) Section 754 Adjustment. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to Code
Section 734(b) or Code Section 743(b) is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4),
to be taken into account in determining Capital Accounts as the result of a
distribution to a Holder in complete liquidation of his interest in the
Partnership, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Holders in accordance with their interests in the
Partnership in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2)
applies, or to the Holders to whom such distribution was made in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

                                       27
<PAGE>

                        (viii) Curative Allocation. The allocations set forth in
Sections 6.3.A(i), (ii), (iii), (iv), (v), (vi), and (vii) (the "Regulatory
Allocations") are intended to comply with certain regulatory requirements,
including the requirements of Regulations Sections 1.704-1(b) and 1.704-2.
Notwithstanding the provisions of Sections 6.1 and 6.2, the Regulatory
Allocations shall be taken into account in allocating other items of income,
gain, loss and deduction among the Holders so that, to the extent possible, the
net amount of such allocations of other items and the Regulatory Allocations to
each Holder shall be equal to the net amount that would have been allocated to
each such Holder if the Regulatory Allocations had not occurred.

      B. For purposes of determining a Holder's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Holder's interest in Partnership profits
shall be such Holder's Percentage Interest.

Section 6.4 Tax Allocations

      A. In General. Except as otherwise provided in this Section 6.4, for
income tax purposes each item of income, gain, loss and deduction (collectively,
"Tax Items") shall be allocated among the Holders in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Sections 6.2 and 6.3.

      B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.4.A, Tax Items with respect to Partnership property that is
contributed to the Partnership by a Partner shall be shared among the Holders
for income tax purposes pursuant to Regulations promulgated under Section 704(c)
of the Code, so as to take into account the variation, if any, between the basis
of the property to the Partnership and its initial Gross Asset Value. With
respect to Partnership property that is contributed to the Partnership in
connection with the General Partner's initial public offering, such variation
between basis and initial Gross Asset Value shall be taken into account under
the "traditional method" as described in Regulations Section 1.704-3(b). With
respect to other properties contributed to the Partnership, the Partnership
shall account for such variation under any method consistent with Section 704(c)
of the Code and the applicable regulations as chosen by the General Partner. In
the event the Gross Asset Value of any Partnership asset is adjusted pursuant to
subparagraph (b) of the definition of Gross Asset Value (provided in Article 1),
subsequent allocations of Tax Items with respect to such asset shall take
account of the variation, if any, between the adjusted basis of such asset and
its Gross Asset Value in the same manner as under Section 704(c) of the Code and
the applicable regulations consistent with the requirements of Regulations
Section 1.704-1(b)(2)(iv)(g) using any method approved under Section 704(c) of
the Code and the applicable regulations as chosen by the General Partner,
provided, however, that the "traditional method" as described in Regulations
Section 1.704-3(b) shall be used with respect to Partnership Property that is
contributed to the Partnership in connection with the General Partner's initial
public offering.

                                       28
<PAGE>

                                   ARTICLE 7.
                      MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1 Management

      A.    Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause, except with the consent of the
General Partner. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to the other provisions hereof including Sections 7.3 and 11.2,
shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership (including, without
limitation, all actions consistent with allowing the General Partner at all
times to qualify as a REIT unless the General Partner voluntarily terminates its
REIT status), to exercise all powers set forth in Section 3.2 and to effectuate
the purposes set forth in Section 3.1, including, without limitation:

            (1) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on loans and borrowing
money to permit the Partnership to make distributions to its Partners in such
amounts as will permit the General Partner (so long as the General Partner has
determined to qualify as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its stockholders sufficient to permit the
General Partner to maintain REIT status), the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by mortgage, deed of
trust or other lien or encumbrance on all or any of the Partnership's assets)
and the incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership;

            (2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having jurisdiction
over the business or assets of the Partnership, the registration of any class of
securities of the Partnership under the Exchange Act, and the listing of any
debt securities of the Partnership on any exchange;

            (3) subject to the provisions of Section 11.2, the acquisition,
disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any
assets of the Partnership or the merger or other combination of the Partnership
with or into another entity;

            (4) the acquisition, disposition, mortgage, pledge, encumbrance or
hypothecation of all or any assets of the Partnership, and the use of the assets
of the Partnership (including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it sees fit,
including, without limitation, the financing of the conduct or the operations of
the General Partner or the Partnership, the lending of funds to other Persons
(including, without limitation, the General Partner or any Subsidiaries of the
Partnership) and the repayment of obligations of the Partnership, any of its
Subsidiaries and any

                                       29
<PAGE>

other Person in which it has an equity investment, and the making of capital
contributions to its Subsidiaries;

            (5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements owned
by the Partnership or any Subsidiary of the Partnership;

            (6) the negotiation, execution, and performance of any contracts,
leases, conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or the
implementation of the General Partner's powers under this Agreement, including
contracting with contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents and the payment of their
expenses and compensation out of the Partnership's assets;

            (7) the distribution of Partnership cash or other Partnership assets
in accordance with this Agreement;

            (8) the establishment of one or more divisions of the Partnership,
the selection and dismissal of employees of the Partnership (including, without
limitation, employees having titles such as "president," "vice president,"
"secretary" and "treasurer"), and agents, outside attorneys, accountants,
consultants and contractors of the Partnership, the determination of their
compensation and other terms of employment or hiring, including waivers of
conflicts of interest and the payment of their expenses and compensation out of
the Partnership's assets;

            (9) the maintenance of such insurance for the benefit of the
Partnership and the Partners and directors and officers of the Partnership or
the General Partner as it deems necessary or appropriate;

            (10) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships,
limited liability companies, joint ventures, corporations or other relationships
that it deems desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to any Subsidiary and any other
Person in which it has an equity investment from time to time); provided, that,
as long as the General Partner has determined to continue to qualify as a REIT,
the Partnership may not engage in any such formation, acquisition or
contribution that could cause the General Partner to fail to qualify as a REIT;

            (11) the control of any matters affecting the rights and obligations
of the Partnership, including the settlement, compromise, submission to
arbitration or any other form of dispute resolution, or abandonment of, any
claim, cause of action, liability, debt or damages, due or owing to or from the
Partnership, the commencement or defense of suits, legal proceedings,
administrative proceedings, arbitration or other forms of dispute resolution,
and the representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution,
the incurring of legal expense, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;

            (12) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Person (including, without
limitation, contributing or loaning

                                       30
<PAGE>

Partnership funds to, incurring indebtedness on behalf of, or guarantying the
obligations of any such Persons);

            (13) subject to the other provisions in this Agreement, the
determination of the fair market value of any Partnership property distributed
in kind using such reasonable method of valuation as it may adopt, provided,
that such methods are otherwise consistent with requirements of this Agreement;

            (14) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements owned
by the Partnership or any Subsidiary of the Partnership or any Person in which
the Partnership has made a direct or indirect equity investment;

            (15) holding, managing, investing and reinvesting cash and other
assets of the Partnership;

            (16) the collection and receipt of revenues and income of the
Partnership;

            (17) the exercise, directly or indirectly through any
attorney-in-fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any asset or investment held
by the Partnership;

            (18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any Subsidiary
of the Partnership or any other Person in which the Partnership has a direct or
indirect interest, or jointly with any such Subsidiary or other Person;

            (19) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the Partnership
does not have an interest pursuant to contractual or other arrangements with
such Person;

            (20) the making, execution and delivery of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner for the accomplishment of any
of the powers of the General Partner enumerated in this Agreement;

            (21) the issuance of additional Partnership Interests, as
appropriate, in connection with the contribution of Additional Funds pursuant to
Section 4.3;

            (22) the distribution of cash to acquire Partnership Units held by a
Limited Partner in connection with a Limited Partner's exercise of its
Redemption Right under Section 8.6 hereof;

            (23) the amendment and restatement of Exhibit A hereto to reflect
accurately at all times the Capital Contributions and Percentage Interests of
the Partners as the same are adjusted from time to time to the extent necessary
to reflect redemptions, Capital Contributions, the issuance of Partnership
Units, the admission of any Additional Limited Partner or any

                                       31
<PAGE>

Substituted Limited Partner or otherwise, which amendment and restatement,
notwithstanding anything in this Agreement to the contrary, shall not be deemed
an amendment to this Agreement, as long as the matter or event being reflected
in Exhibit A hereto otherwise is authorized by this Agreement;

            (24) the taking of any and all acts and things necessary or prudent
to ensure that the Partnership will not be classified as a "publicly traded
partnership" taxable as a corporation under Section 7704 of the Code; and

            (25) the delegation to another Person of any powers now or hereafter
granted to the General Partner.

      B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provisions of this Agreement
(except as provided in Section 7.3 or 11.2), the Act or any applicable law, rule
or regulation to the fullest extent permitted under the Act or other applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.

      C. At all times from and after the date hereof, the General Partner may
cause the Partnership to obtain and maintain (i) casualty, liability and other
insurance on the properties of the Partnership and (ii) liability insurance for
the Indemnities hereunder.

      D. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain working capital and other
reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.

      E. Each of the Limited Partners acknowledges that, in exercising its
authority under this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner (including
the General Partner) of any action taken (or not taken) by the General Partner.
The General Partner and the Partnership shall not have liability to a Partner
under this Agreement as a result of any income tax liability incurred by a
Limited Partner as a result of an action (or inaction) by the General Partner
pursuant to its authority under this Agreement.

      F. Except as otherwise provided herein, to the extent the duties of the
General Partner require expenditures of funds to be paid to third parties, the
General Partner shall not have any obligations hereunder except to the extent
that Partnership funds are reasonably available to it for the performance of
such duties, and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend its individual
funds for payment to third parties or to undertake any individual liability or
obligation on behalf of the Partnership.

                                       32
<PAGE>

Section 7.2 Certificate of Limited Partnership

            To the extent that such action is determined by the General Partner
to be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Maryland
and to maintain the Partnership's qualification to do business as a foreign
limited partnership in each other state, the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(4), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Maryland, any other state, or the District of Columbia or other jurisdiction,
in which the Partnership may elect to do business or own property.

Section 7.3 Restrictions on General Partner's Authority

      A. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written Consent
of the Limited Partners and may not (i) perform any act that would subject a
Limited Partner to liability as a general partner in any jurisdiction or any
other liability except as provided herein or under the Act; or (ii) enter into
any contract, mortgage, loan or other agreement that prohibits or restricts, or
has the effect of prohibiting or restricting, the ability of a Limited Partner
to exercise its rights to a Redemption in full, except in each case with the
written consent of such Limited Partner.

      B. The General Partner shall not, without the prior Consent of the
Partners (in addition to any Consent of the Limited Partners required by any
other provision hereof), or except as provided in Section 7.3.C, amend, modify
or terminate this Agreement.

      C. Notwithstanding Section 7.3.B, the General Partner shall have the
exclusive power to amend this Agreement as may be required to facilitate or
implement any of the following purposes:

            (1) to add to the obligations of the General Partner or surrender
any right or power granted to the General Partner or any Affiliate of the
General Partner for the benefit of the Limited Partners;

            (2) to reflect the issuance of additional Partnership Interests
pursuant to Sections 4.3.B, 5.4 and 6.2B. or the admission, substitution,
termination, or withdrawal of Partners in accordance with this Agreement (which
may be effected through the replacement of Exhibit A with an amended Exhibit A);

            (3) to set forth or amend the designations, rights, powers, duties
and preferences of the holders of any additional Partnership Interests issued
pursuant to Article 4;

                                       33
<PAGE>

            (4) to reflect a change that is of an inconsequential nature and
does not adversely affect the Limited Partners in any material respect, or to
cure any ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other changes with
respect to matters arising under this Agreement that will not be inconsistent
with law or with the provisions of this Agreement;

            (5) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a federal or state
agency or contained in federal or state law;

            (6) to reflect such changes as are reasonably necessary for the
General Partner to maintain its status as a REIT, including changes which may be
necessitated due to a change in applicable law (or an authoritative
interpretation thereof) or a ruling of the IRS;

            (7) to modify, as set forth in the definition of "Capital Account,"
the manner in which Capital Accounts are computed; and

            (8) to amend or modify any provision of this Agreement in connection
with a Termination Transaction.

            The General Partner will provide notice to the Limited Partners when
any action under this Section 7.3.C is taken.

      D. Notwithstanding Sections 7.3.B and 7.3.C, this Agreement shall not be
amended with respect to any Partner adversely affected, and no action may be
taken by the General Partner, without the Consent of such Partner adversely
affected if such amendment or action would (i) convert a Limited Partner's
interest in the Partnership into a general partner's interest (except as the
result of the General Partner acquiring such interest), (ii) modify the limited
liability of a Limited Partner, (iii) alter rights of the Partner to receive
distributions pursuant to Article 5 or Section 13.2.A(4), or the allocations
specified in Article 6 (except as permitted pursuant to Sections 4.3, 5.4, 6.2.B
and Section 7.3.C(3)), (iv) materially alter or modify the rights to a
Redemption or the REIT Shares Amount as set forth in Section 8.6, and related
definitions hereof, or (v) amend this Section 7.3.D. Further, no amendment may
alter the restrictions on the General Partner's authority set forth elsewhere in
this Section 7.3 or in Section 11.2.B without the Consent specified in such
section. This Section 7.3.D does not require unanimous consent of all Partners
adversely affected unless the amendment is to be effective against all partners
adversely affected.

Section 7.4 Reimbursement of the General Partner

      A. Except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.

      B. The Partnership shall be responsible for and shall pay all expenses
relating to the Partnership's and the General Partner's organization, the
ownership of its assets and its operations. The General Partner is hereby
authorized to pay compensation for accounting,

                                       34
<PAGE>

administrative, legal, technical, management and other services rendered to the
Partnership. Except to the extent provided in this Agreement, the General
Partner and its Affiliates shall be reimbursed on a monthly basis, or such other
basis as the General Partner may determine in its sole and absolute discretion,
for all expenses that the General Partner and its Affiliates incur relating to
the ownership and operation of, or for the benefit of, the Partnership
(including, without limitation, administrative expenses); provided, that the
amount of any such reimbursement shall be reduced by any interest earned by the
General Partner with respect to bank accounts or other instruments or accounts
held by it on behalf of the Partnership. The Partners acknowledge that all such
expenses of the General Partner are deemed to be for the benefit of the
Partnership. Such reimbursement shall be in addition to any reimbursement made
as a result of indemnification pursuant to Section 7.7 hereof. In the event that
certain expenses are incurred for the benefit of the Partnership and other
entities (including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. All payments and
reimbursements hereunder shall be characterized for federal income tax purposes
as expenses of the Partnership incurred on its behalf, and not as expenses of
the General Partner.

      C. If the General Partner shall elect to purchase from its stockholders
REIT Shares for the purpose of delivering such REIT Shares to satisfy an
obligation under any dividend reinvestment program adopted by the General
Partner, any employee stock purchase plan adopted by the General Partner, or any
similar obligation or arrangement undertaken by the General Partner in the
future or for the purpose of retiring such REIT Shares, the purchase price paid
by the General Partner for such REIT Shares and any other expenses incurred by
the General Partner in connection with such purchase shall be considered
expenses of the Partnership and shall be advanced to the General Partner or
reimbursed to the General Partner, subject to the condition that: (i) if such
REIT Shares subsequently are sold by the General Partner, the General Partner
shall pay to the Partnership any proceeds received by the General Partner for
such REIT Shares (which sales proceeds shall include the amount of dividends
reinvested under any dividend reinvestment or similar program; provided, that a
transfer of REIT Shares for Partnership Units pursuant to Section 8.6 would not
be considered a sale for such purposes); and (ii) if such REIT Shares are not
retransferred by the General Partner within thirty (30) days after the purchase
thereof, or the General Partner otherwise determines not to retransfer such REIT
Shares, the General Partner, shall cause the Partnership to redeem a number of
Partnership Units held by the General Partner equal to the number of such REIT
Shares, as adjusted (x) pursuant to Section 7.5 (in the event the General
Partner acquires material assets, other than on behalf of the Partnership) and
(y) for stock dividends and distributions, stock splits and subdivisions,
reverse stock splits and combinations, distributions of rights, warrants or
options, and distributions of evidences of indebtedness or assets relating to
assets not received by the General Partner pursuant to a pro rata distribution
by the Partnership (in which case such advancement or reimbursement of expenses
shall be treated as having been made as a distribution in redemption of such
number of Partnership Units held by the General Partner).

      D. As set forth in Section 4.3, the General Partner shall be treated as
having made a Capital Contribution in the amount of all expenses that it incurs
relating to the General Partner's offering of REIT Shares, other shares of
capital stock of the General Partner or New Securities.

                                       35
<PAGE>

      E. If and to the extent any reimbursements to the General Partner pursuant
to this Section 7.4 constitute gross income of the General Partner (as opposed
to the repayment of advances made by the General Partner on behalf of the
Partnership), such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.

Section 7.5 Outside Activities of the General Partner

      A. Except in connection with a transaction authorized in Section 11.2,
without the Consent of the Limited Partners, the General Partner shall not,
directly or indirectly, enter into or conduct any business, other than in
connection with the ownership, acquisition and disposition of Partnership
Interests as a General Partner and the management of the business of the
Partnership, its operation as a public reporting company with a class (or
classes) of securities registered under the Exchange Act, its operation as a
REIT and such activities as are incidental to the same. Without the Consent of
the Limited Partners, the General Partner shall not, directly or indirectly,
participate in or otherwise acquire any interest in any real or personal
property, except its General Partner Interest, its minority interest in any
Subsidiary Partnership(s) that the General Partner holds in order to maintain
such Subsidiary Partnership's status as a partnership, and such bank accounts,
similar instruments or other short term investments as it deems necessary to
carry out its responsibilities contemplated under this Agreement and the
Charter. In the event the General Partner desires to contribute cash to any
Subsidiary Partnership to acquire or maintain an interest of 1% or less in the
capital of such partnership, the General Partner may acquire or maintain an
interest of 1% or less in the capital of such partnership, and the General
Partner may acquire such cash from the Partnership as a loan or in exchange for
a reduction in the General Partner's Partnership Units, in an amount equal to
the amount of such cash divided by the Fair Market Value of a REIT Share on the
day such cash is received by the General Partner. Notwithstanding the foregoing,
the General Partner may acquire Properties or other assets in exchange for REIT
Shares or cash, to the extent such Properties or other assets are immediately
contributed by the General Partner to the Partnership, pursuant to the terms
described in Section 4.3.D. Any Limited Partner Interests acquired by the
General Partner, whether pursuant to exercise by a Limited Partner of its right
of Redemption, or otherwise, shall be automatically converted into a General
Partner Interest comprised of an identical number of Partnership Units with the
same rights, priorities and preferences as the class or series so acquired. The
General Partner may also own one hundred percent (100%) of the stock or
interests of one or more Qualified REIT Subsidiaries or limited liability
companies, respectively, provided that any such entity shall be subject to the
limitations of this Section 7.5.A. If, at any time, the General Partner acquires
material assets (other than Partnership Interests or other assets on behalf of
the Partnership) the definition of "REIT Shares Amount" and the definition of
"Deemed Value of Partnership Interests" shall be adjusted, as reasonably
determined by the General Partner, to reflect the relative Fair Market Value of
a share of capital stock of the General Partner relative to the Deemed
Partnership Interest Value of the related Partnership Unit. The General
Partner's General Partner Interest in the Partnership, its minority interest in
any Subsidiary Partnership(s) (held directly or indirectly through a Qualified
REIT Subsidiary) that the General Partner holds in order to maintain such
Subsidiary Partnership's status as a partnership, and interests in such
short-term liquid investments, bank accounts or similar instruments as the
General Partner deems necessary to carry out its responsibilities contemplated
under this Agreement and the Charter are interests which the General Partner is
permitted to acquire and hold for purposes of this Section 7.5.A.

      B. In the event the General Partner exercises its rights under the Charter
to purchase REIT Shares, other capital stock of the General Partner or New
Securities, as the case may be, then the General Partner shall cause the
Partnership to purchase from it a number of Partnership Units equal to the
number of REIT Shares, other capital stock of the General Partner or New
Securities, as the case may be, so purchased on the same terms that the General
Partner purchased such REIT Shares, other capital stock of the General Partner
or New Securities, as the case may be.

                                       36
<PAGE>

Section 7.6 Contracts with Affiliates

      A. The Partnership may lend or contribute to Persons in which it has an
equity investment, and such Persons may borrow funds from the Partnership, on
terms and conditions established in the sole and absolute discretion of the
General Partner. The foregoing authority shall not create any right or benefit
in favor of any Person.

      B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law as
the General Partner in its sole discretion deems advisable.

      C. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans funded by the Partnership for the benefit of
employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership's Subsidiaries. The General Partner also is expressly
authorized to cause the Partnership to issue to it Partnership Units
corresponding to REIT Shares issued by the General Partner pursuant to any Stock
Plan or any similar or successor plan and to repurchase such Partnership Units
from the General Partner to the extent necessary to permit the General Partner
to repurchase such REIT Shares in accordance with such plan.

      D. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable.

      E. The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, a right of first opportunity arrangement and
other conflict avoidance agreements with various Affiliates of the Partnership
and the General Partner, on such terms as the General Partner, in its sole and
absolute discretion, believes are advisable.

Section 7.7 Indemnification

      A. To the fullest extent permitted by law, the Partnership shall indemnify
an Indemnitee from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including legal fees and expenses), judgments,
fines, settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement
in which any Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, unless it is established that: (i) the act or omission of
the Indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith, fraud or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an improper
personal benefit in money, property or services; or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to believe that the act
or omission was unlawful. Without limitation, the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a

                                       37
<PAGE>

loan guaranty or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity agreements
consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent, or any entry of an order of
probation prior to judgment, does not create a presumption that the Indemnitee
did not meet the requisite standard of conduct set forth in this Section 7.7.A.
Any indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitee, and neither the General Partner
nor any Limited Partner shall have any obligation to contribute to the capital
of the Partnership or otherwise provide funds to enable the Partnership to fund
its obligations under this Section 7.7, except to the extent otherwise expressly
agreed to by such Partner and the Partnership.

      B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.

      C. The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement pursuant to which
such Indemnitee is indemnified.

      D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.

      E. For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.

                                       38
<PAGE>

      F. In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.

      G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.

      H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

      I. If and to the extent any reimbursements to the General Partner pursuant
to this Section 7.7 constitute gross income of the General Partner (as opposed
to the repayment of advances made by the General Partner on behalf of the
Partnership) such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.

      J. Any indemnification hereunder is subject to, and limited by, the
provisions of Section 10-107 of the Act.

      K. In the event the Partnership is made a party to any litigation or
otherwise incurs any loss or expense as a result of or in connection with any
Partner's personal obligations or liabilities unrelated to Partnership business,
such Partner shall indemnify and reimburse the Partnership for all such loss and
expense incurred, including legal fees, and the Partnership interest of such
Partner may be charged therefor. The liability of a Partner under this Section
7.7.K shall not be limited to such Partner's Partnership Interest, but shall be
enforceable against such Partner personally.

Section 7.8 Liability of the General Partner

      A. Notwithstanding anything to the contrary set forth in this Agreement,
none of the General Partner nor any of its officers, directors, agents or
employees shall be liable or accountable in damages or otherwise to the
Partnership, any Partners or any Assignees, or their successors or assigns, for
losses sustained, liabilities incurred or benefits not derived as a result of
errors in judgment or mistakes of fact or law or any act or omission if the
General Partner acted in good faith.

      B. The Limited Partners expressly acknowledge that the General Partner is
acting for the benefit of the Partnership, the Limited Partners and the General
Partner's stockholders collectively. The General Partner is under no obligation
to give priority to the separate interests of the Limited Partners or the
General Partner's stockholders (including, without limitation, the

                                       39
<PAGE>

tax consequences to Limited Partners or Assignees or to stockholders) in
deciding whether to cause the Partnership to take (or decline to take) any
actions. If there is a conflict between the interests of the stockholders of the
General Partner on one hand and the Limited Partners on the other, the General
Partner shall endeavor in good faith to resolve the conflict in a manner not
adverse to either the stockholders of the General Partner or the Limited
Partners; provided, however, that for so long as the General Partner, owns a
controlling interest in the Partnership, any such conflict that cannot be
resolved in a manner not adverse to either the stockholders of the General
Partner or the Limited Partners shall be resolved in favor of the stockholders.
The General Partner shall not be liable under this Agreement to the Partnership
or to any Partner for monetary damages for losses sustained, liabilities
incurred, or benefits not derived by Limited Partners in connection with such
decisions; provided, that the General Partner has acted in good faith.

      C. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A, the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by it in good faith.

      D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability of the General Partner and any of its officers,
directors, agents and employee's liability to the Partnership and the Limited
Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.9 Other Matters Concerning the General Partner

      A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.

      B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which such General Partner
reasonably believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.

      C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.

                                       40
<PAGE>

      D. Notwithstanding any other provisions of this Agreement or any
non-mandatory provision of the Act, any action of the General Partner on behalf
of the Partnership or any decision of the General Partner to refrain from acting
on behalf of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order to protect the ability of
the General Partner, for so long as the General Partner has determined to
qualify as a REIT, to (i) continue to qualify as a REIT or (ii) avoid the
General Partner incurring any taxes under Section 857 or Section 4981 of the
Code, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners.

Section 7.10 Title to Partnership Assets

            Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property
of the Partnership in its books and records, irrespective of the name in which
legal title to such Partnership assets is held.

Section 7.11 Reliance by Third Parties

            Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.

                                       41
<PAGE>

                                   ARTICLE 8.
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1 Limitation of Liability

            The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement or under the Act.

Section 8.2 Management of Business

            No Limited Partner or Assignee (other than the General Partner, any
of its Affiliates or any officer, director, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operations, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.

Section 8.3 Outside Activities of Limited Partners

            Subject to any agreements entered into by a Limited Partner or its
Affiliates with the General Partner, Partnership or a Subsidiary, any Limited
Partner and any officer, director, employee, agent, trustee, Affiliate or
stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition
with the Partnership or that are enhanced by the activities of the Partnership.
Neither the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners benefiting from the business conducted by the General Partner,
and such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be
taken by such Person.

Section 8.4 Return of Capital

            Except pursuant to the rights of Redemption set forth in Section
8.6, no Limited Partner shall be entitled to the withdrawal or return of his or
her Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. No
Limited Partner or Assignee shall have priority over any other Limited Partner
or Assignee either as to the return of Capital Contributions, or as otherwise
expressly provided in this Agreement, or as to profits, losses, distributions or
credits.

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<PAGE>

Section 8.5 Rights of Limited Partners Relating to the Partnership

      A. In addition to other rights provided by this Agreement or by the Act,
and except as limited by Section 8.5.C, each Limited Partner shall have the
right, for a purpose reasonably related to such Limited Partner's interest as a
limited partner in the Partnership, upon written demand with a statement of the
purpose of such demand and at such Limited Partner's expense:

            (1) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by the General Partner
pursuant to the Exchange Act, and each communication sent to the stockholders of
the General Partner;

            (2) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;

            (3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;

            (4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers of attorney
pursuant to which this Agreement, the Certificate and all amendments thereto
have been executed; and

            (5) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or services contributed by
each Partner and which each Partner has agreed to contribute in the future, and
the date on which each became a Partner.

      B. The Partnership shall notify each Limited Partner in writing of any
adjustment made in the calculation of the REIT Shares Amount within a reasonable
time after the date such change becomes effective.

      C. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner believes to be in the
nature of trade secrets or other information the disclosure of which the General
Partner in good faith believes is not in the best interests of the Partnership
or (ii) the Partnership or the General Partner is required by law or by
agreements with unaffiliated third parties to keep confidential.

Section 8.6 Redemption Rights

      A. On or after the first anniversary of the Effective Date, with respect
to the Partnership Units acquired on or contemporaneously with the Effective
Date, or (ii) the date of issuance of any other Partnership Units, or on or
after such later date as expressly provided in an agreement entered into between
the Partnership and any Limited Partner, each Limited Partner shall have the
right (subject to the terms and conditions set forth herein and in any other
such agreement, as applicable) to require the Partnership to redeem all or a
portion of the Partnership Units held by such Limited Partner (such Partnership
Units being hereafter referred to as "Tendered Units") in exchange for the Cash
Amount (a "Redemption"); provided that the terms of such Partnership Units do
not provide that such

                                       43
<PAGE>

Partnership Units are not entitled to a right of Redemption. Unless otherwise
expressly provided in this Agreement or in a separate agreement entered into
between the Partnership and the holders of such Partnership Units, all
Partnership Units shall be entitled to a right of Redemption hereunder. The
Tendering Partner shall have no right, with respect to any Partnership Units so
redeemed, to receive any distributions paid on or after the Specified Redemption
Date. Any Redemption shall be exercised pursuant to a Notice of Redemption
delivered to the General Partner by the Limited Partner who is exercising the
right (the "Tendering Partner"). The Cash Amount shall be payable to the
Tendering Partner within ten (10) days of the Specified Redemption Date in
accordance with the instructions set forth in the Notice of Redemption.

      B. Notwithstanding Section 8.6.A above, if a Limited Partner has delivered
to the General Partner a Notice of Redemption then the General Partner may, in
its sole and absolute discretion (subject to the limitations on ownership and
transfer of REIT Shares set forth in the Charter), elect to acquire some or all
of the Tendered Units from the Tendering Partner in exchange for the REIT Shares
Amount (as of the Specified Redemption Date) and, if the General Partner so
elects, the Tendering Partner shall sell the Tendered Units to the General
Partner in exchange for the REIT Shares Amount. In such event, the Tendering
Partner shall have no right to cause the Partnership to redeem such Tendered
Units. The General Partner shall promptly give such Tendering Partner written
notice of its election, and the Tendering Partner may elect to withdraw its
redemption request at any time prior to the acceptance of the cash or REIT
Shares Amount by such Tendering Partner.

      C. The REIT Shares Amount, if applicable, shall be delivered as duly
authorized, validly issued, fully paid and nonassessable REIT Shares and, if
applicable, free of any pledge, lien, encumbrance or restriction, other than
those provided in the Charter, the Bylaws of the General Partner, the Securities
Act, relevant state securities or blue sky laws and any applicable registration
rights agreement with respect to such REIT Shares entered into by the Tendering
Partner. Notwithstanding any delay in such delivery (but subject to Section
8.6.E), the Tendering Partner shall be deemed the owner of such REIT Shares for
all purposes, including without limitation, rights to vote or consent, and
receive dividends, as of the Specified Redemption Date. In addition, the REIT
Shares for which the Partnership Units might be exchanged shall also bear a
legend which generally provides the following:

            THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER
FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST ("REIT") UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY
PROVIDED IN THE CORPORATION'S ARTICLES OF AMENDMENT AND RESTATEMENT, (i) NO
PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION'S COMMON
STOCK IN EXCESS OF 9.8% (BY VALUE OR BY NUMBER OF SHARES, WHICHEVER IS MORE
RESTRICTIVE) OF THE OUTSTANDING COMMON STOCK OF THE CORPORATION; (ii) NO PERSON
MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF COMMON STOCK THAT WOULD RESULT
IN THE CORPORATION BEING "CLOSELY HELD" UNDER SECTION 856(h) OF THE CODE OR
OTHERWISE CAUSE THE CORPORATION TO FAIL TO

                                       44
<PAGE>

QUALIFY AS A REIT; AND (iii) NO PERSON MAY TRANSFER SHARES OF COMMON STOCK IF
SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED
BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS,
OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN, SHARES OF COMMON STOCK IN
VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF
ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE SHARES OF
COMMON STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO THE TRUSTEE
OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION,
THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE
BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES
THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS
DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED
TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB
INITIO. ALL TERMS IN THIS LEGEND THAT ARE DEFINED IN THE ARTICLES OF AMENDMENT
AND RESTATEMENT OF THE CORPORATION SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN
THE ARTICLES OF AMENDMENT AND RESTATEMENT OF THE CORPORATION, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON
TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF SHARES OF COMMON
STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO
THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.

      D. Each Limited Partner covenants and agrees with the General Partner that
all Tendered Units shall be delivered to the General Partner free and clear of
all liens, claims and encumbrances whatsoever and should any such liens, claims
and/or encumbrances exist or arise with respect to such Tendered Units, the
General Partner shall be under no obligation to acquire the same. Each Limited
Partner further agrees that, in the event any state or local property transfer
tax is payable as a result of the transfer of its Tendered Units to the General
Partner (or its designee), such Limited Partner shall assume and pay such
transfer tax.

      E. Notwithstanding the provisions of Section 8.6.A, 8.6.B, 8.6.C or any
other provision of this Agreement, a Limited Partner (i) shall not be entitled
to effect a Redemption for cash or an exchange for REIT Shares to the extent the
ownership or right to acquire REIT Shares pursuant to such exchange by such
Partner on the Specified Redemption Date could cause such Partner or any other
Person, or, in the opinion of counsel selected by the General Partner, may cause
such Partner or any other Person, to violate the restrictions on ownership and
transfer of REIT Shares set forth in the Charter and (ii) shall have no rights
under this Agreement to acquire REIT Shares which would otherwise be prohibited
under the Charter. To the extent any attempted Redemption or exchange for REIT
Shares would be in violation of this Section 8.6.E, it shall be null and void ab
initio and such Limited Partner shall not acquire any rights or economic
interest in the cash otherwise payable upon such Redemption or the REIT Shares
otherwise issuable upon such exchange.

                                       45
<PAGE>

      F. Notwithstanding anything herein to the contrary (but subject to Section
8.6.E), with respect to any Redemption or exchange for REIT Shares pursuant to
this Section 8.6:

            (1) All Partnership Units acquired by the General Partner pursuant
thereto shall automatically, and without further action required, be converted
into and deemed to be Limited Partner Interests comprised of the same number and
class of Partnership Units.

            (2) Without the consent of the General Partner, each Limited Partner
may not effect a Redemption for less than 1,000 Partnership Units or, if the
Limited Partner holds less than 1,000 Partnership Units, all of the Partnership
Units held by such Limited Partner.

            (3) Without the consent of the General Partner, each Limited Partner
may not effect a Redemption during the period after the Partnership Record Date
with respect to a distribution and before the record date established by the
General Partner for a distribution to its stockholders of some or all of its
portion of such distribution.

            (4) The consummation of any Redemption or exchange for REIT Shares
shall be subject to the expiration or termination of the applicable waiting
period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

            (5) Each Tendering Partner shall continue to own all Partnership
Units subject to any Redemption or exchange for REIT Shares, and be treated as a
Limited Partner with respect to such Partnership Units for all purposes of this
Agreement, until such Partnership Units are transferred to the General Partner
and paid for or exchanged on the Specified Redemption Date. Until a Specified
Redemption Date, the Tendering Partner shall have no rights as a stockholder of
the General Partner with respect to such Tendering Partner's Partnership Units.

      G. In the event that the Partnership issues additional Partnership
Interests to any Additional Limited Partner pursuant to Section 4.3.B, the
General Partner shall make such revisions to this Section 8.6 as it determines
are necessary to reflect the issuance of such additional Partnership Interests.

      H. Notwithstanding any other provision of this Agreement, the General
Partner is authorized to take any action that it determines to be necessary or
appropriate to cause the partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law that apply
upon a Redemption or exchange of Tendered Units. If a Tendering Partner believes
that it is exempt from withholding upon a Redemption or exchange of Tendered
Units, such Partner must furnish the General Partner a FIRPTA certificate or
other documentation requested by the General Partner is a form acceptable to the
General Partner. If the Partnership or the General Partner is required to
withhold and pay over to any taxing authority any amount upon a Redemption or
exchange of Tendered Units and the Cash Amount or the REIT Shares Amount, as the
case may be, equals or exceeds the amount of tax required to be withheld, the
amount withheld shall be treated as an amount received by such Partner in
redemption of its Tendered Units. If the Cash Amount or the REIT Shares Amount,
as the case may be, is less than the amount of tax required to be withheld, the
Tendering Partner shall not receive any Cash Amount or REIT Shares Amount, and
the Tendering Partner shall contribute

                                       46
<PAGE>

the excess of the amount of tax required to be withheld over the Cash Amount or
REIT Shares Amount before such excess taxes are required to be paid to the
taxing authority.

                                   ARTICLE 9.
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1 Records and Accounting

            The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of any information storage device,
provided, that the records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the Partnership
shall be maintained, for financial and tax reporting purposes, on an accrual
basis in accordance with generally accepted accounting principles.

Section 9.2 Fiscal Year

            The fiscal year of the Partnership shall be the calendar year.

Section 9.3 Reports

      A. As soon as practicable, but in no event later than 105 days after the
close of each Partnership Year, or such earlier date as they are filed with the
Securities and Exchange Commission, the General Partner shall cause to be mailed
to each Limited Partner as of the close of the Partnership Year, an annual
report containing financial statements of the Partnership, or of the General
Partner if such statements are prepared solely on a consolidated basis with the
General Partner, for such Partnership Year, presented in accordance with
generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner.

      B. As soon as practicable, but in no event later than 45 days after the
close of each calendar quarter (except the last calendar quarter of each year),
or such earlier date as they are filed with the Securities and Exchange
Commission, the General Partner shall cause to be mailed to each Limited Partner
as of the last day of the calendar quarter, a report containing unaudited
financial statements of the Partnership, or of the General Partner, if such
statements are prepared solely on a consolidated basis with the applicable law
or regulation, or as the General Partner determines to be appropriate.

Section 9.4 Nondisclosure of Certain Information

            Notwithstanding the provisions of Sections 9.1 and 9.3, the General
Partner may keep confidential from the Limited Partners any information that the
General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interest of the Partnership or which the Partnership is
required by law or by agreements with unaffiliated third parties to keep
confidential.

                                       47
<PAGE>

                                  ARTICLE 10.
                                  TAX MATTERS

Section 10.1 Preparation of Tax Returns

            The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and applicable state income tax
purposes and shall use all reasonable efforts to furnish, within 90 days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and applicable state income tax reporting purposes. Each
Limited Partner shall promptly provide the General Partner with any information
reasonably requested by the General Partner relating to any Contributed Property
contributed (directly or indirectly) by such Limited Partner to the Partnership.

Section 10.2 Tax Elections

            Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code, including the election under Section 754 of the
Code. The General Partner shall have the right to seek to revoke any such
election (including without limitation, any election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is the best interests of the Partners.

Section 10.3 Tax Matters Partner

      A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address and profit interest of each of the
Limited Partners and Assignees; provided, however, that such information is
provided to the Partnership by the Limited Partners and Assignees.

      B. The tax matters partner is authorized, but not required:

            (1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of Partnership items
required to be taken into account by a Partner for income tax purposes (such
administrative proceedings being referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"), and in the settlement
agreement the tax matters partner may expressly state that such agreement shall
bind all Partners, except that such settlement agreement shall not bind any
Partner (i) who (within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice partner" (as defined in Section
6231 of the Code) or a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);

            (2) in the event that a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into account by a
Partner for tax purposes (a "final adjustment") is mailed to the tax matters
partner, to seek judicial review of such final

                                       48
<PAGE>

adjustment, including the filing of a petition for readjustment with the Tax
Court or the United States Claims Court, or the filing of a complaint for refund
with the District Court of the United States for the district in which the
Partnership's principal place of business is located;

            (3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;

            (4) to file a request for an administrative adjustment with the IRS
at any time and, if any part of such request is not allowed by the IRS, to file
an appropriate pleading (petition or complaint) for judicial review with respect
to such request;

            (5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to be taken into
account by a Partner for tax purposes, or an item affected by such item; and

            (6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review proceeding to
the extent permitted by applicable law or regulations.

            The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 shall be fully applicable to the tax matters
partner in its capacity as such.

      C. The tax matters partner shall receive no compensation for its services.
All third party costs and expenses incurred by the tax matters partner in
performing its duties as such (including legal and accounting fees) shall be
borne by the Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm to assist the tax matters partner
in discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.

Section 10.4 Organizational Expenses

            The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a 60-month period as provided in
Section 709 of the Code.

Section 10.5 Withholding

            Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
receivable of the Partnership from such Limited Partner, which receivable shall
be paid by such Limited Partner within 15 days after notice from the General
Partner that such payment must be made unless (i) the Partnership

                                       49
<PAGE>

withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. Any amounts payable by a Limited
Partner hereunder shall bear interest at the base rate on corporate loans at
large United States money center commercial banks, as published from time to
time in the Wall Street Journal, plus two percentage points (but not higher than
the maximum lawful rate) from the date such amount is due (i.e., 15 days after
demand) until such amount is paid in full. Each Limited Partner shall take such
actions as the Partnership or the General Partner shall request in order to
perfect or enforce the security interest created hereunder.

                                  ARTICLE 11.
                            TRANSFERS AND WITHDRAWALS

Section 11.1 Transfer

      A. The term "transfer," when used in this Article 11 with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which a
Partner purports to assign its Partnership Interest to another Person and
includes a sale, assignment, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term "transfer" when used in this Article 11 does not include any Redemption
or exchange for REIT Shares pursuant to Section 8.6, except as otherwise
provided herein. No part of the interest of a Limited Partner shall be subject
to the claims of any creditor, any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement or consented to by
the General Partner.

      B. No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void ab initio unless
otherwise consented to by the General Partner in its sole and absolute
discretion.

Section 11.2 Transfer of General Partner's Partnership Interest

      A. Except in connection with a Termination Transaction permitted under
Section 11.2.B, the General Partner shall not withdraw from the Partnership and
shall not transfer all or any portion of its interest in the Partnership
(whether by sale, statutory merger or consolidation, liquidation or otherwise),
other than to an Affiliate, without the Consent of the Limited Partners, which
may be given or withheld by each Limited Partner in his, her or its sole and
absolute discretion, and only upon the admission of a successor General Partner
pursuant to Section 12.1. Upon any transfer of a Partnership Interest in
accordance with the provisions of this Section 11.2, the transferee shall become
a Substitute General Partner for all purposes herein, and shall

                                       50
<PAGE>

be vested with the powers and rights of the transferor General Partner, and
shall be liable for all obligations and responsible for all duties of the
General Partner, once such transferee has executed such instruments as may be
necessary to effectuate such admission and to confirm the agreement of such
transferee to be bound by all the terms and provisions of this Agreement with
respect to the Partnership Interest so acquired. It is a condition to any
transfer otherwise permitted hereunder that the transferee assumes, by operation
of law or express agreement, all of the obligations of the transferor General
Partner under this Agreement with respect to such transferred Partnership
Interest, and no such transfer (other than pursuant to a statutory merger or
consolidation wherein all obligations and liabilities of the transferor General
Partner are assumed by a successor corporation by operation of law) shall
relieve the transferor General Partner of its obligations under this Agreement
without the Consent of the Limited Partners, in their reasonable discretion. In
the event the General Partner withdraws from the Partnership in violation of
this Agreement or otherwise, or otherwise dissolves or terminates, or upon the
Incapacity of the General Partner, all of the remaining Partners may elect to
continue the Partnership business by selecting a Substitute General Partner in
accordance with the Act.

      B. The General Partner shall not engage in any merger, consolidation or
other combination with or into another person, sale of all or substantially all
of its assets or any reclassification, recapitalization or change of its
outstanding equity interests ("Termination Transaction") unless either clause
(a) or (b) below is satisfied:

                  (a) in connection with such Termination Transaction all
Limited Partners either will receive, or will have the right to elect to
receive, for each Partnership Unit an amount of cash, securities, or other
property equal to the product of the REIT Shares Amount and the greatest amount
of cash, securities or other property paid to a holder of one REIT Share in
consideration of one REIT Share at any time during the period commencing upon
and continuing after the date on which the Termination Transaction is
consummated; provided, that, if, in connection with the Termination Transaction,
a purchase, tender or exchange offer shall have been made to and accepted by the
holders of more than fifty percent (50%) of the outstanding REIT Shares, each
holder of Partnership Units shall receive, or shall have the right to elect to
receive, the greatest amount of cash, securities, or other property which such
holder would have received had it exercised its right to Redemption (as set
forth in Section 8.6) and received REIT Shares in exchange for its Partnership
Units immediately prior to the expiration of such purchase, tender or exchange
offer and had thereupon accepted such purchase, tender or exchange offer and
then such Termination Transaction shall have been consummated; or

                  (b) the following conditions are met: (i) substantially all of
the assets directly or indirectly owned by the surviving entity are held
directly or indirectly by the Partnership or another limited partnership or
limited liability company which is the survivor of a merger, consolidation or
combination of assets with the Partnership (in each case, the "Surviving
Partnership"); (ii) the holders of Partnership Units own a percentage interest
of the Surviving Partnership based on the relative fair market value of the net
assets of the Partnership and the other net assets of the Surviving Partnership
immediately prior to the consummation of such transaction; (iii) the rights,
preferences and privileges of such holders in the Surviving Partnership are at
least as favorable as those in effect immediately prior to the consummation of
such transaction and as those applicable to any other limited partners or
non-managing members of the Surviving Partnership; and (iv) such rights of the
Limited Partners include at least one of

                                       51
<PAGE>

the following: (a) the right to redeem their interests in the Surviving
Partnership for the consideration available to such persons pursuant to Section
11.2.B(2)(a); or (b) the right to redeem their Partnership Units for cash on
terms equivalent to those in effect with respect to their Partnership Units
immediately prior to the consummation of such transaction, or, if the ultimate
controlling person of the Surviving Partnership has publicly traded common
equity securities, such common equity securities, with an exchange ratio based
on the determination of relative fair market value of such securities and the
REIT Shares.

Section 11.3 Limited Partners' Rights to Transfer

      A. Prior to the first anniversary of the Effective Date, no Limited
Partner shall transfer all or any portion of its Partnership Interest to any
transferee without the consent of the General Partner, which consent may be
withheld in its sole and absolute discretion; provided, however, that any
Limited Partner may, at any time (whether prior to or after such one-year
period), without the consent of the General Partner, (i) transfer all or any
portion of its Partnership Interest to the General Partner, (ii) transfer all or
any portion of its Partnership Interest to an Affiliate, another original
Limited Partner or to an Immediate Family Member, subject to the provisions of
Section 11.6, (iii) transfer all or any portion of its Partnership Interest to a
trust for the benefit of a charitable beneficiary or to a charitable foundation,
subject to the provisions of Section 11.6, and (iv) subject to the provisions of
Section 11.6, pledge (a "Pledge") all or any portion of its Partnership Interest
to a lending institution, which is not an Affiliate of such Limited Partner, as
collateral or security for a bona fide loan or other extension of credit, and
transfer such pledged Partnership Interest to such lending institution in
connection with the exercise of remedies under such loan or extension or credit,
and the transfer of such pledged Partnership Interest by the lender to any
transferee. After such anniversary, each Limited Partner or Assignee (resulting
from a transfer made pursuant to clauses (i)-(iv) of the proviso of the
preceding sentence) shall have the right to transfer all or any portion of its
Partnership Interest, subject to the provisions of Section 11.6 and the
satisfaction of each of the following conditions (in addition to the right of
each such Limited Partner or Assignee to continue to make any such transfer
permitted by clauses (i)-(iv) of such proviso without satisfying either of the
following conditions):

            (1) General Partner Right of First Refusal. The transferring Partner
shall give written notice of the proposed transfer to the General Partner, which
notice shall state (i) the identity of the proposed transferee, and (ii) the
amount and type of consideration proposed to be received for the transferred
Partnership Units. The General Partner shall have ten (10) days upon which to
give the transferring Partner notice of its election to acquire the Partnership
Units on the proposed terms. If it so elects, it shall purchase the Partnership
Units on such terms within ten (10) days after giving notice of such election.
If it does not so elect, the transferring Partner may transfer such Partnership
Units to a third party, on economic terms no more favorable to the transferee
than the proposed terms, subject to the other conditions of this Section 11.3.

            (2) Qualified Transferee. Any transfer of a Partnership Interest
shall be made only to Qualified Transferees.

            It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited

                                       52
<PAGE>

Partner under this Agreement with respect to such transferred Partnership
Interest and no such transfer (other than pursuant to a statutory merger or
consolidation wherein all obligations and liabilities of the transferor Partner
are assumed by a successor corporation by operation of law) shall relieve the
transferor Partner of its obligations under this Agreement without the approval
of the General Partner, in its reasonable discretion. Notwithstanding the
foregoing, any transferee of any transferred Partnership Interest shall be
subject to any and all ownership limitations contained in the Charter, which may
limit or restrict such transferee's ability to exercise its Redemption rights,
and to the representations in Section 3.4.D. Any transferee, whether or not
admitted as a Substituted Limited Partner, shall take subject to the obligations
of the transferor hereunder. Unless admitted as a Substituted Limited Partner,
no transferee, whether by a voluntary transfer, by operation of law or
otherwise, shall have any rights hereunder, other than the rights of an Assignee
as provided in Section 11.5.

      B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator, or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but not
more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate, and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.

      C. The General Partner may prohibit any transfer otherwise permitted under
Section 11.3 by a Limited Partner of his or her Partnership Units if, in the
opinion of legal counsel to the Partnership, such transfer would require the
filing of a registration statement under the Securities Act by the Partnership
or would otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Unit.

Section 11.4 Substituted Limited Partners

      A. No Limited Partner shall have the right to substitute a transferee as a
Limited Partner in his or her place (including any transferee permitted by
Section 11.3). The General Partner shall, however, have the right to consent to
the admission of a transferee of the interest of a Limited Partner pursuant to
this Section 11.4 as a Substituted Limited Partner, which consent may be given
or withheld by the General Partner in its sole and absolute discretion. The
General Partner's failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action, whether at law or in equity, against the Partnership or any
Partner.

      B. A transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement. The admission of any transferee as a Substituted Limited Partner
shall be subject to the transferee executing and delivering to the General
Partner an acceptance of all of the terms and conditions of this Agreement
(including without limitation, the provisions of Section 2.4 and such other
documents or instruments as may be required to effect the admission), each in
form and substance satisfactory to the General Partner) and the acknowledgment
by such transferee that each of the representations and warranties set forth in
Section 3.4 are true and correct with respect to such

                                       53
<PAGE>

transferee as of the date of the transfer of the Partnership Interest to such
transferee and will continue to be true to the extent required by such
representations and warranties.

      C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.

Section 11.5 Assignees

            If the General Partner, in its sole and absolute discretion, does
not consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain and loss attributable to the
Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, the right of Redemption provided
in Section 8.6, but shall not be deemed to be a holder of Partnership Units for
any other purpose under this Agreement, and shall not be entitled to effect a
Consent with respect to such Partnership Units on any matter presented to the
Limited Partners for approval (such Consent remaining with the transferor
Limited Partner). In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject to
all the provisions of this Article 11 to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of Partnership Units.
Notwithstanding anything contained in this Agreement to the contrary, as a
condition to becoming an Assignee, any prospective Assignee must first execute
and deliver to the Partnership an acknowledgment that each of the
representations and warranties set forth in Section 3.4 are true and correct
with respect to such prospective Assignee as of the date of the prospective
assignment of the Partnership Interest to such prospective Assignee and will
continue to be true to the extent required by such representations or
warranties.

Section 11.6 General Provisions

      A. No Limited Partner may withdraw from the Partnership other than as a
result of (i) a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 and the transferee(s) of such
Partnership Units being admitted to the Partnership as a Substituted Limited
Partner or (ii) pursuant to the exercise of its right of Redemption of all of
such Limited Partner's Partnership Units under Section 8.6; provided that after
such transfer, exchange or redemption such Limited Partner owns no Partnership
Interest.

      B. Any Limited Partner who shall transfer all of such Limited Partner's
Partnership Units in a transfer permitted pursuant to this Article 11 where such
transferee was admitted as a Substituted Limited Partner or pursuant to the
exercise of its rights of Redemption of all of such Limited Partner's
Partnership Units under Section 8.6 shall cease to be a Limited Partner;
provided that after such transfer, exchange or redemption such Limited Partner
owns no Partnership Interest.

                                       54
<PAGE>

      C. Transfers pursuant to this Article 11 may only be made on the first day
of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.

      D. If any Partnership Interest is transferred, assigned or redeemed during
any quarterly segment of the Partnership's Partnership Year in compliance with
the provisions of this Article 11 or transferred or redeemed pursuant to Section
8.6, on any day other than the first day of a Partnership Year, then Net Income,
Net Losses, each item thereof and all other items attributable to such
Partnership Interest for such Partnership Year shall be divided and allocated
between the transferor Partner and the transferee Partner by taking into account
their varying interests during the Partnership Year using a method selected by
the General Partner that is in accordance with Section 706(d) of the Code.
Except as otherwise agreed by the General Partner, all distributions of
Available Cash with respect to which the Partnership Record Date is before the
date of such transfer, assignment, exchange or redemption shall be made to the
transferor Partner, and all distributions of Available Cash thereafter, in the
case of a transfer or assignment other than a redemption, shall be made to the
transferee Partner.

      E. In addition to any other restrictions on transfer herein contained,
including without limitation the provisions of this Article 11 and Section 2.6,
in no event may any transfer or assignment of a Partnership Interest by any
Partner (including pursuant to a Redemption or exchange for REIT Shares by the
Partnership or the General Partner) be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii) in
violation of applicable law; (iii) except with the consent of the General
Partner, which may be given or withheld in its sole and absolute discretion, of
any component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (iv) except with the consent of the General Partner, which
may be given or withheld in its sole and absolute discretion, if in the opinion
of legal counsel to the Partnership such transfer could cause a termination of
the Partnership for federal or state income tax purposes (except as a result of
the Redemption or exchange for REIT Shares of all Partnership Interests held by
all Limited Partners or pursuant to a transaction expressly permitted under
Section 11.2); (v) if in the opinion of counsel to the Partnership such transfer
could cause the Partnership to cease to be classified as a partnership for
federal income tax purposes (except as a result of the Redemption or exchange
for REIT Shares of all Partnership Interests held by all Limited Partners); (vi)
if such transfer could, in the opinion of counsel to the Partnership, cause the
Partnership to become, with respect to any employee benefit plan subject to
Title I of ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA)
or a "disqualified person" (as defined in Section 4975(c) of the Code); (vii) if
such transfer could, in the opinion of counsel to the Partnership, cause any
portion of the assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.2-101;
(viii) if such transfer requires the registration of such Partnership Interest
pursuant to any applicable federal or state securities laws; (ix) except with
the consent of the General Partner, which may be given or withheld in its sole
and absolute discretion, if such transfer (1) could be treated as effectuated
through an "established securities market" or a "secondary market" (or the
substantial equivalent thereof) within the meaning of Section 7704 of the Code,
(2) could cause the Partnership to become a "publicly traded partnership," as
such term is defined in Sections 469(k)(2) or 7704(b) of the Code, (3) could be
in violation of Section 3.4E(5), or (4) could cause the Partnership to fail one
or more of the Safe Harbors (as defined below); (x) if such transfer subjects
the Partnership to be regulated under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or the Employee Retirement

                                       55
<PAGE>

Income Security Act of 1974, each as amended; (xi) except with the consent of
the General Partner, which may be given or withheld in its sole discretion, if
the transferee or assignee of such Partnership Interest is unable to make the
representations set forth in Section 3.4.C; (xii) if such transfer is made to a
lender to the Partnership or any Person who is related (within the meaning of
Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose
loan constitutes a Nonrecourse Liability, except with the consent of the General
Partner, which may be given or withheld in its sole and absolute discretion; and
provided, that, as a condition to granting such consent the lender may be
required to enter into an arrangement with the Partnership and the General
Partner to redeem or exchange for the REIT Shares Amount any Partnership Units
in which a security interest is held simultaneously with the time at which such
lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code; or (xiii)
if in the opinion of legal counsel for the Partnership such transfer could
adversely affect the ability of the General Partner to continue to qualify as a
REIT or, except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code.

      F. The General Partner shall monitor the transfers of interests in the
Partnership (including any acquisition of Partnership Units by the Partnership
or the General Partner) to determine (i) if such interests could be treated as
being traded on an "established securities market" or a "secondary market (or
the substantial equivalent thereof)" within the meaning of Section 7704 of the
Code and (ii) whether such transfers of interests could result in the
Partnership being unable to qualify for the "safe harbors" set forth in
Regulations Section 1.7704-1 (or such other guidance subsequently published by
the IRS setting forth safe harbors under which interests will not be treated as
"readily tradable on a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe Harbors"). The
General Partner shall have the authority (but shall not be required) to take any
steps it determines are necessary or appropriate in its sole and absolute
discretion to prevent any trading of interests which could cause the Partnership
to become a "publicly traded partnership" within the meaning of Code Section
7704, or any recognition by the Partnership of such transfers, or to ensure that
one or more of the Safe Harbors is met.

                                  ARTICLE 12.
                              ADMISSION OF PARTNERS

Section 12.1 Admission of Successor General Partner

            A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
upon such transfer. Any such transferee shall carry on the business of the
Partnership without dissolution. In each case, the admission shall be subject to
the successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring General Partner and such successor
as provided in Article 11.

                                       56
<PAGE>

Section 12.2 Admission of Additional Limited Partners

      A. After the admission to the Partnership of the initial Limited Partners
on the date hereof, a Person who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 and (ii) such other documents or instruments
as may be required in the discretion of the General Partner in order to effect
such Person's admission as an Additional Limited Partner.

      B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the receipt of the Capital Contribution in respect of such Limited
Partner and the consent of the General Partner to such admission. If any
Additional Limited Partner is admitted to the Partnership on any day other than
the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated among such Limited Partner and all other
Partners and Assignees by taking into account their varying interests during the
Partnership Year using a method selected by the General Partner that is in
accordance with Section 706(d) of the Code. All distributions of Available Cash
with respect to which the Partnership Record Date is before the date of such
admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner (other than in its capacity as an Assignee) and,
except as otherwise agreed to by the Additional Limited Partners and the General
Partner, all distributions of Available Cash thereafter shall be made to all
Partners and Assignees including such Additional Limited Partner.

Section 12.3 Amendment of Agreement and Certificate of Limited Partnership

            For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4.

                                  ARTICLE 13.
                           DISSOLUTION AND LIQUIDATION

Section 13.1 Dissolution

            The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any

                                       57
<PAGE>

successor General Partner (selected as described in Section 13.1.B below) shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
(each a "Liquidating Event"):

      A. the expiration of its term as provided in Section 2.5;

      B. an event of withdrawal of the General Partner, as defined in the Act,
unless, within 90 days after the withdrawal, all of the remaining Partners agree
in writing, in their sole and absolute discretion, to continue the business of
the Partnership and to the appointment, effective as of the date of withdrawal,
of a substitute General Partner;

      C. subject to compliance with Section 11.2 an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;

      D. entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act;

      E. any sale or other disposition of all or substantially all of the assets
of the Partnership or a related series of transactions that, taken together,
result in the sale or other disposition of all or substantially all of the
assets of the Partnership;

      F. the Incapacity of the General Partner, unless all of the remaining
Partners in their sole and absolute discretion agree in writing to continue the
business of the Partnership and to the appointment, effective as of a date prior
to the date of such Incapacity, of a substitute General Partner;

      G. the Redemption or exchange for REIT Shares of all Partnership Units
(other than those of the General Partner) pursuant to this Agreement; or

      H. a final and non-appealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless prior
to the entry of such order or judgment all of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.

Section 13.2 Winding Up

      A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner (or, in the event there is no remaining General Partner, any
Person elected by a Majority in Interest of the Limited Partners (the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds

                                       58
<PAGE>

therefrom (which may, to the extent determined by the General Partner, include
shares of stock in the General Partner) shall be applied and distributed in the
following order:

            (1) First, to the payment and discharge of all of the Partnership's
debts and liabilities to creditors other than the Partners;

            (2) Second, to the payment and discharge of all of the Partnership's
debts and liabilities to the General Partner;

            (3) Third, to the payment and discharge of all of the Partnership's
debts and liabilities to the other Partners; and

            (4) The balance, if any, to the General Partner and Limited Partners
in accordance with their positive Capital Account balances, determined after
taking into account all Capital Account adjustments for all prior periods and
the Partnership taxable year during which the liquidation occurs (other than
those made as a result of the liquidating distribution set forth in this Section
13.2.A(4)).

The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.

      B. Notwithstanding the provisions of Section 13.2.A which require
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the Partnership
the Liquidator determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A, undivided interests in such
Partnership assets as the Liquidator deems not suitable for liquidation. Any
such distributions in-kind shall be made only if, in the good faith judgment of
the Liquidator, such distributions in-kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.

Section 13.3 Capital Contribution Obligation

            If any Partner has a deficit balance in his or her Capital Account
(after giving effect to all contributions, distributions and allocations for the
taxable years, including the year during which such liquidation occurs), such
Partner shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit at any time shall not
be considered a debt owed to the Partnership or to any other Person for any
purpose whatsoever, except to the extent otherwise expressly agreed to by such
Partner and the Partnership.

                                       59
<PAGE>

Section 13.4 Compliance with Timing Requirements of Regulations

            In the discretion of the Liquidator or the General Partner, a pro
rata portion of the distributions that would otherwise be made to the General
Partner and Limited Partners pursuant to this Article 13 may be:

            (1) distributed to a trust established for the benefit of the
General Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the Liquidator or the General
Partner, in the same proportions and the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement; or

            (2) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership, provided, that
such withheld or escrowed amounts shall be distributed to the General Partner
and Limited Partners in the manner and priority set forth in Section 13.2.A as
soon as practicable.

Section 13.5 Deemed Distribution and Recontribution

            Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have contributed all of its assets
and liabilities to a new partnership in exchange a for an interest in the new
partnership. Immediately thereafter, the Partnership shall be deemed to
distribute interests in the new partnership to the General Partner and Limited
Partners in proportion to their respective interests in the Partnership in
liquidation of the Partnership.

Section 13.6 Rights of Limited Partners

            Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of his Capital
Contribution and shall have no right or power to demand or receive property from
the General Partner. No Limited Partner shall have priority over any other
Limited Partner as to the return of his Capital Contributions, distributions or
allocations.

Section 13.7 Notice of Dissolution

            In the event a Liquidating Event occurs or an event occurs that
would, but for provisions of Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within 30 days thereafter, provide
written notice thereof to each of the Partners and to all other parties with
whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in

                                       60
<PAGE>

each place in which the Partnership regularly conducts business (as determined
in the discretion of the General Partner).

Section 13.8 Cancellation of Certificate of Limited Partnership

                  Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Maryland shall be
cancelled and such other actions as may be necessary to terminate the
Partnership shall be taken.

Section 13.9 Reasonable Time for Winding-Up

                  A reasonable time shall be allowed for the orderly winding-up
of the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2, in order to minimize any losses otherwise attendant
upon such winding-up, and the provisions of this Agreement shall remain in
effect between the Partners during the period of liquidation.

Section 13.10 Waiver of Partition

                  Each Partner hereby waives any right to partition of the
Partnership property.

                                  ARTICLE 14.
                  AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

Section 14.1 Amendments

         A.       The actions requiring consent or approval of the Partners or
of the Limited Partners pursuant to this Agreement, including Section 7.3, or
otherwise pursuant to applicable law, are subject to the procedures in this
Article 14.

         B.       Amendments to this Agreement requiring the consent or approval
of Limited Partners may be proposed by the General Partner or by Limited
Partners holding twenty-five percent (25%) or more of the Partnership Interests
held by Limited Partners. Following such proposal, the General Partner shall
submit any proposed amendment to the Partners or to the Limited Partners, as
applicable. The General Partner shall seek the written consent of the Limited
Partners on the proposed amendment or shall call a meeting to vote thereon and
to transact any other business that it may deem appropriate. For purposes of
obtaining a written consent, the General Partner may require a response within a
reasonable specified time, but not less than 15 days, and failure to respond in
such time period shall constitute a consent which is consistent with the General
Partner's recommendation (if so recommended) with respect to the proposal;
provided, that, an action shall become effective at such time as requisite
consents are received even if prior to such specified time.

Section 14.2 Action by the Partners

         A.       Meetings of the Partners may be called by the General Partner
and shall be called upon the receipt by the General Partner of a written request
by Limited Partners holding twenty-

                                       61
<PAGE>

five percent (25%) or more of the Partnership Interests held by Limited
Partners. The notice shall state the nature of the business to be transacted.
Notice of any such meeting shall be given to all Partners not less than seven
days nor more than 30 days prior to the date of such meeting. Partners may vote
in person or by proxy at such meeting. Whenever the vote or Consent of the
Limited Partners or of the Partners is permitted or required under this
Agreement, such vote or Consent may be given at a meeting of Partners or may be
given in accordance with the procedure prescribed in Section 14.1.

         B.       Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent setting forth
the action so taken is signed by the percentage as is expressly required by this
Agreement for the action in question. Such consent may be in one instrument or
in several instruments, and shall have the same force and effect as a vote of
the Percentage Interests of the Partners (expressly required by this Agreement).
Such consent shall be filed with the General Partner. An action so taken shall
be deemed to have been taken at a meeting held on the effective date so
certified.

         C.       Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it.

         D.       Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate.

         E.       On matters on which Limited Partners are entitled to vote,
each Limited Partner shall have a vote equal to the number of Partnership Units
held.

                                   ARTICLE 15.

                               GENERAL PROVISIONS

Section 15.1 Addresses and Notice

                  Any notice, demand, request or report required or permitted to
be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit A or such other
address as the Partners shall notify the General Partner in writing.

Section 15.2 Titles and Captions

                  All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.

                                       62
<PAGE>

Section 15.3 Pronouns and Plurals

                  Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.

Section 15.4 Further Action

                  The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

Section 15.5 Binding Effect

                  This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.

Section 15.6 Creditors

                  Other than as expressly set forth herein with respect to
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.

Section 15.7 Waiver

                  No failure or delay by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon any breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.

Section 15.8 Counterparts

                  This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.

Section 15.9 Applicable Law

                  This Agreement shall be construed in accordance with and
governed by the laws of the State of Maryland, without regard to the principles
of conflicts of law.

Section 15.10 Invalidity of Provisions

                  If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.

                                       63
<PAGE>

Section 15.11 Entire Agreement

                  This Agreement contains the entire understanding and agreement
among the Partners with respect to the subject matter hereof and supersedes any
other prior written or oral understandings or agreements among them with respect
thereto.

Section 15.12 No Rights as Stockholders

                  Nothing contained in this Agreement shall be construed as
conferring upon the holders of Partnership Units any rights whatsoever as
stockholders of the General Partner, including without limitation any right to
receive dividends or other distributions made to stockholders of the General
Partner or to vote or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the General
Partner or any other matter.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Agreement of Limited Partnership as of the date first written above.

General Partner:                            BIOMED REALTY TRUST, INC.,
                                            a Maryland corporation

                                            By: ________________________________
                                                Name:
                                                Title:

                                            By: ________________________________
                                                Name:
                                                Title:

    Signature Page to Amended and Restated Agreement of Limited Partnership of
BioMed Realty, L.P.

                                      S-1

<PAGE>

                              [L.P. SIGNATURE PAGE]

Limited Partner:                        ________________________________________
                                        (Signature of Limited Partner)

                                        ________________________________________
                                        (Street Address)

                                        ________________________________________
                                        (City) (State) (Zip Code)

Limited Partner:                        ________________________________________
                                        (Signature of Limited Partner)

                                        ________________________________________
                                        (Street Address)

                                        ________________________________________
                                        (City) (State) (Zip Code)

Limited Partner:                        ________________________________________
                                        (Signature of Limited Partner)

                                        ________________________________________
                                        (Street Address)

                                        ________________________________________
                                        (City) (State) (Zip Code)

Limited Partner:                        ________________________________________
                                        (Signature of Limited Partner)

                                        ________________________________________
                                        (Street Address)

                                        ________________________________________
                                        (City) (State) (Zip Code)

 Signature Page to Amended and Restated Agreement of Limited Partnership of
BioMed Realty, L.P.

                                      S-2

<PAGE>

                                   EXHIBIT A-1

                            (DATED __________, 2004)

                PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS

<TABLE>
<CAPTION>
                                                              AGREED VALUE OF
NAME AND ADDRESS                GROSS ASSET        CASH         CONTRIBUTED         TOTAL       PARTNERSHIP  PERCENTAGE
   OF PARTNER                      VALUE       CONTRIBUTIONS     PROPERTY*      CONTRIBUTIONS      UNITS      INTEREST
----------------                -----------    -------------  ---------------   -------------   -----------  ----------
<S>                             <C>            <C>            <C>               <C>             <C>          <C>
General Partner
BioMed Realty Trust, Inc.

Limited Partners
</TABLE>

* Net of Debt (if any)

                                      A-1
<PAGE>

                                    EXHIBIT B

                              NOTICE OF REDEMPTION

                  The undersigned hereby irrevocably (i) transfers ____________
Limited Partnership Units in BioMed Realty, L.P. in accordance with the terms of
the Amended and Restated Agreement of Limited Partnership of BioMed Realty, L.P.
and the rights of Redemption referred to therein, (ii) surrenders such Limited
Partnership Units and all right, title and interest therein, and (iii) directs
that the cash (or, if applicable, REIT Shares) deliverable upon Redemption or
exchange be delivered to the address specified below, and if applicable, that
such REIT Shares be registered or placed in the name(s) and at the address(es)
specified below.

Dated: _________________________________

         Name of Limited Partner:

                                            ____________________________________
                                            (Signature of Limited Partner)

                                            ____________________________________
                                            (Street Address)

                                            ____________________________________
                                            (City) (State) (Zip Code)

                                            Signature Guaranteed by:

                                            ____________________________________

Issue REIT Shares to:

Please insert social security or identifying number:

Name:

                                      B-1
<PAGE>

                                    EXHIBIT C

                        CONSTRUCTIVE OWNERSHIP DEFINITION

                  The term "Constructively Owns" means ownership determined
through the application of the constructive ownership rules of Section 318 of
the Code, as modified by Section 856(d)(5) of the Code. Generally, these rules
provide the following:

                  a.       an individual is considered as owning the Ownership
Interest (defined below) that is owned, actually or constructively, by or for
his spouse, his children, his grandchildren, and his parents;

                  b.       an Ownership Interest that is owned, actually or
constructively, by or for a partnership, limited liability company or estate is
considered as owned proportionately by its partners or beneficiaries;

                  c.       an Ownership Interest that is owned, actually or
constructively, by or for a trust is considered as owned by its beneficiaries in
proportion to the actuarial interest of such beneficiaries (provided, however,
that in the case of a "grantor trust" the Ownership Interest will be considered
as owned by the grantors);

                  d.       if ten (10) percent or more in value of the stock in
a corporation is owned, actually or constructively, by or for any person, such
person shall be considered as owning the Ownership Interest that is owned,
actually or constructively, by or for such corporation in that proportion which
the value of the stock which such person so owns bears to the value of all the
stock in such corporation;

                  e.       an Ownership Interest that is owned, actually or
constructively, by or for a partner or member which actually or constructively
owns a 25% or greater capital interest or profits interest in a partnership or
limited liability company, or by or to or for a beneficiary of an estate or
trust shall be considered as owned by the partnership, limited liability
company, estate, or trust (or, in the case of a grantor trust, the grantors);

                  f.       if ten (10) percent or more in value of the stock in
a corporation is owned, actually or constructively, by or for any person, such
corporation shall be considered as owning the Ownership Interest that is owned,
actually or constructively, by or for such person;

                  g.       if any person has an option to acquire an Ownership
Interest (including an option to acquire an option or any one of a series of
such options), such Ownership Interest shall be considered as owned by such
person;

                  h.       an Ownership Interest that is constructively owned by
a person by reason of the application of the rules described in paragraphs (a)
through (g) above shall, for purposes of applying paragraphs (a) through (g), be
considered as actually owned by such person provided, however, that (i) an
Ownership Interest constructively owned by an individual by reason of paragraph
(a) shall not be considered as owned by him for purposes of again applying
paragraph (a) in order to make another the constructive owner of such Ownership
Interest, (ii) an Ownership Interest constructively owned by a partnership,
estate, trust, or corporation by reason

                                      C-1
<PAGE>

of the application of paragraphs (e) or (f) shall not be considered as owned by
it for purposes of applying paragraphs (b), (c), or (d) in order to make another
the constructive owner of such Ownership Interest, (iii) if an Ownership
Interest may be considered as owned by an individual under paragraphs (a) or
(g), it shall be considered as owned by him under paragraph (g), and (iv) for
purposes of the above described rules, an S corporation shall be treated as a
partnership and any stockholder of the S corporation shall be treated as a
partner of such partnership except that this rule shall not apply for purposes
of determining whether stock in the S corporation is constructively owned by any
person.

                  i.       For purposes of the above summary of the constructive
ownership rules, the term "Ownership Interest" means the ownership of stock with
respect to a corporation and, with respect to any other type of entity, the
ownership of an interest in either its assets or net profits.

                                      C-2
<PAGE>

                                    EXHIBIT D

                      FORM OF PARTNERSHIP UNIT CERTIFICATE

                      CERTIFICATE FOR PARTNERSHIP UNITS OF
                               BIOMED REALTY, L.P.

No._________                                                     __________UNITS

                  BioMed Realty Trust, Inc., as the General Partner of BioMed
Realty, L.P., a Maryland limited partnership (the "Operating Partnership"),
hereby certifies that ____________________ is a Limited Partner of the Operating
Partnership whose Partnership Interests therein, as set forth in the Amended and
Restated Agreement of Limited Partnership of the Operating Partnership dated
_________, 2004 (the "Partnership Agreement"), under which the Operating
Partnership is existing (copies of which are on file at the Operating
Partnership's principal office at 17140 Bernardo Center Drive, Suite 195, San
Diego, California 92128, represent _______ units of limited partnership interest
in the Operating Partnership.

                  THE UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY
NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT, AS IT MAY
BE AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON FILE WITH THE OPERATING
PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN THE PARTNERSHIP AGREEMENT, THE
UNITS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION,
UNLESS THE TRANSFEROR DELIVERS TO THE GENERAL PARTNER AN OPINION OF COUNSEL
SATISFACTORY TO THE GENERAL PARTNER, TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT
AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.

DATED: _________________

                                        BIOMED REALTY TRUST, INC.

                                        General Partner of
                                        BioMed Realty, L.P.

ATTEST:

By: ____________________                By: ______________________

                                      D-1
<PAGE>

                                    EXHIBIT E

                         SCHEDULE OF PARTNERS' OWNERSHIP
                             WITH RESPECT TO TENANTS

                                      E-1
<PAGE>

                                    EXHIBIT F

                             SCHEDULE OF REIT SHARES
              ACTUALLY OR CONSTRUCTIVELY OWNED BY LIMITED PARTNERS
                OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE

                                      F-1
<PAGE>

                                        i

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