Exhibit 10.1

SG MORTGAGE SECURITIES, LLC

Depositor

OPTION ONE MORTGAGE CORPORATION

Servicer

WELLS FARGO BANK, N.A.

Master Servicer, Securities Administrator and Custodian

HSBC BANK USA, NATIONAL ASSOCIATION

Trustee

POOLING AND SERVICING AGREEMENT

Dated as of December 1, 2006

SG Mortgage Securities Trust 2006-OPT2

Asset Backed Certificates, Series 2006-OPT2

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TABLE OF CONTENTS

 

          Page ARTICLE I     DEFINITIONS    5

Section 1.01

   Defined Terms    5

Section 1.02

   Allocation of Certain Interest Shortfalls    63 ARTICLE II     CONVEYANCE OF
MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES    64

Section 2.01

   Conveyance of the Mortgage Loans    64

Section 2.02

   Acceptance by Trustee    67

Section 2.03

   Repurchase or Substitution of Mortgage Loans    68

Section 2.04

   Representations and Warranties of the Master Servicer    71

Section 2.05

   Representations, Warranties and Covenants of the Servicer    72

Section 2.06

   Issuance of Certificates    75

Section 2.07

   Issuance of the REMIC I Regular Interests and the Class R-I Interest;
Conveyance of the REMIC I Regular Interests and Acceptance of REMIC II by the
Trustee    75

Section 2.08

   Negative Covenants of the Trustee, the Servicer and the Master Servicer    76

Section 2.09

   Establishment of the Trust    77 ARTICLE III     ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS; ACCOUNTS    77

Section 3.01

   Servicer to Act as Servicer    77

Section 3.02

   Sub-Servicing Agreements Between the Servicer and Sub-Servicers    79

Section 3.03

   Successor Sub-Servicers    79

Section 3.04

   No Contractual Relationship Between Sub-Servicer, Trustee or the
Certificateholders    80

Section 3.05

   Assumption or Termination of Sub-Servicing Agreement by Successor Servicer   
80

Section 3.06

   Collection of Certain Mortgage Loan Payments    80

Section 3.07

   Collection of Taxes, Assessments and Similar Items; Servicing Accounts    81

Section 3.08

   Collection Account and Distribution Account    82

Section 3.09

   Withdrawals from the Collection Account and Distribution Account    84

Section 3.10

   Investment of Funds in the Investment Accounts    86

Section 3.11

   Maintenance of Hazard Insurance, Errors and Omissions and Fidelity Coverage
and Primary Mortgage Insurance    87

Section 3.12

   Enforcement of Due-on-Sale Clauses; Assumption Agreements    89

Section 3.13

   Realization Upon Defaulted Mortgage Loans    90

Section 3.14

   Trustee to Cooperate; Release of Mortgage Files    91

Section 3.15

   Servicing Compensation    93

Section 3.16

   Collection Account Statements    93

Section 3.17    

   Statement as to Compliance    93

 

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TABLE OF CONTENTS

(Continued)

 

          Page

Section 3.18

   Assessments of Compliance and Accountant’s Attestation Reports    94

Section 3.19

   [Reserved]    96

Section 3.20

   Access to Certain Documentation    96

Section 3.21

   Title, Management and Disposition of REO Property    96

Section 3.22

   Obligations of the Servicer in Respect of Prepayment Interest Shortfalls;
Relief Act Interest Shortfalls    99

Section 3.23

   Obligations of the Servicer in Respect of Mortgage Rates and Monthly Payments
   100

Section 3.24

   Reserve Fund    100

Section 3.25

   Servicer Indemnification    101

Section 3.26

   Solicitations    101

ARTICLE IV    ADMINISTRATION AND MASTER SERVICING OF THE MORTGAGE LOANS BY THE
MASTER SERVICER

   102

Section 4.01

   Master Servicer    102

Section 4.02

   REMIC-Related Covenants    103

Section 4.03

   Monitoring of Servicer    103

Section 4.04

   Fidelity Bond    104

Section 4.05

   Power to Act; Procedures    105

Section 4.06

   Due-on-Sale Clauses; Assumption Agreements    106

Section 4.07

   Documents, Records and Funds in Possession of Master Servicer To Be Held for
Trustee    106

Section 4.08

   Standard Hazard Insurance and Flood Insurance Policies    106

Section 4.09

   Presentment of Claims and Collection of Proceeds    107

Section 4.10

   Maintenance of Primary Mortgage Insurance Policies    107

Section 4.11

   Trustee to Retain Possession of Certain Insurance Policies and Documents   
107

Section 4.12

   Realization Upon Defaulted Mortgage Loans    108

Section 4.13

   Compensation for the Master Servicer    108

Section 4.14

   REO Property    108

Section 4.15

   [Reserved]    109

Section 4.16

   [Reserved]    109

Section 4.17

   UCC    109

Section 4.18

   Obligation of the Master Servicer in Respect of Prepayment Interest
Shortfalls    109

Section 4.19

   Prepayment Charge Review    109

ARTICLE V     PAYMENTS TO CERTIFICATEHOLDERS

   110

Section 5.01

   Distributions    110

Section 5.02

   Statements to Certificateholders    121

Section 5.03

   Servicer Reports; P&I Advances    124

Section 5.04

   Swap Account    125

Section 5.05

   Distributions on the REMIC I Regular Interests    127

Section 5.06    

   Allocation of Realized Losses    132

 

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TABLE OF CONTENTS

(Continued)

 

          Page

Section 5.07

   Tax Treatment of Swap Payments and Swap Termination Payments    135

Section 5.08

   Compliance with Withholding Requirements    135

Section 5.09

   Reports Filed with Securities and Exchange Commission    136

ARTICLE VI     THE CERTIFICATES

   145

Section 6.01

   The Certificates    145

Section 6.02

   Registration of Transfer and Exchange of Certificates    146

Section 6.03

   Mutilated, Destroyed, Lost or Stolen Certificates    155

Section 6.04

   Persons Deemed Owners    156

Section 6.05

   Certain Available Information    156

ARTICLE VII     THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER

   157

Section 7.01

   Liability of the Depositor, the Servicer and the Master Servicer    157

Section 7.02

   Merger or Consolidation of the Depositor, the Servicer or the Master Servicer
   157

Section 7.03

   Limitation on Liability of the Depositor, the Servicer, the Master Servicer
and Others    157

Section 7.04

   Limitation on Resignation of the Servicer    158

Section 7.05

   Limitation on Resignation of the Master Servicer    159

Section 7.06

   Assignment of Master Servicing    159

Section 7.07

   Rights of the Depositor in Respect of the Servicer and the Master Servicer   
160

Section 7.08

   Duties of the Credit Risk Manager    161

Section 7.09

   Limitation Upon Liability of the Credit Risk Manager    161

ARTICLE VIII     DEFAULT

   162

Section 8.01

   Servicer Events of Default    162

Section 8.02

   Master Servicer to Act; Appointment of Successor    166

Section 8.03

   Notification to Certificateholders    168

Section 8.04

   Waiver of Servicer Events of Default    168

ARTICLE IX     CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

   168

Section 9.01

   Duties of Trustee and Securities Administrator    168

Section 9.02

   Certain Matters Affecting Trustee and Securities Administrator    170

Section 9.03

   Trustee and Securities Administrator not Liable for Certificates or Mortgage
Loans    172

Section 9.04

   Trustee and Securities Administrator May Own Certificates    172

Section 9.05

   Fees and Expenses of Trustee and Securities Administrator    172

Section 9.06

   Eligibility Requirements for Trustee and Securities Administrator    173

Section 9.07    

   Resignation and Removal of Trustee and Securities Administrator    173

 

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TABLE OF CONTENTS

(Continued)

 

          Page

Section 9.08

   Successor Trustee or Securities Administrator    174

Section 9.09

   Merger or Consolidation of Trustee or Securities Administrator    175

Section 9.10

   Appointment of Co-Trustee or Separate Trustee    175

Section 9.11

   Appointment of Office or Agency    176

Section 9.12

   Representations and Warranties    177

ARTICLE X     TERMINATION

   177

Section 10.01

   Termination Upon Repurchase or Liquidation of All Mortgage Loans    177

Section 10.02

   Additional Termination Requirements    179

ARTICLE XI     REMIC PROVISIONS

   180

Section 11.01

   REMIC Administration    180

Section 11.02

   Prohibited Transactions and Activities    182

Section 11.03

   Indemnification with Respect to Certain Taxes and Loss of REMIC Status    182

ARTICLE XII     MISCELLANEOUS PROVISIONS

   183

Section 12.01

   Amendment    183

Section 12.02

   Recordation of Agreement; Counterparts    184

Section 12.03

   Limitation on Rights of Certificateholders    185

Section 12.04

   Governing Law    185

Section 12.05

   Notices    185

Section 12.06

   Severability of Provisions    186

Section 12.07

   Notice to Rating Agencies    186

Section 12.08

   Article and Section References    187

Section 12.09

   Grant of Security Interest    187

Section 12.10

   Survival of Indemnification    188

Section 12.11

   Third Party Beneficiary    188

ARTICLE XIII     COMPLIANCE WITH REGULATION AB

   188

Section 13.01

   Intent of the Parties; Reasonableness    188

Section 13.02    

   Additional Representations and Warranties of the Servicer    189

 

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EXHIBITS

 

Exhibit A-1    Form of Class A-1 Certificates Exhibit A-2    Form of Class A-2
Certificates Exhibit A-3    Form of Class A-3A Certificates Exhibit A-4    Form
of Class A-3B Certificates Exhibit A-5    Form of Class A-3C Certificates
Exhibit A-6    Form of Class A-3D Certificates Exhibit A-7    Form of Class M
Certificates [Publicly Offered] Exhibit A-8    Form of Class M Certificates
[Privately Placed] Exhibit A-9    Form of Class CE Certificates Exhibit A-10   
Form of Class P Certificates Exhibit A-11    Form of Class R-I Certificates
Exhibit A-12    Form of Class R-II Certificates Exhibit A-13    Form of Class
R-III Certificates Exhibit B    [Reserved.] Exhibit C    Form of Servicer
Certificate Exhibit D    Mortgage Loan Schedule Exhibit E    Request for Release
Exhibit F-1    Form of Trustee’s Initial Certification Exhibit F-2    Form of
Trustee’s Final Certification Exhibit F-3    Form of Receipt of Mortgage Note
Exhibit G    Prepayment Charge Schedule Exhibit H    Form of Lost Note Affidavit
Exhibit I    List of Hurricane-affected Mortgage Loans Exhibit J    Form of
Investment Letter Exhibit K    Form of Residual Certificates Transfer Affidavit
Exhibit L    Form of Transferor Certificate Exhibit M    Form of Certification
to Be Provided by the Master Servicer with Form 10-K Exhibit N    Form of ERISA
Representation Letter Exhibit O-1    Form of Transfer Certificate for Transfer
from Restricted Global Security to Regulation S Global Security pursuant to
Section 6.02(d)(iii)(B) Exhibit O-2    Form of Transfer Certificate for Transfer
from Regulation S Global Security to Restricted Global Security pursuant to
Section 6.02(d)(iii)(C) Exhibit P    Servicing Criteria Exhibit Q    Additional
Form 10-D Disclosure Exhibit R    Form 8-K Disclosure Information Exhibit S   
Additional Disclosure Notification Exhibit T    Additional 10-K Disclosure
Exhibit U    Form of Back-up Certification Exhibit V-1    Form of Delinquency
Report Exhibit V-2    Form of Remittance Advice Exhibit V-3    Form of Realized
Loss Report

 

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This Pooling and Servicing Agreement, is dated and effective as of December 1,
2006, among SG MORTGAGE SECURITIES, LLC, as Depositor, OPTION ONE MORTGAGE
CORPORATION, as Servicer, WELLS FARGO BANK, N.A., as Master Servicer, Securities
Administrator and Custodian and HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee.

PRELIMINARY STATEMENT:

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

REMIC I

As provided herein, the Trustee shall make an election to treat the segregated
pool of assets consisting of the Mortgage Loans and certain other related assets
subject to this Agreement (but exclusive of the Reserve Fund, the Servicer
Prepayment Charge Payment Amounts, the Swap Account and the Interest Rate Swap
Agreement) as a real estate investment conduit (a “REMIC”) for federal income
tax purposes, and such segregated pool of assets will be designated as “REMIC
I.” The Class R-I Interest will represent the sole class of “residual interests”
in REMIC I for purposes of the REMIC Provisions. The following table irrevocably
sets forth the designation, the Uncertificated REMIC I Pass-Through Rate, the
initial Uncertificated Principal Balance, and 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.

 

Designation

   Uncertificated REMIC I
Pass-Through Rate   Initial Uncertificated
Principal Balance   Latest Possible
Maturity Date

LT-I-A (Group I Loans)

   (1)   (2)   October 2036

LT-I-B (Group I Loans)

   (1)   (2)   October 2036

LT-II-A (Group II Loans)

   (1)   (2)   October 2036

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Designation

   Uncertificated REMIC I
Pass-Through Rate   Initial Uncertificated
Principal Balance   Latest Possible
Maturity Date

LT-II-B (Group II Loans)

   (1)   (2)   October 2036

LT-III-A (Group III Loans)

   (1)   (2)   October 2036

LT-III-B (Group III Loans)

   (1)   (2)   October 2036

 

(1) Calculated in accordance with the definition of “Uncertificated REMIC I
Pass-Through Rate” herein.

 

(2) Each REMIC I Class A Interest will have an uncertificated principal balance
initially equal to 0.10% of the Subordinate Component of its corresponding Loan
Group. The initial principal balance of each REMIC I Class B Interest will be
equal to the excess of the initial aggregate principal balance of its
corresponding Loan Group over the initial aggregate principal balance of the
REMIC I Class A Interest corresponding to such Loan Group. Principal
Distribution Amounts and Realized Losses with respect to each Loan Group shall
be allocated, first, to cause the Loan Group’s corresponding REMIC I Class A
Interest to equal 0.10% of the Subordinate Component of the corresponding Loan
Group.

REMIC II

As provided herein, the Trustee shall make an election 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-II Interest will represent the sole class
of “residual interests” in REMIC II for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, Uncertificated REMIC II
Pass-Through Rate, aggregate Initial Uncertificated Principal Balance and 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. None
of the REMIC II Regular Interests shall be certificated.

 

2

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Designation

   Uncertificated REMIC II
Pass-Through Rate  

Initial Uncertificated
REMIC II

Principal Balance

   Latest Possible
Maturity Date(3)

I-AA

   (1)   $ 191,016,893.20    October 2036

A-I-1

   (1)   $ 1,482,330    October 2036

I-ZZ

   (1)   $ 1,977,418.05    October 2036

II-AA

   (1)   $ 265,768,143.30    October 2036

A-II-2

   (1)   $ 2,062,410    October 2036

II-ZZ

   (1)   $ 2,751,246.89    October 2036

III-AA

   (1)   $ 340,238,606.14    October 2036

A-III-3A

   (1)   $ 1,498,990    October 2036

A-III-3B

   (1)   $ 578,050    October 2036

A-III-3C

   (1)   $ 313,480    October 2036

A-III-3D

   (1)   $ 250,230    October 2036

III-ZZ

   (1)   $ 3,522,739.98    October 2036

M-1

   (2)   $ 427,010    October 2036

M-2

   (2)   $ 390,410    October 2036

M-3

   (2)   $ 122,000    October 2036

M-4

   (2)   $ 170,800    October 2036

M-5

   (2)   $ 138,270    October 2036

M-6

   (2)   $ 81,330    October 2036

M-7

   (2)   $ 109,800    October 2036

M-8

   (2)   $ 61,000    October 2036

M-9

   (2)   $ 105,730    October 2036

M-10

   (2)   $ 126,070    October 2036

M-11

   (2)   $ 97,600    October 2036

MT-P

   (3)   $ 1    October 2036

 

(1) Calculated in accordance with the definition of “Uncertificated REMIC II
Pass-Through Rate” herein.

 

(2) Calculated in accordance with the definition of “Uncertificated Subordinate
REMIC II Pass-Through Rate” herein.

 

(3) The Uncertificated REMIC II Regular Interest MT-P will not accrue interest.

REMIC III

As provided herein, the Trustee shall 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-III Interest represents the sole class of
“residual interests” in REMIC III for purposes of the REMIC Provisions.

 

3

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The following table sets forth (or describes) 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, and the sole class of “residual interests” in each REMIC created hereunder:

 

Designation

   Type    Pass-Through
Rate     Aggregate Initial
Certificate
Principal Balance    Features    Final Scheduled
Distribution Date    Initial Ratings                                Moody’s   
S&P    Fitch    DBRS

Class A-1(1)

   Senior    Adjustable (2)(3)   $ 148,233,000.00    Senior    October* 2036   
Aaa    AAA    AAA    AAA

Class A-2

   Senior    Adjustable (2)(3)   $ 206,241,000.00    Senior    October 2036   
Aaa    AAA    AAA    AAA

Class A-3A

   Senior    Adjustable (2)(3)   $ 149,899,000.00    Senior    October 2036   
Aaa    AAA    AAA    AAA

Class A-3B

   Senior    Adjustable (2)(3)   $ 57,805,000.00    Senior    October 2036   
Aaa    AAA    AAA    AAA

Class A-3C

   Senior    Adjustable (2)(3)   $ 31,348,000.00    Senior    October 2036   
Aaa    AAA    AAA    AAA

Class A-3D

   Senior    Adjustable (2)(3)   $ 25,023,000.00    Senior    October 2036   
Aaa    AAA    AAA    AAA

Class M-1

   Mezzanine    Adjustable (2)(3)   $ 42,701,000.00    Mezzanine    October 2036
   Aa1    AA+    AA+    AA
(high)

Class M-2

   Mezzanine    Adjustable (2)(3)   $ 39,041,000.00    Mezzanine    October 2036
   Aa2    AA    AA    AA

Class M-3

   Mezzanine    Adjustable (2)(3)   $ 12,200,000.00    Mezzanine    October 2036
   Aa3    AA-    AA-    AA
(low)

Class M-4

   Mezzanine    Adjustable (2)(3)   $ 17,080,000.00    Mezzanine    October 2036
   A1    A+    A+    A
(high)

Class M-5

   Mezzanine    Adjustable (2)(3)   $ 13,827,000.00    Mezzanine    October 2036
   A2    A    A    A

Class M-6

   Mezzanine    Adjustable (2)(3)   $ 8,133,000.00    Mezzanine    October 2036
   A3    A-    A-    A
(low)

Class M-7

   Mezzanine    Adjustable (2)(3)   $ 10,980,000.00    Mezzanine    October 2036
   Baa1    BBB+    BBB+    BBB
(high)

Class M-8

   Mezzanine    Adjustable (2)(3)   $ 6,100,000.00    Mezzanine    October 2036
   Baa2    BBB    BBB    BBB

Class M-9

   Mezzanine    Adjustable (2)(3)   $ 10,573,000.00    Mezzanine    October 2036
   Baa3    BBB-    BBB-    BBB
(low)

Class M-10

   Mezzanine    Adjustable (2)(3)   $ 12,607,000.00    Mezzanine    October 2036
   Ba1    BB+    BB+    BB
(high)

Class M-11

   Mezzanine    Adjustable (2)(3)   $ 9,760,000.00    Mezzanine    October 2036
   Ba2    BB    N/R    BB

Class CE Interest

   Subordinate    Variable (4)   $ 11,794,695.44    Subordinate    October 2036
   N/R    N/R    N/R    N/R

Class P Interest

   Prepayment
charge    Variable (5)   $ 100.00    Subordinate    October 2036    N/R    N/R
   N/R    N/R

Class R-I

   Residual    N/A       N/A    Residual    N/A    N/R    N/R    N/R    N/R

Class R-II

   Residual    N/A       N/A    Residual    N/A    N/R    N/R    N/R    N/R

Class R-III

   Residual    N/A       N/A    Residual    N/A    N/R    N/R    N/R    N/R

 

* For purposes of Section 1.860G-1a)(4)(iii) of the Treasury regulations, the
Distribution Date immediately following the maturity date for the Mortgage Loans
with the latest maturity date has been designated as the “latest possible
maturity date” for each Class of Certificates.

 

4

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(1) The Class A and Mezzanine Certificates will represent ownership of the
related REMIC III Regular Interests, together with (x) certain additional rights
to receive payments from amounts received under the Interest Rate Swap
Agreement, from amounts received by the Class CE Certificates attributable to
such Certificates’ related REMIC III Regular Interests, and from amounts
received under a Cap Agreement and (y) the obligation in certain instances to
make payments under a notional principal contract to the Class CE Certificates
in favor of the Swap Provider, all of which additional rights and obligations
will be treated for federal income tax purposes as arising and occurring outside
of REMIC III.

 

(2) The REMIC III Regular Interests, ownership of which is represented by the
Class A and Mezzanine Certificates, will accrue interest as a per annum rate
equal to LIBOR plus the applicable Margin, in each case subject to payment caps
as described in the definition of “Pass-Through Rate,” and the provision for
payment of Net WAC Carryover Shortfall Amounts described herein, which amounts
will not be part of the entitlement of the REMIC III Regular Interests related
to such Certificates.

 

(3) The Class CE Certificates will be comprised of two REMIC III Regular
Interests, a principal only regular interest designated REMIC III Regular
Interest Class CE-PO and an interest only regular interest designated REMIC III
Regular Interest CE-IO, each of which will be entitled to distributions as set
forth herein.

 

(4) The Class CE Interest will accrue interest at its variable Pass-Through Rate
on the Notional Amount of the Class CE Interest outstanding from time to time
which shall equal the aggregate of the Uncertificated Principal Balances of the
REMIC III Regular Interests (other than REMIC III Regular Interest LTP). The
Class CE Interest will not accrue interest on its Class Certificate Principal
Balance.

 

(5) The Class P Certificates will not accrue interest.

ARTICLE I

DEFINITIONS

Section 1.01 Defined Terms.

Whenever used in this Agreement, including, without limitation, in the
Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations in respect of interest on the
Class A Certificates and the Mezzanine Certificates shall be made on the basis
of the actual number of days elapsed on the basis of a 360-day year and all
calculations in respect of interest on the Class CE Certificates and all other
calculations of interest described herein shall be made on the basis of a
360-day year consisting of twelve 30-day months. The Class P Certificates and
the Residual Certificates are not entitled to distributions in respect of
interest and, accordingly, will not accrue interest.

“10-K Filing Deadline”: has the meaning set forth in Section 5.09(a)(ii).

“Accepted Master Servicing Practices”: With respect to any Mortgage Loan, as
applicable, either (x) those customary mortgage master servicing practices of
prudent mortgage servicing institutions that master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Master
Servicer (except in its capacity as successor to the Servicer), or (y) as
provided in Section 4.01 hereof, but in no event below the standard set forth in
clause (x).

 

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“Accepted Servicing Practices”: As defined in Section 3.01.

“Account”: The Collection Account and the Distribution Account as the context
may require.

“Accrual Period”: With respect to the Class A Certificates and the Mezzanine
Certificates and each Distribution Date, the period commencing on the preceding
Distribution Date (or in the case of the first such Accrual Period, commencing
on the Closing Date) and ending on the day preceding the current Distribution
Date. With respect to the Class CE Certificates and each Distribution Date, the
calendar month prior to the month of such Distribution Date.

“Accrued Certificate Interest”: With respect to any Class A Certificate,
Mezzanine Certificate or Class CE Certificate and each Distribution Date,
interest accrued during the related Accrual Period at the Pass-Through Rate for
such Certificate for such Distribution Date on the Certificate Principal
Balance, in the case of the Class A Certificates and the Mezzanine Certificates,
or on the Notional Amount in the case of the Class CE Certificates, of such
Certificate immediately prior to such Distribution Date. The Class P
Certificates are not entitled to distributions in respect of interest, and
accordingly, will not accrue interest. All distributions of interest on the
Class A Certificates and the Mezzanine Certificates will be calculated on the
basis of a 360-day year and the actual number of days in the applicable Accrual
Period. All distributions of interest on the Class CE Certificates will be based
on a 360-day year consisting of twelve 30-day months. Accrued Certificate
Interest with respect to each Distribution Date, as to any Class A Certificate,
Mezzanine Certificate or Class CE Certificate shall be reduced by an amount
equal to the portion allocable to such Certificate pursuant to Section 1.02
hereof, if any, of the sum of (a) the aggregate Prepayment Interest Shortfall,
if any, for such Distribution Date to the extent not covered by payments
pursuant to Section 3.22 or Section 4.18 of this Agreement and (b) the aggregate
amount of any Relief Act Interest Shortfall, if any, for such Distribution Date.
In addition, Accrued Certificate Interest with respect to each Distribution
Date, as to any Class CE Certificate, shall be reduced by an amount equal to the
portion allocable to such Class CE Certificate of Realized Losses, if any,
pursuant to Section 1.02 and the Preliminary Statement hereof.

“Additional Disclosure Notification”: has the meaning set forth in
Section 5.09(a)(i).

“Additional Form 10-D Disclosure”: has the meaning set forth in
Section 5.09(a)(i).

“Additional Form 10-K Disclosure”: has the meaning set forth in
Section 5.09(a)(iii).

“Adjustable Rate Mortgage Loan”: A first lien Mortgage Loan which provides at
any period during the life of such loan for the adjustment of the Mortgage Rate
payable in respect thereto. The Adjustable Rate Mortgage Loans are identified as
such on the Mortgage Loan Schedule.

“Adjusted Net Maximum Mortgage Rate”: With respect to any Distribution Date and
any Mortgage Loan (or the related REO Property) in the Trust Fund as of the
close of business on the last day of the preceding Prepayment Period, a per
annum rate of interest equal to the applicable Maximum Mortgage Rate for such
Mortgage Loan (or the Mortgage Rate in the case

 

6

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of any Fixed Rate Mortgage Loan) as of the first day of the month preceding the
month in which the Distribution Date occurs (or the Cut-Off Date with respect to
the first Distribution Date) minus the Servicing Fee Rate and the Credit Risk
Manager Fee Rate.

“Adjusted Net Mortgage Rate”: With respect to any Distribution Date and any
Mortgage Loan (or the related REO Property) in the Trust Fund as of the close of
business on the last day of the preceding Prepayment Period, a per annum rate of
interest equal to the applicable Mortgage Rate for such Mortgage Loan as of the
first day of the month preceding the month in which such Distribution Date
occurs (or the Cut-Off Date with respect to the first Distribution Date) minus
the Servicing Fee Rate and the Credit Risk Manager Fee Rate.

“Adjustment Date”: With respect to each Adjustable Rate Mortgage Loan, each
adjustment date, on which the Mortgage Rate of such Mortgage Loan changes
pursuant to the related Mortgage Note. The first Adjustment Date following the
Cut-off Date as to each Adjustable Rate Mortgage Loan is set forth in the
Mortgage Loan Schedule.

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

“Agreement”: This Pooling and Servicing Agreement, including all exhibits and
schedules hereto and all amendments hereof and supplements hereto.

“Allocated Realized Loss Amount”: With respect to any Distribution Date and any
Class of Mezzanine Certificates, the sum of (i) any Realized Losses allocated to
such Class of Certificates on such Distribution Date and (ii) the amount of any
Allocated Realized Loss Amount for such Class of Certificates remaining unpaid
from the previous Distribution Date as reduced by an amount equal to the
increase in the related Certificate Principal Balance due to the receipt of
Subsequent Recoveries.

“Amounts Held for Future Distribution”: As to any Distribution Date, the
aggregate amount held in the Collection Account at the close of business on the
immediately preceding Determination Date on account of (i) all Monthly 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 Mortgaged Property, the lesser of (i) the
value thereof as determined by an appraisal made for the originator of the
Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser
who met the minimum requirements of Fannie Mae and Freddie Mac; provided,
however, that in accordance with the Underwriting Guidelines, such value may be
reduced to reflect the results of a desk review of such appraisal, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Loan, provided, however, in the case of a Refinanced Mortgage
Loan, such value of the Mortgaged Property is based solely upon clause
(i) above.

 

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

“Available Distribution Amount”: With respect to any Distribution Date, an
amount equal to (i) the sum of (a) the aggregate amount of monthly payments on
the Mortgage Loans due on the related Due Date and received by the Master
Servicer as of the close of business on the related Determination Date, and the
Principal Prepayments, Insurance Proceeds, Net Liquidation Proceeds, Subsequent
Recoveries and other unscheduled recoveries of principal and interest in respect
of the Mortgage Loans received during the related Prepayment Period, and
proceeds from repurchases of and substitutions for such Mortgage Loans occurring
during the related Prepayment Period, (b) the amount of any Prepayment Charges
collected by the Servicer in connection with the full or partial prepayment of
any Mortgage Loans and any Servicer Prepayment Charge Payment Amount, (c) the
aggregate of any amounts received in respect of a related REO Property withdrawn
from any REO Account and deposited in the Distribution Account for such
Distribution Date, (d) the aggregate of any amounts deposited in the
Distribution Account by the Servicer or the Master Servicer in respect of
Prepayment Interest Shortfalls for such Distribution Date pursuant to
Section 3.22 or Section 4.18 of this Agreement, (e) the aggregate of any P&I
Advances for such Distribution Date made by the Servicer pursuant to
Section 5.03 of this Agreement, and (f) the aggregate of any P&I Advances made
by a successor Servicer (including the Master Servicer) for such Distribution
Date pursuant to Section 8.02, reduced (to not less than zero) by (ii) the sum
of (a) amounts reimbursable or payable to the Master Servicer pursuant to
Section 7.01, to the Servicer pursuant to Section 3.09(a) or the Securities
Administrator or the Custodian pursuant to Section 9.05 of this Agreement or
otherwise payable in respect of Extraordinary Trust Fund Expenses, pursuant to
Section 3.09(b), (b) amounts deposited in the Collection Account or the
Distribution Account pursuant to clauses (a) through (d) above, as the case may
be, in error, (c) the amount of any Prepayment Charges collected by the Servicer
in connection with the full or partial Principal Prepayment of any of the
Mortgage Loans and any Servicer Prepayment Charge Payment Amount, (d) the Credit
Risk Manager Fee payable from the Distribution Account, and (e) any
indemnification payments or expense reimbursements made by the Trust Fund
pursuant to Section 9.05.

“Back-Up Certification”: has the meaning set forth in Section 5.09(a)(iii)(C).

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

“Book-Entry Certificates”: The Offered Certificates for so long as the
Certificates of such Class shall be registered in the name of the Depository or
its nominee.

 

8

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“Business Day”: Any day other than a Saturday, a Sunday or a day on which
banking or savings and loan institutions in the States of New York, New Jersey,
Florida, Pennsylvania, California, Maryland, Minnesota or in any city in which
the Corporate Trust Office of the Trustee or the Securities Administrator is
located, are authorized or obligated by law or executive order to be closed.

“Cap Agreement”: The interest rate cap confirmation dated as of November 8, 2006
between the Cap Agreement Provider and the Securities Administrator on behalf of
the Trust which incorporates by reference the 1992 ISDA Master Agreement
(Multicurrency Cross-Border).

“Cap Agreement Provider”: The Bank of New York.

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

“Certificate”: Any one of SG Mortgage Securities Trust 2006-OPT2, Asset-Backed
Certificates, Series 2006-OPT2, Class A-1, Class A-2, Class A-3A, Class A-3B,
Class A-3C, Class A-3D, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11, Class CE,
Class P, Class R-I and Class R-II issued under this Agreement.

“Certificate Margin”: With respect to each Class of Class A and Mezzanine
Certificates and for purposes of the Marker Rate and the related REMIC II
Regular Interest Maximum Interest Deferral Amount, the specified REMIC III
Regular Interest, as follows:

 

Class

   REMIC II Regular
Interest    Certificate Margin         (1)(%)     (2)(%)  

A-1

   A-I-1    0.140 %   0.280 %

A-2

   A-II-2    0.140 %   0.280 %

A-3A

   A-III-3A    0.050 %   0.100 %

A-3B

   A-III-3B    0.110 %   0.220 %

A-3C

   A-III-3C    0.150 %   0.300 %

A-3D

   A-III-3D    0.210 %   0.420 %

M-1

   MTM1    0.240 %   0.360 %

M-2

   MTM2    0.290 %   0.435 %

M-3

   MTM3    0.330 %   0.495 %

M-4

   MTM4    0.380 %   0.570 %

M-5

   MTM5    0.390 %   0.585 %

M-6

   MTM6    0.470 %   0.705 %

M-7

   MTM7    0.850 %   1.275 %

M-8

   MTM8    1.650 %   2.475 %

M-9

   MTM9    2.500 %   3.750 %

M-10

   MTM10    2.250 %   3.375 %

M-11

   MTM11    2.150 %   3.225 %

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(1) For the Accrual Period for each Distribution Date on or prior to the
Optional Termination Date.

 

(2) For each other Accrual Period.

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

 

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“Certificate Principal Balance”: With respect to any Class of Regular
Certificates (other than the Class CE Certificates) immediately prior to any
Distribution Date, the Initial Certificate Principal Balance thereof
(A) increased, in the case of a Mezzanine Certificate by the amount of any
Subsequent Recoveries added to the Certificate Principal Balance of such Class
pursuant to Section 5.01, (B) reduced by the sum of all amounts actually
distributed in respect of principal of such Class and (C) further reduced, in
the case of a Mezzanine Certificate by Realized Losses allocated thereto on all
prior Distribution Dates. With respect to the Class CE Certificates as of any
date of determination, an amount equal to the excess, if any, of (A) the then
aggregate Uncertificated Principal Balance of the REMIC II Regular Interests
over (B) the then aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates then
outstanding.

“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, except that a Disqualified Organization
or a Non-United States Person shall not be a Holder of a Residual Certificate
for any purposes hereof, and solely for the purposes of giving any consent
pursuant to this Agreement, any Certificate registered in the name of or
beneficially owned by the Depositor, the Seller, the Servicer, the Master
Servicer, the Securities Administrator, the Trustee or any Affiliate thereof
shall be deemed not to be outstanding and the Voting Rights to which it is
entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 12.01. The Trustee and the
Securities Administrator may conclusively rely upon a certificate of the
Depositor, the Seller, the Master Servicer, the Securities Administrator or the
Servicer in determining whether a Certificate is held by an Affiliate thereof.
All references herein to “Holders” or “Certificateholders” shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights through
the Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Securities Administrator
shall be required to recognize as a “Holder” or “Certificateholder” only the
Person in whose name a Certificate is registered in the Certificate Register.

“Certification Parties”: has the meaning set forth in Section 5.09(a)(iii)(C).

“Certifying Person”: has the meaning set forth in Section 5.09(a)(iii)(C).

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

“Class A Certificateholder”: Any Holder of a Class A Certificate.

“Class A Certificates”: Any Class A-1 Certificate, Class A-2 Certificate or
Class A-3 Certificate.

 

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“Class A Principal Distribution Amount”: An amount equal to the sum of the
Class A-1 Principal Distribution Amount, Class A-2 Principal Distribution Amount
and the Class A-3 Principal Distribution Amount.

“Class A-1 Allocation Percentage”: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is (x) the Group I
Principal Remittance Amount for such Distribution Date and the denominator of
which is (y) the Principal Remittance Amount for such Distribution Date.

“Class A-1 Certificate”: Any one of the Class A-1 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-1, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class A-1 Principal Distribution Amount”: An amount equal to the excess of
(x) the aggregate Certificate Principal Balance of the Class A-1 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 52.10% and (ii) the aggregate Stated Principal Balance of the
Group I Mortgage Loans as of the last day of the related Due Period (after
giving effect to scheduled payments of principal due during that Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the excess of (i) the
aggregate Stated Principal Balance of the Group I Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during that Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) over (ii) the product of (x) 0.50% and (y) aggregate Stated Principal
Balance of the Group I Mortgage Loans as of the last day of the Cut-Off Date.

“Class A-2 Allocation Percentage”: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is (x) the Group II
Principal Remittance Amount for such Distribution Date and the denominator of
which is (y) the Principal Remittance Amount for such Distribution Date.

“Class A-2 Certificate”: Any one of the Class A-2 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class A-2 Principal Distribution Amount”: An amount equal to the excess of
(x) the aggregate Certificate Principal Balance of the Class A-2 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 52.10% and (ii) the aggregate Stated Principal Balance of the
Group II Mortgage Loans as of the last day of the related Due Period (after
giving effect to scheduled payments of principal due during that Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the excess of (i) the
aggregate Stated Principal Balance of the Group II Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled

 

11

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payments of principal due during that Due Period, to the extent received or
advanced, and unscheduled collections of principal received during the related
Prepayment Period) over (ii) the product of (x) 0.50% and (y) aggregate Stated
Principal Balance of the Group II Mortgage Loans as of the last day of the
Cut-Off Date.

“Class A-3 Allocation Percentage”: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is (x) the Group III
Principal Remittance Amount for such Distribution Date and the denominator of
which is (y) the Principal Remittance Amount for such Distribution Date.

“Class A-3 Certificate”: Any one of the Class A-3A, Class A-3B, Class A-3C or
Class A-3D Certificates.

“Class A-3A Certificate”: Any one of the Class A-3A Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-3, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class A-3B Certificate”: Any one of the Class A-3B Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-4, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class A-3C Certificate”: Any one of the Class A-3C Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-5, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class A-3D Certificate”: Any one of the Class A-3D Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-6, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class A-3 Principal Distribution Amount”: An amount equal to the excess of
(x) the aggregate Certificate Principal Balance of the Class A-3 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 52.10% and (ii) the aggregate Stated Principal Balance of the
Group III Mortgage Loans as of the last day of the related Due Period (after
giving effect to scheduled payments of principal due during that Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the excess of (i) the
aggregate Stated Principal Balance of the Group III Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during that Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) over (ii) the product of (x) 0.50% and (y) aggregate Stated Principal
Balance of the Group III Mortgage Loans as of the last day of the Cut-Off Date.

 

12

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“Class CE Certificate”: Any one of the Class CE Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-9, representing
(i) ownership of two Regular Interests in REMIC III, the Class CE-PO Interest
and the Class CE-IO Interest, (ii) the obligation to pay Net WAC Rate Carryover
Amounts and Swap Termination Payments and (iii) the right to receive the Class
IO Distribution Amount.

“Class CE-PO Interest”: An uncertificated interest in the Trust held by the
Securities Administrator on behalf of the Holders of the Class CE Certificates,
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.

“Class CE-IO Interest”: An uncertificated interest in the Trust held by the
Securities Administrator on behalf of the Holders of the Class CE Certificates,
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.

“Class IO Distribution Amount”: As defined in Section 5.04 hereof. For purposes
of clarity, the Class IO Distribution Amount for any Distribution Date shall
equal the amount payable to the Trust on such Distribution Date in excess of the
amount payable on the Class CE Certificates on such Distribution Date, all as
further provided in Section 5.04 hereof.

“Class M-1 Certificate”: Any one of the Class M-1 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-2 Certificate”: Any one of the Class M-2 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-3 Certificate”: Any one of the Class M-3 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-4 Certificate”: Any one of the Class M-4 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

 

13

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“Class M-4 Principal Distribution Amount”: An amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the aggregate Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the payment of the Sequential Class M Principal Distribution
Amount on such Distribution Date), and (iii) the Certificate Principal Balance
of the Class M-4 Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 79.40% and (ii) 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 that
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the positive
difference, if any, of 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 that Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) minus the Overcollateralization Floor.

“Class M-5 Certificate”: Any one of the Class M-5 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-5 Principal Distribution Amount”: An amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the aggregate Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the payment of the Sequential Class M Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M-4 Certificates (after taking into account the payment of the Class
M-4 Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class M-5 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 82.80% and
(ii) 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 that Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the positive difference, if any, of 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 that
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the
Overcollateralization Floor.

“Class M-6 Certificate”: Any one of the Class M-6 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

 

14

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“Class M-6 Principal Distribution Amount”: An amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the aggregate Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the payment of the Sequential Class M Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M-4 Certificates (after taking into account the payment of the Class
M-4 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-5 Certificates (after taking into
account the payment of the Class M-5 Principal Distribution Amount on such
Distribution Date) and (v) the Certificate Principal Balance of the Class M-6
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 84.80% and (ii) 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 that Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the positive difference, if any,
of 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 that Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) minus the Overcollateralization Floor.

“Class M-7 Certificate”: Any one of the Class M-7 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-7 Principal Distribution Amount”: An amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the aggregate Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the payment of the Sequential Class M Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M-4 Certificates (after taking into account the payment of the Class
M-4 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-5 Certificates (after taking into
account the payment of the Class M-5 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class M-6
Certificates (after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date) and (vi) the Certificate
Principal Balance of the Class M-7 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 87.50% and
(ii) 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 that Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the positive difference, if any, of 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 that
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the
Overcollateralization Floor.

 

15

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“Class M-8 Certificate”: Any one of the Class M-8 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-8 Principal Distribution Amount”: An amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the aggregate Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the payment of the Sequential Class M Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M-4 Certificates (after taking into account the payment of the Class
M-4 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-5 Certificates (after taking into
account the payment of the Class M-5 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class M-6
Certificates (after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-7 Certificates (after taking into account the payment of
the Class M-7 Principal Distribution Amount on such Distribution Date) and
(vii) the Certificate Principal Balance of the Class M-8 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 89.00% and (ii) 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 that Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) and (B) the positive difference, if any, of 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 that Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor.

“Class M-9 Certificate”: Any one of the Class M-9 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-9 Principal Distribution Amount”: An amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the aggregate Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the payment of the Sequential Class M Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M-4 Certificates (after taking into account the payment of the Class
M-4 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-5 Certificates (after taking into
account the payment of the Class M-5 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class M-6
Certificates (after taking into account the payment of the Class M-6 Principal

 

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Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-7 Certificates (after taking into account the payment of
the Class M-7 Principal Distribution Amount on such Distribution Date),
(vii) the Certificate Principal Balance of the Class M-8 Certificates (after
taking into account the payment of the Class M-8 Principal Distribution Amount
on such Distribution Date) and (viii) the Certificate Principal Balance of the
Class M-9 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 91.60% and (ii) 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 that Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the positive
difference, if any, of 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 that Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) minus the Overcollateralization Floor.

“Class M-10 Certificate”: Any one of the Class M-10 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-8, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-10 Principal Distribution Amount”: An amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the aggregate Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the payment of the Sequential Class M Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M-4 Certificates (after taking into account the payment of the Class
M-4 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-5 Certificates (after taking into
account the payment of the Class M-5 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class M-6
Certificates (after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-7 Certificates (after taking into account the payment of
the Class M-7 Principal Distribution Amount on such Distribution Date),
(vii) the Certificate Principal Balance of the Class M-8 Certificates (after
taking into account the payment of the Class M-8 Principal Distribution Amount
on such Distribution Date), (viii) the Certificate Principal Balance of the
Class M-9 Certificates (after taking into account the payment of the Class M-9
Principal Distribution Amount on such Distribution Date) and (ix) the
Certificate Principal Balance of the Class M-10 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 94.70%
and (ii) 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 that Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the positive difference, if any, of 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 that
Due Period, to

 

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the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) minus the Overcollateralization
Floor.

“Class M-11 Certificate”: Any one of the Class M-11 Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-8, representing
(i) a Regular Interest in REMIC III, (ii) the right to receive the Net WAC Rate
Carryover Amount and (iii) the obligation to pay the Class IO Distribution
Amount.

“Class M-11 Principal Distribution Amount”: An amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (ii) the aggregate Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the payment of the Sequential Class M Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M-4 Certificates (after taking into account the payment of the Class
M-4 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-5 Certificates (after taking into
account the payment of the Class M-5 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class M-6
Certificates (after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-7 Certificates (after taking into account the payment of
the Class M-7 Principal Distribution Amount on such Distribution Date),
(vii) the Certificate Principal Balance of the Class M-8 Certificates (after
taking into account the payment of the Class M-8 Principal Distribution Amount
on such Distribution Date), (viii) the Certificate Principal Balance of the
Class M-9 Certificates (after taking into account the payment of the Class M-9
Principal Distribution Amount on such Distribution Date), (ix) the Certificate
Principal Balance of the Class M-10 Certificates (after taking into account the
payment of the Class M-10 Principal Distribution Amount on such Distribution
Date) and (x) the Certificate Principal Balance of the Class M-11 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 97.10% and (ii) 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 that Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) and (B) the positive difference, if any, of 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 that Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor.

“Class P Certificate”: Any one of the Class P Certificates executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-10,
representing the right to distributions as set forth herein and therein and
evidencing a Regular Interest in REMIC III.

“Class R Certificate”: Any Class R-I Certificate, Class R-II Certificate or
Class R-III Certificate.

 

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“Class R-I Certificate”: The Class R-I Certificate executed by the Securities
Administrator, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-11 and evidencing the
ownership of the Class R-I Interest.

“Class R-I Interest”: The certificated Residual Interest in REMIC I.

“Class R-II Certificate”: The Class R-II Certificate executed by the Securities
Administrator, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-12 and evidencing the
ownership of the Class R-II Interest.

“Class R-II Interest”: The certificated Residual Interest in REMIC II.

“Class R-III Certificate”: The Class R-III Certificate executed by the
Securities Administrator, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-13 and
evidencing the ownership of the Class R-III Interest.

“Class R-III Interest”: The certificated Residual Interest in REMIC III.

“Closing Date”: December 14, 2006.

“Code”: The Internal Revenue Code of 1986, as amended from time to time.

“Collection Account”: The account or accounts created and maintained, or caused
to be created and maintained, by the Servicer pursuant to Section 3.08(a), which
shall be entitled “Option One Mortgage Corporation, as Servicer for HSBC Bank
USA, National Association, as Trustee, in trust for the registered holders of SG
Mortgage Securities Trust 2006-OPT2, Asset Backed Certificates, Series
2006-OPT2”. The Collection Account maintained by the Servicer must be an
Eligible Account.

“Combined Loan-to-Value Ratio or CLTV”: With respect to any Second Lien Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the sum
of (a) the original principal balance of such Second Lien Mortgage Loan, plus
(b) the unpaid principal balance, as of the date of origination of the Second
Lien Mortgage Loan, of any and all mortgage loans which are senior or
subordinate in lien priority to such Second Lien Mortgage Loan and the
denominator of which is the Appraised Value of the related Mortgaged Property.

“Commission”: The Securities and Exchange Commission.

“Compensating Interest”: As defined in Section 3.22.

“Corporate Trust Office”: The principal corporate trust office of the Trustee
which office at the date of the execution of this instrument is located at 452
Fifth Avenue, New York, New York 10018, Attention: Corporate Trust & Loan
Agency, SG Mortgage Securities, LLC, SG Mortgage Securities Trust 2006-OPT2, or
at such other address as the Trustee may designate from time to time by notice
to the Certificateholders, the Depositor, the Master Servicer, the Securities
Administrator and the Servicer. The office of the Securities Administrator,
which for purposes of Certificate transfers and surrender is located at Wells
Fargo Bank, N.A., Wells Fargo Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479, Attention:

 

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Corporate Trust Services-SGMS 2006-OPT2 and for all other purposes is located at
9062 Old Annapolis Road, Columbia, Maryland 21045, Attention: Corporate Trust
Services-SGMS 2006-OPT2.

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

 

REMIC II Regular Interest

   Regular Certificate

A-I-1

   Class A-1

A-II-1

   Class A-2

A-III-3A

   Class A-3A

A-III-3B

   Class A-3B

A-III-3C

   Class A-3C

A-III-3D

   Class A-3D

M-1

   Class M-1

M-2

   Class M-2

M-3

   Class M-3

M-4

   Class M-4

M-5

   Class M-5

M-6

   Class M-6

M-7

   Class M-7

M-8

   Class M-8

M-9

   Class M-9

M-10

   Class M-10

M-11

   Class M-11

MT-P

   Class P

“Credit Enhancement Percentage”: For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate Certificate
Principal Balance of the Mezzanine Certificates and the Class CE Certificates,
and the denominator of which is the aggregate Stated Principal Balance of the
Mortgage Loans, calculated prior to taking into account payments 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.

“Credit Risk Management Agreement”: The Limited Trust Oversight Agreement, dated
as of December 14, 2006 among the Credit Risk Manager, as trust oversight
manager, the Depositor, and the Servicer, as the same may be amended,
supplemented or otherwise modified from time to time.

“Credit Risk Management Fee”: The amount payable to the Credit Risk Manager on
each Distribution Date as compensation for all services rendered by it in the
exercise and performance of any and all powers and duties of the Credit Risk
Manager under the Credit Risk Management Agreement, which amount shall equal one
twelfth of the product of (i) the Credit Risk Management Fee Rate multiplied by
(ii) the Stated Principal Balance of the Mortgage Loans and any related REO
Properties as of the first day of the related Due Period.

 

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“Credit Risk Management Fee Rate”: 0.015% per annum.

“Credit Risk Manager”: Pentalpha Surveillance LLC, a Delaware corporation, and
its successors and assigns.

“Custodian”: Wells Fargo, as custodian of the Mortgage Files, any successor in
interest thereto or any successor appointed hereunder.

“Cut-off Date”: With respect to each Mortgage Loan, December 1, 2006. With
respect to all Qualified Substitute Mortgage Loans, their respective dates of
substitution. References herein to the “Cut-off Date,” when used with respect to
more than one Mortgage Loan, shall be to the respective Cut-off Dates for such
Mortgage Loans.

“Cut-off Date Principal Balance”: The aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.

“DBRS”: Dominion Bond Rating Service, Inc.

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

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

“Definitive Certificates”: As defined in Section 6.02(c).

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

“Depositor”: SG Mortgage Securities, LLC, a Delaware limited liability company,
or its successor in interest.

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

“Depository Institution”: Any depository institution or trust company, including
the Trustee, that (a) is incorporated under the laws of the United States of
America or any State thereof, (b) is subject to supervision and examination by
federal or state banking authorities and (c) has outstanding unsecured
commercial paper or other short-term unsecured debt obligations (or, in the case
of a depository institution that is the principal subsidiary of a holding
company,

 

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such holding company has unsecured commercial paper or other short-term
unsecured debt obligations) that are rated at least A-1+ by S&P, F-1+ by Fitch
and P-1 by Moody’s (or, if such Rating Agencies are no longer rating the Offered
Certificates, comparable ratings by any other nationally recognized statistical
rating agency then rating the Offered Certificates).

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

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

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

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

“Distribution Account”: The trust account or accounts created and maintained by
the Securities Administrator pursuant to Section 3.08(b) in the name of the
Securities Administrator for the benefit of the Certificateholders and
designated “Distribution Account, Wells Fargo Bank, N.A., in trust for
registered holders of SG Mortgage Securities Trust 2006-OPT2, Asset-Backed
Certificates, Series 2006-OPT2.” Funds in the Distribution Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in this
Agreement. The Distribution Account must be an Eligible Account.

 

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“Distribution Date”: The 25th day of any month, or if such 25th day is not a
Business Day, the Business Day immediately following such 25th day, commencing
in January 2007.

“Due Date”: With respect to each Mortgage Loan and any Distribution Date, the
first day of the calendar month in which such Distribution Date occurs on which
the Monthly Payment for such Mortgage Loan was due (or, in the case of any
Mortgage Loan under the terms of which the Monthly Payment for such Mortgage
Loan was due on a day other than the first day of the calendar month in which
such Distribution Date occurs, the day during the related Due Period on which
such Monthly Payment was due), exclusive of any days of grace.

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

“Eligible Account”: Any of (i) an account or accounts maintained with a
Depository Institution, (ii) an account or accounts the deposits in which are
fully insured by the FDIC or (iii) a trust account or accounts maintained with a
federal depository institution or state chartered depository institution acting
in its fiduciary capacity. Eligible Accounts may bear interest.

“ERISA”: The Employee Retirement Income Security Act of 1974, as amended from
time to time.

“Escrow Payments”: The amounts constituting ground rents, taxes, assessments,
water charges, sewer rents, fire and hazard insurance premiums and other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant to
the terms of any Mortgage Note or Mortgage.

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

“Exchange Act”: means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

“Extraordinary Trust Fund Expense”: Any amounts payable or reimbursable to the
Trustee, the Master Servicer, the Securities Administrator, the Custodian or any
director, officer, employee or agent of any such Person from the Trust Fund
pursuant to the terms of this Agreement and any amounts payable from the
Distribution Account in respect of taxes pursuant to Section 11.01.

“Fannie Mae”: Fannie Mae, formerly known as the Federal National Mortgage
Association, or any successor thereto.

“FDIC”: Federal Deposit Insurance Corporation or any successor thereto.

 

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“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
Originator, the Seller or the Master Servicer pursuant to or as contemplated by
Section 2.03, 3.26 or Section 10.01), a determination made by the Servicer 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, which determination shall
be evidenced by a certificate of a Servicing Officer delivered to the Master
Servicer and maintained in its records.

“First Lien”: With respect to any second lien Mortgage Loan, the mortgage loan
relating to the corresponding Mortgaged Property having a first priority lien.

“First Lien Mortgage Loan”: A Mortgage Loan with respect to which the lien of
the related Mortgage securing the principal amount of the Mortgage Loan is
indicated on the related Mortgage Loan Schedule as the first priority lien.

“Fitch”: Fitch Ratings or any successor in interest.

“Fixed Swap Payment”: With respect to any Distribution Date, the amount
calculated based on a fixed rate as set forth in the Interest Rate Swap
Agreement.

“Floating Swap Payment”: With respect to any Distribution Date, the amount equal
to the product of (i) Swap LIBOR, (ii) the related Notional Amount (as defined
in the Interest Rate Swap Agreement) and (iii) a fraction, the numerator of
which is the actual number of days elapsed from and including the previous
Floating Rate Payer Payment Date (as defined in the Interest Rate Swap
Agreement) to but excluding the current Distribution Date, and the denominator
of which is 360.

“Form 8-K Disclosure Information”: has the meaning set forth in
Section 5.09(a)(iv).

“Formula Rate”: For any Distribution Date and any Class of the Class A
Certificates and the Mezzanine Certificates, the lesser of (i) LIBOR plus the
related Certificate Margin and (ii) the applicable Maximum Cap Rate.

“Freddie Mac”: Freddie Mac, formerly known as the Federal Home Loan Mortgage
Corporation, or any successor thereto.

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

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

“Group I Allocation Percentage”: For any Distribution Date, the aggregate Stated
Principal Balance of the Group I Mortgage Loans as of the close of business on
the last day of the immediately preceding Due Period (after giving effect to
scheduled payments of principal due on the Group I Mortgage Loans during that
Due Period, to the extent received or advanced

 

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and unscheduled collections of principal received on the Group I Mortgage Loans
during the related Prepayment Period) divided by the aggregate Stated Principal
Balance of the Mortgage Loans as of the close of business on the last day of the
immediately preceding Due Period (after giving effect to scheduled payments of
principal due on the Mortgage Loans during that Due Period, to the extent
received or advanced and unscheduled collections of principal received on the
Mortgage Loans during the related Prepayment Period).

“Group I Interest Remittance Amount”: With respect to any Distribution Date, the
portion of the Available Distribution Amount for such Distribution Date that
represents interest received, recovered or advanced on the Group I Mortgage
Loans (net of the Servicing Fee, the Credit Risk Management Fee, any Prepayment
Charges and after taking into account any other amounts payable or reimbursable
to the Trustee, the Custodian, the Securities Administrator, the Credit Risk
Manager, the Master Servicer or the Servicer with respect to the Group I
Mortgage Loans pursuant to this Agreement or the Custodial Agreements).

“Group I Mortgage Loans”: Those Mortgage Loans identified on the Mortgage Loan
Schedule as Group I Mortgage Loans.

“Group I Principal Distribution Amount”: With respect to any Distribution Date,
the sum of (i) the principal portion of all Monthly Payments on the Group I
Mortgage Loans due during the related Due Period, whether or not received on or
prior to the related Determination Date; (ii) the principal portion of all
proceeds received in respect of the repurchase of a Group I Mortgage Loan or, in
the case of a substitution, the Substitution Shortfall Amount, during the
related Prepayment Period pursuant to or as contemplated by Section 2.03 and
Section 10.01 of this Agreement; (iii) the principal portion of all other
unscheduled collections, including Insurance Proceeds, Liquidation Proceeds and
all Principal Prepayments in full and in part, received during the related
Prepayment Period, to the extent applied as recoveries of principal on the Group
I Mortgage Loans; and (iv) the Class A-1 Allocation Percentage of any
Overcollateralization Increase Amount for such Distribution Date minus, (v) the
Class A-1 Allocation Percentage of any Overcollateralization Reduction Amount
for such Distribution Date and (vi) amounts payable or reimbursable to the
Servicer, the Trustee, the Custodian, the Credit Risk Manager, the Master
Servicer or the Securities Administrator.

“Group I Principal Remittance Amount”: With respect to any Distribution Date,
the sum of (a) the amounts described in clauses (i) through (iii) of the
definition of Group I Principal Distribution Amount net of amounts payable or
reimbursable to the Servicer, the Trustee, the Custodian, the Credit Risk
Manager, the Master Servicer or the Securities Administrator.

Group I REMIC Net WAC Cap Rate: With respect to any Distribution Date and the
REMIC III Regular Interests the ownership of which is represented by the A-1
Certificates, a per annum rate equal to the weighted average (adjusted for the
actual number of days elapsed in the related Accrual Period) of the
Uncertificated REMIC II Pass-Through Rate for the REMIC II Group I Regular
Interests I-AA and A-I-1, weighted on the basis of the Uncertificated Principal
Balance of such REMIC II Group I Regular Interests immediately prior to such
Distribution Date, multiplied by a fraction, the numerator of which is 30, and
the denominator of which is the actual number of days in the related Accrual
Period.

 

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“Group II Allocation Percentage”: For any Distribution Date, the aggregate
Stated Principal Balance of the Group II Mortgage Loans as of the close of
business on the last day of the immediately preceding Due Period (after giving
effect to scheduled payments of principal due on the Group II Mortgage Loans
during that Due Period, to the extent received or advanced and unscheduled
collections of principal received on the Group II Mortgage Loans during the
related Prepayment Period) divided by the aggregate Stated Principal Balance of
the Mortgage Loans as of the close of business on the last day of the
immediately preceding Due Period (after giving effect to scheduled payments of
principal due on the Mortgage Loans during that Due Period, to the extent
received or advanced, and unscheduled collections of principal received on the
Mortgage Loans during the related Prepayment Period).

“Group II Interest Remittance Amount”: With respect to any Distribution Date,
the portion of the Available Distribution Amount for such Distribution Date that
represents interest received, recovered or advanced on the Group II Mortgage
Loans (and net of the Servicing Fee, the Credit Risk Management Fee, any
Prepayment Charges and after taking into account any other amounts payable or
reimbursable to the Trustee, the Custodian, the Securities Administrator, the
Credit Risk Manager, the Master Servicer or the Servicer with respect to the
Group II Mortgage Loans pursuant to this Agreement or the Custodial Agreements).

“Group II Mortgage Loans”: Those Mortgage Loans identified on the Mortgage Loan
Schedule as Group II Mortgage Loans.

“Group II Principal Distribution Amount”: With respect to any Distribution Date,
the sum of (i) the principal portion of all Monthly Payments on the Group II
Mortgage Loans due during the related Due Period, whether or not received on or
prior to the related Determination Date; (ii) the principal portion of all
proceeds received in respect of the repurchase of a Group II Mortgage Loan or,
in the case of a substitution, the Substitution Shortfall Amount, during the
related Prepayment Period pursuant to or as contemplated by Section 2.03 and
Section 10.01 of this Agreement; (iii) the principal portion of all other
unscheduled collections, including Insurance Proceeds, Liquidation Proceeds and
all Principal Prepayments in full and in part, received during the related
Prepayment Period, to the extent applied as recoveries of principal on the Group
II Mortgage Loans; and (iv) the Class A-2 Allocation Percentage of any
Overcollateralization Increase Amount for such Distribution Date, minus (v) the
Class A-2 Allocation Percentage of any Overcollateralization Reduction Amount
for such Distribution Date and (vi) amounts payable or reimbursable to the
Servicer, the Trustee, the Custodian, the Credit Risk Manager, the Master
Servicer or the Securities Administrator.

“Group II Principal Remittance Amount”: With respect to any Distribution Date,
the sum of the amounts described in clauses (i) through (iii) of the definition
of Group II Principal Distribution Amount net of amounts payable or reimbursable
to the Servicer, the Trustee, the Custodian, the Credit Risk Manager, the Master
Servicer or the Securities Administrator.

Group II REMIC Net WAC Cap Rate: With respect to any Distribution Date and the
REMIC III Regular Interests the ownership of which is represented by the A-2
Certificates, a per annum rate equal to the weighted average (adjusted for the
actual number of days elapsed in the related Accrual Period) of the
Uncertificated REMIC II Pass-Through Rate for the REMIC II Group II Regular
Interests II-AA and A-II-2, weighted on the basis of the Uncertificated

 

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Principal Balance of such REMIC II Group II Regular Interests immediately prior
to such Distribution Date, multiplied by a fraction, the numerator of which is
30, and the denominator of which is the actual number of days in the related
Accrual Period.

“Group III Allocation Percentage”: For any Distribution Date, the aggregate
Stated Principal Balance of the Group III Mortgage Loans as of the close of
business on the last day of the immediately preceding Due Period (after giving
effect to scheduled payments of principal due on the Group III Mortgage Loans
during that Due Period, to the extent received or advanced and unscheduled
collections of principal received on the Group III Mortgage Loans during the
related Prepayment Period) divided by the aggregate Stated Principal Balance of
the Mortgage Loans as of the close of business on the last day of the
immediately preceding Due Period (after giving effect to scheduled payments of
principal due on the Mortgage Loans during that Due Period, to the extent
received or advanced, and unscheduled collections of principal received on the
Mortgage Loans during the related Prepayment Period).

“Group III Interest Remittance Amount”: With respect to any Distribution Date,
the portion of the Available Distribution Amount for such Distribution Date that
represents interest received, recovered or advanced on the Group III Mortgage
Loans (and net of the Servicing Fee, the Credit Risk Management Fee, any
Prepayment Charges and after taking into account any other amounts payable or
reimbursable to the Trustee, the Custodian, the Securities Administrator, the
Credit Risk Manager, the Master Servicer or the Servicer with respect to the
Group III Mortgage Loans pursuant to this Agreement or the Custodial
Agreements).

“Group III Mortgage Loans”: Those Mortgage Loans identified on the Mortgage Loan
Schedule as Group III Mortgage Loans.

“Group III Principal Distribution Amount”: With respect to any Distribution
Date, the sum of (i) the principal portion of all Monthly Payments on the Group
III 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 Group III Mortgage Loan or,
in the case of a substitution, the Substitution Shortfall Amount, during the
related Prepayment Period pursuant to or as contemplated by Section 2.03 and
Section 10.01 of this Agreement; (iii) the principal portion of all other
unscheduled collections, including Insurance Proceeds, Liquidation Proceeds and
all Principal Prepayments in full and in part, received during the related
Prepayment Period, to the extent applied as recoveries of principal on the Group
III Mortgage Loans; and (iv) the Class A-3 Allocation Percentage of any
Overcollateralization Increase Amount for such Distribution Date, minus (v) the
Class A-3 Allocation Percentage of any Overcollateralization Reduction Amount
for such Distribution Date and (vi) amounts payable or reimbursable to the
Servicer, the Trustee, the Custodian, the Credit Risk Manager, the Master
Servicer or the Securities Administrator.

“Group III Principal Remittance Amount”: With respect to any Distribution Date,
the sum of the amounts described in clauses (i) through (iii) of the definition
of Group III Principal Distribution Amount net of amounts payable or
reimbursable to the Servicer, the Trustee, the Custodian, the Credit Risk
Manager, the Master Servicer or the Securities Administrator.

 

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Group III REMIC Net WAC Cap Rate: With respect to any Distribution Date and the
REMIC III Regular Interests the ownership of which is represented by the A-3A,
A-3B, A-3C and A-3D Certificates, a per annum rate equal to the weighted average
(adjusted for the actual number of days elapsed in the related Accrual Period)
of the Uncertificated REMIC II Pass-Through Rate for the REMIC II Group III
Regular Interests III-AA, A-III-3A, A-III-3B, A-III-3C and A-III-3D, weighted on
the basis of the Uncertificated Principal Balance of such REMIC II Group III
Regular Interests immediately prior to such Distribution Date, multiplied by a
fraction, the numerator of which is 30, and the denominator of which is the
actual number of days in the related Accrual Period.

“Highest Priority”: As of any date of determination, the Class of Mezzanine
Certificates then outstanding with a Certificate Principal Balance greater than
zero, with the highest priority for payments pursuant to Section 5.01, in the
following order: Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class
M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates.

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

“Indenture”: An indenture relating to the issuance of notes secured by the Class
CE Certificates, the Class P Certificates and/or Residual Certificates (or any
portion thereof).

“Independent”: When used with respect to any specified Person, any such Person
who (a) is in fact independent of the Depositor, the Master Servicer, the
Securities Administrator, the Servicer, the Seller, the Originator and their
respective Affiliates, (b) does not have any direct financial interest in or any
material indirect financial interest in the Depositor, the Master Servicer, the
Securities Administrator, the Servicer, the Seller, the Originator or any
Affiliate thereof, and (c) is not connected with the Depositor, the Master
Servicer, the Securities Administrator, the Servicer, the Seller, the Originator
or any Affiliate thereof as an officer, employee, promoter, underwriter,
trustee, partner, director or Person performing similar functions; provided,
however, that a Person shall not fail to be Independent of the Depositor, the
Master Servicer, the Securities Administrator, the Servicer, the Seller, the
Originator or any Affiliate thereof merely because such Person is the beneficial
owner of 1% or less of any class of securities issued by the Depositor, the
Master Servicer, the Securities Administrator, the Servicer, the Seller, the
Originator or any Affiliate thereof, as the case may be.

“Independent Contractor”: Either (i) any Person (other than the Servicer) that
would be an “independent contractor” with respect to any of the REMICs created
hereunder within the meaning of Section 856(d)(3) of the Code if such REMIC were
a real estate investment trust (except that the ownership tests set forth in
that section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as each such
REMIC does not receive or derive any income from such Person and provided that
the relationship between such Person and such REMIC is at arm’s length, all
within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Servicer) if the Trustee has received an Opinion of
Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor will not
cause such

 

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REO Property to cease to qualify as “foreclosure property” within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.

“Index”: With respect to each Adjustable Rate Mortgage Loan and with respect to
each related Adjustment Date, the index as specified in the related Mortgage
Note.

“Initial Certificate Principal Balance”: With respect to any Regular
Certificate, the amount designated “Initial Certificate Principal Balance” on
the face thereof.

“Insurance Proceeds”: Proceeds of any title policy, hazard policy or other
insurance policy covering a Mortgage Loan or the related Mortgaged Property, to
the extent such proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Mortgagor or a senior lienholder in
accordance with Accepted Servicing Practices, subject to the terms and
conditions of the related Mortgage Note and Mortgage.

“Interest Carry Forward Amount”: With respect to any Distribution Date and any
Class of Class A Certificate or Mezzanine Certificate, the sum of (i) the
amount, if any, by which (a) the Interest Distribution Amount for such Class as
of the immediately preceding Distribution Date exceeded (b) the actual amount
distributed on such Class in respect of interest on such immediately preceding
Distribution Date and (ii) the amount of any Interest Carry Forward Amount for
such Class remaining unpaid from the previous Distribution Date, and
(iii) accrued interest on such sum calculated at the related Pass-Through Rate
for the most recently ended Accrual Period.

“Interest Determination Date”: With respect to the Class A Certificates and the
Mezzanine Certificates and any Accrual Period therefor, the second London
Business Day preceding the commencement of such Accrual Period.

“Interest Distribution Amount”: With respect to any Distribution Date and any
Class A Certificates, any Mezzanine Certificates and any Class CE Certificates,
the aggregate Accrued Certificate Interest on the Certificates of such Class for
such Distribution Date.

“Interest Rate Swap Agreement”: The confirmation dated as of November 8, 2006
between the Swap Provider and the Securities Administrator on behalf of the
Trust, which incorporates by reference the 1992 ISDA Master Agreement
(Multicurrency-Cross Border).

“Interest Remittance Amount”: With respect to any Distribution Date, the sum of:
(i) the Group I Interest Remittance Amount, (ii) the Group II Interest
Remittance Amount and (iii) the Group III Interest Remittance Amount.

“Late Collections”: With respect to any Mortgage Loan and any Due Period, all
amounts received subsequent to the Determination Date immediately following such
Due Period with respect to such Mortgage Loan, whether as late payments of
Monthly Payments or as Insurance Proceeds, Liquidation Proceeds, Subsequent
Recoveries or otherwise, which represent late payments or collections of
principal and/or interest due (without regard to any acceleration of payments
under the related Mortgage and Mortgage Note) but delinquent for such Due Period
and not previously recovered.

 

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“LIBOR”: With respect to each Accrual Period for the Class A Certificates and
the Mezzanine Certificates, the rate determined by the Securities Administrator
on the related Interest Determination Date on the basis of the London interbank
offered rate for one-month United States dollar deposits, as such rate appears
on the Telerate Page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date. If such rate does not appear on Telerate Page 3750, the rate
for such Interest Determination Date will be determined on the basis of the
offered rates of the Reference Banks for one-month United States dollar
deposits, as of 11:00 a.m. (London time) on such Interest Determination Date.
The Securities Administrator will request the principal London office of each of
the Reference Banks to provide a quotation of its rate. On such Interest
Determination Date, LIBOR for the related Accrual Period for the Class A
Certificates and the Mezzanine Certificates will be established by the
Securities Administrator as follows:

(i) If on such Interest Determination Date two or more Reference Banks provide
such offered quotations, LIBOR for the related Accrual Period shall be the
arithmetic mean of such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16 of 1%); and

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

The establishment of One-Month LIBOR by the Securities Administrator and the
Securities Administrator’s subsequent calculation of the One-Month LIBOR
Pass-Through Rates for the relevant Accrual Period, shall, in the absence of
manifest error, be final and binding.

Notwithstanding the foregoing, LIBOR for the Class A and Mezzanine Certificates
for the first Accrual Period will be 5.3500%.

“Liquidated Mortgage Loan”: As to any Distribution Date, any Mortgage Loan in
respect of which the Servicer has determined, in accordance with the servicing
procedures specified herein, as of the end of the related Prepayment Period,
that all Liquidation Proceeds which it expects to recover with respect to the
liquidation of the Mortgage Loan or disposition of the related REO Property have
been recovered.

“Liquidation Event”: With respect to any Mortgage Loan, any of the following
events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property or (ii) such REO Property is
removed from the Trust Fund by reason of its being purchased pursuant to
Section 10.01.

“Liquidation Proceeds”: The amount (other than Insurance Proceeds, amounts
received in respect of the rental of any REO Property prior to REO Disposition,
or required to be released

 

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to a Mortgagor or a senior lienholder in accordance with applicable law or the
terms of the related Mortgage Loan Documents) received by the Servicer in
connection with (i) the taking of all or a part of a Mortgaged Property by
exercise of the power of eminent domain or condemnation (other than amounts
required to be released to the Mortgagor or a senior lienholder), (ii) the
liquidation of a defaulted Mortgage Loan through a trustee’s sale, foreclosure
sale or otherwise, (iii) the repurchase, substitution or sale of a Mortgage Loan
or an REO Property pursuant to or as contemplated by Section 2.03, Section 3.21
or Section 10.01 of this Agreement or (iv) any Subsequent Recoveries.

“Loan Group”: Either of the Group I Mortgage Loans, Group II Mortgage Loans or
the Group III Mortgage Loans.

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

“London Business Day”: Any day on which banks in the City of London and the City
of New York are open and conducting transactions in United States dollars.

“Loss Severity Percentage”: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan and the denominator of which is the
principal balance of such Mortgage Loan immediately prior to the liquidation of
such Mortgage Loan.

“Marker Rate”: With respect to the Class CE Interest Certificates or the Class
CE-IO Interest, and any Distribution Date, a per annum rate equal to two
(2) multiplied by the weighted average of the Uncertificated REMIC I
Pass-Through Rates for the REMIC I Regular Interests (other than REMIC II Group
I Regular Interest I-AA, REMIC II Group II Regular Interest II-AA and REMIC II
Group III Regular Interest III-AA), with the rate on each such REMIC I Regular
Interest (other than REMIC II Group I Regular Interest I-ZZ, REMIC II Group II
Regular Interest II-ZZ and REMIC II Group III Regular Interest III-ZZ), subject
to a cap equal to LIBOR plus the related Certificate Margin applicable to the
Corresponding Certificate and with the rate on REMIC II Group I Regular Interest
I-ZZ, REMIC II Group II Regular Interest II-ZZ and REMIC II Group III Regular
Interest III-ZZ, each subject to a cap of zero; provided, however, that for
purposes of the calculations, LIBOR plus the related Certificate Margin shall be
multiplied by a fraction, the numerator of which is the actual number of days
elapsed in the related Accrual Period and the denominator of which is 30.

“Master Servicer”: As of the Closing Date, Wells Fargo and thereafter, any
successor in interest who meets the qualifications of this Agreement and any
successor appointed hereunder. The Master Servicer and the Securities
Administrator shall at all times be the same Person.

“Master Servicer Event of Default”: Any of the events described in
Section 8.01(b).

“Maximum Cap Rate”: For any Distribution Date, a per annum rate equal to the sum
of (i) the product of (x) the weighted average of the Adjusted Net Maximum
Mortgage Rates of the Mortgage Loans and (y) a fraction, the numerator of which
is 30 and the denominator of which is the actual number of days elapsed in the
related Accrual Period and (ii) an amount, expressed as

 

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a percentage, equal to a fraction, the numerator of which is equal to the Net
Swap Payment made by the Swap Provider and the denominator of which is equal to
the aggregate Stated Principal Balance of the Mortgage Loans, multiplied by 12.

“Maximum Mortgage Rate”: With respect to each Adjustable Rate Mortgage Loan, the
percentage set forth in the related Mortgage Note as the maximum Mortgage Rate
thereunder.

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

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

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

“Mezzanine Certificate”: Any Class M-1 Certificate, Class M-2 Certificate, Class
M-3 Certificate, Class M-4 Certificate, Class M-5 Certificate, Class M-6
Certificate, Class M-7 Certificate, Class M-8 Certificate, Class M-9
Certificate, Class M-10 Certificate or Class M-11 Certificate.

“MIN”: The Mortgage Identification Number for any MERS Loan.

“Minimum Mortgage Rate”: With respect to each Adjustable Rate Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Mortgage Rate
thereunder.

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

“Monthly Payment”: With respect to any Mortgage Loan, the scheduled monthly
payment of principal and interest on such Mortgage Loan which is payable by the
related Mortgagor from time to time under the related Mortgage Note, determined:
(a) after giving effect to (i) any Deficient Valuation and/or Debt Service
Reduction with respect to such Mortgage Loan and (ii) any reduction in the
amount of interest collectible from the related Mortgagor pursuant to the Relief
Act or similar state laws; (b) without giving effect to any extension granted or
agreed to by the Servicer pursuant to Section 3.01 of this Agreement; and (c) on
the assumption that all other amounts, if any, due under such Mortgage Loan are
paid when due.

“Monthly Statement”: A monthly statement required to be delivered to
Certificateholders pursuant to Section 5.02.

“Moody’s”: Moody’s Investors Service, Inc. or any successor in interest.

“Mortgage”: The mortgage, deed of trust or other instrument creating a first
lien on, or first priority security interest in, a Mortgaged Property securing a
Mortgage Note.

“Mortgage File”: For each Mortgage Loan, the related mortgage documents listed
on Exhibit 2 to the Mortgage Loan Purchase Agreement.

 

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“Mortgage Loan”: Each mortgage loan transferred and assigned to the Trustee and
the related Mortgage File, as held from time to time as a part of the Trust
Fund, the Mortgage Loans so held being identified in the Mortgage Loan Schedule.

“Mortgage Loan Documents”: The documents identified in Exhibit 3 of the Mortgage
Loan Purchase Agreement evidencing or relating to each Mortgage Loan.

“Mortgage Loan Purchase Agreement”: The Mortgage Loan Purchase Agreement dated
as of November 13, 2006, among the Originator, the Depositor and the Seller and
acknowledged and agreed by Wells Fargo, as interim trustee and as Master
Servicer.

“Mortgage Loan Schedule”: As of any date, the list of Mortgage Loans included in
the Trust on such date, attached hereto as Exhibit D. The Depositor shall
deliver or cause the delivery of the initial Mortgage Loan Schedule to the
Servicer, the Master Servicer, the Custodian and the Trustee on the Closing
Date. The Mortgage Loan Schedule shall set forth the following information with
respect to each Mortgage Loan:

(i) the Mortgage Loan identifying number;

(ii) [reserved];

(iii) the state and zip code of the Mortgaged Property including;

(iv) a code indicating whether the Mortgaged Property is owner-occupied;

(v) the type of Residential Dwelling constituting the Mortgaged Property;

(vi) the original months to maturity;

(vii) the original date of the Mortgage Loan and the remaining months to
maturity from the Cut-off Date, based on the original amortization schedule;

(viii) the Loan-to-Value Ratio or CLTV at origination;

(ix) the Mortgage Rate in effect immediately following the Cut-off Date;

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

(xi) the stated maturity date;

(xii) the amount of the Monthly Payment at origination;

(xiii) the amount of the Monthly Payment as of the Cut-off Date;

(xiv) the last Due Date on which a Monthly Payment was actually applied to the
unpaid Stated Principal Balance;

(xv) the original principal amount of the Mortgage Loan;

 

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(xvi) the Stated Principal Balance of the Mortgage Loan as of the close of
business on the Cut-off Date;

(xvii) with respect to each Adjustable Rate Mortgage Loan, the first Adjustment
Date;

(xviii) with respect to each Adjustable Rate Mortgage Loan, the Gross Margin;

(xix) a code indicating the purpose of the loan (i.e., purchase financing,
rate/term refinancing, cash-out refinancing);

(xx) with respect to each Adjustable Rate Mortgage Loan, the Maximum Mortgage
Rate under the terms of the Mortgage Note;

(xxi) with respect to each Adjustable Rate Mortgage Loan, the Minimum Mortgage
Rate under the terms of the Mortgage Note;

(xxii) the Mortgage Rate at origination;

(xxiii) with respect to each Adjustable Rate Mortgage Loan, the Periodic Rate
Cap;

(xxiv) with respect to each Adjustable Rate Mortgage Loan, the first Adjustment
Date immediately following the Cut-off Date;

(xxv) with respect to each Adjustable Rate Mortgage Loan, the Index;

(xxvi) the date on which the first Monthly Payment was due on the Mortgage Loan
and, if such date is not consistent with the Due Date currently in effect, such
Due Date;

(xxvii) a code indicating whether the Mortgage Loan is an Adjustable Rate
Mortgage Loan or a fixed rate Mortgage Loan;

(xxviii) a code indicating the documentation style (i.e., full, stated or
limited);

(xxix) a code indicating if the Mortgage Loan is subject to a primary insurance
policy or lender paid mortgage insurance policy and the name of the insurer;

(xxx) the Appraised Value of the Mortgaged Property;

(xxxi) the sale price of the Mortgaged Property, if applicable;

(xxxii) 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;

(xxxiii) the product type (e.g., 2/28, 15 year fixed, 30 year fixed, 15/30
balloon, etc.);

 

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(xxxiv) the Mortgagor’s debt to income ratio;

(xxxv) the rounding code;

(xxxvi) the program code;

(xxxvii) a code indicating the lien priority for Mortgage Loans;

(xxxviii) [reserved]; and

(xxxix) the total amount of points and fees charged such Mortgage Loan.

The Mortgage Loan Schedule shall set forth the following information with
respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1) the
number of Mortgage Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule
shall be amended from time to time by the Depositor in accordance with the
provisions of this Agreement. With respect to any Qualified Substitute Mortgage
Loan, the Cut-off Date shall refer to the related Cut-off Date for such Mortgage
Loan, determined in accordance with the definition of Cut-off Date herein.

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

“Mortgage Rate”: With respect to each Mortgage Loan, the annual rate at which
interest accrues on such Mortgage Loan from time to time in accordance with the
provisions of the related Mortgage Note, which rate with respect to each
Adjustable Rate Mortgage Loan (A) as of any date of determination until the
first Adjustment Date following the Cut-off Date shall be the rate set forth in
the Mortgage Loan Schedule as the Mortgage Rate in effect immediately following
the Cut-off Date and (B) as of any date of determination thereafter shall be the
rate as adjusted on the most recent Adjustment Date equal to the sum, rounded to
the nearest 0.125% as provided in the Mortgage Note, of the Index, as most
recently available as of a date prior to the Adjustment Date as set forth in the
related Mortgage Note, plus the related Gross Margin; provided that the Mortgage
Rate on such Adjustable Rate Mortgage Loan on any Adjustment Date shall never be
more than the lesser of (i) the sum of the Mortgage Rate in effect immediately
prior to the Adjustment Date plus the related Periodic Rate Cap, if any, and
(ii) the related Maximum Mortgage Rate, and shall never be less than the greater
of (i) the Mortgage Rate in effect immediately prior to the Adjustment Date less
the Periodic Rate Cap, if any, and (ii) the related Minimum Mortgage Rate. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.

“Mortgaged Property”: The underlying property securing a Mortgage Loan,
including any REO Property, consisting of an Estate in Real Property improved by
a Residential Dwelling.

“Mortgagor”: The obligor on a Mortgage Note.

 

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“Net Liquidation Proceeds”: With respect to any Liquidated Mortgage Loan or any
other disposition of related Mortgaged Property (including REO Property) the
related Liquidation Proceeds and Insurance Proceeds net of P&I Advances,
Servicing Advances, Servicing Fees and any other accrued and unpaid servicing
fees received and retained in connection with the liquidation of such Mortgage
Loan or Mortgaged Property.

“Net Monthly Excess Cashflow”: With respect to any Distribution Date, the sum of
(i) any Overcollateralization Reduction Amount for such Distribution Date and
(ii) the excess of (x) the Available Distribution Amount for such Distribution
Date over (y) the sum for such Distribution Date of (A) the aggregate Senior
Interest Distribution Amounts payable to the Holders of the Class A
Certificates, (B) the aggregate Interest Distribution Amounts payable to the
Holders of the Mezzanine Certificates, (C) the Principal Remittance Amount and
(D) any Net Swap Payment or Swap Termination Payment (not caused by a Swap
Provider Trigger Event) owed to the Swap Provider.

“Net Mortgage Rate”: With respect to any Mortgage Loan (or the related REO
Property) as of any date of determination, a per annum rate of interest equal to
the then applicable Mortgage Rate for such Mortgage Loan minus the Servicing Fee
Rate and the Credit Risk Manager Fee Rate.

“Net Prepayment Interest Shortfall”: With respect to any Distribution Date and
Loan Group, the excess, if any, of any Prepayment Interest Shortfalls for such
Loan Group for such date over the sum of (i) the related Compensating Interest
and (ii) the excess, if any, of the aggregate Compensating Interest for the
other Loan Groups over the Prepayment Interest Shortfalls for such other Loan
Groups.

“Net Swap Payment”: In the case of payments made by the Trust, the excess, if
any, of (x) the Fixed Swap Payment over (y) the Floating Swap Payment and in the
case of payments made by the Swap Provider, the excess, if any, of (x) the
Floating Swap Payment over (y) the Fixed Swap Payment. In each case, the Net
Swap Payment shall not be less than zero.

“Net WAC Pass-Through Rate”: With respect to the Class A-1 Certificates and any
Distribution Date, a rate per annum (adjusted for the actual number of days
elapsed in the related Accrual Period) equal to a fraction, expressed as a
percentage, the numerator of which is the amount of interest that accrued on the
Group I Mortgage Loans in the prior calendar month minus the Servicing Fees and
Credit Risk Manager Fees with respect to the Group I Mortgage Loans for such
Distribution Date and the Group I Allocation Percentage of any Net Swap Payment
payable to the Swap Provider or Swap Termination Payment payable to the Swap
Provider which was not caused by the occurrence of a Swap Provider Trigger
Event, in each case for such Distribution Date and the denominator of which is
the aggregate Stated Principal Balance of the Group I Mortgage Loans as of the
first day of the immediately preceding Due Period (or as of the Cut-off Date
with respect to the first Distribution Date), after giving effect to Principal
Prepayments received during the related Prepayment Period. For federal income
tax purposes, however, the per annum Net WAC Pass- Through Rate with respect to
the Class A-1 Certificates and any Distribution Date shall be equal to the Group
I REMIC Net WAC Cap Rate.

 

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With respect to the Class A-2 Certificates and any Distribution Date, a rate per
annum (adjusted for the actual number of days elapsed in the related Accrual
Period) equal to a fraction, expressed as a percentage, the numerator of which
is the amount of interest that accrued on the Group II Mortgage Loans in the
prior calendar month minus the Servicing Fees and Credit Risk Manager Fees with
respect to the Group II Mortgage Loans for such Distribution Date and the Group
II Allocation Percentage of any Net Swap Payment payable to the Swap Provider or
Swap Termination Payment payable to the Swap Provider which was not caused by
the occurrence of a Swap Provider Trigger Event, in each case for such
Distribution Date and the denominator of which is the aggregate Stated Principal
Balance of the Group II Mortgage Loans as of the first day of the immediately
preceding Due Period (or as of the Cut-off Date with respect to the first
Distribution Date), after giving effect to Principal Prepayments received during
the related Prepayment Period. For federal income tax purposes, however, the per
annum Net WAC Pass-Through Rate with respect to the Class A-2 Certificates and
any Distribution Date shall be equal to the Group II REMIC Net WAC Cap Rate.

With respect to the Class A-3 Certificates and any Distribution Date, a rate per
annum (adjusted for the actual number of days elapsed in the related Accrual
Period) equal to a fraction, expressed as a percentage, the numerator of which
is the amount of interest that accrued on the Group III Mortgage Loans in the
prior calendar month minus the Servicing Fees and Credit Risk Manager Fees with
respect to the Group III Mortgage Loans for such Distribution Date and the Group
III Allocation Percentage of any Net Swap Payment payable to the Swap Provider
or Swap Termination Payment payable to the Swap Provider which was not caused by
the occurrence of a Swap Provider Trigger Event, in each case for such
Distribution Date and the denominator of which is the aggregate Stated Principal
Balance of the Group III Mortgage Loans as of the first day of the immediately
preceding Due Period (or as of the Cut-off Date with respect to the first
Distribution Date), after giving effect to Principal Prepayments received during
the related Prepayment Period. For federal income tax purposes, however, the per
annum Net WAC Pass-Through Rate with respect to the Class A-3 Certificates and
any Distribution Date shall be equal to the Group III REMIC Net WAC Cap Rate.

With respect to the Mezzanine Certificates and any Distribution Date a rate per
annum equal to the weighted average (weighted in proportion to the results of
subtracting from the Stated Principal Balance of each Loan Group, the aggregate
Certificate Principal Balance of the related Classes of Class A Certificates) of
(i) the Net WAC Pass-Through Rate for the Class A-1 Certificates, (ii) the Net
WAC Pass-Through Rate for the Class A-2 Certificates and (iii) the Net WAC
Pass-Through Rate for the Class A-3 Certificates. For federal income tax
purposes, however, the per annum Net WAC Pass-Through Rate with respect to the
Mezzanine Certificates and any Distribution Date shall be equal to the
Subordinate Net WAC Cap Rate.

“Net WAC Rate Carryover Amount”: With respect to any Class of Class A
Certificates or Mezzanine Certificates and any Distribution Date, 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 without taking
into account the applicable Net WAC Pass-Through Rate over (y) the amount of
interest distributed to such Class on such Distribution Date at the applicable
Net WAC Pass-Through Rate plus (ii) the related Net WAC Rate Carryover Amount
for the previous Distribution Date not previously distributed to such Class
together with interest thereon

 

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at a rate equal to the Pass-Through Rate for such Class for the most recently
ended Accrual Period without taking into account the applicable Net WAC
Pass-Through Rate.

“New Lease”: Any lease of REO Property entered into on behalf of the Trust,
including any lease renewed or extended on behalf of the Trust if the Trust has
the right to renegotiate the terms of such lease.

“Nonrecoverable P&I Advance”: Any P&I Advance previously made or proposed to be
made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Servicer or a successor Servicer (including the Trustee
or the Master Servicer) will not or, in the case of a proposed P&I Advance,
would not be ultimately recoverable from related Late Collections, Insurance
Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property as
provided herein.

“Nonrecoverable Servicing Advance”: Any Servicing Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Servicer, will not or, in the case of a
proposed Servicing Advance, would not be ultimately recoverable from related
Late Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage
Loan or REO Property as provided herein.

“Non-United States Person”: Any Person other than a United States Person.

“Notional Amount”: Immediately prior to any Distribution Date, with respect to
the Class CE Interest, the aggregate of the Uncertificated Principal Balances of
the REMIC II Regular Interests (other than REMIC II Regular Interest MT-P).

“Offered Certificates”: The Class A Certificates, the Class M-1 Certificates,
the Class M-2 Certificates, the Class M-3 Certificates, the Class M-4
Certificates, the Class M-5 Certificates, the Class M-6 Certificates, the Class
M-7 Certificates, the Class M-8 Certificates and the Class M-9 Certificates
offered to the public pursuant to the Prospectus Supplement.

“Officer’s Certificate”: A certificate signed by the Chairman of the Board, the
Vice Chairman of the Board, the President or a vice president (however
denominated), or by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Servicer, the Master Servicer, the
Seller or the Depositor, as applicable.

“Opinion of Counsel”: A written opinion of counsel, who may, without limitation,
be salaried counsel for the Depositor, the Servicer, the Securities
Administrator or the Master Servicer, acceptable to the Trustee, except that any
opinion of counsel relating to (a) the qualification of any REMIC as a REMIC or
(b) compliance with the REMIC Provisions must be an opinion of Independent
counsel.

“Optional Termination Date”: The Distribution Date on which the aggregate
principal balance of the Mortgage Loans (and properties acquired in respect
thereof) remaining in the Trust Fund is reduced to less than 10% of the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date.

 

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“Original Notional Amount”: With respect to the Class CE IO Interest, the
aggregate Initial Uncertificated REMIC I Principal Balance of the REMIC I
Regular Interests.

“Originator”: Option One Mortgage Corporation, a California corporation.

“Overcollateralization Amount”: With respect to any Distribution Date, the
excess, if any, of (a) the aggregate Stated Principal Balances of the Mortgage
Loans and REO Properties immediately following such Distribution Date over
(b) the sum of the aggregate Certificate Principal Balance of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates as of such
Distribution Date (after taking into account the payment of the Principal
Remittance Amount on such Distribution Date).

“Overcollateralization Deficiency Amount”: With respect to any Distribution
Date, the amount, if any, by which the Required Overcollateralization Amount
exceeds the Overcollateralized Amount on such Distribution Date (after giving
effect to distributions in respect of the Principal Remittance Amount).

“Overcollateralization Floor”: An amount equal to the product of (i) 0.50% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date.

“Overcollateralization Increase Amount”: With respect to any Distribution Date,
the lesser of (i) the Net Monthly Excess Cashflow for such Distribution Date and
(ii) the Overcollateralization Deficiency Amount.

“Overcollateralization Reduction Amount”: With respect to any Distribution Date,
the lesser of (i) the amount by which the Overcollateralization Amount exceeds
the Required Overcollateralization Amount and (ii) the Principal Remittance
Amount; provided, however that on any Distribution Date on which a Trigger Event
is in effect, the Overcollateralization Reduction Amount shall equal zero.

“Ownership Interest”: As to any Certificate, any ownership or security 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, as owner or as pledgee.

“P&I Advance”: As to any Mortgage Loan or REO Property, any advance made by the
Servicer in respect of any Determination Date pursuant to Section 5.03 of this
Agreement, an advancing person pursuant to Section 3.25 or in respect of any
Distribution Date by a successor Servicer (including the Master Servicer)
pursuant to Section 8.02 (which advances shall not include principal or interest
shortfalls due to bankruptcy proceedings or application of the Relief Act or
similar state or local laws.)

“Pass-Through Rate”: With respect to any Class of the Class A and Mezzanine
Certificates and any Distribution Date, the lesser of (x) the related Formula
Rate for such Distribution Date and (y) the applicable Net WAC Pass-Through Rate
for such Distribution Date.

With respect to the Class CE Certificates and any Distribution Date, a per annum
rate equal to the percentage equivalent of a fraction, the numerator of which is
(x) the sum, for each

 

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REMIC II Regular Interest, of the excess of the applicable Uncertificated REMIC
II Pass-Through Rate for such REMIC II Regular Interest over the Marker Rate,
applied to a notional amount equal to the Uncertificated Principal Balance of
such REMIC II Regular Interest and (y) the denominator of which is the aggregate
Uncertificated Principal Balance of the REMIC II Regular Interests.

“Percentage Interest”: With respect to any Certificate (other than a Residual
Certificate), fraction, expressed as a percentage, the numerator of which is the
Initial Certificate Principal Balance or Notional Amount represented by such
Certificate and the denominator of which is the Initial Certificate Principal
Balance or initial Notional Amount of the related Class. With respect to a
Residual Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate; provided, however, that
the sum of all such percentages for each such Class totals 100%.

“Periodic Rate Cap”: With respect to each Adjustable Rate Mortgage Loan and any
Adjustment Date therefor, the fixed percentage set forth in the related Mortgage
Note, which is the maximum amount by which the Mortgage Rate for such Adjustable
Rate Mortgage Loan may increase or decrease (without regard to the Maximum
Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from the
Mortgage Rate in effect immediately prior to such Adjustment Date.

“Permitted Investments”: Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued by the Depositor, the Servicer, the Master Servicer, the Trustee
or any of their respective Affiliates:

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

(ii) (A) demand and time deposits in, certificates of deposit of, bankers’
acceptances issued by or federal funds sold by any depository institution or
trust company (including the Trustee or its agent acting in their respective
commercial capacities) incorporated under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal and/or state authorities, so long as, at the time of such investment or
contractual commitment providing for such investment, such depository
institution or trust company (or, if the only Rating Agency is S&P, in the case
of the principal depository institution in a depository institution holding
company, debt obligations of the depository institution holding company) or its
ultimate parent has a short-term uninsured debt rating in the highest available
rating category of Moody’s, Fitch and S&P and provided that each such investment
has an original maturity of no more than 365 days; and provided further that, if
the only Rating Agency is S&P and if the depository or trust company is a
principal subsidiary of a bank holding company and the debt obligations of such
subsidiary are not separately rated, the applicable rating shall be that of the
bank holding company; and, provided further that, if the original maturity of
such short-term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the short-term rating of such

 

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institution shall be A-1+ in the case of S&P if S&P is the Rating Agency; and
(B) any other demand or time deposit or deposit which is fully insured by the
FDIC;

(iii) repurchase obligations with a term not to exceed 30 days with respect to
any security described in clause (i) above and entered into with a depository
institution or trust company (acting as principal) rated A-1+ or higher by S&P,
F-1 or higher by Fitch and A2 or higher by Moody’s, provided, however, that
collateral transferred pursuant to such repurchase obligation must be of the
type described in clause (i) above and must (A) be valued daily at current
market prices plus accrued interest, (B) pursuant to such valuation, be equal,
at all times, to 105% of the cash transferred by a party in exchange for such
collateral and (C) be delivered to such party or, if such party is supplying the
collateral, an agent for such party, in such a manner as to accomplish
perfection of a security interest in the collateral by possession of
certificated securities;

(iv) securities bearing interest or sold at a discount that are issued by any
corporation incorporated under the laws of the United States of America or any
state thereof and that are rated by each Rating Agency that rates such
securities in its highest long-term unsecured rating categories at the time of
such investment or contractual commitment providing for such investment;

(v) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than 30 days after the date of acquisition thereof) that is rated by each
Rating Agency that rates such securities in its highest short-term unsecured
debt rating available at the time of such investment;

(vi) units of money market funds that have been rated “AAA” by Fitch (if rated
by Fitch), “AAA” by S&P or “Aaa” by Moody’s including any such money market fund
managed or advised by the Master Servicer, the Trustee or any of their
Affiliates; and

(vii) if previously confirmed in writing to the Trustee, any other demand, money
market or time deposit, or any other obligation, security or investment, as may
be acceptable to the Rating Agencies as a permitted investment of funds backing
securities having ratings equivalent to its highest initial rating of the
Class A Certificates;

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

“Permitted Transferee”: Any Transferee of a Residual Certificate other than a
Disqualified Organization or Non-United States Person.

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

 

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“Plan”: As defined in Section 6.02(f).

“Prepayment Assumption”: As defined in the Prospectus Supplement.

“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.

“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 G (including the prepayment charge summary attached
thereto). The Prepayment Charge Schedule shall be prepared by the Servicer (in
its capacity as Originator) and 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 state of origination of the related Mortgage Loan;

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

(v) the term of the related Prepayment Charge;

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

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

“Prepayment Interest Excess”: With respect to each Mortgage Loan that was the
subject of a Principal Prepayment in full or in part during the portion of the
related Prepayment Period occurring between the first day of the calendar month
in which such Distribution Date occurs and the Determination Date of the
calendar month in which such Distribution Date occurs, an amount equal to
interest (to the extent received) at the applicable Net Mortgage Rate on the
amount of such Principal Prepayment for the number of days commencing on the
first day of the calendar month in which such Distribution Date occurs and
ending on the last date through which interest is collected from the related
Mortgagor. The Servicer may withdraw such Prepayment Interest Excess from the
Collection Account in accordance with Section 3.09(a)(x).

“Prepayment Interest Shortfall”: With respect to any Distribution Date, for each
such Mortgage Loan that was the subject of a Principal Prepayment in full or in
part during the portion of the related Prepayment Period occurring between the
first day of the related Prepayment Period and the last day of the calendar
month preceding the month in which such Distribution Date occurs that was
applied by the Servicer to reduce the outstanding principal balance of such
Mortgage Loan on a date preceding the Due Date in the succeeding Prepayment
Period, an amount equal to interest at the applicable Net Mortgage Rate on the
amount of such

 

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Principal Prepayment for the number of days commencing on the date on which the
prepayment is applied and ending on the last day of the calendar month preceding
such Distribution Date. The obligations of the Servicer and the Master Servicer
in respect of any Prepayment Interest Shortfall are set forth in Section 3.22
and Section 4.18, respectively of this Agreement.

“Prepayment Period”: With respect to any Distribution Date, the period that
commences on and includes the day immediately following the Determination Date
falling in the month immediately preceding the month in which the related
Distribution Date occurs (or commencing on the Cut-off Date in the case of the
first Distribution Date) and ends on and includes the Determination Date falling
in the month in which such Distribution Date occurs.

“Principal Distribution Amount”: With respect to any Distribution Date, the sum
of the Group I Principal Distribution Amount, the Group II Principal
Distribution Amount and the Group III Principal Distribution Amount.

“Principal Prepayment”: Any voluntary payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing the full amount
of scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.

“Principal Remittance Amount”: With respect to any Distribution Date, the sum of
the Group I Principal Remittance Amount, Group II Principal Remittance Amount
and the Group III Principal Remittance Amount.

“Prospectus Supplement”: The prospectus supplement, dated as of November 16,
2006, filed with the Commission in connection with the SG Mortgage Securities
Trust 2006-OPT2 Asset-Backed Certificates, Series 2006-OPT2.

“Purchase Price”: With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or Section 10.01, and
as confirmed by a certification of a Servicing Officer to the Trustee, an amount
equal to the sum of (i) 100% of the Stated Principal Balance thereof as of the
date of purchase (or such other price as provided in Section 10.01), (ii) in the
case of (x) a Mortgage Loan, accrued interest on such Stated Principal Balance
at the applicable Mortgage Rate (or the Net Mortgage Rate if the purchaser is
the Servicer) in effect from time to time from the Due Date as to which interest
was last covered by a payment by the Mortgagor or a P&I Advance by the Servicer,
which payment or P&I Advance had as of the date of purchase been distributed
pursuant to Section 5.01, through the end of the calendar month in which the
purchase is to be effected and (y) an REO Property, the sum of (1) accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or a P&I Advance by the Servicer through the end
of the calendar month immediately preceding the calendar month in which such REO
Property was acquired, plus (2) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to
Section 5.01, (iii) any unreimbursed Servicing

 

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Advances and P&I Advances (including Nonrecoverable P&I Advances and
Nonrecoverable Servicing Advances) and any unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from
the Collection Account pursuant to Section 3.09(a)(ix) and Section 3.13(b) and
(v) in the case of a Mortgage Loan required to be purchased pursuant to
Section 2.03, expenses reasonably incurred or to be incurred by the Servicer or
the Trustee in respect of the breach or defect giving rise to the purchase
obligation and any costs and damages incurred by the Trust Fund and the Trustee
in connection with any violation by any such Mortgage Loan of any predatory or
abusive lending law.

“Qualified Substitute Mortgage Loan”: A mortgage loan substituted for a Deleted
Mortgage Loan pursuant to the terms of this Agreement or the Mortgage Loan
Purchase Agreement which must, on the date of such substitution, (i) have an
outstanding principal balance (or in the case of a substitution of more than one
mortgage loan for a Deleted Mortgage Loan, an aggregate principal balance),
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of, and not more than 5%
less than, the outstanding principal balance of the Deleted Mortgage Loan as of
the Due Date in the calendar month during which the substitution occurs,
(ii) have a Mortgage Rate not less than (and not more than one percentage point
in excess of) the Mortgage Rate of the Deleted Mortgage Loan, (iii) if the
Qualified Substitute Mortgage Loan is an Adjustable Rate Mortgage Loan, have a
Maximum Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted
Mortgage Loan, (iv) if the Qualified Substitute Mortgage Loan is an Adjustable
Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the Minimum
Mortgage Rate of the Deleted Mortgage Loan, (v) if the Qualified Substitute
Mortgage Loan is an Adjustable Rate Mortgage Loan, have a Gross Margin equal to
or greater than the Gross Margin of the Deleted Mortgage Loan, (vi) if the
Qualified Substitute Mortgage Loan is an Adjustable Rate Mortgage Loan, have a
next Adjustment Date not more than two months later than the next Adjustment
Date on the Deleted Mortgage Loan, (vii) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (viii) be current as of the date of substitution, (ix) have a
Loan-to-Value Ratio and a CLTV as of the date of substitution equal to or lower
than the Loan-to-Value Ratio and the CLTV of the Deleted Mortgage Loan as of
such date, (x) have a risk grading determined by the Originator at least equal
to the risk grading assigned on the Deleted Mortgage Loan, (xi) have been
underwritten or reunderwritten by the Originator in accordance with the same
underwriting criteria and guidelines as the Deleted Mortgage Loan, (xii) have a
Prepayment Charge provision at least equal to the Prepayment Charge provision of
the Deleted Mortgage Loan, (xiii) conform to each representation and warranty
set forth in Section 6 of the Mortgage Loan Purchase Agreement applicable to the
Deleted Mortgage Loan, (xiv) have the same Due Date as the Deleted Mortgage
Loan, and (xv) not be a Convertible Mortgage Loan unless that Deleted Mortgage
Loan was a Convertible Mortgage Loan. In the event that one or more mortgage
loans are substituted for one or more Deleted Mortgage Loans, the amounts
described in clause (i) hereof shall be determined on the basis of aggregate
principal balances, the Mortgage Rates described in clauses (ii) through
(vi) hereof shall be satisfied for each such mortgage loan, the risk gradings
described in clause (x) hereof shall be satisfied as to each such mortgage loan,
the terms described in clause (vii) hereof shall be determined on the basis of
weighted average remaining term to maturity (provided that no such mortgage loan
may have a remaining term to maturity longer than the Deleted Mortgage Loan),
the Loan-to-Value Ratios and CLTV described in clause (ix) hereof shall be
satisfied as to each such mortgage loan and, except to the extent otherwise
provided in

 

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this sentence, the representations and warranties described in clause
(xii) hereof must be satisfied as to each Qualified Substitute Mortgage Loan or
in the aggregate, as the case may be.

“Rating Agency or Rating Agencies”: DBRS, Fitch, Moody’s and S&P or their
successors. If such agencies or their successors are no longer in existence,
“Rating Agencies” shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Servicer.

“Realized Loss”: With respect to any Liquidated Mortgage Loan, the amount of
loss realized equal to the portion of the Stated Principal Balance remaining
unpaid after application of all Net Liquidation Proceeds in respect of such
Mortgage Loan.

Realized Losses allocated to the Class CE Certificates shall be allocated first
to the REMIC III Regular Interest Class CE-IO Interest in reduction of all
accrued but unpaid interest therein and then to the REMIC III Regular Interest
Class CE-PO Interest in reduction of the Uncertificated Principal Balance
thereof.

“Record Date”: With respect to each Distribution Date and the Class A
Certificates and the Mezzanine Certificates, the Business Day immediately
preceding such Distribution Date for so long as such Certificates are Book-Entry
Certificates. With respect to each Distribution Date and any other Class of
Certificates, including any Definitive Certificates, the last day of the
calendar month immediately preceding the month in which such Distribution Date
occurs.

“Reference Banks”: Barclay’s Bank PLC, The Tokyo Mitsubishi Bank and National
Westminster Bank PLC and their successors in interest; provided, however, that
if any of the foregoing banks are not suitable to serve as a Reference Bank,
then any leading banks selected by the Securities Administrator which are
engaged in transactions in Eurodollar deposits in the International Eurocurrency
market (i) with an established place of business in London, (ii) not
controlling, under the control of or under common control with the Depositor or
any Affiliate thereof and (iii) which have been designated as such by the
Securities Administrator.

“Refinanced Mortgage Loan”: A Mortgage Loan the proceeds of which were not used
to purchase the related Mortgaged Property.

“Regular Certificate”: Any of the Class A Certificates, Mezzanine Certificates,
Class CE Certificates or Class P Certificates.

“Regulation AB”: Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17
C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506-1,631 (January 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time and publicly available.

“Regulation S”: Regulation S promulgated under the 1933 Act or any successor
provision thereto, in each case as the same may be amended from time to time;
and all references to any rule, section or subsection of, or definition or term
contained in, Regulation S means such rule, section, subsection, definition or
term, as the case may be, or any successor thereto, in each case as the same may
be amended from time to time.

 

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“Regulation S Global Security”: The meaning specified in Section 6.01.

“Relevant Servicing Criteria”: The Servicing Criteria applicable to the various
parties, as set forth on Exhibit P attached hereto. For clarification purposes,
multiple parties can have responsibility for the same Relevant Servicing
Criteria. With respect to a Servicing Function Participant engaged by the Master
Servicer, the Securities Administrator, the Servicer or the Custodian, the term
“Relevant Servicing Criteria” may refer to a portion of the Relevant Servicing
Criteria applicable to such parties.

“Relief Act”: The Servicemembers Civil Relief Act, as amended.

“Relief Act Interest Shortfall”: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest collectible on such
Mortgage Loan for the most recently ended Due Period as a result of the
application of the Relief Act, or similar state or local laws.

“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 be made consisting of: (i) such Mortgage Loans as
from time to time are subject to this Agreement, together with the Mortgage
Files relating thereto, and together with all collections thereon and proceeds
thereof, (ii) any REO Property, together with all collections thereon and
proceeds thereof, (iii) the Trustee’s rights with respect to the Mortgage Loans
under all insurance policies, required to be maintained pursuant to this
Agreement and any proceeds thereof, (iv) the Depositor’s rights under the
Mortgage Loan Purchase Agreement (including any security interest created
thereby) and (v) the Collection Account, the Distribution Account (subject to
the last sentence of this definition) and any REO Account and such assets that
are deposited therein from time to time and any investments thereof, together
with any and all income, proceeds and payments with respect thereto.
Notwithstanding the foregoing, however, a REMIC election will not be made with
respect to, and no REMIC created hereunder shall include, the Reserve Fund, the
Servicer Prepayment Charge Payment Amounts, the Cap Agreement, the Interest Rate
Swap Agreement or the Swap Account, or any income or proceeds with respect
thereto.

“REMIC I Regular Interests”: Any of the separate non-certificated beneficial
ownership interests in REMIC I described in the Preliminary Statement and issued
hereunder and designated as a “regular interest” in REMIC I within the meaning
of the REMIC Provisions. Each REMIC I Regular Interest 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 LT-I-A”: A regular interest in REMIC I that is held as
an asset of REMIC II, that has an initial principal balance equal to the related
Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.

 

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“REMIC I Regular Interest LT-I-B”: A regular interest in REMIC I that is held as
an asset of REMIC II, that has an initial principal balance equal to the related
Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC I Regular Interest LT-II-A”: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC I Regular Interest LT-II-B”: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC I Regular Interest LT-III-A”: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC I Regular Interest LT-III-B”: A regular interest in REMIC I that is held
as an asset of REMIC II, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC I Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC II”: The segregated pool of assets consisting of all of the REMIC I
Regular Interests described in the Preliminary Statement conveyed in trust to
the Trustee, for the benefit of the Holders of the REMIC II Regular Interests
and the Class R-II Certificate (in respect of the Class R-II Interest), pursuant
to Article II hereunder, and all amounts deposited therein, with respect to
which a separate REMIC election is to be made.

REMIC II Group I Interest Loss Allocation Amount: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Uncertificated Principal Balance of the REMIC I Group I Regular Interests then
outstanding and (ii) the Uncertificated Pass-Through Rate for REMIC II Group I
Regular Interest I-AA minus the Marker Rate, divided by (b) 12.

“REMIC II Group I Overcollateralized Amount”: With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC II Group I Regular Interests minus (ii) the aggregate Uncertificated
Principal Balances of the REMIC II Group I Regular Interests (other than REMIC
II Group I Regular Interests I-AA and I-ZZ), in each case as of such date of
determination.

“REMIC II Group I Principal Loss Allocation Amount”: With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Stated
Principal Balance of the Group I Mortgage Loans then outstanding and (ii) 1
minus a fraction, the numerator of which

 

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is two times the sum of the Uncertificated Principal Balances of REMIC II Group
I Regular Interests A-I-1, and the denominator of which is the sum of the
Uncertificated Principal Balances of REMIC II Group I Regular Interests A-I-1
and I-ZZ.

“REMIC II Group I Regular Interests”: REMIC II Interests I-AA, A-I-1 and I-ZZ.

“REMIC II Group II Interest Loss Allocation Amount”: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Uncertificated Principal Balance of the REMIC I Group II Regular Interests then
outstanding and (ii) the Uncertificated Pass Through Rate for REMIC II Group II
Regular Interest II-AA minus the Marker Rate, divided by (b) 12.

“REMIC II Group II Overcollateralized Amount”: With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC II Group II Regular Interests minus (ii) the aggregate Uncertificated
Principal Balances of the REMIC II Group II Regular Interests (other than REMIC
II Group II Regular Interests II-AA and II-ZZ), in each case as of such date of
determination.

“REMIC II Group II Principal Loss Allocation Amount”: With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Stated
Principal Balance of the Group II Mortgage Loans then outstanding and (ii) 1
minus a fraction, the numerator of which is two times the sum of the
Uncertificated Principal Balances of REMIC II Group II Regular Interests A-II-2,
and the denominator of which is the sum of the Uncertificated Principal Balances
of REMIC II Group II Regular Interests A-II-2 and II-ZZ.

“REMIC II Group II Regular Interests”: REMIC II Interest II-AA, A-II-2 and
II-ZZ.

“REMIC II Group III Interest Loss Allocation Amount”: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Uncertificated Principal Balance of the REMIC I Group III Regular Interests then
outstanding and (ii) the Uncertificated Pass Through Rate for REMIC II Group III
Regular Interest III-AA minus the Marker Rate, divided by (b) 12.

“REMIC II Group III Overcollateralized Amount”: With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC II Group III Regular Interests minus (ii) the aggregate Uncertificated
Principal Balances of the REMIC II Group III Regular Interests (other than REMIC
II Group III Regular Interests III-AA and II-ZZ), in each case as of such date
of determination.

“REMIC II Group III Principal Loss Allocation Amount”: With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Stated
Principal Balance of the Group III Mortgage Loans then outstanding and (ii) 1
minus a fraction, the numerator of which is two times the sum of the
Uncertificated Principal Balances of REMIC II Group III Regular Interests
A-III-3A, A-III-3B, A-III-3C and A-III-3D, and the denominator of which is the
sum of the Uncertificated Principal Balances of REMIC II Group III Regular
Interests A-III-3A, A-III-3B, A-III-3C, A-III-3D and III-ZZ.

 

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“REMIC II Group III Regular Interest”: REMIC II Interest III-AA, A-III-3A,
A-III-3B, A-III-3C, A-III-3D and III-ZZ.

“REMIC II Group I Regular Interest A-I-1”: A regular interest in REMIC II that
is held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC II Group I Regular Interest I-AA”: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC II Group I Regular Interest I-ZZ”: A regular interest in REMIC II that is
held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC II Group II Regular Interest A-II-2”: A regular interest in REMIC II that
is held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC II Group II Regular Interest II-AA”: A regular interest in REMIC II that
is held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC II Group II Regular Interest II-ZZ”: A regular interest in REMIC II that
is held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC II Pass-Through Rate, and that has such other terms as are
described herein.

“REMIC II Group III Regular Interest A-III-3A”: A regular interest in REMIC II
that is held as an asset of REMIC III, that has an initial principal balance
equal to the related Uncertificated Principal Balance, that bears interest at
the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Group III Regular Interest A-III-3B”: A regular interest in REMIC II
that is held as an asset of REMIC III, that has an initial principal balance
equal to the related Uncertificated Principal Balance, that bears interest at
the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Group III Regular Interest A-III-3C”: A regular interest in REMIC II
that is held as an asset of REMIC III, that has an initial principal balance
equal to the related Uncertificated Principal Balance, that bears interest at
the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

 

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“REMIC II Group III Regular Interest A-III-3D”: A regular interest in REMIC II
that is held as an asset of REMIC III, that has an initial principal balance
equal to the related Uncertificated Principal Balance, that bears interest at
the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Group III Regular Interest III-AA”: A regular interest in REMIC II
that is held as an asset of REMIC III, that has an initial principal balance
equal to the related Uncertificated Principal Balance, that bears interest at
the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Group III Regular Interest III-ZZ”: A regular interest in REMIC II
that is held as an asset of REMIC III, that has an initial principal balance
equal to the related Uncertificated Principal Balance, that bears interest at
the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-1”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-2”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-3”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-4”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-5”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-6”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-7”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal

 

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Balance, that bears interest at the related Uncertificated Subordinate REMIC II
Pass-Through Rate, and that has such other terms as are described herein.

“REMIC II Regular Interest M-8”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-9”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-10”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest M-11”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that bears interest at the related
Uncertificated Subordinate REMIC II Pass-Through Rate, and that has such other
terms as are described herein.

“REMIC II Regular Interest Ms”: REMIC II Regular Interests M-1 through M-11.

“REMIC II Regular Interest MT-P”: A regular interest in REMIC II that is held as
an asset of REMIC III, that has an initial principal balance equal to the
related Uncertificated Principal Balance, that does not bear interest, and that
has such other terms as are described herein.

“REMIC II Regular Interest I-ZZ Maximum Interest Deferral Amount”: With respect
to any Distribution Date, the excess of (i) Uncertificated Accrued Interest
calculated at the REMIC II Regular Interest I-ZZ Uncertificated Pass-Through
Rate on an Uncertificated Principal Balance equal to the excess of (x) the
Uncertificated Principal Balance of REMIC II Regular Interest I-ZZ over (y) the
REMIC II Group I Overcollateralized Amount, in each case for such Distribution
Date, over (ii) the sum of Uncertificated Accrued Interest on REMIC II Regular
Interest A-I-1 and a proportionate percentage of Uncertificated Accrued Interest
on REMIC II Regular Interests M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10
and M-11, with the rate on each such REMIC II Regular Interest subject to a cap
equal to the Pass-Through Rate for the corresponding Class for the purpose of
this calculation.

“REMIC II Regular Interest II-ZZ Maximum Interest Deferral Amount”: With respect
to any Distribution Date, the excess of (i) Uncertificated Accrued Interest
calculated at the REMIC II Regular Interest II-ZZ Uncertificated Pass-Through
Rate on an Uncertificated Principal Balance equal to the excess of (x) the
Uncertificated Principal Balance of REMIC II Regular Interest II-ZZ over (y) the
REMIC II Group II Overcollateralized Amount, in each case for such Distribution
Date, over (ii) the sum of Uncertificated Accrued Interest on REMIC II Regular
Interest A-II-2 and a proportionate percentage of Uncertificated Accrued
Interest on REMIC II

 

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Regular Interests M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10 and M-11,
with the rate on each such REMIC II Regular Interest subject to a cap equal to
the Pass-Through Rate for the corresponding Class for the purpose of this
calculation.

“REMIC II Regular Interest III-ZZ Maximum Interest Deferral Amount”: With
respect to any Distribution Date, the excess of (i) Uncertificated Accrued
Interest calculated at the REMIC II Regular Interest III-ZZ Uncertificated
Pass-Through Rate on an Uncertificated Principal Balance equal to the excess of
(x) the Uncertificated Principal Balance of REMIC II Regular Interest III-ZZ
over (y) the REMIC II Group III Overcollateralized Amount, in each case for such
Distribution Date, over (ii) the sum of Uncertificated Accrued Interest on REMIC
II Regular Interest A-III-3A, A-III-3B, A-III-3C, and A-III-3D, and a
proportionate percentage of Uncertificated Accrued Interest on REMIC II Regular
Interests M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10 and M-11, with the
rate on each such REMIC II Regular Interest subject to a cap equal to the
Pass-Through Rate for the corresponding Class for the purpose of this
calculation.

“REMIC III”: The segregated pool of assets described in the Preliminary
Statement.

“REMIC III Regular Interest”: Any “regular interest” issued by REMIC III the
ownership of which is evidenced by a Class A Certificate, Class M Certificate or
Class SB Certificate.

“REMIC III Regular Interest SB-IO”: A separate non-certificated regular interest
of REMIC III designated as a REMIC III Regular Interest. REMIC III Regular
Interest SB-IO shall have no entitlement to principal and shall be entitled to
distributions of interest subject to the terms and conditions hereof, in an
aggregate amount equal to interest distributable with respect to the Class SB
Certificates pursuant to the terms and conditions hereof.

“REMIC III Regular Interest SB-PO”: A separate non-certificated regular interest
of REMIC III designated as a REMIC III Regular Interest. REMIC III Regular
Interest SB-PO shall have no entitlement to interest and shall be entitled to
distributions of principal subject to the terms and conditions hereof, in an
aggregate amount equal to principal distributable with respect to the Class SB
Certificates pursuant to the terms and conditions hereof.

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

“REMIC Regular Interests”: The REMIC I Regular Interests, REMIC II Regular
Interests and REMIC III Regular Interests.

“Rents from Real Property”: With respect to any REO Property, gross income of
the character described in Section 856(d) of the Code as being included in the
term “rents from real property.”

“REO Account”: The account or accounts maintained, or caused to be maintained,
by the Servicer in respect of an REO Property pursuant to Section 3.21 of this
Agreement.

 

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“REO Disposition”: The sale or other disposition of an REO Property on behalf of
the Trust.

“REO Imputed Interest”: As to any REO Property, for any calendar month during
which such REO Property was at any time part of the Trust Fund, one month’s
interest at the applicable Net Mortgage Rate on the Stated Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the close of business on the
Distribution Date in such calendar month.

“REO Principal Amortization”: With respect to any REO Property, for any calendar
month, the excess, if any, of (a) the aggregate of all amounts received in
respect of such REO Property during such calendar month, whether in the form of
rental income, sale proceeds (including, without limitation, that portion of the
Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 10.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i) payable in
respect of the proper operation, management and maintenance of such REO Property
or (ii) payable or reimbursable to the Servicer pursuant to Section 3.21(d) of
this Agreement for unpaid Servicing Fees in respect of the related Mortgage Loan
and unreimbursed Servicing Advances and P&I Advances in respect of such REO
Property or the related Mortgage Loan, over (b) the REO Imputed Interest in
respect of such REO Property for such calendar month.

“REO Property”: A Mortgaged Property acquired by the Servicer on behalf of REMIC
I through foreclosure or deed-in-lieu of foreclosure, as described in
Section 3.21 of this Agreement.

“Reportable Event”: As defined in Section 5.09(a)(iv).

“Reporting Servicer”: As defined in Section 5.09(a)(ii).

“Required Overcollateralization Amount”: With respect to any Distribution Date
(i) prior to the Stepdown Date, the product of (A) 1.45% and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date, (ii) on
or after the Stepdown Date provided a Trigger Event is not in effect, the
greater of (x) 2.90% of 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 that Due Period, to the extent
received or advanced and unscheduled collections of principal received during
the related Prepayment Period) and (y) the Overcollateralization Floor, and
(iii) on or after the Stepdown Date if a Trigger Event is in effect, the
Required Overcollateralization Amount for the immediately preceding Distribution
Date. Notwithstanding the foregoing, on and after any Distribution Date
following the reduction of the aggregate Certificate Principal Balance of the
Class A Certificates and Mezzanine Certificates to zero, the Required
Overcollateralization Amount shall be zero.

“Reserve Fund”: The reserve account established and maintained pursuant to
Section 3.24.

“Reserve Interest Rate”: With respect to any Interest Determination Date, the
rate per annum that the Securities Administrator determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
1/16%) of the one-month U.S. dollar

 

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lending rates which New York City banks selected by the Securities
Administrator, after consultation with the Depositor, are quoting on the
relevant Interest Determination Date to the principal London offices of leading
banks in the London interbank market or (ii) in the event that the Securities
Administrator can determine no such arithmetic mean, the lowest one-month U.S.
dollar lending rate which New York City banks selected by the Securities
Administrator are quoting on such Interest Determination Date to leading
European banks.

“Residential Dwelling”: Any one of the following: (i) a detached one-family
dwelling, (ii) a detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a Fannie Mae eligible condominium project, (iv) a manufactured
home, or (v) a detached one-family dwelling in a planned unit development, none
of which is a co-operative or mobile home.

“Residual Certificate”: Any Class R Certificate.

“Residual Interest”: The sole class of “residual interests” in a REMIC within
the meaning of Section 860G(a)(2) of the Code.

“Responsible Officer”: When used with respect to the Trustee, any officer of the
Trustee having direct responsibility for the administration of this Agreement
and, with respect to a particular matter, to whom such matter is referred
because of such officer’s knowledge of and familiarity with the particular
subject.

“Restricted Certificate”: Any Class M-10 or Class M-11 Certificate.

“Restricted Global Security”: As defined in Section 6.01.

“S&P”: Standard and Poor’s, a division of The McGraw-Hill Companies, Inc.

“Sarbanes-Oxley Act”: The Sarbanes-Oxley Act of 2002 and the rules and
regulations of the Commission promulgated thereunder (including any publicly
available interpretations thereof by the Commission’s staff).

“Sarbanes-Oxley Certification”: A written certification signed by an officer of
the Master Servicer that complies with (i) the Sarbanes-Oxley Act, and
(ii) Exchange Act Rules 13a-14(d) and 15d-14(d), as in effect from time to time;
provided that if, after the Closing Date (a) the Sarbanes-Oxley Act is amended,
(b) the Rules referred to in clause (ii) are modified or superseded by any
subsequent statement, rule or regulation of the Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Commission from time to time pursuant to the Sarbanes-Oxley
Act, which in any such case affects the form or substance of the required
certification and results in the required certification being, in the reasonable
judgment of the Master Servicer, materially more onerous that then form of the
required certification as of the Closing Date, the Sarbanes-Oxley Certification
shall be as agreed to by the Master Servicer and the Depositor following a
negotiation in good faith to determine how to comply with any such new
requirements.

“Scheduled Principal Balance”: With respect to any Mortgage Loan: (a) as of the
Cut-off Date, the outstanding principal balance of such Mortgage Loan as of such
date, net of the principal portion of all unpaid Monthly Payments, if any, due
on or before such date; (b) as of

 

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any Due Date subsequent to the Cut-off Date up to and including the Due Date in
the calendar month in which a Liquidation Event occurs with respect to such
Mortgage Loan, the Scheduled Principal Balance of such Mortgage Loan as of the
Cut-off Date, minus the sum of (i) the principal portion of each Monthly Payment
due on or before such Due Date but subsequent to the Cut-off Date, whether or
not received, (ii) all Principal Prepayments received before such Due Date but
after the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds
and Insurance Proceeds received before such Due Date but after the Cut-off Date,
net of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and
(c) as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such REO Property, an amount (not less
than zero) equal to the Scheduled Principal Balance of the related Mortgage Loan
as of the Due Date in the calendar month in which such REO Property was
acquired, minus the aggregate amount of REO Principal Amortization, if any, in
respect of REO Property for all previously ended calendar months; and (b) as of
any Due Date subsequent to the occurrence of a Liquidation Event with respect to
such REO Property, zero.

“Second Lien Mortgage Loan”: A Mortgage Loan secured by the lien on the
Mortgaged Property, subject to one prior lien on such Mortgaged Property
securing financing obtained by the related Mortgagor as indicated on the
Mortgage Loan Schedule.

“SEC Reporting Year”: A fiscal year at the beginning of which the aggregate
number of Depository Participants holding a position in all the classes of
Offered Certificates outstanding is equal to or greater than the number set
forth in Section 15(d) of the Exchange Act (which as of the Closing Date is
300).

“Securities Act”: The Securities Act of 1933, as amended, and the rules and
regulations thereunder.

“Securities Administrator”: As of the Closing Date, Wells Fargo and thereafter,
any successor in interest who meets the qualifications of this Agreement and any
successor appointed hereunder. The Securities Administrator and the Master
Servicer shall at all times be the same Person.

“Securitization Transaction”: Any transaction involving a sale or other transfer
of mortgage loans directly or indirectly to an issuing in connection with an
issuance of publicly offered or privately placed, rated or unrated mortgage
backed securities.

“Seller”: SG Mortgage Finance Corp. or its successor in interest, in its
capacity as seller under the Mortgage Loan Purchase Agreement.

 

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“Senior Interest Distribution Amount”: With respect to any Distribution Date, an
amount equal to the sum of (i) the Interest Distribution Amounts for such
Distribution Date for the Class A Certificates and (ii) the Interest Carry
Forward Amounts, if any, for such Distribution Date for the Class A
Certificates.

“Sequential Class M Principal Distribution Amount”: An amount equal to the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date) and (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 75.20% and (ii) 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 that Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (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 that Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the
Overcollateralization Floor.

“Servicer”: Option One Mortgage Corporation, a California corporation, or any
successor servicer appointed as herein provided, in its capacity as Servicer
hereunder.

“Servicer Event of Default”: One or more of the events described in
Section 8.01(a).

“Servicer Prepayment Charge Payment Amount”: The amounts payable by the Servicer
in respect of any Prepayment Charges pursuant to Section 2.05 or Section 3.01.

“Servicer Remittance Date”: With respect to any Distribution Date, the third
Business Day following the Determination Date, but in no event later than the
20th day of each month (or if such day is not a Business Day, the preceding
Business Day).

“Servicer Report”: A report in form and substance acceptable to the Master
Servicer and Securities Administrator on an electronic data file or tape
prepared by the Servicer pursuant to Section 5.03(a) with such additions,
deletions and modifications as agreed to by the Master Servicer, the Securities
Administrator and the Servicer.

“Servicing Advances”: The customary and reasonable “out-of-pocket” costs and
expenses (including reasonable attorneys’ fees and expenses) incurred by the
Servicer in the performance of its servicing obligations in connection with a
default, delinquency or other unanticipated event including, but not limited to,
the cost of (i) the preservation, restoration, inspection and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including but
not limited to foreclosures, in respect of a particular Mortgage Loan, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property and (iv) the performance of its obligations under
Section 3.01, Section 3.07, Section 3.11, Section 3.13 and Section 3.21 of this
Agreement. Servicing Advances also include any reasonable “out-of-pocket” cost
and expenses (including legal fees) incurred by the Servicer in connection with
executing and recording instruments of satisfaction, deeds of reconveyance or

 

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Assignments to the extent not recovered from the Mortgagor or otherwise payable
under this Agreement. The Servicer shall not be required to make any
Nonrecoverable Servicing Advances.

“Servicing Criteria”: The criteria set forth in paragraph (d) of Item 1122 of
Regulation AB, as such may be amended from time to time.

“Servicing Fee”: With respect to each Mortgage Loan and for any calendar month,
an amount equal to one twelfth of the product of the Servicing Fee Rate
multiplied by the Scheduled Principal Balance of the Mortgage Loans as of the
Due Date in the preceding calendar month. The Servicing Fee is payable solely
from collections or recoveries of interest on the Mortgage Loans.

“Servicing Fee Rate”: 0.30% per annum for the first 10 Due Periods following the
Cut-off Date, 0.40% per annum for the 11th through 30th Due Periods and
0.65% per annum for all Due Periods thereafter.

“Servicing Function Participant”: Any Sub-Servicer or Subcontractor of a
Servicer, the Master Servicer, the Custodian or the Securities Administrator,
respectively, “participating in the servicing function” within the meaning of
the Regulation AB.

“Servicing Officer”: Any officer of the Servicer or any employee designated by
an officer of the Servicer, in each case involved in, or responsible for, the
administration and servicing or master servicing of Mortgage Loans, whose name
and specimen signature appear on a list of Servicing Officers furnished by the
Servicer to the Trustee, the Master Servicer, the Securities Administrator and
the Depositor on the Closing Date, as such list may from time to time be
amended.

“Single Certificate”: With respect to any Class of Certificates (other than the
Residual Certificates), a hypothetical Certificate of such Class evidencing a
Percentage Interest for such Class corresponding to an initial Certificate
Principal Balance of $1,000. With respect to the Residual Certificates, a
hypothetical Certificate of such Class evidencing a 100% Percentage Interest in
such Class.

“Startup Day”: With respect to each Trust REMIC, the day designated as such
pursuant to Section 11.01(b) hereof.

“Stated Principal Balance”: With respect to any Mortgage Loan: (a) as of any
date of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, the Scheduled Principal Balance of such Mortgage Loan as
of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum of
(i) the principal portion of each Monthly Payment due on a Due Date subsequent
to the Cut-off Date, to the extent received from the Mortgagor or advanced by
the Servicer or a successor Servicer (including the Master Servicer and
distributed pursuant to Section 5.01 on or before such date of determination,
(ii) all Principal Prepayments received after the Cut-off Date, to the extent
distributed pursuant to Section 5.01 on or before such date of determination,
(iii) all Liquidation Proceeds and Insurance Proceeds applied by the Servicer as
recoveries of principal in accordance with the provisions of Section 3.13, to
the extent distributed

 

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pursuant to Section 5.01 on or before such date of determination, and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Prepayment Period for the most recent Distribution
Date coinciding with or preceding such date of determination; and (b) as of any
date of determination coinciding with or subsequent to the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, zero. With respect to any REO Property: (a) as of any
date of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of the Trust Fund, minus the sum of (i) if such REO
Property was acquired before the Distribution Date in any calendar month, the
principal portion of the Monthly Payment due on the Due Date in the calendar
month of acquisition, to the extent advanced by the Servicer or a successor
Servicer (including the Master Servicer) and distributed pursuant to
Section 5.01 of this Agreement on or before such date of determination and
(ii) the aggregate amount of REO Principal Amortization in respect of such REO
Property for all previously ended calendar months, to the extent distributed
pursuant to Section 5.01 on or before such date of determination; and (b) as of
any date of determination coinciding with or subsequent to the Distribution Date
on which the proceeds, if any, of a Liquidation Event with respect to such REO
Property would be distributed, zero.

“Stepdown Date”: The earlier to occur of (a) the first Distribution Date after
the Distribution Date on which the aggregate Certificate Principal Balance of
the Class A Certificates has been reduced to zero and (b) the later to occur of
(i) the Distribution Date occurring in January 2010 and (ii) the first
Distribution Date on which the Credit Enhancement Percentage (calculated for
this purpose only after taking into account payments of principal on the
Mortgage Loans and distribution of the Principal Distribution Amount to the
Certificates then entitled to distributions of principal on such Distribution
Date) is equal to or greater than 47.90%.

“Subordinate Certificates”: Collectively, the Mezzanine Certificates and the
Class CE Certificates.

“Subordinate Component”: With respect to each Loan Group and any Distribution
Date, the positive excess, if any, of the aggregate Stated Principal Balance of
the Mortgage Loans in that Loan Group, over the aggregate Certificate Principal
Balance of the related Class A Certificates, in each case immediately prior to
that Distribution Date.

Subordinate Net WAC Cap Rate: With respect to any Distribution Date and the
Class M Certificates, a per annum rate equal to the weighted average of (i) the
Group I REMIC Net WAC Cap Rate, (ii) the Group II REMIC Net WAC Cap Rate and
(iii) the Group III REMIC Net WAC Cap Rate, weighted on the basis of the related
Subordinate Component.

“Subcontractor”: A vendor, subcontractor or other Person that is not responsible
for the overall servicing of Mortgage Loans but performs one or more discrete
functions identified in Item 1122(d) of Regulation AB with respect to Mortgage
Loans under the direction or authority of any Servicer (or a Sub-Servicer of any
Servicer), the Master Servicer, the Custodian or the Securities Administrator.

 

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“Subsequent Recoveries”: As of any Distribution Date, amounts received during
the related Prepayment Period by the Servicer (net of any related expenses
permitted to be reimbursed pursuant to Section 3.08) specifically related to a
Mortgage Loan that was the subject of a liquidation or an REO Disposition prior
to the related Prepayment Period that resulted in a Realized Loss.

“Sub-Servicer”: A Person that services Mortgage Loans on behalf of a Servicer,
and is responsible for the performance (whether directly or through
sub-servicers or Subcontractors) of a material portion of servicing functions
required to be performed under this Agreement, any related servicing agreement
or any sub-servicing agreement that are identified in Item 1122(d) of Regulation
AB.

“Sub-Servicing Agreement”: The written contract between the Servicer and a
Sub-Servicer relating to servicing and administration of certain Mortgage Loans
as provided in Section 3.02 of this Agreement.

“Substitution Shortfall Amount”: As defined in Section 2.03.

“Swap Account”: The account or accounts created and maintained by the Securities
Administrator pursuant to Section 5.04 in the name of the Securities
Administrator for the benefit of the Certificateholders and designated “Swap
Account, Wells Fargo Bank, N.A., in trust for registered holders of SG Mortgage
Securities Trust 2006-OPT2, Asset-Backed Certificates, Series 2006-OPT2.” The
Swap Account must be an Eligible Account.

“Swap LIBOR”: A per annum rate equal to the floating rate payable by the Swap
Provider under the Interest Rate Swap Agreement.

“Swap Provider”: The Bank of New York.

“Swap Provider Trigger Event”: A Swap Termination Payment that is triggered
upon: (i) an Event of Default under the Interest Rate Swap Agreement with
respect to which the Swap Provider is a Defaulting Party (as defined in the
Interest Rate Swap Agreement), (ii) a Termination Event under the Interest Rate
Swap Agreement with respect to which the Swap Provider is the sole Affected
Party (as defined in the Interest Rate Swap Agreement) or (iii) an Additional
Termination Event under the Interest Rate Swap Agreement with respect to which
the Swap Provider is the sole Affected Party.

“Swap Termination Payment”: The payment due to either party under the Interest
Rate Swap Agreement upon the early termination of the Interest Rate Swap
Agreement.

“Tax Returns”: The federal income tax return on Internal Revenue Service Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including
Schedule Q thereto, Quarterly Notice to Residual Interest Holders of REMIC
Taxable Income or Net Loss Allocation, or any successor forms, to be filed on
behalf of the Trust REMICs under the REMIC Provisions, together with any and all
other information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.

 

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“Telerate Page 3750”: The display designated as page “3750” on the Dow Jones
Telerate Capital Markets Report (or such other page as may replace page 3750 on
that report for the purpose of displaying London interbank offered rates of
major banks).

“Termination Price”: As defined in Section 10.01.

“Three Month Rolling Delinquency Percentage”: With respect to the Mortgage Loans
and any Distribution Date, the average for the three most recent calendar months
of the fraction, expressed as a percentage, the numerator of which is (x) the
sum (without duplication) of the aggregate of the Stated Principal Balances of
all Mortgage Loans that are (i) 60 or more days Delinquent (including Mortgage
Loans in bankruptcy, in foreclosure and REO Properties but excluding any
Liquidated Mortgage Loans as of the end of the related Prepayment Period), and
the denominator of which is (y) the sum of the Stated Principal Balances of the
Mortgage Loans, in the case of both (x) and (y), as of the close of business on
the last Business Day of each of the three most recent calendar months.

“Transfer”: Any direct or indirect transfer, sale, pledge, hypothecation, or
other form of assignment of any Ownership Interest in a Certificate.

“Transferee”: Any Person who is acquiring by Transfer any Ownership Interest in
a Certificate.

“Transferor”: Any Person who is disposing by Transfer of any Ownership Interest
in a Certificate.

“Trigger Event”: A Trigger Event is in effect with respect to any Distribution
Date:

(a) the Three Month Rolling Delinquency Percentage exceeds 34.45% of the Credit
Enhancement Percentage or

(b) 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

January 2009 to December 2009

   1.45% plus 1/12 of 1.80% for each month thereafter

January 2010 to December 2010

   3.25% plus 1/12 of 1.80% for each month thereafter

January 2011 to December 2011

   5.05% plus 1/12 of 1.45% for each month thereafter

January 2012 to December 2012

   6.50% plus 1/12 of 0.70% for each month thereafter

January 2013 and thereafter

   7.20%

“Trust”: SG Mortgage Securities Trust 2006-OPT2, the trust created hereunder.

 

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“Trust Fund”: All of the assets of the Trust, consisting of all of the assets of
each Trust REMIC, the Reserve Fund, the Servicer Prepayment Charge Payment
Amounts, distributions made to the Trust under the Interest Rate Swap Agreement,
the Cap Agreement and the Swap Account.

“Trust REMIC”: Any of REMIC I, REMIC II, or REMIC III.

“Trustee”: HSBC Bank USA, National Association, a national banking association,
or its successor in interest, or any successor trustee appointed as herein
provided.

“Uncertificated Accrued Interest”: With respect to any REMIC I or REMIC II
Regular Interest for any Distribution Date, one month’s interest at the related
Uncertificated REMIC I Pass-Through Rate or Uncertificated REMIC II Pass-Through
Rate for such Distribution Date, accrued on its Uncertificated Principal Balance
immediately prior to such Distribution Date. Uncertificated Accrued Interest
will be reduced by any Net Prepayment Interest Shortfalls and Relief Act
Interest Shortfalls (allocated to such REMIC Regular I or REMIC II Interests
based on their respective entitlements to interest irrespective of any Net
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution Date) and shall accrue on the basis of a 360-day year consisting of
twelve 30-day months.

“Uncertificated REMIC I Pass-Through Rate”: With respect to any Distribution
Date and REMIC I Regular Interest LT-I-A and REMIC I Regular Interest LT-I-B,
the weighted average of the Net Mortgage Rates of the Group I Loans. With
respect to any Distribution Date and REMIC I Regular Interest LT-II-A and REMIC
I Regular Interest LT II-B, the weighted average of the Net Mortgage Rates of
the Group II Loans. With respect to any Distribution Date and REMIC I Regular
Interest LT-III-A and REMIC I Regular Interest LT III-B, the weighted average of
the Net Mortgage Rates of the Group III Loans.

“Uncertificated REMIC II Pass-Through Rate”: With respect to any Distribution
Date and each Uncertificated REMIC II Regular Interest (other than REMIC II
Regular Interest Ms), a per annum rate equal to the weighted average of the Net
Mortgage rates of the Group I Loans, the Group II Loans or the Group III Loans,
as applicable. With respect to any Distribution Date and each REMIC II Regular
Interest M, a per annum rate equal to the Uncertificated Subordinate REMIC II
Pass-Through Rate.

“Uncertificated Notional Amount”: With respect to the Class SB Certificates or
the REMIC III Regular Interest SB-IO, immediately prior to any Distribution
Date, an amount equal to the aggregate of the Uncertificated Principal Balance
of the REMIC II Regular Interests.

“Uncertificated Pass-Through Rate”: The Uncertificated REMIC I Pass-Through
Rate, the Uncertificated REMIC II Pass-Through Rate or the Uncertificated
Subordinate REMIC II Pass-Through Rate, as applicable.

“Uncertificated Principal Balance”: The principal amount of any Uncertificated
Regular Interest outstanding as of any date of determination. As of the Closing
Date, the Uncertificated Principal Balance of each Uncertificated Regular
Interest shall equal the amount set forth in the Preliminary Statement hereto as
its initial Uncertificated Principal Balance. The Uncertificated Principal
Balance of the Uncertificated Regular Interests shall be reduced by all
distributions of

 

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principal made on such Uncertificated Regular Interests on a Distribution Date
pursuant to Section 5.05 and, if and to the extent necessary and appropriate,
shall be further reduced on such Distribution Date by Realized Losses as
provided in Section 5.05, and the Uncertificated Principal Balance of REMIC II
Regular Interest I-ZZ and II-ZZ shall be increased by the related interest
deferrals as provided in Section 5.05. The Uncertificated Principal Balance of
each REMIC Regular Interest shall never be less than zero. With respect to the
REMIC III Regular Interest SB-PO, as of any date of determination, an amount
equal to the excess, if any, of (A) the then aggregate Uncertificated Principal
Balance of the REMIC II Regular Interests over (B) the then aggregate
Uncertificated Principal Balance of the Class A Certificates and the Class M
Certificates then outstanding.

“Uncertificated Subordinate REMIC II Pass-Through Rate”: With respect to any
Distribution Date and the REMIC II Regular Interest Ms, a per annum rate equal
to the weighted average of the Uncertificated REMIC I Pass-Through Rate
applicable to REMIC I Regular Interest LT-I-A, REMIC I Regular Interest LT-II-A
and REMIC I Regular Interest LT-III-A, weighted on the basis of the related
Subordinate Component.

“Underwriting Guidelines”: The underwriting guidelines of the Originator as
described in the Prospectus Supplement under the caption “The Originator and the
Servicer-Underwriting Standards.”

“Uninsured Cause”: Any cause of damage to a Mortgaged Property such that the
complete restoration of such property is not fully reimbursable by the hazard
insurance policies required to be maintained pursuant to Section 3.11.

“United States Person”: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof (except, in the
case of a partnership, to the extent provided in regulations) provided that, for
purposes solely of the restrictions on the transfer of any Residual Certificate,
no partnership or other entity treated as a partnership for United States
federal income tax purposes shall be treated as a United States Person unless
all persons that own an interest in such partnership either directly or through
any entity that is not a corporation for United States federal income tax
purposes are required to be United States Persons, or an estate whose income is
subject to United States federal income tax regardless of its source, or a trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, a trust which was in
existence on August 20, 1996 (other than a trust treated as owned by the grantor
under subpart E of part I of subchapter J of chapter I of the Code), and which
was treated as a United States person on August 20, 1996 may elect to continue
to be treated as a United States person notwithstanding the previous sentence.
The term “United States” shall have the meaning set forth in Section 7701 of the
Code.

“U.S. person”: The meaning specified in Regulation S.

“Voting Rights”: The portion of the voting rights of all of the Certificates
which is allocated to any Certificate. At all times the Class A Certificates,
the Mezzanine Certificates and

 

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the Class CE Certificates shall have 98% of the Voting Rights (allocated among
the Holders of the Class A Certificates, the Mezzanine Certificates and the
Class CE Certificates in proportion to the then outstanding Certificate
Principal Balances of their respective Certificates), the Class P Certificates
shall have 1% of the Voting Rights and the Residual Certificates shall have 1%
of the Voting Rights. The Voting Rights allocated to any Class of Certificates
(other than the Class P Certificates and the Residual Certificates) shall be
allocated among all Holders of each such Class in proportion to the outstanding
Certificate Principal Balance or Notional Amount of such Certificates and the
Voting Rights allocated to the Class P Certificates and the Residual
Certificates shall be allocated among all Holders of each such Class in
proportion to such Holders’ respective Percentage Interest; provided, however
that when none of the Regular Certificates are outstanding, 100% of the Voting
Rights shall be allocated among Holders of the Residual Certificates in
accordance with such Holders’ respective Percentage Interests in the
Certificates of such Class.

“Wells Fargo”: Wells Fargo Bank, N.A. or any successor thereto.

Section 1.02 Allocation of Certain Interest Shortfalls. For purposes of
calculating the amount of Accrued Certificate Interest and the amount of the
Interest Distribution Amount for the Class A Certificates, the Mezzanine
Certificates and the Class CE Certificates for any Distribution Date, (1) the
aggregate amount of any Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to the Class M-11 Certificates,
second, to the Class M-10 Certificates, third, to the Class M-9 Certificates,
fourth, to the Class M-8 Certificates, fifth, to the Class M-7 Certificates,
sixth, to the Class M-6 Certificates, seventh, to the Class M-5 Certificates,
eighth, to the Class M-4 Certificates, ninth, to the Class M-3 Certificates,
tenth, to the Class M-2 Certificates, eleventh, to the Class M-1 Certificates
and twelfth, to the Class A Certificates, on a pro rata basis, in each case
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 Class and (2) the aggregate amount
of any Realized Losses incurred and Net WAC Rate Carryover Amounts paid to the
Class A Certificates and the Mezzanine Certificates for any Distribution Date
shall be allocated to the Class CE Certificates to the extent of one month’s
interest at the then applicable Pass-Through Rate on the Class CE Certificates.

For purposes of calculating the amount of Uncertificated Accrued Interest for
the REMIC I Regular Interests and REMIC II Regular Interests for any
Distribution Date, the aggregate amount of any Prepayment Interest Shortfalls
(to the extent not covered by payments by the Servicer pursuant to Section 3.22)
and any Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans
for any Distribution Date shall be allocated, first, among the REMIC I Regular
Interests, and then among the REMIC II Regular Interests (other than the REMIC
II Regular Interest MT-P), in each case pro rata based on, and to the extent of,
one month’s interest at the then applicable respective Uncertificated REMIC I
Pass-Through Rate or Uncertificated REMIC II Pass-Through Rate, as the case may
be, on the respective Uncertificated Principal Balance of each such REMIC I
Regular Interest or REMIC II Regular Interest, as applicable.

 

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ARTICLE II

CONVEYANCE OF MORTGAGE LOANS;

ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01 Conveyance of the Mortgage Loans.

(a) The Depositor, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey in trust to the Trustee
without recourse for the benefit of the Certificateholders all the right, title
and interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to (i) the Mortgage Loans identified on the
Mortgage Loan Schedule, including the related Cut-off Date Principal Balance,
all interest accruing thereon on and after the Cut-off Date and all collections
in respect of interest and principal due after the Cut-off Date; (ii) property
which secured each such Mortgage Loan and which has been acquired by foreclosure
or deed in lieu of foreclosure; (iii) its interest in any insurance policies in
respect of the Mortgage Loans; (iv) the rights of the Depositor under the
Mortgage Loan Purchase Agreement (including, without limitation the right to
enforce the obligations of the other parties thereto thereunder), (v) all other
assets included or to be included in the Trust Fund, (vi) any Net Swap Payment
and any Swap Termination Payment paid by the Swap Provider and deposited into
the Swap Account, (vii) the Reserve Fund, (viii) any payments received from the
Cap Agreement Provider under the Cap Agreement and deposited into the Swap
Account, (ix) the amounts in the Collection Account, the Distribution Account
and the Swap Account, and (x) all proceeds of any of the foregoing. Such
assignment includes all interest and principal received by the Depositor or the
Servicer on or with respect to the Mortgage Loans (other than payments of
principal and interest due on such Mortgage Loans on or before the Cut-off
Date). The Depositor herewith delivers to the Trustee and the Servicer an
executed copy of the Mortgage Loan Purchase Agreement.

In connection with such transfer and assignment, the Depositor does hereby
deliver to and deposit with Wells Fargo, as the Custodian and designated agent
of the Trustee, the following documents or instruments with respect to each
Mortgage Loan so transferred and assigned:

(i) the original Mortgage Note, endorsed either (A) in blank, in which case the
Depositor shall cause the endorsement to be completed or (B) in the following
form: “Pay to the order of HSBC Bank USA, National Association, as Trustee,
without recourse”, or with respect to any lost Mortgage Note, an original Lost
Note Affidavit substantially in the form of Exhibit H stating that the original
mortgage note was lost, misplaced or destroyed, together with a copy of the
related mortgage note; provided, however, that such substitutions of Lost Note
Affidavits for original Mortgage Notes may occur only with respect to Mortgage
Loans, the aggregate Cut-off Date Principal Balance, as applicable, of which is
less than or equal to 1.00% of the Pool Balance as of the Cut-off Date;

(ii) the original Mortgage with evidence of recording thereon, and the original
recorded power of attorney, if the Mortgage was executed pursuant to a power of
attorney, with evidence of recording thereon;

 

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(iii) an original Assignment. The Mortgage shall be assigned either (A) in blank
or (B) to “HSBC Bank USA, National Association, as Trustee, without recourse”;

(iv) an original of any intervening assignment of Mortgage showing a complete
chain of assignments;

(v) the original or a certified copy of lender’s title insurance policy;

(vi) the original or copies of each assumption, modification, written assurance
or substitution agreement, if any; and

(vii) any additional documents included in the definition of “Mortgage File”.

The Custodian agrees to execute and deliver to the Depositor, the Servicer and
the Trustee on or prior to the Closing Date an acknowledgment of receipt of the
original Mortgage Note (with any exceptions noted), substantially in the form
attached as Exhibit F-3 hereto.

(b) If any of the documents referred to in Section 2.01(a)(ii), (iii) or
(iv) above has as of the Closing Date been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Depositor to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Trustee or the Custodian no
later than the Closing Date, of a copy of each such document certified by the
Servicer, in its capacity as Originator, in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Servicer, in its capacity as Originator, delivery to
the Trustee or the Custodian, promptly upon receipt thereof of either the
original or a copy of such document certified by the applicable public recording
office to be a true and complete copy of the original. If the original lender’s
title insurance policy, or a certified copy thereof, was not delivered pursuant
to Section 2.01(a)(v) above, the Servicer, in its capacity as Originator, shall
deliver or cause to be delivered to the Trustee or the Custodian, the original
or a copy of a written commitment or interim binder or preliminary report of
title issued by the title insurance or escrow company or an original attorney’s
opinion of title, with the original or a certified copy thereof to be delivered
to the Trustee or the Custodian, promptly upon receipt thereof. The Servicer or
the Depositor shall deliver or cause to be delivered to the Trustee or the
Custodian promptly upon receipt thereof any other documents constituting a part
of a Mortgage File received with respect to any Mortgage Loan, including, but
not limited to, any original documents evidencing an assumption or modification
of any Mortgage Loan.

Upon discovery or receipt of notice of any materially defective document in, or
that a document is missing from, a Mortgage File, the Servicer, in its capacity
as Originator, shall have 120 days to cure such defect or deliver such missing
document to the Trustee or the Custodian. If the Originator does not cure such
defect or deliver such missing document within such time period, the Servicer,
in its capacity as Originator, shall either repurchase or substitute for such
Mortgage Loan in accordance with Section 2.03.

The Depositor (at the expense of the Servicer, in its capacity as Originator)
shall cause the Assignments which were delivered in blank to be completed and
shall cause all Assignments

 

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referred to in Section 2.01(iii) hereof and, to the extent necessary, in
Section 2.01(iv) hereof to be recorded. The Depositor shall be required to
deliver such Assignments for recording within 90 days of the Closing Date.
Notwithstanding the foregoing, however, for administrative convenience and
facilitation of servicing and to reduce closing costs, the Assignments of
Mortgage shall not be required to be submitted for recording (except with
respect to any Mortgage Loan located in Maryland) unless the Trustee and the
Depositor receive notice that such failure to record would result in a
withdrawal or a downgrading by any Rating Agency of the rating on any Class of
Certificates; provided, however, each Assignment shall be submitted for
recording by the Depositor in the manner described above, at no expense to the
Trust Fund or Trustee, upon the earliest to occur of: (i) reasonable direction
by Holders of Certificates entitled to at least 25% of the Voting Rights,
(ii) the occurrence of a Servicer Event of Termination, (iii) the occurrence of
a bankruptcy, insolvency or foreclosure relating to the Servicer, (iv) the
occurrence of a servicing transfer as described in Section 8.02 hereof, (v) if
the Originator is not the Servicer and with respect to any one Assignment the
occurrence of a bankruptcy, insolvency or foreclosure relating to the Mortgagor
under the related Mortgage and (vi) any Mortgage Loan that is 90 days or more
Delinquent and such recordation would be necessary to facilitate conversion of
the Mortgaged Property in accordance with Section 3.13. Upon (a) receipt of
written notice from the Trustee that recording of the Assignments is required
pursuant to one or more of the conditions (excluding (v) and (vi) above) set
forth in the preceding sentence or (b) upon the occurrence of condition (v) or
(vi) in the preceding sentence, the Depositor shall be required to deliver such
Assignments for recording as provided above, promptly and in any event within 30
days following receipt of such notice. Notwithstanding the foregoing, if the
Originator fails to pay the cost of recording the Assignments, such expense will
be paid by the Trust. To the extent not previously delivered to the Trustee by
the Depositor, the Depositor shall furnish the Trustee, or its designated agent,
with a copy of each Assignment submitted for recording. In the event that any
such Assignment is lost or returned unrecorded because of a defect therein, the
Depositor shall promptly have a substitute Assignment prepared or have such
defect cured, as the case may be, and thereafter cause each such Assignment to
be duly recorded.

The Servicer shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with this Agreement within two weeks of their
execution; provided, however, that the Servicer shall provide the Custodian with
a certified true copy of any such document submitted for recordation within two
weeks of its execution, and shall provide the original of any document submitted
for recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within 365 days
of its submission for recordation. In the event that the Servicer cannot provide
a copy of such document certified by the public recording office within such 365
day period, an Officers’ Certificate of the Servicer which shall (A) identify
the recorded document, (B) state that the recorded document has not been
delivered to the Custodian due solely to a delay caused by the public recording
office, (C) state the amount of time generally required by the applicable
recording office to record and return a document submitted for recordation, if
known and (D) specify the date the applicable recorded document is expected to
be delivered to the Custodian, and, upon receipt of a copy of such document
certified by the public recording office, the Servicer shall immediately deliver
such document to the Custodian. In the event the appropriate public recording
office will not certify as to the accuracy of such document, the Servicer shall
deliver a copy of such document certified by an officer of the Servicer to be a
true and complete copy of the original to the Custodian.

 

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The parties hereto understand and agree that it is not intended that any
mortgage loan be included in the Trust that is a high-cost home loan as defined
by the HOEPA or any other applicable predatory or abusive lending laws.
Notwithstanding anything to the contrary contained herein, the parties hereto
acknowledge that the functions of the Trustee with respect to the custody,
acceptance, inspection and release of Mortgage Files, including but not limited
to certain insurance policies and documents contemplated by this Agreement, and
preparation and delivery of the certifications shall be performed by the
Custodian pursuant to the terms and conditions hereof.

Section 2.02 Acceptance by Trustee.

Subject to the provisions of Section 2.01 and subject to the review described
below and any exceptions noted on the exception report described in the next
paragraph below, the Trustee acknowledges receipt of the documents referred to
in Section 2.01 above and all other assets included in the definition of “Trust
Fund” and declares that it, or the Custodian on its behalf, holds and will hold
such documents and the other documents delivered to it constituting a Mortgage
File, and that it holds or will hold all such assets and such other assets
included in the definition of “Trust Fund” in trust for the exclusive use and
benefit of all present and future Certificateholders.

The Custodian agrees, for the benefit of the Certificateholders, to review
pursuant to Section 2.01 each Mortgage File on or prior to the Closing Date,
with respect to each Mortgage Loan (or, with respect to any document delivered
after the Startup Day, within 45 days of receipt and with respect to any
Qualified Substitute Mortgage, within 45 days after the assignment thereof). The
Custodian further agrees, for the benefit of the Certificateholders, to certify
to the Depositor, the Servicer and the Trustee in substantially the form
attached hereto as Exhibit F-1, within 45 days after the Closing Date, with
respect to each Mortgage Loan (or, with respect to any document delivered after
the Startup Day, within 45 days of receipt and with respect to any Qualified
Substitute Mortgage, within 45 days after the assignment thereof) that, as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in the exception
report annexed thereto as not being covered by such certification), (i) all
documents required to be delivered to it pursuant Section 2.01 of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based
on its examination and only as to the foregoing, the information set forth in
the Mortgage Loan Schedule that corresponds to item (i) of the Mortgage Loan
Schedule accurately reflects information set forth in the Mortgage File. It is
herein acknowledged that, in conducting such review, the Custodian is under no
duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.

Prior to the first anniversary date of this Agreement, the Custodian shall
deliver to the Depositor, the Servicer and the Trustee a final certification in
the form annexed hereto as Exhibit F-2 evidencing the completeness of the
Mortgage Files, with any applicable exceptions noted thereon.

 

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If in the process of reviewing the Mortgage Files and making or preparing, as
the case may be, the certifications referred to above, the Custodian finds any
document or documents constituting a part of a Mortgage File to be missing or
defective in any material respect, at the conclusion of its review the Custodian
shall so notify the Originator, the Depositor, the Trustee and the Servicer. In
addition, upon the discovery by the Originator, the Depositor, the Trustee or
the Servicer (or upon receipt by the Trustee of written notification of such
breach) of a breach of any of the representations and warranties made by the
Originator in the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan which materially adversely affects such Mortgage Loan or the interests of
the related Certificateholders in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties to this Agreement.

The Depositor and the Trustee intend that the assignment and transfer herein
contemplated constitute a sale of the Mortgage Loans, the related Mortgage Notes
and the related documents, conveying good title thereto free and clear of any
liens and encumbrances, from the Depositor to the Trustee in trust for the
benefit of the Certificateholders and that such property not be part of the
Depositor’s estate or property of the Depositor in the event of any insolvency
by the Depositor. In the event that such conveyance is deemed to be, or to be
made as security for, a loan, the parties intend that the Depositor shall be
deemed to have granted and does hereby grant to the Trustee a first priority
perfected security interest in all of the Depositor’s right, title and interest
in and to the Mortgage Loans, the related Mortgage Notes and the related
documents, and that this Agreement shall constitute a security agreement under
applicable law.

Section 2.03 Repurchase or Substitution of Mortgage Loans.

(a) Upon discovery or receipt of notice of any materially defective document in,
or that a document is missing from, a Mortgage File or of a breach by the
Originator or the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
and adversely affects the value of such Mortgage Loan or the interest therein of
the Certificateholders, the Custodian or the Trustee shall promptly notify the
Seller, the Originator and the Servicer of such defect, missing document or
breach and request that the Originator or the Seller deliver such missing
document, cure such defect or breach within 60 days from the date the Originator
was notified of such missing document, defect or breach, and if the Originator
or the Seller does not deliver such missing document or cure such defect or
breach in all material respects during such period, the Trustee shall enforce
the obligations of the Originator or the Seller under the Mortgage Loan Purchase
Agreement to repurchase such Mortgage Loan from the Trust Fund at the Purchase
Price within 90 days after the date on which the Originator or the Seller was
notified of such missing document, defect or breach, if and to the extent that
the Originator or the Seller is obligated to do so under the Mortgage Loan
Purchase Agreement. The Purchase Price for the repurchased Mortgage Loan shall
be remitted to the Servicer for deposit in the Collection Account and the
Trustee, upon receipt of written certification from the Servicer of such
deposit, shall release or cause the Custodian to release to the Originator or
cause the Custodian to release to the Seller the related Mortgage File and the
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, representation or warranty, as the Originator or the

 

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Seller shall furnish to it and as shall be necessary to vest in the Originator
or the Seller any Mortgage Loan released pursuant hereto, and the Trustee and
the Custodian shall not have any further responsibility with regard to such
Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided above,
if so provided in the Mortgage Loan Purchase Agreement, the Originator or the
Seller may cause such Mortgage Loan to be removed from the Trust Fund (in which
case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the limitations
set forth in Section 2.03(b). It is understood and agreed that the obligation of
the Originator or the Seller to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such omission, defect or
breach available to the Trustee and the Certificateholders.

In addition, promptly upon the earlier of discovery by the Servicer or receipt
of notice by the Servicer of the breach of the representation or covenant of the
Originator set forth in Section 6(www) of the Mortgage Loan Purchase Agreement
which materially and adversely affects the interests of the Holders of the Class
P Certificates in any Prepayment Charge, the Servicer shall promptly notify the
Originator and the Trustee of such breach. The Trustee shall enforce the
obligations of the Originator under the Mortgage Loan Purchase Agreement to
remedy such breach to the extent and in the manner set forth in the Mortgage
Loan Purchase Agreement.

(b) Any substitution of Qualified Substitute Mortgage Loans for Deleted Mortgage
Loans made pursuant to Section 2.03(a) must be effected prior to the date which
is two years after the Closing Date.

As to any Deleted Mortgage Loan for which the Originator or the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Originator or the Seller delivering to the Trustee or
the Custodian on behalf of the Trustee, for such Qualified Substitute Mortgage
Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee,
and such other documents and agreements, with all necessary endorsements
thereon, as are required by Section 2.01, together with an Officers’ Certificate
providing that each such Qualified Substitute Mortgage Loan satisfies the
definition thereof and specifying the Substitution Shortfall Amount (as
described below), if any, in connection with such substitution. The Custodian on
behalf of the Trustee shall acknowledge receipt of such Qualified Substitute
Mortgage Loan or Loans and, within ten Business Days thereafter, review such
documents as specified in Section 2.02 and deliver to the Depositor, the Trustee
and the Servicer, with respect to such Qualified Substitute Mortgage Loan or
Loans, an initial certification in the form attached hereto as Exhibit F-1, with
any applicable exceptions noted thereon. Within one year of the date of
substitution, the Custodian on behalf of the Trustee shall deliver to the
Depositor, the Trustee and the Servicer a final certification pursuant to the
this Agreement with respect to such Qualified Substitute Mortgage Loan or Loans,
with any applicable exceptions noted thereon. Monthly Payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution are not part
of REMIC I and will be retained by the Seller. For the month of substitution,
distributions to Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of substitution,
and the Originator shall thereafter be entitled to retain all amounts
subsequently

 

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received in respect of such Deleted Mortgage Loan. The Depositor shall give or
cause to be given written notice to the Certificateholders that such
substitution has taken place, shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted Mortgage Loan from the terms of this Agreement and
the substitution of the Qualified Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee and the
Servicer. Upon such substitution, such Qualified Substitute Mortgage Loan or
Loans shall constitute part of the Trust Fund and shall be subject in all
respects to the terms of this Agreement and the Mortgage Loan Purchase Agreement
including all applicable representations and warranties thereof included herein
or in the Mortgage Loan Purchase Agreement.

For any month in which the Originator or the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Servicer will determine the amount (the “Substitution Shortfall Amount”), if
any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans
exceeds the aggregate of, as to each such Qualified Substitute Mortgage Loan,
the Scheduled Principal Balance thereof as of the date of substitution, together
with one month’s interest on such Scheduled Principal Balance at the applicable
Net Mortgage Rate, plus all outstanding P&I Advances and Servicing Advances
(including Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances)
related thereto. On the date of such substitution, the Originator or the Seller
will deliver or cause to be delivered to the Servicer for deposit in the
Collection Account an amount equal to the Substitution Shortfall Amount, if any,
and the Trustee or the Custodian on behalf of the Trustee, upon receipt of the
related Qualified Substitute Mortgage Loan or Loans, upon receipt of a request
for release and certification by the Servicer of such deposit, shall release to
the Originator or the Seller the related Mortgage File or Files and the Trustee
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, representation or warranty, as the Originator or the
Seller shall deliver to it and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.

In addition, the Originator or the Seller, as the case may be, shall obtain at
its own expense and deliver to the Trustee an Opinion of Counsel to the effect
that such substitution will not cause (a) any federal tax to be imposed on any
Trust Fund, including without limitation, any federal tax imposed on “prohibited
transactions” under Section 860F(a)(1) of the Code or on “contributions after
the startup date” under Section 860G(d)(1) of the Code, or (b) any REMIC to fail
to qualify as a REMIC at any time that any Certificate is outstanding.

(c) Upon discovery by the Depositor, the Seller, the Originator, the Servicer or
the Trustee that any Mortgage Loan does not constitute a “qualified mortgage”
within the meaning of Section 860G(a)(3) of the Code, the party discovering such
fact shall within two Business Days give written notice thereof to the other
parties. In connection therewith, the Originator shall repurchase or substitute
one or more Qualified Substitute Mortgage Loans for the affected Mortgage Loan
within 90 days of the earlier of discovery or receipt of such notice with
respect to such affected Mortgage Loan. Such repurchase or substitution shall be
made by (i) the Originator if the affected Mortgage Loan’s status as a
non-qualified mortgage is or results from a breach of any representation,
warranty or covenant made by the Originator under the Mortgage Loan Purchase
Agreement or (ii) the Depositor, if the affected Mortgage Loan’s status as a
non-qualified mortgage is a breach of no representation or warranty. Any such
repurchase or substitution shall be made in the same manner as set forth in
Section 2.03(a). The Trustee shall

 

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reconvey to the Originator the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty.

(d) With respect to a breach of the representations made pursuant to Section 6
of the Mortgage Loan Purchase Agreement that materially and adversely affects
the value of such Mortgage Loan or the interest therein of the
Certificateholders, the Originator shall be required to take the actions set
forth in this Section 2.03.

(e) Within 90 days of the earlier of discovery by the Servicer or receipt of
notice by the Servicer of the breach of any representation, warranty or covenant
of the Servicer set forth in Section 2.05 which materially and adversely affects
the interests of the Certificateholders in any Mortgage Loan or Prepayment
Charge, the Servicer shall cure such breach in all material respects.

Section 2.04 Representations and Warranties of the Master Servicer.

The Master Servicer hereby represents, warrants and covenants to the Servicer,
the Depositor and the Trustee, for the benefit of each of the Trustee and the
Certificateholders, that as of the Closing Date or as of such date specifically
provided herein:

(i) The Master Servicer is a national banking association duly formed, validly
existing and in good standing under the laws of the United States of America and
is duly authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by the Master Servicer;

(ii) The Master Servicer has the full power and authority to conduct its
business as presently conducted by it and to execute, deliver and perform, and
to enter into and consummate, all transactions contemplated by this Agreement.
The Master Servicer has duly authorized the execution, delivery and performance
of this Agreement, has duly executed and delivered this Agreement, and this
Agreement, assuming due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity;

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

 

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bound by, or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or regulation of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or, to the Master
Servicer’s knowledge, would in the future materially and adversely affect,
(x) the ability of the Master Servicer to perform its obligations under this
Agreement or (y) the business, operations, financial condition, properties or
assets of the Master Servicer taken as a whole;

(iv) The Master Servicer does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant made by it and
contained in this Agreement;

(v) No litigation is pending against the Master Servicer that would materially
and adversely affect the execution, delivery or enforceability of this Agreement
or the ability of the Master Servicer to perform any of its other obligations
hereunder in accordance with the terms hereof,

(vi) There are no actions or proceedings against, or investigations known to it
of, the Master Servicer before any court, administrative or other tribunal
(A) that might prohibit its entering into this Agreement, (B) seeking to prevent
the consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the Master
Servicer of its obligations under, or validity or enforceability of, this
Agreement; and

(vii) No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by the
Master Servicer of, or compliance by the Master Servicer with, this Agreement or
the consummation by it of the transactions contemplated by this Agreement,
except for such consents, approvals, authorizations or orders, if any, that have
been obtained prior to the Closing Date.

It is understood and agreed that the representations, warranties and covenants
set forth in this Section 2.04 shall survive the resignation or termination of
the parties hereto and the termination of this Agreement and shall inure to the
benefit of the Trustee, the Depositor and the Certificateholders.

Section 2.05 Representations, Warranties and Covenants of the Servicer.

The Servicer hereby represents, warrants and covenants to the Master Servicer,
the Securities Administrator, the Depositor and the Trustee, for the benefit of
each of such Persons and the Certificateholders that as of the Closing Date or
as of such date specifically provided herein:

(i) The Servicer is a corporation duly organized and validly existing under the
laws of the State of California and is duly authorized and qualified to transact
any and all business contemplated by this Agreement to be conducted by the
Servicer in any state in which a Mortgaged Property is located or is otherwise
not required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business

 

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laws of any such State, to the extent necessary to ensure its ability to enforce
each Mortgage Loan and to service the Mortgage Loans in accordance with the
terms of this Agreement;

(ii) The Servicer has the full power and authority to conduct its business as
presently conducted by it and to execute, deliver and perform, and to enter into
and consummate, all transactions contemplated by this Agreement. The Servicer
has duly authorized the execution, delivery and performance of this Agreement,
has duly executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of the Servicer, enforceable against it in
accordance with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the enforcement
of creditors’ rights generally and by general principles of equity;

(iii) The execution and delivery of this Agreement by the Servicer, the
servicing of the Mortgage Loans by the Servicer hereunder, the consummation by
the Servicer of any other of the transactions herein contemplated, and the
fulfillment of or compliance with the terms hereof are in the ordinary course of
business of the Servicer and will not (A) result in a breach of any term or
provision of the articles of incorporation or by-laws of the Servicer or
(B) conflict with, result in a breach, violation or acceleration of, or result
in a default under, the terms of any other material agreement or instrument to
which the Servicer is a party or by which it may be bound, or any statute, order
or regulation applicable to the Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Servicer; and the Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to the Servicer’s knowledge, would in the
future materially and adversely affect, (x) the ability of the Servicer to
perform its obligations under this Agreement, (y) the business, operations,
financial condition, properties or assets of the Servicer taken as a whole or
(z) the legality, validity or enforceability of this Agreement;

(iv) The Servicer does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant made by it and contained
in this Agreement;

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

(vi) There are no actions or proceedings against, or investigations known to it
of, the Servicer before any court, administrative or other tribunal (A) that
might prohibit its entering into this Agreement, (B) seeking to prevent the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of, this
Agreement;

 

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(vii) No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by the
Servicer of, or compliance by the Servicer with, this Agreement or the
consummation by it of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations or orders, if any, that have been
obtained prior to the Closing Date;

(viii) Neither this Agreement nor any information, certificate of an officer,
statement furnished in writing or report delivered to the Trustee by the
Servicer in connection with the transactions contemplated hereby contains any
untrue statement of a material fact;

(ix) The Servicer covenants that its computer and other systems used in
servicing the Mortgage Loans operate in a manner such that the Servicer can
service the Mortgage Loans in accordance with the terms of this Agreement;

(x) The information set forth in the Prepayment Charge Schedule (including the
Prepayment Charge Summary attached thereto) is complete, true and correct in all
material respects on the date or dates when such information is furnished and
each Prepayment Charge is permissible and enforceable in accordance with its
terms (except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
affecting creditor’s rights generally or the collectibility thereof may be
limited due to acceleration in connection with a foreclosure) under applicable
federal, state and local law;

(xi) 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; and

(xii) The Servicer will not waive any Prepayment Charge with respect to any
Mortgage Loan other than in accordance with the standard set forth in
Section 3.01.

Notwithstanding anything to the contrary contained in this Agreement, if the
representation made by the Servicer (in its capacity as the Originator) set
forth in Section 2.5(x) is breached and a Principal Prepayment has occurred on
the applicable Prepayment Period or if a change of law subsequent to the Closing
Date limits the enforceability of a Prepayment Charge (other than in the
circumstances provided in Section 2.05(x) above), the Servicer (in its capacity
as Originator) must pay the amount of the scheduled Prepayment Charge, for the
benefit of the Holders of the Class P Certificates, by depositing such amount
into the Collection Account, net of any amount previously collected by the
Servicer and paid by the Servicer, for the benefit of the Holders of the Class P
Certificates, in respect of such Prepayment Charge; and if the covenant of the
Servicer set forth in Section 2.05(xii) above is breached, the Servicer will pay
the amount of such waived Prepayment Charge, from its own funds without any
right of reimbursement, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account, in each
case within 90 days of the earlier of discovery by

 

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the Servicer or receipt of notice by the Servicer of such breach. Furthermore,
notwithstanding any other provisions of this Agreement, any payments made by the
Servicer in respect of any waived Prepayment Charges pursuant to this paragraph
shall be deemed to be paid outside of the Trust Fund.

It is understood and agreed that the representations, warranties and covenants
set forth in this Section 2.05 shall survive the resignation or termination of
the parties hereto, the termination of this Agreement and the delivery of the
Mortgage Files to the Custodian and shall inure to the benefit of the Trustee,
the Master Servicer, the Securities Administrator, the Depositor and the
Certificateholders. Upon discovery by any such Person or the Servicer of a
breach of any of the foregoing representations, warranties and covenants which
materially and adversely affects the value of any Mortgage Loan, Prepayment
Charge or the interests therein of the Certificateholders, the party discovering
such breach shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the Trustee. Subject to Section 8.01,
unless such breach shall not be susceptible of cure within 90 days, the
obligation of the Servicer set forth in Section 2.03(e) to cure breaches shall
constitute the sole remedy against the Servicer available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.05.

The foregoing shall not, however, limit any remedies available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders, pursuant to the Mortgage Loan Purchase Agreement signed by
the Servicer in its capacity as Originator, respecting a breach of the
representations, warranties and covenants of the Servicer in its capacity as
Originator contained in the Mortgage Loan Purchase Agreement.

Section 2.06 Issuance of Certificates.

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 Sections 2.01 and 2.02, together with the assignment to it of all
other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Securities Administrator, pursuant to the written request of the
Depositor executed by an officer of the Depositor, has executed, authenticated
and delivered to or upon the order of the Depositor, the Certificates in
authorized denominations. The interests evidenced by the Certificates,
constitute the entire beneficial ownership interest in the Trust Fund.

Section 2.07 Issuance of the REMIC I Regular Interests and the Class R-I
Interest; Conveyance of the REMIC I Regular Interests and Acceptance of REMIC II
by the Trustee.

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

 

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Interests and the Class R Certificates (in respect of the Class R-I Interest).
The interests evidenced by the Class R-I Interest, together with the REMIC I
Regular Interests, constitute the entire beneficial ownership interest in REMIC
I.

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

(c) The Depositor concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey in trust to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC II Regular Interests for the benefit of the holders of the REMIC III
Regular Interests (which are uncertificated) and the Class R-III Certificates.
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 the holders of the REMIC III Regular Interests and the Class R-III
Certificates.

(d) The Trustee acknowledges the assignment to it of the REMIC Regular Interests
and, concurrently therewith and in exchange therefor, the Securities
Administrator, pursuant to the written request of the Depositor executed by an
officer of the Depositor, has executed, authenticated and delivered to or upon
the order of the Depositor, the Residual Certificates.

Section 2.08 Negative Covenants of the Trustee, the Servicer and the Master
Servicer.

Except as otherwise expressly permitted by this Agreement, the Trustee, the
Servicer and the Master Servicer shall not cause the Trust Fund to:

(i) sell, transfer, exchange or otherwise dispose of any of the assets of the
Trust Fund;

(ii) dissolve or liquidate the Trust Fund in whole or in part;

(iii) engage, directly or indirectly, in any business other than that arising
out of the issue of the Certificates, and the actions contemplated or required
to be performed under this Agreement;

(iv) incur, create or assume any indebtedness for borrowed money;

(v) voluntarily file a petition for bankruptcy, reorganization, assignment for
the benefit of creditors or similar proceeding; or

(vi) merge, convert or consolidate with any other Person.

 

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Section 2.09 Establishment of the 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 “SG Mortgage Securities Trust 2006-OPT2” and does hereby
appoint HSBC Bank USA, National Association, as Trustee in accordance with the
provisions of this Agreement.

ARTICLE III

ADMINISTRATION AND SERVICING

OF THE MORTGAGE LOANS; ACCOUNTS

Section 3.01 Servicer to Act as Servicer.

The Servicer shall service and administer the Mortgage Loans on behalf of the
Trust Fund and in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance with the terms of this Agreement and the respective Mortgage Loans
and all applicable law and regulations and, to the extent consistent with such
terms, in the same manner in which it services and administers similar mortgage
loans for its own portfolio, giving due consideration to customary and usual
standards of practice of prudent mortgage lenders and loan servicers
administering similar mortgage loans but without regard to:

(i) any relationship that the Servicer’s or any Affiliate of the Servicer may
have with the related Mortgagor;

(ii) the ownership of any Certificate by the Servicer or any Affiliate of the
Servicer;

(iii) the Servicer’s obligation to make P&I Advances or Servicing Advances; or

(iv) the Servicer’s right to receive compensation for its services hereunder.

To the extent consistent with the foregoing, the Servicer shall also seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes related to the Mortgage Loans and shall waive (or permit a
Sub-Servicer to waive) a Prepayment Charge only under the following
circumstances: (i) such waiver is standard and customary in servicing similar
Mortgage Loans and such waiver is related to a default or reasonably foreseeable
default and would, in the reasonable judgment of the Servicer, maximize recovery
of total proceeds taking into account the value of such Prepayment Charge and
the related Mortgage Loan 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 (ii) such Prepayment Charge is
unenforceable in accordance with applicable law or the collection of such
related Prepayment Charge would otherwise violate applicable law.

Subject only to the above-described servicing standards (the “Accepted Servicing
Practices”) and the terms of this Agreement and of the respective Mortgage
Loans, the Servicer

 

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shall have full power and authority, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Servicer in its own name is hereby authorized and empowered by the Trustee when
the Servicer believes it appropriate in its best judgment, to execute and
deliver, on behalf of the Trust Fund, the Certificateholders and the Trustee or
any of them, and upon written notice to the Trustee, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge or
subordination, and all other comparable instruments, with respect to the
Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee, for the benefit of the Trust Fund and the
Certificateholders. The Servicer shall service and administer the Mortgage Loans
in accordance with applicable state and federal law and shall provide to the
Mortgagors any reports required to be provided to them thereby. The Servicer
shall also comply in the performance of this Agreement with all reasonable rules
and requirements of each insurer under any standard hazard insurance policy.
Subject to Section 3.14, the Trustee shall execute, at the written request of
the Servicer, and furnish to the Servicer any special or limited powers of
attorney and other documents (in form reasonably acceptable to the Trustee)
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder and furnished to the Trustee by the Servicer,
and the Trustee shall not be liable for the actions of the Servicer under such
powers of attorney, or such other documents furnished by the Trustee pursuant to
this paragraph and shall be indemnified by the Servicer for any cost, liability
or expense incurred by the Trustee in connection with the Servicer’s use or
misuse of any such power of attorney or other document furnished by the Trustee
pursuant to this paragraph.

In accordance with Accepted Servicing Practices, the Servicer shall make or
cause to be made Servicing Advances as necessary for the purpose of effecting
the payment of taxes and assessments on the Mortgaged Properties, which
Servicing Advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.07, and further as
provided in Section 3.09; provided, however, the Servicer shall only make such
Servicing Advance if the related Mortgagor has not made such payment and if the
failure to make such Servicing Advance would result in the loss of the related
Mortgaged Property due to a tax sale or foreclosure as result of a tax lien. Any
cost incurred by the Servicer in effecting the payment of taxes and assessments
on a Mortgaged Property shall not, for the purpose of calculating the Stated
Principal Balance of such Mortgage Loan or distributions to Certificateholders,
be added to the unpaid principal balance of the related Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so permit.

Notwithstanding anything in this Agreement to the contrary, the Servicer may not
make any future advances with respect to a Mortgage Loan and the Servicer shall
not permit any modification with respect to any related Mortgage Loan that would
change the Mortgage Rate, reduce or increase the principal balance (except for
reductions resulting from actual payments of principal) or change the final
maturity date on such related Mortgage Loan (unless, as provided in
Section 3.06, the related Mortgagor is in default with respect to the related
Mortgage Loan or such default is, in the judgment of the Servicer, reasonably
foreseeable) or any modification, waiver or amendment of any term of any
Mortgage Loan that would both (A) effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the Code (or final, temporary or

 

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proposed Treasury regulations promulgated thereunder) and (B) cause any REMIC
created hereunder to fail to qualify as a REMIC under the Code or the imposition
of any tax on “prohibited transactions” or “contributions after the startup
date” under the REMIC Provisions.

Section 3.02 Sub-Servicing Agreements Between the Servicer and Sub-Servicers.

The Servicer may arrange for the subservicing of any Mortgage Loan by a Sub-
Servicer pursuant to a Sub-Servicing Agreement; provided that such sub-servicing
arrangement and the terms of the related Sub-Servicing Agreement must provide
for the servicing of such Mortgage Loans in a manner consistent with the
servicing arrangements contemplated hereunder and that such agreements would not
result in a withdrawal or a downgrading by any Rating Agency of the rating on
any Class of Certificates. The Trustee is hereby authorized to acknowledge, at
the request of the Servicer, any Sub-Servicing Agreement that meets the
requirements applicable to Sub- Servicing Agreements set forth in this Agreement
and that is otherwise permitted under this Agreement. Each Sub-Servicer shall be
(i) authorized to transact business in the state or states where the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement and (ii) a Freddie Mac or Fannie
Mae approved mortgage servicer. Notwithstanding the provisions of any
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer or a Sub- Servicer or reference
to actions taken through the Servicer or otherwise, the Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the Mortgage Loans in accordance with
the provisions of this Agreement without diminution of such obligation or
liability by virtue of such Sub-Servicing Agreements or arrangements or by
virtue of indemnification from the Sub-Servicer and to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and
administering the Mortgage Loans. Every Sub-Servicing Agreement entered into by
the Servicer shall contain a provision giving the successor Servicer the option
to terminate such agreement in the event a successor Servicer is appointed. All
actions of each Sub-Servicer performed pursuant to the related Sub-Servicing
Agreement shall be performed as an agent of the Servicer with the same force and
effect as if performed directly by the Servicer.

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

Section 3.03 Successor Sub-Servicers.

Any Sub-Servicing Agreement shall provide that the Servicer shall be entitled to
terminate any Sub-Servicing Agreement and to either itself directly service the
related Mortgage Loans or enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02. Any Sub- Servicing Agreement
shall include the provision that such agreement may be immediately terminated by
any successor to the Servicer (which may be the Trustee or the Master Servicer)
without fee, in accordance with the terms of this Agreement, in the event that
the Servicer (or any successor to the Servicer) shall, for any reason, no longer
be the Servicer, (including termination due to a Servicer Event of Default).

 

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Section 3.04 No Contractual Relationship Between Sub-Servicer, Trustee or the
Certificateholders.

Any Sub-Servicing Agreement and any other transactions or services relating to
the Mortgage Loans involving a Sub-Servicer shall be deemed to be between the
Sub-Servicer and the Servicer alone and the Master Servicer, the Trustee and the
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Sub-Servicer
except as set forth in Section 3.05. The Servicer shall be solely liable for all
fees owed by it to any Sub-Servicer, irrespective of whether the Servicer’s
compensation pursuant to this Agreement is sufficient to pay such fee.

Section 3.05 Assumption or Termination of Sub-Servicing Agreement by Successor
Servicer.

In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
a successor Servicer (which may be the Master Servicer) pursuant to
Section 8.02, it is understood and agreed that the Servicer’s rights and
obligations under any Sub-Servicing Agreement then in force between the Servicer
and a Sub-Servicer shall be assumed simultaneously by such successor Servicer
without act or deed on the part of such successor Servicer; provided, however,
that any successor Servicer may terminate the Sub-Servicer.

The Servicer shall, upon the reasonable request of the Master Servicer, but at
its own expense, deliver to the assuming party documents and records relating to
each Sub-Servicing Agreement and an accounting of amounts collected and held by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the Sub-Servicing Agreements to the assuming party.

The Servicing Fee payable to any such successor Servicer shall be payable from
payments received on the Mortgage Loans in the amount and in the manner set
forth in this Agreement.

Section 3.06 Collection of Certain Mortgage Loan Payments.

The Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Mortgage Loans, and shall, to the extent
such procedures shall be consistent with this Agreement and Accepted Servicing
Practices, follow such collection procedures as it would follow with respect to
mortgage loans comparable to the Mortgage Loans and held for its own account.
Consistent with the foregoing, the Servicer may in its discretion (i) waive any
late payment charge or, if applicable, penalty interest or (ii) extend the due
dates for the Monthly Payments due on a Mortgage Note; provided that any
extension pursuant to this clause shall not affect the amortization schedule of
any Mortgage Loan for purposes of any computation hereunder. In the event of any
such arrangement pursuant to clause (ii) above, the Servicer shall make timely
P&I Advances on such Mortgage Loan during such extension pursuant to
Section 5.03 and in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangement.

 

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Notwithstanding the foregoing, in the event that any Mortgage Loan is in default
or, in the judgment of the Servicer, such default is reasonably foreseeable, the
Servicer, consistent with Accepted Servicing Practices may waive, modify or vary
any term of such Mortgage Loan (including modifications that change the Mortgage
Rate, forgive the payment of principal or interest or extend the final maturity
date of such Mortgage Loan), accept payment from the related Mortgagor of an
amount less than the Stated Principal Balance in final satisfaction of such
Mortgage Loan, or consent to the postponement of strict compliance with any such
term or otherwise grant indulgence to any Mortgagor if in the Servicer’s
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Certificateholders (taking into
account any estimated Realized Loss that might result absent such action).

Section 3.07 Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.

To the extent the terms of a Mortgage related to a Mortgage Loan provide for
Escrow Payments, the Servicer shall establish and maintain one or more accounts
(the “Servicing Accounts”), into which all collections from the related
Mortgagors (or related advances from Sub-Servicers) for the payment of taxes,
assessments, fire, flood, and hazard insurance premiums, and comparable items
for the account of the Mortgagors (“Escrow Payments”) shall be deposited and
retained. Servicing Accounts shall be Eligible Accounts. The Servicer shall
deposit in the Servicing Accounts on a daily basis and in no event later than
the second Business Day after receipt, and retain therein, all Escrow Payments
collected on account of the Mortgage Loans, for the purpose of effecting the
timely payment of any such items as required under the terms of this Agreement.
Withdrawals of amounts from a Servicing Account may be made only to (i) effect
timely payment of taxes, assessments, fire, flood, and hazard insurance
premiums, and comparable items; (ii) reimburse itself out of related collections
for any Servicing Advances made pursuant to Section 3.01 (with respect to taxes
and assessments) and Section 3.11 (with respect to fire, flood and hazard
insurance); (iii) refund to Mortgagors any sums as may be determined to be
overages; (iv) pay interest to the Servicer or, if required and as described
below, to Mortgagors on balances in the Servicing Account; or (v) clear and
terminate the Servicing Account at the termination of the Servicer’s obligations
and responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article X. As part of its servicing duties, the Servicer shall
pay to the Mortgagors interest on funds in Servicing Accounts, to the extent
required by law and, to the extent that interest earned on funds in the
Servicing Accounts is insufficient, to pay such interest from its or their own
funds, without any reimbursement therefor. Notwithstanding the foregoing, the
Servicer shall not be obligated to collect Escrow Payments if the related
Mortgage Loan does not require such payments but the Servicer shall nevertheless
be obligated to make Servicing Advances as provided in Section 3.01 and
Section 3.11. In the event the Servicer shall deposit in the Servicing Accounts
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Servicing Accounts, any provision to the contrary
notwithstanding.

To the extent that a Mortgage does not provide for Escrow Payments, the Servicer
(i) shall determine whether any such payments are made by the Mortgagor in a
manner and at a time that is necessary to avoid the loss of the Mortgaged
Property due to a tax sale or the foreclosure as a result of a tax lien and
(ii) shall ensure that all insurance required to be maintained on the Mortgaged
Property pursuant to this Agreement is maintained. If any such payment has not
been

 

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made and the Servicer receives notice of a tax lien with respect to the Mortgage
Loan being imposed, the Servicer shall, promptly and to the extent required to
avoid loss of the Mortgaged Property, advance or cause to be advanced funds
necessary to discharge such lien on the Mortgaged Property unless the Servicer
determines the advance to be nonrecoverable. The Servicer assumes full
responsibility for the payment of all such bills and shall effect payments of
all such bills irrespective of the Mortgagor’s faithful performance in the
payment of same or the making of the Escrow Payments and shall make Servicing
Advances to effect such payments subject to its determination of recoverability.

Section 3.08 Collection Account and Distribution Account.

(a) On behalf of the Trust Fund, the Servicer shall establish and maintain one
or more Collection Accounts, held in trust for the benefit of the Trustee and
the Certificateholders. On behalf of the Trust Fund, the Servicer shall deposit
or cause to be deposited in the Collection Account on a daily basis and in no
event later than two Business Days after receipt, as and when received or as
otherwise required hereunder, the following payments and collections received or
made by it on or subsequent to the Cut-off Date other than amounts attributable
to a Due Date on or prior to the Cut-off Date or payments received by it on or
prior to the Cut-off Date, but allocable to a Due Period subsequent thereto:

(i) all payments on account of principal, including Principal Prepayments (but
not Prepayment Charges), on the Mortgage Loans;

(ii) all payments on account of interest (net of the related Servicing Fee and
any Prepayment Interest Excess) on each Mortgage Loan;

(iii) all Insurance Proceeds and Liquidation Proceeds (other than proceeds
collected in respect of any particular REO Property) and all Subsequent
Recoveries;

(iv) any amounts required to be deposited by the Servicer pursuant to
Section 3.10 in connection with any losses realized on Permitted Investments
with respect to funds held in the Collection Account;

(v) any amounts required to be deposited by the Servicer pursuant to the second
paragraph of Section 3.11(a) in respect of any blanket policy deductibles;

(vi) any Purchase Price or Substitution Shortfall Amount delivered to the
Servicer and all proceeds (net of amounts payable or reimbursable to the
Servicer, the Master Servicer, the Trustee, the Custodian or the Securities
Administrator) of Mortgage Loans purchased in accordance with Section 2.03,
Section 3.13 or Section 10.01; and

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

The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges, assumption
fees or other similar fees need not be deposited

 

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by the Servicer in the Collection Account and may be retained by the Servicer as
additional compensation. In the event the Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.

(b) On behalf of the Trust Fund, the Securities Administrator shall establish
and maintain one or more accounts (such account or accounts, the “Distribution
Account”), held in trust for the benefit of the Trustee, the Trust Fund and the
Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to
the Securities Administrator in immediately available funds for deposit in the
Distribution Account on or before 12:00 noon New York time on the Servicer
Remittance Date, that portion of the Available Distribution Amount (calculated
without regard to the references in the definition thereof to amounts that may
be withdrawn from the Distribution Account) for the related Distribution Date
then on deposit in the Collection Account and the amount of all Prepayment
Charges collected by the Servicer in connection with the Principal Prepayment of
any of the Mortgage Loans then on deposit in the Collection Account. If the
balance on deposit in the Collection Account exceeds $100,000 as of the
commencement of business on any Business Day and the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of “Eligible Account,” the Servicer shall, on or before 5:00 p.m. New York time
on such Business Day, withdraw from the Collection Account any and all amounts
payable or reimbursable to the Depositor, the Servicer, the Trustee, the Master
Servicer, the Securities Administrator or the Seller pursuant to Section 3.09(a)
and shall pay such amounts to the Persons entitled thereto.

With respect to any remittance received by the Securities Administrator on or
after the first Business Day following the Business Day on which such payment
was due, the Securities Administrator shall send written notice thereof to the
Servicer. The Servicer shall pay to the Securities Administrator interest on any
such late payment by the Servicer at an annual rate equal to Prime Rate (as
defined in the Wall Street Journal) plus one percentage point, but in no event
greater than the maximum amount permitted by applicable law. Such interest shall
be paid by the Servicer to the Securities Administrator on the date such late
payment is made and shall cover the period commencing with the day following
such first Business Day and ending with the Business Day on which such payment
is made, both inclusive. The payment by the Servicer of any such interest, or
the failure of the Securities Administrator to notify the Servicer of such
interest, shall not be deemed an extension of time for payment or a waiver of
any Event of Default by the Servicer.

(c) Funds in the Collection Account maintained by the Servicer and funds in the
Distribution Account may be invested in Permitted Investments in accordance with
the provisions set forth in Section 3.10. The Servicer shall give notice to the
Trustee, the Securities Administrator and the Master Servicer of the location of
the Collection Account maintained by it when established and prior to any change
thereof. The Securities Administrator shall give notice to the Servicer and the
Depositor of the location of the Distribution Account when established and prior
to any change thereof.

(d) Funds held in the Collection Account maintained by the Servicer at any time
may be delivered by the Servicer in immediately available funds to the
Securities Administrator for deposit in the Distribution Account. In the event
the Servicer shall deliver to the Securities

 

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Administrator for deposit in the Distribution Account any amount not required to
be deposited therein, it may at any time request that the Securities
Administrator withdraw such amount from the Distribution Account and remit to it
any such amount, any provision herein to the contrary notwithstanding. In no
event shall the Securities Administrator incur liability as a result of
withdrawals from the Distribution Account at the direction of the Servicer in
accordance with the immediately preceding sentence. In addition, the Servicer
shall deliver to the Securities Administrator no later than the Servicer
Remittance Date the amounts set forth in clauses (i) through (iv) below:

(i) any P&I Advances, as required pursuant to Section 5.03;

(ii) any amounts required to be deposited pursuant to Section 3.21(d) or 3.21(f)
in connection with any REO Property;

(iii) any amounts to be paid in connection with a purchase of Mortgage Loans and
REO Properties pursuant to Section 10.01; and

(iv) any amounts required to be deposited pursuant to Section 3.22 in connection
with any Prepayment Interest Shortfalls.

Section 3.09 Withdrawals from the Collection Account and Distribution Account.

(a) The Servicer shall, from time to time, make withdrawals from the Collection
Account for any of the following purposes or as described in Section 5.03:

(i) to remit to the Securities Administrator for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Section 3.08(b) or
permitted to be so remitted pursuant to the first sentence of Section 3.08(d);

(ii) subject to Section 3.13(d), to reimburse itself (including any successor
Servicer) for P&I Advances made by it, but only to the extent of amounts
received which represent Late Collections (net of the related Servicing Fees) of
Monthly Payments on Mortgage Loans with respect to which such P&I Advances were
made in accordance with the provisions of Section 5.03;

(iii) subject to Section 3.13(d), to pay itself any unpaid Servicing Fees and
reimburse itself any unreimbursed Servicing Advances with respect to each
Mortgage Loan, but only to the extent of any Liquidation Proceeds and Insurance
Proceeds received with respect to such Mortgage Loan or to the extent of funds
held in the Collection Account for future distribution that were not included in
the Available Distribution Amount for the preceding Distribution Date;

(iv) to pay to itself as servicing compensation (in addition to the Servicing
Fee) on the Servicer Remittance Date any interest or investment income earned on
funds deposited in the Collection Account;

(v) to pay itself or the Seller, as the case may be, with respect to each
Mortgage Loan that has previously been purchased or replaced pursuant to
Section 2.03 all amounts received thereon not included in the Purchase Price or
the Substitution Shortfall Amount;

 

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(vi) to reimburse itself (including any successor Servicer) for any P&I Advance
or Servicing Advance previously made by it which it has determined to be a
Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance in accordance
with the provisions of Section 5.03;

(vii) to reimburse itself or the Depositor for expenses incurred by or
reimbursable to it or the Depositor, as the case may be, pursuant to
Section 3.01 or Section 7.03;

(viii) to reimburse itself or the Trustee, as the case may be, for expenses
reasonably incurred in respect of the breach or defect giving rise to the
purchase obligation under Section 2.03 of this Agreement that were included in
the Purchase Price of the related Mortgage Loan, including any expenses arising
out of the enforcement of the purchase obligation;

(ix) to pay, or to reimburse itself for advances in respect of, expenses
incurred in connection with any Mortgage Loan pursuant to Section 3.13(b);

(x) to pay to itself any Prepayment Interest Excess on the Mortgage Loans to the
extent not retained pursuant to Section 3.08(a)(ii)); and

(xi) to clear and terminate the Collection Account pursuant to Section 10.01.

The Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Collection Account, to the extent held by or on behalf of it, pursuant to
subclauses (ii), (iii), (v), (vi), (vii), (viii), (ix) and (x) above.

(b) The Securities Administrator shall, from time to time, make withdrawals from
the Distribution Account, for any of the following purposes, without priority:

(i) to make distributions to Certificateholders in accordance with Section 5.01;

(ii) to pay to itself, the Custodian, the Master Servicer and the Trustee
amounts to which it is entitled pursuant to Section 9.05 or any other provision
of this Agreement and any Extraordinary Trust Fund Expenses;

(iii) to reimburse itself or the Master Servicer pursuant to Section 8.02;

(iv) to pay any amounts in respect of taxes pursuant to Section 11.01(g)(v);

(v) [Reserved];

(vi) to pay the Credit Risk Management Fee to the Credit Risk Manager; and

 

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

Section 3.10 Investment of Funds in the Investment Accounts.

(a) The Servicer may direct, by means of written directions (which may be
standing directions), any depository institution maintaining the Collection
Account to invest the funds in such Collection Account (for purposes of this
Section 3.10, an “Investment Account”) in one or more Permitted Investments
bearing interest or sold at a discount, and maturing, unless payable on demand,
(i) no later than the Business Day immediately preceding the date on which such
funds are required to be withdrawn from such account pursuant to this Agreement,
if a Person other than the Securities Administrator is the obligor thereon, and
(ii) no later than the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if the Securities Administrator is
the obligor on such Permitted Investment. Amounts in the Distribution Account
may be invested in Permitted Investments as directed in writing by the Master
Servicer and maturing, unless payable on demand, (i) no later than the Business
Day immediately preceding the date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if a Person other than
the Securities Administrator is the obligor thereon, and (ii) no later than the
date on which such funds are required to be withdrawn from such account pursuant
to this Agreement, if the Securities Administrator is the obligor thereon. All
such Permitted Investments shall be held to maturity, unless payable on demand.
Any investment of funds shall be made in the name of the Trustee (in its
capacity as such) or in the name of a nominee of the Trustee. The Securities
Administrator shall be entitled to sole possession over each such investment in
the Distribution Account and, subject to subsection (b) below, the income
thereon, and any certificate or other instrument evidencing any such investment
shall be delivered directly to the Securities Administrator or its agent,
together with any document of transfer necessary to transfer title to such
investment to the Trustee or its nominee. In the event amounts on deposit in the
Collection Account maintained by the Servicer are at any time invested in a
Permitted Investment payable on demand, the party with investment discretion
over such Investment Account shall:

(x) consistent with any notice required to be given thereunder, demand that
payment thereon be made on the last day such Permitted Investment may otherwise
mature hereunder in an amount equal to the lesser of (1) all amounts then
payable thereunder and (2) the amount required to be withdrawn on such date; and

(y) demand payment of all amounts due thereunder promptly upon receipt by such
party of written notice from the Servicer that such Permitted Investment would
not constitute a Permitted Investment in respect of funds thereafter on deposit
in the Investment Account.

(b) All income and gain realized from the investment of funds deposited in the
Collection Account held by or on behalf of the Servicer, shall be for the
benefit of the Servicer and shall be subject to its withdrawal in accordance
with Section 3.09. The Servicer shall deposit in the Collection Account
maintained by the Servicer the amount of any loss incurred in respect of any
such Permitted Investment made with funds in such account immediately upon
realization of such loss. All earnings and gain realized from the investment of
funds deposited in the Distribution Account shall be for the benefit of the
Master Servicer. The Master Servicer

 

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shall remit from its own funds for deposit into the Distribution Account the
amount of any loss incurred on Permitted Investments in the Distribution
Account.

(c) Except as otherwise expressly provided in this Agreement, if any default
occurs in the making of a payment due under any Permitted Investment, or if a
default occurs in any other performance required under any Permitted Investment,
the Trustee may and, subject to Section 9.01 and Section 9.02(a)(v), shall, at
the written direction of the Servicer, take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate proceedings.

(d) The Trustee, the Master Servicer or their respective Affiliates are
permitted to receive additional compensation that could be deemed to be in the
Trustee’s or the Master Servicer’s economic self-interest for (i) serving as
investment adviser, administrator, shareholder servicing agent, custodian or
sub-custodian with respect to certain of the Permitted Investments, (ii) using
Affiliates to effect transactions in certain Permitted Investments and
(iii) effecting transactions in certain Permitted Investments. Such compensation
shall not be considered an amount that is reimbursable or payable to the Trustee
or the Master Servicer pursuant to Section 3.09 or 3.10 or otherwise payable in
respect of Extraordinary Trust Fund Expenses. Such additional compensation shall
not be an expense of the Trust Fund.

Section 3.11 Maintenance of Hazard Insurance, Errors and Omissions and Fidelity
Coverage and Primary Mortgage Insurance.

(a) The terms of each Mortgage Note require the related Mortgagor to maintain
fire, flood and hazard insurance policies. To the extent such policies are not
maintained, the Servicer shall cause to be maintained for each Mortgaged
Property fire and hazard insurance with extended coverage as is customary in the
area where the Mortgaged Property is located in an amount which is at least
equal to the lesser of the current principal balance of such Mortgage Loan and
the amount necessary to compensate fully for any damage or loss to the
improvements which are a part of such property on a replacement cost basis, in
each case in an amount not less than such amount as is necessary to avoid the
application of any coinsurance clause contained in the related hazard insurance
policy. The Servicer shall also cause to be maintained fire and hazard insurance
on each REO Property with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements which are a part
of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property. The Servicer will comply in
the performance of this Agreement with all reasonable rules and requirements of
each insurer under any such hazard policies. Any amounts to be collected by the
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts
to be released to the Mortgagor in accordance with Accepted Servicing Practices,
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.09, if received in respect of a Mortgage Loan, or in the REO Account,
subject to withdrawal pursuant to Section 3.21, if received in respect of an REO
Property. Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to Certificateholders,
be added to the unpaid principal balance of the related Mortgage Loan,
notwithstanding that the terms of

 

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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, the
Servicer will cause to be maintained a flood insurance policy in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of
(i) the unpaid principal balance of the related Mortgage Loan and (ii) the
maximum amount of such insurance available for the related Mortgaged Property
under the national flood insurance program (assuming that the area in which such
Mortgaged Property is located is participating in such program).

In the event that the Servicer shall obtain and maintain a blanket policy with
an insurer having a General Policy Rating of A:X or better in Best’s Key Rating
Guide or otherwise acceptable to Fannie Mae or Freddie Mac insuring against
hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to
have satisfied its obligations to cause fire and hazard insurance to be
maintained on the Mortgaged Properties, 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 3.11, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Collection Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee, the Trust Fund and the 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 its respective 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 Mortgage Loans, unless
the Servicer, has obtained a waiver of such requirements from Fannie Mae or
Freddie Mac. 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.

(c) The Servicer shall not take any action that would result in noncoverage
under any applicable primary mortgage insurance policy of any loss which, but
for the actions of the Servicer would have been covered thereunder. The Servicer
shall use its best efforts to keep in force and effect any applicable primary
mortgage insurance policy and, to the extent that the related Mortgage Loan
requires the Mortgagor to maintain such insurance, any other primary mortgage
insurance applicable to any Mortgage Loan. Except as required by applicable law
or the related Mortgage Loan Documents, the Servicer shall not cancel or refuse
to renew any such

 

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primary mortgage insurance policy that is in effect at the date of the initial
issuance of the related Mortgage Note and is required to be kept in force
hereunder.

The Servicer agrees to present on behalf of the Trustee and the
Certificateholders claims to the applicable insurer under any other primary
mortgage insurance policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any primary mortgage insurance
policies respecting defaulted Mortgage Loans. Pursuant to Section 3.08, any
amounts collected by the Servicer under any primary mortgage insurance policies
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.09.

Section 3.12 Enforcement of Due-on-Sale Clauses; Assumption Agreements.

The Servicer shall, to the extent it has knowledge of any conveyance of any
Mortgaged Property by any Mortgagor (whether by absolute conveyance or by
contract of sale, and whether or not the Mortgagor remains or is to remain
liable under the Mortgage Note and/or the Mortgage), exercise its rights to
accelerate the maturity of such Mortgage Loan under the “due-on-sale” clause, if
any, applicable thereto; provided, however, that the Servicer shall not exercise
any such rights if prohibited by law from doing so. If the Servicer reasonably
believes it is unable under applicable law to enforce such “due-on-sale” clause,
or if any of the other conditions set forth in the proviso to the preceding
sentence apply, the Servicer shall enter into an assumption and modification
agreement from or with the person to whom such property has been conveyed or is
proposed to be conveyed, pursuant to which such person becomes liable under the
Mortgage Note and, to the extent permitted by applicable state law, the
Mortgagor remains liable thereon. The Servicer is also authorized to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
the Mortgagor and becomes liable under the Mortgage Note, provided that no such
substitution shall be effective unless such person satisfies the then current
underwriting criteria of the Servicer for mortgage loans similar to the Mortgage
Loans. In connection with any assumption or substitution, the Servicer shall
apply such underwriting standards and follow such practices and procedures as
shall be normal and usual in its general mortgage servicing activities and as it
applies to other mortgage loans owned solely by it. The Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy. Any fee collected by the Servicer in respect of an assumption or
substitution of liability agreement will be retained by the Servicer as
additional servicing compensation. In connection with any such assumption, no
material term of the Mortgage Note (including but not limited to the related
Mortgage Rate and the amount of the Monthly Payment) may be amended or modified,
except as otherwise required pursuant to the terms thereof. The Servicer shall
notify the Trustee (or the Custodian) that any such substitution or assumption
agreement has been completed by forwarding to the Trustee (or the Custodian) the
executed original of such substitution or assumption agreement, which document
shall be added to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof.

Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations

 

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hereunder by reason of any assumption of a Mortgage Loan by operation of law or
by the terms of the Mortgage Note or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatever. For purposes of this
Section 3.12, the term “assumption” is deemed to also include a sale (of the
Mortgaged Property) subject to the Mortgage that is not accompanied by an
assumption or substitution of liability agreement.

Section 3.13 Realization Upon Defaulted Mortgage Loans.

(a) The Servicer shall use its best efforts, consistent with Accepted Servicing
Practices, to foreclose upon or otherwise comparably convert the ownership of
properties securing such of the Mortgage Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments pursuant to Section 3.06. The Servicer shall be
responsible for all costs and expenses incurred by it in any such proceedings;
provided, however, that such costs and expenses will be recoverable as Servicing
Advances by the Servicer as contemplated in Sections 3.09 and 3.21. The
foregoing is subject to the provision that, in any case in which a Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Servicer shall
not be required to expend its own funds toward the restoration of such property
unless it shall determine in its discretion that such restoration will increase
the proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.

(b) Notwithstanding the foregoing provisions of this Section 3.13 or any other
provision of this Agreement, with respect to any Mortgage Loan as to which the
Servicer has received actual notice of, or has actual knowledge of, the presence
of any toxic or hazardous substance on the related Mortgaged Property, the
Servicer shall not, on behalf of the Trust Fund, either (i) obtain title to such
Mortgaged Property as a result of or in lieu of foreclosure or otherwise, or
(ii) otherwise acquire possession of, or take any other action with respect to,
such Mortgaged Property, if, as a result of any such action, the Trust Fund, the
Trustee or the Certificateholders would be considered to hold title to, to be a
“mortgagee-in- possession” of, or to be an “owner” or “operator” of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Servicer has also previously determined, based
on its reasonable judgment and a prudent report prepared by an Independent
Person who regularly conducts environmental audits using customary industry
standards, that:

 

  (1) such Mortgaged Property is in compliance with applicable environmental
laws or, if not, that it would be in the best economic interest of the Trust
Fund to take such actions as are necessary to bring the Mortgaged Property into
compliance therewith; and

 

  (2) there are no circumstances present at such Mortgaged Property relating to
the use, management or disposal of any hazardous substances, hazardous
materials, hazardous wastes or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any federal, state or local law or regulation, or that if any
such materials are present for which such action could be required, that it
would be in the best economic interest of the Trust Fund to take such actions
with respect to the affected Mortgaged Property.

 

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The cost of the environmental audit report contemplated by this Section 3.13
shall be advanced by the Servicer, subject to the Servicer’s right to be
reimbursed therefor from the Collection Account as provided in
Section 3.09(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.

If the Servicer determines, as described above, that it is in the best economic
interest of the Trust Fund to take such actions as are necessary to bring any
such Mortgaged Property into compliance with applicable environmental laws, or
to take such action with respect to the containment, clean-up or remediation of
hazardous substances, hazardous materials, hazardous wastes, or petroleum-based
materials affecting any such Mortgaged Property, then the Servicer shall take
such action as it deems to be in the best economic interest of the Trust Fund.
The cost of any such compliance, containment, cleanup or remediation shall be
advanced by the Servicer, subject to the Servicer’s right to be reimbursed
therefor from the Collection Account as provided in Sections 3.09(a)(iii) or
3.09(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.

(c) Proceeds received in connection with any Final Recovery Determination, as
well as any recovery resulting from a partial collection of Insurance Proceeds
or Liquidation Proceeds, in respect of any Mortgage Loan, will be applied in the
following order of priority: first, to reimburse the Servicer for any related
unreimbursed Servicing Advances and P&I Advances, pursuant to
Section 3.09(a)(ii) or (a)(iii); second, to accrued and unpaid interest on the
Mortgage Loan, to the date of the Final Recovery Determination, or to the Due
Date prior to the Distribution Date on which such amounts are to be distributed
if not in connection with a Final Recovery Determination; and third, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than the full amount of accrued and unpaid
interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Servicer as follows: first, to unpaid Servicing Fees; and
second, to the balance of the interest then due and owing. The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer pursuant to Section 3.09(a)(iii). The portion of the recovery allocated
to interest (net of unpaid Servicing Fees) and the portion of the recovery
allocated to principal of the Mortgage Loan shall be applied as follows: first,
to reimburse the Servicer for any related unreimbursed Advances in accordance
with Section 3.09(a)(ii) and any other amounts reimbursable to the Servicer
pursuant to Section 3.09, and second, as part of the amounts to be transferred
to the Distribution Account in accordance with Section 3.08(b).

Section 3.14 Trustee to Cooperate; 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 Custodian, on
behalf of the Trustee, two copies of a request for release substantially in the
form attached to this Agreement signed by a Servicing Officer or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
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a Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payment that are required to
be deposited in the Collection Account have been or will be so deposited) and
shall request that the Custodian, on behalf of the Trustee, deliver to the
Servicer the related Mortgage File. Upon receipt of such certification and
request, the Custodian, on behalf of the Trustee, shall within five (5) Business
Days release the related Mortgage File to the Servicer and the Trustee and
Custodian shall have no further responsibility with regard to such Mortgage
File. Upon any such payment in full, the Servicer is authorized, to give, as
agent for the Trustee, as the mortgagee under the Mortgage that secured the
Mortgage Loan, an instrument of satisfaction (or assignment of mortgage without
recourse) regarding the Mortgaged Property subject to the Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of such
payment, it being understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account.

(b) From time to time and as appropriate for the servicing or foreclosure of any
Mortgage Loan, the Trustee shall execute such 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 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 Servicing Officer substantially in the form
attached to this Agreement (or in a mutually agreeable electronic format which
will, in lieu of a signature on its face, originate from a Servicing Officer),
release within five (5) Business Days the related Mortgage File held in its
possession or control to the Servicer. Such trust receipt shall obligate the
Servicer to return the Mortgage File to the Custodian on behalf of the Trustee,
when the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the Mortgage File shall be
released by the Custodian, on behalf of the Trustee, to the Servicer.

Notwithstanding the foregoing, in connection with a Principal Prepayment in full
of any Mortgage Loan, the Master Servicer may request release of the related
Mortgage File from the Custodian, in the event the Servicer fails to do so.

Upon written certification of a Servicing Officer, the Trustee shall execute and
deliver to the Servicer, any court pleadings, requests for trustee’s sale or
other documents prepared and delivered to the Trustee and reasonably acceptable
to it and necessary to the foreclosure or trustee’s sale in respect of a
Mortgaged Property or to any legal action brought to obtain judgment against any
Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency judgment,
or to enforce any other remedies or rights provided by the Mortgage Note or
Mortgage or otherwise available at law or in equity. Each such certification
shall include a request that such pleadings or documents be executed by the
Trustee and a statement as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee’s sale.
So long as no Servicing Termination Event shall have occurred and be continuing,
the Servicer shall have the right to execute any and all such court pleadings,
requests and other documents as attorney-in-fact for, and on behalf of the
Trustee. Notwithstanding anything to the contrary herein, the Trustee shall in
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liable or responsible for the willful malfeasance of the Servicer, or for any
wrongful or negligent actions taken by the Servicer, while the Servicer is
acting pursuant to the powers granted to it in this paragraph.

Section 3.15 Servicing Compensation.

As compensation for the activities of the Servicer, hereunder, the Servicer
shall be entitled to the Servicing Fee with respect to each Mortgage Loan
payable solely from payments of interest in respect of such Mortgage Loan,
subject to Section 3.22. In addition, the Servicer shall be entitled to recover
unpaid Servicing Fees out of Insurance Proceeds or Liquidation Proceeds to the
extent permitted by Section 3.09(a)(iii) and out of amounts derived from the
operation and sale of an REO Property to the extent permitted by Section 3.21.
The right to the Servicing Fee may not be transferred in whole or in part except
in connection with the transfer of all of the Servicer’s responsibilities under
this Agreement to the extent permitted herein.

Additional servicing compensation in the form of assumption fees, late payment
charges and other miscellaneous fees (other than Prepayment Charges) shall be
retained by the Servicer only to the extent such fees or charges are received by
the Servicer. The Servicer shall also be entitled pursuant to
Section 3.09(a)(iv) to withdraw from the Collection Account and pursuant to
Section 3.21(b) to withdraw from any REO Account, as additional servicing
compensation, interest or other income earned on deposits therein, subject to
Section 3.10. In addition, the Servicer shall be entitled to retain or withdraw
from the Collection Account, pursuant to Section 3.09(a)(x), any Prepayment
Interest Excess with respect to the Mortgage Loans as additional servicing
compensation. The Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder and shall not be entitled
to reimbursement therefor except as specifically provided herein.

Section 3.16 Collection Account Statements.

Not later than twenty days after each Distribution Date, the Servicer shall
forward to the Master Servicer and the Securities Administrator, and, upon
request, the Securities Administrator shall forward to the Trustee and the
Depositor, a statement prepared by the institution at which the Collection
Account is maintained setting forth the status of the Collection Account as of
the close of business on such Distribution Date and showing, for the period
covered by such statement, the aggregate amount of deposits into and withdrawals
from the Collection Account of each category of deposit specified in
Section 3.08(a) and each category of withdrawal specified in Section 3.09.
Copies of such statement shall be provided by the Securities Administrator to
any Certificateholder and to any Person identified to the Securities
Administrator as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Securities Administrator.

Section 3.17 Statement as to Compliance.

Each of the Servicer, Master Servicer and the Securities Administrator shall use
its best reasonable efforts to deliver (or otherwise make available) (and with
respect to any calendar year during which the Trust’s annual report on Form 10K
is required to be filed in accordance with the Exchange Act, the Servicer, each
of the Master Servicer and Securities Administrator shall

 

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use its best reasonable efforts to cause any Servicing Function Participant
engaged by it to deliver) to the Securities Administrator on or before March 1
of each year, but in no event later than March 15, commencing in March 2007,
and, in turn, the Securities Administrator will forward to the Depositor, an
Officer’s Certificate stating, as to the signer thereof, that:

(i) a review of such party’s activities during the preceding calendar year or
portion thereof and of such party’s performance under this Agreement or such
other applicable agreement in the case of a Servicing Function Participant, has
been made under such officer’s supervision; and

(ii) to the best of such officer’s knowledge, based on such review, such party
has fulfilled all of its obligations under this Agreement or such other
applicable agreement in the case of a Servicing Function Participant, in all
material respects throughout such year or portion thereof, or, if there has been
a failure to fulfill any such obligation in any material respect, specifying
each such failure known to such officer and the nature and status thereof.

In the event the Servicer, the Master Servicer, the Securities Administrator or
any Servicing Function Participant engaged by any such party is terminated or
resigns pursuant to the terms of this Agreement, or any applicable agreement in
the case of a Servicing Function Participant, as the case may be, such party
shall provide an Officer’s Certificate pursuant to this Section 3.17 or to such
applicable agreement, as the case may be, notwithstanding any such termination,
assignment or resignation.

Section 3.18 Assessments of Compliance and Accountant’s Attestation Reports.

On or before March 1 of each year, but in no event later than March 15,
commencing in March 2007, the Servicer, the Master Servicer, the Securities
Administrator, and the Custodian, each at its own expense, shall furnish or
otherwise make available, and with respect to any calendar year during which the
Trust’s annual report on Form 10K is required to be filed in accordance with the
Exchange Act each such party shall cause any Servicing Function Participant
engaged by it to furnish, each at its own expense, to the Securities
Administrator and, in turn, the Securities Administration shall forward the
Depositor, a report on an assessment of compliance with the Relevant Servicing
Criteria that contains (A) a statement by such party of its responsibility for
assessing compliance with the Relevant Servicing Criteria, (B) a statement that
such party used the Relevant Servicing Criteria to assess compliance with the
Relevant Servicing Criteria, (C) such party’s assessment of compliance with the
Relevant Servicing Criteria as of and for the fiscal year covered by the Form
10-K required to be filed pursuant to Section 5.09(a)(ii), including, if there
has been any material instance of noncompliance with the Relevant Servicing
Criteria, a discussion of each such failure and the nature and status thereof,
and (D) a statement that a registered public accounting firm has issued an
attestation report on such party’s assessment of compliance with the Relevant
Servicing Criteria as of and for such period.

No later than the end of each fiscal year for the Trust for which a 10-K is
required to be filed, the Servicer, the Master Servicer and the Custodian shall
each forward to the Securities Administrator and, in turn, the Securities
Administrator shall forward the Depositor the name of each Servicing Function
Participant engaged by it and what Relevant Servicing Criteria will be

 

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addressed in the report on assessment of compliance prepared by such Servicing
Function Participant (provided, however, that the Master Servicer need not
provide such information to the Securities Administrator so long as the Master
Servicer and the Securities Administrator are the same Person). When the
Servicer, the Master Servicer, the Custodian and the Securities Administrator
(or any Servicing Function Participant engaged by them) submit their assessments
to the Securities Administrator, such parties will also at such time include the
assessment and attestation pursuant to Section 3.18 of each Servicing Function
Participant engaged by it.

Promptly after receipt of each such report on assessment of compliance, (i) the
Depositor shall review each such report and, if applicable, consult with the
Servicer, the Master Servicer, the Securities Administrator, the Custodian and
any Servicing Function Participant engaged by such parties as to the nature of
any material instance of noncompliance with the Relevant Servicing Criteria by
each such party, and (ii) the Securities Administrator shall confirm that the
assessments, taken as a whole, address all of the Servicing Criteria and taken
individually address the Relevant Servicing Criteria for each party as set forth
on Exhibit P and notify the Depositor of any exceptions.

In the event the Servicer, the Master Servicer, the Securities Administrator,
the Custodian, or any Servicing Function Participant engaged by any such party
is terminated, assigns its rights and obligations under, or resigns pursuant to,
the terms of this Agreement, or any other applicable agreement, as the case may
be, such party shall provide a report on assessment of compliance pursuant to
this Section 3.18, or to such other applicable agreement, notwithstanding any
such termination, assignment or resignation.

On or before March 1 of each year, but in no event later than March 15,
commencing in March 2007, the Servicer, the Master Servicer, the Securities
Administrator and the Custodian, each at its own expense, shall cause, (and with
respect to any calendar year during which the Trust’s annual report on Form 10K
is required to be filed in accordance with the Exchange Act each such party
shall cause any Servicing Function Participant engaged by it to cause), each at
its own expense, a registered public accounting firm (which may also render
other services to the Servicer, Master Servicer, the Trustee, the Securities
Administrator, or such other Servicing Function Participants, as the case may
be) and that is a member of the American Institute of Certified Public
Accountants to furnish an attestation report to the Securities Administrator and
the Depositor, to the effect that (i) it has obtained a representation regarding
certain matters from the management of such party, which includes an assertion
that such party has complied with the Relevant Servicing Criteria, and (ii) on
the basis of an examination conducted by such firm in accordance with standards
for attestation engagements issued or adopted by the Public Company Accounting
Oversight Board, it is expressing an opinion as to whether such party’s
compliance with the Relevant Servicing Criteria was fairly stated in all
material respects, or it cannot express an overall opinion regarding such
party’s assessment of compliance with the Relevant Servicing Criteria. In the
event that an overall opinion cannot be expressed, such registered public
accounting firm shall state in such report why it was unable to express such an
opinion. Such report must be available for general use and not contain
restricted use language.

Promptly after receipt of each such assessment of compliance and attestation
report, the Securities Administrator shall confirm that each assessment
submitted pursuant to Section 3.18 is coupled with an attestation meeting the
requirements of this Section and notify the Depositor of any exceptions.

 

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In the event the Servicer, the Master Servicer, the Securities Administrator,
the Custodian or any Servicing Function Participant engaged by any such party is
terminated, assigns its rights and duties under, or resigns pursuant to the
terms of, this Agreement, or any applicable custodial agreement, servicing
agreement or sub-servicing agreement, as the case may be, such party shall cause
a registered public accounting firm to provide an attestation pursuant to this
Section 3.18, or such other applicable agreement, notwithstanding any such
termination, assignment or resignation.

Section 3.19 [Reserved].

Section 3.20 Access to Certain Documentation.

The Servicer shall provide to the Office of Thrift Supervision, the FDIC, and
any other federal or state banking or insurance regulatory authority that may
exercise authority over any Certificate Owner, access to the documentation
regarding the Mortgage Loans required by applicable laws and regulations. Such
access shall be afforded without charge, but only upon reasonable request and
during normal business hours at the offices of the Servicer designated by it.
Nothing in this Section 3.20 shall limit the obligation of the Servicer to
comply with any applicable law prohibiting disclosure of information regarding
the Mortgagors and the failure of the Servicer to provide access as provided in
this Section as a result of such obligation shall not constitute a breach of
this Section. Nothing in this Section 3.20 shall require the Servicer to
collect, create, collate or otherwise generate any information that it does not
generate in its usual course of business. The Servicer shall not be required to
make copies of or ship documents to any Person unless provisions have been made
for the reimbursement of the costs thereof.

Section 3.21 Title, Management and Disposition of REO Property.

(a) The deed or certificate of sale of any REO Property shall be taken in the
name of the Trustee, or its nominee, on behalf of the Trust Fund and for the
benefit of the Certificateholders. The Servicer, on behalf of REMIC I, shall
either sell any REO Property by the close of the third calendar year following
the calendar year in which REMIC I acquires ownership of such REO Property for
purposes of Section 860G(a)(8) of the Code or request from the Internal Revenue
Service, no later than 60 days before the day on which the three-year grace
period would otherwise expire an extension of the three-year grace period,
unless the Servicer had delivered to the Trustee an Opinion of Counsel,
addressed to the Trustee and the Depositor, to the effect that the holding by
REMIC I of such REO Property subsequent to three years after its acquisition
will not result in the imposition on any Trust REMIC created hereunder of taxes
on “prohibited transactions” thereof, as defined in Section 860F of the Code, or
cause any Trust REMIC hereunder to fail to qualify as a REMIC under Federal law
at any time that any Certificates are outstanding. The Servicer shall manage,
conserve, protect and operate each REO Property for the Certificateholders
solely for the purpose of its prompt disposition and sale in a manner which does
not cause such REO Property to fail to qualify as “foreclosure property” within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by any
Trust REMIC created hereunder of any “income from non-permitted assets” within
the meaning of Section 860F(a)(2)(B) of the Code, or any “net income from
foreclosure property” which is subject to taxation under the REMIC Provisions.

 

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(b) The Servicer shall segregate and hold all funds collected and received in
connection with the operation of any REO Property separate and apart from its
own funds and general assets and shall establish and maintain with respect to
REO Properties an account held in trust for the Trustee, on behalf of the Trust
Fund and for the benefit of the Certificateholders (the “REO Account”), which
shall be an Eligible Account. The Servicer shall be permitted to allow the
Collection Account to serve as the REO Account, subject to separate ledgers for
each REO Property. The Servicer shall be entitled to retain or withdraw any
interest income paid on funds deposited in the REO Account.

(c) The Servicer shall have full power and authority, subject only to the
specific requirements and prohibitions of this Agreement, to do any and all
things in connection with any REO Property as are consistent with the manner in
which the Servicer manages and operates similar property owned by it or any of
its Affiliates, all on such terms and for such period as the Servicer deems to
be in the best interests of Certificateholders. In connection therewith, the
Servicer shall deposit, or cause to be deposited, on a daily basis in the REO
Account all revenues received by it with respect to an REO Property and shall
withdraw therefrom funds necessary for the proper operation, management and
maintenance of such REO Property including, without limitation:

(i) all insurance premiums due and payable in respect of such REO Property;

(ii) all real estate taxes and assessments in respect of such REO Property that
may result in the imposition of a lien thereon; and

(iii) all costs and expenses necessary to maintain such REO Property.

To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Servicer shall advance from
its own funds such amount as is necessary for such purposes if, but only if, the
Servicer would make such advances if the Servicer owned the REO Property and if
in the Servicer’s judgment, the payment of such amounts will be recoverable from
the rental or sale of the REO Property.

Subject to compliance with applicable laws and regulations as shall at any time
be in force, and notwithstanding the foregoing, the Servicer, on behalf of the
Trust Fund, shall not:

(i) enter into, renew or extend any New Lease with respect to any REO Property,
if the New Lease by its terms will give rise to any income that does not
constitute Rents from Real Property;

(ii) permit any amount to be received or accrued under any New Lease other than
amounts that will constitute Rents from Real Property;

(iii) authorize or permit any construction on any REO Property, other than the
completion of a building or other improvement thereon, and then only if more
than ten

 

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percent of the construction of such building or other improvement was completed
before default on the related Mortgage Loan became imminent, all within the
meaning of Section 856(e)(4)(B) of the Code; or

(iv) allow any Person to Directly Operate any REO Property on any date more than
90 days after its date of acquisition by the Trust Fund;

unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Servicer and the Trustee, to the effect that such action will
not cause such REO Property to fail to qualify as “foreclosure property” within
the meaning of Section 860G(a)(8) of the Code at any time that it is held by
REMIC I, in which case the Servicer may take such actions as are specified in
such Opinion of Counsel.

The Servicer may contract with any Independent Contractor for the operation and
management of any REO Property, provided that:

(i) the terms and conditions of any such contract shall not be inconsistent
herewith;

(ii) any such contract shall require, or shall be administered to require, that
the Independent Contractor pay all costs and expenses incurred in connection
with the operation and management of such REO Property, including those listed
above and remit all related revenues (net of such costs and expenses) to the
Servicer as soon as practicable, but in no event later than thirty days
following the receipt thereof by such Independent Contractor;

(iii) none of the provisions of this Section 3.21(c) relating to any such
contract or to actions taken through any such Independent Contractor shall be
deemed to relieve the Servicer of any of its duties and obligations to the
Trustee on behalf of the Trust Fund and for the benefit of the
Certificateholders with respect to the operation and management of any such REO
Property; and

(iv) the Servicer shall be obligated with respect thereto to the same extent as
if it alone were performing all duties and obligations in connection with the
operation and management of such REO Property.

The Servicer shall be entitled to enter into any agreement with any Independent
Contractor performing services for it related to its duties and obligations
hereunder for indemnification of the Servicer by such Independent Contractor,
and nothing in this Agreement shall be deemed to limit or modify such
indemnification. The Servicer shall be solely liable for all fees owed by it to
any such Independent Contractor, irrespective of whether the Servicer’s
compensation pursuant to Section 3.15 is sufficient to pay such fees. Any such
agreement shall include a provision that such agreement may be immediately
terminated by the Trustee (as successor Servicer) or any other successor
Servicer (including the Master Servicer) without fee, in the event the Servicer
shall for any reason, no longer be the Servicer (including termination due to a
Servicer Event of Default).

 

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(d) In addition to the withdrawals permitted under Section 3.21(c), the Servicer
may from time to time make withdrawals from the REO Account for any REO
Property: (i) to pay itself unpaid Servicing Fees in respect of the related
Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer for unreimbursed
Servicing Advances and Advances made in respect of such REO Property or the
related Mortgage Loan. On the Servicer Remittance Date, the Servicer shall
withdraw from each REO Account maintained by it and deposit into the
Distribution Account in accordance with Section 3.08(d)(ii), for distribution on
the related Distribution Date in accordance with Section 5.01, the income from
the related REO Property received during the prior calendar month, net of any
withdrawals made pursuant to Section 3.21(c) or this Section 3.21(d).

(e) Subject to the time constraints set forth in Section 3.21(a), each REO
Disposition shall be carried out by the Servicer at such price and upon such
terms and conditions as the Servicer shall deem necessary or advisable, as shall
be normal and usual in accordance with Accepted Servicing Practices.

(f) The proceeds from the REO Disposition, net of any amount required by law to
be remitted to the Mortgagor under the related Mortgage Loan and net of any
payment or reimbursement to the Servicer as provided above, shall be deposited
in the Distribution Account in accordance with Section 3.08(d)(ii) on the
Servicer Remittance Date in the month following the receipt thereof for
distribution on the related Distribution Date in accordance with Section 5.01.
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration).

(g) The Servicer shall file information returns (and shall provide a
certification of a Servicing Officer to the Master Servicer that such filings
have been made) with respect to the receipt of mortgage interest received in a
trade or business, reports of foreclosures and abandonments of any Mortgaged
Property and cancellation of indebtedness income with respect to any Mortgaged
Property as required by Sections 6050H, 6050J and 6050P of the Code,
respectively. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code.

Section 3.22 Obligations of the Servicer in Respect of Prepayment Interest
Shortfalls; Relief Act Interest Shortfalls.

The Servicer shall deliver to the Securities Administrator for deposit into the
Distribution Account on or before 12:00 noon New York time on the Servicer
Remittance Date from its own funds an amount (the “Compensating Interest”) equal
to the lesser of (i) the aggregate amount of the Prepayment Interest Shortfalls
attributable to prepayments in full on the Mortgage Loans for the related
Distribution Date resulting solely from voluntary Principal Prepayments received
by the Servicer during the related Prepayment Period and (ii) the aggregate
amount of the related Servicing Fees payable to the Servicer on such
Distribution Date and any Prepayment Interest Excess earned during the related
Prepayment Period with respect to the Mortgage Loans. The Servicer shall not
have the right to reimbursement for any amounts remitted to the Securities
Administrator in respect of this Section 3.22. The Servicer shall not be
obligated to pay the amounts set forth in this Section 3.22 with respect to
shortfalls resulting from the application of the Relief Act.

 

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Section 3.23 Obligations of the Servicer in Respect of Mortgage Rates and
Monthly Payments.

In the event that a shortfall in any collection on or liability with respect to
any Mortgage Loan results from or is attributable to adjustments to Mortgage
Rates, Monthly Payments or Stated Principal Balances that were made by the
Servicer in a manner not consistent with the terms of the related Mortgage Note
and this Agreement, the Servicer, upon discovery or receipt of notice thereof,
immediately shall deliver to the Securities Administrator for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Securities
Administrator and the Master Servicer, the Depositor and any successor Servicer
in respect of any such liability. Such indemnities shall survive the termination
or discharge of this Agreement. Notwithstanding the foregoing, this Section 3.23
shall not limit the ability of the Servicer to seek recovery of any such amounts
from the related Mortgagor under the terms of the related Mortgage Note and
Mortgage, to the extent permitted by applicable law.

Section 3.24 Reserve Fund.

(a) No later than the Closing Date, the Securities Administrator shall establish
and maintain with itself a separate, segregated trust account titled, “Reserve
Fund, Wells Fargo Bank, N.A., as Securities Administrator, in trust for
registered holders of SG Mortgage Securities Trust 2006-OPT2, Asset-Backed
Certificates, Series 2006-OPT2” which shall be an Eligible Account.

(b) On each Distribution Date as to which there is a Net WAC Rate Carryover
Amount payable to the Class A Certificates and/or the Mezzanine Certificates,
the Securities Administrator has been directed by the Class CE
Certificateholders to, and therefore will, deposit into the Reserve Fund the
amounts described in Section 5.01(h)(vi), rather than distributing such amounts
to the Class CE Certificateholders. On each such Distribution Date, the
Securities Administrator shall hold all such amounts for the benefit of the
Holders of the Class A Certificates and the Mezzanine Certificates, and will
distribute such amounts to the Holders of the Class A Certificates and/or the
Mezzanine Certificates in the amounts and priorities set forth in
Section 5.01(h).

(c) For federal and state income tax purposes, the Class CE Certificateholders
will be deemed to be the owners of the Reserve Fund and all amounts deposited
into the Reserve Fund shall be treated as amounts distributed by REMIC III to
the Holders of the Class CE Certificates. Upon the termination of the Trust, or
the payment in full of the Class A Certificates and the Mezzanine Certificates,
all amounts remaining on deposit in the Reserve Fund will be released by the
Trust and distributed to the Class CE Certificateholders or their designees. The
Reserve Fund will be part of the Trust but not part of any REMIC created
hereunder and any payments to the Holders of the Class A Certificates or the
Mezzanine Certificates of Net WAC Rate Carryover Amounts will not be payments
with respect to a “regular interest” in a REMIC within the meaning of Code
Section 860(G)(a)(1).

(d) By accepting a Class CE Certificate, each Class CE Certificateholder hereby
agrees to direct the Securities Administrator, and the Securities Administrator
hereby is directed, to deposit into the Reserve Fund the amounts described above
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which there is any Net WAC Rate Carryover Amount rather than distributing such
amounts to the Class CE Certificateholders. By accepting a Class CE Certificate,
each Class CE Certificateholder further agrees that such direction is given for
good and valuable consideration, the receipt and sufficiency of which is
acknowledged by such acceptance.

(e) At the direction of the Holders of a majority in Percentage Interest in the
Class CE Certificates, the Securities Administrator shall direct any depository
institution maintaining the Reserve Fund to invest the funds in such account in
one or more Permitted Investments bearing interest or sold at a discount, and
maturing, unless payable on demand, (i) no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if a Person other than the
Securities Administrator or an Affiliate manages or advises such investment, and
(ii) no later than the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if the Securities Administrator or
an Affiliate manages or advises such investment. If no investment direction of
the Holders of a majority in Percentage Interest in the Class CE Certificates
with respect to the Reserve Fund is received by the Securities Administrator,
the Securities Administrator shall invest the funds in the Wells Fargo Advantage
Prime Investment Money Market Fund so long as such fund is a Permitted
Investment.

(f) For federal tax return and information reporting, the value of the right of
the Holders of the Class A and the Mezzanine Certificates to receive payments
from the Reserve Fund in respect of any Net WAC Rate Carryover Amount shall be
$10,000.

Section 3.25 Servicer Indemnification.

The Servicer agrees to indemnify the Trustee, Master Servicer and the Securities
Administrator, from, and hold the Trustee, Master Servicer and the Securities
Administrator harmless against, any loss, liability or expense (including
reasonable attorney’s fees and expenses) incurred by any such Person by reason
of the Servicer’s willful misfeasance, bad faith or gross negligence in the
performance of its duties under this Agreement or by reason of the Servicer’s
reckless disregard of its obligations and duties under this Agreement. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Servicer, the Trustee, the Master Servicer and the
Securities Administrator. Any payment hereunder made by the Servicer to any such
Person shall be from the Servicer own funds, without reimbursement from REMIC I
therefor.

Section 3.26 Solicitations.

From and after the Closing Date, the Servicer agrees that it will not take any
action or permit or cause any action to be taken by any of its agents and
Affiliates, or by any independent contractors or independent mortgage brokerage
companies on the Servicer’s behalf, to personally, by telephone, mail or
electronic mail, solicit the Mortgagor under any Mortgage Loan for the purpose
of refinancing such Mortgage Loan; provided, that the Servicer may solicit any
Mortgagor for whom the Servicer has received a request for verification of
mortgage, a request for demand for payoff, a mortgagor initiated written or
verbal communication indicating a desire to prepay the related Mortgage Loan,
another mortgage company has pulled a credit report on the mortgagor or the
mortgagor initiates a title search; provided further, it is understood and
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that promotions undertaken by the Servicer or any of its Affiliates which
(i) concern optional insurance products or other additional products or (ii) are
directed to the general public at large, including, without limitation, mass
mailings based on commercially acquired mailing lists, newspaper, radio and
television advertisements shall not constitute solicitation under this Section,
nor is the Servicer prohibited from responding to unsolicited requests or
inquiries made by a Mortgagor or an agent of a Mortgagor. Furthermore, the
Servicer shall be permitted to include in its monthly statements to borrowers or
otherwise, statements regarding the availability of the Servicer’s counseling
services with respect to refinancing mortgage loans.

Notwithstanding the foregoing, solely during the sixty (60) day period ending on
(a) in the case of fixed rate Mortgage Loans, the last day of the period during
which Prepayment Charges apply under the terms of the related Mortgage Loan
Documents or (b) in the case of Adjustable Rate Mortgage Loans, the later of
(i) the last day of the period during which Prepayment Charges apply under the
terms of the related Mortgage Loan Documents and (ii) the last day of the
period, if any, during which the related Mortgage Rate is fixed and not variable
under the terms of the related Mortgage Loan Documents, the Servicer may solicit
the related Mortgagor to refinance such Mortgage Loan, in whole or in part.

ARTICLE IV

ADMINISTRATION AND MASTER SERVICING OF THE

MORTGAGE LOANS BY THE MASTER SERVICER

Section 4.01 Master Servicer.

The Master Servicer shall supervise, monitor and oversee the obligation of the
Servicer to service and administer the Mortgage Loans in accordance with the
terms of this Agreement and shall have full power and authority to do any and
all things which it may deem necessary or desirable in connection with such
master servicing and administration. In performing its obligations hereunder,
the Master Servicer shall act in a manner consistent with Accepted Master
Servicing Practices. Furthermore, the Master Servicer shall oversee and consult
with the Servicer as necessary from time-to-time to carry out the Master
Servicer’s obligations hereunder, shall receive, review and evaluate all
reports, information and other data provided to the Master Servicer by the
Servicer and shall cause the Servicer to perform and observe the covenants,
obligations and conditions to be performed or observed by the Servicer under
this Agreement. The Master Servicer shall independently and separately monitor
the Servicer’s servicing activities with respect to each related Mortgage Loan,
reconcile the results of such monitoring with such information provided in the
previous sentence on a monthly basis and coordinate corrective adjustments to
the Servicer’s and Master Servicer’s records, and based on such reconciled and
corrected information, prepare the statements specified in Section 5.03 and any
other information and statements required to be provided by the Master Servicer
hereunder. The Master Servicer shall reconcile the results of its Mortgage Loan
monitoring with the actual remittances of the Servicer to the Distribution
Account pursuant to the terms hereof based on information provided to the Master
Servicer by the Servicer.

The Trustee shall furnish the Servicer and the Master Servicer with any limited
powers of attorney and other documents in form acceptable to it necessary or
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Servicer and the Master Servicer to service and administer the related Mortgage
Loans and REO Property. The Trustee shall have no responsibility for any action
of the Master Servicer or the Servicer pursuant to any such limited power of
attorney and shall be indemnified by the Master Servicer or the Servicer, as
applicable, for any cost, liability or expense incurred by the Trustee in
connection with such Person’s misuse of any such power of attorney.

The Trustee, the Custodian and the Securities Administrator shall provide access
to the records and documentation in possession of the Trustee, the Custodian or
the Securities Administrator 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, the Custodian or the Securities Administrator; provided,
however, that, unless otherwise required by law, none of the Trustee, the
Custodian or the Securities Administrator shall 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, the Custodian and the Securities
Administrator 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, the Custodian’s or the Securities
Administrator’s actual costs.

The Trustee shall execute and deliver to the Servicer or the Master Servicer
upon written request 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 any other Mortgage Loan
Document; (iii) obtain a deficiency judgment against the Mortgagor; or
(iv) enforce any other rights or remedies provided by the Mortgage Note or any
other Mortgage Loan Document or otherwise available at law or equity.

Section 4.02 REMIC-Related Covenants.

For as long as each REMIC shall exist, the Trustee and the Securities
Administrator shall act in accordance herewith to treat such REMIC as a REMIC,
and the Trustee and the Securities Administrator shall comply with any
directions of the Seller, the Servicer or the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received a REMIC
Opinion prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to the Mortgage Loan Purchase Agreements or
Section 2.03 of this Agreement, as applicable, accept any contribution to any
REMIC after the Startup Day without receipt of a Opinion of Counsel stating that
such contribution will not result in an Adverse REMIC Event as defined in
Section 11.01(f).

Section 4.03 Monitoring of Servicer.

(a) The Master Servicer shall be responsible for monitoring the compliance by
the Servicer with its duties under this Agreement. In the review of the
Servicer’s activities, the Master Servicer may rely upon an officer’s
certificate of the Servicer with regard to the Servicer’s compliance with the
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its judgment, determines that the Servicer should be terminated in accordance
with the terms hereof, or that a notice should be sent pursuant to the terms
hereof with respect to the occurrence of an event that, unless cured, would
constitute an Event of Default by the Servicer, the Master Servicer shall notify
the Servicer, the Seller and the Trustee thereof and the Master Servicer shall
issue such notice or take such other action as it deems appropriate.

(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer under this
Agreement, and shall, in the event that the Servicer fails to perform its
obligations in accordance with this Agreement, subject to this Section and
Article VIII, cause the Trustee to terminate the rights and obligations of the
Servicer hereunder in accordance with the provisions of Article VIII. Such
enforcement, including, without limitation, the legal prosecution of claims and
the pursuit of other appropriate remedies, shall be in such form and carried out
to such an extent and at such time as the Master Servicer, in its good faith
business judgment, would require were it the owner of the related Mortgage
Loans. The Master Servicer shall pay the costs of such enforcement at its own
expense, provided that the Master Servicer shall not be required to prosecute or
defend any legal action except to the extent that the Master Servicer shall have
received reasonable indemnity for its costs and expenses in pursuing such
action.

(c) The Master Servicer shall be entitled to be reimbursed by the Servicer (or
from amounts on deposit in the Distribution Account if the Servicer is unable to
fulfill its obligations hereunder) for all reasonable out-of-pocket or third
party costs associated with the transfer of servicing from the predecessor
Servicer (or if the predecessor Servicer is the Master Servicer, from the
Servicer immediately preceding the Master Servicer), including without
limitation, any reasonable out-of-pocket or third party costs or 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
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.

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

(e) If the Master Servicer acts as successor to the Servicer, it will not assume
liability for the representations and warranties of the terminated Servicer.

Section 4.04 Fidelity Bond.

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

 

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Section 4.05 Power to Act; Procedures.

The Master Servicer shall master service the Mortgage Loans and shall have full
power and authority, subject to the REMIC Provisions and the provisions of
Article XI, to do any and all things that it may deem necessary or desirable in
connection with the master servicing and administration of the Mortgage Loans,
including but not limited to the power and authority (i) to execute and deliver,
on behalf of the Certificateholders and the Trustee, customary consents or
waivers and other instruments and documents, (ii) to consent to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages,
(iii) to collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan, in each case, in accordance with the
provisions of this Agreement; provided, however, that the Master Servicer shall
not (and, consistent with its responsibilities under Section 4.03, shall not
permit the Servicer to) knowingly or intentionally take any action, or fail to
take (or fail to cause to be taken) any action reasonably within its control and
the scope of duties more specifically set forth herein, that, under the REMIC
Provisions, if taken or not taken, as the case may be, would cause REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC or result in the imposition
of a tax upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) unless the
Master Servicer has received an Opinion of Counsel (but not at the expense of
the Master Servicer) to the effect that the contemplated action will not would
cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC or result in
the imposition of a tax upon REMIC I, REMIC II or REMIC III, as the case may be.
The Trustee shall furnish the Master Servicer, upon written request from a
Servicing Officer, with any powers of attorney prepared and delivered to it and
reasonably acceptable to it by empowering the Master Servicer or the Servicer to
execute and deliver instruments of satisfaction or cancellation, or of partial
or full release or discharge, and to foreclose upon or otherwise liquidate
Mortgaged Property, and to appeal, prosecute or defend in any court action
relating to the Mortgage Loans or the Mortgaged Property, in accordance with
this Agreement, and the Trustee shall execute and deliver such other documents
prepared and delivered to it and reasonably acceptable to it, as the Master
Servicer or the Servicer may request, to enable the Master Servicer to master
service and administer the Mortgage Loans and carry out its duties hereunder, in
each case in accordance with Accepted Master Servicing Practices (and the
Trustee shall have no liability for misuse of any such powers of attorney, or
any other documents executed by the Trustee pursuant to this Section 4.05, by
the Master Servicer or the Servicer and shall be indemnified by the Master
Servicer or the Servicer, as applicable, for any cost, liability or expense
incurred by the Trustee in connection with such Person’s use or misuse of any
such power of attorney). If the Master Servicer or the Trustee has been advised
that it is likely that the laws of the state in which action is to be taken
prohibit such action if taken in the name of the Trustee or that the Trustee
would be adversely affected under the “doing business” or tax laws of such state
if such action is taken in its name, the Master Servicer shall join with the
Trustee in the appointment of a co-trustee pursuant to Section 9.10. In the
performance of its duties hereunder, the Master Servicer shall be an independent
contractor and shall not, except in those instances where it is taking action in
the name of the Trustee, be deemed to be the agent of the Trustee.

 

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Section 4.06 Due-on-Sale Clauses; Assumption Agreements.

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

Section 4.07 Documents, Records and Funds in Possession of Master Servicer To Be
Held for Trustee.

(a) The Master Servicer shall transmit to the Trustee or Custodian such
documents and instruments coming into the possession of the Master Servicer from
time to time as are required by the terms hereof to be delivered to the Trustee
or Custodian. Any funds received by the Master Servicer in respect of any
Mortgage Loan or which otherwise are collected by the Master Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall
be remitted to the Securities Administrator for deposit in the Distribution
Account. The Master Servicer shall, and, subject to Section 3.20, shall cause
the Servicer to, provide access to information and documentation regarding the
Mortgage Loans to the Trustee, its agents and accountants at any time upon
reasonable request and during normal business hours, and to Certificateholders
that are savings and loan associations, banks or insurance companies, the Office
of Thrift Supervision, the FDIC and the supervisory agents and examiners of such
Office and Corporation or examiners of any other federal or state banking or
insurance regulatory authority if so required by applicable regulations of the
Office of Thrift Supervision or other regulatory authority, such access to be
afforded without charge but only upon reasonable request in writing and during
normal business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.

(b) All Mortgage Files and funds collected or held by, or under the control of,
the Master Servicer, in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation Proceeds or
Insurance Proceeds, shall be remitted to the Trustee for deposit in the
Distribution Account.

Section 4.08 Standard Hazard Insurance and Flood Insurance Policies.

For each Mortgage Loan, the Master Servicer shall enforce the obligation of the
Servicer under this Agreement to maintain or cause to be maintained standard
fire and casualty insurance and, where applicable, flood insurance, all in
accordance with the provisions of this Agreement. It is understood and agreed
that such insurance shall be with insurers meeting the eligibility requirements
set forth in Section 3.11 and that no earthquake or other additional insurance
is to be required of any Mortgagor or to be maintained on property acquired in
respect of a defaulted loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance.

 

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Section 4.09 Presentment of Claims and Collection of Proceeds.

The Master Servicer shall enforce the Servicer’s obligations under this
Agreement to prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured’s claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer in respect of such policies, bonds
or contracts shall be promptly remitted to the Trustee for deposit in the
Distribution 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 or remitted.

Section 4.10 Maintenance of Primary Mortgage Insurance Policies.

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

(b) The Master Servicer agrees to cause the Servicer to present, on behalf of
the Trustee and the Certificateholders, claims to the insurer under any primary
mortgage insurance policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any primary mortgage insurance
policies respecting defaulted Mortgage Loans.

Section 4.11 Trustee to Retain Possession of Certain Insurance Policies and
Documents.

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

 

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Section 4.12 Realization Upon Defaulted Mortgage Loans.

The Master Servicer shall cause the Servicer to foreclose upon, repossess or
otherwise comparably convert the ownership of Mortgaged Properties securing such
of the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments, all
in accordance with this Agreement.

Section 4.13 Compensation for the Master Servicer.

As compensation for the activities of the Master Servicer hereunder, the Master
Servicer shall be entitled to the income from investment of or earnings on the
funds from time to time in the Distribution Account, as provided in
Section 3.10. The Master Servicer shall be required to pay all expenses incurred
by it in connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement.

Section 4.14 REO Property.

(a) In the event the Trust Fund acquires ownership of any REO Property in
respect of any related Mortgage Loan, the deed or certificate of sale shall be
issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall cause the Servicer to sell, any
REO Property as expeditiously as possible and in accordance with the provisions
of this Agreement. Further, the Master Servicer shall cause the Servicer to sell
any REO Property prior to three years after the end of the calendar year of its
acquisition by REMIC I unless (i) the Trustee shall have been supplied by the
Servicer with an Opinion of Counsel to the effect that the holding by the Trust
Fund of such REO Property subsequent to such three-year period will not result
in the imposition of taxes on “prohibited transactions” of any REMIC hereunder
as defined in section 860F of the Code or cause any REMIC hereunder 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) or (ii) the Servicer shall have
applied for, prior to the expiration of such three-year period, an extension of
such three-year period in the manner contemplated by Section 856(e)(3) of the
Code, in which case the three-year period shall be extended by the applicable
extension period. The Master Servicer shall cause the Servicer to protect and
conserve, such REO Property in the manner and to the extent required by this
Agreement, in accordance with the REMIC Provisions and in a manner that does not
result in a tax on “net income from foreclosure property” or cause such REO
Property to fail to qualify as “foreclosure property” within the meaning of
Section 860G(a)(8) of the Code.

(b) The Master Servicer shall cause the Servicer to deposit all funds collected
and received in connection with the operation of any REO Property in the
Collection Account.

 

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Section 4.15 [Reserved]

Section 4.16 [Reserved]

Section 4.17 UCC.

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

Section 4.18 Obligation of the Master Servicer in Respect of Prepayment Interest
Shortfalls.

In the event of any Prepayment Interest Shortfalls, the Master Servicer shall
deposit into the Distribution Account not later than the related Distribution
Date an amount equal to the lesser of (i) the aggregate amounts required to be
paid by the Servicer with respect to Prepayment Interest Shortfalls attributable
to Principal Prepayments on the related Mortgage Loans for the related
Distribution Date, and not so paid by the Servicer and (ii) the aggregate amount
of the Master Servicer’s compensation for such Distribution Date, without
reimbursement therefor.

Section 4.19 Prepayment Charge Review.

On or prior to the Servicer Remittance Date, the Servicer shall provide to the
Credit Risk Manager in a mutually acceptable electronic format the data
necessary for the Credit Risk Manager to perform its duties set forth in the
Credit Risk Management Agreement. The Credit Risk Manager will perform such
duties as required by the Credit Risk Management Agreement and issue its
findings in a report (the “Exceptions Report”) required under the Credit Risk
Management Agreement to the Servicer. If the Servicer agrees with the Exceptions
Report, the Servicer shall adjust the immediately succeeding Servicer Report to
reconcile any changes as may be required under Section 2.02 of the Credit Risk
Management Agreement and the amount remitted to the Securities Administrator
with respect to prepayments accordingly.

If the Servicer disagrees with the Exceptions Report, during such time as the
Servicer and the Credit Risk Manager are resolving discrepancies with respect to
the Prepayment Charges, no payments in respect of any disputed Prepayment
Charges will be remitted to the Securities Administrator for deposit in the
Distribution Account. In connection with such duties, the Credit Risk Manager
shall be able to rely solely on the information provided to it by the Servicer
in accordance with this Section and under the Credit Risk Management Agreement.
The Credit Risk Manager shall not be responsible for verifying the accuracy of
any of the information provided to it by the Servicer.

 

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ARTICLE V

PAYMENTS TO CERTIFICATEHOLDERS

Section 5.01 Distributions.

(a) On each Distribution Date, the Securities Administrator shall withdraw from
the Distribution Account to the extent on deposit therein an amount equal to the
Group I Interest Remittance Amount and make the following disbursements and
transfers in the order described below, in each case to the extent of the Group
I Interest Remittance Amount remaining for such Distribution Date:

(i) to the Swap Account, an amount equal to the Group I Allocation Percentage of
(i) any Net Swap Payment owed to the Swap Provider and (ii) any Swap Termination
Payment owed to the Swap Provider not due to a Swap Provider Trigger Event; and

(ii) to the Class A-1 Certificates, the Senior Interest Distribution Amount
allocable to the Class A-1 Certificates.

(b) On each Distribution Date, the Securities Administrator shall withdraw from
the Distribution Account to the extent on deposit therein an amount equal to the
Group II Interest Remittance Amount and make the following disbursements and
transfers in the order described below, in each case to the extent of the Group
II Interest Remittance Amount remaining for such Distribution Date:

(i) to the Swap Account, an amount equal to the Group II Allocation Percentage
of (i) any Net Swap Payment owed to the Swap Provider and (ii) any Swap
Termination Payment owed to the Swap Provider not due to a Swap Provider Trigger
Event; and

(ii) to the Class A-2 Certificates, the Senior Interest Distribution Amount
allocable to the Class A-2 Certificates.

(c) On each Distribution Date, the Securities Administrator shall withdraw from
the Distribution Account to the extent on deposit therein an amount equal to the
Group III Interest Remittance Amount and make the following disbursements and
transfers in the order described below, in each case to the extent of the Group
III Interest Remittance Amount remaining for such Distribution Date:

(i) to the Swap Account, an amount equal to the Group III Allocation Percentage
of (i) any Net Swap Payment owed to the Swap Provider and (ii) any Swap
Termination Payment owed to the Swap Provider not due to a Swap Provider Trigger
Event; and

(ii) concurrently, to the Class A-3A, Class A-3B, Class A-3C and Class A-3D
Certificates, the Senior Interest Distribution Amount allocable to each such
Class, pro rata, based on the entitlement of each such Class.

 

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(d) On each Distribution Date, the Securities Administrator shall withdraw from
the Distribution Account the aggregate amount of the Group I Interest Remittance
Amount, Group II Interest Remittance Amount and Group III Interest Remittance
Amount remaining after the distributions in clauses 5.01(a), (b) and (c) above
and make the following disbursements and transfers concurrently, on a pro rata
basis, based on the aggregate entitlement of each of the following Classes:

(x) to the Class A-1 Certificates, the Senior Interest Distribution Amount
allocable to such Class, to the extent remaining unpaid after distribution of
the Group I Interest Remittance Amount as set forth in clause 5.01(a)(ii) above;

(y) to the Class A-2 Certificates, the Senior Interest Distribution Amount
allocable to such Class, to the extent remaining unpaid after distribution of
the Group II Interest Remittance Amount as set forth in clause 5.01(b)(ii)
above; and

(z) concurrently, on a pro rata basis based on the entitlement of each such
Class, to the Class A-3A, Class A-3B, Class A-3C and Class A-3D Certificates,
the Senior Interest Distribution Amount allocable to each such Class, to the
extent remaining unpaid after distribution of the Group III Interest Remittance
Amount as set forth in clause 5.01(c)(ii) above.

(e) On each Distribution Date, the Securities Administrator shall make the
following disbursements and transfers in the order described below, in each case
to the extent of the Group I Interest Remittance Amount, Group II Interest
Remittance Amount and Group III Interest Remittance Amount remaining for such
Distribution Date:

(i) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, to the extent of the Interest Distribution Amount
allocable to each such Class.

(f) On each Distribution Date (a) prior to the Stepdown Date or (b) on which a
Trigger Event is in effect, the Securities Administrator shall withdraw from the
Distribution Account to the extent on deposit therein an amount equal to the
Group I Principal Distribution Amount, Group II Interest Remittance Amount and
Group III Principal Distribution Amount and distribute to the Certificateholders
the following amounts, in the following order of priority:

(i) The Group I Principal Distribution Amount shall be distributed in the
following order:

 

  (A) to the Swap Account, an amount equal to the Group I Allocation Percentage
of (i) any Net Swap Payment owed to the Swap Provider and (ii) any Swap
Termination Payment owed to the Swap Provider not due to a Swap Provider Trigger
Event to the extent not paid from the Interest Remittance Amount on such
Distribution Date; and

 

  (B) to the Class A-1 Certificates, until the Certificate Principal Balance of
Class A-1 Certificates has been reduced to zero.

 

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(ii) The Group II Principal Distribution Amount shall be distributed in the
following order:

 

  (A) to the Swap Account, an amount equal to the Group II Allocation Percentage
of (i) any Net Swap Payment owed to the Swap Provider and (ii) any Swap
Termination Payment owed to the Swap Provider not due to a Swap Provider Trigger
Event to the extent not paid from the Interest Remittance Amount on such
Distribution Date; and

 

  (B) to the Class A-2 Certificates, until the Certificate Principal Balance of
the Class A-2 Certificates has been reduced to zero.

(iii) The Group III Principal Distribution Amount shall be distributed in the
following order of priority:

 

  (A) to the Swap Account, an amount equal to the Group III Allocation
Percentage of (i) any Net Swap Payment owed to the Swap Provider and (ii) any
Swap Termination Payment owed to the Swap Provider not due to a Swap Provider
Trigger Event to the extent not paid from the Interest Remittance Amount on such
Distribution Date; and

 

  (B) sequentially, to the Class A-3A, Class A-3B, Class A-3C and Class A-3D
Certificates, in that order, until the Certificate Principal Balance of each
such Class has been reduced to zero.

(iv) On each Distribution Date (a) prior to the Stepdown Date or (b) on which a
Trigger Event is in effect, the Securities Administrator shall withdraw from the
Distribution Account the aggregate amount of the Group I Principal Distribution
Amount, Group II Principal Distribution Amount and Group III Principal
Distribution Amount remaining after the distributions in clauses 5.01(f)(i),
(ii) and (iii) above and distribute the following amounts, concurrently, on a
pro rata basis, based on the Certificate Principal Balance of the Class A-1
Certificates, the Certificate Principal Balance of the Class A-2 Certificates
and the aggregate Certificate Principal Balance of the Class A-3A, Class A-3B,
Class A-3C and Class A-3D Certificates, after taking into account distributions
for that Distribution Date in accordance with the principal distribution
allocations described in clauses 5.01(f)(i), (ii) and (iii) above:

(x) to the Class A-1 Certificates, after taking into account the distribution of
the Group I Principal Distribution Amount as described in clause (f)(i) above,
until the Certificate Principal Balance of such class has been reduced to zero;

(y) to the Class A-2 Certificates, after taking into account the distribution of
the Group II Principal Distribution Amount as described in clause (f)(ii) above,
until the Certificate Principal Balance of such class has been reduced to zero;
and

(z) sequentially, to the Class A-3A, Class A-3B, Class A-3C and Class A-3D
Certificates, in that order, after taking into account the distribution of the
Group

 

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III Principal Distribution Amount as described in clause (f)(iii) above, until
the Certificate Principal Balance of each such Class has been reduced to zero.

(v) The Group I Principal Distribution Amount, Group II Principal Distribution
Amount and Group III Principal Distribution Amount remaining after distributions
pursuant to Sections 5.01(f)(i)—(iv) above shall be distributed sequentially, to
the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 and Class M-11 Certificates, in that order, in
each case, until the Certificate Principal Balance of each such Class has been
reduced to zero.

(g) On each Distribution Date (a) on or after the Stepdown Date and (b) on which
a Trigger Event is not in effect, the Securities Administrator shall withdraw
from the Distribution Account to the extent on deposit therein an amount equal
to the Group I Principal Distribution Amount, Group II Principal Distribution
Amount and Group III Principal Distribution Amount and distribute the following
amounts, in the following order:

(i) The Group I Principal Distribution Amount shall be distributed in the
following order:

 

  (A) to the Swap Account, an amount equal to the Group I Allocation Percentage
of (i) any Net Swap Payment owed to the Swap Provider and (ii) any Swap
Termination Payment owed to the Swap Provider not due to a Swap Provider Trigger
Event to the extent not paid from the Interest Remittance Amount on such
Distribution Date; and

 

  (B) to the Class A-1 Certificates, the Class A-1 Principal Distribution
Amount, until the Certificate Principal Balance of the Class A-1 Certificates
has been reduced to zero.

(ii) The Group II Principal Distribution Amount shall be distributed in the
following order:

 

  (A) to the Swap Account, an amount equal to the Group II Allocation Percentage
of (i) any Net Swap Payment owed to the Swap Provider and (ii) any Swap
Termination Payment owed to the Swap Provider not due to a Swap Provider Trigger
Event to the extent not paid from the Interest Remittance Amount on such
Distribution Date; and

 

  (B) to the Class A-2 Certificates, the Class A-2 Principal Distribution
Amount, until the Certificate Principal Balance of the Class A-2 Certificates
has been reduced to zero.

(iii) The Group III Principal Distribution Amount shall be distributed in the
following order:

 

  (A) to the Swap Account, an amount equal to the Group III Allocation
Percentage of (i) any Net Swap Payment owed to the Swap Provider and (ii) any
Swap Termination Payment owed to the Swap Provider not due to a Swap Provider
Trigger Event to the extent not paid from the Interest Remittance Amount on such
Distribution Date; and

 

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  (B) sequentially, to the Class A-3A, Class A-3B, Class A-3C, and Class A-3D
Certificates, in that order, the Class A-3 Principal Distribution Amount, until
the Certificate Principal Balances of the Class A-3 Certificates have been
reduced to zero.

(iv) On each Distribution Date (a) on or after the Stepdown Date and (b) on
which a Trigger Event is not in effect, the Securities Administrator shall
withdraw from the Distribution Account the aggregate amount of the Class A-1
Principal Distribution Amount, Class A-2 Principal Distribution Amount and
Class A-3 Principal Distribution Amount remaining after the distributions in
clauses 5.01(g)(i), (ii) and (iii) above and distribute the following amounts,
concurrently, on a pro rata basis, based on the Certificate Principal Balance of
the Class A-1 Certificates, the Certificate Principal Balance of the Class A-2
Certificates and the aggregate Certificate Principal Balance of the Class A-3A,
Class A-3B, Class A-3C and Class A-3D Certificates, after taking into account
distributions for that Distribution Date in accordance with the principal
distribution allocations described in clauses 5.01(g)(i), (ii) and (iii) above:

(x) to the Class A-1 Certificates, after taking into account the distribution of
the Class A-1 Principal Distribution Amount as described in clause 5.01(g)(i)
above, up to the amount of the Class A-1 Principal Distribution Amount remaining
undistributed on such Distribution Date, until the Certificate Principal Balance
of such class has been reduced to zero;

(y) to the Class A-2 Certificates, after taking into account the distribution of
the Class A-2 Principal Distribution Amount as described in clause 5.01(g)(ii)
above, up to the amount equal to the Class A-2 Principal Distribution Amount
remaining undistributed on such Distribution Date, until the Certificate
Principal Balance of such class has been reduced to zero; and

(z) sequentially, to the Class A-3A, Class A-3B, Class A-3C and Class A-3D
Certificates, in that order, after taking into account the distribution of the
Class A-3 Principal Distribution Amount as described in clause 5.01(g)(iii)
above, up to the amount equal to the Class A-3 Principal Distribution Amount
remaining undistributed on such Distribution Date, until the Certificate
Principal Balance of each such class has been reduced to zero.

(v) The Principal Distribution Amount remaining after distributions pursuant to
Sections 5.01(g)(i), (ii), (iii) and (iv) above shall be distributed in the
following order in each case to the extent of the Principal Distribution Amount
remaining:

 

  (A) sequentially, to the Class M-1, Class M-2 and Class M-3 Certificates, in
that order, the Sequential Class M Principal Distribution Amount, until the
Certificate Principal Balance of each such Class has been reduced to zero;

 

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  (B) to the Class M-4 Certificates, the Class M-4 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-4 Certificates
has been reduced to zero;

 

  (C) to the Class M-5 Certificates, the Class M-5 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-5 Certificates
has been reduced to zero;

 

  (D) to the Class M-6 Certificates, the Class M-6 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-6 Certificates
has been reduced to zero;

 

  (E) to the Class M-7 Certificates, the Class M-7 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-7 Certificates
has been reduced to zero;

 

  (F) to the Class M-8 Certificates, the Class M-8 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-8 Certificates
has been reduced to zero;

 

  (G) to the Class M-9 Certificates, the Class M-9 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-9 Certificates
has been reduced to zero;

 

  (H) to the Class M-10 Certificates, the Class M-10 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-10 Certificates
has been reduced to zero; and

 

  (I) to the Class M-11 Certificates, the lesser of the Class M-11 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-11
Certificates has been reduced to zero.

Notwithstanding the priority of distributions described in Section 5.01(f) and
(g) with respect to the Class A-3A, Class A-3B, Class A-3C and Class A-3D
Certificates, on any Distribution Date which occurs after the Certificate
Principal Balances of the Mezzanine Certificates have been reduced to zero,
distributions in respect of principal to the Class A-3A, Class A-3B, Class A-3C
and Class A-3D Certificates will be made on a pro rata basis, based on the
Certificate Principal Balance of each such Class, until the Certificate
Principal Balance of each such Class has been reduced to zero.

(h) On each Distribution Date, the Net Monthly Excess Cashflow (or, in the case
of clause (i) below, the Net Monthly Excess Cashflow exclusive of any
Overcollateralization Reduction Amount) shall be distributed as follows:

(i) to the Class or Classes of Certificates then entitled to receive
distributions in respect of principal, in an amount equal to the
Overcollateralization Increase Amount, distributable in accordance with the
priorities set forth in Section 5.01(f) and (g) above;

 

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(ii) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, in an amount equal to the Interest Carry Forward
Amount allocable to each such Class;

(iii) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, in an amount equal to the Allocated Realized Loss
Amount allocable to each such Class;

(iv) concurrently, the Class A Certificates, in an amount equal to such
Certificates’ allocated share of any Net Prepayment Interest Shortfalls and any
shortfalls resulting from the application of the Relief Act or similar state or
local law or the bankruptcy code with respect to the Mortgage Loans to the
extent not previously reimbursed pursuant to Section 1.02;

(v) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, in an amount equal to such Certificates’ share of
any Net Prepayment Interest Shortfalls and any Relief Act Interest Shortfall, in
each case that were allocated to such Class for such Distribution Date and for
any prior Distribution Date, to the extent not previously reimbursed pursuant to
Section 1.02;

(vi) to the Reserve Fund, the amount by which the Net WAC Rate Carryover
Amounts, if any, with respect to the Class A Certificates and Mezzanine
Certificates exceeds the amount in the Reserve Fund that was not distributed on
prior Distribution Dates;

(vii) to the Swap Account, an amount equal to any Swap Termination Payment owed
to the Swap Provider due to a Swap Provider Trigger Event pursuant to the Swap
Agreement;

(viii) to the Holders of the Class CE Certificates the Interest Distribution
Amount and any remaining Overcollateralization Reduction Amount for such
Distribution Date; and

(ix) to the Holders of the Class R Certificates, in respect of the Class R-III
Interest, any remaining amounts; provided that if such Distribution Date is the
Distribution Date immediately following the expiration of the latest Prepayment
Charge term as identified on the Mortgage Loan Schedule or any Distribution Date
thereafter, then any such remaining amounts will be distributed first, to the
Holders of the Class P Certificates, until the Certificate Principal Balance
thereof has been reduced to zero and second, to the Holders of the Class R
Certificates.

On each Distribution Date, after making the distributions of the Available
Distribution Amount as set forth above, the Securities Administrator will first,
withdraw from the Reserve Fund all income from the investment of funds in the
Reserve Fund and distribute such amount to the Holders of the Class CE
Certificates, and second, withdraw from the Reserve Fund, to the

 

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extent of amounts remaining on deposit therein, the amount of any Net WAC Rate
Carryover Amount for such Distribution Date and distribute such amount first,
concurrently to the Classes of Class A Certificates, pro rata according to the
Certificate Principal Balances of such Classes, second, sequentially, to the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 and Class M-11 Certificates, in that order, in
each case to the extent any Net WAC Rate Carryover Amount for each such Class.

(i) On the second Business Day prior to each Distribution Date, Net Swap
Payments and Swap Termination Payments (other than Swap Termination Payments
resulting from a Swap Provider Trigger Event) payable from funds in the Swap
Account to the Swap Provider pursuant to the Swap Agreement shall be remitted to
the Swap Account, first to make any Net Swap Payment owed to the Swap Provider
pursuant to the Swap Agreement for such Distribution Date, and second to make
any Swap Termination Payment (not due to a Swap Provider Trigger Event) owed to
the Swap Provider pursuant to the Swap Agreement for such Distribution Date. Any
Swap Termination Payment triggered by a Swap Provider Trigger Event owed to the
Swap Provider pursuant to the Swap Agreement shall be paid pursuant to
Section 5.01(h)(vii).

(j) On each Distribution Date, following, with respect to any Net Swap Payment
made by the Swap Provider only, the distribution of the Net Monthly Excess
Cashflow and withdrawals from the Reserve Fund, the Securities Administrator
will withdraw any amounts in the Swap Account and distribute such amounts in the
following order:

(i) to the Swap Provider, any Net Swap Payment owed to the Swap Provider
pursuant to the Swap Agreement for such Distribution Date;

(ii) to the Swap Provider, any Swap Termination Payment owed to the Swap
Provider not due to a Swap Provider Trigger Event pursuant to the Swap
Agreement;

(iii) concurrently, to each Class of Class A Certificates, the related Senior
Interest Distribution Amount remaining undistributed after the distributions of
the Group I Interest Remittance Amount, the Group II Interest Remittance Amount,
the Group III Interest Remittance Amount and the Net Monthly Excess Cashflow,
pro rata, based on such respective remaining Senior Interest Distribution
Amounts;

(iv) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, the related Interest Distribution Amount and
Interest Carry Forward Amount, to the extent remaining undistributed after the
distributions of the Group I Interest Remittance Amount, the Group II Interest
Remittance Amount, the Group III Interest Remittance Amount and the Net Monthly
Excess Cashflow;

(v) to the Class or Classes of Certificates then entitled to receive
distributions in respect of principal, in an amount necessary to maintain the
Required Overcollateralization Amount after taking into account distributions
made pursuant to Section 5.01(h)(i) above; provided that this amount, together
with all other amounts paid to the Certificateholders on all prior Distribution
Dates, pursuant to this item (v), may not exceed the cumulative amount of
Realized Losses incurred on the Mortgage Pool from and after the Cut-off Date;

 

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(vi) concurrently, to each Class of Class A Certificates, the related Net WAC
Rate Carryover Amount, to the extent remaining undistributed after distributions
of Net Monthly Excess Cashflow on deposit in the Reserve Fund, pro rata, based
on such respective Net WAC Rate Carryover Amounts remaining;

(vii) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, the related Net WAC Rate Carryover Amount, to the
extent remaining undistributed after distributions are made from the Reserve
Fund;

(viii) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, in each case up to the related Allocated Realized
Loss Amount for such Distribution Date remaining undistributed after
distribution of the Net Monthly Excess Cashflow;

(ix) to the Swap Provider, an amount equal to any Swap Termination Payment owed
to the Swap Provider due to a Swap Provider Trigger Event pursuant to the Swap
Agreement; and

(x) to the Class CE Certificates, any remaining amounts.

(k) On each Distribution Date, the Securities Administrator shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges and shall distribute such amounts to the Class P Certificateholders as
described in Section 5.01(h)(ix).

(l) All distributions made with respect to each Class of Certificates on each
Distribution Date shall be allocated pro rata among the outstanding Certificates
in such Class based on their respective Percentage Interests. Payments in
respect of each Class of Certificates on each Distribution Date will be made to
the Holders of the respective Class of record on the related Record Date (except
as otherwise provided in Section 5.01(j) or Section 10.01 respecting the final
distribution on such Class), based on the aggregate Percentage Interest
represented by their respective Certificates, and shall be made by wire transfer
of immediately available funds to the account of any such Holder at a bank or
other entity having appropriate facilities therefor, if such Holder shall have
so notified the Securities Administrator in writing at least five Business Days
prior to the Record Date immediately prior to such Distribution Date and is the
registered owner of Certificates having an initial aggregate Certificate
Principal Balance that is in excess of the lesser of (i) $5,000,000 or
(ii) two-thirds of the initial Certificate Principal Balance of such Class of
Certificates, or otherwise by check mailed by first class mail to the address of
such Holder appearing in the Certificate Register. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the Corporate Trust Office of the Securities
Administrator or such other location specified in the notice to
Certificateholders of such final distribution.

 

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Each distribution with respect to a Book-Entry Certificate shall be paid to the
Depository, as Holder thereof, and the Depository shall be responsible for
crediting the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a “brokerage firm” or “indirect participating firm”) for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Depositor, the Servicer, the Securities
Administrator or the Master Servicer shall have any responsibility therefor
except as otherwise provided by this Agreement or applicable law.

(m) Subsequent Recoveries. On each Distribution Date, following all
distributions on the Certificates pursuant to Section 5.01, an amount equal to
the amount of Subsequent Recoveries deposited into the Collection Account
pursuant to Section 3.08 and included in the Available Distribution Amount for
such Distribution Date will be applied to increase the Certificate Principal
Balance of the Class of Certificates with the Highest Priority up to the extent
of such Realized Losses previously allocated to that Class of Certificates
pursuant to Section 5.05 and not previously reimbursed to such Class with Net
Monthly Excess Cashflow pursuant to Section 5.01(h). An amount equal to the
amount of any remaining Subsequent Recoveries will be applied to increase the
Certificate Principal Balance of the Class of Certificates with the next Highest
Priority, up to the amount of such Realized Losses previously allocated to that
Class of Certificates pursuant to Section 5.05 and not previously reimbursed to
such Class with Net Monthly Excess Cashflow pursuant to Section 5.01(h), and so
on. Holders of such Certificates will not be entitled to any distribution in
respect of 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
Certificate of such Class in accordance with its respective Percentage Interest.

(n) It is the intention of all of the parties hereto that the Class CE
Certificates receive all principal and interest received by the Trust on the
Mortgage Loans that is not otherwise distributable to any other Class of Regular
Certificates or REMIC Regular Interests. If the Securities Administrator
determines that the Residual Certificates are entitled to any distributions, the
Securities Administrator, prior to any such distribution to any Residual
Certificate, shall notify the Depositor of such impending distribution. Upon
such notification, the Depositor will request an amendment to this Agreement to
revise such mistake in the distribution provisions. The Residual Certificate
Holders, by acceptance of their Certificates, and the Servicer hereby agree and
no further consent shall be necessary, notwithstanding anything to the contrary
in Section 12.01 of this Agreement.

(o) The rights of the Certificateholders to receive distributions in respect of
the Certificates, and all interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement. None of the Holders of
any Class of Certificates, the Trustee, the Servicer, the Securities
Administrator or the Master Servicer shall in any way be responsible or liable
to the Holders of any other Class of Certificates in respect of amounts properly
previously distributed on the Certificates.

 

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(p) Except as otherwise provided in Section 10.01, whenever the Securities
Administrator expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Securities
Administrator shall, no later than three (3) days before the related
Distribution Date, mail to each Holder on such date of such Class of
Certificates a notice to the effect that:

(i) the Securities Administrator expects that the final distribution with
respect to such Class of Certificates will be made on such Distribution Date but
only upon presentation and surrender of such Certificates at the office of the
Securities Administrator therein specified, and

(ii) no interest shall accrue on such Certificates from and after the end of the
related Accrual Period.

Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Securities Administrator and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 5.01(p) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Securities Administrator shall mail a second notice to the remaining
non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Securities Administrator shall, directly
or through an agent, mail a final notice to the remaining non-tendering
Certificateholders concerning surrender of their Certificates but shall continue
to hold any remaining funds for the benefit of non-tendering Certificateholders.
The costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in such trust fund.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Securities Administrator shall pay to the
Depositor all such amounts, and all rights of non-tendering Certificateholders
in or to such amounts shall thereupon cease. No interest shall accrue or be
payable to any Certificateholder on any amount held in trust by the Securities
Administrator as a result of such Certificateholder’s failure to surrender its
Certificate(s) on the final Distribution Date for final payment thereof in
accordance with this Section 5.01(p). Any such amounts held in trust by the
Securities Administrator shall be held uninvested in an Eligible Account.

(q) Notwithstanding anything to the contrary herein, (i) in no event shall the
Certificate Principal Balance of a Class A Certificate or a Mezzanine
Certificate be reduced more than once in respect of any particular amount both
(a) allocated to such Certificate in respect of Realized Losses pursuant to
Section 5.06 and (b) distributed to the Holder of such Certificate in reduction
of the Certificate Principal Balance thereof pursuant to this Section 5.01 from
Net Monthly Excess Cashflow and (ii) in no event shall the Uncertificated
Balance of a REMIC I Regular Interest be reduced more than once in respect of
any particular amount both (a) allocated to such REMIC I Regular Interest in
respect of Realized Losses pursuant to Section 5.06 and (b) distributed on such
REMIC I Regular Interest in reduction of the Uncertificated Balance thereof
pursuant to this Section 5.01.

 

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Section 5.02 Statements to Certificateholders.

(a) On each Distribution Date, the Securities Administrator (based on the
information set forth in the Servicer Report for such Distribution Date and
information provided by the respective counterparties to the Interest Rate Swap
Agreement and the Cap Agreement with respect to payments made pursuant to the
Interest Rate Swap Agreement and the Cap Agreement) shall make available to each
Holder of the Certificates and the Credit Risk Manager, a statement as to the
distributions made on such Distribution Date setting forth:

(i) the applicable Record Date and Determination Date;

(ii) the amount of the distribution made on such Distribution Date to the
Holders of each Class of Regular Certificates allocable to principal and the
amount of the distribution made to the Holders of the Class P Certificates
allocable to Prepayment Charges and Servicer Prepayment Charge Payment Amounts;

(iii) the amount of the distribution made on such Distribution Date to the
Holders of each Class of Regular Certificates (other than the Class P
Certificates) allocable to interest, separately identified;

(iv) the Overcollateralization Amount, the Overcollateralization Reduction
Amount, the Overcollateralization Increase Amount and the Required
Overcollateralization Amount as of such Distribution Date;

(v) the aggregate Servicing Fee received by the Servicer with respect to the
related Due Period;

(vi) the amount of any other fees or expenses paid, and the identity of the
party receiving such amounts;

(vii) the aggregate amount of P&I Advances for the related Due Period;

(viii) the aggregate amount of interest and scheduled principal received or
advanced by the Servicer with respect to the related Due Period;

(ix) the number, aggregate principal balance, weighted average remaining term to
maturity and weighted average Mortgage Rate of the Mortgage Loans as of the
related Due Date;

(x) the number and aggregate unpaid principal balance of Mortgage Loans that
were (determined in accordance with OTS methodology) (A) Delinquent (exclusive
of Mortgage Loans in bankruptcy or foreclosure and REO Properties) (1) 30 to 59
days, (2) 60 to 89 days and (3) 90 or more days; (B) as to which foreclosure
proceedings have been commenced and Delinquent (1) 30 to 59 days, (2) 60 to 89
days and (3) 90 or more days; (C) in bankruptcy and Delinquent (1) 30 to 59
days, (2) 60 to 89 days and (3) 90 or more days, in each case as of the Close of
Business on the last day of the calendar month preceding such Distribution Date
(not including Principal Prepayments in full as of the end of the related
Prepayment Period); and (D) REO Properties;

 

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(xi) the total number and cumulative principal balance of all Liquidated
Mortgage Loans as of the Close of Business of the last day of the preceding
Prepayment Period, prior to the reduction of each principal balance to zero;

(xii) the total number and cumulative principal balance of all REO Properties as
of the Close of Business of the last day of the preceding Prepayment Period;

(xiii) the aggregate amount of Principal Prepayments in full, the aggregate
amount of Principal Prepayments in part and Net Liquidation Proceeds made during
the related Prepayment Period;

(xiv) the aggregate amount of Realized Losses incurred during the related
Prepayment Period and the cumulative amount of Realized Losses;

(xv) unless otherwise set forth in the Form 10-D relating to such Distribution
Date, any material modifications, extensions or waivers to the terms of the
Mortgage Loans during the Due Period or that have cumulatively become material
over time;

(xvi) unless otherwise set forth in the Form 10-D relating to such Distribution
Date, any material breaches of Mortgage Loan representations or warranties or
covenants in the Agreement;

(xvii) the aggregate amount of Extraordinary Trust Fund Expenses withdrawn from
the Collection Account for such Distribution Date;

(xviii) the Certificate Principal Balance of each Class of Class A Certificates,
each class of Mezzanine Certificates and the Class CE Certificates, after giving
effect to the distributions made on such Distribution Date;

(xix) the Accrued Certificate Interest in respect of each Class of Class A
Certificates, each class of Mezzanine Certificates and the Class CE Certificates
for such Distribution Date and the Interest Carry Forward Amount, if any, with
respect to the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates for such Distribution Date;

(xx) the aggregate amount of any Prepayment Interest Shortfalls for such
Distribution Date, to the extent not covered by payments by the Servicer
pursuant to Section 3.22 or the Master Servicer pursuant to Section 4.18;

(xxi) the Credit Enhancement Percentage for such Distribution Date;

(xxii) the Net WAC Rate Carryover Amount for each class of Class A Certificates
and each class of Mezzanine Certificates, if any, for such Distribution Date and
the amount remaining unpaid after reimbursements therefor on such Distribution
Date;

 

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(xxiii) (1) the amount of any Net Swap Payments or Swap Termination Payments
(a) due from the Trust and (b) due from the Swap Provider, and the amount of any
payments received by the Trust under the Cap Agreement;

(xxiv) when the Stepdown Date or a Trigger Event is in effect;

(xxv) the Available Distribution Amount;

(xxvi) the respective Pass-Through Rates applicable to each Class of Class A
Certificates, each Class of Mezzanine Certificates and the Class CE Certificates
for such Distribution Date and the Pass-Through Rate applicable to each Class of
Class A Certificates and each class of Mezzanine Certificates for the
immediately succeeding Distribution Date; and

(xxvii) the amount on deposit in the Reserve Fund.

The Securities Administrator will make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to the Certificateholders and the Rating Agencies via the
Securities Administrator’s internet website. The Securities Administrator’s
internet website shall initially be located at http:\\www.ctslink.com and
assistance in using the website can be obtained by calling the Securities
Administrator’s customer service desk at 1-301-815-6600. 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 Securities Administrator shall have the right to change the way such
statements are distributed in order to make such distribution more convenient
and/or more accessible to the above parties and the Securities Administrator
shall provide timely and adequate notification to all above parties regarding
any such changes.

In the case of information furnished pursuant to subclauses (i) and (ii) above,
the amounts shall be expressed in a separate section of the report as a dollar
amount for each $1,000 original dollar amount as of the Cut-off Date per Single
Certificate of the relevant Class.

(b) Within a reasonable period of time after the end of each calendar year, the
Securities Administrator shall furnish upon request to each Person who at any
time during the calendar year was a Certificateholder of a Regular Certificate a
statement containing the information set forth in subclauses (ii) and
(iii) above, aggregated for such calendar year or applicable portion thereof
during which such person was a Certificateholder. Such obligation of the
Securities Administrator shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Securities
Administrator pursuant to any requirements of the Code as from time to time are
in force.

(c) Within a reasonable period of time after the end of each calendar year, the
Securities Administrator shall deliver to each Person who at any time during the
calendar year was a Residual Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Residual Certificateholder. Such obligation of the

 

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Securities Administrator shall be deemed to have been satisfied to the extent
that substantially comparable information shall be prepared and furnished to
Certificateholders by the Securities Administrator pursuant to any requirements
of the Code as from time to time in force.

(d) The Securities Administrator shall, upon request, furnish to each
Certificateholder or Certificate Owner during the term of this Agreement, such
periodic, special, or other reports or information, whether or not provided for
herein, as shall be reasonable with respect to the Certificateholder or
Certificate Owner, as applicable, or otherwise with respect to the purposes of
this Agreement, all such reports or information to be provided at the expense of
the Certificateholder or Certificate Owner, in accordance with such reasonable
and explicit instructions and directions as the Certificateholder or Certificate
Owner may provide.

(e) On each Distribution Date the Securities Administrator shall provide
Bloomberg Financial Markets, L.P. (“Bloomberg”) CUSIP level factors for each
class of Certificates as of such Distribution Date, using a format and media
mutually acceptable to the Securities Administrator and Bloomberg.

Section 5.03 Servicer Reports; P&I Advances.

(a) No later than the second Business Day following the Determination Date, the
Servicer shall deliver to the Master Servicer and the Securities Administrator a
delinquency report containing substantially the information contained in the
form set forth in Exhibit V-1, a monthly remittance advice containing
substantially the information contained in the form set forth in Exhibit V-2,
and a realized loss report containing substantially the information contained in
the form set forth in Exhibit V-3, each in a mutually agreeable electronic
format, as to the remittance on such Remittance Date and as to the period ending
on the last day of the month preceding such Remittance Date together with such
other information with respect to the Mortgage Loans and the related
Distribution Date as is reasonably available to the Servicer as the Master
Servicer or the Securities Administrator may reasonably require so as to enable
the Master Servicer to master service the Mortgage Loans and oversee the
servicing by the Servicer and the Securities Administrator to fulfill its
obligations hereunder with respect to securities and tax reporting.

(b) The amount of P&I Advances to be made by the Servicer on any Distribution
Date shall equal, subject to Section 5.03(d), (i) the aggregate amount of
Monthly Payments (net of the related Servicing Fees), due during the related Due
Period in respect of the Mortgage Loans, which Monthly Payments were delinquent
as of the close of business on the related Determination Date and (ii) with
respect to each REO Property serviced by the Servicer, which REO Property was
acquired during or prior to the related Prepayment Period and as to which such
REO Property an REO Disposition did not occur during the related Prepayment
Period, an amount equal to the excess, if any, of the REO Imputed Interest on
such REO Property for the most recently ended calendar month, over the net
income from such REO Property deposited in the Collection Account pursuant to
Section 3.21 for distribution on such Distribution Date; provided, however, the
Servicer shall not be required to make P&I Advances with respect to Relief Act
Interest Shortfalls, or with respect to Prepayment Interest Shortfalls in excess
of its obligations under Section 3.22.

 

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By 12:00 noon New York time on the Servicer Remittance Date, the Servicer shall
remit in immediately available funds to the Securities Administrator for deposit
in the Distribution Account an amount equal to the aggregate amount of P&I
Advances, if any, to be made in respect of the Mortgage Loans and REO Properties
for the related Distribution Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of any Amounts Held For Future Distribution on
deposit therein (in which case it will cause to be made an appropriate entry in
the records of the Collection Account that Amounts Held For Future Distribution
have been, as permitted by this Section 5.03, used by the Servicer in discharge
of any such P&I Advance) or (iii) in the form of any combination of (i) and
(ii) aggregating the total amount of P&I Advances to be made by the Servicer
with respect to the Mortgage Loans and REO Properties. In addition, the Servicer
shall have the right to reimburse itself for any outstanding P&I Advance made
from its own funds from Amounts Held for Future Distribution. Any Amounts Held
For Future Distribution used by the Servicer to make P&I Advances or to
reimburse itself for outstanding P&I Advances shall be appropriately reflected
in the Servicer’s records and replaced by the Servicer by deposit in the
Collection Account no later than the close of business on the Servicer
Remittance Date immediately following the Due Period or Prepayment Period for
which such amounts relate. The Securities Administrator will notify the Servicer
and the Master Servicer by the close of business on the Business Day prior to
the Distribution Date in the event that the amount remitted by the Servicer to
the Securities Administrator on such date is less than the P&I Advances required
to be made by the Servicer for the related Distribution Date.

(c) The obligation of the Servicer to make such P&I Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to (d) below,
and, with respect to any Mortgage Loan or REO Property, shall continue until a
Final Recovery Determination in connection therewith or the removal thereof from
the Trust Fund pursuant to any applicable provision of this Agreement, except as
otherwise provided in this Section.

(d) Notwithstanding anything herein to the contrary, no P&I Advance or Servicing
Advance shall be required to be made hereunder by the Servicer if such P&I
Advance or Servicing Advance would, if made, constitute a Nonrecoverable P&I
Advance or Nonrecoverable Servicing Advance, respectively. The determination by
the Servicer that it has made a Nonrecoverable P&I Advance or a Nonrecoverable
Servicing Advance or that any proposed P&I Advance or Servicing Advance, if
made, would constitute a Nonrecoverable P&I Advance or Nonrecoverable Servicing
Advance, respectively, shall be evidenced by a certification of a Servicing
Officer delivered to the Master Servicer.

(e) Subject to and in accordance with the provisions of Article VIII, in the
event the Servicer fails to make any required P&I Advance, then the Master
Servicer (in its capacity as successor servicer) or any other successor Servicer
shall be required to make such P&I Advance on the Distribution Date on which the
Servicer was required to make such Advance, subject to its determination of
recoverability.

Section 5.04 Swap Account.

(a) No later than the Closing Date, on behalf of the Trust Fund, the Securities
Administrator shall establish and maintain a separate, segregated trust account
to be held in trust

 

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for the benefit of the Trustee, the Trust Fund and the Certificateholders. Such
account shall be an Eligible Account and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including, without limitation, other moneys of the Trust Fund held pursuant to
this Agreement. Amounts therein shall be held uninvested.

(b) On the Business Day prior to each Distribution Date, prior to any
distribution to any Certificate, the Securities Administrator shall deposit into
the Swap Account: (i) the amount of any Net Swap Payment or Swap Termination
Payment (other than any Swap Termination Payment resulting from a Swap Provider
Trigger Event) owed to the Swap Provider (after taking into account any upfront
payment received from the counterparty to a replacement swap agreement) from
funds collected and received with respect to the Mortgage Loans prior to the
determination of Available Distribution Amount and (ii) amounts received by the
Securities Administrator for distribution in accordance with subsection
(d) below. For federal income tax purposes, any amounts paid to the Swap
Provider on each Distribution Date shall first be deemed paid to the Swap
Provider in respect of the REMIC III Regular Interest Class CE-IO to the extent
of the amount distributable on such Class on such Distribution Date, and any
remaining amount shall be deemed paid to the Swap Provider in respect of a Class
IO Distribution Amount (as defined below).

(c) For federal income tax purposes, the Swap Account shall be owned by the
majority Holder of the Class CE Certificates.

(d) On the Business Day prior to each Distribution Date, the Securities
Administrator will be required to deposit into the Swap Account the Net Swap
Payment received from Swap Provider starting from the Distribution Date in
January 2007 to (and including) the Distribution Date in December 2011 and the
amount received from the Cap Agreement Provider to (and including) the
Distribution Date in June 2007.

(e) The Trustee shall treat the Holders of Certificates (other than the Class P,
Class CE and Residual Certificates) as having entered into a notional principal
contract with respect to the Holders of the Class CE Certificates. Pursuant to
each such notional principal contract, all Holders of Certificates (other than
the Class P, Class CE and Residual Certificates) shall be treated as having
agreed to pay, on each Distribution Date, to the Holder of the Class CE
Certificates an aggregate amount equal to the excess, if any, of (i) the amount
payable on such Distribution Date on the REMIC III Regular Interest
corresponding to such Class of Certificates over (ii) the amount payable on such
Class of Certificates on such Distribution Date (such excess, a “Class IO
Distribution Amount”). A Class IO Distribution Amount payable from interest
collections shall be allocated pro rata among such Certificates based on the
amount of interest otherwise payable to such Certificates, and a Class IO
Distribution Amount payable from principal collections shall be allocated to the
most subordinate Class of Certificates with an outstanding principal balance to
the extent of such balance. In addition, pursuant to such notional principal
contract, the Holder of the Class CE Certificates shall be treated as having
agreed to pay Net WAC Rate Carryover Amounts to the Holders of the Certificates
(other than the Class CE, Class P and Residual Certificates) in accordance with
the terms of this Agreement. Any payments to the Certificates from amounts
deemed received in respect of this notional principal contract shall not be
payments with respect to a Regular Interest in a REMIC within the meaning of
Code Section 860G(a)(1). However, any payment from the Certificates (other than

 

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the Class CE, Class P and Residual Certificates) of a Class IO Distribution
Amount shall be treated for tax purposes as having been received by the Holders
of such Certificates in respect of their interests in REMIC III and as having
been paid by such Holders to the Trust pursuant to the notional principal
contract. Thus, each Certificate (other than the Class P and Residual
Certificates) shall be treated as representing not only ownership of Regular
Interests in REMIC III, but also ownership of an interest in, and obligations
with respect to, a notional principal contract.

Section 5.05 Distributions on the REMIC I Regular Interests.

(a) On each Distribution Date, the Securities Administrator shall cause, in the
following order of priority, the following amounts to be distributed by REMIC I
to REMIC II on account of the Mortgage Loans or withdrawn from the Distribution
Account and distributed to the Holders of the Class R-I Certificates (in respect
of the Class R-I Interest), as the case may be:

(i) On each Distribution Date, the following amounts, in the following order of
priority, shall be distributed by REMIC I to REMIC II on account of the REMIC I
Regular Interests LT-I-A and LT-I-B:

 

  (A) to the extent of the Group I Interest Remittance Amount, to the Holders of
REMIC I Regular Interests LT-I-A and LT-I-B, pro rata, in an amount equal to
(A) Uncertificated Accrued Interest for such REMIC I Regular Interests for such
Distribution Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates; and

 

  (B) on each Distribution Date, to the Holders of REMIC I Regular Interests
LT-I-A and LT-I-B, in an amount equal to the Group I Principal Remittance Amount
plus the remainder of the Available Distribution Amount, if any, attributable to
amounts received in respect of the Group I Mortgage Loans after the
distributions made pursuant to clause (i) above, allocated first, to cause the
Uncertificated Principal Balance of REMIC I Regular Interest LT-I-A to equal
0.10% of the related Subordinate Component of the Group I Loans and, then, to
REMIC I Regular Interest LT-I-B.

(ii) On each Distribution Date, the following amounts, in the following order of
priority, shall be distributed by REMIC I to REMIC II on account of the REMIC I
Regular Interests LT-II-A and LT-II-B:

 

  (A) to the extent of the Group II Interest Remittance Amount, to the Holders
of REMIC I Regular Interests LT-II-A and LT-II-B, pro rata, in an amount equal
to (A) Uncertificated Accrued Interest for such REMIC I Regular Interests for
such Distribution Date, plus (B) any amounts in respect thereof remaining unpaid
from previous Distribution Dates; and

 

  (B)

on each Distribution Date, to the Holders of REMIC I Regular Interests LT-II-A
and LT-II-B, in an amount equal to the Group II Principal Remittance Amount plus
the remainder of the Available Distribution

 

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Amount, if any, attributable to amounts received in respect of the Group II
Mortgage Loans after the distributions made pursuant to clause (i) above,
allocated first, to cause the Uncertificated Principal Balance of REMIC I
Regular Interest LT-II-A to equal 0.10% of the related Subordinate Component of
the Group II Loans and, then, to REMIC I Regular Interest LT-II-B.

(iii) On each Distribution Date, the following amounts, in the following order
of priority, shall be distributed by REMIC I to REMIC II on account of the REMIC
I Regular Interests LT-III-A and LT-III-B:

 

  (A) to the extent of the Group III Interest Remittance Amount, to the Holders
of REMIC I Regular Interests LT-III-A and LT-III-B, pro rata, in an amount equal
to (A) Uncertificated Accrued Interest for such REMIC I Regular Interests for
such Distribution Date, plus (B) any amounts in respect thereof remaining unpaid
from previous Distribution Dates; and

 

  (B) on each Distribution Date, to the Holders of REMIC I Regular Interests
LT-III-A and LT-III-B, in an amount equal to the Group III Principal Interest
Remittance Amount plus the remainder of the Available Distribution Amount, if
any, attributable to amounts received in respect of the Group III Mortgage Loans
after the distributions made pursuant to clause (i) above, allocated first, to
cause the Uncertificated Principal Balance of REMIC I Regular Interest LT-III-A
to equal 0.10% of the related Subordinate Component of the Group III Loans and,
then, to REMIC I Regular Interest LT-III-B.

(b) On each Distribution Date, the Securities Administrator shall cause, in the
following order of priority, the following amounts to be distributed by REMIC II
to REMIC III on account of the REMIC I Regular Interests or withdrawn from the
Distribution Account and distributed to the Holders of the Class R-II
Certificates (in respect of the Class R-II Interest), as the case may be:

(i) On each Distribution Date, the following amounts, in the following order of
priority, shall be distributed by REMIC II to REMIC III on account of the REMIC
II Group I Regular Interests:

 

  (A)

to the extent of the Available Distribution Amount attributable to the Group I
Mortgage Loans and received in respect of the REMIC I Group I Regular Interests,
to the Holders of each REMIC II Group I Regular Interest, and the REMIC II
Regular Interest Ms proportionate to the related Subordinate Component, pro
rata, in an amount equal to (A) Uncertificated Accrued Interest for such REMIC
II Regular Interests 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 Group I Regular Interest
I-ZZ shall be reduced when the sum of (i) the REMIC II Group I

 

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Overcollateralized Amount, (ii) the REMIC II Group II Overcollateralized Amount
and (iii) the REMIC II Group III Overcollateralized Amount is less than the
Required Overcollateralization Amount, by the lesser of (x) the amount of such
difference and (y) the REMIC II Regular Interest I-ZZ Maximum Interest Deferral
Amount, and such amount will be payable to the Holders of REMIC II Regular
Interests A-I-1, M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10 and M-11 in
the same proportion as the Overcollateralization Increase Amount is allocated to
the corresponding Class of Certificates, and the Uncertificated Principal
Balance of the REMIC II Regular Interest I-ZZ shall be increased by such amount;
and

 

  (B) on each Distribution Date, to the Holders of REMIC II Group I Regular
Interests and the REMIC II Regular Interest Ms, in an amount equal to the
remainder of the Available Distribution Amount attributable to the Group I
Mortgage Loans and received in respect of the REMIC I Group I Regular Interests,
after the distributions made pursuant to clause (i) above, allocated as follows
(except as provided below): (A) to the Holders of the REMIC II Regular Interest
I-AA, 98.00% of such remainder until the Uncertificated Principal Balance of
such REMIC II Regular Interest is reduced to zero; (B) 2.00% of such remainder,
first to the Holders of REMIC II Regular Interests A-I-1, M-1, M-2, M-3, M-4,
M-5, M-6, M-7, M-8, M-9, M-10 and M-11, in an aggregate amount equal to 1.00% of
and in the same proportion as principal payments from the Group I Mortgage Loans
are allocated to the corresponding Class of Certificates for each such REMIC II
Regular Interests, respectively, until the Uncertificated Principal Balance of
each such REMIC II Regular Interest is reduced to zero; and, second, to the
Holders of the REMIC II Regular Interest I-ZZ, until the Uncertificated
Principal Balance of such REMIC II Regular Interest is reduced to zero; and
(C) any remaining amounts to the Holders of the Class R-II Certificates.

(ii) On each Distribution Date, the following amounts, in the following order of
priority, shall be distributed by REMIC II to REMIC III on account of the REMIC
II Group II Regular Interests:

 

  (A)

to the extent of the Available Distribution Amount attributable to the Group II
Mortgage Loans and received in respect of the REMIC I Group II Regular
Interests, to the Holders of each REMIC II Group II Regular Interest, and the
REMIC II Regular Interest Ms proportionate to the related Subordinate Component,
pro rata, in an amount equal to (A) Uncertificated Accrued Interest for such
REMIC II Regular Interests 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 Group II
Regular Interest II-ZZ shall be reduced when the sum of (i) the REMIC II Group I
Overcollateralized Amount, (ii) the REMIC II Group II Overcollateralized Amount
and (iii) the REMIC II Group III Overcollateralized Amount is

 

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less than the Required Overcollateralization Amount, by the lesser of (x) the
amount of such difference and (y) the REMIC II Regular Interest II-ZZ Maximum
Interest Deferral Amount, and such amount will be payable to the Holders of
REMIC II Regular Interests A-II-2, M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9,
M-10 and M-11, in the same proportion as the Overcollateralization Increase
Amount is allocated to the corresponding Class of Certificates, and the
Uncertificated Principal Balance of the REMIC II Regular Interest II-ZZ shall be
increased by such amount; and

 

  (B) on each Distribution Date, to the Holders of REMIC II Group II Regular
Interests and the REMIC II Regular Interests Ms, in an amount equal to the
remainder of the Available Distribution Amount attributable to the Group II
Mortgage Loans and received in respect of the REMIC I Group II Regular
Interests, after the distributions made pursuant to clause (i) above, allocated
as follows (except as provided below): (A) to the Holders of the REMIC II
Regular Interest II-AA, 98.00% of such remainder until the Uncertificated
Principal Balance of such REMIC II Regular Interest is reduced to zero;
(B) 2.00% of such remainder, first to the Holders of REMIC II Regular Interests
A-II-2, M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10 and M-11, in an
aggregate amount equal to 1.00% of and in the same proportion as principal
payments from the Group III Mortgage Loans are allocated to the corresponding
Class of Certificates for each such REMIC II Regular Interest, respectively,
until the Uncertificated Principal Balance of each such REMIC II Regular
Interest is reduced to zero; and, second, to the Holders of the REMIC II Regular
Interest II-ZZ, until the Uncertificated Principal Balance of such REMIC II
Regular Interest is reduced to zero; and (C) any remaining amounts to the
Holders of the Class R-II Certificates.

(iii) On each Distribution Date, the following amounts, in the following order
of priority, shall be distributed by REMIC II to REMIC III on account of the
REMIC II Group III Regular Interests:

 

  (A)

to the extent of the Available Distribution Amount attributable to the Group III
Mortgage Loans and received in respect of the REMIC I Group III Regular
Interests, to the Holders of each REMIC II Group II Regular Interest and the
REMIC II Regular Interests Ms proportionate to the related Subordinate
Component, pro rata, in an amount equal to (A) 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.
Amounts payable as Uncertificated Accrued Interest in respect of REMIC II Group
III Regular Interest III-ZZ shall be reduced when the sum of (i) the REMIC II
Group I Overcollateralized Amount, (ii) the REMIC II Group II Overcollateralized
Amount and (iii) the REMIC II Group III Overcollateralized Amount is less than
the Required Overcollateralization Amount, by the lesser of (x) the amount of
such difference and (y) the REMIC II Regular Interest III-

 

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ZZ Maximum Interest Deferral Amount, and such amount will be payable to the
Holders of REMIC II Regular Interests A-III-3A, A-III-3B, A-III-3C, A-III-3D,
M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10 and M-11 in the same
proportion as the Overcollateralization Increase Amount is allocated to the
corresponding Class of Certificates, and the Uncertificated Principal Balance of
the REMIC II Regular Interest III-ZZ shall be increased by such amount; and

 

  (B) on each Distribution Date, to the Holders of REMIC II Group III Regular
Interests and the REMIC II Regular Interests Ms, in an amount equal to the
remainder of the Available Distribution Amount attributable to the Group III
Mortgage Loans and received in respect of the REMIC I Group III Regular
Interests after the distributions made pursuant to clause (i) above, allocated
as follows (except as provided below): (A) to the Holders of the REMIC II
Regular Interest III-AA, 98.00% of such remainder until the Uncertificated
Principal Balance of such REMIC II Regular Interest is reduced to zero;
(B) 2.00% of such remainder, first to the Holders of REMIC II Regular Interests
A-III-3A, A-III-3B, A-III-3C, A-III-3D, M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8,
M-9, M-10 and M-11, in an aggregate amount equal to 1.00% of and in the same
proportion as principal payments from the Group III Mortgage Loans are allocated
to the corresponding Class of Certificates for each such REMIC II Regular
Interest, respectively, until the Uncertificated Principal Balance of each such
REMIC II Regular Interest is reduced to zero; and, second, to the Holders of the
REMIC II Regular Interest III-ZZ, until the Uncertificated Principal Balance of
such REMIC II Regular Interest is reduced to zero; and (C) any remaining amounts
to the Holders of the Class R-II Certificates.

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 I-AA, II-AA and III-AA, pro rata and
then to REMIC I Regular Interest MT-P and (ii) REMIC I Regular Interest I-ZZ,
II-ZZ, and III-ZZ, pro rata, respectively; provided further that REMIC II
Regular Interest MT-P shall not be reduced by any amount whatsoever until the
Distribution Date immediately following the expiration of the latest Prepayment
Charge as identified on the Prepayment Charge Schedule or any Distribution Date
thereafter, at which point such amounts shall be distributed to REMIC I Regular
Interest MT-P, until $1 has been distributed pursuant to this clause; and

(c) Notwithstanding the distributions described in this Section 5.05,
distribution of funds shall be made only in accordance with Section 5.01.

On each Distribution Date, all amounts representing Prepayment Charges in
respect of the Mortgage Loans received during the related Prepayment Period will
be distributed, pro rata, by REMIC I to REMIC II in respect of the outstanding
REMIC I Regular Interests, and from REMIC II to REMIC III in respect of REMIC II
Regular Interest MT-P. The payment of the foregoing Prepayment Charge amounts
from REMIC I to REMIC II, and from REMIC II to

 

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REMIC III in respect of the applicable REMIC I and REMIC II Regular Interests
shall not reduce the Uncertificated Principal Balances thereof.

Section 5.06 Allocation of Realized Losses.

(a) All Realized Losses on the Mortgage Loans allocated to any Regular
Certificate shall be allocated by the Securities Administrator on each
Distribution Date as follows: first, to Net Monthly Excess Cashflow, second, to
the Class CE Certificates, third, to the Class M-11 Certificates, fourth, to the
Class M-10 Certificates, fifth, to the Class M-9 Certificates, sixth, to the
Class M-8 Certificates, seventh, to the Class M-7 Certificates, eighth, to the
Class M-6 Certificates, ninth, to the Class M-5 Certificates, tenth, to the
Class M-4 Certificates, eleventh, to the Class M-3 Certificates, twelfth, to the
Class M-2 Certificates and thirteenth, to the Class M-1 Certificates until their
Certificate Principal Balances are reduced to zero. All Realized Losses to be
allocated to the Certificate Principal Balances of all Classes on any
Distribution Date shall be so allocated after the actual distributions to be
made on such date as provided above. All references above to the Certificate
Principal Balance of any Class of Certificates shall be to the Certificate
Principal Balance of such Class immediately prior to the relevant Distribution
Date, before reduction thereof by any Realized Losses, in each case to be
allocated to such Class of Certificates, on such Distribution Date.

Any allocation of Realized Losses to a Mezzanine Certificate on any Distribution
Date shall be made by reducing the Certificate Principal Balance thereof by the
amount so allocated; any allocation of Realized Losses to a Class CE Certificate
shall be made by reducing the amount otherwise payable in respect thereof
pursuant to Section 5.01(h)(viii). No allocations of any Realized Losses shall
be made to the Certificate Principal Balances of the Class A Certificates or the
Class P Certificates.

(b) All Realized Losses on the Group I, Group II and Group III Mortgage Loans
shall be allocated on each Distribution Date, first, to cause the Loan Group’s
corresponding REMIC I Regular Interest LT-I-A, REMIC I Regular Interest LT-II-A
or REMIC I Regular Interest LT-III-A to equal 0.10% of the related Subordinate
Component; and second, to the Loan Group’s corresponding REMIC I Regular
Interest LT-I-B, REMIC I Regular Interest LT-II-B or REMIC I Regular Interest
LT-III-B.

(i) All Realized Losses on the Group I Loans shall be allocated on each
Distribution Date to the following REMIC Regular Interests in the specified
percentages, as follows: first, to Uncertificated Accrued Interest payable to
the REMIC II Regular Interests I-AA and I-ZZ up to an aggregate amount equal to
the excess of (a) the REMIC II Group I Interest Loss Allocation Amount over
(b) Prepayment Interest Shortfalls (to the extent not covered by payments
pursuant to Section 3.22 or Section 4.18 of this Agreement) relating to the
Mortgage Loans for such Distribution Date, 98% and 2%, respectively; second, to
the Uncertificated Principal Balances of the REMIC II Regular Interests I-AA and
I-ZZ up to an aggregate amount equal to the REMIC II Group I Principal Loss
Allocation Amount, 98% and 2%, respectively; third, to the Uncertificated
Principal Balances of REMIC II Regular Interests I-AA, 98%, M-11, 1% and I-ZZ,
1%, until the Uncertificated Principal Balance of REMIC II Regular Interest M-11
has been reduced to zero; fourth, to the Uncertificated Principal Balances of
REMIC II Regular

 

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Interests I-AA, 98%, M-10, 1% and I-ZZ, 1%, until the Uncertificated Principal
Balance of REMIC II Regular Interest M-10 has been reduced to zero; fifth, to
the Uncertificated Principal Balances of REMIC II Regular Interests I-AA, 98%,
M-9, 1% and I-ZZ, 1%, until the Uncertificated Principal Balance of REMIC II
Regular Interest M-9 has been reduced to zero; sixth, to the Uncertificated
Principal Balances of REMIC II Regular Interests I-AA, 98%, M-8, 1% and I-ZZ,
1%, until the Uncertificated Principal Balance of REMIC II Regular Interest M-8
has been reduced to zero; seventh, to the Uncertificated Principal Balances of
REMIC II Regular Interests I-AA, 98%, M-7, 1% and I-ZZ, 1%, until the
Uncertificated Principal Balance of REMIC II Regular Interest M-7 has been
reduced to zero; eighth, to the Uncertificated Principal Balances of REMIC II
Regular Interests I-AA, 98%, M-6, 1% and I-ZZ, 1%, until the Uncertificated
Principal Balance of REMIC II Regular Interest M-6 has been reduced to zero;
ninth, to the Uncertificated Principal Balances of REMIC I Regular Interests
I-AA, 98%, M-5, 1% and I-ZZ, 1%, until the Uncertificated Principal Balance of
REMIC II Regular Interest M-5 has been reduced to zero; tenth, to the
Uncertificated Principal Balances of REMIC II Regular Interests I-AA, 98%, M-4,
1% and I-ZZ, 1%, until the Uncertificated Principal Balance of REMIC II Regular
Interest M-4 has been reduced to zero; eleventh, to the Uncertificated Principal
Balances of REMIC II Regular Interests I-AA, 98%, M-3, 1% and I-ZZ, 1%, until
the Uncertificated Principal Balance of REMIC II Regular Interest M-3 has been
reduced to zero; twelfth, to the Uncertificated Principal Balances of REMIC II
Regular Interests I-AA, 98%, M-2, 1%, and I-ZZ, 1%, until the Uncertificated
Principal Balances of REMIC II Regular Interest M-2 has been reduced to zero;
and thirteenth, to the Uncertificated Principal Balances of REMIC II Regular
Interests I-AA, 98%, M-1, 1%, and I-ZZ, 1%, until the Uncertificated Principal
Balances of REMIC II Regular Interest M-1 has been reduced to zero.

(ii) All Realized Losses on the Group II Loans shall be allocated on each
Distribution Date to the following REMIC Regular Interests in the specified
percentages, as follows: first, to Uncertificated Accrued Interest payable to
the REMIC II Regular Interests II-AA and II-ZZ up to an aggregate amount equal
to the excess of (a) the REMIC II Group II Interest Loss Allocation Amount over
(b) Prepayment Interest Shortfalls (to the extent not covered by payments
pursuant to Section 3.22 or Section 4.18 of this Agreement) relating to the
Mortgage Loans for such Distribution Date, 98% and 2%, respectively; second, to
the Uncertificated Principal Balances of the REMIC II Regular Interests II-AA
and II-ZZ up to an aggregate amount equal to the REMIC II Group II Principal
Loss Allocation Amount, 98% and 2%, respectively; third, to the Uncertificated
Principal Balances of REMIC II Regular Interests II-AA, 98%, M-11, 1% and II-ZZ,
1%, until the Uncertificated Principal Balance of REMIC II Regular Interest M-11
has been reduced to zero; fourth, to the Uncertificated Principal Balances of
REMIC II Regular Interests II-AA, 98%, M-10, 1% and II-ZZ, 1%, until the
Uncertificated Principal Balance of REMIC II Regular Interest M-10 has been
reduced to zero; fifth, to the Uncertificated Principal Balances of REMIC II
Regular Interests II-AA, 98%, M-9, 1% and II-ZZ, 1%, until the Uncertificated
Principal Balance of REMIC II Regular Interest M-9 has been reduced to zero;
sixth, to the Uncertificated Principal Balances of REMIC II Regular Interests
II-AA, 98%, M-8, 1% and II-ZZ, 1%, until the Uncertificated Principal Balance of
REMIC II Regular Interest M-8 has been reduced to zero; seventh, to the
Uncertificated Principal Balances of REMIC II Regular Interests II-

 

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AA, 98%, M-7, 1% and II-ZZ, 1%, until the Uncertificated Principal Balance of
REMIC II Regular Interest M-7 has been reduced to zero; eighth, to the
Uncertificated Principal Balances of REMIC II Regular Interests II-AA, 98%, M-6,
1% and II-ZZ, 1%, until the Uncertificated Principal Balance of REMIC II Regular
Interest M-6 has been reduced to zero; ninth, to the Uncertificated Principal
Balances of REMIC I Regular Interests II-AA, 98%, M-5, 1% and II-ZZ, 1%, until
the Uncertificated Principal Balance of REMIC II Regular Interest M-5 has been
reduced to zero; tenth, to the Uncertificated Principal Balances of REMIC II
Regular Interests II-AA, 98%, M-4, 1% and II-ZZ, 1%, until the Uncertificated
Principal Balance of REMIC II Regular Interest M-4 has been reduced to zero;
eleventh, to the Uncertificated Principal Balances of REMIC II Regular Interests
II-AA, 98%, M-3, 1% and II-ZZ, 1%, until the Uncertificated Principal Balance of
REMIC II Regular Interest M-3 has been reduced to zero; twelfth, to the
Uncertificated Principal Balances of REMIC II Regular Interests II-AA, 98%, M-2,
1%, and II-ZZ, 1%, until the Uncertificated Principal Balances of REMIC II
Regular Interest M-2 has been reduced to zero; and thirteenth, to the
Uncertificated Principal Balances of REMIC II Regular Interests II-AA, 98%, M-1,
1%, and II-ZZ, 1%, until the Uncertificated Principal Balances of REMIC II
Regular Interest M-1 has been reduced to zero.

(iii) All Realized Losses on the Group III Loans shall be allocated on each
Distribution Date to the following REMIC Regular Interests in the specified
percentages, as follows: first, to Uncertificated Accrued Interest payable to
the REMIC II Regular Interests III-AA and III-ZZ up to an aggregate amount equal
to the excess of (a) the REMIC II Group III Interest Loss Allocation Amount over
(b) Prepayment Interest Shortfalls (to the extent not covered by payments
pursuant to Section 3.22 or Section 4.18 of this Agreement) relating to the
Mortgage Loans for such Distribution Date, 98% and 2%, respectively; second, to
the Uncertificated Principal Balances of the REMIC II Regular Interests III-AA
and III-ZZ up to an aggregate amount equal to the REMIC II Group III Principal
Loss Allocation Amount, 98% and 2%, respectively; third, to the Uncertificated
Principal Balances of REMIC II Regular Interests III-AA, 98%, M-11, 1% and
III-ZZ, 1%, until the Uncertificated Principal Balance of REMIC II Regular
Interest M-11 has been reduced to zero; fourth, to the Uncertificated Principal
Balances of REMIC II Regular Interests III-AA, 98%, M-10, 1% and III-ZZ, 1%,
until the Uncertificated Principal Balance of REMIC II Regular Interest M-10 has
been reduced to zero; fifth, to the Uncertificated Principal Balances of REMIC
II Regular Interests III-AA, 98%, M-9, 1% and III-ZZ, 1%, until the
Uncertificated Principal Balance of REMIC II Regular Interest M-9 has been
reduced to zero; sixth, to the Uncertificated Principal Balances of REMIC II
Regular Interests III-AA, 98%, M-8, 1% and III-ZZ, 1%, until the Uncertificated
Principal Balance of REMIC II Regular Interest M-8 has been reduced to zero;
seventh, to the Uncertificated Principal Balances of REMIC II Regular Interests
III-AA, 98%, M-7, 1% and III-ZZ, 1%, until the Uncertificated Principal Balance
of REMIC II Regular Interest M-7 has been reduced to zero; eighth, to the
Uncertificated Principal Balances of REMIC II Regular Interests III-AA, 98%,
M-6, 1% and III-ZZ, 1%, until the Uncertificated Principal Balance of REMIC II
Regular Interest M-6 has been reduced to zero; ninth, to the Uncertificated
Principal Balances of REMIC I Regular Interests III-AA, 98%, M-5, 1% and III-ZZ,
1%, until the Uncertificated Principal Balance of REMIC II Regular Interest M-5
has been reduced to zero; tenth, to the

 

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Uncertificated Principal Balances of REMIC II Regular Interests III-AA, 98%,
M-4, 1% and III-ZZ, 1%, until the Uncertificated Principal Balance of REMIC II
Regular Interest M-4 has been reduced to zero; eleventh, to the Uncertificated
Principal Balances of REMIC II Regular Interests III-AA, 98%, M-3, 1% and
III-ZZ, 1%, until the Uncertificated Principal Balance of REMIC II Regular
Interest M-3 has been reduced to zero; twelfth, to the Uncertificated Principal
Balances of REMIC II Regular Interests III-AA, 98%, M-2, 1%, and III-ZZ, 1%,
until the Uncertificated Principal Balances of REMIC II Regular Interest M-2 has
been reduced to zero; and thirteenth, to the Uncertificated Principal Balances
of REMIC II Regular Interests III-AA, 98%, M-1, 1%, and III-ZZ, 1%, until the
Uncertificated Principal Balances of REMIC II Regular Interest M-1 has been
reduced to zero.

Section 5.07 Tax Treatment of Swap Payments and Swap Termination Payments.

For federal income tax purposes, each holder of a Class A or Mezzanine
Certificate is deemed to own an undivided beneficial ownership interest in a
REMIC regular interest and the right to receive payments from the Swap Account
in respect of the Net WAC Rate Carryover Amount and the obligation to make
payments to the Swap Account. For federal income tax purposes, the Securities
Administrator will account for payments to each Class A and Mezzanine
Certificates as follows: each Class A and Mezzanine Certificate will be treated
as receiving their entire payment from REMIC III (regardless of any Swap
Termination Payment or obligation under the Interest Rate Swap Agreement) and
subsequently paying their portion of any Swap Termination Payment in respect of
each such Class’ obligation under the Interest Rate Swap Agreement. In the event
that any such Class is resecuritized in a REMIC, the obligation under the
Interest Rate Swap Agreement to pay any such Swap Termination Payment, will be
made by one or more of the REMIC Regular Interests issued by the
resecuritization REMIC subsequent to such REMIC Regular Interest receiving its
full payment from any such Class A or Mezzanine Certificate. Resecuritization of
any Class A or Mezzanine Certificate in a REMIC will be permissible only if the
Securities Administrator hereunder is the trustee in such resecuritization.

The REMIC regular interest corresponding to a Class A or Mezzanine Certificate
will be entitled to receive interest and principal payments at the times and in
the amounts equal to those made on the certificate to which it corresponds,
except that (i) the maximum interest rate of that REMIC regular interest will
equal the Net WAC Rate computed for this purpose by limiting the Notional Amount
of the Interest Rate Swap Agreement to the aggregate principal balance of the
Mortgage Loans and (ii) any Swap Termination Payment will be treated as being
payable solely from Net Monthly Excess Cashflow. As a result of the foregoing,
the amount of distributions and taxable income on the REMIC regular interest
corresponding to a Class A or Mezzanine Certificate may exceed the actual amount
of distributions on the Class A or Mezzanine Certificate.

Section 5.08 Compliance with Withholding Requirements.

Notwithstanding any other provision of this Agreement, the Trustee and the
Securities Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue discount
that the Trustee reasonably believes are applicable under the Code. The consent
of Certificateholders shall not be required for such

 

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withholding. In the event the Securities Administrator does withhold any amount
from interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Securities
Administrator shall indicate the amount withheld to such Certificateholders.

Section 5.09 Reports Filed with Securities and Exchange Commission.

(a) Within 15 days after each Distribution Date (subject to permitted extensions
under the Exchange Act), the Securities Administrator shall prepare and file on
behalf of the Trust any Form 10-D required by the Exchange Act, in form and
substance as required by the Exchange Act. The Securities Administrator shall
file each Form 10-D with a copy of the related Monthly Statement attached
thereto. Any disclosure in addition to the Monthly Statement that is required to
be included on Form 10-D (“Additional Form 10-D Disclosure”) shall be reported
by the parties set forth on Exhibit Q to the Depositor and the Securities
Administrator and directed and approved by the Depositor pursuant to the
following paragraph, and the Securities Administrator will have no duty or
liability for any failure hereunder to determine or prepare any Additional Form
10-D Disclosure, except as set forth in the next paragraph.

(i) As set forth on Exhibit Q hereto, within 5 calendar days after the related
Distribution Date, (i) the parties described on Exhibit Q shall be required to
provide to the Securities Administrator and to the Depositor, to the extent
known by a responsible officer thereof, in EDGAR-compatible format, or in such
other format as otherwise agreed upon by the Securities Administrator and such
party, the form and substance of any Additional Form 10-D Disclosure, if
applicable, together with an Additional Disclosure Notification in the form of
Exhibit S hereto (an “Additional Disclosure Notification”) and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the case may
be, the inclusion of the Additional Form 10-D Disclosure on Form 10-D. The
Securities Administrator has no duty under this Agreement to monitor or enforce
the performance by the parties listed on Exhibit Q of their duties under this
paragraph or proactively solicit or procure from such parties any Additional
Form 10-D Disclosure information. The Depositor will be responsible for any
reasonable fees and expenses assessed or incurred by the Securities
Administrator in connection with including any Additional Form 10-D Disclosure
on Form 10-D pursuant to this paragraph.

 

  (A)

After preparing the Form 10-D, the Securities Administrator shall, upon request,
forward electronically a copy of the Form 10-D to the Depositor (provided that
such Form 10-D includes any Additional Form 10-D Disclosure). Within two
Business Days after receipt of such copy, but no later than the 12th calendar
day after the Distribution Date, the Depositor shall notify the Securities
Administrator in writing (which may be furnished electronically) of any changes
to or approval of such Form 10-D. In the absence of receipt of any written
changes or approval, or if the Depositor does not request a copy of a Form 10-D,
the Securities Administrator shall be entitled to assume that such Form 10-D is
in final form and the Securities Administrator may proceed with the execution
and filing of the Form 10-D. A duly authorized representative of the Master

 

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Servicer shall sign each Form 10-D. If a Form 10-D cannot be filed on time or if
a previously filed Form 10-D needs to be amended, the Securities Administrator
will follow the procedures set forth in Section 5.09(a)(v). Promptly (but no
later than one Business Day) after filing with the Commission, the Securities
Administrator will make available on its internet website a final executed copy
of each Form 10-D filed by the Securities Administrator. Each party to this
Agreement acknowledges that the performance by the Master Servicer and the
Securities Administrator of its duties under this Section 5.09(a)(i) related to
the timely preparation, execution and filing of Form 10-D is contingent upon
such parties strictly observing all applicable deadlines in the performance of
their duties under this Section 5.09(a)(i). Form 10-D requires the registrant to
indicate (by checking “yes” or “no”) that it “(1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.” The Depositor hereby represents to the Securities Administrator that the
Depositor has filed all such required reports during the preceding 12 months and
that it has been subject to such filing requirement for the past 90 days. The
Depositor shall notify the Securities Administrator in writing, no later than
the fifth calendar day after the related Distribution Date with respect to the
filing of a report on Form 10-D, if the answer to either question should be
“no.” The Securities Administrator shall be entitled to rely on such
representations in preparing, executing and/or filing any such Form 10-D. The
Depositor acknowledges that the performance by the Master Servicer and the
Securities Administrator of its duties under this Section 5.09(a)(i) related to
the timely preparation, execution and filing of Form 10-D is also contingent
upon the Servicer, the Custodian and any Servicing Function Participant strictly
observing deadlines no later than those set forth in this paragraph that are
applicable to the parties to this Agreement in the delivery to the Securities
Administrator of any necessary Additional Form 10-D Disclosure pursuant to any
related servicing agreement, custodial agreement or any other applicable
agreement. Neither the Master Servicer nor the Securities Administrator shall
have any liability for any loss, expense, damage, claim arising out of or with
respect to any failure to properly prepare, execute and/or timely file such Form
10-D, where such failure results from the Securities Administrator’s inability
or failure to obtain or receive, on a timely basis, any information from any
other party hereto or Servicing Function Participant needed to prepare, arrange
for execution or file such Form 10-D, not resulting from its own negligence, bad
faith or willful misconduct.

(ii) On or prior to the 90th day after the end of each fiscal year of the Trust
or such earlier date as may be required by the Exchange Act (the “10-K Filing
Deadline”) (it being understood that the fiscal year for the Trust ends on
December 31st of each year), commencing in March 2007, the Securities
Administrator shall prepare and file on behalf

 

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of the Trust a Form 10-K, in form and substance as required by the Exchange Act.
Each such Form 10-K shall include the following items, in each case to the
extent they have been delivered to the Securities Administrator within the
applicable time frames set forth in this Agreement, any related servicing
agreement or custodial agreement:

 

  (A) an annual compliance statement for each Servicer, the Master Servicer, the
Securities Administrator and any Servicing Function Participant engaged by such
parties (together with each Custodian, each, a “Reporting Servicer”) as
described under Section 3.17 of this Agreement, any related servicing agreement
or custodial agreement, provided, however, that the Securities Administrator, at
its discretion, may omit from the Form 10-K any annual compliance statement that
is not required to be filed with such Form 10-K pursuant to Regulation AB;

 

  (B) (a) the annual reports on assessment of compliance with Servicing Criteria
for each Reporting Servicer, as described under Section 3.18 of this Agreement,
the any related servicing agreement or custodial agreement, and (b) if each
Reporting Servicer’s report on assessment of compliance with Servicing Criteria
identifies any material instance of noncompliance, disclosure identifying such
instance of noncompliance, or if each Reporting Servicer’s report on assessment
of compliance with Servicing Criteria is not included as an exhibit to such Form
10-K, disclosure that such report is not included and an explanation why such
report is not included, provided, however, that the Securities Administrator, at
its discretion, may omit from the Form 10-K any assessment of compliance or any
attestation report described in clause (3) below that is not required to be
filed with such Form 10-K pursuant to Regulation AB;

 

  (C) (a) the registered public accounting firm attestation report for each
Reporting Servicer, as described under Section 3.18 of this Agreement, any
related servicing agreement or custodial agreement, and (b) if any registered
public accounting firm attestation report identifies any material instance of
noncompliance, disclosure identifying such instance of noncompliance, or if any
such registered public accounting firm attestation report is not included as an
exhibit to such Form 10-K, disclosure that such report is not included and an
explanation why such report is not included; and

 

  (D) a Sarbanes-Oxley Certification.

(iii) Any disclosure or information in addition to (A) through (D) in subsection
(ii) above that is required to be included on Form 10-K (“Additional Form 10-K
Disclosure”) shall be reported by the parties set forth on Exhibit T to the
Depositor and the Securities Administrator and directed and approved by the
Depositor pursuant to the following paragraph, and the Securities Administrator
will have no duty or liability for any failure hereunder to determine or prepare
any Additional Form 10-K Disclosure, except as set forth in the next paragraph.

 

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  (A) As set forth on Exhibit T hereto, on or before March 1, but in no event
later than March 15 of each year that the Trust is subject to the Exchange Act
reporting requirements, commencing in 2007, (i) the parties described on Exhibit
T shall be required to provide to the Securities Administrator and to the
Depositor, to the extent known by a responsible officer thereof, in
EDGAR-compatible format, or in such other format as otherwise agreed upon by the
Securities Administrator and such party, the form and substance of any
Additional Form 10-K Disclosure, if applicable, together with an Additional
Disclosure Notification, and (ii) the Depositor will approve, as to form and
substance, or disapprove, as the case may be, the inclusion of the Additional
Form 10-K Disclosure on Form 10-K. The Securities Administrator has no duty
under this Agreement to monitor or enforce the performance by the parties listed
on Exhibit T of their duties under this paragraph or proactively solicit or
procure from such parties any Additional Form 10-K Disclosure information. The
Depositor will be responsible for any reasonable fees and expenses assessed or
incurred by the Securities Administrator in connection with including any
Additional Form 10-K Disclosure on Form 10-K pursuant to this paragraph.

 

  (B)

After preparing the Form 10-K, the Securities Administrator shall, upon request,
forward electronically a copy of the Form 10-K to the Depositor. Within three
Business Days after receipt of such copy, but no later than March 25th, the
Depositor shall notify the Securities Administrator in writing (which may be
furnished electronically) of any changes to or approval of such Form 10-K. In
the absence of receipt of any written changes or approval, or if the Depositor
does not request a copy of a Form 10-K, the Securities Administrator shall be
entitled to assume that such Form 10-K is in final form and the Securities
Administrator may proceed with the execution and filing of the Form 10-K. A
senior officer of the Master Servicer in charge of the master servicing function
shall sign the Form 10-K. If a Form 10-K cannot be filed on time or if a
previously filed Form 10-K needs to be amended, the Securities Administrator
will follow the procedures set forth in Section 5.09(a)(v). Promptly (but no
later than one Business Day) after filing with the Commission, the Securities
Administrator will make available on its internet website a final executed copy
of each Form 10-K filed by the Securities Administrator. The parties to this
Agreement acknowledge that the performance by the Master Servicer and the
Securities Administrator of its duties under this Section 5.09(a)(iii) related
to the timely preparation, execution and filing of Form 10-K is contingent upon
such parties strictly observing all applicable deadlines in the performance of
their duties under this Section 5.09(a)(iii), Section 5.09(a)(iii)(C),
Section 3.17 and Section 3.18. Form 10-K requires the registrant to indicate (by
checking “yes” or “no”) that it “(1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.” The
Depositor

 

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hereby represents to the Securities Administrator that the Depositor has filed
all such required reports during the preceding 12 months and that it has been
subject to such filing requirement for the past 90 days. The Depositor shall
notify the Securities Administrator in writing, no later than the 15th calendar
day of March in any year in which the Trust is subject to the reporting
requirements of the Exchange Act, if the answer to either question should be
“no.” The Securities Administrator shall be entitled to rely on such
representations in preparing, executing and/or filing any such Form 10-K. The
Depositor acknowledges that the performance by the Master Servicer and the
Securities Administrator of its duties under this Section 5.09(iii) related to
the timely preparation, execution and filing of Form 10-K is also contingent
upon the Servicer, the Custodian and any Servicing Function Participant strictly
observing deadlines no later than those set forth in this paragraph that are
applicable to the parties to this Agreement in the delivery to the Securities
Administrator of any necessary Additional Form 10-K Disclosure, any annual
statement of compliance and any assessment of compliance and attestation
pursuant to any related servicing agreement, any custodial agreement or any
other applicable agreement. Neither the Master Servicer nor the Securities
Administrator shall have any liability for any loss, expense, damage or claim
arising out of or with respect to any failure to properly prepare, execute
and/or timely file such Form 10-K, where such failure results from the
Securities Administrator’s inability or failure to obtain or receive, on a
timely basis, any information from any other party hereto or any Servicing
Function Participant needed to prepare, arrange for execution or file such Form
10-K, not resulting from its own negligence, bad faith or willful misconduct.

 

  (C)

Each Form 10-K shall include a Sarbanes-Oxley Certification. Each of the
Servicer, the Master Servicer and the Securities Administrator shall use its
best reasonable efforts to provide, and each such party shall use its best
reasonable efforts to cause any Servicing Function Participant engaged by it to
provide, to the Person who signs the Sarbanes-Oxley Certification (the
“Certifying Person”), on or before March 1, but in no event later than March 15,
of each year in which the Trust is subject to the reporting requirements of the
Exchange Act and otherwise within a reasonable period of time upon request, a
certification (each, a “Back-Up Certification”), in the form attached hereto as
Exhibit U, upon which the Certifying Person, the entity for which the Certifying
Person acts as an officer, and such entity’s officers, directors and Affiliates
(collectively with the Certifying Person, “Certification Parties”) can
reasonably rely. The senior officer of the Master Servicer in charge of the
master servicing function shall serve as the Certifying Person on behalf of the
Trust. Such officer of the Certifying Person can be contacted by e-mail at
cts.sec.notifications@wellsfargo.com or by facsimile at 410-715-2380. In the
event any such party or any Servicing Function Participant engaged by such party
is terminated or resigns pursuant to the terms of this Agreement, or any
applicable sub-servicing agreement, as the case may

 

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be, such party shall provide a Back-Up Certification to the Certifying Person
pursuant to this Section 5.09(a)(iii)(C) with respect to the period of time it
was subject to this Agreement or any applicable sub-servicing agreement, as the
case may be. Notwithstanding the foregoing, (i) the Master Servicer and the
Securities Administrator shall not be required to deliver a Back-Up
Certification to each other if both are the same Person and the Master Servicer
is the Certifying Person and (ii) the Master Servicer shall not be obligated to
sign the Sarbanes-Oxley Certification in the event that it does not receive any
Back-Up Certification required to be furnished to it pursuant to this section or
any servicing agreement or custodial agreement.

(iv) Within four (4) Business Days after the occurrence of an event requiring
disclosure on Form 8-K (each such event, a “Reportable Event”), and if requested
by the Depositor, the Securities Administrator shall prepare and file on behalf
of the Trust any Form 8-K, as required by the Exchange Act, provided that the
Depositor shall file the initial Form 8-K in connection with the issuance of the
Certificates. Any disclosure or information related to a Reportable Event or
that is otherwise required to be included on Form 8-K other than the initial
Form 8-K (“Form 8-K Disclosure Information”) shall be reported by the parties
set forth on Exhibit R to the Depositor and the Securities Administrator and
directed and approved by the Depositor pursuant to the following paragraph, and
the Securities Administrator will have no duty or liability for any failure
hereunder to determine or prepare any Form 8-K Disclosure Information or any
Form 8-K, except as set forth in the next paragraph.

 

  (A) As set forth on Exhibit R hereto, for so long as the Trust is subject to
the Exchange Act reporting requirements, no later than the close of business
(New York City time) on the 2nd Business Day after the occurrence of a
Reportable Event (i) the parties to this transaction shall be required to
provide to the Securities Administrator and to the Depositor, to the extent
known by a responsible officer thereof, in EDGAR-compatible form, or in such
other form as otherwise agreed upon by the Securities Administrator and such
party, the form and substance of any Form 8-K Disclosure Information, if
applicable, together with an Additional Disclosure Notification and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the case may
be, the inclusion of the Form 8-K Disclosure Information. The Depositor will be
responsible for any reasonable fees and expenses assessed or incurred by the
Securities Administrator in connection with including any Form 8-K Disclosure
Information on Form 8-K pursuant to this paragraph.

 

  (B)

After preparing the Form 8-K, the Securities Administrator shall, upon request,
forward electronically a copy of the Form 8-K to the Depositor. Promptly, but no
later than the close of business on the third Business Day after the Reportable
Event, the Depositor shall notify the Securities Administrator in writing (which
may be furnished electronically) of any changes to or approval of such Form 8-K.
In the absence of receipt of any

 

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written changes or approval, or if the Depositor does not request a copy of a
Form 8-K, the Securities Administrator shall be entitled to assume that such
Form 8-K is in final form and the Securities Administrator may proceed with the
execution and filing of the Form 8-K. A duly authorized representative of the
Master Servicer shall sign each Form 8-K. If a Form 8-K cannot be filed on time
or if a previously filed Form 8-K needs to be amended, the Securities
Administrator will follow the procedures set forth in Section 5.09(a)(v).
Promptly (but no later than one Business Day) after filing with the Commission,
the Securities Administrator will make available on its internet website a final
executed copy of each Form 8-K filed by it. The parties to this Agreement
acknowledge that the performance by the Master Servicer and the Securities
Administrator of its duties under this Section 5.09(a)(iv) related to the timely
preparation, execution and filing of Form 8-K is contingent upon such parties
strictly observing all applicable deadlines in the performance of their duties
under this Section 5.09(a)(iv). The Depositor acknowledges that the performance
by the Master Servicer and the Securities Administrator of its duties under this
Section 5.09(a)(iv) related to the timely preparation, execution and filing of
Form 8-K is also contingent upon the Servicer, the Custodian and any Servicing
Function Participant strictly observing deadlines no later than those set forth
in this paragraph that are applicable to the parties to this Agreement in the
delivery to the Securities Administrator of any necessary Form 8-K Disclosure
Information pursuant to any related servicing agreement, any custodial agreement
or any other applicable agreement. Neither the Master Servicer nor the
Securities Administrator shall have any liability for any loss, expense, damage,
claim arising out of or with respect to any failure to properly prepare, execute
and/or timely file such Form 8-K, where such failure results from the Securities
Administrator’s inability or failure to obtain or receive, on a timely basis,
any information from any other party hereto or any Servicer, Custodian or
Servicing Function Participant needed to prepare, arrange for execution or file
such Form 8-K, not resulting from its own negligence, bad faith or willful
misconduct.

(v) On or prior to January 30 of the first year in which the Securities
Administrator is able to do so under applicable law, the Securities
Administrator shall prepare and file a Form 15 Suspension Notification relating
to the automatic suspension of reporting in respect of the Trust under the
Exchange Act.

 

  (A)

On or prior to January 30 of each succeeding fiscal year (such fiscal year being
a calendar year) for the Trust Fund after the filing of a Form 15 Suspension
Notification, the Securities Administrator shall determine if the aggregate
number of Depository Participants holding a position in all the classes of
Offered Certificates outstanding as of the beginning of such fiscal year is
equal to or greater than the number set forth in Section 15(d) of the Exchange
Act (which as of the Closing Date is 300), which would cause the Trust Fund to
again become subject to the reporting

 

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requirements of the Exchange Act, in which case (i) such year is referred to in
this Agreement as an “SEC Reporting Year,” and (ii) the Securities Administrator
shall recommence preparing and filing reports on Form 8-K, 10-D and Form 10-K as
required pursuant to this Section until such time as the Securities
Administrator is again able to file a Form 15 Suspension Notification with
respect to the Trust Fund with the Commission.

 

  (B) In the event that the Securities Administrator is unable to timely file
with the Commission all or any required portion of any Form 8-K, 10-D or 10-K
required to be filed by this Agreement because required disclosure information
was either not delivered to it or delivered to it after the delivery deadlines
set forth in this Agreement or for any other reason, the Securities
Administrator will promptly notify electronically the Depositor. In the case of
Form 10-D and 10-K, the parties to this Agreement will cooperate to prepare and
file a Form 12b 25 and a 10-D/A and 10-K/A as applicable, pursuant to Rule 12b
25 of the Exchange Act. In the case of Form 8-K, the Securities Administrator
will, upon receipt of all required Form 8-K Disclosure Information and upon the
approval and direction of the Depositor, include such disclosure information on
the next Form 10-D. In the event that any previously filed Form 8-K, 10-D or
10-K needs to be amended in connection with any Additional Form 10-D Disclosure
(other than, in the case of Form 10-D, for the purpose of restating any Monthly
Statement), Additional Form 10-K Disclosure or Form 8-K Disclosure Information,
the Securities Administrator will electronically notify the Depositor and such
other parties to the transaction as are affected by such amendment, and such
parties will cooperate to prepare any necessary 8-K/A, 10-D/A or 10-K/A. Any
Form 15, Form 12b 25 or any amendment to Form 8-K, 10-D or 10-K shall be signed
by a duly authorized representative, or senior officer in charge of master
servicing, as applicable, of the Master Servicer. The parties to this Agreement
acknowledge that the performance by the Master Servicer and the Securities
Administrator of its duties under this Section 5.09(a)(v) related to the timely
preparation, execution and filing of Form 15, a Form 12b 25 or any amendment to
Form 8-K, 10-D or 10-K is contingent upon each such party performing its duties
under this Section. Neither the Master Servicer nor the Securities Administrator
shall have any liability for any loss, expense, damage, claim arising out of or
with respect to any failure to properly prepare, execute and/or timely file any
such Form 15, Form 12b 25 or any amendments to Forms 8-K, 10-D or 10-K, where
such failure results from the Securities Administrator’s inability or failure to
obtain or receive, on a timely basis, any information from any other party
hereto or any Servicing Function Participant needed to prepare, arrange for
execution or file such Form 15, Form 12b 25 or any amendments to Forms 8-K, 10-D
or 10-K, not resulting from its own negligence, bad faith or willful misconduct.

 

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(b) The Securities Administrator shall have no responsibility to file any items
other than those specified in this Section 5.09; provided, however, the
Securities Administrator will cooperate with the Depositor in connection with
any additional filings with respect to the Trust Fund as the Depositor deems
necessary under the Exchange Act. Fees and expenses incurred by the Securities
Administrator in connection with this Section 5.09 shall not be reimbursable
from the Trust Fund.

(c) Each of the parties agrees to provide to the Securities Administrator such
additional information related to such party as the Securities Administrator may
reasonably request, including evidence of the authorization of the person
signing any certificate or statement, financial information and reports, and
such other information related to such party or its performance hereunder.

(d) Any notice or notification required to be delivered by the Securities
Administrator or Master Servicer to the Depositor pursuant to this 5.09, may be
delivered via facsimile to (212) 278-7320, via email to Abner.Figueroa@sgcib.com
or telephonically by calling Abner Figueroa at (212) 278-5384.

(e) The Servicer shall indemnify and hold harmless the Master Servicer, the
Securities Administrator, the Trustee and the Depositor and their respective
officers, directors and affiliates (each, an “Indemnified Party”), 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 (i) a breach of the obligations of the Servicer
under Section 3.17, Section 3.18 or Section 5.09, including any failure by the
Servicer (or any Servicing Function Participant engaged by the Servicer), to
provide any Back-Up Certification, annual statement of compliance, annual
assessment of compliance with Servicing Criteria or attestation report, any
information, data or materials required to be included in any Exchange Act
report or any other information or material when and as required under Sections
3.17, 3.18 or 5.09, or the Servicer’s negligence, bad faith or willful
misconduct in connection therewith, (ii) any material misstatement or omission
contained in any information, disclosure, report, certification, data,
accountants’ letter or other material provided under Sections 3.17, 3.18 and
5.09 to the Master Servicer or the Securities Administrator by or on behalf of
the Servicer or on behalf of any Servicing Function Participant engaged by the
Servicer), including any material misstatement or material omission in (A) any
Back-Up Certification, annual statement of compliance, annual assessment of
compliance with Servicing Criteria or attestation report delivered by the
Servicer, or by any Servicing Function Participant engaged by it, pursuant to
this Agreement, or (B) any Additional Form 10-D Disclosure, Additional Form 10-K
Disclosure or Form 8-K Disclosure Information provided by the Servicer and
(iii) any breach by the Servicer of a representation or warranty set forth in
Section 13.02 or in a writing furnished pursuant to Section 13.02(b) and made as
of a date prior to the closing date of the related Securitization Transaction,
to the extent that such breach is not cured by such closing date, or any breach
by the Company of a representation or warranty in a writing furnished pursuant
to Section 13.02(b) to the extent made as of a date subsequent to such closing
date.

If the indemnification provided for herein is unavailable or insufficient to
hold harmless an Indemnified Party, then the Servicer agrees that it shall
contribute to the amount paid or payable by such Indemnified Party as a result
of any claims, losses, damages or liabilities

 

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incurred by such Indemnified Party in such proportion as is appropriate to
reflect the relative fault of such Indemnified Party on the one hand and the
Servicer on the other.

In the case of any failure of performance described in clause (e)(i) of this
Section, the Servicer shall promptly reimburse the Master Servicer, the
Securities Administrator and the Depositor, as applicable, for all costs
reasonably incurred by each such party in order to obtain the information,
report, certification, accountants’ letter or other material not delivered as
required by the Servicer, or any Servicing Function Participant engaged by it.

This indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.

(f) To the extent that, following the Closing Date, the Depositor certifies that
reports and certifications differing from those required under this Section 5.09
comply with the reporting requirements under the Exchange Act, the Master
Servicer, the Servicer, the Securities Administrator and the Trustee hereby
agrees that it will reasonably cooperate to amend the provisions of this
Section 5.09 in order to comply with such amended reporting requirements and
such amendment of this Section 5.09. Any such amendment may result in the
reduction of the reports filed by the Depositor under the Exchange Act.
Notwithstanding the foregoing, the Securities Administrator shall not be
obligated to enter into any amendment pursuant to this Section that adversely
affects its obligations and immunities under this Agreement.

ARTICLE VI

THE CERTIFICATES

Section 6.01 The Certificates.

Each of the Class A Certificates, the Mezzanine Certificates, the Class P
Certificates, the Class CE Certificates and the Residual Certificates shall be
substantially in the forms annexed hereto as exhibits, and shall, on original
issue, be executed and authenticated by the Securities Administrator and
delivered by the Trustee to or upon the order of the Depositor concurrently with
the sale and assignment to the Trustee of the Trust Fund. The Class A
Certificates and the Mezzanine Certificates shall be initially evidenced by one
or more Certificates representing a Percentage Interest with a minimum dollar
denomination of $100,000 and integral dollar multiples of $1.00 in excess
thereof, except that one Certificate of each such Class of Certificates may be
in a different denomination so that the sum of the denominations of all
outstanding Certificates of such Class shall equal the Certificate Principal
Balance or Notional Amount of such Class on the Closing Date. The Class P
Certificates, the Class CE Certificates and the Residual Certificates are
issuable in any Percentage Interests; provided, however, that the sum of all
such percentages for each such Class totals 100% and no more than ten
Certificates of each Class may be issued and outstanding at any one time.

The Certificates shall be executed on behalf of the Trust by manual or facsimile
signature on behalf of the Securities Administrator by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Securities Administrator shall bind the Trust,

 

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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 Certificate. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
such Certificate shall have been manually authenticated by the Securities
Administrator substantially in the form provided for herein, and such
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Subject to Section 6.02, the Class A Certificates and the Mezzanine Certificates
shall be Book-Entry Certificates. The other Classes of Certificates shall not be
Book-Entry Certificates.

The Class M-10 and Class M-11 Certificates offered and sold in reliance on the
exemption from registration under Rule 144A shall be issued initially in the
form of one or more Global Securities with the applicable legends set forth in
Exhibit A-8, added to the forms of such Certificates (each, a “Restricted Global
Security”) and the Class M-10 and Class M-11 Certificates sold in offshore
transactions in reliance on Regulation S shall be issued initially in the form
of one or more Global Securities with the applicable legends set forth in
Exhibit A-8, hereto added to the forms of such Certificates (each, a “Regulation
S Global Security”).

Section 6.02 Registration of Transfer and Exchange of Certificates.

(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Securities Administrator shall initially serve as
Certificate Registrar for the purpose of registering Certificates and transfers
and exchanges of Certificates as herein provided.

Upon surrender for registration of transfer of any Certificate at any office or
agency of the Certificate Registrar maintained for such purpose pursuant to the
foregoing paragraph and, in the case of a Residual Certificate, upon
satisfaction of the conditions set forth below, the Securities Administrator on
behalf of the Trust shall execute and authenticate and the Securities
Administrator on behalf of the Trust shall deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
aggregate Percentage Interest.

At the option of the Certificateholders, Certificates may be exchanged for other
Certificates in authorized denominations and the same aggregate Percentage
Interests, upon surrender of the Certificates to be exchanged at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Securities Administrator shall execute and authenticate on behalf of the Trust
and the Securities Administrator shall deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall (if so
required by the Securities Administrator or the Certificate Registrar) be duly
endorsed by, or be accompanied by a written instrument of transfer satisfactory
to the Securities Administrator and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing. By acceptance of
a Restricted Global Security or a Regulation S Global Security, whether upon
original issuance or subsequent transfer, each Holder or Certificate Owner of
such a Certificate

 

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

(b) Except as provided in paragraph (c) below, the Book-Entry Certificates shall
at all times remain registered in the name of the Depository or its nominee and
at all times: (i) registration of such Certificates may not be transferred by
the Securities Administrator except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Securities Administrator
shall for all purposes deal with the Depository as representative of the
Certificate Owners of the Certificates for purposes of exercising the rights of
Holders under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; (vi) the Securities Administrator may
rely and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and Persons
shown on the books of such indirect participating firms as direct or indirect
Certificate Owners; and (vii) the direct participants of the Depository shall
have no rights under this Agreement under or with respect to any of the
Certificates held on their behalf by the Depository, and the Depository may be
treated by the Securities Administrator and its agents, employees, officers and
directors as the absolute owner of the Certificates for all purposes whatsoever.

All transfers by Certificate Owners of Book-Entry Certificates shall be made in
accordance with the procedures established by the Depository Participant or
brokerage firm representing such Certificate Owners. Each Depository Participant
shall only transfer Book- Entry Certificates of Certificate Owners that it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository’s normal procedures. The parties hereto are hereby authorized to
execute a Letter of Representations with the Depository or take such other
action as may be necessary or desirable to register a Book-Entry Certificate to
the Depository. In the event of any conflict between the terms of any such
Letter of Representation and this Agreement, the terms of this Agreement shall
control.

(c) If (i)(x) the Depository or the Depositor advises the Securities
Administrator in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as Depository and (y) the Depositor is
unable to locate a qualified successor or (ii) after the occurrence of a
Servicer Event of Termination, the Certificate Owners of the Book-Entry
Certificates representing Percentage Interests of such Classes aggregating not
less than 51% advise the Securities Administrator and Depository through the
Financial Intermediaries and the Depository Participants in writing that the
continuation of a book-entry system through the Depository to the exclusion of
definitive, fully registered certificates (the “Definitive Certificates”) to
Certificate Owners is no longer in the best interests of the Certificate Owners.
Upon surrender to the Certificate Registrar of the Book-Entry Certificates by
the Depository, accompanied by registration instructions from the Depository for
registration, the Securities Administrator shall, at the Depositor’s expense, in
the case of (i) or (ii) above, or the Servicer’s expense, in the case of
(iii) above, execute on behalf of the Trust and authenticate the Definitive

 

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Certificates. Neither the Depositor, the Servicer, the Master Servicer, the
Trustee nor the Securities Administrator shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Securities Administrator, the Trustee, the Certificate
Registrar, the Master Servicer, the Servicer and the Depositor shall recognize
the Holders of the Definitive Certificates as Certificateholders hereunder.

(d) No transfer, sale, pledge or other disposition of any Class M-10, Class M-11
and Class CE Certificate, Class P Certificate or Residual Certificate (the
“Private Certificates”) shall be made unless such disposition is exempt from the
registration requirements of the Securities Act, and any applicable state
securities laws or is made in accordance with the Securities Act and any
applicable state securities laws. In the event of any such transfer (other than
in connection with (i) the initial transfer of any such Certificate by the
Depositor to an Affiliate of the Depositor or, in the case of the Class R
Certificates, the first transfer by an Affiliate of the Depositor, (ii) the
transfer of any such Class CE, Class P or Residual Certificate to the issuer
under the Indenture or the indenture trustee under the Indenture or (iii) a
transfer of any such Class CE, Class P or Residual Certificate from the issuer
under the Indenture or the indenture trustee under the Indenture to the
Depositor or an Affiliate of the Depositor), the Securities Administrator shall
require the transferor to execute a transferor certificate (in substantially the
form attached hereto as Exhibit L) and, in the case of Certificates offered and
sold in reliance on the exemption from registration under Rule 144A, the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit J) acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Securities Administrator certifying to the
Depositor and the Securities Administrator the facts surrounding such transfer,
which investment letter shall not be an expense of the Securities Administrator
or the Depositor. The Holder of a Class CE Certificate, Class P Certificate or
Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Securities Administrator and the Depositor 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.

(e) (i) Notwithstanding the foregoing, (A) in the event of any such transfer of
any Ownership Interest in any Restricted Global Security, except with respect to
the initial transfer of any such Ownership Interest by the Depositor, such
transfer shall be required to be made in reliance upon Rule 144A under the
Securities Act, and the transferor will be deemed to have made each of the
transferor representations and warranties set forth Exhibit L hereto in respect
of such interest as if it was evidenced by a Definitive Certificate and the
transferee will be deemed to have made each of the transferee representations
and warranties set forth Exhibit J hereto in respect of such interest as if it
was evidenced by a Definitive Certificate and (B), in the event of any such
transfer of any Ownership Interest in any Regulation S Global Security, except
with respect to the initial transfer of any such Ownership Interest by the
Depositor, such transfer shall be required to be made in reliance upon
Regulation S under the 1933 Act, and (x) the transferor of such a Certificate
shall be deemed to have represented and warranted that such Certificates are
being offered, resold, pledged or otherwise transferred only (A) to a person
which the seller reasonably believes is a “qualified institutional buyer” (as
defined in Rule 144A under the 1933 Act), that is purchasing such Certificates
for its own account or for the account of a “qualified institutional buyer” to
which notice is given that the transfer is being made in reliance on Rule 144A
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compliance with the provisions of Regulation S, in each case in compliance with
the requirements of this Agreement, and (y) and the transferee of such a
Certificate shall be deemed to have represented and warranted that (i) such
Person (A) if the offer or sale was made to it prior to the expiration of the
40-day distribution compliance period within the meaning of Regulation S, is not
a U.S. person and (B) was, at the time the buy order was originated, outside the
United States and (ii) such Person understands that such Certificates have not
been registered under the 1933 Act, and that (x) until the expiration of the
40-day distribution compliance period (within the meaning of Regulation S), no
offer, sale, pledge or other transfer of such Certificates or any interest
therein shall be made in the United States or to or for the account or benefit
of a U.S. person and (y) if in the future it decides to offer, resell, pledge or
otherwise transfer such Certificates, such Certificates may be offered, resold,
pledged or otherwise transferred only (A) to a person which the seller
reasonably believes is a “qualified institutional buyer”, that is purchasing
such Certificates for its own account or for the account of a “qualified
institutional buyer” to which notice is given that the transfer is being made in
reliance on Rule 144A or (B) in an offshore transaction (as defined in
Regulation S) in compliance with the provisions of Regulation S, in each case in
compliance with the requirements of this Agreement.

The Certificate Owner of any such Ownership Interest in any such Restricted
Global Security or Regulation S Global Security desiring to effect such transfer
shall, and does hereby agree to, indemnify the Securities Administrator and the
Depositor 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.

(ii) Notwithstanding any provision to the contrary herein, so long as a Global
Security representing any of the Class M-10 or Class M-11 Certificates remains
outstanding and is held by or on behalf of DTC, transfers of a Global Security
representing any such Certificates, in whole or in part, shall only be made in
accordance with Section 6.02.

 

  (A) Subject to clauses (B) and (C) of this Section 6.02(d)(iii), transfers of
a Global Security representing any of the Class M-10 or Class M-11 Certificates
shall be limited to transfers of such Global Security, in whole or in part, to
nominees of DTC or to a successor of DTC or such successor’s nominee.

 

  (B)

Restricted Global Security to Regulation S Global Security. If a holder of a
beneficial interest in a Restricted Global Security deposited with or on behalf
of DTC wishes at any time to exchange its interest in such Restricted Global
Security for an interest in a Regulation S Global Security, or to transfer its
interest in such Restricted Global Security to a Person who wishes to take
delivery thereof in the form of an interest in a Regulation S Global Security,
such holder, provided such holder is not a U.S. person, may, subject to the
rules and procedures of DTC, exchange or cause the exchange of such interest for
an equivalent beneficial interest in the Regulation S Global Security. Upon
receipt by the Certificate Registrar of (I) instructions from DTC directing the
Certificate Registrar to cause to be credited a beneficial interest in a
Regulation S Global

 

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Security in an amount equal to the beneficial interest in such Restricted Global
Security to be exchanged but not less than the minimum denomination applicable
to such holder’s Certificates held through a Regulation S Global Security, (II)
a written order given in accordance with DTC’s procedures containing information
regarding the participant account of DTC and, in the case of a transfer pursuant
to and in accordance with Regulation S, the Euroclear or Clearstream account to
be credited with such increase and (III) a certificate in the form of Exhibit
O-1 hereto given by the holder of such beneficial interest stating that the
exchange or transfer of such interest has been made in compliance with the
transfer restrictions applicable to the Regulation S Global Securities,
including that the holder is not a U.S. person, and pursuant to and in
accordance with Regulation S, the Certificate Registrar shall reduce the
principal amount of the Restricted Global Security and increase the principal
amount of the Regulation S Global Security by the aggregate principal amount of
the beneficial interest in the Restricted Global Security to be exchanged, and
shall instruct Euroclear or Clearstream, as applicable, concurrently with such
reduction, to credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Regulation S Global
Security equal to the reduction in the principal amount of the Restricted Global
Security.

 

  (C)

Regulation S Global Security to Restricted Global Security. If a holder of a
beneficial interest in a Regulation S Global Security deposited with or on
behalf of DTC wishes at any time to transfer its interest in such Regulation S
Global Security to a Person who wishes to take delivery thereof in the form of
an interest in a Restricted Global Security, such holder may, subject to the
rules and procedures DTC, exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Restricted Global Security. Upon receipt by
the Certificate Registrar of (I) instructions from DTC directing the Certificate
Registrar to cause to be credited a beneficial interest in a Restricted Global
Security in an amount equal to the beneficial interest in such Regulation S
Global Security to be exchanged but not less than the minimum denomination
applicable to such holder’s Certificates held through a Restricted Global
Security, to be exchanged, such instructions to contain information regarding
the participant account with DTC to be credited with such increase, and (II) a
certificate in the form of Exhibit O-2 hereto given by the holder of such
beneficial interest and stating, among other things, that the Person
transferring such interest in such Regulation S Global Security reasonably
believes that the Person acquiring such interest in a Restricted Global Security
is a “qualified institutional buyer” (as such term is defined in Rule 144A under
the 1933 Act), is obtaining such beneficial interest in a transaction meeting
the requirements of Rule 144A and in accordance with any applicable securities
laws of any State of the United States or any other jurisdiction, then the
Certificate Registrar will reduce the principal amount of the Regulation S
Global Security and increase the principal amount of the

 

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Restricted Global Security by the aggregate principal amount of the beneficial
interest in the Regulation S Global Security to be transferred and the
Certificate Registrar shall instruct DTC, concurrently with such reduction, to
credit or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Restricted Global Security equal to
the reduction in the principal amount of the Regulation S Global Security.

 

  (D) Other Exchanges. In the event that a Global Security representing a
Restricted Note is exchanged for Certificates in definitive registered form,
pursuant to Section 6.02(c), such Certificates may be exchanged for one another
only in accordance with such procedures as are substantially consistent with the
provisions above (including certification requirements intended to insure that
such transfers comply with Rule 144A, or are to non U.S. persons in compliance
with Regulation S under the 1933 Act, as the case may be and a requirement that
the Certificate Owner make the certifications set forth in Section 6.02(e)
above), and as may be from time to time adopted by the Securities Administrator.

 

  (E) Restrictions on U.S. Transfers. Transfers of interests in a Regulation S
Global Security to U.S. persons shall be limited to transfers made pursuant to
the provisions of Section 6.02(d)(iii)(C).

(f) (i) In the case of any Class A, Class M, Class CE, Class P or Residual
Certificate presented for registration in the name of any Person, the
prospective transferee shall be required to provide the Depositor and the
Securities Administrator with a certification to the effect set forth in Exhibit
N (provided, however that such certification shall have been deemed to have been
given by a Beneficial Owner who acquires a Book-Entry Certificate), which the
Securities Administrator may rely upon without further inquiry or investigation,
or such other certifications as the Securities Administrator may deem desirable
or necessary in order to establish that such transferee or the Person in whose
name such registration is requested is not an employee benefit plan or other
plan subject to the prohibited transaction provisions of ERISA or Section 4975
of the Code (a “Plan”), or any Person (including, without limitation, an
insurance company investing its general account, an investment manager, a named
fiduciary or a trustee of any Plan) who is using “plan assets,” within the
meaning of the U.S. Department of Labor regulation promulgated at 29 C.F.R. §
2510.3-101 (as modified by Section 3(42) of ERISA), of any Plan (a “Plan
Investor”), to effect such acquisition.

(ii) Any Transferee of a Class A, Class M, Class CE, Class P or Residual
Certificate that does not deliver the certification referred to in clause
(i) above will be deemed to have represented by virtue of its acquisition or
holding of such Certificate (or any interest therein) that such Transferee is
not a Plan or a Plan Investor.

(iii) If any Class A, Class M, Class CE, Class P or Residual Certificate (or any
interest therein) is acquired or held by any Person that does not satisfy the
conditions described in paragraph (ii) above, then the last preceding Transferee
that is not a Plan or a Plan Investor shall be restored, to the extent permitted
by law, to all rights and

 

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obligations as Certificate Owner thereof retroactive to the date of such
Transfer of such Certificate. The Securities Administrator shall be under no
liability to any Person for making any payments due on such Certificate to such
preceding Transferee.

(iv) Any purported Certificate Owner whose acquisition or holding of any
Class A, Class M, Class CE, Class P or Residual Certificate (or any interest
therein) was effected in violation of the restrictions in this Section 6.02(f)
shall indemnify and hold harmless the Depositor, the Securities Administrator,
the Trustee, the Master Servicer, any underwriter and the Trust Fund from and
against any and all liabilities, claims, costs or expenses incurred by such
parties as a result of such acquisition or holding.

(g) (i) (Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Securities Administrator or its designee under
clause (iii)(A) below to deliver payments to a Person other than such Person and
to negotiate the terms of any mandatory sale under clause (iii)(B) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale. The rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:

 

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

 

  (B) In connection with any proposed Transfer of any Ownership Interest in a
Residual Certificate, the Securities Administrator shall require delivery to it,
and shall not register the Transfer of any Residual Certificate until its
receipt of,

(i) an affidavit and agreement (a “Transfer Affidavit and Agreement,” in the
form attached hereto as Exhibit K) from the proposed Transferee, in form and
substance satisfactory to the Securities Administrator, representing and
warranting, among other things, that it is a Permitted Transferee, that it is
not acquiring its Ownership Interest in the Residual Certificate that is the
subject of the proposed Transfer as a nominee, trustee or agent for any Person
who is not a Permitted Transferee, that for so long as it retains its Ownership
Interest in a Residual Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions of this Section 6.02(f) and
agrees to be bound by them, and

(ii) a certificate, in the form attached hereto as Exhibit L, from the Holder
wishing to transfer the Residual Certificate, in form and substance satisfactory
to the Securities Administrator, representing and warranting, among other
things, that no purpose of the proposed Transfer is to impede the assessment or
collection of tax.

 

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  (C) Notwithstanding the delivery of a Transfer Affidavit and Agreement by a
proposed Transferee under clause (B) above, if a Responsible Officer of the
Securities Administrator who is assigned to this Agreement has actual knowledge
that the proposed Transferee is not a Permitted Transferee, no Transfer of an
Ownership Interest in a Residual Certificate to such proposed Transferee shall
be effected.

 

  (D) Each Person holding or acquiring any Ownership Interest in a Residual
Certificate shall agree (x) to require a Transfer Affidavit and Agreement from
any other Person to whom such Person attempts to transfer its Ownership Interest
in a Residual Certificate and (y) not to transfer its Ownership Interest unless
it provides a certificate to the Securities Administrator in the form attached
hereto as Exhibit L.

 

  (E) Each Person holding or acquiring an Ownership Interest in a Residual
Certificate, by purchasing an Ownership Interest in such Certificate, agrees to
give the Securities Administrator written notice that it is a “pass-through
interest holder” within the meaning of Temporary Treasury Regulations
Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership Interest in
a Residual Certificate, if it is, or is holding an Ownership Interest in a
Residual Certificate on behalf of, a “pass-through interest holder.”

(ii) The Securities Administrator shall register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and Agreement,
a certificate of the Holder requesting such transfer in the form attached hereto
as Exhibit L and all of such other documents as shall have been reasonably
required by the Securities Administrator as a condition to such registration.
Transfers of the Residual Certificates to Non-United States Persons and
Disqualified Organizations (as defined in Section 860E(e)(5) of the Code) are
prohibited.

 

  (A)

If any Disqualified Organization shall become a holder of a Residual
Certificate, then the last preceding Permitted Transferee shall be restored, to
the extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Residual
Certificate. If a Non-United States Person shall become a holder of a Residual
Certificate, then the last preceding United States Person shall be restored, to
the extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Residual
Certificate. If a transfer of a Residual Certificate is disregarded pursuant to
the provisions of Treasury Regulations Section 1.860E-1 or Section 1.860G-3,
then the last preceding Permitted Transferee shall be restored, to the extent
permitted by law, to all rights and obligations as Holder thereof retroactive to
the date of registration of

 

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such Transfer of such Residual Certificate. The Securities Administrator shall
be under no liability to any Person for any registration of Transfer of a
Residual Certificate that is in fact not permitted by this Section 6.02(f) or
for making any payments due on such Certificate to the holder thereof or for
taking any other action with respect to such holder under the provisions of this
Agreement.

 

  (B) If any purported Transferee shall become a Holder of a Residual
Certificate in violation of the restrictions in this Section 6.02(f) and to the
extent that the retroactive restoration of the rights of the Holder of such
Residual Certificate as described in clause (iii)(A) above shall be invalid,
illegal or unenforceable, then the Securities Administrator shall have the
right, without notice to the holder or any prior holder of such Residual
Certificate, to sell such Residual Certificate to a purchaser selected by the
Depositor on such terms as the Depositor may choose. Such purported Transferee
shall promptly endorse and deliver each Residual Certificate in accordance with
the instructions of the Securities Administrator. Such purchaser may be the
Securities Administrator itself or any Affiliate of the Securities
Administrator. The proceeds of such sale, net of the commissions (which may
include commissions payable to the Securities Administrator or its Affiliates),
expenses and taxes due, if any, will be remitted by the Securities Administrator
to such purported Transferee. The terms and conditions of any sale under this
clause (iii)(B) shall be determined in the sole discretion of the Securities
Administrator, and the Securities Administrator shall not be liable to any
Person having an Ownership Interest in a Residual Certificate as a result of its
exercise of such discretion.

(iii) The Securities Administrator, on behalf of the Trustee, shall make
available, upon written request from the Trustee, all information necessary to
compute any tax imposed

 

  (A) as a result of the Transfer of an Ownership Interest in a Residual
Certificate to any Person who is a Disqualified Organization, including the
information regarding “excess inclusions” of such Residual Certificates required
to be provided to the Internal Revenue Service and certain Persons as described
in Treasury Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and

 

  (B) as a result of any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate or organization described
in Section 1381 of the Code that holds an Ownership Interest in a Residual
Certificate having as among its record holders at any time any Person who is a
Disqualified Organization. Reasonable compensation for providing such
information may be required by the Securities Administrator from such Person.

 

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(iv) The provisions of this Section 6.02(g) set forth prior to this clause
(v) may be modified, added to or eliminated, provided that there shall have been
delivered to the Trustee the following:

 

  (A) Written notification from each Rating Agency to the effect that the
modification, addition to or elimination of such provisions will not cause such
Rating Agency to downgrade its then-current ratings, if any, of the Class A
Certificates and Mezzanine Certificates below the lower of the then-current
rating or the rating assigned to such Certificates as of the Closing Date by
such Rating Agency; and

 

  (B) a certificate of the Securities Administrator stating that the Securities
Administrator has received an Opinion of Counsel, in form and substance
satisfactory to the Securities Administrator, to the effect that such
modification, addition to or absence of such provisions will not cause any REMIC
created hereunder to cease to qualify as a REMIC and will not cause (x) any
REMIC created hereunder to be subject to an entity-level tax caused by the
Transfer of any Residual Certificate to a Person that is a Disqualified
Organization or (y) a Certificateholder or another Person to be subject to a
REMIC-related tax caused by the Transfer of a Residual Certificate to a Person
that is not a Permitted Transferee.

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

(i) All Certificates surrendered for transfer and exchange shall be canceled and
destroyed by the Securities Administrator in accordance with its customary
procedures.

Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates.

If (i) any mutilated Certificate is surrendered to the Securities Administrator
or the Certificate Registrar, or the Securities Administrator or the Certificate
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and of the ownership thereof, and (ii) there is
delivered to Securities Administrator or the Certificate Registrar such security
or indemnity as may be required by it to save it harmless, then, in the absence
of actual knowledge by the Securities Administrator or the Certificate Registrar
that such Certificate has been acquired by a protected purchaser, the Securities
Administrator, shall execute, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like denomination and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Securities
Administrator or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Securities Administrator or the Certificate Registrar) connected therewith. Any
replacement Certificate issued pursuant to this Section shall constitute
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evidence of ownership in the applicable REMIC created hereunder, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.

Section 6.04 Persons Deemed Owners.

The Depositor, the Servicer, the Trustee, the Master Servicer, the Securities
Administrator, the Certificate Registrar and any agent of any of them may treat
the Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and for all other purposes whatsoever, and none of the Depositor, the Servicer,
the Trustee, the Master Servicer, the Securities Administrator, the Certificate
Registrar or any agent of any of them shall be affected by notice to the
contrary.

Section 6.05 Certain Available Information.

On or prior to the date of the first sale of any Class CE Certificate, Class P
Certificate or Residual Certificate to an Independent third party, the Depositor
shall provide to the Securities Administrator ten copies of any private
placement memorandum or other disclosure document used by the Depositor in
connection with the offer and sale of such Certificate. In addition, if any such
private placement memorandum or disclosure document is revised, amended or
supplemented at any time following the delivery thereof to the Securities
Administrator, the Depositor promptly shall inform the Securities Administrator
of such event and shall deliver to the Securities Administrator ten copies of
the private placement memorandum or disclosure document, as revised, amended or
supplemented. The Securities Administrator shall maintain at its office as set
forth in Section 12.05 hereof and shall make available free of charge during
normal business hours for review by any Holder of a Certificate, any Certificate
Owner or any Person identified to the Securities Administrator as a prospective
transferee of a Certificate, originals or copies of the following items: (i) in
the case of a Holder or prospective transferee of a Class CE Certificate, Class
P Certificate or Residual Certificate, the related private placement memorandum
or other disclosure document relating to such Class of Certificates, in the form
most recently provided to the Securities Administrator; and (ii) in all cases,
(A) this Agreement and any amendments hereof entered into pursuant to
Section 11.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class pursuant to Section 5.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date and (C) any copies of all
officers’ certificates of the Servicer since the Closing Date delivered to the
Master Servicer to evidence such Person’s determination that any P&I Advance or
Servicing Advance was, or if made, would be a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance. Copies and mailing of any and all of the
foregoing items will be available from the Securities Administrator upon request
at the expense of the Person requesting the same.

 

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ARTICLE VII

THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER

Section 7.01 Liability of the Depositor, the Servicer and the Master Servicer.

The Depositor, the Servicer and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor, the
Servicer and Master Servicer and undertaken hereunder by the Depositor, the
Servicer and the Master Servicer herein.

Section 7.02 Merger or Consolidation of the Depositor, the Servicer or the
Master Servicer.

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

The Depositor, the Servicer or the Master Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets to
any Person, in which case any Person resulting from any merger or consolidation
to which the Depositor, the Servicer or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor, the Servicer or the
Master Servicer, shall be the successor of the Depositor, the Servicer or the
Master Servicer, as the case may be, hereunder, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that any
successor of the Servicer or the Master Servicer shall meet the eligibility
requirements set forth in clauses (i) and (iii) of the last paragraph of
Section 8.02(a) or Section 7.06, as applicable.

Section 7.03 Limitation on Liability of the Depositor, the Servicer, the Master
Servicer and Others.

None of the Depositor, the Servicer, the Securities Administrator, the Master
Servicer or any of the directors, officers, employees or agents of the
Depositor, the Servicer or the Master Servicer shall be under any liability to
the Trust Fund or the Certificateholders for any action taken or for refraining
from the taking of any action in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Depositor, the Servicer, the Securities Administrator, the Master Servicer or
any such person against any breach of warranties, representations or covenants
made herein or against any specific liability imposed on any such Person
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by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Servicer, the Securities Administrator, the
Master Servicer and any director, officer, employee or agent of the Depositor,
the Servicer, the Securities Administrator and the Master Servicer may rely in
good faith on any document of any kind which, prima facie, is properly executed
and submitted by any Person respecting any matters arising hereunder. The
Depositor, the Servicer, the Securities Administrator, the Master Servicer and
any director, officer, employee or agent of the Depositor, the Servicer, the
Securities Administrator or the Master Servicer shall be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement, the Certificates or
the Credit Risk Management Agreement or any loss, liability or expense incurred
other than by reason of willful misfeasance, bad faith or gross negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Servicer, the
Securities Administrator or the Master Servicer shall be under any obligation to
appear in, prosecute or defend any legal action unless such action is related to
its respective duties under this Agreement and, in its opinion, does not involve
it in any expense or liability; provided, however, that each of the Depositor,
the Servicer, the Securities Administrator and the Master Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom (except
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder) shall be expenses, costs
and liabilities of the Trust Fund, and the Depositor, the Servicer, the
Securities Administrator and the Master Servicer shall be entitled to be
reimbursed therefor from the Collection Account or the Distribution Account as
and to the extent provided in Article III and Article IV, any such right of
reimbursement being prior to the rights of the Certificateholders to receive any
amount in the Collection Account and the Distribution Account.

Notwithstanding anything to the contrary contained herein, the Servicer shall
not be liable for any actions or inactions prior to the Cut-off Date of any
prior servicer of the Mortgage Loans and the Master Servicer shall not be liable
for any action or inaction of the Servicer, except to the extent expressly
provided herein, or the Credit Risk Manager.

Section 7.04 Limitation on Resignation of the Servicer.

(a) The Servicer shall neither assign all or substantially all of its rights
under this Agreement or the servicing hereunder nor delegate all or
substantially all of its duties hereunder nor sell or otherwise dispose of all
or substantially all of its property or assets without, in each case, the prior
written consent of the Master Servicer, which consent shall not be unreasonably
withheld; provided, that in each case, there must be delivered to the Trustee
and the Master Servicer a letter from each Rating Agency to the effect that such
transfer of servicing or sale or disposition of assets will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of the
Certificates. Notwithstanding the foregoing, the Servicer, without the consent
of the Trustee or the Master Servicer, may retain third-party contractors to
perform certain servicing and loan administration functions, including without
limitation hazard insurance administration, tax payment and administration,
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collection services and similar functions, provided, however, that the retention
of such contractors by the Servicer shall not limit the obligation of the
Servicer to service the Mortgage Loans pursuant to the terms and conditions of
this Agreement. The Servicer shall not resign from the obligations and duties
hereby imposed on it except by consent of the Master Servicer or upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination pursuant to the preceding sentence
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect obtained at the expense of the Servicer and delivered to
the Trustee and the Rating Agencies. No resignation of the Servicer shall become
effective until the Master Servicer or a successor Servicer shall have assumed
the Servicer’s responsibilities, duties, liabilities (other than those
liabilities arising prior to the appointment of such successor) and obligations
under this Agreement.

(b) Except as expressly provided herein, the Servicer shall not assign or
transfer all or substantially all of its rights, benefits or privileges
hereunder to any other Person, or delegate to or subcontract with, or authorize
or appoint any other Person to perform all or substantially all of the duties,
covenants or obligations to be performed by the Servicer hereunder. The
foregoing prohibition on assignment shall not prohibit the Servicer from
designating a Sub-Servicer as payee of any indemnification amount payable to the
Servicer hereunder; provided, however, that as provided in Section 3.02, no
Sub-Servicer shall be a third-party beneficiary hereunder and the parties hereto
shall not be required to recognize any Sub-Servicer as an indemnitee under this
Agreement.

Section 7.05 Limitation on Resignation of the Master Servicer.

The Master Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master Servicer and delivered to the Trustee and the Rating Agencies. No
resignation of the Master Servicer shall become effective until the Trustee or a
successor Master Servicer shall have assumed the Master Servicer’s
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.

Section 7.06 Assignment of Master Servicing.

The Master Servicer may sell and assign its rights and delegate its duties and
obligations in its entirety as Master Servicer under this Agreement; provided,
however, that: (i) the purchaser or transferee accept in writing such assignment
and delegation and assume the obligations of the Master Servicer hereunder
(a) shall have a net worth of not less than $15,000,000 (unless otherwise
approved by each Rating Agency pursuant to clause (ii) below); (b) shall be
reasonably satisfactory to the Trustee (as evidenced in a writing signed by the
Trustee); and (c) shall execute and deliver to the Trustee an agreement, in form
and substance reasonably satisfactory to the Trustee, which contains an
assumption by such Person of the due and punctual performance and observance of
each covenant and condition to be performed or observed by it as master servicer
under this Agreement; (ii) each Rating Agency shall be given prior written
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Rating Agency’s rating of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
as a result of such assignment, sale and delegation, as evidenced by a letter to
such effect delivered to the Master Servicer and the Trustee; and (iii) the
Master Servicer assigning and selling the master servicing shall deliver to the
Trustee an officer’s certificate and an Opinion of Independent counsel, each
stating that all conditions precedent to such action under this Agreement have
been completed and such action is permitted by and complies with the terms of
this Agreement. No such assignment or delegation shall affect any liability of
the Master Servicer arising out of acts or omissions prior to the effective date
thereof.

Section 7.07 Rights of the Depositor in Respect of the Servicer and the Master
Servicer.

Each of the Master Servicer and the Servicer shall afford (and any Sub-Servicing
Agreement shall provide that each Sub-Servicer shall afford) the Depositor and
the Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the Master Servicer or the Servicer (and any such
Sub-Servicer) in respect of the Servicer’s rights and obligations hereunder and
access to officers of the Master Servicer or the Servicer (and those of any such
Sub-Servicer) responsible for such obligations, and the Master Servicer shall
have access to all records maintained by the Servicer and any Sub-Servicer. Upon
request, each of the Master Servicer and the Servicer shall furnish to the
Depositor and the Trustee its (and any such Sub-Servicer’s) most recent
financial statements and such other information relating to the Master
Servicer’s or the Servicer’s capacity to perform its obligations under this
Agreement as it possesses (and that any such Sub-Servicer possesses). To the
extent the Depositor and the Trustee are informed that such information is not
otherwise available to the public, the Depositor and the Trustee shall not
disseminate any information obtained pursuant to the preceding two sentences
without the Master Servicer’s or the Servicer’s written consent, except as
required pursuant to this Agreement or to the extent that it is appropriate to
do so (i) to its legal counsel, auditors, taxing authorities or other
governmental agencies and the Certificateholders, (ii) pursuant to any law,
rule, regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Depositor and the Trustee or
the Trust Fund, and in any case, the Depositor or the Trustee, (iii) disclosure
of any and all information that is or becomes publicly known, or information
obtained by the Trustee from sources other than the Depositor, the Servicer or
the Master Servicer, (iv) disclosure as required pursuant to this Agreement or
(v) disclosure of any and all information (A) in any preliminary or final
offering circular, registration statement or contract or other document
pertaining to the transactions contemplated by the Agreement approved in advance
by the Depositor, the Servicer or the Master Servicer or (B) to any affiliate,
independent or internal auditor, agent, employee or attorney of the Trustee
having a need to know the same, provided that the Trustee advises such recipient
of the confidential nature of the information being disclosed, shall use its
best efforts to assure the confidentiality of any such disseminated non-public
information. Nothing in this Section 7.07 shall limit the obligation of the
Servicer to comply with any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section 7.07 as a result of such obligation shall not
constitute a breach of this Section. Nothing in this Section 7.07 shall require
the Servicer to collect, create, collate or otherwise generate any information
that it does not generate in its usual course of business. The Servicer shall
not be required to make copies of or ship documents to any party unless
provisions have been made for the reimbursement of the costs thereof. The
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may, but is not obligated to, enforce the obligations of the Master Servicer and
the Servicer under this Agreement and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Master Servicer or
the Servicer under this Agreement or exercise the rights of the Master Servicer
or the Servicer under this Agreement; provided that neither the Master Servicer
nor the Servicer shall be relieved of any of its obligations under this
Agreement by virtue of such performance by the Depositor or its designee. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Master Servicer or the Servicer and is not obligated to
supervise the performance of the Master Servicer or the Servicer under this
Agreement or otherwise.

Section 7.08 Duties of the Credit Risk Manager.

For and on behalf of the Depositor, the Credit Risk Manager will provide reports
and recommendations concerning certain delinquent and defaulted Mortgage Loans,
the collection of any Prepayment Charges with respect to the Mortgage Loans,
calculation and reporting of payments due under the Cap Agreement and the
Interest Rate Swap Agreement, and Trigger Events in accordance with the terms
and conditions of the Credit Risk Management Agreement. Such reports and
recommendations will be based upon information provided to the Credit Risk
Manager pursuant to the Credit Risk Management Agreement, and the Credit Risk
Manager shall look solely to the Servicer, the Securities Administrator and/or
the Depositor for all information and data (including loss and delinquency
information and data) relating to the servicing of the related Mortgage Loans.
The obligations of the parties under the Credit Risk Management Agreement will
terminate upon the earlier of (i) the termination of the Trust, (ii) the
termination of the Servicer’s rights and obligations under this Agreement,
(iii) the resignation of the Credit Risk Manager upon at least thirty (30) days
advance notice and the appointment of a successor Credit Risk Manager by the
Depositor or its assign, (iv) the removal of the Credit Risk Manager for cause
by the Depositor or its assign upon at least thirty (30) days advance notice and
the appointment of a successor Credit Risk Manager by the Depositor or its
assign, or (v) the removal of the Credit Risk Manager without cause upon thirty
(30) days advance notice by the Depositor or its assign upon the request of the
transferor of a majority of the residual interests in the Trust and the
appointment of a successor Credit Risk Manager by the Depositor or its assign,
in each case, pursuant to the terms and conditions set forth in the Credit Risk
Management Agreement. Upon any termination of the Credit Risk Manager or the
appointment of a successor Credit Risk Manager, the Depositor shall give written
notice thereof to the Servicer, the Master Servicer, the Trustee, and each
Rating Agency.

Section 7.09 Limitation Upon Liability of the Credit Risk Manager.

Neither the Credit Risk Manager, nor any of its directors, officers, employees,
or agents shall be under any liability to the Trustee, the Trust Fund, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement and the
Credit Risk Management Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Credit Risk Manager or any such person
against liability for any breach of a representation, warranty or covenant made
herein or in the Credit Risk Management Agreement or against liability that
would otherwise be imposed by reason of gross negligence, willful malfeasance,
fraud or bad faith in its performance of its duties hereunder or thereunder. The
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agent of the Credit Risk Manager may rely in good faith on any document of any
kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising hereunder or under the Credit Risk Management
Agreement. The Credit Risk Manager and its directors, managers, members,
officers, employees and agents shall be indemnified and held harmless by the
Trust Fund against any loss, liability, cost, claim or expense (including costs
and expenses of litigation and of investigation, reasonable counsel fees,
damages, judgments and amounts paid in settlement) arising out of or incurred in
connection with this Agreement or the Credit Risk Management Agreement, other
than any such loss, liability, cost, claim or expense that was incurred in
connection with claims against such party resulting primarily from (i) any
breach of a representation, warranty or covenant made herein or in the Credit
Risk Management Agreement by the Credit Risk Manager, or (ii) bad faith, fraud,
gross negligence or willful misconduct in the performance of obligations or
duties hereunder or under the Credit Risk Management Agreement by the Credit
Risk Manager, or its gross negligent disregard of such obligations or duties.

ARTICLE VIII

DEFAULT

Section 8.01 Servicer Events of Default.

(a) “Servicer Event of Default,” wherever used herein, means any one of the
following events:

(i) any failure by the Servicer to remit to the Securities Administrator for
distribution to the Certificateholders any payment (other than a P&I Advance
required to be made from its own funds on any Servicer Remittance Date pursuant
to Section 5.03) required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Depositor or the Trustee (in which case notice
shall be provided by telecopy), or to the Servicer, the Depositor, the Trustee
and by the Holders of Certificates entitled to at least 25% of the Voting
Rights; or

(ii) any failure on the part of the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer contained in this Agreement, or the material breach by the Servicer of
any representation and warranty contained in Section 2.05, which continues
unremedied for a period of thirty (30) 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 Depositor or the Trustee or to the Servicer, the
Depositor and the Trustee by the Holders of Certificates entitled to at least
25% of the Voting Rights; provided, however, that in the case of a failure that
cannot be cured within thirty (30) days, the cure period may be extended for an
additional thirty (30) days if the Servicer can demonstrate to the reasonable
satisfaction of the Trustee that the Servicer is diligently pursuing remedial
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(iii) a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceeding, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force undischarged or
unstayed for a period of ninety (90) days; or

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

(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;

(vi) failure by the Servicer to duly perform, within the required time period,
its obligations under Section 3.17, 3.18 or 5.09 which failure continues
unremedied after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by any party to this
Agreement; or

(vii) any failure of the Servicer to make any P&I Advance on any Servicer
Remittance Date required to be made from its own funds pursuant to Section 5.03
which continues unremedied for a period of one Business Day after the date upon
which written notice of such failure requiring the same to be remedied shall
have been given to the Servicer by the Depositor or the Trustee (in which case
notice shall be provided by telecopy) or to the Servicer, the Depositor, the
Trustee and by the Holders of Certificates entitled to at least 25% of the
Voting Rights.

If a Servicer Event of Default described in clauses (i) through (vi) of this
Section shall occur, then, and in each and every such case, so long as such
Servicer Event of Default shall not have been remedied, the Depositor or the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Servicer (and to the Depositor if given by the Trustee or to the
Trustee if given by the Depositor) with a copy to the Master Servicer and each
Rating Agency, terminate all of the rights and obligations of the Servicer in
its capacity as the Servicer under this Agreement, to the extent permitted by
law, and in and to the Mortgage Loans and the proceeds thereof. If a Servicer
Event of Default described in clause (vii) hereof shall occur, the Trustee
shall, by notice in writing to the Servicer, the Depositor and the Master
Servicer, terminate all of the rights and obligations of the Servicer in its
capacity as the Servicer under this Agreement and in and to the Mortgage Loans
and the proceeds thereof. Subject to Section 8.02, 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 Certificates (other than as a
Holder of any Certificate) or the Mortgage Loans or otherwise, shall pass to and
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under this Section, and, without limitation, the Master Servicer is hereby
authorized and empowered, as attorney-in-fact or otherwise, to execute and
deliver, on behalf of and at the expense of the Servicer, any and all documents
and other instruments and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Servicer agrees promptly (and in any event
no later than ten Business Days subsequent to such notice) to provide the Master
Servicer with all documents and records requested by it to enable it to assume
the Servicer’s functions under this Agreement, and to cooperate with the Master
Servicer in effecting the termination of the Servicer’s responsibilities and
rights under this Agreement, including, without limitation, the transfer within
one Business Day to the Master Servicer for administration by it of all cash
amounts which at the time shall be or should have been credited by the Servicer
to the Collection Account held by or on behalf of the Servicer or thereafter be
received with respect to the Mortgage Loans or any REO Property (provided,
however, that the Servicer shall continue to be entitled to receive all amounts
accrued or owing to it under this Agreement on or prior to the date of such
termination, whether in respect of P&I Advances, Servicing Advances, accrued and
unpaid Servicing Fees or otherwise, and shall continue to be entitled to the
benefits of Section 7.03, notwithstanding any such termination, with respect to
events occurring prior to such termination). For purposes of this
Section 8.01(a), the Trustee shall not be deemed to have knowledge of a Servicer
Event of Default unless a Responsible Officer of the Trustee assigned to and
working in the Trustee’s Corporate Trust Office has actual knowledge thereof or
unless written notice of any event which is in fact such a Servicer Event of
Default is received by the Trustee at its Corporate Trust Office and such notice
references the Certificates, the Trust or this Agreement. The Trustee shall
promptly notify the Master Servicer and the Rating Agencies of the occurrence of
a Servicer Event of Default of which it has knowledge as provided above.

The Master Servicer shall be entitled to be reimbursed by the Servicer (or from
amounts on deposit in the Distribution Account if the Servicer is unable to
fulfill its obligations hereunder) for all reasonable out-of-pocket or third
party costs associated with the transfer of servicing from the predecessor
Servicer (or if the predecessor Servicer is the Master Servicer, from the
Servicer immediately preceding the Master Servicer), including without
limitation, any reasonable out-of-pocket or third party costs or 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
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.

(b) “Master Servicer Event of Default,” wherever used herein, means any one of
the following events:

(i) any failure on the part of the Master Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Master Servicer contained in this Agreement, or the breach by the Master
Servicer of any representation and warranty contained in Section 2.04, which
continues unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
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Trustee or to the Master Servicer, the Depositor and the Trustee by the Holders
of Certificates entitled to at least 25% of the Voting Rights; or

(ii) a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceeding, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Master Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 90 days; or

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

(iv) the Master 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.

If a Master Servicer Event of Default shall occur, then, and in each and every
such case, so long as such Master Servicer Event of Default shall not have been
remedied, the Depositor or the Trustee may, and at the written direction of the
Holders of Certificates entitled to at least 51% of Voting Rights, the Trustee
shall, by notice in writing to the Master Servicer (and to the Depositor if
given by the Trustee or to the Trustee if given by the Depositor) with a copy to
each Rating Agency, terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement, to the extent
permitted by law, and in and to the Mortgage Loans and the proceeds thereof. On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement, whether with
respect to the Certificates (other than as a Holder of any Certificate) or the
Mortgage Loans or otherwise including, without limitation, the compensation
payable to the Master Servicer under this Agreement, shall pass to and be vested
in the Trustee pursuant to and under this Section, and, without limitation, the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise, to
execute and deliver, on behalf of and at the expense of the Master Servicer, any
and all documents and other instruments and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees promptly (and in any event no later than ten Business Days subsequent to
such notice) to provide the Trustee with all documents and records requested by
it to enable it to assume the Master Servicer’s functions under this Agreement,
and to cooperate with the Trustee in effecting the termination of the Master
Servicer’s responsibilities and rights under this Agreement (provided, however,
that the Master 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 and shall continue to be entitled to the benefits of Section 7.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 8.01(b), the Trustee shall not
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to have knowledge of a Master Servicer Event of Default unless a Responsible
Officer of the Trustee assigned to and working in the Trustee’s Corporate Trust
Office has actual knowledge thereof or unless written notice of any event which
is in fact such a Master Servicer Event of Default is received by the Trustee
and such notice references the Certificates, the Trust or this Agreement. The
Trustee shall promptly notify the Rating Agencies of the occurrence of a Master
Servicer Event of Default of which it has knowledge as provided above.

To the extent that the costs and expenses of the Trustee related to the
termination of the Master Servicer, appointment of a successor Master Servicer
or the transfer and assumption of the master servicing by the Trustee
(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 Master Servicer as a result of a Master Servicer Event of
Default and (ii) all costs and expenses associated with the complete transfer of
the master 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 Master Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
Master Servicer to master service the Mortgage Loans in accordance with this
Agreement) are not fully and timely reimbursed by the terminated Master
Servicer, the Trustee shall be entitled to reimbursement of such costs and
expenses from the Distribution Account. Notwithstanding the above, the Trustee
may, if it shall be unwilling to continue to so act, or shall, if it is unable
to so act, petition a court of competent jurisdiction to appoint, or appoint on
its own behalf any established housing and home finance institution servicer,
master servicer, servicing or mortgage servicing institution having a net worth
of not less than $15,000,000 and meeting such other standards for a successor
master servicer as are set forth in this Agreement, as the successor to such
Master Servicer in the assumption of all of the responsibilities, duties or
liabilities of a master servicer, like the Master Servicer.

Neither the Trustee nor any other successor master 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 Master Servicer to deliver or
provide, or any delay of the Master Servicer in delivering or providing, any
cash, information, documents or records to it.

Section 8.02 Master Servicer to Act; Appointment of Successor.

(a) On and after the time the Servicer receives a notice of termination, the
Master Servicer shall be the successor in all respects to the Servicer in its
capacity as Servicer under this Agreement and the transactions set forth or
provided for herein, and all the responsibilities, duties and liabilities
relating thereto and arising thereafter shall be assumed by the Master Servicer
(except for any representations or warranties of the Servicer under this
Agreement, the responsibilities, duties and liabilities contained in
Section 2.03 and the obligation to deposit amounts in respect of losses pursuant
to Section 3.10(b)) by the terms and provisions hereof including, without
limitation, the Servicer’s obligations to make P&I Advances pursuant to
Section 5.03; provided, however, that if the Master Servicer is prohibited by
law or regulation from obligating itself to make advances regarding delinquent
mortgage loans, then the Master Servicer shall not be obligated to make P&I
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further, that any failure to perform such duties or responsibilities caused by
the Servicer’s failure to provide information required by Section 8.01 shall not
be considered a default by the Master Servicer as successor to the Servicer
hereunder; provided, however, that (1) it is understood and acknowledged by the
parties hereto that there will be a period of transition (not to exceed 90 days)
before the actual servicing functions can be fully transferred to the Master
Servicer or any successor Servicer appointed in accordance with the following
provisions and (2) any failure to perform such duties or responsibilities caused
by the Servicer’s failure to provide information required by Section 8.01 shall
not be considered a default by the Master Servicer as successor to the Servicer
hereunder. As compensation therefor, the Master Servicer shall be entitled to
the Servicing Fee and all funds relating to the Mortgage Loans to which the
Servicer would have been entitled if it had continued to act hereunder.
Notwithstanding the above and subject to the immediately following paragraph,
the Master Servicer may, if it shall be unwilling to so act, or shall, if it is
unable to so act promptly appoint or petition a court of competent jurisdiction
to appoint, a Person that satisfies the eligibility criteria set forth below as
the successor to the Servicer under this Agreement in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer under
this Agreement.

Notwithstanding anything herein to the contrary, in no event shall the Trustee
or the Master Servicer be liable for any Servicing Fee, or in the case of the
Trustee, any Master Servicer compensation, or for any differential in the amount
of the Servicing Fee paid or Master Servicer compensation received hereunder and
the amount necessary to induce any successor Servicer or Master Servicer to act
as successor Servicer or Master Servicer under this Agreement and the
transactions set forth or provided for herein.

Any successor Servicer appointed under this Agreement must (i) be an established
mortgage loan servicing institution that is a Fannie Mae and Freddie Mac
approved seller/servicer, (ii) be approved by each Rating Agency by a written
confirmation from each Rating Agency that the appointment of such successor
Servicer would not result in the reduction or withdrawal of the then current
ratings of any outstanding Class of Certificates, (iii) have a net worth of not
less than $15,000,000 and (iv) assume all the responsibilities, duties or
liabilities of the Servicer (other than liabilities of the Servicer hereunder
incurred prior to termination of the Servicer under Section 8.01 herein) under
this Agreement as if originally named as a party to this Agreement.

(b) (A) All servicing transfer costs (including, without limitation, servicing
transfer costs of the type described in Section 8.02(a) and incurred by the
Trustee, the Master Servicer and any successor Servicer under paragraph (b)(2)
below) shall be paid by the terminated Servicer upon presentation of reasonable
documentation of such costs, and if such predecessor or initial Servicer, as
applicable, defaults in its obligation to pay such costs, the successor
Servicer, the Master Servicer and the Trustee shall be entitled to reimbursement
therefor from the assets of the Trust Fund.

(B) No appointment of a successor to the Servicer under this Agreement shall be
effective until the assumption by the successor of all of the Servicer’s
responsibilities, duties and liabilities hereunder. In connection with such
appointment and assumption described herein, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree;

 

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provided, however, that no such compensation shall be in excess of that
permitted the Servicer as such hereunder. The Depositor, the Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Pending appointment of a successor
to the Servicer under this Agreement, the Master Servicer shall act in such
capacity as hereinabove provided.

Section 8.03 Notification to Certificateholders.

(a) Upon any termination of the Servicer or the Master Servicer pursuant to
Section 8.01(a) or (b) or any appointment of a successor to the Servicer or the
Master Servicer pursuant to Section 8.02, the Trustee shall give prompt written
notice thereof to the Certificateholders at their respective addresses appearing
in the Certificate Register.

(b) Not later than the later of 60 days after the occurrence of any event, which
constitutes or which, with notice or lapse of time or both, would constitute a
Servicer Event of Default or a Master Servicer Event of Default or five days
after a Responsible Officer of the Trustee becomes aware of the occurrence of
such an event, the Trustee shall transmit by mail to all Holders of Certificates
notice of each such occurrence, unless such default or Servicer Event of Default
or Master Servicer Event of Default shall have been cured or waived.

Section 8.04 Waiver of Servicer Events of Default.

The Holders representing at least 66% of the Voting Rights evidenced by all
Classes of Certificates affected by any default, Servicer Event of Default or
Master Servicer Event of Default hereunder may waive such default, Servicer
Event of Default or Master Servicer Event of Default; provided, however, that a
Servicer Event of Default under clause (i) or (vii) of Section 8.01(a) may be
waived only by all of the Holders of the Regular Certificates. Upon any such
waiver of a default, Servicer Event of Default or Master Servicer Event of
Default, such default, Servicer Event of Default or Master Servicer Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other
default, Servicer Event of Default or Master Servicer Event of Default or impair
any right consequent thereon except to the extent expressly so waived.

ARTICLE IX

CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

Section 9.01 Duties of Trustee and Securities Administrator.

The Trustee, prior to the occurrence of a Servicer Event of Default or a Master
Servicer Event of Default and after the curing or waiver of all Master Servicer
Events of Default and all Servicer Events of Default which may have occurred,
and the Securities Administrator each undertake to perform such duties and only
such duties as are specifically set forth in this Agreement as duties of the
Trustee and the Securities Administrator, respectively. During the continuance
of a Master Servicer Event of Default or a Servicer Event of Default, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
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circumstances in the conduct of such person’s own affairs. Any permissive right
of the Trustee enumerated in this Agreement shall not be construed as a duty.

Each of the Trustee and the Securities Administrator, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to it, which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee or the Securities Administrator, as the case may
be, shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to its satisfaction, the
Securities Administrator will provide notice to the Trustee thereof and the
Trustee will provide notice to the Certificateholders.

The Trustee shall promptly remit to the Servicer any complaint, claim, demand,
notice or other document (collectively, the “Notices”) delivered to the Trustee
as a consequence of the assignment of any Mortgage Loan hereunder and relating
to the servicing of the Mortgage Loans; provided than any such notice (i) is
delivered to the Trustee at its Corporate Trust Office, (ii) contains
information sufficient to permit the Trustee to make a determination that the
real property to which such document relates is a Mortgaged Property. The
Trustee shall have no duty hereunder with respect to any Notice it may receive
or which may be alleged to have been delivered to or served upon it unless such
Notice is delivered to it or served upon it at its Corporate Trust Office and
such Notice contains the information required pursuant to clause (ii) of the
preceding sentence.

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

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

(ii) Neither the Trustee nor the Securities Administrator shall be liable for an
error of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee or an officer or officers of the Securities
Administrator, respectively, unless it shall be proved that the Trustee or the
Securities Administrator, respectively, was negligent in ascertaining the
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(iii) Neither the Trustee nor the Securities Administrator shall be liable with
respect to any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Holders of Certificates entitled to at
least 25% of the Voting Rights relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee or the
Securities Administrator or exercising any trust or power conferred upon the
Trustee or the Securities Administrator under this Agreement.

Section 9.02 Certain Matters Affecting Trustee and Securities Administrator.

(a) Except as otherwise provided in Section 9.01:

(i) Before taking any action or declining to take any action, as the case may
be, under this Agreement, the Trustee and the Securities Administrator may
request and rely upon and shall be protected in acting or refraining from acting
upon any resolution, Officers’ Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or parties;

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

(iii) Neither the Trustee nor the Securities Administrator shall be under any
obligation to exercise any of the trusts or powers vested in it by this
Agreement 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 or the Securities
Administrator, as the case may be, 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 Master Servicer Event of Default (which has
not been cured or waived), to exercise such of the rights and powers vested in
it by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person’s own affairs;

(iv) Neither the Trustee nor the Securities Administrator shall be liable for
any action taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred upon it by
this Agreement;

(v) Prior to the occurrence of a Master Servicer Event of Default hereunder and
after the curing or waiver of all Master Servicer Events of Default which may
have occurred with respect to the Trustee and at all times with respect to the
Securities Administrator, neither the Trustee nor the Securities Administrator
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make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing to
do so by the Holders of Certificates entitled to at least 25% of the Voting
Rights; provided, however, that if the payment within a reasonable time to the
Trustee or the Securities Administrator of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee or the Securities Administrator, as applicable, not
reasonably assured to the Trustee or the Securities Administrator by such
Certificateholders, the Trustee or the Securities Administrator, as applicable,
may require reasonable indemnity satisfactory to it against such expense, or
liability from such Certificateholders as a condition to taking any such action;

(vi) The Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys and
the Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;

(vii) The Trustee shall not be liable for any loss resulting from the investment
of funds held in the Collection Account, or for any loss resulting from the
redemption or sale of any such investment as therein authorized;

(viii) The Trustee shall not be deemed to have notice of any default, Master
Servicer Event of Default or Servicer Event of Default unless a Responsible
Officer of the Trustee has actual knowledge thereof or unless written notice of
any event which is in fact such a default is received by a Responsible Officer
of the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Certificates and this Agreement; and

(ix) The rights, privileges, protections, immunities and benefits given to the
Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, each agent, custodian and other Person
employed to act hereunder.

(b) All rights of action under this Agreement or under any of the Certificates,
enforceable by the Trustee, may be enforced by it without the possession of any
of the Certificates, or the production thereof at the trial or other proceeding
relating thereto, and any such suit, action or proceeding instituted by the
Trustee shall be brought in its name for the benefit of all the Holders of such
Certificates, subject to the provisions of this Agreement.

(c) The Securities Administrator is hereby directed by the Depositor to execute
the Interest Rate Swap Agreement and the Cap Agreement on behalf of the Trust
Fund in the form presented to it by the Depositor and shall have no
responsibility for the contents of the Interest Rate Swap Agreement and the Cap
Agreement, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Securities Administrator under the
Interest Rate Swap Agreement and the Cap Agreement at closing shall be paid by
the Depositor. Notwithstanding anything to the contrary contained herein or in
the Interest Rate Swap Agreement and the Cap Agreement, the Securities
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any payments to the counterparty under the Interest Rate Swap Agreement and the
Cap Agreement. The Securities Administrator hereby agrees to promptly provide to
the Credit Risk Manager any reset/payment advice or reset notification, or any
other notice, report or statement received from the Swap Provider or the Cap
Agreement Provider in connection with the Interest Rate Swap Agreement and the
Cap Agreement.

(d) None of the Securities Administrator, the Master Servicer, the Servicer, the
Seller, the Depositor, the Custodian, the Credit Risk Manager or the Trustee
shall be responsible for the acts or omissions of the others, it being
understood that this Agreement shall not be construed to render those partners
joint venturers or agents of one another.

Section 9.03 Trustee and Securities Administrator not Liable for Certificates or
Mortgage Loans.

The recitals contained herein and in the Certificates (other than the signature
of the Securities Administrator, the authentication of the Securities
Administrator on the Certificates, the acknowledgments of the Trustee contained
in Article II and the representations and warranties of the Trustee in
Section 9.12) shall be taken as the statements of the Depositor and neither the
Trustee nor the Securities Administrator assumes any responsibility for their
correctness. Neither the Trustee nor the Securities Administrator makes any
representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 9.12) or of the
Certificates (other than the signature of the Securities Administrator and
authentication of the Securities Administrator on the Certificates) or of any
Mortgage Loan or related document. The Trustee and the Securities Administrator
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Servicer, other than with respect to the Securities Administrator any
funds held by it or on behalf of the Trustee in accordance with Section 3.23 and
3.24.

Section 9.04 Trustee and Securities Administrator May Own Certificates.

Each of the Trustee and the Securities Administrator in its individual capacity
or any other capacity may become the owner or pledgee of Certificates and may
transact business with other interested parties and their Affiliates with the
same rights it would have if it were not Trustee or the Securities
Administrator.

Section 9.05 Fees and Expenses of Trustee and Securities Administrator.

The fees of the Trustee and the Securities Administrator hereunder and of Wells
Fargo as Custodian shall be paid in accordance with a side letter agreement with
the Master Servicer and at the sole expense of the Master Servicer. In addition,
the Trustee, the Securities Administrator, the Custodian and any director,
officer, employee or agent of the Trustee, the Securities Administrator and the
Custodian shall be indemnified by the Trust and held harmless against any loss,
liability or expense (including reasonable attorney’s fees and expenses)
incurred by the Trustee, the Custodian or the Securities Administrator arising
out of or in connection with the acceptance or administration of its respective
obligations and duties under this Agreement,

 

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including the Interest Rate Swap Agreement and the Cap Agreement and any and all
other agreements related thereto, other than any loss, liability or expense
(i) for which the Trustee is indemnified by the Master Servicer or the Servicer,
(ii) that constitutes a specific liability of the Trustee or the Securities
Administrator pursuant to Section 11.01(g) or (iii) any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder by the Trustee or the Securities
Administrator or by reason of reckless disregard of obligations and duties
hereunder. In no event shall the Trustee or the Securities Administrator be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if it has been
advised of the likelihood of such loss or damage and regardless of the form of
action. The Master Servicer agrees to indemnify the Trustee, from, and hold the
Trustee harmless against, any loss, liability or expense (including reasonable
attorney’s fees and expenses) incurred by the Trustee by reason of the Master
Servicer’s willful misfeasance, bad faith or gross negligence in the performance
of its duties under this Agreement or by reason of the Master Servicer’s
reckless disregard of its obligations and duties under this Agreement. In
addition, the Seller agrees to indemnify the Trustee for, and to hold the
Trustee harmless against, any loss, liability or expense arising out of, or in
connection with, the provisions set forth in the last paragraph of Section 2.01,
including, without limitation, all costs, liabilities and expenses (including
reasonable legal fees and expenses) of investigating and defending itself
against any claim, action or proceeding, pending or threatened, relating to the
provisions of such paragraph. The indemnities in this Section 9.05 shall survive
the termination or discharge of this Agreement and the resignation or removal of
the Master Servicer, the Trustee, the Securities Administrator or the Custodian.
Any payment hereunder made by the Master Servicer to the Trustee shall be from
the Master Servicer’s own funds, without reimbursement from REMIC I therefor.

Section 9.06 Eligibility Requirements for Trustee and Securities Administrator.

The Trustee and the Securities Administrator shall at all times be a corporation
or an association (other than the Depositor, the Seller, the Master Servicer or
any Affiliate of the foregoing) organized and doing business under the laws of
any state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 (or a member of a bank holding company whose capital and
surplus is at least $50,000,000) and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of conditions so published. In case at any time the Trustee or the
Securities Administrator, as applicable, shall cease to be eligible in
accordance with the provisions of this Section, the Trustee or the Securities
Administrator, as applicable, shall resign immediately in the manner and with
the effect specified in Section 9.07.

Section 9.07 Resignation and Removal of Trustee and Securities Administrator.

The Trustee and the Securities Administrator may at any time resign and be
discharged from the trust hereby created by giving written notice thereof to the
Depositor, to the Master Servicer, to the Securities Administrator (or the
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and to the Certificateholders. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee or successor securities
administrator by written instrument, in duplicate, which instrument shall be
delivered to the resigning Trustee or Securities Administrator, as applicable,
and to the successor trustee or successor securities administrator, as
applicable. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee, the Securities Administrator and the Master
Servicer by the Depositor. If no successor trustee or successor securities
administrator shall have been so appointed and have accepted appointment within
30 days after the giving of such notice of resignation, the resigning Trustee or
Securities Administrator, as the case may be, may, at the expense of the Trust
Fund, petition any court of competent jurisdiction for the appointment of a
successor trustee, successor securities administrator, Trustee or Securities
Administrator, as applicable.

If at any time the Trustee or the Securities Administrator shall cease to be
eligible in accordance with the provisions of Section 9.06 and shall fail to
resign after written request therefor by the Depositor, or if at any time the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor may remove the Trustee or the
Securities Administrator, as applicable and appoint a successor trustee or
successor securities administrator, as applicable, by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or the Securities
Administrator so removed and to the successor trustee or successor securities
administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee, the Securities Administrator and the Master
Servicer by the Depositor.

The Holders of Certificates entitled to at least 51% of the Voting Rights may at
any time remove the Trustee or the Securities Administrator and appoint a
successor trustee or successor securities administrator by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee or the Securities Administrator so
removed and one complete set to the successor so appointed. A copy of such
instrument shall be delivered to the Certificateholders, the Trustee (in the
case of the removal of the Securities Administrator), the Securities
Administrator (in the case of the removal of the Trustee) and the Master
Servicer by the Depositor.

Any resignation or removal of the Trustee or the Securities Administrator and
appointment of a successor trustee or successor securities administrator
pursuant to any of the provisions of this Section shall not become effective
until acceptance of appointment by the successor trustee or successor securities
administrator, as applicable, as provided in Section 8.08. Notwithstanding
anything to the contrary contained herein, the Master Servicer and the
Securities Administrator shall at all times be the same Person.

Section 9.08 Successor Trustee or Securities Administrator.

Any successor trustee or successor securities administrator appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Depositor
and its predecessor trustee

 

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or predecessor securities administrator an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
or predecessor securities administrator shall become effective and such
successor trustee or successor securities administrator without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as trustee or securities administrator herein. The predecessor
trustee or predecessor securities administrator shall deliver to the successor
trustee or successor securities administrator all Mortgage Files and related
documents and statements to the extent held by it hereunder, as well as all
moneys, held by it hereunder, and the Depositor and the predecessor trustee or
predecessor securities administrator shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee or successor
securities administrator all such rights, powers, duties and obligations.

No successor trustee or successor securities administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee or successor securities administrator shall be eligible
under the provisions of Section 8.06 and the appointment of such successor
trustee or successor securities administrator shall not result in a downgrading
of any Class of Certificates by any Rating Agency, as evidenced by a letter from
each Rating Agency.

Upon acceptance of appointment by a successor trustee or successor securities
administrator as provided in this Section, the Depositor shall mail notice of
the succession of such trustee hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register. If the Depositor fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee or successor securities administrator, the successor trustee or
successor securities administrator shall cause such notice to be-mailed at the
expense of the Depositor.

Section 9.09 Merger or Consolidation of Trustee or Securities Administrator.

Any corporation or association into which the Trustee or the Securities
Administrator may be merged or converted or with which it may be consolidated or
any corporation or association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator shall be a
party, or any corporation or association succeeding to the business of the
Trustee or the Securities Administrator shall be the successor of the Trustee or
the Securities Administrator hereunder, provided such corporation or association
shall be eligible under the provisions of Section 8.06, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.

Section 9.10 Appointment of Co-Trustee or Separate Trustee.

Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
REMIC I or property securing the same 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
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REMIC I, and to vest in such Person or Persons, in such capacity, and for the
benefit of the Holders of the Certificates, such title to REMIC I, or any part
thereof, and, subject to the other provisions of this Section 9.10, 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 hereunder and
no notice to Holders of Certificates of the appointment of co-trustee(s) or
separate trustee(s) shall be required under Section 8.08 hereof.

In the case of any appointment of a co-trustee or separate trustee pursuant to
this Section 9.10 all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed by the Trustee (whether as Trustee hereunder or as
successor to a defaulting Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to REMIC
I or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.

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

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 or co-trustee.

Section 9.11 Appointment of Office or Agency.

The Certificates may be surrendered for registration of transfer or exchange at
the Securities Administrator’s office located at Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479, and presented for final distribution at
the Corporate Trust Office of the Securities Administrator where notices and
demands to or upon the Securities Administrator in respect of the Certificates
and this Agreement may be served.

 

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Section 9.12 Representations and Warranties.

The Trustee hereby represents and warrants to the Master Servicer, the
Securities Administrator and the Depositor as applicable, as of the Closing
Date, that:

(i) It is a national banking association duly organized, validly existing and in
good standing under the laws of the United States, (ii) The execution and
delivery of this Agreement by it, and the performance and compliance with the
terms of this Agreement by it, will not violate its articles of association or
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or which is
applicable to it or any of its assets.

(ii) It has the full power and authority to enter into and consummate all
transactions contemplated by this Agreement, has duly authorized the execution,
delivery and performance of this Agreement, and has duly executed and delivered
this Agreement. (iv) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and binding
obligation of it, enforceable against it in accordance with the terms hereof,
subject to (A) applicable bankruptcy, insolvency, receivership, reorganization,
moratorium and other laws affecting the enforcement of creditors’ rights
generally, and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.

(iii) It is not in violation of, and its execution and delivery of this
Agreement and its performance and compliance with the terms of this Agreement
will not constitute a violation of, any law, any order or decree of any court or
arbiter, or any order, regulation or demand of any federal, state or local
governmental or regulatory authority, which violation, in its good faith and
reasonable judgment, is likely to affect materially and adversely either the
ability of it to perform its obligations under this Agreement or its financial
condition.

(iv) No litigation is pending or, to the best of its knowledge, threatened
against it, which would prohibit it from entering into this Agreement or, in its
good faith reasonable judgment, is likely to materially and adversely affect
either the ability of it to perform its obligations under this Agreement or its
financial condition.

ARTICLE X

TERMINATION

Section 10.01 Termination Upon Repurchase or Liquidation of All Mortgage Loans.

(a) Subject to Section 10.02, the respective obligations and responsibilities
under this Agreement of the Depositor, the Servicer, the Master Servicer and the
Trustee (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 9.05 and of the Servicer to make remittances to the
Securities Administrator and the Securities Administrator to make payments in
respect of the REMIC I Regular Interests, REMIC II Regular Interests or the
Classes of Certificates as hereinafter set forth) shall terminate upon payment
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the deposit of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Servicer (as described
below) all Mortgage Loans and each REO Property remaining in REMIC I and
(ii) the final payment or other liquidation (or any advance with respect
thereto) of the last Mortgage Loan or REO Property remaining in REMIC I;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.

(b) The Servicer may, at its option (the party exercising such right the
“Terminator”), terminate this Agreement on any Distribution Date on which the
aggregate of the Stated Principal Balances of the Mortgage Loans (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) on such date is equal to or less
than 10% of the aggregate Stated Principal Balance of the Mortgage Loans on the
Cut-off Date, by purchasing, on such Distribution Date, all of the outstanding
Mortgage Loans and REO Properties at a price equal to the fair market value of
the Mortgage Loans and REO Properties (as determined by the Terminator and, to
the extent that the Class A Certificates or a Class of Mezzanine Certificates
will not receive all amounts owed to it as a result of the termination, the
Securities Administrator, as of the close of business on the third Business Day
next preceding the date upon which notice of any such termination is furnished
to the related Certificateholders pursuant to Section 10.01(c)), plus accrued
and unpaid interest thereon at the weighted average of the Mortgage Rates
through the end of the Due Period preceding the final Distribution Date plus
unreimbursed Servicing Advances, P&I Advances, any unpaid Servicing Fees
allocable to such Mortgage Loans and REO Properties, any accrued unpaid Net WAC
Rate Carryover Amount, any previously unpaid Allocated Realized Loss Amounts and
any Swap Termination Payment to the Swap Provider then remaining unpaid or which
is due to the exercise of such option, and any unreimbursed expenses due to any
party to this Agreement (the “Termination Price”). In connection with any such
purchase pursuant to the preceding paragraph, the Servicer shall deposit in the
Distribution Account all amounts then on deposit in the Collection Account,
which deposit shall be deemed to have occurred immediately preceding such
purchase.

Any such purchase shall be accomplished by deposit into the Distribution Account
on the Determination Date before such Distribution Date of the Termination
Price.

(c) Notice of any termination, specifying the Distribution Date (which shall be
a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Securities
Administrator for payment of the final distribution and cancellation, shall be
given promptly by the Securities Administrator upon the Securities Administrator
receiving notice of such date from the Servicer, by letter to the
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution
specifying (1) the Distribution Date upon which final distribution of the
Certificates will be made upon presentation and surrender of such Certificates
at the office or agency of the Securities Administrator therein designated,
(2) the amount of any such final distribution and (3) 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 or agency of the Securities Administrator therein specified.

 

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(d) Upon presentation and surrender of the Certificates, the Securities
Administrator shall cause to be distributed to the Holders of the Certificates
on the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Class and to the extent that funds are
available for such purpose, an amount equal to the amount required to be
distributed to such Holders in accordance with the provisions of Section 5.01
for such Distribution Date.

(e) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Securities Administrator shall promptly following such
date cause all funds in the Distribution Account not distributed in final
distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining Certificateholders by depositing such funds in a separate Servicing
Account for the benefit of such Certificateholders, and the Master Servicer (if
the Servicer has exercised its right to purchase the Mortgage Loans) or the
Securities Administrator (in any other case) 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
nine months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Residual Certificateholder shall be entitled
to all unclaimed funds and other assets which remain subject hereto, and the
Securities Administrator upon transfer of such funds shall be discharged of any
responsibility for such funds, and the Certificateholders shall look to the
Residual Certificateholder for payment.

Section 10.02 Additional Termination Requirements.

(a) In the event that the Servicer purchases all the Mortgage Loans and each REO
Property or the final payment on or other liquidation of the last Mortgage Loan
or REO Property remaining in REMIC I pursuant to Section 10.01, the Trust Fund
shall be terminated in accordance with the following additional requirements:

(i) The Securities Administrator shall specify the first day in the 90-day
liquidation period in a statement attached to each Trust REMIC’s final Tax
Return pursuant to Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion of Counsel obtained by and at
the expense of the Servicer;

(ii) During such 90-day liquidation period and, at or prior to the time of
making of the final payment on the Certificates, the Trustee shall sell all of
the assets of REMIC I to the Servicer for cash; and

(iii) At the time of the making of the final payment on the Certificates, the
Securities Administrator shall distribute or credit, or cause to be distributed
or credited, to the Holders of the Residual Certificates all cash on hand in the
Trust Fund (other than cash retained to meet claims), and the Trust Fund shall
terminate at that time.

(b) At the expense of the Servicer (or, if the Trust Fund is being terminated as
a result of the occurrence of the event described in clause (ii) of the first
paragraph of Section 10.01, at the expense of the Trust Fund), the Servicer
shall prepare or cause to be prepared the documentation required in connection
with the adoption of a plan of liquidation of each Trust REMIC pursuant to this
Section 10.02.

 

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(c) By their acceptance of Certificates, the Holders thereof hereby agree to
authorize the Securities Administrator to specify the 90-day liquidation period
for each Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.

ARTICLE XI

REMIC PROVISIONS

Section 11.01 REMIC Administration.

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

(b) The Closing Date is hereby designated as the “Startup Day” of each REMIC
within the meaning of section 860G(a)(9) of the Code.

(c) The Securities Administrator shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to each REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, but not including expenses of a routine audit or expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Securities Administrator in fulfilling its duties hereunder.
The Securities Administrator shall be entitled to reimbursement of expenses to
the extent provided in clause (i) above from the Collection Account.

(d) The Securities Administrator shall prepare and file, and the Trustee shall
sign all of the Tax Returns in respect of each REMIC created hereunder. The
expenses of preparing and filing such returns shall be borne by the Securities
Administrator without any right of reimbursement thereof.

(e) The Holder of the Residual Certificate at any time holding the largest
Percentage Interest thereof shall be the “tax matters person” as defined in the
REMIC Provisions (the “Tax Matters Person”) with respect to the related REMIC
and shall act as Tax Matters Person for each REMIC. The Securities
Administrator, as agent for the Tax Matters Person, shall perform on behalf of
each REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, if required by the Code, the REMIC
Provisions, or other such guidance, the Securities Administrator, as agent for
the Tax Matters Person, shall provide (i) to the Treasury or other governmental
authority such information as is necessary for the application of any tax
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the transfer of a Residual Certificate to any disqualified person or
organization and (ii) to the Certificateholders such information or reports as
are required by the Code or REMIC Provisions. The Securities Administrator, as
agent for the Tax Matters Person, shall represent each REMIC 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, enter into settlement agreements with any
government taxing agency, extend any statute of limitations relating to any item
of any REMIC and otherwise act on behalf of any REMIC in relation to any tax
matter involving the Trust.

(f) The Securities Administrator and the Holders of Certificates shall take any
action or cause the REMIC to take any action necessary to create or maintain the
status of each REMIC as a REMIC under the REMIC Provisions and shall assist each
other as necessary to create or maintain such status. Neither the Trustee, the
Securities Administrator nor the Holder of any Residual Certificate shall take
any action, cause any REMIC created hereunder to take any action or fail to take
(or fail to cause to be taken) any action that, under the REMIC Provisions, if
taken or not taken, as the case may be, could (i) endanger the status of such
REMIC as a REMIC or (ii) result in the imposition of a tax upon such REMIC
(including but not limited to the tax on prohibited transactions as defined in
Code Section 860F(a)(2) and the tax on prohibited contributions set forth on
Section 860G(d) of the Code) (either such event, an “Adverse REMIC Event”)
unless the Trustee and the Securities Administrator have received an Opinion of
Counsel (at the expense of the party seeking to take such action) to the effect
that the contemplated action will not endanger such status or result in the
imposition of such a tax. In addition, prior to taking any action with respect
to any REMIC created hereunder or the assets therein, or causing such REMIC to
take any action, which is not expressly permitted under the terms of this
Agreement, any Holder of a Residual Certificate will consult with the Trustee
and the Securities Administrator, or their respective designees, in writing,
with respect to whether such action could cause an Adverse REMIC Event to occur
with respect to any REMIC, and no such Person shall take any such action or
cause any REMIC to take any such action as to which the Trustee or the
Securities Administrator has advised it in writing that an Adverse REMIC Event
could occur.

(g) Each Holder of a Residual Certificate shall pay when due any and all taxes
imposed on each REMIC created hereunder by federal or state governmental
authorities. To the extent that such Trust taxes are not paid by a Residual
Certificateholder, the Securities Administrator shall pay any remaining REMIC
taxes out of current or future amounts otherwise distributable to the Holder of
the Residual Certificate in the REMICs or, if no such amounts are available, out
of other amounts held in the Distribution Account, and shall reduce amounts
otherwise payable to Holders of regular interests in the related REMIC. Subject
to the foregoing, in the event that a REMIC incurs a state or local tax,
including franchise taxes, as a result of a determination that such REMIC is
domiciled in the State of California or any other state for state tax purposes
by virtue of the location of the Servicer or any subservicer, the Servicer
agrees to pay on behalf of such REMIC when due, any and all state and local
taxes imposed as a result of such a determination, in the event that the Holder
of the related Residual Certificate fails to pay such taxes, if any, when
imposed.

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

 

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(i) No additional contributions of assets shall be made to any REMIC created
hereunder, except as expressly provided in this Agreement with respect to
eligible substitute mortgage loans.

(j) Neither the Trustee nor the Securities Administrator shall enter into any
arrangement by which any REMIC created hereunder will receive a fee or other
compensation for services.

(k) The Securities Administrator will apply for an Employee Identification
Number from the Internal Revenue Service via a Form SS-4 or other acceptable
method for all tax entities and shall complete the Form 8811.

Section 11.02 Prohibited Transactions and Activities.

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

Section 11.03 Indemnification with Respect to Certain Taxes and Loss of REMIC
Status.

(a) The Trustee agrees to be liable for any taxes and costs incurred by the
Trust Fund, the Depositor, the Master Servicer, the Securities Administrator or
the Servicer including, without limitation, any reasonable attorneys fees
imposed on or incurred by the Trust Fund, the Depositor, the Master Servicer,
the Securities Administrator or the Servicer as a result of the Trustee’s
failure to perform its covenants set forth in this Article XI in accordance with
the standard of care of the Trustee set forth in this Agreement.

(b) The Servicer agrees to indemnify the Trust Fund, the Depositor, the Master
Servicer, the Securities Administrator and the Trustee for any taxes and costs
including any reasonable attorneys’ fees imposed on or incurred by the Trust
Fund, the Depositor, the Master Servicer, the Securities Administrator or the
Trustee, as a result of the Servicer’s failure to perform its covenants set
forth in Article III in accordance with the standard of care of the Servicer set
forth in this Agreement.

 

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(c) The Master Servicer agrees to indemnify the Trust Fund, the Depositor, the
Servicer and the Trustee for any taxes and costs including any reasonable
attorneys’ fees imposed on or incurred by the Trust Fund, the Depositor, the
Servicer or the Trustee, as a result of the Master Servicer’s failure to perform
its covenants set forth in Article IV in accordance with the standard of care of
the Master Servicer set forth in this Agreement.

(d) The Securities Administrator agrees to be liable for any taxes and costs
incurred by the Trust Fund, the Depositor or the Trustee including any
reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Depositor, the Servicer or the Trustee as a result of the Securities
Administrator’s failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Securities Administrator set forth
in this Agreement.

ARTICLE XII

MISCELLANEOUS PROVISIONS

Section 12.01 Amendment.

This Agreement may be amended from time to time by the Depositor, the Servicer,
the Master Servicer, the Securities Administrator and the Trustee, but without
the consent of any of the Certificateholders, (i) to cure any ambiguity or
defect, (ii) to correct, modify or supplement any provisions herein (including
to give effect to the expectations of Certificateholders), or (iii) to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement,
provided that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee, 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. No amendment shall be
deemed to adversely affect in any material respect the interests of any
Certificateholder who shall have consented thereto, and no Opinion of Counsel
shall be required to address the effect of any such amendment on any such
consenting Certificateholder. Notwithstanding any of the other provisions of
this Section 12.01, none of the Depositor, the Servicer, the Master Servicer,
the Securities Administrator or the Trustee shall enter into any amendment of
this Agreement that could have an adverse effect on the Swap Provider without
the prior written consent of the Swap Provider.

This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Master Servicer, the Securities Administrator and the Trustee with
the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii) as
evidenced by an Opinion of Counsel delivered to the Trustee, adversely affect in
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any Class of Certificates in a manner, other than as described in (i), without 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, or (iii) modify the consents required by the immediately preceding
clauses (i) and (ii) without the consent of the Holders of all Certificates then
outstanding. Notwithstanding any other provision of this Agreement, for purposes
of the giving or withholding of consents pursuant to this Section 12.01,
Certificates registered in the name of the Depositor or the Servicer or any
Affiliate thereof shall be entitled to Voting Rights with respect to matters
affecting such Certificates. Without limiting the generality of the foregoing,
any amendment to this Agreement required in connection with the compliance with
or the clarification of any reporting obligations described in Section 5.09
hereof shall not require the consent of any Certificateholder and without the
need for any Opinion of Counsel or Rating Agency confirmation.

Notwithstanding any contrary provision of this Agreement, the Trustee shall not
consent to any amendment to this Agreement unless it shall have first received
an Opinion of Counsel to the effect that such amendment will not result in the
imposition of any tax on any Trust REMIC pursuant to the REMIC Provisions or
cause any Trust REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding, that such amendment is authorized or permitted by
this Agreement and that all conditions precedent thereto have been satisfied.

Promptly after the execution of any such amendment the Trustee shall furnish a
copy of such amendment to each Certificateholder. It shall not be necessary for
the consent of Certificateholders under this Section 12.01 to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe. The cost of any Opinion of Counsel to be delivered
pursuant to this Section 12.01 shall be borne by the Person seeking the related
amendment, but in no event shall such Opinion of Counsel be an expense of the
Trustee. The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.

Section 12.02 Recordation of Agreement; Counterparts.

To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Depositor at the expense of the Certificateholders, but only upon direction of
the Trustee accompanied by an Opinion of Counsel (provided at the expense of the
Certificateholder requesting recordation) to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.

For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.

 

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Section 12.03 Limitation on Rights of Certificateholders.

The death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust Fund, nor entitle such Certificateholder’s legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.

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

No Certificateholder shall have any right by virtue of any provision of this
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Holder previously shall
have given to the Trustee a written notice of default and of the continuance
thereof, as hereinbefore provided, and unless also the Holders of Certificates
entitled to at least 25% of the Voting Rights shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 15 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding. It is understood and intended,
and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatsoever by virtue of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of such Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section, each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.

Section 12.04 Governing Law.

This Agreement shall be construed in accordance with the laws of the State of
New York and the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws without regard to conflicts of laws
principles thereof.

Section 12.05 Notices.

All directions, demands and notices hereunder shall be in writing and shall be
deemed to have been duly given when received if sent by facsimile, receipt
confirmed, if personally delivered at or mailed by first class mail, postage
prepaid, or by express delivery service or delivered in any other manner
specified herein, to (a) in the case of the Depositor, SG Mortgage

 

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Securities, LLC, 1221 Avenue of the Americas, New York, New York 10020,
Attention: Abner Figueroa (telecopy number (212) 278-7320) or such other address
or telecopy number as may hereafter be furnished to the Servicer, the Master
Servicer, the Securities Administrator, Swap Provider and the Trustee in writing
by the Depositor, (b) in the case of the Servicer, Option One Mortgage
Corporation, 3 Ada, Irvine, California 92618, Attention: SGMS 2006 OPT2,
Attention: Debbie Lonergan (facsimile number: (949) 790-7514), or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
Master Servicer, the Securities Administrator, Swap Provider and the Depositor
in writing by the Servicer, (c) in the case of the Master Servicer and the
Securities Administrator, P.O. Box 98, Columbia, Maryland 21046 and for
overnight delivery to 9062 Old Annapolis Road, Columbia, Maryland 21045,
Attention: Corporate Trust Services – SGMS 2006-OPT2 (telecopy number:
(410) 715-2380), or such other address or telecopy number as may hereafter be
furnished to the Trustee, the Depositor, Swap Provider and the Servicer in
writing by the Master Servicer or the Securities Administrator, (d) in the case
of the Trustee, at the Corporate Trust Office or such other address or telecopy
number as may hereafter be furnished to the Servicer, the Master Servicer, the
Securities Administrator, Swap Provider and the Depositor in writing by the
Trustee and (e) in the case of the Swap Provider, The Bank of New York, One Wall
Street, 13th Floor, Attention: Derivatives Group (with a copy to the Legal
Department), or such other address or telecopy number as may hereafter be
furnished to the Servicer, Master Servicer, Securities Administrator, Trustee
and the Depositor in writing by the Swap Provider. Any notice required or
permitted to be given to a Certificateholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given when mailed, whether or
not the Certificateholder receives such notice. A copy of any notice required to
be telecopied hereunder also shall be-mailed to the appropriate party in the
manner set forth above.

Section 12.06 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 12.07 Notice to Rating Agencies.

The Trustee shall use its best efforts promptly to provide notice to the Rating
Agencies with respect to each of the following of which a Responsible Officer
has actual knowledge:

1. Any material change or amendment to this Agreement;

2. The occurrence of any Servicer Event of Default or Master Servicer Event of
Default that has not been cured or waived;

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

 

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4. The repurchase or substitution of Mortgage Loans pursuant to or as
contemplated by Section 2.03;

5. The final payment to the Holders of any Class of Certificates;

6. Any change in the location of the Distribution Account; and

7. Any event that would result in the inability of the Trustee as successor
Servicer to make advances regarding delinquent Mortgage Loans.

In addition, the Securities Administrator shall promptly make available to each
Rating Agency copies of each report to Certificateholders described in
Section 5.02.

The Servicer shall make available to each Rating Agency copies of the following:

1. Each annual statement as to compliance described in Section 3.17;

2. Each annual independent public accountants’ servicing report described in
Section 3.18 and 4.16; and

3. Any change in the location of the Collection Account.

Any such notice pursuant to this Section 12.07 shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by first
class mail, postage prepaid, or by express delivery service to Standard &
Poor’s, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041, to Fitch Ratings, 1 State Street Plaza, New York, New York
10004, to Dominion Bond Rating Service, Inc., One Exchange Plaza, New York, New
York 10006 and to Moody’s Investors Service, Inc., 99 Church Street, New York,
New York 10007 or such other addresses as the Rating Agencies may designate in
writing to the parties hereto.

Section 12.08 Article and Section References.

All article and section references used in this Agreement, unless otherwise
provided, are to articles and sections in this Agreement.

Section 12.09 Grant of Security Interest.

It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Depositor to the Trustee, on behalf of the Trust and for
the benefit of the Certificateholders, be, and be construed as, a sale of the
Mortgage Loans by the Depositor and not a pledge of the Mortgage Loans to secure
a debt or other obligation of the Depositor. However, in the event that,
notwithstanding the aforementioned intent of the parties, the Mortgage Loans are
held to be property of the Depositor, then, (a) it is the express intent of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Depositor to the Trustee, on behalf of the Trust and for the benefit of the
Certificateholders, to secure a debt or other obligation of the Depositor and
(b)(1) this Agreement shall also be deemed to be a security agreement within the
meaning of

 

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Articles 8 and 9 of the Uniform Commercial Code as in effect from time to time
in the State of New York; (2) the conveyance provided for in Section 2.01 shall
be deemed to be a grant by the Depositor to the Trustee, on behalf of the Trust
and for the benefit of the Certificateholders, of a security interest in all of
the Depositor’s right, title and interest in and to the Mortgage Loans and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account and the Distribution Account,
whether in the form of cash, instruments, securities or other property; (3) the
obligations secured by such security agreement shall be deemed to be all of the
Depositor’s obligations under this Agreement, including the obligation to
provide to the Certificateholders the benefits of this Agreement relating to the
Mortgage Loans and the Trust Fund; and (4) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. Accordingly, the Depositor hereby grants to the Trustee, on
behalf of the Trust and for the benefit of the Certificateholders, a security
interest in the Mortgage Loans and all other property described in clause (2) of
the preceding sentence, for the purpose of securing to the Trustee the
performance by the Depositor of the obligations described in clause (3) of the
preceding sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee, on behalf of the Trust and for the benefit of the
Certificateholders.

Section 12.10 Survival of Indemnification. Any and all indemnities to be
provided by any party to this Agreement shall survive the termination and
resignation of any party hereto and the termination of this Agreement.

Section 12.11 Third Party Beneficiary. The Swap Provider is an express
third-party beneficiary of this Agreement, and shall have the right to enforce
the provisions of this Agreement.

ARTICLE XIII

COMPLIANCE WITH REGULATION AB

Section 13.01 Intent of the Parties; Reasonableness. The Depositor, the
Servicer, the Master Servicer and the Securities Administrator acknowledge and
agree that the purpose of Sections 3.17, 3.18, 5.09 and this Article XIII is to
facilitate compliance by the Depositor with the provisions of Regulation AB and
related rules and regulations of the Commission. The Depositor shall not
exercise its right to request delivery of information or other performance under
these provisions other than in good faith, or for purposes other than compliance
with the Securities Act, the Exchange Act and the rules and regulations of the
Commission under the Securities Act and the Exchange Act. Each of the Servicer,
the Master Servicer and the Securities Administrator acknowledges that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its

 

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staff, and agrees to comply with requests made by the Depositor, the Master
Servicer or the Securities Administrator in good faith for delivery of
information under these provisions on the basis of evolving interpretations of
Regulation AB. Each of the Servicer, the Master Servicer, the Securities
Administrator and the Trustee shall cooperate fully with the Depositor to
deliver to the Depositor (including any of its assignees or designees), any and
all statements, reports, certifications, records and any other information
necessary in the good faith determination of the Depositor, the Master Servicer
or the Securities Administrator to permit the Depositor, the Master Servicer or
the Securities Administrator to comply with the provisions of Regulation AB,
together with such disclosures relating to the Servicer, the Master Servicer,
the Securities Administrator, the Trustee and the Mortgage Loans, or the
servicing of the Mortgage Loans, reasonably believed by the Depositor to be
necessary in order to effect such compliance.

Section 13.02 Additional Representations and Warranties of the Servicer. (a) The
Servicer shall be deemed to represent to the Depositor, the Master Servicer and
the Securities Administrator as of the date on which information is first
provided to the Depositor, the Master Servicer or the Securities Administrator
under Section 5.09 that, except as disclosed in writing to the Master Servicer,
the Securities Administrator or the Depositor prior to such date: (i) it is not
aware and has not received notice that any default, early amortization or other
performance triggering event has occurred as to any other Securitization
Transaction due to any act or failure to act of the Servicer; (ii) it has not
been terminated as servicer in a securitization of mortgage loans either due to
a servicing default or to application of a servicing performance test or
trigger; (iii) no material noncompliance with the applicable servicing criteria
with respect to other securitizations of residential mortgage loans involving
the Servicer as servicer has been disclosed or reported by the Servicer; (iv) no
material changes to the Servicer’s policies or procedures with respect to the
servicing function it will perform under this Agreement for mortgage loans of a
type similar to the Mortgage Loans have occurred during the three year period
immediately preceding the related Securitization Transaction; (v) there are no
aspects of its financial condition that could have a material adverse effect on
the performance by it of its servicing obligations under this Agreement or any
other Securitization Transaction; (vi) there are no material legal or
governmental proceedings pending (or known to be contemplated) against it or any
Sub-Servicer; and (vii) there are no affiliations, relationships or transactions
relating to the Servicer or any Sub-Servicer with respect to any Securitization
Transaction and any party thereto identified by the related Depositor of the
type described in Item 1119 of Regulation AB.

(a) If so requested by the Master Servicer, the Securities Administrator or the
Depositor on any date following the date on which information is first provided
to the Master Servicer, the Securities Administrator or the Depositor under
Section 5.09, the Servicer shall, within five Business Days following such
request, confirm in writing the accuracy of the representations and warranties
set forth in paragraph (a) of this Section or, if any such representation and
warranty is not accurate as of the date of such request or such confirmation,
provide reasonably adequate disclosure of the pertinent facts, in writing, to
the requesting party.

 

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

 

SG MORTGAGE SECURITIES, LLC,

as Depositor

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

OPTION ONE MORTGAGE CORPORATION,

as Servicer

By:      Name:   Title:  

HSBC BANK USA, NATIONAL ASSOCIATION,

not in its individual capacity but solely as Trustee

By:      Name:   Title:  

WELLS FARGO BANK, N.A.

as Master Servicer and Securities Administrator

By:      Name:   Title:  

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

WELLS FARGO BANK, N.A.

as Custodian

By:      Name:   Title:   FOR PURPOSES OF SECTIONS 4.19, 7.08 AND 7.09:
PENTALPHA SURVEILLANCE LLC, By:      Name:   Title:  

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

STATE OF

   )       )    ss.:

COUNTY OF

   )   

On the              day of              200__, before me, a notary public in and
for said State, personally appeared                                         
         known to me to be a                                      of SG Mortgage
Securities LLC, one of the entities that executed the within instrument, and
also known to me to be the person who executed it on behalf of said entity, and
acknowledged to me that such entity executed the within instrument.

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

 

              Notary Public

[Notarial Seal]

    My commission expires

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

STATE OF

   )       )    ss.:

COUNTY OF

   )   

On the      day of             , 200__, before me, a notary public in and for
said State, personally appeared                                          known
to me to be a                                               of Pentalpha
Surveillance LLC, one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.

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

 

              Notary Public

[Notarial Seal]

    My commission expires

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

STATE OF

   )       )    ss.:

COUNTY OF

   )   

On the          day of             , 200__, before me, a notary public in and
for said State, personally appeared                                         
     known to me to be a                                               of
                                , Option One Mortgage Corporation, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

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

 

              Notary Public

[Notarial Seal]

    My commission expires

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

STATE OF

   )       )    ss.:

COUNTY OF

   )   

On the          day of             , 200__, before me, a notary public in and
for said State, personally appeared                                         
        , known to me to be a                                          of Wells
Fargo Bank, N.A., one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.

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

 

              Notary Public

[Notarial Seal]

    My commission expires

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

STATE OF

   )       )    ss.:

COUNTY OF

   )   

On the          day of             , 200    , before me, a notary public in and
for said State, personally appeared                                         
    , known to me to be a                                      of HSBC Bank USA,
National Association, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

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

 

              Notary Public

[Notarial Seal]

    My commission expires

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

EXHIBIT A-1

Form of Class A-1 Certificate

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE SECURITIES
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

ANY PURCHASER SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTION
6.02(e) OF THE POOLING AND SERVICING AGREEMENT.

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

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-1-1

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

Certificate No. 1    Variable Pass-Through Rate Class A-1    Percentage
Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class A-1
Certificates: $[________]

First Distribution Date:

January 25, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[___________]

Assumed Final Maturity Date:

October 2036

  

CUSIP

[____________]

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class A-1,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class A-1
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Securities Administrator referred to below or any of their respective
affiliates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-1 Certificate (obtained by dividing the
Denomination of this Class A-1 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by SG Mortgage Securities,
LLC (the “Depositor”). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2006 (the “Agreement”) among the Depositor,
Option One Mortgage Corporation, as servicer (the “Servicer”), Wells Fargo Bank,
N.A., a national banking association, as master servicer (the “Master
Servicer”), securities administrator (the “Securities Administrator”) and
custodian, and HSBC Bank USA, National Association, as trustee (the “Trustee”).
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class A-1 Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Class A-1 Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

 

A-1-2

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

Reference is hereby made to the further provisions of this Class A-1 Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

This Class A-1 Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-1-3

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

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

 

Dated: December 14, 2006    

WELLS FARGO BANK, N.A.,

as Securities Administrator

    By:              Raymond Delli Colli         Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

    By:             

Raymond Delli Colli

Authorized Signatory

 

A-1-4

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

[Reverse of Class A-1 Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-1-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-1-6

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

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 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.

 

A-1-7

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

EXHIBIT A-2

Form of Class A-2 Certificate

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE SECURITIES
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

ANY PURCHASER SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTION
6.02(e) OF THE POOLING AND SERVICING AGREEMENT.

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

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101(as modified by Section 3(42) of ERISA), OF
ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-2-1

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

Certificate No. 1    Variable Pass-Through Rate Class A-2    Percentage
Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class A-2
Certificates: $[________]

First Distribution Date:

January 25, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[___________]

Assumed Final Maturity Date:

October 2036

  

CUSIP

[____________]

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class A-2,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class A-2
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Securities Administrator referred to below or any of their respective
affiliates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-2 Certificate (obtained by dividing the
Denomination of this Class A-2 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by SG Mortgage Securities,
LLC (the “Depositor”). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2006 (the “Agreement”) among the Depositor,
Option One Mortgage Corporation, as servicer (the “Servicer”), Wells Fargo Bank,
N.A., a national banking association, as master servicer (the “Master
Servicer”), securities administrator (the “Securities Administrator”) and
custodian, and HSBC Bank USA, National Association, as trustee (the “Trustee”).
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class A-2 Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Class A-2 Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

 

A-2-2

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

Reference is hereby made to the further provisions of this Class A-2 Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

This Class A-2 Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-2-3

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

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

 

Dated: _______, 200___    

WELLS FARGO BANK, N.A.,

as Securities Administrator

    By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

    By:            Authorized Signatory

 

A-2-4

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

[Reverse of Class A-2 Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-2-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-2-6

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

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 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.

 

A-2-7

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

EXHIBIT A-3

Form of Class A-3A Certificate

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE SECURITIES
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

ANY PURCHASER SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTION
6.02(e) OF THE POOLING AND SERVICING AGREEMENT.

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

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101, (as modified by Section 3(42) of ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-3-1

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

Certificate No. 1    Variable Pass-Through Rate Class A-3A    Percentage
Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class A-3A
Certificates: $[________]

First Distribution Date:

January 25, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[___________]

Assumed Final Maturity Date:

October 2036

  

CUSIP

[____________]

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class A-3A,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class A-3A
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-3A
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, or the Securities Administrator
referred to below or any of their respective affiliates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-3A Certificate (obtained by dividing the
Denomination of this Class A-3A Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by SG Mortgage Securities,
LLC (the “Depositor”). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2006 (the “Agreement”) among the Depositor,
Option One Mortgage Corporation, as servicer (the “Servicer”), Wells Fargo Bank,
N.A., a national banking association, as master servicer (the “Master
Servicer”), securities administrator (the “Securities Administrator”) and
custodian, and HSBC Bank USA, National Association, as trustee (the “Trustee”).
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class A-3A Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Class A-3A Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

 

A-3-2

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

Reference is hereby made to the further provisions of this Class A-3A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

This Class A-3A Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-3-3

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

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

 

Dated: _______, 200___    

WELLS FARGO BANK, N.A.,

as Securities Administrator

    By:              Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

    By:              Authorized Signatory

 

A-3-4

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

[Reverse of Class A-3A Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-3-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-3-6

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

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 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.

 

A-3-7

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

EXHIBIT A-4

Form of Class A-3B Certificate

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE SECURITIES
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-3A CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

ANY PURCHASER SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTION
6.02(e) OF THE POOLING AND SERVICING AGREEMENT.

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

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-4-1

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

Certificate No. 1    Variable Pass-Through Rate Class A-3B    Percentage
Interest: 100%

Date of Pooling and Servicing Agreement:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class A-3B
Certificates: $[________] Cut-off Date: December 1, 2006   

First Distribution Date:

January 27, 2006

  

Initial Certificate Principal Balance of this Certificate:

$[___________]

Assumed Final Maturity Date:

October 2036

  

CUSIP

[____________]

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class A-3B,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class A-3B
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-3B
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, or the Securities Administrator
referred to below or any of their respective affiliates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-3B Certificate (obtained by dividing the
Denomination of this Class A-3B Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by SG Mortgage Securities,
LLC (the “Depositor”). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2006 (the “Agreement”) among the Depositor,
Option One Mortgage Corporation, as servicer (the “Servicer”), Wells Fargo Bank,
N.A., a national banking association, as master servicer (the “Master
Servicer”), securities administrator (the “Securities Administrator”) and
custodian, and HSBC Bank USA, National Association, as trustee (the “Trustee”).
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class A-3B Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Class A-3B Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

 

A-4-2

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

Reference is hereby made to the further provisions of this Class A-3B
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

This Class A-3B Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-4-3

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

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

 

Dated: _______, 200___    

WELLS FARGO BANK, N.A.,

as Securities Administrator

    By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

WELLS FARGO BANK, N.A.,

as Certificate Registrar

By:      Authorized Signatory

 

A-4-4

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

[Reverse of Class A-3B Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-4-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-4-6

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

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 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.

 

A-4-7

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

EXHIBIT A-5

Form of Class A-3C Certificate

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE SECURITIES
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-3A AND CLASS A-3B CERTIFICATES TO
THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

ANY PURCHASER SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTION
6.02(e) OF THE POOLING AND SERVICING AGREEMENT.

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

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-5-1

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

Certificate No. 1    Variable Pass-Through Rate Class A-3C    Percentage
Interest: 100%

Date of Pooling and Servicing Agreement:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class A-3C
Certificates: $[________] Cut-off Date: December 1, 2006   

First Distribution Date:

January 27, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[___________]

Assumed Final Maturity Date:

October 2036

  

CUSIP

[____________]

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class A-3C,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class A-3C
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-3C
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, or the Securities Administrator
referred to below or any of their respective affiliates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-3C Certificate (obtained by dividing the
Denomination of this Class A-3C Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by SG Mortgage Securities,
LLC (the “Depositor”). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2006 (the “Agreement”) among the Depositor,
Option One Mortgage Corporation, as servicer (the “Servicer”), Wells Fargo Bank,
N.A., a national banking association, as master servicer (the “Master
Servicer”), securities administrator (the “Securities Administrator”) and
custodian, and HSBC Bank USA, National Association, as trustee (the “Trustee”).
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class A-3C Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Class A-3C Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

 

A-5-2

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

Reference is hereby made to the further provisions of this Class A-3C
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

This Class A-3C Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-5-3

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

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

 

Dated: _______, 200___    

WELLS FARGO BANK, N.A.,

as Securities Administrator

      By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

      By:            Authorized Signatory

 

A-5-4

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

[Reverse of Class A-3C Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-5-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-5-6

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

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 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.

 

A-5-7

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

EXHIBIT A-6

Form of Class A-3D Certificate

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE SECURITIES
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-3A, CLASS A-3B AND CLASS A-3C
CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.

ANY PURCHASER SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTION
6.02(e) OF THE POOLING AND SERVICING AGREEMENT.

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

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-6-1

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

Certificate No. 1    Variable Pass-Through Rate Class A-3D    Percentage
Interest: 100%

Date of Pooling and Servicing Agreement:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class A-3D
Certificates: $[________] Cut-off Date: December 1, 2006   

First Distribution Date:

January 27, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[___________]

Assumed Final Maturity Date:

October 2036

  

CUSIP

[____________]

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class A-3D,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class A-3D
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-3D
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, or the Securities Administrator
referred to below or any of their respective affiliates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-3D Certificate (obtained by dividing the
Denomination of this Class A-3D Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by SG Mortgage Securities,
LLC (the “Depositor”). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2006 (the “Agreement”) among the Depositor,
Option One Mortgage Corporation, as servicer (the “Servicer”), Wells Fargo Bank,
N.A., a national banking association, as master servicer (the “Master
Servicer”), securities administrator (the “Securities Administrator”) and
custodian, and HSBC Bank USA, National Association, as trustee (the “Trustee”).
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class A-3D Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Class A-3D Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

 

A-6-2

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

Reference is hereby made to the further provisions of this Class A-3D
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

This Class A-3D Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-6-3

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

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

 

Dated: __________, 200__    

WELLS FARGO BANK, N.A.,

as Securities Administrator

      By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

      By:            Authorized Signatory

 

A-6-4

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

[Reverse of Class A-3D Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-6-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-6-6

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

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 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.

 

A-6-7

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

EXHIBIT A-7

Form of Class M-[    ] Certificate

[Publicly-Offered Class M Certificates]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE SECURITIES
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A, [CLASS M-1, AND CLASS M-[    ]]
CERTIFICATES] TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.

ANY PURCHASER SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTIONS
6.02 (e) OF THE POOLING AND SERVICING AGREEMENT.

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

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02 (f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-7-1

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

Certificate No. 1    Variable Pass-Through Rate Class M-[    ]    Percentage
Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class M-1
Certificates: $[________]

First Distribution Date:

January 25, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[___________]

Assumed Final Maturity Date:

October 2036

  

CUSIP

[____________]

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class M-[    ],

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class M-[    ]
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-[    ]
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, or the Securities Administrator
referred to below or any of their respective affiliates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-[    ] Certificate (obtained by dividing the
Denomination of this Class M-[    ] Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by SG Mortgage
Securities, LLC (the “Depositor”). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of December 1, 2006 (the “Agreement”) among the
Depositor, Option One Mortgage Corporation, as servicer (the “Servicer”), Wells
Fargo Bank, N.A., a national banking association, as master servicer (the
“Master Servicer”), securities administrator (the “Securities Administrator”)
and custodian, and HSBC Bank USA, National Association, as trustee (the
“Trustee”). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-[    ] Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-[    ] Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

 

A-7-2

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

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

This Class M-[    ] Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-7-3

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

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

 

Dated: _______, 200__    

WELLS FARGO BANK, N.A.,

as Securities Administrator

      By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

      By:            Authorized Signatory

 

A-7-4

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

[Reverse of Class M-[    ] Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-7-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-7-6

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

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 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.

 

A-7-7

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

EXHIBIT A-8

Form of Class M-[    ] Certificate

[Form of Privately-Placed Class M Certificate]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE SECURITIES
ADMINISTRATOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A, [CLASS M-1, CLASS M-2, CLASS
M-3, CLASS M-4, CLASS M-5, CLASS M-6, CLASS M-7, CLASS M-8 AND CLASS M-9
CERTIFICATES] TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.

THIS CLASS M-[    ] CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND NONE OF THE DEPOSITOR, THE TRUSTEE OR THE SECURITIES ADMINISTRATOR
IS REQUIRED, AND NONE OF THEM INTENDS, TO SO REGISTER OR QUALIFY THIS CLASS
M-[    ] CERTIFICATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS
M-[ ] CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN
ACCORDANCE WITH THE PROVISIONS OF SECTIONS 6.02 (d) AND (e) OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN. THE POOLING AND SERVICING AGREEMENT
CONTAINS CERTAIN RESTRICTIONS REGARDING THE TRANSFER OF THIS CLASS M-[    ]
CERTIFICATE.

EACH HOLDER AND CERTIFICATE OWNER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF
IS DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT ACQUIRED SUCH CERTIFICATE
(A) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE 1933 ACT, (B) AS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A
UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (C) IN THE CASE OF A BENEFICIAL OWNER OF AN
INTEREST IN A REGULATION S GLOBAL SECURITY, AS A NON-U.S. PERSON IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE 1933 ACT.

 

A-8-1

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

ANY PURCHASER SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTIONS
6.02(d) and (e) OF THE POOLING AND SERVICING AGREEMENT.

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

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02 (f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-8-2

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

Certificate No. 1    Variable Pass-Through Rate Class M-[    ]    Percentage
Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class M-[    ]
Certificates: $[________]

First Distribution Date:

January 27, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[___________]

Assumed Final Maturity Date:

October 2036

  

CUSIP

[____________]

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class M-[    ],

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust consisting
of first and second lien, adjustable and fixed rate mortgage loans (the
“Mortgage Loans”), SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class M-[    ]
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-[    ]
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Securities Administrator referred to below or any of their respective
affiliates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-[    ] Certificate (obtained by dividing the
Denomination of this Class M-[    ] Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by SG Mortgage
Securities, LLC (the “Depositor”). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of December 1, 2006 (the “Agreement”) among the
Depositor, Option One Mortgage Corporation, as servicer (the “Servicer”), Wells
Fargo Bank, N.A., a national banking association, as master servicer (the
“Master Servicer”), securities administrator (the “Securities Administrator”)
and custodian, and HSBC Bank USA, National Association, as trustee (the
“Trustee”). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-[    ] Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-[    ] Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(d) and (e) of the Pooling and Servicing Agreement.

 

A-8-3

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

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

This Class M-[    ] Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-8-4

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

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

 

Dated: _______, 200__    

WELLS FARGO BANK, N.A.,

as Securities Administrator

      By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

      By:            Authorized Signatory

 

A-8-5

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

[Reverse of Class M-[    ] Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-8-6

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

Interests in this Restricted Global Security may be exchanged for an interest in
the corresponding Regulation S Global Security, in each case subject to the
restrictions as set forth in the Pooling and Servicing Agreement.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-8-7

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

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 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.

 

A-8-8

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

EXHIBIT A-9

Form of Class CE Certificate

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

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A AND CLASS M CERTIFICATES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), (INCLUDING, WITHOUT
LIMITATION, OR ANY PERSON (INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL
ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO
IS USING “PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR
REGULATION PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42)
OF ERISA), OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-9-1

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

Certificate No. 1    Variable Pass-Through Rate Class CE    Percentage Interest:
100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class CE Certificates:
$[________]

First Distribution Date:

January 25, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[_________]

Assumed Final Maturity Date:

October 2036

  

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class CE,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class CE
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class CE
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Securities Administrator referred to below or any of their respective
affiliates.

This certifies that [                    ] is the registered owner of the
Percentage Interest evidenced by this Class CE Certificate (obtained by dividing
the Denomination of this Class CE Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by SG Mortgage Securities,
LLC (the “Depositor”). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2006 (the “Agreement”) among the Depositor,
Option One Mortgage Corporation, as servicer (the “Servicer”), Wells Fargo Bank,
N.A., a national banking association, as master servicer (the “Master
Servicer”), securities administrator (the “Securities Administrator”) and
custodian, and HSBC Bank USA, National Association, as trustee (the “Trustee”).
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class CE Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Class CE Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

No transfer of a Certificate of this Class shall be made unless such transfer is
made pursuant to an effective registration statement under the Act and any
applicable state securities laws or is exempt from the registration requirements
under said Act and such laws. In the event that a

 

A-9-2

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

transfer is to be made in reliance upon an exemption from the Act and such laws,
in order to assure compliance with the Act and such laws, the Certificateholder
desiring to effect such transfer and such Certificateholder’s prospective
transferee shall each certify to the Securities Administrator and the Depositor
in writing the facts surrounding the transfer. In the event that such a transfer
is not to be made pursuant to Rule 144A of the Act, there shall be delivered to
the Securities Administrator and the Depositor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Act, which Opinion of
Counsel shall not be obtained at the expense of the Securities Administrator or
the Depositor; or there shall be delivered to the Securities Administrator and
the Depositor a transferor certificate by the transferor and an investment
letter shall be executed by the transferee. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Securities
Administrator and the Depositor 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.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

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

This Class CE Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-9-3

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

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

 

Dated: ________, 200____    

WELLS FARGO BANK, N.A.,

as Securities Administrator

    By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

WELLS FARGO BANK, N.A.,

as Certificate Registrar

By:      Authorized Signatory

 

A-9-4

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

[Reverse of Class CE Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust, Asset-Backed Certificates, Series 2006-OPT2
(herein collectively called the “Certificates 2006-OPT2”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-9-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-9-6

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

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 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.

 

A-9-7

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

EXHIBIT A-10

Form of Class P Certificate

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”) (A “PLAN”), OR ANY PERSON (INCLUDING, WITHOUT LIMITATION, AN INSURANCE
COMPANY INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY
OR A TRUSTEE OF ANY PLAN) WHO IS USING “PLAN ASSETS,” WITHIN THE MEANING OF THE
U.S. DEPARTMENT OF LABOR REGULATION PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS
MODIFIED BY SECTION 3(42) OF ERISA), OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT
SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-10-1

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

Certificate No. 1    Class P    Percentage Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

   Aggregate Initial Certificate Principal Balance of the Class P Certificates:
$[________]

First Distribution Date:

January 25, 2007

  

Initial Certificate Principal Balance of this Certificate:

$[_________]

Assumed Final Maturity Date:

October 2036

  

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class P,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

Principal in respect of this Certificate is distributable monthly as set forth
herein. Accordingly, the Certificate Principal Balance of this Class P
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class P
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee or
the Securities Administrator referred to below or any of their respective
affiliates.

This certifies that [                    ] is the registered owner of the
Percentage Interest evidenced by this Class P Certificate (obtained by dividing
the Denomination of this Class P Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by SG Mortgage Securities,
LLC (the “Depositor”). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of December 1, 2006 (the “Agreement”) among the Depositor,
Option One Mortgage Corporation, as servicer (the “Servicer”), Wells Fargo Bank,
N.A., a national banking association, as master servicer (the “Master
Servicer”), securities administrator (the “Securities Administrator”) and
custodian, and HSBC Bank USA, National Association, as trustee (the “Trustee”).
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class P Certificate is issued under and
is subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class P Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

No transfer of a Certificate of this Class shall be made unless such transfer is
made pursuant to an effective registration statement under the Act and any
applicable state securities laws or is exempt from the registration requirements
under said Act and such laws. In the event that a

 

A-10-2

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

transfer is to be made in reliance upon an exemption from the Act and such laws,
in order to assure compliance with the Act and such laws, the Certificateholder
desiring to effect such transfer and such Certificateholder’s prospective
transferee shall each certify to the Securities Administrator and the Depositor
in writing the facts surrounding the transfer. In the event that such a transfer
is not to be made pursuant to Rule 144A of the Act, there shall be delivered to
the Securities Administrator and the Depositor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Act, which Opinion of
Counsel shall not be obtained at the expense of the Securities Administrator or
the Depositor; or there shall be delivered to the Securities Administrator and
the Depositor a transferor certificate by the transferor and an investment
letter shall be executed by the transferee. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Securities
Administrator and the Depositor 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.

Any purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

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

This Class P Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-10-3

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

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

 

Dated: ________, 200____    

WELLS FARGO BANK, N.A.,

as Securities Administrator

    By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

WELLS FARGO BANK, N.A.,

as Certificate Registrar

By:      Authorized Signatory

 

A-10-4

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

[Reverse of Class P Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-10-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-10-6

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

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 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.

 

A-10-7

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

EXHIBIT A-11

Form of Class R-I Certificate

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “RESIDUAL
INTEREST” IN ONE OR MORE “REAL ESTATE MORTGAGE INVESTMENT CONDUITS,” AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CLASS R-I CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE SECURITIES ADMINISTRATOR A TRANSFER
AFFIDAVIT IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS,” WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-11-1

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

Certificate No. 1    Class R-I    Percentage Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

  

First Distribution Date:

January 25, 2007

  

Assumed Final Maturity Date:

October 2036

  

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class R-I,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee
or the Securities Administrator referred to below or any of their respective
affiliates.

This certifies that [                    ] is the registered owner of the
Percentage Interest evidenced by this Certificate specified above in the
interest represented by all Certificates of the Class to which this Certificate
belongs in a Trust consisting primarily of the Mortgage Loans deposited by SG
Mortgage Securities, LLC (the “Depositor”). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of December 1, 2006 (the “Agreement”)
among the Depositor, Option One Mortgage Corporation, as servicer (the
“Servicer”), Wells Fargo Bank, N.A., a national banking association, as master
servicer (the “Master Servicer”), securities administrator (the “Securities
Administrator”) and custodian, and HSBC Bank USA, National Association, as
trustee (the “Trustee”). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

This Certificate does not have a principal balance or pass-through rate and will
be entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Securities
Administrator in Minneapolis, Minnesota.

No transfer of a Certificate of this Class shall be made unless such transfer is
made pursuant to an effective registration statement under the Act and any
applicable state securities laws or is exempt from the registration requirements
under said Act and such laws. In the event that a transfer is to be made in
reliance upon an exemption from the Act and such laws, in order to

 

A-11-2

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

assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder’s prospective transferee shall
each certify to the Securities Administrator and the Depositor in writing the
facts surrounding the transfer. In the event that such a transfer is not to be
made pursuant to Rule 144A of the Act, there shall be delivered to the
Securities Administrator and the Depositor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Act, which Opinion of
Counsel shall not be obtained at the expense of the Securities Administrator or
the Depositor; or there shall be delivered to the Securities Administrator and
the Depositor a transferor certificate by the transferor and an investment
letter shall be executed by the transferee. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Securities
Administrator and the Depositor 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.

Each Holder of this Certificate will be deemed to have agreed to be bound by the
restrictions of the Agreement, including but not limited to the restrictions
that (i) each person holding or acquiring any Ownership Interest in this
Certificate must be a Permitted Transferee, (ii) no Ownership Interest in this
Certificate may be transferred without delivery to the Securities Administrator,
and the Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Certificate must agree to require a transfer affidavit and to
deliver a transfer certificate to the Securities Administrator and the Trustee
as required pursuant to the Agreement, (iv) each person holding or acquiring an
Ownership Interest in this Certificate must agree not to transfer an Ownership
Interest in this Certificate if it has actual knowledge that the proposed
transferee is not a Permitted Transferee and (v) 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. Pursuant to the Agreement, the Master Servicer will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to disqualified organizations, if any person
other than a Permitted Transferee acquires an Ownership Interest on a Class R-I
Certificate in violation of the restrictions mentioned above. Any purchaser
shall be deemed to make the representations set forth in Section 6.02(e) of the
Pooling and Servicing Agreement.

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

This Class R-I Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-11-3

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

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

 

Dated: ________, 200____    

WELLS FARGO BANK, N.A.,

as Securities Administrator

    By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

    By:            Authorized Signatory

 

A-11-4

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

[Reverse of Class R-I Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-11-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-11-6

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

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 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.

 

A-11-7

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

EXHIBIT A-12

[Form of Class R-II Certificate]

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “RESIDUAL
INTEREST” IN ONE OR MORE “REAL ESTATE MORTGAGE INVESTMENT CONDUITS,” AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CLASS R-II CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS”, WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-12-1

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

Certificate No. 1    Class R-II    Percentage Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

  

First Distribution Date:

January 25, 2007

  

Assumed Final Maturity Date:

October 2036

  

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class R-II,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee
or the Securities Administrator referred to below or any of their respective
affiliates.

This certifies that [                    ] is the registered owner of the
Percentage Interest evidenced by this Certificate specified above in the
interest represented by all Certificates of the Class to which this Certificate
belongs in a Trust consisting primarily of the Mortgage Loans deposited by SG
Mortgage Securities, LLC (the “Depositor”). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of December 1, 2006 (the “Agreement”)
among the Depositor, Option One Mortgage Corporation, as servicer (the
“Servicer”), Wells Fargo Bank, N.A., a national banking association, as master
servicer (the “Master Servicer”), securities administrator (the “Securities
Administrator”) and custodian, and HSBC Bank USA, National Association, as
trustee (the “Trustee”). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

This Certificate does not have a principal balance or pass-through rate and will
be entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Securities
Administrator in Minneapolis, Minnesota.

No transfer of a Certificate of this Class shall be made unless such transfer is
made pursuant to an effective registration statement under the Act and any
applicable state securities laws or is exempt from the registration requirements
under said Act and such laws. In the event that a transfer is to be made in
reliance upon an exemption from the Act and such laws, in order to

 

A-12-2

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

assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder’s prospective transferee shall
each certify to the Securities Administrator and the Depositor in writing the
facts surrounding the transfer. In the event that such a transfer is not to be
made pursuant to Rule 144A of the Act, there shall be delivered to the
Securities Administrator and the Depositor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Act, which Opinion of
Counsel shall not be obtained at the expense of the Securities Administrator or
the Depositor; or there shall be delivered to the Securities Administrator and
the Depositor a transferor certificate by the transferor and an investment
letter shall be executed by the transferee. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Securities
Administrator and the Depositor 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.

Each Holder of this Certificate will be deemed to have agreed to be bound by the
restrictions of the Agreement, including but not limited to the restrictions
that (i) each person holding or acquiring any Ownership Interest in this
Certificate must be a Permitted Transferee, (ii) no Ownership Interest in this
Certificate may be transferred without delivery to the Securities Administrator
and the Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Certificate must agree to require a transfer affidavit and to
deliver a transfer certificate to the Securities Administrator and the Trustee
as required pursuant to the Agreement, (iv) each person holding or acquiring an
Ownership Interest in this Certificate must agree not to transfer an Ownership
Interest in this Certificate if it has actual knowledge that the proposed
transferee is not a Permitted Transferee and (v) 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. Pursuant to the Agreement, the Master Servicer will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to disqualified organizations, if any person
other than a Permitted Transferee acquires an Ownership Interest on a Class R-II
Certificate in violation of the restrictions mentioned above. Any purchaser
shall be deemed to make the representations set forth in Section 6.02(e) of the
Pooling and Servicing Agreement.

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

This Class R-II Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-12-3

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

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

 

Dated: ________, 200____    

WELLS FARGO BANK, N.A.,

as Securities Administrator

    By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

    By:            Authorized Signatory

 

A-12-4

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

[Reverse of Class R-II Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-12-5

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As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-12-6

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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 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.

 

A-12-7

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EXHIBIT A-13

[Form of Class R-III Certificate]

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “RESIDUAL
INTEREST” IN ONE OR MORE “REAL ESTATE MORTGAGE INVESTMENT CONDUITS,” AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CLASS R-III CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST
AND WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”) OR SECTION 4975 OF THE CODE (A “PLAN”), OR ANY PERSON (INCLUDING,
WITHOUT LIMITATION, AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY PLAN) WHO IS USING
“PLAN ASSETS”, WITHIN THE MEANING OF THE U.S. DEPARTMENT OF LABOR REGULATION
PROMULGATED AT 29 C.F.R. § 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA),
OF ANY PLAN (A “PLAN INVESTOR”) TO EFFECT SUCH ACQUISITION.

ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE
(OR ANY INTEREST HEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN
SECTION 6.02(f) OF THE POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD
HARMLESS THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE TRUSTEE,
THE MASTER SERVICER, ANY UNDERWRITER AND THE TRUST FUND FROM AND AGAINST ANY AND
ALL LIABILITIES, CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT
OF SUCH ACQUISITION OR HOLDING.

 

A-13-1

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Certificate No. 1    Class R-III    Percentage Interest: 100%

Date of Pooling and Servicing Agreement and Cut-off Date:

December 1, 2006

  

First Distribution Date:

January 25, 2007

  

Assumed Final Maturity Date:

October 2036

  

SG MORTGAGE SECURITIES TRUST 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2 Class R-III,

evidencing the Percentage Interest in the distributions allocable to the
Certificates of the

above-referenced Class with respect to the Trust consisting of first and second
lien,

adjustable and fixed rate mortgage loans (the “Mortgage Loans”),

SG MORTGAGE SECURITIES, LLC, as Depositor

This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer, the Master Servicer, the Trustee
or the Securities Administrator referred to below or any of their respective
affiliates.

This certifies that [                    ] is the registered owner of the
Percentage Interest evidenced by this Certificate specified above in the
interest represented by all Certificates of the Class to which this Certificate
belongs in a Trust consisting primarily of the Mortgage Loans deposited by SG
Mortgage Securities, LLC (the “Depositor”). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of December 1, 2006 (the “Agreement”)
among the Depositor, Option One Mortgage Corporation, as servicer (the
“Servicer”), Wells Fargo Bank, N.A., a national banking association, as master
servicer (the “Master Servicer”), securities administrator (the “Securities
Administrator”) and custodian, and HSBC Bank USA, National Association, as
trustee (the “Trustee”). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

This Certificate does not have a principal balance or pass-through rate and will
be entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Securities
Administrator in Minneapolis, Minnesota.

No transfer of a Certificate of this Class shall be made unless such transfer is
made pursuant to an effective registration statement under the Act and any
applicable state securities laws or is exempt from the registration requirements
under said Act and such laws. In the event that a transfer is to be made in
reliance upon an exemption from the Act and such laws, in order to

 

A-13-2

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assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder’s prospective transferee shall
each certify to the Securities Administrator and the Depositor in writing the
facts surrounding the transfer. In the event that such a transfer is not to be
made pursuant to Rule 144A of the Act, there shall be delivered to the
Securities Administrator and the Depositor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Act, which Opinion of
Counsel shall not be obtained at the expense of the Securities Administrator or
the Depositor; or there shall be delivered to the Securities Administrator and
the Depositor a transferor certificate by the transferor and an investment
letter shall be executed by the transferee. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Securities
Administrator and the Depositor 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.

Each Holder of this Certificate will be deemed to have agreed to be bound by the
restrictions of the Agreement, including but not limited to the restrictions
that (i) each person holding or acquiring any Ownership Interest in this
Certificate must be a Permitted Transferee, (ii) no Ownership Interest in this
Certificate may be transferred without delivery to the Securities Administrator
and the Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Certificate must agree to require a transfer affidavit and to
deliver a transfer certificate to the Securities Administrator and the Trustee
as required pursuant to the Agreement, (iv) each person holding or acquiring an
Ownership Interest in this Certificate must agree not to transfer an Ownership
Interest in this Certificate if it has actual knowledge that the proposed
transferee is not a Permitted Transferee and (v) 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. Pursuant to the Agreement, the Master Servicer will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to disqualified organizations, if any person
other than a Permitted Transferee acquires an Ownership Interest on a Class
R-III Certificate in violation of the restrictions mentioned above. Any
purchaser shall be deemed to make the representations set forth in
Section 6.02(e) of the Pooling and Servicing Agreement.

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

This Class R-III Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Securities Administrator.

 

A-13-3

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

 

Dated: _______, 200___    

WELLS FARGO BANK, N.A.,

as Securities Administrator

      By:            Authorized Signatory

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

 

   

WELLS FARGO BANK, N.A.,

as Certificate Registrar

      By:            Authorized Signatory

 

A-13-4

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[Reverse of Class R-III Certificate]

SG MORTGAGE SECURITIES TRUST 2006-OPT2,

Asset-Backed Certificates, Series 2006-OPT2

This Certificate is one of a duly authorized issue of Certificates designated as
SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2 (herein collectively called the “Certificates”), and representing a
beneficial ownership interest in the Trust created by the Agreement.

The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Securities Administrator 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 thereby, and the rights, duties and
immunities of the Securities Administrator.

Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day then the first
Business Day following such Distribution Date (the “Distribution Date”),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

Distributions on this Certificate shall be made by check or money order mailed
to the address of the person entitled thereto as it appears on the Certificate
Register or by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Securities Administrator specified in the notice to Certificateholders of
such final distribution.

No transfer of this Certificate or any interest herein shall be made to any Plan
or Plan Investor.

The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Master Servicer, the Securities
Administrator and the Trustee, if any and of Holders of the requisite percentage
of the Percentage Interests of each Class of Certificates affected by such
amendment, as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor 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.

 

A-13-5

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

As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Securities Administrator upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Securities
Administrator accompanied by a written instrument of transfer in form
satisfactory to the Securities Administrator and the Certificate Registrar duly
executed by the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage Interest
in the Trust will be issued to the designated transferee or transferees.

The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

No service charge will be made for any such registration of transfer or
exchange, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

The Depositor, the Servicer, the Master Servicer, the Securities Administrator,
the Trustee, the Certificate Registrar, and any agent of the Depositor, the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or the Trust nor any agent of any of them shall be
affected by notice to the contrary.

On any Distribution Date following the date at which the remaining aggregate
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Servicer may
purchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in October 2036.

Capitalized terms used herein that are defined in the Agreement shall have the
meanings ascribed to them in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

 

A-13-6

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

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 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.

 

A-13-7

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

EXHIBIT B

[Reserved]

 

B-1

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

EXHIBIT C

[Reserved]

 

C-1

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

EXHIBIT D

Mortgage Loan Schedule

[To be inserted]

 

D-1

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

EXHIBIT E

Request for Release

 

To: Wells Fargo Bank, N.A., as Custodian

   24 Executive Park

   Irvine, California 92614

   Attention: Corporate Trust Services – SGMS 2006-OPT2

 

Re: Pooling and Servicing Agreement dated as of December 1, 2006 among SG
Mortgage Securities, LLC, as Depositor, Option One Mortgage Corporation, as
Servicer, Wells Fargo Bank, N.A., as Custodian, Master Servicer and Securities
Administrator and HSBC Bank USA, National Association, as Trustee

In connection with the administration of the Mortgage Loans held by you as
Custodian pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt of the Mortgage File for the
Mortgage Loan described below, for the reason indicated.

Mortgage Loan Number: ___________________________________________

Mortgagor Name. Address & Zip Code:
___________________________________________________________________________

____________________________________________________________________________________________________________

Reason for Requesting Documents (check one):

 

1.      Mortgage Paid in Full

 

¨        

 

2.      Foreclosure

 

¨        

 

3.      Substitution

 

¨        

 

4.      Other Liquidation (Repurchases, etc.)

 

¨        

 

5.      Nonliquidation Reason

 

¨        

 

Address to which Custodian should deliver the Custodian’s Mortgage File:
___________________________________________

________________________________________________________________________________________________________

 

E-1

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

By:      (authorized signer)

Issuer:

Address:

Date:

 

 

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

Please acknowledge the execution of the above request by your signature and date
below:

Wells Fargo Bank, N. A., as Custodian

 

By:      (authorized signer)

Date:

Documents returned to Custodian:

 

E-2

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

EXHIBIT F-1

Form of Custodian’s Initial Certification

[Date]

SG Mortgage Securities, LLC

1221 Avenue of the Americas

New York, New York 10020

Option One Mortgage Corporation

3 Ada

Irvine, California 92618

Attention: SGMS 2006-OPT2

 

Re: Pooling and Servicing Agreement dated as of December 1, 2006 among SG
Mortgage Securities, LLC, as Depositor, Option One Mortgage Corporation, as
Servicer, Wells Fargo Bank, N.A., as Custodian, Master Servicer and Securities
Administrator and HSBC Bank USA, National Association, as Trustee

Ladies and Gentlemen:

Attached is the Custodian’s preliminary exception report delivered in accordance
with Section 2.02 of the referenced Pooling and Servicing Agreement (the
“Pooling and Servicing Agreement”). Capitalized terms used but not otherwise
defined herein shall have the meanings set forth in the Pooling and Servicing
Agreement.

The undersigned hereby certifies that as to each Mortgage Loan identified on the
Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.

The Custodian has made no independent examination of any documents contained in
each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in the Mortgage File pertaining to the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) whether any
Mortgage File included any of the documents specified in clause (vi) of
Section 2.01 of the Pooling and Servicing Agreement.

 

F-1-1

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

WELLS FARGO BANK, N.A., as Custodian By:      Name:   Title:  

 

F-1-2

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

Exhibit F-2

Form of Custodian’s Final Certification

[Date]

SG Mortgage Securities, LLC

1221 Avenue of the Americas

New York, New York 10020

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

 

Re: Pooling and Servicing Agreement dated as of December 1, 2006 among SG
Mortgage Securities, LLC, as Depositor, Option One Mortgage Corporation, as
Servicer, Wells Fargo Bank, N.A., as Custodian, Master Servicer and Securities
Administrator, and HSBC Bank USA, National Association, as Trustee

Ladies and Gentlemen:

In accordance with Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage loan paid in full or
listed on Schedule I hereto) it (or its custodian) has received the applicable
documents listed in Section 2.01 of the Pooling and Servicing Agreement.

The undersigned hereby certifies that as to each Mortgage Loan identified on the
Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.

The Custodian has made no independent examination of any documents contained in
each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in the Mortgage File pertaining to the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) whether any
Mortgage File included any of the documents specified in clause (vi) of
Section 2.01 of the Pooling and Servicing Agreement.

Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Pooling and Servicing Agreement. This Certificate is
qualified in all respects by the terms of said Pooling and Servicing Agreement.

 

F-2-1

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

WELLS FARGO BANK, N.A., as Custodian By:      Name:   Title:  

 

F-2-2

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EXHIBIT F-3

Form of Receipt of Mortgage Note

[Date]

SG Mortgage Securities, LLC

1221 Avenue of the Americas

New York, New York 10020

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

 

Re: Pooling and Servicing Agreement dated as of December 1, 2006 among SG
Mortgage Securities, LLC, as Depositor, Option One Mortgage Corporation, as
Servicer, Wells Fargo Bank, N.A., as Custodian, Master Servicer and Securities
Administrator and HSBC Bank USA, National Association, as Trustee (the “Pooling
and Servicing Agreement”)

Ladies and Gentlemen:

Pursuant to Section 2.01 of the Pooling and Servicing Agreement, we hereby
acknowledge the receipt of the original Mortgage Notes (a copy of which is
attached hereto as Exhibit 1) with any exceptions thereto listed on Exhibit 2.

 

WELLS FARGO BANK, N.A., as Custodian By:      Name:   Title:  

 

F-3-1

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EXHIBIT G

Prepayment Charge Schedule

[To be inserted]

 

G-1

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EXHIBIT H

Form of Lost Note Affidavit

Personally appeared before me the undersigned authority to administer oaths,
_______________ who first being duly sworn deposes and says: Deponent is
____________ of _______________, successor by merger to
____________________________________ (“Seller”) and who has personal knowledge
of the facts set out in this affidavit.

On ____________________, ____________________ did execute and deliver a
promissory note in the principal amount of $            . That said note has
been misplaced or lost through causes unknown and is presently lost and
unavailable after diligent search has been made. Seller’s records show that an
amount of principal and interest on said note is still presently outstanding,
due, and unpaid, and Seller is still owner and holder in due course of said lost
note.

Seller executes this Affidavit for the purpose of inducing HSBC Bank USA,
National Association, as trustee on behalf of SG Mortgage Securities Trust
2006-OPT2, Asset-Backed Certificates, Series 2006-OPT2, to accept the transfer
of the above described loan from Seller.

Seller agrees to indemnify HSBC Bank USA, National Association, Wells Fargo
Bank, N.A., SG Mortgage Securities, LLC and Option One Mortgage Corporation
harmless for any losses incurred by such parties resulting from the above
described promissory note has been lost or misplaced.

 

By:     

 

H-1

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

STATE OF______________)   )   ss.: COUNTY OF____________)  

On this _____ day of ____________________, 20__, before me, a Notary Public, in
and for said County and State, appeared ______________________, who acknowledged
the extension of the foregoing and who, having been duly sworn, states that any
representations therein contained are true.

Witness my hand and Notarial Seal this ______ day of _________________, 20__.

My commission expires ____________________.

 

H-2

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EXHIBIT I

List of Hurricane-affected Mortgage Loans

[To be inserted]

 

I-1

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

EXHIBIT J

Form of Investment Letter

Form of Rule 144A Investment Letter

[Date]

SG Mortgage Securities, LLC

1221 Avenue of the Americas

New York, New York 10020

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

Attention: Corporate Trust, SG Mortgage Securities, LLC, SG Mortgage Securities
Trust 2006-OPT2

 

Re: SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates Series
2006-OPT2

Ladies and Gentlemen:

In connection with our acquisition of the above Certificates we certify that:

(a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the “Act”), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws;

(b) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates;

(c) we have not, nor has anyone acting on our behalf offered, transferred,
pledged, sold or otherwise disposed of the Certificates, any interest in the
Certificates or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Certificates, any interest
in the Certificates or any other similar security from, or otherwise approached
or negotiated with respect to the Certificates, any interest in the Certificates
or any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Certificates
under the Securities Act or that would render the disposition of the
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates;

 

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(d) we are a “qualified institutional buyer” as that term is defined in Rule
144A under the Securities Act and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates for our own account or for resale pursuant to Rule 144A; and
further, understand that such Certificates may be resold, pledged or transferred
only to a person reasonably believed to be a qualified institutional buyer that
purchases for its own account or for the account of a qualified institutional
buyer to whom notice is given that the resale, pledge or transfer is being made
in reliance on Rule 144A; and

(e) We are not an employee benefit plan or other plan subject to the prohibited
transaction provisions of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”) or Section 4975 of the Internal Revenue Code of 1974, as
amended (the “Code”) (a “Plan”), or any person (including, without limitation,
an insurance company investing its general account, an investment manager, a
named fiduciary or a trustee of any Plan) who is using “plan assets” within the
meaning of the U.S. Department of Labor regulation promulgated at 29 C.F.R. §
2510.3-101 (as modified by Section 3(42) of ERISA), of any Plan (a “Plan
Investor”) to effect such acquisition.

Very truly yours,

[NAME OF TRANSFEREE]

 

By:      Authorized Officer

 

J-2

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ANNEX 1 TO EXHIBIT J

QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

[For Transferees Other Than Registered Investment Companies]

The undersigned (the “Buyer”) hereby certifies as follows to the parties listed
in the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:

1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

2. In connection with purchases by the Buyer, the Buyer is a “qualified
institutional buyer” as that term is defined in Rule 144A under the Securities
Act of 1933, as amended (“Rule 144A”) because (i) the Buyer owned and/or
invested on a discretionary basis $_______1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer’s most recent
fiscal year (such amount being calculated in accordance with Rule 144A and
(ii) the Buyer satisfies the criteria in the category marked below.

Corporation, etc. The Buyer is a corporation (other than a bank, savings and
loan association or similar institution), Massachusetts or similar business
trust, partnership, or charitable organization described in Section 501
(c) (3) of the Internal Revenue Code of 1986, as amended.

Bank. The Buyer (a) is a national bank or banking institution organized under
the laws of any State, territory or the District of Columbia, the business of
which is substantially confined to banking and is supervised by the State or
territorial banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual financial statements, a copy of which is
attached hereto.

Savings and Loan. The Buyer (a) is a savings and loan association, building and
loan association, cooperative bank, homestead association or similar
institution, which is supervised and examined by a State or Federal authority
having supervision over any such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial statements, a
copy of which is attached hereto.

Broker-dealer. The Buyer is a dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934.

Insurance Company. The Buyer is an insurance company whose primary and
predominant business activity is the writing of insurance or the reinsuring of
risks underwritten by insurance companies and which is subject to supervision by
the insurance commissioner or a similar official or agency of a State, territory
or the District of Columbia.

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1 Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.

 

J-1-1

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State or Local Plan. The Buyer is a plan established and maintained by a State,
its political subdivisions, or any agency or instrumentality of the State or its
political subdivisions, for the benefit of its employees.

ERISA Plan. The Buyer is an employee benefit plan within the meaning of Title I
of the Employee Retirement Income Security Act of 1974.

Investment Advisor. The Buyer is an investment advisor registered under the
Investment Advisors Act of 1940.

Small Business Investment Company. Buyer is a small business investment company
licensed by the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958.

Business Development Company. Buyer is a business development company as defined
in Section 202(a)(22) of the Investment Advisors Act of 1940.

3. The term “securities” as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of an
unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.

4. For purposes of determining the aggregate amount of securities owned and/or
invested on a discretionary basis by the Buyer, the Buyer used the cost of such
securities to the Buyer and did not include any of the securities referred to in
the preceding paragraph, except (i) where the Buyer reports its securities
holdings in its financial statements on the basis of their market value, and
(ii) no current information with respect to the cost of those securities has
been published. If clause (ii) in the preceding sentence applies, the securities
may be valued at market. Further, in determining such aggregate amount, the
Buyer may have included securities owned by subsidiaries of the Buyer, but only
if such subsidiaries are consolidated with the Buyer in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Buyer’s direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934, as amended.

5. The Buyer acknowledges that it is familiar with Rule 144A and understands
that the seller to it and other parties related to the Certificates are relying
and will continue to rely on the statements made herein because one or more
sales to the Buyer may be in reliance on Rule 144A.

 

J-2-2

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6. Until the date of purchase of the Rule 144A Securities, the Buyer will notify
each of the parties to which this certification is made of any changes in the
information and conclusions herein. Until such notice is given, the Buyer’s
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

 

Print Name of Buyer:    _____________________    By:
                                             Name:    Title:    Date:

 

J-2-3

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ANNEX 2 TO EXHIBIT J

QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

[For Transferees That are Registered Investment Companies]

The undersigned (the “Buyer”) hereby certifies as follows to the parties listed
in the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:

1. As indicated below, the undersigned is the President, Chief Financial Officer
or Senior Vice President of the Buyer or, if the Buyer is a “qualified
institutional buyer” as that term is defined in Rule 144A under the Securities
Act of 1933, as amended (“Rule 144A”) because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

2. In connection with purchases by Buyer, the Buyer is a “qualified
institutional buyer” as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer’s Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer’s most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer’s Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyers Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

The Buyer owned $____________ in securities (other than the excluded securities
referred to below) as of the end of the Buyer’s most recent fiscal year (such
amount being calculated in accordance with Rule 144A).

The Buyer is part of a Family of Investment Companies which owned in the
aggregate $_____________ in securities (other than the excluded securities
referred to below) as of the end of the Buyer’s most recent fiscal year (such
amount being calculated in accordance with Rule 144A).

3. The term “Family of Investment Companies” as used herein means two or more
registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

4. The term “securities” as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer’s Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

 

J-2-1

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5. The Buyer is familiar with Rule 144A and understands that the parties listed
in the Rule 144A Transferee Certificate to which this certification relates are
relying and will continue to rely on the statements made herein because one or
more sales to the Buyer will be in reliance on Rule 144A. In addition, the Buyer
will only purchase for the Buyer’s own account.

6. Until the date of purchase of the Certificates, the undersigned will notify
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer’s purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

 

Print Name of Buyer:    _____________________    By:
                                             Name:    Title:    Date:

 

IF AN ADVISER:    

Print Name of Buyer:        Date:

 

J-2-2

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EXHIBIT K

Form of Residual Certificates Transfer Affidavit

AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES

PURSUANT TO SECTION 5.02(d)

SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates Series
2006-OPT2

 

STATE OF______________)   )   ss.: COUNTY OF____________)  

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

1. The undersigned is an officer of [                    ], the proposed
Transferee of an Ownership Interest in a Residual Certificate (the
“Certificate”) issued pursuant to the Pooling and Servicing Agreement dated as
of December 1, 2006 (the “Agreement”), among SG Mortgage Securities, LLC, as
depositor (the “Depositor”), Option One Mortgage Corporation, as servicer (the
“Servicer”), Wells Fargo Bank, N.A., as custodian, securities administrator and
master servicer (the “Master Servicer”) and HSBC Bank USA, National Association,
as trustee (the “Trustee”). Capitalized terms used, but not defined herein or in
Exhibit 1 hereto, shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this affidavit
on behalf of the Transferee for the benefit of the Depositor and the Trustee.

2. The Transferee is, as of the date hereof, and will be, as of the date of the
Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate for its own account. The Transferee has no knowledge
that any such affidavit is false.

3. The Transferee has been advised of, and understands that (i) a tax will be
imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.

4. The Transferee has been advised of, and understands that a tax will be
imposed on a “pass-through entity” holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
“pass-through entity” includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)

 

K-1

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5. The Transferee has reviewed the provisions of Section 5.02(d) of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.

6. The Transferee agrees to require a Transfer Affidavit from any Person to whom
the Transferee attempts to Transfer its Ownership Interest in the Certificate,
and in connection with any Transfer by a Person for whom the Transferee is
acting as nominee, trustee or agent, and the Transferee will not Transfer its
Ownership Interest or cause any Ownership Interest to be Transferred to any
Person that the Transferee knows is not a Permitted Transferee. In connection
with any such Transfer by the Transferee, the Transferee agrees to deliver to
the Trustee a certificate substantially in the form set forth as Exhibit L to
the Agreement (a “Transferor Certificate”) to the effect that such Transferee
has no actual knowledge that the Person to which the Transfer is to be made is
not a Permitted Transferee.

7. The Transferee has historically paid its debts as they have come due, intends
to pay its debts as they come due in the future, and understands that the taxes
payable with respect to the Certificate may exceed the cash flow with respect
thereto in some or all periods and intends to pay such taxes as they become due.
The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the
Certificate.

8. The Transferee’s taxpayer identification number is __________________.

9. The Transferee is a U.S. Person as defined in Code Section 7701(a)(30).

10. The Transferee is aware that the Certificate may be a “noneconomic residual
interest” within the meaning of proposed Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such residual
interest, unless no significant purpose of the transfer was to impede the
assessment or collection of tax.

11. The Transferee will not cause income from the Certificate to be attributable
to a foreign permanent establishment or fixed base, within the meaning of an
applicable income tax treaty, of the Transferee or any other U.S. person.

12. Check one of the following:

[_] The present value of the anticipated tax liabilities associated with holding
the Certificate, as applicable, does not exceed the sum of:

 

K-2

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(i) the present value of any consideration given to the Transferee to acquire
such Certificate;

(ii) the present value of the expected future distributions on such Certificate;
and

(iii) the present value of the anticipated tax savings associated with holding
such Certificate as the related REMIC generates losses.

For purposes of this calculation, (i) the Transferee is assumed to pay tax at
the highest rate currently specified in Section 11(b) of the Code (but the tax
rate in Section 55(b)(1)(B) of the Code may be used in lieu of the highest rate
specified in Section 11(b) of the Code if the Transferee has been subject to the
alternative minimum tax under Section 55 of the Code in the preceding two years
and will compute its taxable income in the current taxable year using the
alternative minimum tax rate) and (ii) present values are computed using a
discount rate equal to the short-term Federal rate prescribed by Section 1274(d)
of the Code for the month of the transfer and the compounding period used by the
Transferee.

[_] The transfer of the Certificate complies with U.S. Treasury Regulations
Sections 1.860E-1(c)(5) and (6) and, accordingly,

(i) the Transferee is an “eligible corporation,” as defined in U.S. Treasury
Regulations Section 1.860E-1(c)(6)(i), as to which income from the Certificate
will only be taxed in the United States;

(ii) at the time of the transfer, and at the close of the Transferee’s two
fiscal years preceding the year of the transfer, the Transferee had gross assets
for financial reporting purposes (excluding any obligation of a person related
to the Transferee within the meaning of U.S. Treasury Regulations
Section 1.860E-1(c)(6)(ii)) in excess of $100 million and net assets in excess
of $10 million;

(iii) the Transferee will transfer the Certificate only to another “eligible
corporation,” as defined in U.S. Treasury Regulations Section 1.860E-1(c)(6)(i),
in a transaction that satisfies the requirements of Sections 1.860E-1(c)(4)(i),
(ii) and (iii) and Section 1.860E-1(c)(5) of the U.S. Treasury Regulations; and

(iv) the Transferee determined the consideration paid to it to acquire the
Certificate based on reasonable market assumptions (including, but not limited
to, borrowing and investment rates, prepayment and loss assumptions, expense and
reinvestment assumptions, tax rates and other factors specific to the
Transferee) that it has determined in good faith.

[_] None of the above.

13. The Transferee is not an employee benefit plan or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act
of 1974, as amended

 

K-3

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(“ERISA”) or Section 4975 of the Internal Revenue Code of 1974, as amended (the
“Code”) (a “Plan”), or any person (including, without limitation, an insurance
company investing its general account, an investment manager, a named fiduciary
or a trustee of any Plan) who is using “plan assets” within the meaning of the
U.S. Department of Labor regulation promulgated at 29 C.F.R. § 2510.3-101 (as
modified by Section 3(42) of ERISA), of any Plan (a “Plan Investor”) to effect
such acquisition.

IN WITNESS WHEREOF, the Transferee has caused this instrument to be executed on
its behalf, pursuant to authority of its Board of Directors, by its duly
authorized officer and its corporate seal to be hereunto affixed, duly attested,
this _____ day of ___________, 20__.

 

[         ]

 

By:     

Name:   Title:  

[Corporate Seal]

ATTEST:

 

   

[Assistant] Secretary

Personally appeared before me the above-named __________, known or proved to me
to be the same person who executed the foregoing instrument and to be the
___________ of the Transferee, and acknowledged that he executed the same as his
free act and deed and the free act and deed of the Transferee.

Subscribed and sworn before me this ____ day of __________, 20___.

 

   

NOTARY PUBLIC

My Commission expires the _____ day of _________, 20____

[Corporate Seal]

ATTEST:

 

   

 

K-4

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[Assistant] Secretary

Personally appeared before me the above-named __________________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the ____________________ of the Transferee, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Transferee.

Subscribed and sworn before me this ____ day of __________, ____.

NOTARY PUBLIC

My Commission expires the _____ day of _________, 20____

 

K-5

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EXHIBIT L

Form of Transferor Certificate

[DATE]

SG Mortgage Securities, LLC

1221 Avenue of the Americas

New York, New York 10020

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

Re: SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2

Ladies and Gentlemen:

In connection with our disposition of the above Certificates we certify that
(a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the “Act”), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act,
(b) we have not offered or sold any Certificates to, or solicited offers to buy
any Certificates from, any person, or otherwise approached or negotiated with
any person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class [    ] Certificate, we have no knowledge
the Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [            ] Certificate is to impede the assessment or
collection of tax.

Very truly yours,

TRANSFEROR

 

By:        Name:   Title:

 

L-1

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EXHIBIT M

[Reserved]

 

M-1

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Exhibit N

Form of ERISA Representation Letter

______________, 2005

SG Mortgage Securities, LLC

1221 Avenue of the Americas

New York, New York 10020

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

Re: SG Mortgage Securities Trust 2006-OPT2, Asset-Backed Certificates, Series
2006-OPT2

Ladies and Gentlemen:

_________________________ (the “Purchaser”) intends to purchase from
___________________________ (the “Seller”) $_____________ Initial Certificate
Principal Balance of Asset-Backed Certificates, Series 2006-OPT2, Class __ (the
“Certificates”), issued pursuant to the Pooling and Servicing Agreement (the
“Pooling and Servicing Agreement”), dated as of December 1, 2006 among SG
Mortgage Securities, LLC as depositor (the “Depositor”), Option One Mortgage
Corporation as servicer (the “Servicer”), Wells Fargo Bank, N.A. as custodian,
master servicer and securities administrator (the “Master Servicer”) and HSBC
Bank USA, National Association 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, Servicer, the Master Servicer and the Trustee
that the Purchaser is not an employee benefit plan or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”) or Section 4975 of the Internal Revenue Code of
1986, as amended (the “Code”) (a “Plan”), or any person (including, without
limitation, an insurance company investing its general account, an investment
manager, a named fiduciary or a trustee of any Plan) who is using “plan assets,”
within the meaning of the U.S. Department of Labor regulation promulgated at 29
C.F.R. § 2510.3-101 (as modified by Section 3(42) of ERISA), of any Plan (a
“Plan Investor”) to effect such acquisition.

In addition, the Purchaser hereby certifies, represents and warrants to, and
covenants with, the Depositor, Servicer, the Master Servicer and the Trustee
that the Purchaser will not transfer such Certificates to any transferee unless
such transferee meets the requirements set forth above.

 

N-1

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Very truly yours,     (Purchaser)

 

By:     

Name:      Title:     

 

N-2

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EXHIBIT O-1

Form of Transfer Certificate for

Transfer from Restricted Global Security

to Regulation S Global Security

 

Re: SG Mortgage Securities Trust 2006-OPT2

   Asset-Backed Certificates, Series 2006-OPT2

Reference is hereby made to the Pooling and Servicing Agreement (the “Pooling
and Servicing Agreement”) among SG Mortgage Securities, LLC, as Depositor,
Option One Mortgage Corporation, as Originator, Wells Fargo Bank, N.A., as
Custodian, as Master Servicer and as Securities Administrator, and HSBC Bank
USA, National Association, as Trustee, dated as of December 1, 2006. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Pooling and Servicing Agreement.

This letter relates to U.S. $__________ aggregate principal amount of Restricted
Securities which are held in the form of a Restricted Global Security with DTC
in the name of [name of transferor] ________________________________ (the
“Transferor”) to effect the transfer of the Securities in exchange for an
equivalent beneficial interest in a Regulation S Global Security.

In connection with such request, the Transferor does hereby certify that such
transfer has been effected in accordance with the transfer restrictions set
forth in the Pooling and Servicing Agreement and the Restricted Securities and
in accordance with Rule 904 of Regulation S, and that:

 

  a. the offer of the Restricted Securities was not made to a person in the
United States;

 

  b. at the time the buy order was originated, the transferee was outside the
United States or the Transferor and any person acting on its behalf reasonably
believed that the transferee was outside the United States;

 

  c. no directed selling efforts have been made in contravention of the
requirements of Rule 903 or 904 of Regulation S, as applicable;

 

  d. the transaction is not part of a plan or scheme to evade the registration
requirements of the United States Securities Act of 1933, as amended; and

 

  e. the transferee is not a U.S. person (as defined in Regulation S).

You are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.

 

O-1-1

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[Name of Transferor] By:   Name:   Title:  

Date: ______________________, ____]

 

O-1-2

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EXHIBIT O-2

Form of Transfer Certificate for Transfer

from Regulation S Global Security to

Restricted Global Security

SG Mortgage Securities Trust 2006-OPT2

Asset-Backed Certificates, Series 2006-OPT2

Reference is hereby made to the Pooling and Servicing Agreement (the “Pooling
and Servicing Agreement”) among SG Mortgage Securities, LLC, as Depositor,
Option One Mortgage Corporation, as Originator, Wells Fargo Bank, N.A., as
Custodian, as Master Servicer and as Securities Administrator, and HSBC Bank
USA, National Association, as Trustee, dated as of December 1, 2006. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Pooling and Servicing Agreement.

This letter relates to U.S. $___________ aggregate principal amount of
Restricted Securities which are held in the form of a Regulations S Global
Security in the name of [name of transferor] ______________________________ (the
“Transferor”) to effect the transfer of the Restricted Securities in exchange
for an equivalent beneficial interest in a Restricted Global Security.

In connection with such request, and in respect of such Restricted Securities,
the Transferor does hereby certify that such Restricted Securities are being
transferred in accordance with (i) the transfer restrictions set forth in the
Pooling and Servicing Agreement and the Restricted Securities and (ii) Rule 144A
under the United States Securities Act of 1933, as amended, to a transferee that
the Transferor reasonably believes is purchasing the Restricted Securities for
its own account or an account with respect to which the transferee exercises
sole investment discretion, the transferee and any such account is a qualified
institutional buyer within the meaning of Rule 144A, in a transaction meeting
the requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other jurisdiction.

 

[Name of Transferor] By:   Name:   Title:  

Date: ______________________, ____]

 

O-2-1

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EXHIBIT P

Relevant Servicing Criteria

EXHIBIT P

SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

The assessment of compliance to be delivered by the parties set forth below
shall address, at a minimum, the criteria identified as below as “Applicable
Servicing Criteria”:

 

Servicing Criteria

  

Applicable

Servicing

Criteria for:
Master
Servicer,
Securities
Administrator
and Custodian

   Applicable
Servicing
Criteria for
Servicer Reference    Criteria          General Servicing Considerations      

1122(d)(1)(i)

   Policies and procedures are instituted to monitor any performance or other
triggers and events of default in accordance with the transaction agreements.   
X    X

1122(d)(1)(ii)

   If any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s performance
and compliance with such servicing activities.    X    X

1122(d)(1)(iii)

   Any requirements in the transaction agreements to maintain a back-up servicer
for the mortgage loans are maintained.      

1122(d)(1)(iv)

   A fidelity bond and errors and omissions policy is in effect on the party
participating in the servicing function throughout the reporting period in the
amount of coverage required by and otherwise in accordance with the terms of the
transaction agreements.    X    X    Cash Collection and Administration      

1122(d)(2)(i)

   Payments on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the transaction
agreements.    X    X

1122(d)(2)(ii)

   Disbursements made via wire transfer on behalf of an obligor or to an
investor are made only by authorized personnel.    X    X

1122(d)(2)(iii)

   Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such advances, are
made, reviewed and approved as specified in the transaction agreements.    X   
X

 

P-1

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Servicing Criteria

  

Applicable

Servicing

Criteria for:
Master
Servicer,
Securities
Administrator
and Custodian

   Applicable
Servicing
Criteria for
Servicer Reference    Criteria      

1122(d)(2)(iv)

   The related accounts for the transaction, such as cash reserve accounts or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth in the
transaction agreements.    X    X

1122(d)(2)(v)

   Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of this
criterion, “federally insured depository institution” with respect to a foreign
financial institution means a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.    X    X

1122(d)(2)(vi)

   Unissued checks are safeguarded so as to prevent unauthorized access.    X   
X

1122(d)(2)(vii)

   Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and related bank
clearing accounts. These reconciliations are (A) mathematically accurate; (B)
prepared within 30 calendar days after the bank statement cutoff date, or such
other number of days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the reconciliation; and
(D) contain explanations for reconciling items. These reconciling items are
resolved within 90 calendar days of their original identification, or such other
number of days specified in the transaction agreements.    X    X    Investor
Remittances and Reporting      

1122(d)(3)(i)

   Reports to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors’ or the
trustee’s records as to the total unpaid principal balance and number of
mortgage loans serviced by the Servicer.    X    X

1122(d)(3)(ii)

   Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the transaction
agreements.    X    X

1122(d)(3)(iii)

   Disbursements made to an investor are posted within two business days to the
Servicer’s investor records, or such other number of days specified in the
transaction agreements.    X    X

 

P-2

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Servicing Criteria

  

Applicable

Servicing

Criteria for:
Master
Servicer,
Securities
Administrator
and Custodian

   Applicable
Servicing
Criteria for
Servicer Reference    Criteria      

1122(d)(3)(iv)

   Amounts remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank statements.    X    X   
Pool Asset Administration      

1122(d)(4)(i)

   Collateral or security on mortgage loans is maintained as required by the
transaction agreements or related mortgage loan documents.    X    X

1122(d)(4)(ii)

   Mortgage loan and related documents are safeguarded as required by the
transaction agreements.    X    X

1122(d)(4)(iii)

   Any additions, removals or substitutions to the asset pool are made, reviewed
and approved in accordance with any conditions or requirements in the
transaction agreements.       X

1122(d)(4)(iv)

   Payments on mortgage loans, including any payoffs, made in accordance with
the related mortgage loan documents are posted to the Servicer’s obligor records
maintained no more than two business days after receipt, or such other number of
days specified in the transaction agreements, and allocated to principal,
interest or other items (e.g., escrow) in accordance with the related mortgage
loan documents.       X

1122(d)(4)(v)

   The Servicer’s records regarding the mortgage loans agree with the Servicer’s
records with respect to an obligor’s unpaid principal balance.       X

1122(d)(4)(vi)

   Changes with respect to the terms or status of an obligor’s mortgage loans
(e.g., loan modifications or re-agings) are made, reviewed and approved by
authorized personnel in accordance with the transaction agreements and related
pool asset documents.       X

1122(d)(4)(vii)

   Loss mitigation or recovery actions (e.g., forbearance plans, modifications
and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable)
are initiated, conducted and concluded in accordance with the timeframes or
other requirements established by the transaction agreements.       X

 

P-3

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Servicing Criteria

  

Applicable

Servicing

Criteria for:
Master
Servicer,
Securities
Administrator
and Custodian

   Applicable
Servicing
Criteria for
Servicer Reference    Criteria      

1122(d)(4)(viii)

   Records documenting collection efforts are maintained during the period a
mortgage loan is delinquent in accordance with the transaction agreements. Such
records are maintained on at least a monthly basis, or such other period
specified in the transaction agreements, and describe the entity’s activities in
monitoring delinquent mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency is deemed
temporary (e.g., illness or unemployment).       X

1122(d)(4)(ix)

   Adjustments to interest rates or rates of return for mortgage loans with
variable rates are computed based on the related mortgage loan documents.      
X

1122(d)(4)(x)

   Regarding any funds held in trust for an obligor (such as escrow accounts):
(A) such funds are analyzed, in accordance with the obligor’s mortgage loan
documents, on at least an annual basis, or such other period specified in the
transaction agreements; (B) interest on such funds is paid, or credited, to
obligors in accordance with applicable mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar days of full
repayment of the related mortgage loans, or such other number of days specified
in the transaction agreements.       X

1122(d)(4)(xi)

   Payments made on behalf of an obligor (such as tax or insurance payments) are
made on or before the related penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided that such support has
been received by the servicer at least 30 calendar days prior to these dates, or
such other number of days specified in the transaction agreements.       X

1122(d)(4)(xii)

   Any late payment penalties in connection with any payment to be made on
behalf of an obligor are paid from the servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or omission.   
   X

1122(d)(4)(xiii)

   Disbursements made on behalf of an obligor are posted within two business
days to the obligor’s records maintained by the servicer, or such other number
of days specified in the transaction agreements.       X

1122(d)(4)(xiv)

   Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.    X    X

1122(d)(4)(xv)

   Any external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth in the
transaction agreements.    X   

 

P-4

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EXHIBIT Q

Additional Form 10-D Disclosure

 

ADDITIONAL FORM 10-D DISCLOSURE

Item on Form 10-D

  

Party Responsible

Item 1: Distribution and Pool Performance Information    Information included in
the [Monthly Statement]   

Master Servicer

Servicer

Securities Administrator

Any information required by 1121 which is NOT included on the [Monthly
Statement]    Depositor Item 2: Legal Proceedings    Any legal proceeding
pending against the following entities or their respective property, that is
material to Certificateholders, including any proceeding known to be
contemplated by governmental authorities:   

•        Issuing Entity (Trust Fund)

   Trustee, Master Servicer, Securities Administrator and Depositor

•        Sponsor (Seller)

   Seller (if a party to the Pooling and Servicing Agreement) or Depositor

•        Depositor

   Depositor

•        Trustee

   Trustee

•        Securities Administrator

   Securities Administrator

•        Master Servicer

   Master Servicer

•        Custodian

   Custodian

•        1110(b) Originator

   Depositor

•        Any 1108(a)(2) Servicer (other than the Master Servicer or Securities
Administrator)

   Servicer

•        Any other party contemplated by 1100(d)(1)

   Depositor Item 3: Sale of Securities and Use of Proceeds    Depositor

Information from Item 2(a) of Part II of Form 10-Q:

 

With respect to any sale of securities by the sponsor, depositor or issuing
entity, that are backed by the same asset pool or are otherwise issued by the
issuing entity, whether or not registered, provide the sales and use of proceeds
information in Item 701 of Regulation S-K. Pricing information can be omitted if
securities were not registered.

  

 

Q-1

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ADDITIONAL FORM 10-D DISCLOSURE

Item on Form 10-D

  

Party Responsible

Item 4: Defaults Upon Senior Securities   

Information from Item 3 of Part II of Form 10-Q:

 

Report the occurrence of any Event of Default (after expiration of any grace
period and provision of any required notice)

  

Securities Administrator

Trustee

Item 5: Submission of Matters to a Vote of Security Holders   

Securities Administrator

Trustee

Information from Item 4 of Part II of Form 10-Q    Item 6: Significant Obligors
of Pool Assets    Depositor Item 1112(b) – Significant Obligor Financial
Information*   

*  This information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the Item.

   Item 7: Significant Enhancement Provider Information    Item 1114(b)(2) –
Credit Enhancement Provider Financial Information*   

•        Determining applicable disclosure threshold

   Depositor

•        Requesting required financial information (including any required
accountants’ consent to the use thereof) or effecting incorporation by reference

   Depositor Item 1115(b) – Derivative Counterparty Financial Information*   

•        Determining current maximum probable exposure

   Depositor

•        Determining current significance percentage

   Depositor

•        Requesting required financial information (including any required
accountants’ consent to the use thereof) or effecting incorporation by reference

   Depositor

*  This information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the Items.

  

 

Q-2

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ADDITIONAL FORM 10-D DISCLOSURE

Item on Form 10-D

  

Party Responsible

Item 8: Other Information    Any party responsible for the applicable Form 8-K
Disclosure item Disclose any information required to be reported on Form 8-K
during the period covered by the Form 10-D but not reported    Item 9: Exhibits
   Monthly Statement to Certificateholders    Securities Administrator Exhibits
required by Item 601 of Regulation S-K, such as material agreements    Depositor

 

Q-3

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EXHIBIT R

Form 8-K Disclosure Information

FORM 8-K DISCLOSURE INFORMATION

 

Item on Form 8-K

  

Party Responsible

Item 1.01- Entry into a Material Definitive Agreement

 

Disclosure is required regarding entry into or amendment of any definitive
agreement that is material to the securitization, even if depositor is not a
party.

 

Examples: servicing agreement, custodial agreement.

 

Note: disclosure not required as to definitive agreements that are fully
disclosed in the prospectus

   All parties

Item 1.02- Termination of a Material Definitive Agreement

 

Disclosure is required regarding termination of any definitive agreement that is
material to the securitization (other than expiration in accordance with its
terms), even if depositor is not a party.

 

Examples: servicing agreement, custodial agreement.

   All parties

Item 1.03- Bankruptcy or Receivership

 

Disclosure is required regarding the bankruptcy or receivership, with respect to
any of the following:

   Depositor

•        Sponsor (Seller)

   Depositor/Sponsor (Seller)

•        Depositor

   Depositor

•        Master Servicer

   Master Servicer

•        Affiliated Servicer

   Servicer

•        Other Servicer servicing 20% or more of the pool assets at the time of
the report

   Servicer

•        Other material servicers

   Servicer

•        Trustee

   Trustee

•        Securities Administrator

   Securities Administrator

•        Significant Obligor

   Depositor

•        Credit Enhancer (10% or more)

   Depositor

 

R-1

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FORM 8-K DISCLOSURE INFORMATION

 

Item on Form 8-K

  

Party Responsible

•        Derivative Counterparty

   Depositor

•        Custodian

   Custodian

Item 2.04- Triggering Events that Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement

 

Includes an early amortization, performance trigger or other event, including
event of default, that would materially alter the payment priority/distribution
of cash flows/amortization schedule.

 

Disclosure will be made of events other than waterfall triggers which are
disclosed in the monthly statements to the certificateholders.

  

Depositor

Master Servicer

Securities Administrator

Item 3.03- Material Modification to Rights of Security Holders

 

Disclosure is required of any material modification to documents defining the
rights of Certificateholders, including the Pooling and Servicing Agreement.

  

Securities Administrator

Trustee

Depositor

Item 5.03- Amendments of Articles of Incorporation or Bylaws; Change of Fiscal
Year

 

Disclosure is required of any amendment “to the governing documents of the
issuing entity”.

   Depositor Item 6.01- ABS Informational and Computational Material   
Depositor

Item 6.02- Change of Servicer or Securities Administrator

 

Requires disclosure of any removal, replacement, substitution or addition of any
master servicer, affiliated servicer, other servicer servicing 10% or more of
pool assets at time of report, other material servicers or trustee.

  

Master Servicer/Securities Administrator/Depositor/

Servicer/Trustee

Reg AB disclosure about any new servicer or master servicer is also required.   
Servicer/Master Servicer/Depositor Reg AB disclosure about any new Trustee is
also required.    Trustee

 

R-2

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FORM 8-K DISCLOSURE INFORMATION

 

Item on Form 8-K

  

Party Responsible

Item 6.03- Change in Credit Enhancement or External Support

 

Covers termination of any enhancement in manner other than by its terms, the
addition of an enhancement, or a material change in the enhancement provided.
Applies to external credit enhancements as well as derivatives.

   Depositor/Securities Administrator/Trustee Reg AB disclosure about any new
enhancement provider is also required.    Depositor Item 6.04- Failure to Make a
Required Distribution   

Securities Administrator

Trustee

Item 6.05- Securities Act Updating Disclosure

 

If any material pool characteristic differs by 5% or more at the time of
issuance of the securities from the description in the final prospectus, provide
updated Reg AB disclosure about the actual asset pool.

   Depositor If there are any new servicers or originators required to be
disclosed under Regulation AB as a result of the foregoing, provide the
information called for in Items 1108 and 1110 respectively.    Depositor Item
7.01- Reg FD Disclosure    All parties

Item 8.01- Other Events

 

Any event, with respect to which information is not otherwise called for in Form
8-K, that the registrant deems of importance to certificateholders.

   Depositor Item 9.01- Financial Statements and Exhibits    Responsible party
for reporting/disclosing the financial statement or exhibit

 

R-3

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EXHIBIT S

Additional Disclosure Notification

**SEND TO WELLS FARGO VIA FAX TO 410-715-2380 AND VIA EMAIL TO
cts.sec.notifications@wellsfargo.com AND VIA OVERNIGHT MAIL TO THE ADDRESS
IMMEDIATELY BELOW. SEND TO THE DEPOSITOR AT THE ADDRESS BELOW**

Wells Fargo Bank, N.A. as Securities Administrator

9062 Old Annapolis Road

Columbia, Maryland 21045

Fax: (410) 715-2380

E-mail: cts.sec.notifications@wellsfargo.com

SG Mortgage Securities, LLC

1221 Avenue of the Americas

New York, New York 10020

Attn: Corporate Trust Services- SG Mortgage Securities Trust, 2006 OPT2-SEC
REPORT PROCESSING

RE: **Additional Form [ ] Disclosure**Required

Ladies and Gentlemen:

In accordance with Section 5.09(a)(ii) of the Pooling and Servicing Agreement,
dated as of December 1, 2006, among SG Mortgage Securities, LLC, as Depositor,
Option One Mortgage Corporation, as Originator, Wells Fargo Bank, N.A., as
custodian, master servicer, and securities administrator, and HSBC Bank USA,
National Association, as trustee. The Undersigned, as [    ], hereby notifies
you that certain events have come to our attention that [will][may] need to be
disclosed on Form [    ].

Description of Additional Form [    ] Disclosure:

List of Any Attachments hereto to be included in the Additional Form [ ]
Disclosure:

Any inquiries related to this notification should be directed to [    ], phone
number: [    ]; email address: [    ].

 

[NAME OF PARTY]

as [role]

By:        Name:   Title:

 

S-1

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EXHIBIT T

Additional Form 10-K Disclosure

ADDITIONAL FORM 10-K DISCLOSURE

 

Item on Form 10-K

  

Party Responsible

Item 1B: Unresolved Staff Comments    Depositor

Item 9B: Other Information

Disclose any information required to be reported on Form 8-K during the fourth
quarter covered by the Form 10-K but not reported

   Any party responsible for disclosure items on Form 8-K Item 15: Exhibits,
Financial Statement Schedules   

Securities Administrator

Depositor

Reg AB Item 1112(b): Significant

Obligors of Pool Assets

   Significant Obligor Financial Information*    Depositor

*  This information need only be reported on the Form 10-K if updated
information is required pursuant to the Item.

  

Reg AB Item 1114(b)(2): Credit

Enhancement Provider Financial Information

  

•        Determining applicable disclosure threshold

   Depositor

•        Requesting required financial information (including any required
accountants’ consent to the use thereof) or effecting incorporation by reference

   Depositor

*  This information need only be reported on the Form 10-K if updated
information is required pursuant to the Item.

  

Reg AB Item 1115(b): Derivative

Counterparty Financial Information

  

•        Determining current maximum probable exposure

   Depositor

•        Determining current significance percentage

   Depositor

•        Requesting required financial information (including any required
accountants’ consent to the use thereof) or effecting incorporation by reference

   Depositor

*  This information need only be reported on the Form 10-K if updated
information is required pursuant to the Item.

  

 

T-1

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ADDITIONAL FORM 10-K DISCLOSURE

 

Item on Form 10-K

  

Party Responsible

Reg AB Item 1117: Legal Proceedings

Any legal proceeding pending against the following entities or their respective
property, that is material to Certificateholders, including any proceeding known
to be contemplated by governmental authorities:

  

•        Issuing Entity (Trust Fund)

   Trustee, Master Servicer, Securities Administrator and Depositor

•        Sponsor (Seller)

   Seller (if a party to the Pooling and Servicing Agreement) or Depositor

•        Depositor

   Depositor

•        Trustee

   Trustee

•        Securities Administrator

   Securities Administrator

•        Master Servicer

   Master Servicer

•        Custodian

   Custodian

•        1110(b) Originator

   Depositor

•        Any 1108(a)(2) Servicer (other than the Master Servicer or Securities
Administrator)

   Servicer

•        Any other party contemplated by 1100(d)(1)

   Depositor Reg AB Item 1119: Affiliations and Relationships    Whether (a) the
Sponsor (Seller), Depositor or Issuing Entity is an affiliate of the following
parties, and (b) to the extent known and material, any of the following parties
are affiliated with one another:   

Depositor as to (a)

Sponsor/Seller as to (a)

•        Master Servicer

   Master Servicer

•        Securities Administrator

   Securities Administrator

•        Trustee

   Trustee

•        Any other 1108(a)(3) servicer

   Servicer

•        Any 1110 Originator

   Depositor/Sponsor

•        Any 1112(b) Significant Obligor

   Depositor/Sponsor

•        Any 1114 Credit Enhancement Provider

   Depositor/Sponsor

•        Any 1115 Derivate Counterparty Provider

   Depositor/Sponsor

•        Any other 1101(d)(1) material party

   Depositor/Sponsor Whether there are any “outside the ordinary course business
arrangements” other than would be obtained in an arm’s length transaction
between (a) the Sponsor (Seller), Depositor or Issuing Entity on the one hand,
and (b) any of the following parties (or their affiliates) on the other hand,
that exist currently or within the past two years and that are material to a
Certificateholder’s understanding of the Certificates:   

Depositor as to (a)

Sponsor/Seller as to (a)

•        Master Servicer

   Master Servicer

•        Securities Administrator

   Securities Administrator

•        Trustee

   Depositor/Sponsor

•        Any other 1108(a)(3) servicer

   Servicer

 

T-2

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ADDITIONAL FORM 10-K DISCLOSURE

 

Item on Form 10-K

  

Party Responsible

•        Any 1110 Originator

   Depositor/Sponsor

•        Any 1112(b) Significant Obligor

   Depositor/Sponsor

•        Any 1114 Credit Enhancement Provider

   Depositor/Sponsor

•        Any 1115 Derivate Counterparty Provider

   Depositor/Sponsor

•        Any other 1101(d)(1) material party

   Depositor/Sponsor Whether there are any specific relationships involving the
transaction or the pool assets between (a) the Sponsor (Seller), Depositor or
Issuing Entity on the one hand, and (b) any of the following parties (or their
affiliates) on the other hand, that exist currently or within the past two years
and that are material:   

Depositor as to (a)

Sponsor/Seller as to (a)

•        Master Servicer

   Master Servicer

•        Securities Administrator

   Securities Administrator

•        Trustee

   Depositor/Sponsor

•        Any other 1108(a)(3) servicer

   Servicer

•        Any 1110 Originator

   Depositor/Sponsor

•        Any 1112(b) Significant Obligor

   Depositor/Sponsor

•        Any 1114 Credit Enhancement Provider

   Depositor/Sponsor

•        Any 1115 Derivate Counterparty Provider

   Depositor/Sponsor

•        Any other 1101(d)(1) material party

   Depositor/Sponsor Reg AB Item 1122: Compliance with applicable Servicer
Criteria   

•        See Exhibit P

   Servicer, Master Servicer, Securities Administrator, Custodian Reg AB
Item 1123: Servicer Compliance Statement   

•        annual compliance statement

   Servicer, Master Servicer, Securities Administrator

 

T-3

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EXHIBIT U

Form of Back-Up Certification

 

Re: Pooling and Servicing Agreement, dated as of December 1, 2006, among SG
Mortgage Securities, LLC, as Depositor, Option One Mortgage Corporation, as
Originator, Wells Fargo Bank, N.A., as custodian, master servicer, and
securities administrator, and HSBC Bank USA, National Association, as trustee.

I, ________________________________, the _______________________ of [NAME OF
COMPANY], certify to [the Purchaser], [the Depositor], and the Master Servicer
[,Trustee], and their officers, with the knowledge and intent that they will
rely upon this certification, that:

(1) I have reviewed the servicer compliance statement of the Company provided in
accordance with Item 1123 of Regulation AB (the “Compliance Statement”), the
report on assessment of the Company’s compliance with the servicing criteria set
forth in Item 1122(d) of Regulation AB (the “Servicing Criteria”), provided in
accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and Item 1122 of Regulation AB (the “Servicing
Assessment”), the registered public accounting firm’s attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Regulation AB (the “Attestation Report”), and all servicing
reports, officer’s certificates and other information relating to the servicing
of the Mortgage Loans by the Company during 200[ ] that were delivered by the
Company to the Master Servicer pursuant to the Agreement (collectively, the
“Company Servicing Information”);

(2) Based on my knowledge, the Company Servicing Information, taken as a whole,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Company Servicing Information;

(3) Based on my knowledge, all of the Company Servicing Information required to
be provided by the Company under the Agreement has been provided to the Master
Servicer;

(4) I am responsible for reviewing the activities performed by the Company as
servicer under the Agreement, and based on my knowledge and the compliance
review conducted in preparing the Compliance Statement and except as disclosed
in the Compliance Statement, the Servicing Assessment or the Attestation Report,
the Company has fulfilled its obligations under the Agreement in all material
respects; and

 

U-1

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(5) The Compliance Statement required to be delivered by the Company pursuant to
the Agreement2, and the Servicing Assessment and Attestation Report required to
be provided by the Company and by any Subservicer and Subcontractor pursuant to
the Agreement, have been provided to the Master Servicer. Any material instances
of noncompliance described in such reports have been disclosed to [Wells Fargo].
Any material instance of noncompliance with the Servicing Criteria has been
disclosed in such reports.

Date: _________________________

 

By:      Name:  

 

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2 need to define agreement

 

U-2

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EXHIBIT V-1

Form of Delinquency Report

Standard File Layout – Delinquency Reporting

 

* The column/header names in bold are the minimum fields Wells Fargo must
receive from every Servicer

 

Column/Header Name

  

Description

   Decimal   

Format Comment

SERVICER LOAN NBR    A unique number assigned to a loan by the Servicer. This
may be different than the LOAN NBR       LOAN NBR    A unique identifier
assigned to each loan by the originator.       CLIENT NBR    Servicer Client
Number       SERV INVESTOR NBR    Contains a unique number as assigned by an
external servicer to identify a group of loans in their system.       BORROWER
FIRST NAME    First Name of the Borrower.       BORROWER LAST NAME    Last name
of the borrower.       PROP ADDRESS    Street Name and Number of Property      
PROP STATE    The state where the property located.       PROP ZIP    Zip code
where the property is located.       BORR NEXT PAY DUE DATE    The date that the
borrower’s next payment is due to the servicer at the end of processing cycle,
as reported by Servicer.       MM/DD/YYYY LOAN TYPE    Loan Type (i.e. FHA, VA,
Conv)       BANKRUPTCY FILED DATE    The date a particular bankruptcy claim was
filed.       MM/DD/YYYY BANKRUPTCY CHAPTER CODE    The chapter under which the
bankruptcy was filed.       BANKRUPTCY CASE NBR    The case number assigned by
the court to the bankruptcy filing.       POST PETITION DUE DATE    The payment
due date once the bankruptcy has been approved by the courts       MM/DD/YYYY
BANKRUPTCY DCHRG DISM DATE    The Date The Loan Is Removed From Bankruptcy.
Either by Dismissal, Discharged and/or a Motion For Relief Was Granted.      
MM/DD/YYYY

 

V-1-1

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Column/Header Name

  

Description

   Decimal   

Format Comment

LOSS MIT APPR DATE    The Date The Loss Mitigation Was Approved By The Servicer
      MM/DD/YYYY LOSS MIT TYPE    The Type Of Loss Mitigation Approved For A
Loan Such As;       LOSS MIT EST COMP DATE    The Date The Loss Mitigation /Plan
Is Scheduled To End/Close       MM/DD/YYYY LOSS MIT ACT COMP DATE    The Date
The Loss Mitigation Is Actually Completed       MM/DD/YYYY FRCLSR APPROVED DATE
   The date DA Admin sends a letter to the servicer with instructions to begin
foreclosure proceedings.       MM/DD/YYYY ATTORNEY REFERRAL DATE    Date File
Was Referred To Attorney to Pursue Foreclosure       MM/DD/YYYY FIRST LEGAL DATE
   Notice of 1st legal filed by an Attorney in a Foreclosure Action      
MM/DD/YYYY FRCLSR SALE EXPECTED DATE    The date by which a foreclosure sale is
expected to occur.       MM/DD/YYYY FRCLSR SALE DATE    The actual date of the
foreclosure sale.       MM/DD/YYYY FRCLSR SALE AMT    The amount a property sold
for at the foreclosure sale.    2    No commas(,) or dollar signs ($) EVICTION
START DATE    The date the servicer initiates eviction of the borrower.      
MM/DD/YYYY EVICTION COMPLETED DATE    The date the court revokes legal
possession of the property from the borrower.       MM/DD/YYYY LIST PRICE    The
price at which an REO property is marketed.    2    No commas(,) or dollar signs
($) LIST DATE    The date an REO property is listed at a particular price.      
MM/DD/YYYY OFFER AMT    The dollar value of an offer for an REO property.    2
   No commas(,) or dollar signs ($) OFFER DATE TIME    The date an offer is
received by DA Admin or by the Servicer.       MM/DD/YYYY REO CLOSING DATE   
The date the REO sale of the property is scheduled to close.       MM/DD/YYYY
REO ACTUAL CLOSING DATE    Actual Date Of REO Sale       MM/DD/YYYY OCCUPANT
CODE    Classification of how the property is occupied.       PROP CONDITION
CODE    A code that indicates the condition of the property.       PROP
INSPECTION DATE    The date a property inspection is performed.       MM/DD/YYYY

 

V-1-2

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Column/Header Name

  

Description

   Decimal   

Format Comment

APPRAISAL DATE    The date the appraisal was done.       MM/DD/YYYY CURR PROP
VAL    The current “as is” value of the property based on brokers price opinion
or appraisal.    2    REPAIRED PROP VAL    The amount the property would be
worth if repairs are completed pursuant to a broker’s price opinion or
appraisal.    2    If applicable:          DELINQ STATUS CODE    FNMA Code
Describing Status of Loan       DELINQ REASON CODE    The circumstances which
caused a borrower to stop paying on a loan. Code indicates the reason why the
loan is in default for this cycle.       MI CLAIM FILED DATE    Date Mortgage
Insurance Claim Was Filed With Mortgage Insurance Company.       MM/DD/YYYY MI
CLAIM AMT    Amount of Mortgage Insurance Claim Filed       No commas(,) or
dollar signs ($) MI CLAIM PAID DATE    Date Mortgage Insurance Company Disbursed
Claim Payment       MM/DD/YYYY MI CLAIM AMT PAID    Amount Mortgage Insurance
Company Paid On Claim    2    No commas(,) or dollar signs ($) POOL CLAIM FILED
DATE    Date Claim Was Filed With Pool Insurance Company       MM/DD/YYYY POOL
CLAIM AMT    Amount of Claim Filed With Pool Insurance Company    2    No
commas(,) or dollar signs ($) POOL CLAIM PAID DATE    Date Claim Was Settled and
The Check Was Issued By The Pool Insurer       MM/DD/YYYY POOL CLAIM AMT PAID   
Amount Paid On Claim By Pool Insurance Company    2    No commas(,) or dollar
signs ($) FHA PART A CLAIM FILED DATE    Date FHA Part A Claim Was Filed With
HUD       MM/DD/YYYY FHA PART A CLAIM AMT    Amount of FHA Part A Claim Filed   
2    No commas(,) or dollar signs ($) FHA PART A CLAIM PAID DATE    Date HUD
Disbursed Part A Claim Payment       MM/DD/YYYY FHA PART A CLAIM PAID AMT   
Amount HUD Paid on Part A Claim    2    No commas(,) or dollar signs ($) FHA
PART B CLAIM FILED DATE    Date FHA Part B Claim Was Filed With HUD      
MM/DD/YYYY

 

V-1-3

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Column/Header Name

  

Description

   Decimal   

Format Comment

FHA PART B CLAIM AMT    Amount of FHA Part B Claim Filed    2    No commas(,) or
dollar signs ($) FHA PART B CLAIM PAID DATE    Date HUD Disbursed Part B Claim
Payment       MM/DD/YYYY FHA PART B CLAIM PAID AMT    Amount HUD Paid on Part B
Claim    2    No commas(,) or dollar signs ($) VA CLAIM FILED DATE    Date VA
Claim Was Filed With the Veterans Admin       MM/DD/YYYY VA CLAIM PAID DATE   
Date Veterans Admin. Disbursed VA Claim Payment       MM/DD/YYYY VA CLAIM PAID
AMT    Amount Veterans Admin. Paid on VA Claim    2    No commas(,) or dollar
signs ($) MOTION FOR RELIEF DATE    The date the Motion for Relief was filed   
10    MM/DD/YYYY FRCLSR BID AMT    The foreclosure sale bid amount    11    No
commas(,) or dollar signs ($) FRCLSR SALE TYPE    The foreclosure sales results:
REO, Third Party, Conveyance to HUD/VA       REO PROCEEDS    The net proceeds
from the sale of the REO property.       No commas(,) or dollar signs ($) BPO
DATE    The date the BPO was done.       CURRENT BPO VAL    The current “as is”
value of the property based on a brokers price opinion.       REPAIRED BPO PROP
VAL    The amount the property would be worth if repairs are completed pursuant
to a broker’s price opinion.       CURR APP VAL    The current “as is” value of
the property based on an appraisal.    11    No commas(,) or dollar signs ($)
CURRENT FICO    The current FICO score       HAZARD CLAIM FILED DATE    The date
the Hazard Claim was filed with the Hazard Insurance Company.    10   
MM/DD/YYYY HAZARD CLAIM AMT    The amount of the Hazard Insurance Claim filed.
   11    No commas(,) or dollar signs ($) HAZARD CLAIM PAID DATE    The date the
Hazard Insurance Company disbursed the claim payment.    10    MM/DD/YYYY HAZARD
CLAIM PAID AMT    The amount the Hazard Insurance Company paid on the claim.   
11    No commas(,) or dollar signs ($)

 

V-1-4

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Column/Header Name

  

Description

   Decimal   

Format Comment

POOL CLAIM FILED DATE    The date the claim was filed with the Pool Insurance
Company.    10    MM/DD/YYYY POOL CLAIM AMT    The amount of the claim filed
with the Pool Insurance Company.    11    No commas(,) or dollar signs ($) POOL
CLAIM PAID DATE    The date the claim was settled and the check was issued by
the Pool Insurer.    10    MM/DD/YYYY POOL CLAIM AMT PAID    The amount paid on
the claim by the Pool Insurance Company.    11    No commas(,) or dollar signs
($) FORECLOSURE FLAG    Y or N       Text BANKRUPTCY FLAG    Y or N       Text
NOD DATE          MM/DD/YYYY MI CLAIM DATE    Date Mortgage Insurance is filed
      MM/DD/YYYY NOI DATE          MM/DD/YYYY ACTUAL PAYMENT PLAN START DATE   
      MM/DD/YYYY ACTUAL PAYMENT PLAN END DATE          LIST DATE         
MM/DD/YYYY VACANCY/OCCUPANCY STATUS    The Occupancy status of the defaulted
loan’s collateral       Text ACTUAL REO START DATE          MM/DD/YYYY SALES
PRICE          Number UPB LIQUIDATION    Outstanding Principal Balance of the
loan upon Liquidation       Number REALIZED LOSS/GAIN    As defined in the
Servicing Agreement       Number LIQUIDATION PROCEEDS          Number PREPAYMENT
CHARGES COLLECTED    The amount of Prepayment Charges received       Number
PREPAYMENT CALCULATION    The formula behind the prepayment charge       Text
PAYOFF DATE    The date on which the loan was paid off       MM/DD/YYYY

Standard File Codes – Delinquency Reporting

The Loss Mit Type field should show the approved Loss Mitigation Code as
follows:

 

  •   ASUM- Approved Assumption

 

  •   BAP- Borrower Assistance Program

 

V-1-5

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  •   CO- Charge Off

 

  •   DIL- Deed-in-Lieu

 

  •   FFA- Formal Forbearance Agreement

 

  •   MOD- Loan Modification

 

  •   PRE- Pre-Sale

 

  •   SS- Short Sale

 

  •   MISC- Anything else approved by the PMI or Pool Insurer

NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.

The Occupant Code field should show the current status of the property code as
follows:

 

  •   Mortgagor

 

  •   Tenant

 

  •   Unknown

 

  •   Vacant

The Property Condition field should show the last reported condition of the
property as follows:

 

  •   Damaged

 

  •   Excellent

 

  •   Fair

 

  •   Gone

 

  •   Good

 

  •   Poor

 

  •   Special Hazard

 

  •   Unknown

 

V-1-6

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Standard File Codes – Delinquency Reporting, Continued

The FNMA Delinquent Reason Code field should show the Reason for Delinquency as
follows:

 

Delinquency

Code

  

Delinquency Description

001    FNMA-Death of principal mortgagor 002    FNMA-Illness of principal
mortgagor 003    FNMA-Illness of mortgagor’s family member 004    FNMA-Death of
mortgagor’s family member 005    FNMA-Marital difficulties 006   
FNMA-Curtailment of income 007    FNMA-Excessive Obligation 008   
FNMA-Abandonment of property 009    FNMA-Distant employee transfer 011   
FNMA-Property problem 012    FNMA-Inability to sell property 013   
FNMA-Inability to rent property 014    FNMA-Military Service 015    FNMA-Other
016    FNMA-Unemployment 017    FNMA-Business failure 019    FNMA-Casualty loss
022    FNMA-Energy environment costs 023    FNMA-Servicing problems 026   
FNMA-Payment adjustment 027    FNMA-Payment dispute 029    FNMA-Transfer of
ownership pending 030    FNMA-Fraud 031    FNMA-Unable to contact borrower INC
   FNMA-Incarceration

 

V-1-7

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Standard File Codes – Delinquency Reporting, Continued

The FNMA Delinquent Status Code field should show the Status of Default as
follows:

 

Status Code

  

Status Description

09    Forbearance 17    Pre-foreclosure Sale Closing Plan Accepted 24   
Government Seizure 26    Refinance 27    Assumption 28    Modification 29   
Charge-Off 30    Third Party Sale 31    Probate 32    Military Indulgence 43   
Foreclosure Started 44    Deed-in-Lieu Started 49    Assignment Completed 61   
Second Lien Considerations 62    Veteran’s Affairs-No Bid 63    Veteran’s
Affairs-Refund 64    Veteran’s Affairs-Buydown 65    Chapter 7 Bankruptcy 66   
Chapter 11 Bankruptcy 67    Chapter 13 Bankruptcy

 

V-1-8

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EXHIBIT V-2

Form of Remittance Advice

Standard File Layout - Master Servicing

 

Column Name

  

Description

   Decimal   

Format Comment

   Max Size SER INVESTOR NBR    A value assigned by the Servicer to define a
group of loans.       Text up to 10 digits    20 LOAN NBR    A unique identifier
assigned to each loan by the investor.       Text up to 10 digits    10
SERVICER LOAN NBR    A unique number assigned to a loan by the Servicer. This
may be different than the LOAN NBR.       Text up to 10 digits    10 BORROWER
NAME    The borrower name as received in the file. It is not separated by first
and last name.       Maximum length of 30 (Last, First)    30 SCHED PAY AMT   
Scheduled monthly principal and scheduled interest payment that a borrower is
expected to pay, P&I constant.    2    No commas(,) or dollar signs ($)    11
NOTE INT RATE    The loan interest rate as reported by the Servicer.    4    Max
length of 6    6 NET INT RATE    The loan gross interest rate less the service
fee rate as reported by the Servicer.    4    Max length of 6    6 SERV FEE RATE
   The servicer’s fee rate for a loan as reported by the Servicer.    4    Max
length of 6    6 SERV FEE AMT    The servicer’s fee amount for a loan as
reported by the Servicer.    2    No commas(,) or dollar signs ($)    11 NEW PAY
AMT    The new loan payment amount as reported by the Servicer.    2    No
commas(,) or dollar signs ($)    11 NEW LOAN RATE    The new loan rate as
reported by the Servicer.    4    Max length of 6    6 ARM INDEX RATE    The
index the Servicer is using to calculate a forecasted rate.    4    Max length
of 6    6

 

V-2-1

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Column Name

  

Description

   Decimal   

Format Comment

   Max Size ACTL BEG PRIN BAL    The borrower’s actual principal balance at the
beginning of the processing cycle.    2    No commas(,) or dollar signs ($)   
11 ACTL END PRIN BAL    The borrower’s actual principal balance at the end of
the processing cycle.    2    No commas(,) or dollar signs ($)    11
BORR NEXT PAY DUE DATE    The date at the end of processing cycle that the
borrower’s next payment is due to the Servicer, as reported by Servicer.      
MM/DD/YYYY    10 SERV CURT AMT 1    The first curtailment amount to be applied.
   2    No commas(,) or dollar signs ($)    11 SERV CURT DATE 1    The
curtailment date associated with the first curtailment amount.       MM/DD/YYYY
   10 CURT ADJ AMT 1    The curtailment interest on the first curtailment
amount, if applicable.    2    No commas(,) or dollar signs ($)    11 SERV CURT
AMT 2    The second curtailment amount to be applied.    2    No commas(,) or
dollar signs ($)    11 SERV CURT DATE 2    The curtailment date associated with
the second curtailment amount.       MM/DD/YYYY    10 CURT ADJ AMT 2    The
curtailment interest on the second curtailment amount, if applicable.    2    No
commas(,) or dollar signs ($)    11 SERV CURT AMT 3    The third curtailment
amount to be applied.    2    No commas(,) or dollar signs ($)    11 SERV CURT
DATE 3    The curtailment date associated with the third curtailment amount.   
   MM/DD/YYYY    10 CURT ADJ AMT 3    The curtailment interest on the third
curtailment amount, if applicable.    2    No commas(,) or dollar signs ($)   
11 PIF AMT    The loan “paid in full” amount as reported by the Servicer.    2
   No commas(,) or dollar signs ($)    11 PIF DATE    The paid in full date as
reported by the Servicer.       MM/DD/YYYY    10 ACTION CODE    The standard
FNMA numeric code used to indicate the default/delinquent status of a particular
loan.      

Action Code Key:

15=Bankruptcy,

30=Foreclosure, ,

60=PIF,

63=Substitution,

65=Repurchase,70=REO

   2

 

V-2-2

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Column Name

  

Description

   Decimal   

Format Comment

   Max Size INT ADJ AMT    The amount of the interest adjustment as reported by
the Servicer.    2    No commas(,) or dollar signs ($)    11
SOLDIER SAILOR ADJ AMT    The Soldier and Sailor Adjustment amount, if
applicable.    2    No commas(,) or dollar signs ($)    11 NON ADV LOAN AMT   
The Non Recoverable Loan Amount, if applicable.    2    No commas(,) or dollar
signs ($)    11 LOAN LOSS AMT    The amount the Servicer is passing as a loss,
if applicable.    2    No commas(,) or dollar signs ($)    11 SCHED BEG PRIN BAL
   The scheduled outstanding principal amount due at the beginning of the cycle
date to be passed through to investors.    2    No commas(,) or dollar signs ($)
   11 SCHED END PRIN BAL    The scheduled principal balance due to investors at
the end of a processing cycle.    2    No commas(,) or dollar signs ($)    11
SCHED PRIN AMT    The scheduled principal amount as reported by the Servicer for
the current cycle — only applicable for Scheduled/Scheduled Loans.    2    No
commas(,) or dollar signs ($)    11 SCHED NET INT    The scheduled gross
interest amount less the service fee amount for the current cycle as reported by
the Servicer — only applicable for Scheduled/Scheduled Loans.    2    No
commas(,) or dollar signs ($)    11 ACTL PRIN AMT    The actual principal amount
collected by the Servicer for the current reporting cycle — only applicable for
Actual/Actual Loans.    2    No commas(,) or dollar signs ($)    11 ACTL NET INT
   The actual gross interest amount less the service fee amount for the current
reporting cycle as reported by the Servicer — only applicable for Actual/Actual
Loans.    2    No commas(,) or dollar signs ($)    11 PREPAY PENALTY AMT    The
penalty amount received when a borrower prepays on his loan as reported by the
Servicer.    2    No commas(,) or dollar signs ($)    11

 

V-2-3

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Column Name

  

Description

   Decimal   

Format Comment

   Max Size PREPAY PENALTY WAIVED    The prepayment penalty amount for the loan
waived by the servicer.    2    No commas(,) or dollar signs ($)    11 MOD DATE
   The Effective Payment Date of the Modification for the loan.       MM/DD/YYYY
   10 MOD TYPE    The Modification Type.       Varchar - value can
be alpha or numeric    30 DELINQ P&I ADVANCE AMT    The current outstanding
principal and interest advances made by Servicer.    2    No commas(,) or dollar
signs ($)    11

 

V-2-4

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EXHIBIT V-3

Form of Realized Loss Report

Calculation of Realized Loss/Gain Form 332– Instruction Sheet

NOTE: Do not net or combine items. Show all expenses individually and all
credits as separate line items. Claim packages are due on the remittance report
date. Late submissions may result in claims not being passed until the following
month. The Servicer is responsible to remit all funds pending loss approval and
/or resolution of any disputed items.

The numbers on the 332 form correspond with the numbers listed below.

Liquidation and Acquisition Expenses:

 

1. The Actual Unpaid Principal Balance of the Mortgage Loan. For documentation,
an Amortization Schedule from date of default through liquidation breaking out
the net interest and servicing fees advanced is required.

 

2. The Total Interest Due less the aggregate amount of servicing fee that would
have been earned if all delinquent payments had been made as agreed. For
documentation, an Amortization Schedule from date of default through liquidation
breaking out the net interest and servicing fees advanced is required.

 

3. Accrued Servicing Fees based upon the Scheduled Principal Balance of the
Mortgage Loan as calculated on a monthly basis. For documentation, an
Amortization Schedule from date of default through liquidation breaking out the
net interest and servicing fees advanced is required.

 

4-12. Complete as applicable. Required documentation:

 

  * For taxes and insurance advances – see page 2 of 332 form—breakdown required
showing period of coverage, base tax, interest, penalty. Advances prior to
default require evidence of servicer efforts to recover advances.

 

  * For escrow advances—complete payment history (to calculate advances from
last positive escrow balance forward)

 

  * Other expenses— copies of corporate advance history showing all payments

 

  * REO repairs > $1500 require explanation

 

  * REO repairs >$3000 require evidence of at least 2 bids.

 

  * Short Sale or Charge Off require P&L supporting the decision and WFB’s
approved Officer Certificate

 

  * Unusual or extraordinary items may require further documentation.

 

V-3-1

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13. The total of lines 1 through 12.

Credits:

 

14-21. Complete as applicable. Required documentation:

 

  * Copy of the HUD 1 from the REO sale. If a 3rd Party Sale, bid instructions
and Escrow Agent / Attorney Letter of Proceeds Breakdown.

 

  * Copy of EOB for any MI or gov’t guarantee

 

  * All other credits need to be clearly defined on the 332 form

 

22. The total of lines 14 through 21.

Please Note: For HUD/VA loans, use line (18a) for Part A/Initial proceeds and
line (18b) for Part B/Supplemental proceeds.

Total Realized Loss (or Amount of Any Gain)

 

23. The total derived from subtracting line 22 from 13. If the amount represents
a realized gain, show the amount in parenthesis (    ).

Calculation of Realized Loss/Gain Form 332

 

Prepared by:         Date:      

Phone:         Email Address:      

 

Servicer Loan No.    Servicer Name    Servicer Address

 

WELLS FARGO BANK, N.A. Loan No.     

Borrower’s Name:     

Property Address:     

 

Liquidation Type: REO Sale    3rd Party Sale    Short Sale    Charge Off

 

Was this loan granted a Bankruptcy deficiency or cramdown    Yes    No

 

If “Yes”, provide deficiency or cramdown amount     

 

V-3-2

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Liquidation and Acquisition Expenses:

 

(1)

  

Actual Unpaid Principal Balance of Mortgage Loan

(1)

   $______________

(2)

  

Interest accrued at Net Rate

(2)

   _______________

(3)

  

Accrued Servicing Fees

(3)

   _______________

(4)

  

Attorney’s Fees

(4)

   _______________

(5)

  

Taxes (see page 2)

(5)

   _______________

(6)

  

Property Maintenance

(6)

   _______________

(7)

  

MI/Hazard Insurance Premiums (see page 2)

(7)

   _______________

(8)

  

Utility Expenses

(8)

   _______________

(9)

  

Appraisal/BPO

(9)

   _______________

(10)

  

Property Inspections

(10)

   _______________

(11)

  

FC Costs/Other Legal Expenses

(11)

   _______________

(12)

  

Other (itemize)

(12)

   _______________   

Cash for Keys__________________________

(12)

   _______________   

HOA/Condo Fees_______________________

(12)

   _______________

___________________________________________

   _______________   

(12)

     

Total Expenses

(13)

   $______________

 

V-3-3

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Credits:

  

(14)

  

Escrow Balance

(14)

   $______________

(15)

  

HIP Refund

(15)

   ______________

(16)

  

Rental Receipts

(16)

   ______________

(17)

  

Hazard Loss Proceeds

(17)

   ______________

(18)

  

Primary Mortgage Insurance / Gov’t Insurance

(18a) HUD Part A

   ______________ (18b) HUD Part B    ______________

(19)

  

Pool Insurance Proceeds

(19)

   ______________

(20)

  

Proceeds from Sale of Acquired Property

(20)

   ______________

(21)

  

Other (itemize)

(21)

   ______________

___________________________________________

   _______________   

(21)

     

Total Credits

(22)

   $______________ Total Realized Loss (or Amount of Gain)    $______________   

(23)

  

Escrow Disbursement Detail

 

Type (Tax /Ins.)

   Date Paid    Period of
Coverage    Total Paid    Base
Amount    Penalties    Interest                                                
                                                                                
              

 

V-3-4