Document:

Prepared and filed by St Ives Financial

Exhibit 10.8

Amendment

December 1, 2006

 

AMENDMENT TO EMPLOYMENT AGREEMENT

THIS WAIVER OF RIGHTS UNDER and AMENDMENT TO EMPLOYMENT AGREEMENT (“Waiver and Amendment”) is effective this 1st day of December 2006, between STERLING FINANCIAL CORPORATION (“Corporation”), and Thomas J. Sposito, II (“Executive”). 

WHEREAS, Corporation and Executive executed an Employment Agreement, dated June 14, 2004 (“Employment Agreement”);

WHEREAS, The Pennsylvania State Banking Company and Pennsylvania State Bank were also parties to the Employment Agreement; and

WHEREAS, the Corporation and Executive desire to amend certain terms of the Employment Agreement and to limit the parties to the Employment Agreement, as amended, to Corporation and Executive,

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained in this Amendment, Corporation and Executive, each intending to be legally bound hereby, do covenant, acknowledge and confirm that:

	

 
 	

1.
 	

The parties to the Employment Agreement, as amended by this Waiver and Amendment, will be limited to Corporation and Executive. Any obligations that Executive owed to The Pennsylvania State Banking Company or Pennsylvania State Bank under the Employment Agreement, as amended, will be owed to Corporation and all benefits under the Employment Agreement, as amended, that inured to The Pennsylvania State Banking Company or Pennsylvania State Bank will inure to Corporation. All obligations owed by The Pennsylvania State Banking Company or Pennsylvania State Bank under the Employment Agreement, as amended, will be assumed by Corporation.
 

	

 
 	

2.
 	

This Waiver and Amendment amends Section 1 of the Employment Agreement as set forth herein.
 

	

 
 	

3.
 	

Section 1 of the Employment Agreement is hereby amended to read as follows:
 

	

 
 	

(a)
 	

Sterling hereby agrees to employ Executive and Executive hereby agrees to serve as Chief Banking Officer of Sterling. 
 

Amendment

December 1, 2006

 

	

 
 	

(b)
 	

Executive shall devote his full working time and best efforts to the performance of his responsibilities and duties hereunder and as Chief Banking Officer of Sterling. During the Term of Employment, Executive shall not, without the prior consent of the Board of Directors of Sterling, render services as an employee, independent contractor, or otherwise, whether or not compensated, to any person or entity other than Sterling, its subsidiaries and affiliates; provided that Executive may, where involvement in such activities does not individually or in the aggregate significantly interfere with the performance by Executive of his duties, (i) render services to charitable organizations, (ii) manage his personal investments, and (iii) with the prior written permission of the Board of Directors of Sterling, hold such other directorships or part
time academic appointments or have such other business affiliations as would otherwise be prohibited under this Section 1.
 

	

 
 	

4.
 	

This Waiver and Amendment amends Section 2(a)(vii) of the Employment Agreement as set forth herein. 
 

	

 
 	

5.
 	

Section 2(a)(vii) of the Employment Agreement is hereby amended to read as follows:
 

Executive’s resignation for “Good Reason.”  “Good Reason” shall mean Executive’s resignation at any time before or on December 31, 2007 for any reason whatsoever.

	

 
 	

6.
 	

This Waiver and Amendment amends Section 2(c) of the Employment Agreement as set forth herein.
 

	

 
 	

7.
 	

Section 2(c) of the Employment Agreement is hereby amended to read as follows:
 

	

 
 	

(c)
 	

In the event that the term of the employment shall be terminated for any reason set forth in Section 2(a)(vi) or 2(a)(vii) hereof at any time before June 30, 2007, Executive shall be entitled to receive:
 

	

 
 	

8.
 	

The remainder of Section 2(c), specifically subsections (i)-(iv), remain as originally stated in the Employment Agreement; there are no amendments to these subsections.
 

	

 
 	

9.
 	

This Waiver and Amendment amends Section 2(d) of the Employment Agreement as set forth herein.
 

Amendment

December 1, 2006

 

	

 
 	

10.
 	

Section 2(d) of the Employment Agreement is hereby amended to read as follows:
 

	

 
 	

(c)
 	

In the event that the Term of Employment shall be terminated for any reason set forth in Section 2(a)(vi) or 2(a)(vii) hereof at any time between July 1, 2007 and December 31, 2007 , Executive shall be entitled to receive:
 

	

 
 	

(i)
 	

any salary payable pursuant to section 3(a)(i) hereof which shall have accrued as of the Termination Date; and
 

	

 
 	

(ii)
 	

for the period commencing on the date immediately following the Termination Date and ending one (1) year later, salary payable at the rate established pursuant to section 3(a)(i) hereof, in a manner consistent with the normal payroll practices of Sterling with respect to executive personnel presently in effect or as they may be modified by Sterling from time to time; and
 

* * *

	

 
 	

11.
 	

The remainder of section 2(d), specifically subsection (iii), remains as originally stated in the Employment Agreement; there are no amendments to subsection (iii).
 

	

 
 	

12.
 	

This Waiver and Amendment amends section 2(e) as set forth herein. 
 

Amendment

December 1, 2006

 

	

 
 	

13.
 	

Section 2(e) is hereby amended to read as follows:
 

	

 
 	

(e)
 	

(i) Notwithstanding any other provision hereof to the contrary, in the event any payments or benefits Executive may become entitled to pursuant to section 2(c) or 2(d) hereof or any other payments or benefits received or to be received by Executive in connection with the Merger (whether pursuant to the terms of any other agreement, plan, arrangement, or otherwise) (collectively the “Severance Payments”) will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), Sterling shall pay to Executive an additional amount (the “Gross-Up Payments”) so that the net amount retained by Executive, after deduction of the Excise Tax (but before deduction for any federal, state or local income tax) on the Severance Payments and after deduction for the
aggregate of any federal, state, or local income tax and Excise Tax upon the Gross-Up Payment, shall be equal to the Severance Payments. For purposes of determining whether any of the Severance Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) the entire amount of the Severance Payments shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of the Code and as subject to the Excise Tax, unless and to the extent, in the written opinion of outside tax counsel selected by Sterling’s independent accountants and reasonably acceptable to Executive, such payments (in whole or in part) are not subject to the Excise Tax; and (B) the value of any non-cash benefits or any deferred payment or benefit (constituting a part of the Severance Payments) shall be determined by Sterling’s independent auditors in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals (without taking into account surtaxes or loss or reduction of deductions) for the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of taxation in the state and locality of Executive’s residence on the Termination Date. In the event that the amount of Excise Tax Executive is required to pay is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to Sterling promptly after the time that the amount of such reduction in Excise Tax is finally determined the amount of the reduction, together with interest on the amount of such reduction at the rate of six percent per annum from the date of the Gross-Up Payment, plus, if in the written opinion of outside tax counsel selected by Sterling’s
independent accountants and reasonably acceptable to Executive, such payment (or a portion thereof) was not taxable income to Executive when reported or is deductible by Executive for federal income tax purposes, the net federal income tax benefit Executive actually realized as a result of making such payment pursuant to this sentence. In the event that the amount of Excise Tax Executive is required to pay is subsequently determined to exceed the amount taken into account hereunder, Sterling shall make an additional Gross-Up Payment in the manner set forth above in respect of such excess (plus any interest, additions to tax, or penalties payable by Executive with respect to such excess) promptly after the time that the amount can be reasonably determined.
 

(ii) The payments provided for in subsection (i) above, shall be made not later than the fifth (5th) business day following the Termination Date; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, Sterling shall pay to Executive on such day an estimate, as determined in good faith by Sterling, of the minimum amount of such payments, and shall pay the remainder of such payments (together with interest at the rate of six percent per annum) as soon as the amount thereof can be determined. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by Sterling to Executive, payable on the fifth (5th) day after demand by the Bank (together with interest at the rate of six percent per annum).

Amendment

December 1, 2006

 

	

 
 	

14.
 	

This Waiver and Amendment amends section 3(a)(i) as set forth herein.
 

	

 
 	

15.
 	

Section 3(a)(i) is hereby amended to read as follows:
 

3. Compensation. For the services to be performed by Executive for Sterling under this Agreement, Executive shall be compensation in the following manner:

	
         

      	

(a)
 	

Salary. During the term of employment:
 

(i) Sterling shall pay Executive a salary which on an annual basis shall not be less than $200,000.58, assuming Executive performs competently. Salary shall be payable in accordance with the normal payroll practice of Sterling with respect to executive personnel as presently in effect or as may be modified by Sterling from time to time.

	

 
 	

16.
 	

This Waiver and Amendment deletes section 4 of the Employment Agreement in its entirety.
 

	

 
 	

17.
 	

Sterling shall provide Executive with a change of control agreement effective January 1, 2008, provided that Executive’s employment has not otherwise been terminated.
 

	

 
 	

18.
 	

The Employment Agreement shall continue in full force and effect until terminated, subject to this Waiver and Amendment.
 

	

 
 	

19.
 	

This Waiver and Amendment has been executed in accordance with and satisfies the requirements of Section 11 of the Employment Agreement.
 

Amendment

December 1, 2006

 

	

 
 	

20.
 	

Any notice obligations owed to Executive with respect to this Waiver and Amendment, pursuant to Section 8 of the Employment Agreement or otherwise, have been satisfied.
 

	

 
 	

21.
 	

The Executive waives any and all rights to claim that this Waiver and Amendment has not been executed in accordance with the provisions of or is in breach of the Employment Agreement, including without limitation, the requirements set forth in Sections 11 and 8 of the Employment Agreement.
 

	

 
 	

22.
 	

The modifications and amendments to the Employment Agreement, as set forth in this Waiver and Amendment, shall not constitute a termination “without cause” as set forth in section 2(a)(vi) of the Employment Agreement or constitute Good Reason, as defined in section 2(a)(vii) of the Employment Agreement, for Executive to terminate the Employment Agreement and Executive waives any and all rights to claim termination without cause or to terminate the Employment Agreement for Good Reason as a result of anything contained in this Waiver and Amendment.
 

	

 
 	

23.
 	

This Waiver and Amendment shall be governed by and construed in accordance with the domestic, internal laws of the Commonwealth of Pennsylvania, without regard to conflicts of laws principles.
 

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Amendment

December 1, 2006

 

IN WITNESS WHEREOF, the parties, intending to be legally bound, have executed this Amendment on the date first written above, by placing their signatures or having their authorized representatives sign below.

 

	

ATTEST:
 	

 
 	

STERLING FINANCIAL CORPORATION
 
	

 /s/ Kathleen A. Prime
 	

 
 	

By: 
 	

 /s/ J. Roger Moyer, Jr.
 
	

 	

 
 	

 
 	

 
	

 
 	

 
 	

 
 	

J. Roger Moyer, Jr.
 President and Chief Executive Officer
 

 

  	
        WITNESS:

      	
         

      	
        Executive:

      
	
        

          /s/ Kathleen A. Prime

      	
         

      	
        

          /s/ Thomas J. Sposito, II

      
	
        
        

      	
         

      	
        
        

      
	
         

      	
         

      	
        Thomas
          J. Sposito, II

      

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) made and entered into this 14th day of June, 2004, by and among THOMAS J. SPOSITO, II (“Executive”) and PENNSYLVANIA STATE BANK, a Pennsylvania banking institution having its principal office in Camp Hill, Pennsylvania (the “Bank”), THE PENNSYLVANIA STATE BANKING COMPANY, a Pennsylvania corporation having its principal office in Camp Hill, Pennsylvania (“Pennsylvania”), and STERLING FINANCIAL CORPORATION, a Pennsylvania corporation having its principal office in Lancaster, Pennsylvania
(“Sterling”).

WITNESSETH THAT:

WHEREAS, the Bank is a wholly-owned subsidiary of Pennsylvania;

WHEREAS, the Executive and the Bank are parties to that certain Employment Agreement dated as of August 7, 2002 (the “2002 Employment Agreement”) pursuant to which the Bank has agreed to employ the Executive as its President and Chief Executive Officer;

WHEREAS, the Executive, the Bank and Pennsylvania are parties to that certain Amendment No. 1 to the 2002 Employment Agreement dated as of March 16, 2004 (the “2004 Amendment”) pursuant to which the Executive, the Bank and Pennsylvania agreed to amend the Employment Agreement to add Pennsylvania as an employer party thereto (the 2002 Employment Agreement and the 2004 Amendment are hereinafter collectively referred to as the “Pennsylvania Employment Agreement”);

WHEREAS, the Executive and Pennsylvania are parties to that certain letter agreement dated as of March 16, 2004 providing for certain benefits to the Executive upon the termination of the Executive’s employment subsequent to a change in control of Pennsylvania (the “Pennsylvania Change in Control Agreement”);

WHEREAS, Pennsylvania and Sterling are parties to that certain Agreement and Plan of Merger dated as of June 14, 2004 (the “Merger Agreement”) pursuant to which Pennsylvania will merge with and into Sterling, with Sterling as the surviving corporation (the “Merger”);

WHEREAS, upon the completion of the Merger, the Bank will become a wholly-owned subsidiary of Sterling;

WHEREAS, the Merger will constitute a change in control of Pennsylvania under the Pennsylvania Change in Control Agreement;

WHEREAS, the parties disagree as to whether or not, upon the completion of the Merger, the conditions precedent to the Executive’s receipt of the benefits provided under the Pennsylvania Change in Control Agreement will have been satisfied;

WHEREAS, the Bank and Sterling desire to resolve such disagreements, terminate the Pennsylvania Employment Agreement and the Pennsylvania Change in Control Agreement, and employ the Executive as the President and Chief Executive Officer of the Bank following the completion of the Merger, all in consideration for and upon the terms and conditions set forth in this Agreement;

WHEREAS, the Executive desires to resolve such disagreements, terminate the Pennsylvania Employment Agreement and the Pennsylvania Change in Control Agreement, accept employment as the President and Chief Executive Officer of the Bank following the completion of the Merger, all in consideration for and upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements hereinafter set forth, intending to be legally bound, the parties agree as follows:

1. Employment Responsibilities and Duties.

(a) The Bank hereby agrees to employ Executive and Executive hereby agrees to serve as President and Chief Executive Officer of the Bank.

(b) Contingent upon Executive qualifying under the Bank’s Bylaws, the Bank hereby agrees to cause Executive to be elected to the board of directors of the Bank throughout the Term of Employment (hereinafter defined).

(c) Executive shall devote his full working time and best efforts to the performance of his responsibilities and duties hereunder and to the retention of the customer relationships to which the Bank has been a party prior to the date of this Agreement and the expansion of the customer relationships of the Bank subsequent to the date of this Agreement. During the Term of Employment, Executive shall not, without the prior written consent of the Board of Directors of Sterling, render services as an employee, independent contractor, or otherwise, whether or not compensated, to any person or entity other than the Bank or its affiliates; provided that Executive may, where involvement in such activities does not individually or in the aggregate significantly interfere with the performance by Executive of his duties or violate the provisions of section 4 hereof, (i) render services to
charitable organizations, (ii) manage his personal investments, and (iii) with the prior written permission of the Board of Directors of Sterling, hold such other directorships or part-time academic appointments or have such other business affiliations as would otherwise be prohibited under this section 1.

2. Term of Employment.

(a) The term of Executive’s employment under this Agreement (“Term of Employment”) shall be the period commencing on the Effective Date of the Merger as defined in the Merger Agreement (hereinafter, the “Commencement Date”), and continue until the Termination Date, which shall mean the earliest to occur of:

(i) January 16, 2008; or

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(ii) the death of Executive; or

(iii) Executive’s inability to perform his duties hereunder, as a result of physical or mental disability as reasonably determined by the personal physician of Executive, for a period of at least 180 consecutive days or for at least 180 days during any period of twelve consecutive months during the Term of Employment; or

(iv) the discharge of Executive by the Bank “for cause,” which shall mean one or more of the following:

(A) any willful or gross misconduct by Executive with respect to the business and affairs of the Bank, or with respect to any of its affiliates for which Executive is assigned material responsibilities or duties;

(B) the conviction of Executive of a felony (after the earlier of the expiration of any applicable appeal period without perfection of an appeal by Executive or the denial of any appeal as to which no further appeal or review is available to Executive) whether or not committed in the course of his employment by the Bank;

(C) Executive’s willful neglect, failure, or refusal to carry out his duties hereunder in a reasonable manner (other than any such failure resulting from disability or death or from termination by Executive for Good Reason, as hereinafter defined);

(D) the breach by Executive of any representation or warranty in section 7(a) hereof or of any agreement contained in sections 1, 5, 6, or 7(b) hereof, which breach is material and adverse to the Bank or any of its affiliates for which Executive is assigned material responsibilities or duties; or

(E) for purposes of section 4 hereof, as defined in section 4(c) hereof; or

(v) Executive’s resignation from his position as President and Chief Executive Officer of the Bank other than for “Good Reason,” as hereinafter defined; or

(vi) the termination of Executive’s employment by the Bank “without cause,” which shall be for any reason other than those set forth in subsections (i), (ii), (iii), (iv), (v) or (vii) of this section 2(a), at any time, upon the thirtieth (30th) day following prior written notice to Executive from the Bank or Sterling; or

(vii) Executive’s resignation for “Good Reason.”  “Good Reason” shall mean, (A) Executive’s resignation at any time during the two (2) year period commencing on the Commencement Date for any reason whatsoever or, (B) without Executive’s express written consent, reassignment of Executive to a position other than as President and Chief Executive Officer of the Bank other than “for cause,” or a decrease in the amount of Executive’s salary from the amount established in section 3(a) hereof, or, (C) for purposes of section 4 hereof, as defined in section 4(a)(iv) hereof.

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(b) In the event that the Term of Employment shall be terminated for any reason other than that set forth in section 2(a)(vi) or 2(a)(vii) hereof, Executive shall be entitled to receive, upon the occurrence of any such event:

(i) any salary payable pursuant to section 3(a)(i) hereof which shall be accrued as of the Termination Date; and

(ii) such rights as Executive shall have accrued as of the Termination Date under the terms of any plans, programs or arrangements in which he participates pursuant to section 3(b) hereof, any right to reimbursement for expenses accrued as of the Termination Date payable pursuant to section 3(g) hereof, and the right to receive the cash equivalent of paid annual vacation, personal and sick leave accrued as of the Termination Date pursuant to section 3(c) hereof.

(c) In the event that the Term of Employment shall be terminated for any reason set forth in section 2(a)(vi) or 2(a)(vii) hereof at any time during the two (2) year period commencing on the Commencement Date, Executive shall be entitled to receive:

(i) any salary payable pursuant to section 3(a)(i) hereof which shall have accrued as of the Termination Date; and

(ii) severance pay in an amount equal to two (2) times Executive’s “Base Amount,” which for purposes of this section 2(c)(ii) means Executive’s average annual compensation includible in gross income for federal income tax purposes for the three (3) years immediately preceding the year in which the Commencement Date occurs, including base salary, non-deferred amounts under annual incentive, long-term performance, and profit sharing plans, distributions of previously deferred amounts under such plans, and ordinary income recognized with respect to stock options. The Executive, at Executive’s election, will be paid the severance pay in either (i) 24 equal monthly installments, or (ii) a lump sum equal to the present value of the amounts payable under this subsection; commencing within 30 days after his termination of employment. For purposes of the
preceding sentence, present value will be determined by using the short-term applicable federal rate under Section 1274 of the Internal Revenue Code of 1986, as amended (the “Code”), in effect on the Termination Date. For purposes of this subsection, to the extent necessary, base salary and bonuses with any predecessor of Sterling or the Bank shall be taken into account; and

(iii) for one year after the Termination Date, continued participation in all non-cash employee benefit plans, programs or arrangements (including, without limitation, pension and retirement plans and arrangements, stock option plans, life insurance and health and accident plans and arrangements, medical insurance plans, disability plans, and vacation plans) in which Executive was entitled to participant immediately prior to the Termination Date, provided that Executive’s continued participation is possible after termination under the general terms and provisions of such plans, programs, and arrangements, and further provided, however, that if Executive becomes eligible to participate in a benefit plan, program or arrangement of another employer which confers substantially the same benefits upon Executive, Executive shall cease to receive benefits under this subsection in
respect of such plan, program or arrangement. In the event Executive’s participation in any such plan, program or arrangement is barred, the Bank or Sterling, as the case may be, shall arrange to provide to Executive benefits substantially similar to those which Executive would have received under such plans, programs or arrangements; and

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(iv) such rights as Executive may have accrued as of the Termination Date under the terms of any  plans,  programs or  arrangements in  which  Executive  participates pursuant to section 3(b) hereof, any right to reimbursement for expenses accrued as of the Termination Date payable pursuant to section 3(g) hereof, and the right to receive the cash equivalent of paid time off accrued as of the Termination Date pursuant to section 3(c) hereof.

(d) In the event that the Term of Employment shall be terminated for any reason set forth in section 2(a)(vi) or 2(a)(vii) (B) or (C) hereof at any time after the expiration of the two (2) year period commencing on the Commencement Date, Executive shall be entitled to receive:

(i) any salary payable pursuant to section 3(a)(i) hereof which shall have accrued as of the Termination Date; and

(ii) for the period commencing on the date immediately following the Termination Date and ending upon and including January 16, 2008, salary payable at the rate established pursuant to section 3(a)(i) hereof, in a manner consistent with the normal payroll practices of the Bank with respect to executive personnel as presently in effect or as they may be modified by the Bank from time to time; and

(iii) such rights as Executive may have accrued as of the Termination Date under the terms of any plans, programs or arrangements in which Executive participates pursuant to section 3(b) hereof, any right to reimbursement for expenses accrued as of the Termination Date payable pursuant to section 3(g) hereof, and the right to receive the cash equivalent of paid time off accrued as of the Termination Date pursuant to section 3(c) hereof.

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(e) (i) Notwithstanding any other provision hereof to the contrary, in the event any payments or benefits Executive may become entitled to pursuant to section 2(c) hereof or any other payments or benefits received or to be received by Executive in connection with the Merger or termination of Executive’s employment within two (2) years after the Commencement Date (whether pursuant to the terms of any other agreement, plan, arrangement, or otherwise) (collectively the “Severance Payments”) will be subject to the tax (the “Excise Tax”) imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the Bank shall pay to Executive an additional amount (the “Gross-Up Payments”) so that the net amount retained by Executive, after deduction of the Excise Tax (but before deduction for any federal, state or local income
tax) on the Severance Payments and after deduction for the aggregate of any federal, state, or local income tax and Excise Tax upon the Gross-Up Payment, shall be equal to the Severance Payments. For purposes of determining whether any of the Severance Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) the entire amount of the Severance Payments shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of the Code and as subject to the Excise Tax, unless and to the extent, in the written opinion of outside tax counsel selected by Sterling’s independent accountants and reasonably acceptable to Executive, such payments (in whole or in part) are not subject to the Excise Tax; and (B) the value of any non-cash benefits or any deferred payment or benefit (constituting a part of the severance Payments) shall be determined by Sterling’s independent auditors in accordance with the principles of sections 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals (without taking into account surtaxes or loss or reduction of deductions) for the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of taxation in the state and locality of Executive’s residence on the Termination Date. In the event that the amount of Excise Tax Executive is required to pay is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Bank promptly after the time that the amount of such reduction in Excise Tax is finally determined the amount of the reduction, together with interest on the amount of such reduction at the rate of six percent per annum from the date of the Gross-Up Payment, plus, if in the written opinion of outside
tax counsel selected by Sterling’s independent accountants and reasonably acceptable to Executive, such payment (or a portion thereof) was not taxable income to Executive when reported or is deductible by Executive for federal income tax purposes, the net federal income tax benefit Executive actually realized as a result of making such payment pursuant to this sentence. In the event that the amount of Excise Tax Executive is required to pay is subsequently determined to exceed the amount taken into account hereunder, the Bank shall make an additional Gross-Up Payment in the manner set forth above in respect of such excess (plus any interest, additions to tax, or penalties payable by Executive with respect to such excess) promptly after the time that the amount can be reasonably determined.

(ii) The payments provided for in subsection (i) above, shall be made not later than the fifth (5th) business day following the Termination Date; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Bank shall pay to Executive on such day an estimate, as determined in good faith by the Bank, of the minimum amount of such payments, and shall pay the remainder of such payments (together with interest at the rate of six percent per annum) as soon as the amount thereof can be determined. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Bank to Executive, payable on the fifth (5th) day after demand by the Bank (together with interest at the rate of six percent per annum).

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3. Compensation. For the services to be performed by Executive for the Bank under this Agreement, Executive shall be compensated in the following manner:

(a)
  Salary.
  During the Term of Employment:

(i) the Bank shall pay Executive a salary which, on an annual basis, shall not be less than $167,200, assuming Executive performs competently. Salary shall be payable in accordance with the normal payroll practices of Sterling with respect to executive personnel as presently in effect or as they may be modified by Sterling from time to time.

(ii) Executive shall be eligible to be considered for salary increases, upon review, in accordance with the compensation policies of Sterling with respect to executive personnel as presently in effect or as they may be modified by Sterling from time to time.

(iii) Executive shall be entitled to receive annual performance bonuses, in accordance with the Sterling bonus program(s) as in effect from time to time during the Term of Employment under such terms as may be applicable to officers of Executive’s rank employed by Sterling or its affiliates.

(b) Employee Benefit Plans or Arrangements. During the Term of Employment, Executive shall be entitled to participate in all employee benefit plans of Sterling as presently in effect or as they may be modified by Sterling from time to time, under such terms as may be applicable to officers of Executive’s rank employed by Sterling or its affiliates, including, without limitation, plans providing retirement benefits, stock options, medical insurance, life insurance, disability insurance, and accidental death or dismemberment insurance, provided that there be no duplication of such benefits as are provided under any other provision of this Agreement.

(c) Paid Time Off. During the Term of Employment, Executive shall be entitled to paid time off in accordance with the policies of Sterling as in effect as of the Commencement Date or as may be modified by Sterling from time to time as may be applicable to officers of Executive’s rank employed by Sterling or its affiliates; provided that Executive shall be entitled to no less than twenty-five (25) days under Sterling’s paid time off program.

(d) Automobile. During the Term of Employment, Executive shall be entitled to the use of an automobile owned or leased by the Bank, the make, model, and year of which 

automobile shall be appropriate to an officer of Executive’s rank employed by Sterling or its affiliates. The Bank shall be responsible for all expenses of ownership and use of such automobile, subject to reimbursement of expenses for personal use in accordance with section 3(f).

(e) Country Club Dues. Executive shall be reimbursed for an initiation fee, dues and assessments incurred in relation to a full membership in a country club mutually agreed upon by Executive and Sterling. 

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(f) Withholding. All compensation to be paid to Executive hereunder shall be subject to required withholding and other taxes.

(g)
  Expenses.
  During the Term of Employment, Executive shall be reimbursed for reasonable
  travel and other expenses (including telecommunications equipment) incurred
  or paid by Executive in connection with the performance of his services under
  this Agreement, upon presentation of expense statements or vouchers or such
  other supporting information as may from time to time be required, in accordance
  with such policies of Sterling as are in effect as of the Commencement Date
  and as may be modified by Sterling from time to time, under such terms as may
  be applicable to officers of Executive’s rank employed by Sterling or its
  affiliates.

(h) Trade Association/Continuing Education Meetings. The Bank shall pay for all expenses incurred by the Executive to attend one trade association or continuing education meeting per year. 

4. Sterling Change in Control.

(a) Termination for Good Reason after Sterling Change in Control. If a Sterling Change in Control (as defined in section 4(a)(ii) hereof) occurs and, in anticipation thereof, concurrently therewith or thereafter during the Term of Sterling Change in Control (as defined in section 4(a)(iii) hereof) an event constituting Good Reason (as defined in section 4(a)(iv) hereof) also occurs with respect to the Executive, Executive may terminate Executive’s employment in accordance with the provisions of section 4(a)(i) hereof and, thereupon, will become entitled to the payments described in section 4(b) hereof. 

(i)
  Notice of Termination.
  Upon the occurrence of a Sterling Change in Control and an event of Good Reason
  as contemplated by section 4(a) above, the Executive may, within 90 days after
  the occurrence of any such event of Good Reason, resign from employment by a
  notice in writing (“Notice of Termination”) delivered to Sterling,
  whereupon Executive will become entitled to the payments described in section
  4(b) hereof. In the case of a termination described in section 4(a)(iv)(A) hereof,
  the Executive will confirm Executive’s involuntary termination, in writing,
  within 90 days after the date of such termination, and such confirmation will
  be deemed a Notice of Termination.

(ii) Sterling Change in Control Defined. As used in this section 4, the term “Sterling Change in Control” means any of the following:

(A) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities and Exchange Act of 1934 (the “Exchange Act”)), other than Sterling, the Bank, a subsidiary of Sterling or the Bank, an employee benefit plan of Sterling or the Bank or a subsidiary of Sterling or the Bank, (including a related trust), becomes the beneficial owner (as determined pursuant to Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Sterling or the Bank representing more than 20% of the combined voting power of Sterling’s or the Bank’s, as the case may be, then outstanding securities;

-8-

(B) the occurrence of, or execution of an agreement providing for, a sale of all or substantially all of the assets of Sterling or the Bank to an entity which is not a direct or indirect subsidiary of Sterling or the Bank;

(C) the occurrence of, or execution of an agreement providing for, a reorganization, merger, consolidation or similar transaction involving Sterling or the Bank, unless (A) the shareholders of Sterling or the Bank, as the case may be, immediately prior to the consummation of any such transaction will initially own securities representing a majority of the voting power of the surviving or resulting corporation, and (B) the directors of Sterling or the Bank, as the case may be, immediately prior to the consummation of any such transaction will initially represent a majority of the directors of the surviving or resulting corporation; or

(D) any other event which is at any time irrevocably designated as a “Sterling Change in Control” for purposes of this Agreement by resolution adopted by a majority of the then non-employee directors of Sterling.

(iii) Term of Sterling Change in Control Defined. Notwithstanding that the Term of Employment under this Agreement may terminate prior thereto, the term “Term of Sterling Change in Control”, as used in this section 4, means the period commencing two (2) years after the Commencement Date and terminating on December 31, 2010, provided that on such date, and each December 31 thereafter, the Term of Sterling Change in Control shall be automatically extended for an additional calendar year, unless either party gives written notice to the other, by no later than the preceding November 30, that it does not concur in such extension, and unless Executive’s employment with the Bank has been sooner terminated.

(iv) Good Reason Defined. As used in this section 4, the term “Good Reason” means any of the following events:

(A) the involuntary termination of the Executive, other than “for cause” as defined in section 4(c) hereof or by reason of “disability” as contemplated by section 4(e) hereof;

(B) a reduction in the Executive’s title, responsibility (including reporting responsibility) or authority as in effect immediately prior to the Sterling Change in Control; provided, however, that the assignment of the Executive to a position with a reasonably similar title, responsibility and authority will not constitute an event of Good Reason if the Executive’s actual or targeted compensation  in such new position is not less than the Executive’s actual and targeted compensation immediately prior to the Sterling Change in Control; 

(C) the assignment to the Executive of duties inconsistent with Executive’s position immediately prior to the Sterling Change in Control, except for an assignment of duties consistent with a position permitted in clause (B) above;

-9-

(D) a reduction in the Executive’s annual base salary in effect immediately prior to the Sterling Change in Control;

(E) reassignment of the Executive to a principal office which is more than 30 miles from the Executive’s principal office in Camp Hill, Pennsylvania;

(F) the failure to provide the Executive with welfare, pension, incentive compensation, fringe and other benefits to which Executive was entitled immediately prior to the Sterling Change in Control, unless such failure occurs by reason of a reduction or change in such benefits for employees generally or similarly situated executive employees of the corporation which is the acquiring, resulting or successor corporation in the Sterling Change in Control (or an affiliate thereof); or 

(G) any material breach of this Agreement by the Bank or Sterling which is not cured within thirty (30) days after receipt of written notice of such breach from the Executive.

(b) Rights in the Event of Certain Terminations Following Sterling Change in Control. In the event the Executive validly and timely delivers a Notice of Termination to Sterling, the Executive will be entitled to receive the following payments and benefits:

(i) Basic Payments. The Executive will be paid an amount equal to two and one-half (2.5) times the Base Amount. “Base Amount”, for purposes of this section 4(b)(i) shall mean an amount equal to the average annual compensation payable by Sterling and the Bank to the Executive and includable by the Executive in gross income for the most recent five (5) taxable years, or such shorter period as the Executive shall have been employed by Sterling and the Bank, ending before the date on which the Sterling Change of Control occurred. The Executive, at Executive’s election, will be paid the Basic Payments in either (i) 30 equal monthly installments, or (ii) a lump sum equal to the present value of the amounts payable under this subsection; commencing within 30 days after his termination of
employment. For purposes of the preceding sentence, present value will be determined by using the short-term applicable federal rate under Section 1274 of the Internal Revenue Code of 1986, as amended (the “Code”), in effect on the Termination Date. For purposes of this subsection, to the extent necessary, base salary and bonuses with any predecessor of Sterling, the Bank or an affiliate thereof shall be taken into account.

(ii) Supplemental Payment in Lieu of Certain Benefits. In lieu of continued pension, welfare and other benefits, a one-time lump sum cash payment equaling 25% of the Basic Payments calculated above will be paid to the Executive within 30 days following the Termination Date.

(iii) Stock Options. Upon a Sterling Change in Control, all stock options theretofore granted to the Executive by Sterling and not previously exercisable shall become fully exercisable to the same extent and in the same manner as if they had become exercisable by passage of time or by virtue of Sterling or the Bank achieving certain performance objectives in accordance with the relevant provisions of any plan and any agreement.

-10-

(iv) Section 280G. Notwithstanding any other provisions of this section 4 or any other agreement entered into by the Executive with the Bank or Sterling (“Other Agreement”), and notwithstanding any formal or informal plan or other arrangement heretofore or hereafter adopted by the Bank or Sterling for the direct or indirect provision of compensation to the Executive (including groups of participants or beneficiaries of which the Executive is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Executive (a “ Benefit Plan”), the Executive shall not have any right to receive any payment or other benefit under this section 4, any Other Agreement, or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Executive under this section 4, all Other Agreements, and all Benefit Plans, would cause any payment to the Executive under this Agreement to be considered a “parachute payment” within the meaning of Section 280G of the Code as then in effect (a “Parachute Payment”). In the event that the receipt of any such payment or benefit under this section 4, any Other Agreement, or any Benefit Plan would cause the Executive to be considered to have received a Parachute Payment under this Agreement, then the Executive shall have the right, in the Executive’s sole discretion, to designate those payments or benefits under this section 4, any Other Agreements and/or any Benefit Plans, which should be reduced or eliminated so as to avoid having the payment to the Executive under this section 4 to be deemed to be a Parachute Payment.

(c) Termination For Cause. Notwithstanding any other provisions of this Agreement to the contrary, section 4 of this Agreement and the respective rights and obligations of the parties thereunder will terminate automatically upon termination of the Executive’s employment by the Bank or Sterling for cause. As used in this section 4, the term “for cause” means:

(i) prior to a Sterling Change in Control, termination for any reason; and

(ii) concurrent with or following a Sterling Change in Control, termination following, (A) the Executive’s conviction or plea of guilty or nolo contendere to a felony, a crime of falsehood, or a crime involving fraud or moral turpitude, or the actual incarceration of the Executive for a period of 45 consecutive days, (B) the Executive’s failure to follow the lawful instructions of the Bank or Sterling after receipt of written notice of such instructions from an appropriate corporate official, other than a failure resulting from the Executive’s incapacity because of physical or mental illness, or (C) a government regulatory agency recommends or orders in writing that the employment of the Executive be so terminated.

(d) Voluntary Termination, Retirement or Death. Notwithstanding any other provisions of this Agreement to the contrary, section 4 of this Agreement and the respective rights and obligations of the parties thereunder will terminate automatically upon the voluntary termination of the Executive’s employment (other than in accordance with section 4(a) of this Agreement), Executive’s retirement or Executive’s death; provided, however, that if the Executive dies after a Notice of Termination is delivered by Executive in accordance with section 4(a)(i) of this Agreement, the payments described in section 4(b) of this Agreement will nonetheless be made to the person or persons determined pursuant to section 17(b) hereof.

-11-

(e) Disability. Notwithstanding any other provisions of this Agreement to the contrary, section 4 of this Agreement and the respective rights and obligations of the parties thereunder will terminate automatically upon the termination of the Executive’s employment by reason of disability; provided, however, that if the Executive becomes disabled after a Notice of Termination is delivered by Executive in accordance with section 4(a)(i) of this Agreement, Executive will nonetheless be entitled to receive the payments described in section 4(b) of this Agreement. The term “disability” as used in this section 4(e) means incapacitation, by accident, sickness or otherwise, such that the Executive is rendered unable to perform the services required of Executive by Executive’s then position
with the Bank for a period for six (6) consecutive months.

5. Confidential Business Information; Non-Competition.

(a) Executive acknowledges that certain business methods, creative techniques, and technical data of Sterling, the Bank and their affiliates and the like are deemed by Sterling and the Bank to be and are in fact confidential business information of Sterling, the Bank and their affiliates. Such confidential information includes but is not limited to procedures, methods, sales relationships developed while in the service of Sterling, the Bank and their affiliates, knowledge of customers and their requirements, marketing plans, marketing information, studies, forecasts, and surveys, competitive analyses, mailing and marketing lists, new business proposals, lists of vendors, consultants, and other persons who render service or provide material to Sterling, the Bank or their affiliates, and compositions, ideas, plans, and methods belonging to or related to the affairs of Sterling,
the Bank or their affiliates. In this regard, Sterling and the Bank assert proprietary rights in all of their business information and that of their affiliates except for such information as is clearly in the public domain. Notwithstanding the foregoing, information that would be generally known or available to persons skilled in Executive’s fields shall be considered to be “clearly in the public domain” for the purposes of the preceding sentence. Executive agrees that Executive will not disclose or divulge to any third party, except as may be required by Executive’s duties hereunder, by law, regulation, or order of a court or government authority, or as directed by Sterling or the Bank, nor shall Executive use, to the detriment of Sterling, the Bank or their affiliates, such confidential information obtained during the course of Executive’s employment by the Bank in any business or on behalf of any business competitive with or substantially similar to any
business of the Bank or Sterling. The foregoing shall not be construed as restricting Executive from disclosing such information to the employees of the Bank, Sterling or their affiliates.

(b) Executive hereby acknowledges and recognizes the highly competitive nature of the business of Sterling and the Bank and accordingly agrees that, during the Term of Employment with the Bank and for two (2) years following termination of the Term of Employment for any reason set forth in section 2(a)(vii)(A) hereof then, in consideration of the benefits to which Executive would then be entitled pursuant to section 2(c) hereof, Executive shall not, except as otherwise permitted in writing by Sterling and the Bank:

(i) be engaged, directly or indirectly, either for his own account or as agent, consultant, employee, partner, officer, director, proprietor, investor (except as an investor owning less than 5% of the stock of a publicly owned company) or otherwise of any person, firm, corporation or enterprise engaged in (1) the banking (including financial or bank holding company) or financial services industry, or (2) any other activity in which Sterling or the Bank or any of their subsidiaries or affiliates, other than Town and Country, Inc. and/or Equipment Finance, Inc., are engaged during the Term of Employment and remain so engaged on the Termination Date, in Cumberland, Dauphin, Lancaster and York Counties (the “Non-Competition Area”); or

-12-

(ii) provide financial or other assistance to any person, firm, corporation, or enterprise engaged in (1) the banking (including financial or bank holding company) or financial services industry, or (2) any other activity in which Sterling, the Bank or any of their subsidiaries or affiliates, other than Town and Country, Inc. and/or Equipment finance, Inc., are engaged during the Term of Employment and remain so engaged on the Termination Date in the Non-Competition Area; or 

(iii) directly or indirectly contact, solicit or induce any person, corporation or other entity who or which is a customer or referral source of Sterling, the Bank or any of their subsidiaries or affiliates, at any time during the Term of Employment or on the Termination Date, to become a customer or referral source of any person or entity engaged in (1) the banking (including financial or bank holding company) or financial services industry, or (2) any other activity in which Sterling, the Bank or their subsidiaries or affiliates are engaged during the Term of Employment and remain so engaged on the Termination Date; or 

(iv) directly or indirectly solicit, induce or encourage any employee of Sterling, the Bank or any of their subsidiaries or affiliates, who is employed by Sterling, the Bank or any of their subsidiaries or affiliates, to leave the employ of Sterling, the Bank or any of their subsidiaries or affiliates or to seek, obtain or accept employment with an person other than Sterling, the Bank or any of their subsidiaries or affiliates.

It is expressly understood and agreed that, although Executive, Sterling and the Bank consider the restrictions contained in this section 5(b) reasonable for the purpose of preserving for Sterling, the Bank and their subsidiaries and affiliates, their good will and other proprietary rights, if a final judicial determination is made by a court having jurisdiction that the time or territory or any other restriction contained in this section 5(b) is an unreasonable or otherwise unenforceable restriction against Executive, the provisions of this section 5(b) shall not be rendered void, but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable. 

-13-

(c) Executive acknowledges and agrees that irreparable injury will result to Sterling and the Bank in the event of a breach of any of the provisions of this section 5 (the “Designated Provision”) and that Sterling and the Bank will have no adequate remedy at law with respect thereto. Accordingly, in the event of a material breach of any Designated Provision, and in addition to any other legal or equitable remedy Sterling or the Bank may have, Sterling and the Bank shall be entitled to the entry of a preliminary and permanent injunction (including, without limitation, specific performance by a court of competent jurisdiction in Lancaster County, Pennsylvania, or elsewhere), to restrain the violation or breach thereof by Executive, and Executive submits to the jurisdiction of such court in any such action.

(d) It is the desire and intent of the parties that the provisions of this section 5 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this section 5 shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made. In addition, should any court determine that the provisions of this section 5 shall be unenforceable with respect to scope, duration, or geographic area, such court shall be empowered to substitute, to the extent enforceable, provisions similar thereto or other provisions so as to
provide to Sterling and the Bank, to the fullest extent permitted by applicable law, the benefits intended by this section 5.

6. Life Insurance. In light of the unusual abilities and experience of Executive, Sterling and the Bank in their discretion may apply for and procure as owner and for their own benefit insurance on the life of Executive, in such amount and in such form as Sterling or the Bank may choose.  Sterling or the Bank shall make all payments for such insurance and shall receive all benefits from it. Executive shall have no interest whatsoever in any such policy or policies but, at the request of Sterling or the Bank, shall submit to medical examinations and supply such information and execute such documents as may reasonably be required by the insurance company or companies to which Sterling or the Bank has applied for insurance.

7. Representations and Warranties.

(a) Executive represents and warrants to Sterling and the Bank that his execution, delivery, and performance of this Agreement will not result in or constitute a breach of or conflict with any term, covenant, condition, or provision of any commitment, contract, or other agreement or instrument, including, without limitation, any other employment agreement, to which Executive is or has been a party.

(b) Executive shall indemnify, defend, and hold harmless Sterling and the Bank for, from, and against any and all losses, claims, suits, damages, expenses, or liabilities, including court costs and counsel fees, which Sterling or the Bank has incurred or to which Sterling or the Bank may become subject, insofar as such losses, claims, suits, damages, expenses, liabilities, costs, or fees arise out of or are based upon any failure of any representation or warranty of Executive in section 7(a) hereof to be true and correct when made.

-14-

8. Notices. All notices, consents, waivers, or other communications which are required or permitted hereunder shall be in writing and deemed to have been duly given if delivered personally or by messenger, transmitted by telex or telegram, by express courier, or sent by registered or certified mail, return receipt requested, postage prepaid. All communications shall be addressed to the appropriate address of each party as follows:

 

  	 	
        If
          to the Bank:

      	
         

      	
        Pennsylvania
          State Bank

          1822 Market Street

          Camp Hill, PA 17011-4824

          Attention: William E. Miller, Jr., Chairman

      
	 	
         

      	
         

      	
         

      
	 	
        If
          to Sterling:

      	
         

      	
        Sterling
          Financial Corporation

          101 North Pointe Boulevard

          Lancaster, PA 17601

          Attention: J. Roger Moyer, Jr., President
          and Chief Executive Officer

      
	 	
         

      	
         

      	
         

      
	 	
        If
          to Executive:

      	
         

      	
        Thomas
          J. Sposito, II

          7608 Aynlee Way

          Harrisburg, PA 17112

      

All such notices shall be deemed to have been given on the date delivered, transmitted, or mailed in the manner provided above.

9. Assignment. Neither party may assign this Agreement or any rights or obligations hereunder without the consent of the other party.

10. Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the principles of conflict of law thereof. The parties hereby designate the Court of Common Pleas of Lancaster County, Pennsylvania to be the proper jurisdiction and venue for any suit or action arising out of this Agreement. Each of the parties consents to personal jurisdiction in such venue for such a proceeding and agrees that it may be served with process in any action with respect to this Agreement or the transactions contemplated thereby by certified or registered mail, return receipt requested, or to its registered agent for service of process in the Commonwealth of Pennsylvania. Each of the parties irrevocably and
unconditionally waives and agrees, to the fullest extent permitted by law, not to plead any objection that it may now or hereafter have to the laying of venue or the convenience of the forum of any action or claim with respect to this Agreement or the transactions contemplated thereby brought in the court aforesaid.

-15-

11. Entire Agreement. This Agreement constitutes the entire understanding among the Bank, Sterling and Executive relating to the subject matter hereof. This Agreement shall not become effective unless and until the Effective Date (as defined in the Merger Agreement) of the Merger. In the event the Merger Agreement shall be terminated pursuant to the terms thereof prior to the completion of the Merger, this Agreement shall be concurrently terminated and deemed null, void and without force or effect. Upon the Commencement Date, any previous agreements or understandings between the parties hereto or between Executive and the Bank or any of its affiliates regarding the subject matter hereof, including without limitation the Pennsylvania Employment Agreement, the Pennsylvania Change in Control Agreement,
any other change in control agreements to which Executive was a party, and all other terms and conditions of employment, compensation, benefits, retirement, competition following employment, and the like, shall thereupon be hereby terminated and merged into and superseded by this Agreement, except that certain Supplemental Executive Retirement Plan Agreement dated July 1, 2002 by and between the Bank and the Executive shall not be amended, terminated or otherwise affected by the terms and conditions of this Agreement and shall remain and continue in full force and effect in accordance with the express terms and conditions thereof.  Neither this Agreement nor any provisions hereof can be modified, changed, discharged, or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge, or termination is sought.

12. Illegality; Severability.

(a) Anything in this Agreement to the contrary notwithstanding, this Agreement is not intended and shall not be construed to require any payment to Executive which would violate any federal or state statute or regulation, including without limitation the “golden parachute payment regulations” of the Federal Deposit Insurance Corporation codified to Part 359 of title 12, Code of Federal Regulations.

(b) If any provision or provisions of this Agreement shall be held to be invalid, illegal, or unenforceable for any reason whatsoever:

(i) the validity, legality, and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal, or unenforceable) shall not in any way be affected or impaired thereby; and

(ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provisions held to be invalid, illegal, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal, or unenforceable.

-16-

13. Arbitration. Subject to the right of each party to seek specific performance (which right shall not be subject to arbitration), if a dispute arises out of or related to this Agreement, or the breach thereof, such dispute shall be referred to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”).  A dispute subject to the provisions of this section will exist if either party notifies the other party in writing that a dispute subject to arbitration exists and states, with reasonable specificity, the issue subject to arbitration (the “Arbitration Notice”). The parties agree that, after the issuance of the Arbitration Notice, the parties will try in good faith to resolve the dispute by mediation in accordance with the
Commercial Rules of Arbitration of AAA between the date of the issuance of the Arbitration Notice and the date the dispute is set for arbitration. If the dispute is not settled by the date set for arbitration, then any controversy or claim arising out of this Agreement or the breach hereof shall be resolved by binding arbitration and judgment upon any award rendered by arbitrator(s) may be entered in a court having jurisdiction. Any person serving as a mediator or arbitrator must have at least ten (10) years’ experience in resolving commercial disputes through arbitration. In the event any claim or dispute involves an amount in excess of $100,000, either party may request that the matter be heard by a panel of three (3) arbitrators; otherwise all matters subject to arbitration shall be heard and resolved by a single arbitrator. The arbitrator shall have the same power to compel the attendance of witnesses and to order the production of documents or other materials and to enforce
discovery as could be exercised by a United States District Court judge sitting in the Middle District of Pennsylvania. In the event of any arbitration, each party shall have a reasonable right to conduct discovery to the same extent permitted by the Federal Rules of Civil Procedure, provided that such discovery shall be concluded within ninety (90) days after the date the matter is set for arbitration. In the event of any arbitration, the arbitrator or arbitrators shall have the power to award reasonable attorney’s fees to the prevailing party. Any provision in this Agreement to the contrary notwithstanding, this section shall be governed by the Federal Arbitration Act and the parties have entered into this Agreement pursuant to such Act.

14. Cost of Litigation. In the event litigation is commenced to enforce any of the provisions hereof, or to obtain declaratory relief in connection with any of the provisions hereof, the prevailing party shall be entitled to recover reasonable attorney’s fees and costs. In the event this Agreement is asserted in any litigation as a defense to any liability, claim, demand, action, cause of action, or right asserted in such litigation, the party prevailing on the issue of that defense shall be entitled to recovery of reasonable attorney’s fees and costs. Notwithstanding the foregoing, with respect any litigation arising under section 4 hereof, Executive shall not be responsible for Sterling’s or the Bank’s attorney’s fees and costs if the Executive’s action is brought in good faith.

15. Affiliation. A company will be deemed to be “affiliated” with Sterling or the Bank according to the definition of “Affiliate” set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, or any successor rule or regulations.

16. Headings. The section and subsection headings herein have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof.

-17-

17. Successors; Binding Agreement. 

(a) Sterling and the Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of Sterling or the Bank, as the case may be, to expressly assume and agree to perform this Agreement (or cause it to be performed) in the same manner and to the same extent that Sterling and the Bank, or any of their affiliates would be required to perform if no such succession had taken place. Failure by Sterling or the Bank to obtain such assumption and agreement prior to the effectiveness of any such succession will constitute a material breach of this Agreement. As used in this Agreement, “Sterling” and the “Bank” each means such entity, as herein before defined and any successor to the business and/or assets of such entity by operation of law, or otherwise.

(b) This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees, and legatees. If the Executive should die while any amount is payable to the Executive under this Agreement if the Executive had continued to live, all such amounts, unless otherwise provided herein, will be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee, or, if there is no such designee, to the Executive’s estate.

18. No Mitigation or Offset. The Executive will not be required to mitigate the amount of any payment provided for in section 2(c) or section 4 of this Agreement by seeking employment or otherwise; nor will any amounts or benefits payable or provided thereunder be reduced in the event Executive does secure employment.

19. Withholding For Taxes. All amounts and benefits paid or provided hereunder will be subject to withholding for taxes as required by law. 

IN WITNESS WHEREOF, the parties hereto executed or caused this Agreement to be executed as of the day and year first above written.

 

	

 
 	

 
 	

PENNSYLVANIA STATE BANK
 
	

  
 	

 
 	

By: 
 	

 /s/ William E. Miller, Jr.
 
	

 
 	

 
 	

 
 	

 
	

 
 	

 
 	

 
 	

William E. Miller, Jr.
 Chairman
 

 

	

 
 	

 
 	

THE PENNSYLVANIA STATE BANKING COMPANY
 
	

  
 	

 
 	

By: 
 	

 /s/ William E. Miller, Jr.
 
	

 
 	

 
 	

 
 	

 
	

 
 	

 
 	

 
 	

William E. Miller, Jr.
 Chairman
 

 

-18-

 

	

 
 	

 
 	

STERLING FINANCIAL CORPORATION
 
	

  
 	

 
 	

By: 
 	

 /s/ J. Roger Moyer, Jr.
 
	

 
 	

 
 	

 
 	

 
	

 
 	

 
 	

 
 	

J. Roger Moyer, Jr.
 President & Chief Executive Officer
 

  	
        
        

      	
         

      	
        

          /s/ Thomas J. Sposito, II

      
			
        

      
	
         

      	
         

      	
        Thomas
          J. Sposito, II

      

-19-Novation Agreement dated as of November 29, 2006, including the Interest Rate
      Swap Agreement, dated November 29, 2006 and the Credit Support Annex, dated
      November 29, 2006

    BEAR
      STEARNS FINANCIAL PRODUCTS INC.

    383
      MADISON AVENUE

    NEW
      YORK,
      NEW YORK 10179

    212-272-4009

    
 

    
      

        
          	
                  DATE:

                	 	
                  November
                    29, 2006

                
	 	 	 
	
                  TO:

                	 	
                  LaSalle
                    Bank National Association, not individually, but solely as Trustee
                    on
                    behalf

                  of
                    the Supplemental Interest Trust with respect
                    to Bear Stearns Mortgage Funding

                  Trust
                    2006-SL4 Mortgage-Backed Certificates,
                    Series 2006-SL4

                   

                
	
                  ATTENTION:

                	 	
                  Global
                    Securities and Trust Services 

                
	
                  TELEPHONE:

                	 	
                  312-904-6709

                
	
                  FACSIMILE:

                	 	
                  312-904-1368

                
	 	 	 
	
                  FROM:

                	 	
                  Derivatives
                    Documentation

                
	
                  TELEPHONE:

                	 	
                  212-272-2711

                
	
                  FACSIMILE:

                	 	
                  212-272-9857

                
	 	 	 
	
                  RE:

                	 	
                  Novation
                    Confirmation

                

        

      

       

      REFERENCE
        NUMBER(S): 
        FXNSC8957-CXNS205195

    

    

    The
      purpose of this letter is to confirm the terms and conditions of the Novation
      Transaction entered into between the parties and effective from the Novation
      Date specified below. This Novation Confirmation constitutes a “Confirmation” as
      referred to in the New Agreement specified below. 

    

    1.
       The
      definitions and provisions contained in the 2004 ISDA Novation Definitions
      (the
“Definitions”) and the terms and provisions of the 2000 ISDA
      Definitions,
      as
      published by the International Swaps and Derivatives Association, Inc. and
      amended from time to time, are incorporated in this Novation Confirmation.
      In
      the event of any inconsistency between (i) the Definitions, (ii) the 2000 ISDA
      Definitions and/or (iii) the Novation Agreement and this Novation Confirmation,
      this Novation Confirmation will govern. 

    

    2. The
      terms
      of the Novation Transaction to which this Novation Confirmation relates are
      as
      follows:

     

    
      
        	 	
                Novation
                  Trade Date:

              	
                November
                  29, 2006

              
	
                 

              	
                Novation
                  Date:

              	
                November
                  29, 2006

              
	
                 

              	
                Novated
                  Amount:

              	
                USD
                  3,004,711.90

              
	
                 

              	
                Transferor:

              	
                BearBear
                  Stearns Capital Markets Inc

              
	
                 

              	
                Transferee:

              	
                BearBear
                  Stearns Financial Products Inc.

              
	
                 

              	
                Remaining
                  Party:

              	
                LaSalle
                  Bank National Association, not individually, but solely as Trustee
                  on
                  behalf of the Supplemental Interest Trust with respect to Bear
                  Stearns
                  Mortgage Funding Trust 2006-SL4 Mortgage-Backed Certificates, Series
                  2006-SL4

              
	
                 

              	
                New
                  Agreement (between Transferee and Remaining Party):

              	
                The
                  Master Agreement as defined in the New
                  Confirmation

              

      

    

     

    3.
       The
      terms
      of the Old Transaction to which this Novation Confirmation relates, for
      identification purposes, are as follows:

    

    
      	 	
              Trade
                Date of Old Transaction:

            	
              November
                6, 2006

            
	 	
              Effective
                Date of Old Transaction:

            	
              November
                10, 2006

            
	 	
              Termination
                Date of Old Transaction:

            	
              July
                25, 2010

            

    

    

    
      
        
        

      

       

    

    4.
       The
      terms
      of the New Transaction to which this Novation Confirmation relates shall be
      as
      specified in the New Confirmation
      attached hereto as Exhibit A including the Credit Support Annex attached hereto
      as Annex A.

    

    
      	 	
              Full
                First Calculation Period:

            	
              Applicable

            

    

    

    5. Offices:

     

    
      	 	
              Transferor:

            	
              Not
                Applicable

            
	 	
              Transferee:

            	
              Not
                Applicable

            
	 	
              Remaining
                Party:

            	
              Not
                Applicable

            

    

    

    The
      parties confirm their acceptance to be bound by this Novation Confirmation
      as of
      the Novation Date by executing a copy of this Novation Confirmation and
      returning a facsimile of the fully-executed Novation Confirmation to
212-272-9857.
      The
      Transferor, by its execution of a copy of this Novation Confirmation, agrees
      to
      the terms of the Novation Confirmation as it relates to the Old Transaction.
      The
      Transferee, by its execution of a copy of this Novation Confirmation, agrees
      to
      the terms of the Novation Confirmation as it relates to the New Transaction.
      For
      inquiries regarding U.S. Transactions, please contact Derivatives
      Documentation
      by
      telephone at 212-272-2711.
      For all
      other inquiries please contact Derivatives
      Documentation by
      telephone at 353-1-402-6223.

    

    

    
      	
              Bear
                Stearns Financial Products Inc.

               

               

              By:
                /s/ Annie Manevitz

              Name:
                Annie Manevitz

              Title:
                Authorized Signatory

              Date:
                November 29, 2006

            	
              Bear
                Stearns Capital Markets 

               

               

              By:
                /s/ Susan Donlon

              Name:
                Susan Donlon

              Title:
                Authorized Signatory

              Date:
                November 29, 2006

            
	 	 
	
              LaSalle
                Bank National Association, not individually, but solely as Trustee
                on
                behalf of the Supplemental Interest Trust with respect to Bear Stearns
                Mortgage Funding Trust 2006-SL4 Mortgage-Backed Certificates, Series
                2006-SL4

               

               

              By:
                /s/ Rita Lopez

              Name:
                Rita Lopez

              Title:
                Vice President

              Date:
                November 29, 2006

            	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      BEAR
        STEARNS FINANCIAL PRODUCTS INC.

      383
        MADISON AVENUE

      NEW
        YORK,
        NEW YORK 10179

      212-272-4009

      

      Exhibit
        A

       

      
        
          	
                  DATE:

                	 	
                  November
                    29, 2006

                
	 	 	 
	
                  TO:

                	 	
                  LaSalle
                    Bank National Association, not individually, but solely as Trustee
                    on

                  behalf
                    of the Supplemental Interest Trust with respect to Bear
                    Stearns

                  Mortgage
                    Funding Trust 2006-SL4 Mortgage-Backed Certificates, Series

                  2006-SL4

                
	
                  ATTENTION:

                	 	
                  Global
                    Securities and Trust Services 

                
	
                  TELEPHONE:

                	 	
                  312-904-6709

                
	
                  FACSIMILE:

                	 	
                  312-904-1368

                
	 	 	 
	
                  FROM:

                	 	
                  Derivatives
                    Documentation

                
	
                  TELEPHONE:

                	 	
                  212-272-2711

                
	
                  FACSIMILE:

                	 	
                  212-272-9857

                
	 	 	 
	
                  SUBJECT:

                	 	
                  Fixed
                    Income Derivatives Confirmation and
                    Agreement

                

        

      

      

        REFERENCE
          NUMBER: FXNSC8957

        

        The
          purpose of this long-form confirmation (“Confirmation”)
          is to
          confirm the terms and conditions of the current Transaction entered into
          on the
          Trade Date specified below (the “Transaction”)
          between
          Bear Stearns Financial Products Inc. (“Party
          A”) and
          LaSalle Bank National Association, not individually, but solely as trustee
          (the
“Supplemental Interest Trust Trustee”) on behalf of the supplemental interest
          trust with respect to the Bear Stearns Mortgage Funding Trust 2006-SL4
          Mortgage-Backed Certificates, Series 2006-SL4 (the “Supplemental Interest
          Trust”) (“Party
          B”)
          created
          under the Pooling and Servicing Agreement, dated as of October 1, 2006,
          among
          Bear Stearns Asset Backed Securities I LLC, a Delaware limited liability
          company, as depositor (the “Depositor”), EMC Mortgage Corporation, a Delaware
          corporation, as seller (in such capacity, the “Seller”) and as master servicer
          (in such capacity, the “Master Servicer”), and LaSalle Bank National
          Association, a national banking association (the “Trustee”).
          (the
          “Pooling
          and Servicing Agreement”).
          This
          Confirmation evidences a complete and binding agreement between you and
          us to
          enter into the Transaction on the terms set forth below and replaces any
          previous agreement between us with respect to the subject matter hereof.
          This
          Confirmation constitutes a “Confirmation”
          and also
          constitutes a “Schedule”
          as
          referred to in the ISDA Master Agreement, and Paragraph 13 of a Credit
          Support
          Annex to the Schedule.

        

        	1.  	
                This
                  Confirmation shall supplement, form a part of, and be subject to
                  an
                  agreement in the form of the ISDA Master Agreement (Multicurrency
                  - Cross
                  Border) as published and copyrighted in 1992 by the International
                  Swaps
                  and Derivatives Association, Inc. (the “ISDA
                  Master Agreement”),
                  as if Party A and Party B had executed an agreement in such form
                  on the
                  date hereof, with a Schedule as set forth in Item 3 of this Confirmation,
                  and an ISDA Credit Support Annex (Bilateral Form - ISDA Agreements
                  Subject
                  to New York Law Only version) as published and copyrighted in 1994
                  by the
                  International Swaps and Derivatives Association, Inc., with Paragraph
                  13
                  thereof as set forth in Annex A hereto (the “Credit
                  Support Annex”).
                  For the avoidance of doubt, the Transaction described herein shall
                  be the
                  sole Transaction governed by such ISDA Master Agreement. In the
                  event of
                  any inconsistency among any of the following documents, the relevant
                  document first listed shall govern: (i) this Confirmation, exclusive
                  of
                  the provisions set forth in Item 3 hereof and Annex A hereto; (ii)
                  the
                  provisions set forth in Item 3 hereof, which are incorporated by
                  reference
                  into the Schedule; (iii) the Credit Support Annex; (iv) the Definitions;
                  and (v) the ISDA Master Agreement. Terms capitalized but not defined
                  herein shall have the meanings attributed to them in the Pooling
                  and
                  Servicing Agreement.

              

        

        Each
          reference herein to a “Section” (unless specifically referencing the Pooling and
          Servicing Agreement) or to a “Section of this Agreement” will be construed as a
          reference to a Section of the ISDA Master Agreement; each herein reference
          to a
“Part” will be construed as a reference to the provisions herein deemed
          incorporated in a Schedule to the ISDA Master Agreement; each reference
          herein
          to a “Paragraph” will be construed as a reference to a Paragraph of the Credit
          Support Annex.

        

        

        
          	
                  2.

                	
                  The
                    terms of the particular Transaction to which this Confirmation
                    relates are
                    as follows:

                

        

        

        Type
          of
          Transaction:                             
Interest Rate Swap  

         

        Notional
          Amount:                                  
With respect to any Calculation Period, the amount set forth for such period
          on
          Schedule I attached hereto.

        

        Trade
          Date:                                              November
          28, 2006 

         

        Effective
          Date:                                        
November 10,
          2006,
          provided however for purposes of calculating the initial Fixed and Floating
          Amounts such date shall be November 25, 2006.

        

        Termination
          Date:                                   July
25,
          2010,
          subject to adjustment in accordance with the Business Day Convention; provided,
          however, that for the purpose of determining the final Fixed Rate Payer
          Period
          End Date, Termination
          Date shall be subject to No Adjustment.

        

        Fixed
          Amounts:

        

        Fixed
          Rate
          Payer:                    
Party
          B

        

        Fixed
          Rate Payer

        Period
          End
          Dates:                  
The 25th
          calendar
          day of each month during the Term of this Transaction, commencing December
          25, 2006,
          and
          ending on the Termination Date, with No Adjustment.

        

        Fixed
          Rate Payer 

        Payment
          Dates:                      
Early
          Payment
          shall be applicable. The Fixed Rate Payer Payment Date shall be one Business
          Day
          preceding each Fixed Rate Payer Period End Date.

        

        Fixed
          Rate:                               
5.15000%

        

        Fixed
          Amount:                        
To be
          determined in accordance with the following formula: 

                                                               
          

                                                             
                      
100*Fixed Rate*Notional Amount*Fixed Rate Day Count Fraction

        

        Fixed
          Rate Day 

        Count
          Fraction:                      
30/360

        

        Floating
          Amounts: 

        

        Floating
          Rate
          Payer:               Party
          A

        

        Floating
          Rate Payer

        Period
          End
          Dates:                 
The 25th
          calendar
          day of each month during the Term of this Transaction, commencing December
          25,
          2006, and ending on the Termination Date, subject to adjustment in accordance
          with the Business Day Convention.

        

        Floating
          Rate Payer 

        Payment
          Dates:                      
Early
          Payment
          shall be applicable. The Floating Rate Payer Payment Date shall be one
          Business
          Day preceding each Fixed Rate Payer Period End Date.

        

        Floating
          Rate
          Option:             USD-LIBOR-BBA

        

        Floating
          Amount:                   
To
          be
          determined in accordance with the following formula: 

         

                                                                                          
          100*Floating Rate Option*Notional Amount*Floating Rate Day Count
          Fraction

        

        Designated
          Maturity:           
  One
          month

        

        Floating
          Rate Day 

        Count
          Fraction:                      
 Actual/360

        

        Reset
          Dates:                           
 The
          first
          day of each Calculation Period.

        

        Compounding:                       
           Inapplicable

        

        Business
          Days:                     
 New
          York
          and Illinois

        

        Business
          Day Convention:   Following

        

        Calculation
          Agent:                
 Party
          A

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          	
                  3.

                	
                  Provisions
                    Deemed Incorporated in a Schedule to the ISDA Master
                    Agreement:

                

        

        

        
          	
                  Part
                    1.

                	
                  Termination
                    Provisions.

                

        

        

        For
          the
          purposes of this Agreement:-

        

        (a) “Specified
          Entity”
          will not
          apply to Party A or Party B for any purpose. 

        

        
          	
                  (b)

                	
                  “Specified
                    Transaction”
                    will have the meaning specified in Section
                    14.

                

        

        

        
          	
                  (c)

                	
                  Events
                    of Default.

                

        

        

        The
          statement below that an Event of Default will apply to a specific party
          means
          that upon the occurrence of such an Event of Default with respect to such
          party,
          the other party shall have the rights of a Non-defaulting Party under Section
          6
          of this Agreement; conversely, the statement below that such event will
          not
          apply to a specific party means that the other party shall not have such
          rights.

        

        	(i)  	
                The
                  “Failure
                  to Pay or Deliver”
                  provisions of Section 5(a)(i) will apply to Party A and will apply
                  to
                  Party B; provided, however, that Section 5(a)(i) is hereby amended
                  by
                  replacing the word “third” with the word “second”; provided, further, that
                  notwithstanding anything to the contrary in Section 5(a)(i) and
                  Paragraph
                  7 of the Credit Support Annex, any failure by Party A to comply
                  with or
                  perform any obligation to be complied with or performed by Party
                  A under
                  the Credit Support Annex shall not constitute an Event of Default
                  under
                  Section 5(a)(i) unless (A) a Required Ratings Downgrade Event has
                  occurred
                  and been continuing for 30 or more Local Business Days and (B)
                  such
                  failure is not remedied on or before the third Local Business Day
                  after
                  notice of such failure is given to Party
                  A.

              

        

        	(ii)  	
                The
                  “Breach
                  of Agreement”
                  provisions of Section 5(a)(ii) will apply to Party A and will not
                  apply to
                  Party B.

              

        

        	(iii)  	
                The
                  “Credit
                  Support Default”
                  provisions of Section 5(a)(iii) will apply to Party A and will
                  not apply
                  to Party B except that Section 5(a)(iii)(1) will apply to Party
                  B solely
                  in respect of Party B’s obligations under Paragraph 3(b) of the Credit
                  Support Annex; provided, however, that notwithstanding anything
                  to the
                  contrary in Section 5(a)(iii)(1), any failure by Party A to comply
                  with or
                  perform any obligation to be complied with or performed by Party
                  A under
                  the Credit Support Annex shall not constitute an Event of Default
                  under
                  Section 5(a)(iii) unless (A) a Required Ratings Downgrade Event
                  has
                  occurred and been continuing for 30 or more Local Business Days
                  and (B)
                  such failure is not remedied on or before the third Local Business
                  Day
                  after notice of such failure is given to Party
                  A.

              

        

        	(iv)  	
                The
                  “Misrepresentation”
                  provisions of Section 5(a)(iv) will apply to Party A and will not
                  apply to
                  Party B. 

              

        

        	(v)  	
                The
                  “Default
                  under Specified Transaction”
                  provisions of Section 5(a)(v) will apply to Party A and will not
                  apply to
                  Party B.

              

        

        	(vi)  	
                The
                  “Cross
                  Default”
                  provisions of Section 5(a)(vi) will apply to Party A and will not
                  apply to
                  Party B. For purposes of Section 5(a)(vi), solely with respect
                  to Party
                  A:

              

        

        “Specified
          Indebtedness” will have the meaning specified in Section 14.

        

        “Threshold
          Amount” means with respect to Party A USD 100,000,000

        

        

        	(vii)  	
                The
                  “Bankruptcy”
                  provisions of Section 5(a)(vii) will apply to Party A and will
                  apply to
                  Party B except that the provisions of Section 5(a)(vii)(2), (6)
                  (to the
                  extent that such provisions refer to any appointment contemplated
                  or
                  effected by the Pooling and Servicing Agreement or any appointment
                  to
                  which Party B has not become subject), (7) and (9) will not apply
                  to Party
                  B; provided that, with respect to Party B only, Section 5(a)(vii)(4)
                  is
                  hereby amended by adding after the words “against it” the words
                  “(excluding any proceeding or petition instituted or presented by
                  Party A
                  or its Affiliates)”, and Section 5(a)(vii)(8) is hereby amended by
                  deleting the words “to (7) inclusive” and inserting lieu thereof “, (3),
                  (4) as amended, (5), (6) as amended, or
                  (7)”.

              

        

        	(viii)  	
                The
                  “Merger
                  Without Assumption”
                  provisions of Section 5(a)(viii) will apply to Party A and will
                  apply to
                  Party B.

              

        

        (d) Termination
          Events.

        

        The
          statement below that a Termination Event will apply to a specific party
          means
          that upon the occurrence of such a Termination Event, if such specific
          party is
          the Affected Party with respect to a Tax Event, the Burdened Party with
          respect
          to a Tax Event Upon Merger (except as noted below) or the non-Affected
          Party
          with respect to a Credit Event Upon Merger, as the case may be, such specific
          party shall have the right to designate an Early Termination Date in accordance
          with Section 6 of this Agreement; conversely, the statement below that
          such an
          event will not apply to a specific party means that such party shall not
          have
          such right; provided, however, with respect to “Illegality” the statement that
          such event will apply to a specific party means that upon the occurrence
          of such
          a Termination Event with respect to such party, either party shall have
          the
          right to designate an Early Termination Date in accordance with Section
          6 of
          this Agreement.

        

        (i) The
          “Illegality”
          provisions of Section 5(b)(i) will apply to Party A and will apply to Party
          B.

        

        
          	 	
                  (ii)

                	
                  The
                    “Tax
                    Event”
                    provisions of Section 5(b)(ii) will apply to Party A except that,
                    for
                    purposes of the application of Section 5(b)(ii) to Party A, Section
                    5(b)(ii) is hereby amended by deleting the words “(x) any action taken by
                    a taxing authority, or brought in a court of competent jurisdiction,
                    on or
                    after the date on which a Transaction is entered into (regardless
                    of
                    whether such action is taken or brought with respect to a party
                    to this
                    Agreement) or (y)”, and the “Tax
                    Event”
                    provisions of Section 5(b)(ii) will apply to Party B.
                    

                

        

        

        
          	 	
                  (iii)

                	
                  The
                    “Tax
                    Event Upon Merger”
                    provisions of Section 5(b)(iii) will apply to Party A and will
                    apply to
                    Party B, provided that Party A shall not be entitled to designate
                    an Early
                    Termination Date by reason of a Tax Event upon Merger in respect
                    of which
                    it is the Affected Party.

                

        

        

        
          	 	
                  (iv)

                	
                  The
                    “Credit
                    Event Upon Merger”
                    provisions of Section 5(b)(iv) will not apply to Party A and
                    will not
                    apply to Party B.

                

        

        

        
          	
                  (e)

                	
                  The
                    “Automatic
                    Early Termination”
                    provision of Section 6(a) will not apply to Party A and will
                    not apply to
                    Party B.

                

        

        

        (f)  Payments
          on Early Termination.
          For the
          purpose of Section 6(e) of this Agreement:

        

        	(i)  	
                Market
                  Quotation will apply, provided, however, that, in the event of
                  a
                  Derivative Provider Trigger Event, the following provisions will
                  apply:

              

        

        
          	 	
                  (A)
                    

                	
                  The
                    definition of Market Quotation in Section 14 shall be deleted
                    in its
                    entirety and replaced with the
                    following:

                

        

        

        “Market
          Quotation” means,
          with respect to one or more Terminated Transactions, a Firm Offer which
          is (1)
          made by a Reference Market-maker that is an Eligible Replacement, (2) for
          an
          amount that would be paid to Party B (expressed as a negative number) or
          by
          Party B (expressed as a positive number) in consideration of an agreement
          between Party B and such Reference Market-maker to enter into a Replacement
          Transaction, and (3) made on the basis that Unpaid Amounts in respect of
          the
          Terminated Transaction or group of Transactions are to be excluded but,
          without
          limitation, any payment or delivery that would, but for the relevant Early
          Termination Date, have been required (assuming satisfaction of each applicable
          condition precedent) after that Early Termination Date is to be included.
          The
          party making the determination (or its agent) will request each Reference
          Market-maker to provide its quotation to the extent reasonably practicable
          as of
          the same day and time (without regard to different time zones) on or as
          soon as
          reasonably practicable after the relevant Early Termination Date. The day
          and
          time as of which those quotations are to be obtained will be selected in
          good
          faith by the party obliged to make a determination under Section 6(e),
          and, if
          each party is so obliged, after consultation with the other.  

        

        
          	 	
                  (B)

                	
                  The
                    definition of Settlement Amount shall be deleted in its entirety
                    and
                    replaced with the following:

                

        

        

        “Settlement
          Amount”
          means,
          with respect to any Early Termination Date, an amount (as determined by
          Party B)
          equal to: 

        

        
          	 	
                  (a)

                	
                  If
                    a Market Quotation for the relevant Terminated Transaction or
                    group of
                    Terminated Transactions is accepted by Party B so as to become
                    legally
                    binding on or before the day falling ten Local Business Days
                    after the day
                    on which the Early Termination Date is designated, or such later
                    day as
                    Party B may specify in writing to Party A, but in either case
                    no later
                    than one Local Business Day prior to the Early Termination Date
                    (such day,
                    the “Latest Settlement Amount Determination Day”), the Termination
                    Currency Equivalent of the amount (whether positive or negative)
                    of such
                    Market Quotation; 

                

        

        

        
          	 	
                  (b)

                	
                  If,
                    on the Latest Settlement Amount Determination Day, no Market
                    Quotation for
                    the relevant Terminated Transaction or group of Terminated Transactions
                    has been accepted by Party B so as to become legally binding
                    and one or
                    more Market Quotations from
                    Approved Replacements have
                    been made and remain capable of becoming legally binding upon
                    acceptance,
                    the Settlement Amount shall equal the Termination Currency Equivalent
                    of
                    the amount (whether positive or negative) of the lowest of such
                    Market
                    Quotations (for the avoidance of doubt, the lowest of such Market
                    Quotations shall be the lowest Market Quotation of
                    such Market Quotations
                    expressed as a positive number or, if any of such Market Quotations
                    is
                    expressed as a negative number, the Market Quotation expressed
                    as a
                    negative number with the largest absolute value);
                    or

                

        

        

        
          	 	
                  (c)

                	
                  If,
                    on the Latest Settlement Amount Determination Day, no Market
                    Quotation for
                    the relevant Terminated Transaction or group of Terminated Transactions
                    is
                    accepted by Party B so as to become legally binding and no Market
                    Quotation from an Approved Replacement remains capable of becoming
                    legally
                    binding upon acceptance, the Settlement Amount shall equal Party
                    B’s Loss
                    (whether positive or negative and without reference to any Unpaid
                    Amounts)
                    for the relevant Terminated Transaction or group of Terminated
                    Transactions.

                

        

        

        
          	 	
                  (C)

                	
                  If
                    Party B requests Party A in writing to obtain Market Quotations,
                    Party A
                    shall use its reasonable efforts to do so before the Latest Settlement
                    Amount Determination Day.

                

        

        

        
          	 	
                  (D)

                	
                  If
                    the Settlement Amount is a negative number, Section 6(e)(i)(3)
                    shall be
                    deleted in its entirety and replaced with the
                    following:

                

        

        

        “(3)
          Second
          Method and Market Quotation.
          If the
          Second Method and Market Quotation apply, (I) Party B shall pay to Party
          A an
          amount equal to the absolute value of the Settlement Amount in respect
          of the
          Terminated Transactions, (II) Party B shall pay to Party A the Termination
          Currency Equivalent of the Unpaid Amounts owing to Party A and (III) Party
          A
          shall pay to Party B the Termination Currency Equivalent of the Unpaid
          Amounts
          owing to Party B; provided, however, that (x) the amounts payable under
          the
          immediately preceding clauses (II) and (III) shall be subject to netting
          in
          accordance with Section 2(c) of this Agreement and (y) notwithstanding
          any other
          provision of this Agreement, any amount payable by Party A under the immediately
          preceding clause (III) shall not be netted-off against any amount payable
          by
          Party B under the immediately preceding clause (I).”

         

        
          	 	
                  (E)

                	
                  At
                    any time on or before the Latest Settlement Amount Determination
                    Day at
                    which two or more Market Quotations from Approved Replacements
                    remain
                    capable of becoming legally binding upon acceptance, Party B
                    shall be
                    entitled to accept only the lowest of such Market Quotations
                    (for the
                    avoidance of doubt, the lowest of such Market Quotations shall
                    be the
                    lowest Market Quotation of such Market Quotations expressed as
                    a positive
                    number or, if any of such Market Quotations is expressed as a
                    negative
                    number, the Market Quotation expressed as a negative number with
                    the
                    largest absolute value).

                

        

        

        	(ii)  	
                The
                  Second Method will apply.

              

        

        (g) “Termination
          Currency”
          means
          USD.

        

        (h)
           Additional
          Termination Events.
          Additional Termination Events will apply as provided in Part 5(c).

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Part
          2.  Tax
          Matters.

        

        (a) Tax
          Representations. 

        

        
          	 	
                  (i)

                	
                  Payer
                    Representations.
                    For the purpose of Section 3(e) of this Agreement:
                    

                

        

         

        (A) Party
          A
          makes the following representation(s):

        

        It
          is not
          required by any applicable law, as modified by the practice of any relevant
          governmental revenue authority, of any Relevant Jurisdiction to make any
          deduction or withholding for or on account of any Tax from any payment
          (other
          than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to
          be made
          by it to the other party under this Agreement. In making this representation,
          it
          may rely on: the accuracy of any representations made by the other party
          pursuant to Section 3(f) of this Agreement; (ii) the satisfaction of the
          agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and
          the
          accuracy and effectiveness of any document provided by the other party
          pursuant
          to Section 4(a)(i) or 4(a)(iii) of this Agreement; and (iii) the satisfaction
          of
          the agreement of the other party contained in Section 4(d) of this Agreement,
          provided that it shall not be a breach of this representation where reliance
          is
          placed on clause (ii) and the other party does not deliver a form or document
          under Section 4(a)(iii) by reason of material prejudice to its legal or
          commercial position.

        
          	 	 	 

        

        (B) Party
          B
          makes the following representation(s):

        

        None.

        

        (ii)
           Payee
          Representations.
          For the
          purpose of Section 3(f) of this Agreement: 

         

        (A) Party
          A
          makes the following representation(s):

        

        Party
          A
          is a corporation created or organized in the United States or under the
          laws of
          the United States or of any State or of the District of Columbia. Party
          A is a
“United States person” for U.S. federal tax purposes as that term is defined in
          Section 7701(a)(30) (or any applicable successor provision) of the U.S.
          Internal
          Revenue Code of 1986, as amended. Party A’s U.S. taxpayer identification number
          is 13-3866307.

        
          	 	 	 

        

        (B) Party
          B
          makes the following representation(s):

        

        None. 

        

        
          	
                  (b)

                	
                  Tax
                    Provisions.

                

        

        

        
          	 	
                  (i)

                	
                  Gross
                    Up.
                    Section 2(d)(i)(4) shall not apply to Party B as X, and Section
                    2(d)(ii)
                    shall not apply to Party B as Y, in each case such that Party
                    B shall not
                    be required to pay any additional amounts referred to
                    therein.

                

        

        

        
          	 	
                  (ii)

                	
                  Indemnifiable
                    Tax.
                    The definition of “Indemnifiable Tax” in Section 14 is deleted in its
                    entirety and replaced with the
                    following:

                

        

        

        “Indemnifiable
          Tax”
          means,
          in relation to payments by Party A, any Tax (including any Tax imposed
          in
          respect of a payment under a Credit Support Document) and, in relation
          to
          payments by Party B, no Tax. 

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Part
          3.  Agreement
          to Deliver Documents.  

        

        (a) For
          the
          purpose of Section 4(a)(i), tax forms, documents, or certificates to be
          delivered are:

        

        
          	
                   

                  Party
                    required to deliver document

                   

                	
                   

                  Form/Document/

                  Certificate

                   

                	
                   

                  Date
                    by which to

                  be
                    delivered

                   

                
	
                   

                  Party
                    A

                   

                	
                   

                  An
                    original properly completed and executed United States Internal
                    Revenue
                    Service Form W-9
                    (or any successor thereto) with respect to any payments received
                    or to be
                    received by Party A, that eliminates U.S. federal withholding
                    and backup
                    withholding Tax on payments to Party A under this Agreement.

                   

                	
                   

                  (i)
                    upon execution of this Agreement, (ii) on or before the first
                    payment date
                    under this Agreement, including any Credit Support Document,
                    (iii)
                    promptly upon the reasonable demand by Party B, (iv) prior to
                    the
                    expiration or obsolescence of any previously delivered form,
                    and (v)
                    promptly upon the information on any such previously delivered
                    form
                    becoming inaccurate or incorrect.

                   

                
	
                   

                  Party
                    B

                   

                	
                   

                  Party
                    B will deliver at closing an original properly completed and
                    executed
                    United States Internal Revenue Service Form W-9 (or any successor
                    thereto)
                    with respect to any payments received or to be received by Party
                    A, that
                    eliminates U.S. federal withholding and backup withholding Tax
                    on payments
                    to Party A under this Agreement, and may deliver other tax forms
                    relating
                    to the beneficial owner of payments to Party B under this Agreement
                    from
                    time to time.

                   

                	
                   

                  (i)
                    upon execution of this Agreement, (ii) on or before the first
                    payment date
                    under this Agreement, including any Credit Support Document,
                    (iii)
                    promptly upon the reasonable demand by Party B, (iv) prior to
                    the
                    expiration or obsolescence of any previously delivered form,
                    and (v)
                    promptly upon the information on any such previously delivered
                    form
                    becoming inaccurate or incorrect.

                   

                

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (b) For
          the
          purpose of Section 4(a)(ii), other documents to be delivered are:

        

        
          	
                   

                  Party
                    required to deliver document

                   

                	
                   

                  Form/Document/

                  Certificate

                   

                	
                   

                  Date
                    by which to

                  be
                    delivered

                   

                	
                   

                  Covered
                    by Section 3(d) Representation

                   

                
	
                   

                  Party
                    A and

                   

                  Party
                    B

                   

                	
                   

                  Any
                    documents required by the receiving party to evidence the authority
                    of the
                    delivering party or its Credit Support Provider, if any, for
                    it to execute
                    and deliver the Agreement, this Confirmation, and any Credit
                    Support
                    Documents to which it is a party, and to evidence the authority
                    of the
                    delivering party or its Credit Support Provider to perform its
                    obligations
                    under the Agreement, this Confirmation and any Credit Support
                    Document, as
                    the case may be

                   

                	
                   

                  Upon
                    the execution and delivery of this Agreement

                   

                	
                   

                  Yes

                   

                
	
                   

                  Party
                    A and

                   

                  Party
                    B

                   

                	
                   

                  A
                    certificate of an authorized officer of the party, as to the
                    incumbency
                    and authority of the respective officers of the party signing
                    the
                    Agreement, this Confirmation, and any relevant Credit Support
                    Document, as
                    the case may be

                   

                	
                   

                  Upon
                    the execution and delivery of this Agreement

                   

                	
                   

                  Yes

                   

                
	
                   

                  Party
                    A

                   

                	
                   

                  Annual
                    Report of Party A containing consolidated financial statements
                    certified
                    by independent certified public accountants and prepared in accordance
                    with generally accepted accounting principles in the country
                    in which
                    Party A is organized

                   

                	
                   

                  Upon
                    request by Party B

                   

                	
                   

                  Yes

                   

                
	
                   

                  Party
                    A

                   

                	
                   

                  Quarterly
                    Financial Statements of Party A containing unaudited, consolidated
                    financial statements of Party A’s fiscal quarter prepared in accordance
                    with generally accepted accounting principles in the country
                    in which
                    Party A is organized

                   

                	
                   

                  Upon
                    request by Party B

                   

                	
                   

                  Yes

                   

                
	
                   

                  Party
                    A

                   

                	
                   

                  An
                    opinion of counsel to Party A 

                   

                	
                   

                  Upon
                    the execution and delivery of this Agreement

                   

                	
                   

                  No

                   

                
	
                   

                  Party
                    B

                   

                	
                   

                  An
                    executed version of the Pooling and Servicing Agreement

                   

                	
                   

                  Concurrently
                    with filing of each draft of the Pooling and Servicing Agreement
                    with the
                    U.S. Securities and Exchange Commission

                   

                	
                   

                  Yes

                   

                

        

        

        Part
          4. Miscellaneous. 

        

        
          	
                  (a)

                	
                  Address
                    for Notices:
                    For the purposes of Section 12(a) of this
                    Agreement:

                

        

        

        Address
          for notices or communications to Party A:

        

                       
          Address:                                                      
          383
          Madison Avenue, New York, New York 10179

                      
          Attention:                     
DPC
          Manager 

                      
          Facsimile:                      
(212)
          272-5823

         

                      
          with a copy to:

         

                                                      
          Address:                        
One
          Metrotech Center North, Brooklyn, New York 11201

                      
          Attention:                      
Derivative
          Operations - 7th Floor

                       Facsimile:                       
          (212)
          272-1634

        

                      
          (For all purposes)

         

                       
          Address for notices or communications to Party B:

         

                      
          Address:  LaSalle
          Bank National Association

                                                   
            135
          South
          LaSalle Street, Suite 1511

                                                
               Chicago,
          IL 60603

                      
          Attention:            Global
          Securities and Trust Services

                                                  
            Bear
          Stearns Mortgage Funding Trust 2006-SL4

                      
          Facsimile:             312-904-6257 

                      
          Phone:                 
312-904-6709

         

                      
          (For all purposes)

        

        Address
          for notices or communications to the Swap Rating Agencies, including, without
          limitation, notice of designation of an Early Termination Date by Party
          B and
          notice of any transfer of any rights or obligations under this
          Agreement:

        

        S&P

        Address:   55
          Water
          Street, 41st Floor

                                                   
          New
          York, New York 10041

        

        Moody’s

        Address:   99
          Church
          Street

                                                   
          New
          York, New York 10007, 

        Attention:                         
          Home
          Equity Monitoring

        

        

        

        (b) Process
          Agent.
          For the
          purpose of Section 13(c):

        

        Party
          A
          appoints as its Process Agent: Not applicable.

        

        Party
          B
          appoints as its Process Agent: Not applicable.

        

        
          	
                  (c)

                	
                  Offices.
                    The provisions of Section 10(a) will apply to this
                    Agreement.

                

        

        

        
          	
                  (d)

                	
                  Multibranch
                    Party.
                    For the purpose of Section 10(c) of this
                    Agreement:

                

        

        

        Party
          A
          is not a Multibranch Party.

        

        
          	 	
                  Party
                    B is not a Multibranch Party.

                

        

        

        
          	
                  (e)

                	
                  Calculation
                    Agent.
                    The Calculation Agent is Party A.

                

        

        

        (f) Credit
          Support Document. 

         

        
          	 	
                  Party
                    A:

                	
                  The
                    Credit Support Annex, and any guarantee in support of Party A’s
                    obligations under this Agreement.

                

        

        

        Party
          B: The
          Credit Support Annex.

        

        
          	
                  (g)

                	
                  Credit
                    Support Provider.

                

        

        

        Party
          A: The
          guarantor under any guarantee in support of Party A’s obligations under this
          Agreement.

        

        Party
          B: None.

        

        
          	
                  (h)

                	
                  Governing
                    Law.
                    The parties to this Agreement hereby agree that the law of the
                    State of
                    New York shall govern their rights and duties in whole, without
                    regard to
                    the conflict of law provisions thereof other than New York General
                    Obligations Law Sections 5-1401 and 5-1402.

                

        

        

        
          	
                  (i)

                	
                  Netting
                    of Payments.
                    The parties agree that subparagraph (ii) of Section 2(c) will
                    apply to
                    each Transaction hereunder. 

                

        

        

        
          	
                  (j)

                	
                  Affiliate.“Affiliate”
                    shall have the meaning assigned thereto in Section 14; provided,
                    however,
                    that neither Party A nor Party B shall be deemed to have any
                    Affiliates
                    for purposes of this Agreement, including for purposes of Section
                    6(b)(ii).

                

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Part
          5.  Others
          Provisions.

        

        
          	
                  (a)

                	
                  Definitions.
                    Unless
                    otherwise specified in a Confirmation, this Agreement and each
                    Transaction
                    under this Agreement are subject to the 2000 ISDA Definitions
                    as published
                    and copyrighted in 2000 by the International Swaps and Derivatives
                    Association, Inc. (the “Definitions”),
                    and will be governed in all relevant respects by the provisions
                    set forth
                    in the Definitions, without regard to any amendment to the Definitions
                    subsequent to the date hereof. The provisions of the Definitions
                    are
                    hereby incorporated by reference in and shall be deemed a part
                    of this
                    Agreement, except that (i) references in the Definitions to a
“Swap
                    Transaction” shall be deemed references to a “Transaction” for purposes of
                    this Agreement, and (ii) references to a “Transaction” in this Agreement
                    shall be deemed references to a “Swap Transaction” for purposes of the
                    Definitions. Each term capitalized but not defined in this Agreement
                    shall
                    have the meaning assigned thereto in the Pooling and Servicing
                    Agreement.

                

        

         

        (b) Amendments
          to ISDA Master Agreement.

        

        
          	 	
                  (i)

                	
                  Single
                    Agreement.
                    Section 1(c) is hereby amended by the adding the words “including, for the
                    avoidance of doubt, the Credit Support Annex” after the words “Master
                    Agreement”. 

                

        

        

        
          	 	
                  (ii)

                	
                  Change
                    of Account.
                    Section 2(b) is hereby amended by the addition of the following
                    after the
                    word “delivery” in the first line
                    thereof:

                

        

         

        “to
          another account in the same legal and tax jurisdiction as the original
          account”.

        

        
          	 	
                  (iii)

                	
                  Representations.
                    Section 3 is hereby amended by adding at the end thereof the
                    following
                    subsection (g): 

                

        

        

        
          	 	
                  “(g)

                	
                  Relationship
                    Between Parties. 

                

        

        

        
          	 	
                  (1)

                	
                  Nonreliance.
                    (i) It is not relying on any statement or representation of the
                    other
                    party regarding the Transaction (whether written or oral), other
                    than the
                    representations expressly made in this Agreement or the Confirmation
                    in
                    respect of that Transaction and (ii) it has consulted with its
                    own legal,
                    regulatory, tax, business, investment, financial and accounting
                    advisors
                    to the extent it has deemed necessary, and it has made its own
                    investment,
                    hedging and trading decisions based upon its own judgment and
                    upon any
                    advice from such advisors as it has deemed necessary and not
                    upon any view
                    expressed by the other party.

                

        

         

        
          	 	
                  (2)

                	
                  Evaluation
                    and Understanding. (i) It has the capacity to evaluate (internally
                    or
                    through independent professional advice) the Transaction and
                    has made its
                    own decision subject to Section 6(n) of this Agreement to enter
                    into the
                    Transaction and (ii) It understands the terms, conditions and
                    risks of the
                    Transaction and is willing and able to accept those terms and
                    conditions
                    and to assume those risks, financially and otherwise.
                    

                

        

        

        
          	 	
                  (3)

                	
                  Purpose.
                    It is entering into the Transaction for the purposes of managing
                    its
                    borrowings or investments, hedging its underlying assets or liabilities
                    or
                    in connection with a line of business.

                

        

        

        
          	 	
                  (4)

                	
                  Status
                    of Parties. The other party is not acting as an agent, fiduciary
                    or
                    advisor for it in respect of the Transaction.

                

        

        

        
          	 	
                  (5)

                	
                  Eligible
                    Contract Participant. It is an “eligible swap participant” as such term is
                    defined in, Section 35.1(b)(2) of the regulations (17 C.F.R.
                    35)
                    promulgated under, and an “eligible contract participant” as defined in
                    Section 1(a)(12) of the Commodity Exchange Act, as
                    amended.”

                

        

        

        
          	 	
                  (iv)

                	
                  Transfer
                    to Avoid Termination Event.
                    Section 6(b)(ii) is hereby amended by (i) deleting the words
“or if a Tax
                    Event Upon Merger occurs and the Burdened Party is the Affected
                    Party,”
                    (ii) deleting the words “to transfer” and inserting the words “to effect a
                    Permitted Transfer” in lieu thereof and (iii) deleting the last paragraph
                    thereof and inserting the
                    following:

                

        

        

        “Notwithstanding
          anything to the contrary in Section 7 and Part 5(f), any transfer by Party
          A
          under this Section 6(b)(ii) shall not require the consent of Party B specified
          in clause (d) of the definition of Permitted Transfer provided
          that:

         

        
          	 	
                  (A)

                	
                  the
                    transferee (the “Transferee”) is an Eligible
                    Replacement;

                

        

         

        
          	 	
                  (B)

                	
                  if
                    the Transferee is domiciled in a different country or political
                    subdivision thereof from both Party A and Party B, such transfer
                    satisfies
                    the Rating Agency Condition;

                

        

         

        
          	 	
                  (C)

                	
                  the
                    Transferee will not, as a result of such transfer, be required
                    on the next
                    succeeding Scheduled Payment Date to withhold or deduct on account
                    of any
                    Tax (except in respect of default interest) amounts in excess
                    of that
                    which Party A would, on the next succeeding Scheduled Payment
                    Date have
                    been required to so withhold or deduct unless the Transferee
                    would be
                    required to make additional payments pursuant to Section 2(d)
                    (i)(4)
                    corresponding to such excess; 

                

        

         

        (D) a
          Termination Event or Event of Default does not occur as a result of such
          transfer; 

         

        
          	 	
                  (E)

                	
                  no
                    additional amount will be payable by Party B to Party A or the
                    Transferee
                    on the next succeeding Scheduled Payment Date as a result of
                    such
                    transfer; and

                

        

         

        
          	 	
                  (F)

                	
                  the
                    Transferee confirms in writing that it will accept all of the
                    interests
                    and obligations in and under this Agreement which are to be transferred
                    to
                    it in accordance with the terms of this
                    provision.

                

        

         

        On
          and
          from the effective date of any such transfer to the Transferee, Party A
          will be
          fully released from any and all obligations hereunder.

        

        
          	 	
                  (v)

                	
                  Jurisdiction.
                    Section
                    13(b) is hereby amended by: (i) deleting in the second line of
                    subparagraph (i) thereof the word "non-", (ii) deleting “; and” from the
                    end of subparagraph 1 and inserting “.” in lieu thereof, and (iii)
                    deleting the final paragraph
                    thereof.

                

        

        

        
          	 	
                  (vi)

                	
                  Local
                    Business Day.
                    The definition of Local Business Day in Section 14 is hereby
                    amended by
                    the addition of the words “or any Credit Support Document” after “Section
                    2(a)(i)” and the addition of the words “or Credit Support Document” after
                    “Confirmation”. 

                

        

        

        
          	
                  (c)

                	
                  Additional
                    Termination Events.
                    The following Additional Termination Events will
                    apply:

                

        

        

        	(i)  	
                First
                  Rating Trigger Collateral.
                  If
                  (A) it is not the case that a Moody’s Second Trigger Ratings Event has
                  occurred and been continuing for 30 or more Local Business Days
                  and (B)
                  Party
                  A has failed to comply with or perform any obligation to be complied
                  with
                  or performed by Party A in accordance with the Credit Support Annex,
                  then
                  an Additional Termination Event shall have occurred with respect
                  to Party
                  A and Party A shall be the sole Affected Party with respect to
                  such
                  Additional Termination Event.

              

        

        	(ii)  	
                Second
                  Rating Trigger Replacement.
                  If
                  (A) a Required Ratings Downgrade Event has occurred and been continuing
                  for 30 or more Local Business Days and (B) (i) at least one Eligible
                  Replacement has made a Firm Offer to be the transferee of all of
                  Party A’s
                  rights and obligations under this Agreement (and such Firm Offer
                  remains
                  an offer that will become legally binding upon such Eligible Replacement
                  upon acceptance by the offeree) and/or (ii) an Eligible Guarantor
                  has made
                  a Firm Offer to provide an Eligible Guarantee (and such Firm Offer
                  remains
                  an offer that will become legally binding upon such Eligible Guarantor
                  immediately upon acceptance by the offeree), then an Additional
                  Termination Event shall have occurred with respect to Party A and
                  Party A
                  shall be the sole Affected Party with respect to such Additional
                  Termination Event. 

              

        

        
          	 	
                  (iii)

                	
                  Amendment
                    of Pooling and Servicing Agreement.
                    If, without the prior written consent of Party A where such consent
                    is
                    required under the Pooling and Servicing Agreement (such consent
                    not to be
                    unreasonably withheld), an amendment is made to the Pooling and
                    Servicing
                    Agreement which amendment could reasonably be expected to have
                    a material
                    adverse effect on the interests of Party A under this Agreement,
                    an
                    Additional Termination Event shall have occurred with respect
                    to Party B
                    and Party B shall be the sole Affected Party with respect to
                    such
                    Additional Termination Event. 

                

        

        

        
          	 	
                  (iv)

                	
                  Failure
                    to Comply with Regulation AB Provisions.
                    If, upon the occurrence of a Swap Disclosure Event (as defined
                    in Part
                    5(e) below) Party A has not, within 10 calendar days after such
                    Swap
                    Disclosure Event complied with any of the provisions set forth
                    in Part
                    5(e)(iii) below, then an Additional Termination Event shall have
                    occurred
                    with respect to Party A and Party A shall be the sole Affected
                    Party with
                    respect to such Additional Termination
                    Event.

                

        

        

        
          	 	
                  (v)

                	
                  Optional
                    Termination of Securitization.
                    An
                    Additional Termination Event shall occur upon the notice to
                    Certificateholders of an Optional Termination becoming unrescindable
                    in
                    accordance with Article X of the Pooling and Servicing Agreement
                    (such
                    notice, the “Optional
                    Termination Notice”).
                    With respect to such Additional Termination Event: (A) Party
                    B shall be
                    the sole Affected Party; (B) notwithstanding anything to the
                    contrary in
                    Section 6(b)(iv) or Section 6(c)(i), the final Distribution Date
                    specified
                    in the Optional Termination Notice is hereby designated as the
                    Early
                    Termination Date for this Additional Termination Event in respect
                    of all
                    Affected Transactions; (C) Section 2(a)(iii)(2) shall not be
                    applicable to
                    any Affected Transaction in
                    connection with the Early Termination Date resulting from this
                    Additional
                    Termination Event; notwithstanding anything to the contrary in
                    Section
                    6(c)(ii), payments and deliveries under Section 2(a)(i) or Section
                    2(e) in
                    respect of the Terminated Transactions resulting from this Additional
                    Termination Event will be required to be made through and including
                    the
                    Early Termination Date designated
                    as a result of this Additional Termination Event; provided, for
                    the
                    avoidance of doubt, that any such payments or deliveries that
                    are made on
                    or prior to such Early Termination Date will not be treated as
                    Unpaid
                    Amounts in determining the amount payable in respect of such
                    Early
                    Termination Date; (D) notwithstanding anything to the contrary
                    in Section
                    6(d)(i), (I) if, no later than 4:00 pm New York City time on
                    the day that
                    is four Business Days prior to the final Distribution Date specified
                    in
                    the Optional Termination Notice, the Trustee requests the amount
                    of the
                    Estimated Swap Termination Payment, Party A shall provide to
                    the Trustee
                    in writing (which may be done in electronic format) the amount
                    of the
                    Estimated Swap Termination Payment no later than 2:00 pm New
                    York City
                    time on the following Business Day and (II) if the Trustee provides
                    written notice (which may be done in electronic format) to Party
                    A no
                    later than two Business Days prior to the final Distribution
                    Date
                    specified in the Optional Termination Notice that all requirements
                    of the
                    Optional Termination have been met, then Party A shall, no later
                    than one
                    Business Day prior to the final Distribution Date specified in
                    the
                    Optional Termination Notice, make the calculations contemplated
                    by Section
                    6(e) of the ISDA Master Agreement (as amended herein) and provide
                    to the
                    Trustee in writing (which may be done in electronic format) the
                    amount
                    payable by either Party B or Party A in respect of the related
                    Early
                    Termination Date in
                    connection with this Additional Termination Event; provided,
                    however, that
                    the amount payable by Party B, if any, in respect of the related
                    Early
                    Termination Date shall be the lesser of (x) the amount calculated
                    to be
                    due by Party B pursuant to Section 6(e) and (y) the Estimated
                    Swap
                    Termination Payment; and (E) notwithstanding anything to the
                    contrary in
                    this Agreement, any amount due from Party B to Party A in respect
                    of this
                    Additional Termination Event will be payable on the final Distribution
                    Date specified in the Optional Termination Notice and any amount
                    due from
                    Party A to Party B in respect of this Additional Termination
                    Event will be
                    payable one Business Day prior to the final Distribution Date
                    specified in
                    the Optional Termination Notice. 

                

        

        

        The
          Trustee shall be an express third party beneficiary of this Agreement as
          if a
          party hereto to the extent of the Trustee’s rights specified herein.

        

        
          	
                  (d)

                	
                  Required
                    Ratings Downgrade Event.
                    In
                    the event that no Relevant Entity has credit ratings at least
                    equal to the
                    Required Ratings Threshold (such event, a “Required
                    Ratings Downgrade Event”),
                    then Party A shall, as soon as reasonably practicable and so
                    long as a
                    Required Ratings Downgrade Event is in effect, at its own expense,
                    using
                    commercially reasonable efforts, procure either (A) a Permitted
                    Transfer
                    or (B) an Eligible Guarantee from an Eligible Guarantor.
                    

                

        

        

        
          	
                  (e)
                    

                	
                  Compliance
                    with Regulation AB. 

                

        

        

        
          	 	
                  (i)

                	
                  Party
                    A agrees and acknowledges that Bear Stearns Asset Backed Securities
                    I LLC
                    (“BSABS”) is required under Regulation AB under the Securities Act of
                    1933, as amended, and the Securities Exchange Act of 1934, as
                    amended (the
                    “Exchange Act”) (“Regulation AB”), to disclose certain financial
                    information regarding Party A or its group of affiliated entities,
                    if
                    applicable, depending on the aggregate “significance percentage” of this
                    Agreement and any other derivative contracts between Party A
                    or its group
                    of affiliated entities, if applicable, and Counterparty, as calculated
                    from time to time in accordance with Item 1115 of Regulation
                    AB.
                    

                

        

        

        
          	 	
                  (ii)

                	
                  It
                    shall be a swap disclosure event (“Swap Disclosure Event”) if, on any
                    Business Day after the date hereof for so long as the Issuing
                    Entity is
                    required to file periodic reports under the Exchange Act, BSABS
                    requests
                    from Party A the applicable financial information described in
                    Item 1115
                    of Regulation AB (such request to be based on a reasonable determination
                    by BSABS, in good faith, that such information is required under
                    Regulation AB) (the “Swap Financial
                    Disclosure”).

                

        

        

        
          	 	
                  (iii)

                	
                  Upon
                    the occurrence of a Swap Disclosure Event, Party A, within ten
                    (10) days
                    and at its own expense, shall (1)(a) either (i) provide to BSABS
                    the
                    current Swap Financial Disclosure in an EDGAR-compatible format
                    (for
                    example, such information may be provided in Microsoft Word® or Microsoft
                    Excel® format but not in .pdf format) or (ii) provide written consent
                    to
                    BSABS to incorporation by reference of such current Swap Financial
                    Disclosure that are filed with the Securities and Exchange Commission
                    in
                    the Exchange Act Reports of BSABS, (b) if applicable, cause its
                    outside
                    accounting firm to provide its consent to filing or incorporation
                    by
                    reference in the Exchange Act Reports of BSABS of such accounting
                    firm’s
                    report relating to their audits of such current Swap Financial
                    Disclosure,
                    and (c) provide to BSABS any updated Swap Financial Disclosure
                    with
                    respect to Party A or any entity that consolidates Party A within
                    five
                    days of the release of any such updated Swap Financial Disclosure;
                    (2)
                    secure another entity to replace Party A as party to this Agreement
                    on
                    terms substantially similar to this Agreement and subject to
                    prior
                    notification to the Swap Rating Agencies, which entity (or a
                    guarantor
                    therefor) satisfies the Rating Agency Condition with respect
                    to S&P
                    and which entity is able to comply with the requirements of Item
                    1115 of
                    Regulation AB or (3) subject to the Rating Agency Condition with
                    respect
                    to S&P and obtain a guaranty of the Party A’s obligations under this
                    Agreement from an affiliate of the Party A that is able to comply
                    with the
                    financial information disclosure requirements of Item 1115 of
                    Regulation
                    AB, such that disclosure provided in respect of the affiliate
                    will satisfy
                    any disclosure requirements applicable to the Swap Provider,
                    and cause
                    such affiliate to provide Swap Financial Disclosure. If permitted
                    by
                    Regulation AB, any required Swap Financial Disclosure may be
                    provided by
                    incorporation by reference from reports filed pursuant to the
                    Exchange
                    Act.

                

        

        

        
          	 	
                  (iv)

                	
                  Party
                    A agrees that, in the event that Party A provides Swap Financial
                    Disclosure to BSABS in accordance with Part 5(e)(iii)(a) or causes
                    its
                    affiliate to provide Swap Financial Disclosure to BSABS in accordance
                    with
                    Part 5(e)(iii)(c), it will indemnify and hold harmless BSABS,
                    its
                    respective directors or officers and any person controlling BSABS,
                    from
                    and against any and all losses, claims, damages and liabilities
                    caused by
                    any untrue statement or alleged untrue statement of a material
                    fact
                    contained in such Swap Financial Disclosure or caused by any
                    omission or
                    alleged omission to state in such Swap Financial Disclosure a
                    material
                    fact required to be stated therein or necessary to make the statements
                    therein, in light of the circumstances under which they were
                    made, not
                    misleading.

                

        

        

        
          	 	
                  (v)

                	
                  BSABS
                    shall be an express third party beneficiary of this Agreement
                    as if a
                    party hereto to the extent of BSABS’s rights explicitly specified in this
                    Part 5(e). 

                

        

        

        
          	
                  (f)

                	
                  Transfers. 

                

        

         

        (i) Section
          7
          is hereby amended to read in its entirety as follows:

         

        “Subject
          to Section 6(b)(ii), Part 5(d), and Part 5(e), neither Party A nor Party
          B is
          permitted to assign, novate or transfer (whether by way of security or
          otherwise) as a whole or in part any of its rights, obligations or interests
          under the Agreement or any Transaction without (a) the prior written consent
          of
          the other party or (b) satisfaction of the Rating Agency Condition with
          respect
          to S&P.

         

        
          	 	
                  (ii)

                	
                  If
                    an Eligible Replacement has made a Firm Offer (which remains
                    an offer that
                    will become legally binding upon acceptance by Party B) to be
                    the
                    transferee pursuant to a Permitted Transfer, Party B shall, at
                    Party A’s
                    written request and at Party A’s expense, take any reasonable steps
                    required to be taken by Party B to effect such transfer.
                    

                

        

         

        
          	
                  (g)

                	
                  Non-Recourse.
                    Party A acknowledges and agree that, notwithstanding any provision
                    in this
                    Agreement to the contrary, the obligations of Party B hereunder
                    are
                    limited recourse obligations of Party B, payable solely from
                    the
                    Supplemental Interest Trust and the proceeds thereof, in accordance
                    with
                    the priority of payments and other terms of the Pooling and Servicing
                    Agreement and that Party A will not have any recourse to any
                    of the
                    directors, officers, employees, shareholders or affiliates of
                    the Party B
                    with respect to any claims, losses, damages, liabilities, indemnities
                    or
                    other obligations in connection with any transactions contemplated
                    hereby.
                    In the event that the Supplemental Interest Trust and the proceeds
                    thereof, should be insufficient to satisfy all claims outstanding
                    and
                    following the realization of the account held by the Supplemental
                    Interest
                    Trust and the proceeds thereof, any claims against or obligations
                    of Party
                    B under the ISDA Master Agreement or any other confirmation thereunder
                    still outstanding shall be extinguished and thereafter not revive.
                    The
                    Supplemental Interest Trust Trustee shall not have liability
                    for any
                    failure or delay in making a payment hereunder to Party A due
                    to any
                    failure or delay in receiving amounts in the account held by
                    the
                    Supplemental Interest Trust from the Trust created pursuant to
                    the Pooling
                    and Servicing Agreement. This provision will survive the termination
                    of
                    this Agreement.

                

        

        

        
          	
                  (h)

                	
                  Timing
                    of Payments
                    by Party B upon Early Termination.
                    Notwithstanding anything to the contrary in Section 6(d)(ii),
                    to the
                    extent that all or a portion (in either case, the “Unfunded Amount”) of
                    any amount that is calculated as being due in respect of any
                    Early
                    Termination Date under Section 6(e) from Party B to Party A will
                    be paid
                    by Party B from amounts other than any upfront payment paid to
                    Party B by
                    an Eligible Replacement that has entered a Replacement Transaction
                    with
                    Party B, then such Unfunded Amount shall be due on the next subsequent
                    Distribution Date following the date on which the payment would
                    have been
                    payable as determined in accordance with Section 6(d)(ii), and
                    on any
                    subsequent Distribution Dates until paid in full (or if such
                    Early
                    Termination Date is the final Distribution Date, on such final
                    Distribution Date); provided, however, that if the date on which
                    the
                    payment would have been payable as determined in accordance with
                    Section
                    6(d)(ii) is a Distribution Date, such payment will be payable
                    on such
                    Distribution Date.

                

        

        

        
          	
                  (i)

                	
                  Rating
                    Agency Notifications. Notwithstanding
                    any other provision of this Agreement, no Early Termination Date
                    shall be
                    effectively designated hereunder by Party B and no transfer of
                    any rights
                    or obligations under this Agreement shall be made by either party
                    unless
                    each Swap Rating Agency has been given prior written notice of
                    such
                    designation or transfer. 

                

        

        

        
          	
                  (j)

                	
                  No
                    Set-off.
                    Except as expressly provided for in Section 2(c), Section 6 or
                    Part
                    1(f)(i)(D) hereof, and notwithstanding any other provision of
                    this
                    Agreement or any other existing or future agreement, each party
                    irrevocably waives any and all rights it may have to set off,
                    net, recoup
                    or otherwise withhold or suspend or condition payment or performance
                    of
                    any obligation between it and the other party hereunder against
                    any
                    obligation between it and the other party under any other agreements.
                    Section 6(e) shall be amended by deleting the following sentence:
“The
                    amount, if any, payable in respect of an Early Termination Date
                    and
                    determined pursuant to this Section will be subject to any
                    Set-off.”.

                

        

         

        
          	
                  (k)

                	
                  Amendment.
                    Notwithstanding any provision to the contrary in this Agreement,
                    no
                    amendment of either this Agreement or any Transaction under this
                    Agreement
                    shall be permitted by either party unless each of the Swap Agencies
                    has
                    been provided prior written notice of the same and such amendment
                    satisfies the Rating Agency Condition with respect to S&P.
                    

                

        

        

        
          	
                  (l)

                	
                  Notice
                    of Certain Events or Circumstances.
                    Each Party agrees, upon learning of the occurrence or existence
                    of any
                    event or condition that constitutes (or that with the giving
                    of notice or
                    passage of time or both would constitute) an Event of Default
                    or
                    Termination Event with respect to such party, promptly to give
                    the other
                    Party and to each Swap Rating Agency notice of such event or
                    condition;
                    provided that failure to provide notice of such event or condition
                    pursuant to this Part 5(l) shall not constitute an Event of Default
                    or a
                    Termination Event.

                

        

         

        (m) Proceedings.
          No
          Relevant Entity shall institute against, or cause any other person to institute
          against, or join any other person in instituting against Party B, the
          Supplemental Interest Trust, or the trust formed pursuant to the Pooling
          and
          Servicing Agreement, in any bankruptcy, reorganization, arrangement, insolvency
          or liquidation proceedings or other proceedings under any federal or state
          bankruptcy or similar law for a period of one year (or, if longer, the
          applicable preference period) and one day following payment in full of
          the
          Certificates and any Notes. This provision will survive the termination
          of this
          Agreement. 

        

        
          	
                  (n)

                	
                  Supplemental
                    Interest Trust Trustee Liability Limitations.
                    It
                    is expressly understood and agreed by the parties hereto that
                    (a) this
                    Agreement is executed by LaSalle Bank National Association (“LaSalle”) not
                    in its individual capacity, but solely as Supplemental Interest
                    Trust
                    Trustee under the Pooling and Servicing Agreement in the exercise
                    of the
                    powers and authority conferred and invested in it thereunder;
                    (b) the
                    Supplemental Interest Trust Trustee has been directed pursuant
                    to the
                    Pooling and Servicing Agreement to enter into this Agreement
                    and to
                    perform its obligations hereunder; (c) each of the representations,
                    undertakings and agreements herein made on behalf of the Supplemental
                    Interest Trust is made and intended not as personal representations
                    of the
                    Supplemental Interest Trust Trustee but is made and intended
                    for the
                    purpose of binding only the Supplemental Interest Trust; and
                    (d) under no
                    circumstances shall LaSalle
                    in its individual capacity be personally liable for any payments
                    hereunder
                    or for the breach or failure of any obligation, representation,
                    warranty
                    or covenant made or undertaken under this
                    Agreement.

                

        

        

        
          	
                  (o)

                	
                  Severability.
                    If
                    any term, provision, covenant, or condition of this Agreement,
                    or the
                    application thereof to any party or circumstance, shall be held
                    to be
                    invalid or unenforceable (in whole or in part) in any respect,
                    the
                    remaining terms, provisions, covenants, and conditions hereof
                    shall
                    continue in full force and effect as if this Agreement had been
                    executed
                    with the invalid or unenforceable portion eliminated, so long
                    as this
                    Agreement as so modified continues to express, without material
                    change,
                    the original intentions of the parties as to the subject matter
                    of this
                    Agreement and the deletion of such portion of this Agreement
                    will not
                    substantially impair the respective benefits or expectations
                    of the
                    parties; provided, however, that this severability provision
                    shall not be
                    applicable if any provision of Section 2, 5, 6, or 13 (or any
                    definition
                    or provision in Section 14 to the extent it relates to, or is
                    used in or
                    in connection with any such Section) shall be so held to be invalid
                    or
                    unenforceable. 

                

        

        

        The
          parties shall endeavor to engage in good faith negotiations to replace
          any
          invalid or unenforceable term, provision, covenant or condition with a
          valid or
          enforceable term, provision, covenant or condition, the economic effect
          of which
          comes as close as possible to that of the invalid or unenforceable term,
          provision, covenant or condition. 

        

        
          	
                  (p)

                	
                  Agent
                    for Party B. Party
                    A acknowledges that the Supplemental Interest Trust Trustee has
                    been
                    appointed as agent under the Pooling and Servicing Agreement
                    to carry out
                    certain functions on behalf of the Supplemental Interest Trust,
                    and that
                    the Supplemental Interest Trust Trustee shall be entitled to
                    give notices
                    and to perform and satisfy the obligations of Party B hereunder
                    on behalf
                    of the Supplemental Interest Trust.

                

        

         

        
          	
                  (q)

                	
                  Escrow
                    Payments.
                    If
                    (whether by reason of the time difference between the cities
                    in which
                    payments are to be made or otherwise) it is not possible for
                    simultaneous
                    payments to be made on any date on which both parties are required
                    to make
                    payments hereunder, either Party may at its option and in its
                    sole
                    discretion notify the other Party that payments on that date
                    are to be
                    made in escrow. In this case deposit of the payment due earlier
                    on that
                    date shall be made by 2:00 pm (local time at the place for the
                    earlier
                    payment) on that date with an escrow agent selected by the notifying
                    party, accompanied by irrevocable payment instructions (i) to
                    release the
                    deposited payment to the intended recipient upon receipt by the
                    escrow
                    agent of the required deposit of any corresponding payment payable
                    by the
                    other party on the same date accompanied by irrevocable payment
                    instructions to the same effect or (ii) if the required deposit
                    of the
                    corresponding payment is not made on that same date, to return
                    the payment
                    deposited to the party that paid it into escrow. The party that
                    elects to
                    have payments made in escrow shall pay all costs of the escrow
                    arrangements.

                

        

         

        
          	
                  (r)

                	
                  Consent
                    to Recording.
                    Each party hereto consents to the monitoring or recording, at
                    any time and
                    from time to time, by the other party of any and all communications
                    between trading, marketing, and operations personnel of the parties
                    and
                    their Affiliates, waives any further notice of such monitoring
                    or
                    recording, and agrees to notify such personnel of such monitoring
                    or
                    recording. 

                

        

        

        
          	
                  (s)

                	
                  Waiver
                    of Jury Trial.
                    Each party waives any right it may have to a trial by jury in
                    respect of
                    any in respect of any suit, action or proceeding relating to
                    this
                    Agreement or any Credit Support Document.

                

        

        

        
          	
                  (t)

                	
                  Form
                    of ISDA Master Agreement. Party
                    A and Party B hereby agree that the text of the body of the ISDA
                    Master
                    Agreement is intended to be the printed form of the ISDA Master
                    Agreement
                    (Multicurrency -
                    Crossborder) as published and copyrighted in 1992 by the International
                    Swaps and Derivatives Association,
                    Inc.

                

        

        

        
          	
                  (u)

                	
                  Payment
                    Instructions.
                    Party A hereby agrees that, unless notified in writing by Party
                    B of other
                    payment instructions, any and all amounts payable by Party A
                    to Party B
                    under this Agreement shall be paid to the account specified in
                    Item 4 of
                    this Confirmation, below. 

                

        

        

        
          	
                  (v)

                	
                  Capacity.
                    Party A represents to Party B on the date on which Party A enters
                    into
                    this Agreement that it is entering into the Agreement and the
                    Transaction
                    as principal and not as agent of any person. Party B represents
                    to Party A
                    on the date on which Party B enters into this Agreement it is
                    entering
                    into the Agreement and the Transaction in its capacity as Supplemental
                    Interest Trustee.

                

        

        

        
          	
                  (w)

                	
                  Acknowledgements.

                

        

        

        
          	 	
                  (i)

                	
                  Substantial
                    financial transactions.
                    Each party hereto is hereby advised and acknowledges as of the
                    date hereof
                    that the other party has engaged in (or refrained from engaging
                    in)
                    substantial financial transactions and has taken (or refrained
                    from
                    taking) other material actions in reliance upon the entry by
                    the parties
                    into the Transaction being entered into on the terms and conditions
                    set
                    forth herein and in the Pooling and Servicing Agreement relating
                    to such
                    Transaction, as applicable. This paragraph shall be deemed repeated
                    on the
                    trade date of each Transaction.

                

        

         

        
          	
                  (x)

                	
                  Reserved. 

                

        

         

        
          	
                  (y)

                	
                  Reserved.

                

        

         

        (z) Additional
          Definitions. 

         

        As
          used
          in this Agreement, the following terms shall have the meanings set forth
          below,
          unless the context clearly requires otherwise: 

         

        “Approved
          Ratings Threshold”
          means
          each of the S&P Approved Ratings Threshold and the Moody’s First Trigger
          Ratings Threshold.

        

        “Approved
          Replacement” means,
          with respect to a Market Quotation, an entity making such Market Quotation,
          which entity would satisfy conditions (a), (b), (c) and (e) of the definition
          of
          Permitted Transfer (as determined by Party B in its sole discretion, acting
          in a
          commercially reasonable manner) if such entity were a Transferee, as defined
          in
          the definition of Permitted Transfer.

        

        “Derivative
          Provider Trigger Event”
          means
          (i) an Event of Default with respect to which Party A is a Defaulting Party
          or
          (ii) a Termination Event with respect to which Party A is the sole Affected
          Party.

        

        “Eligible
          Guarantee”
          means an
          unconditional and irrevocable guarantee of all present and future payment
          obligations of Party A or an Eligible Replacement to Party B under this
          Agreement that is provided by an Eligible Guarantor as principal debtor
          rather
          than surety and that is directly enforceable by Party B, the form and substance
          of which guarantee are subject to the Rating Agency Condition with respect
          to
          S&P.

        

        “Eligible
          Guarantor” means
          an
          entity that (A) has credit ratings at least equal to the Approved Ratings
          Threshold or (B) has credit ratings at least equal to the Required Ratings
          Threshold, provided, for the avoidance of doubt, that an Eligible Guarantee
          of
          an Eligible Guarantor with credit ratings below the Approved Ratings Threshold
          will not cause a Collateral Event (as defined in the Credit Support Annex)
          not
          to occur or continue. 

        

        “Eligible
          Replacement”
          means an
          entity (A) (i) that has credit ratings at least equal to the Approved Ratings
          Threshold, (ii) has credit ratings at least equal to the Required Ratings
          Threshold, provided, for the avoidance of doubt, that an Eligible Guarantee
          of
          an Eligible Guarantor with credit ratings below the Approved Ratings Threshold
          will not cause a Collateral Event (as defined in the Credit Support Annex)
          not
          to occur or continue, or (iii) the present and future obligations (for
          the
          avoidance of doubt, not limited to payment obligations) of which entity
          to Party
          B under this Agreement are guaranteed pursuant to an Eligible Guarantee
          provided
          by an Eligible Guarantor and (B) that has executed Regulation AB provisions
          acceptable to Depositor in its sole discretion, exercised in good
          faith.

        

        “Estimated
          Swap Termination Payment”
          means,
          with respect to an Early Termination Date, an amount determined by Party
          A in
          good faith and in a commercially reasonable manner as the maximum payment
          that
          could be owed by Party B to Party A in respect of such Early Termination
          Date
          pursuant to Section 6(e) of the ISDA Master Agreement, taking into account
          then
          current market conditions.

        

        “Firm
          Offer”
          means
          (A) with respect to an Eligible Replacement, a quotation from such Eligible
          Replacement (i) in an amount equal to the actual amount payable by or to
          Party B
          in consideration of an agreement between Party B and such Eligible Replacement
          to replace Party A as the counterparty to this Agreement by way of novation
          or,
          if such novation is not possible, an agreement between Party B and such
          Eligible
          Replacement to enter into a Replacement Transaction (assuming that all
          Transactions hereunder become Terminated Transactions), and (ii) that
          constitutes an offer by such Eligible Replacement to replace Party A as
          the
          counterparty to this Agreement or enter a Replacement Transaction that
          will
          become legally binding upon such Eligible Replacement upon acceptance by
          Party B
          and (B) with respect to an Eligible Guarantor, an offer by such Eligible
          Guarantor to provide an Eligible Guarantee that will become legally binding
          upon
          such Eligible Guarantor upon acceptance by the offeree.

        

        “Moody’s”
          means
          Moody’s Investors Service, Inc., or any successor thereto. 

        

        “Moody’s
          First Trigger Ratings Threshold” means,
          with respect to Party A, the guarantor under an Eligible Guarantee or an
          Eligible Replacement, (i) if such entity has both a long-term unsecured
          and
          unsubordinated debt rating or counterparty rating from Moody’s and a short-term
          unsecured and unsubordinated debt rating from Moody’s, a long-term unsecured and
          unsubordinated debt rating or
          counterparty rating from
          Moody’s of “A2” and a short-term unsecured and unsubordinated debt rating from
          Moody’s of “Prime-1”, or (ii) if such entity has only a long-term unsecured and
          unsubordinated debt rating or counterparty rating from Moody’s, a long-term
          unsecured and unsubordinated debt rating or counterparty rating from Moody’s of
“A1”.

        

        “Moody’s
          Second Trigger Ratings Event” means
          that no
          Relevant Entity has credit ratings from Moody’s at least equal to the Moody’s
          Second Trigger Rating Threshold. 

        

        “Moody’s
          Second Trigger Ratings Threshold” means,
          with respect to Party A, the guarantor under an Eligible Guarantee or an
          Eligible Replacement, (i) if such entity has both a long-term unsecured
          and
          unsubordinated debt rating or counterparty rating from Moody’s and a short-term
          unsecured and unsubordinated debt rating from Moody’s, a long-term unsecured and
          unsubordinated debt rating or counterparty rating from Moody’s of “A3” or a
          short-term unsecured and unsubordinated debt rating from Moody’s of “Prime-2”,
          or (ii) if such entity has only a long-term unsecured and unsubordinated
          debt
          rating or counterparty rating from Moody’s, a long-term unsecured and
          unsubordinated debt rating or counterparty rating from Moody’s of
“A3”.

        

        “Permitted
          Transfer” means
          a
          transfer by novation by Party A to a transferee (the “Transferee”)
          of all,
          but not less than all, of Party A’s rights, liabilities, duties and obligations
          under this Agreement, with
          respect to which transfer each of the following conditions is
          satisfied:
          (a) the
          Transferee is an Eligible Replacement that is a recognized dealer in interest
          rate swaps organized under the laws of the United States of America or
          a
          jurisdiction located in the United States of America (or another jurisdiction
          reasonably acceptable to Party B), (b) as of the date of such transfer
          neither
          Party B nor the Transferee would be required to withhold or deduct on account
          of
          Tax from any payments under this Agreement, (c) an Event of Default or
          Termination Event would not occur as a result of such transfer, (d) Party
          B has
          consented in writing to the transfer, such consent not to be unreasonably
          withheld, (e) the transfer would not give rise to a taxable event or any
          other
          adverse Tax consequences to Party B or its interest holders, as determined
          by
          Party B in its sole discretion, (f) pursuant to a written instrument (the
          “Transfer
          Agreement”),
          the
          Transferee acquires and assumes all rights and obligations of Party A under
          the
          Agreement and the relevant Transaction, (g) Party B shall have determined,
          acting in a commercially reasonable manner, that such Transfer Agreement
          is
          effective to transfer to the Transferee all, but not less than all, of
          Party A’s
          rights and obligations under the Agreement and all relevant Transactions;
          (h)
          Party A will be responsible for any costs or expenses incurred in connection
          with such transfer (including any replacement cost of entering into a
          replacement transaction); (i) Moody’s has been given prior written notice of
          such transfer and the Rating Agency Condition is satisfied with respect
          to
          S&P; and (j) such transfer otherwise complies with the terms of the Pooling
          and Servicing Agreement. 

         

        “Rating
          Agency Condition”
          means,
          with respect to any particular proposed act or omission to act hereunder
          and
          each Swap Rating Agency specified in connection with such proposed act
          or
          omission, that the party acting or failing to act must consult with each
          of the
          specified Swap Rating Agencies and receive from each such Swap Rating Agency
          a
          prior written confirmation that the proposed action or inaction would not
          cause
          a downgrade or withdrawal of the then-current rating of any Certificates
          or
          Notes.

        

        “Relevant
          Entity” means
          Party A and, to the extent applicable, a guarantor under an Eligible
          Guarantee.

        

        “Replacement
          Transaction”
          means,
          with respect to any Terminated Transaction or group of Terminated Transactions,
          a transaction or group of transactions that (i) would have the effect of
          preserving for Party B the economic equivalent of any payment or delivery
          (whether the underlying obligation was absolute or contingent and assuming
          the
          satisfaction of each applicable condition precedent) by the parties under
          Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated
          Transactions that would, but for the occurrence of the relevant Early
          Termination Date, have been required after that Date, and (ii) has terms
          which
          are substantially the same as this Agreement, including, without limitation,
          rating triggers, Regulation AB compliance, and credit support documentation,
          save for the exclusion of provisions relating to Transactions that are
          not
          Terminated Transaction, as determined by Party B in its sole discretion,
          acting
          in a commercially reasonable manner.

        

        “Required
          Ratings Downgrade Event”
          shall
          have the meaning assigned thereto in Part 5(d).

        

        “Required
          Ratings Threshold” means
          each of the S&P Required Ratings Threshold and the Moody’s Second Trigger
          Ratings Threshold.

        

        “S&P”
          means
          Standard & Poor's Rating Services, a division of The McGraw-Hill Companies,
          Inc., or any successor thereto. 

        

        “S&P
          Approved Ratings Threshold”
          means,
          with respect to Party A, the guarantor under an Eligible Guarantee or an
          Eligible Replacement, a short-term unsecured and unsubordinated debt rating
          from
          S&P of “A-1”, or, if such entity does not have a short-term unsecured and
          unsubordinated debt rating from S&P, a long-term unsecured and
          unsubordinated debt rating from S&P of “A+”.

        

        “S&P
          Required Ratings Threshold”
          means,
          with respect to Party A, the guarantor under an Eligible Guarantee or an
          Eligible Replacement, a long-term unsecured and unsubordinated debt rating
          from
          S&P of “BBB+”. 

        

        “Swap
          Rating Agencies”
          means,
          with respect to any date of determination, each of S&P and Moody’s, to the
          extent that each such rating agency is then providing a rating for any
          of the
          Bear Stearns Mortgage Funding Trust 2006-SL1 Mortgage-Backed Certificates,
          Series 2006-SL1 (the “Certificates”) or any notes backed by the Certificates
          (the “Notes”).

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        4. Account
          Details and Settlement Information:  

         

        

        Payments
          to Party
          A:                         
Citibank,
          N.A., New York

        ABA
          Number: 021-0000-89, for the account of

        Bear,
          Stearns Securities Corp.

        Account
          Number: 0925-3186, for further credit to

        Bear
          Stearns Financial Products Inc.

        Sub-account
          Number: 102-04654-1-3

        Attention:
          Derivatives Department

         

        Payments
          to Party
          B:                         
 LaSalle
          Bank N.A.

        ABA#
          071000505

        LaSalle
          CHGO/BNF LaSalle Trust

        Act#
          724222.2

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

        SCHEDULE
          I

        (all
          such
          dates subject to No Adjustment with respect to Fixed Rate Payer Period
          End Dates
          and adjustment in accordance with the Following Business Day Convention
          with
          respect to Floating Rate Payer Period End Dates)

        

        
          	
                  From
                    and including

                	
                  To
                    but excluding

                	
                  Notional
                    Amount (USD)

                
	
                  11/25/2006

                	
                  12/25/2006

                	
                  3,004,711.90

                
	
                  12/25/2006

                	
                  1/25/2007

                	
                  2,898,217.21

                
	
                  1/25/2007

                	
                  2/25/2007

                	
                  2,795,491.21

                
	
                  2/25/2007

                	
                  3/25/2007

                	
                  2,696,400.66

                
	
                  3/25/2007

                	
                  4/25/2007

                	
                  2,600,817.06

                
	
                  4/25/2007

                	
                  5/25/2007

                	
                  2,508,616.41

                
	
                  5/25/2007

                	
                  6/25/2007

                	
                  2,419,679.12

                
	
                  6/25/2007

                	
                  7/25/2007

                	
                  2,333,889.82

                
	
                  7/25/2007

                	
                  8/25/2007

                	
                  2,251,137.20

                
	
                  8/25/2007

                	
                  9/25/2007

                	
                  2,171,313.90

                
	
                  9/25/2007

                	
                  10/25/2007

                	
                  2,094,316.35

                
	
                  10/25/2007

                	
                  11/25/2007

                	
                  2,020,044.62

                
	
                  11/25/2007

                	
                  12/25/2007

                	
                  1,948,402.34

                
	
                  12/25/2007

                	
                  1/25/2008

                	
                  1,879,296.53

                
	
                  1/25/2008

                	
                  2/25/2008

                	
                  1,812,637.48

                
	
                  2/25/2008

                	
                  3/25/2008

                	
                  1,748,338.68

                
	
                  3/25/2008

                	
                  4/25/2008

                	
                  1,686,316.66

                
	
                  4/25/2008

                	
                  5/25/2008

                	
                  1,626,490.89

                
	
                  5/25/2008

                	
                  6/25/2008

                	
                  1,568,783.71

                
	
                  6/25/2008

                	
                  7/25/2008

                	
                  1,513,120.18

                
	
                  7/25/2008

                	
                  8/25/2008

                	
                  1,459,428.03

                
	
                  8/25/2008

                	
                  9/25/2008

                	
                  1,407,637.52

                
	
                  9/25/2008

                	
                  10/25/2008

                	
                  1,357,681.39

                
	
                  10/25/2008

                	
                  11/25/2008

                	
                  1,309,494.77

                
	
                  11/25/2008

                	
                  12/25/2008

                	
                  1,263,015.04

                
	
                  12/25/2008

                	
                  1/25/2009

                	
                  1,218,181.84

                
	
                  1/25/2009

                	
                  2/25/2009

                	
                  1,174,936.91

                
	
                  2/25/2009

                	
                  3/25/2009

                	
                  1,133,224.07

                
	
                  3/25/2009

                	
                  4/25/2009

                	
                  1,092,989.12

                
	
                  4/25/2009

                	
                  5/25/2009

                	
                  1,054,179.76

                
	
                  5/25/2009

                	
                  6/25/2009

                	
                  1,016,745.56

                
	
                  6/25/2009

                	
                  7/25/2009

                	
                  980,637.86

                
	
                  7/25/2009

                	
                  8/25/2009

                	
                  945,809.72

                
	
                  8/25/2009

                	
                  9/25/2009

                	
                  912,215.87

                
	
                  9/25/2009

                	
                  10/25/2009

                	
                  879,812.63

                
	
                  10/25/2009

                	
                  11/25/2009

                	
                  848,557.87

                
	
                  11/25/2009

                	
                  12/25/2009

                	
                  818,410.95

                
	
                  12/25/2009

                	
                  1/25/2010

                	
                  789,332.65

                
	
                  1/25/2010

                	
                  2/25/2010

                	
                  761,285.16

                
	
                  2/25/2010

                	
                  3/25/2010

                	
                  734,232.00

                
	
                  3/25/2010

                	
                  4/25/2010

                	
                  708,137.96

                
	
                  4/25/2010

                	
                  5/25/2010

                	
                  682,969.10

                
	
                  5/25/2010

                	
                  6/25/2010

                	
                  658,692.68

                
	
                  6/25/2010

                	
                  Termination
                    Date

                	
                  635,277.09

                

        

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        
          
            
 

            
              ANNEX
                

              ISDA®

              CREDIT
                SUPPORT ANNEX

              to
                the
                Schedule to the

              ISDA
                Master Agreement

              dated
                as
                of November 29, 2006 between

              Bear
                Stearns Financial Products Inc. (hereinafter referred to as “Party
                A”
                or
“Pledgor”)

              and

              LaSalle
                Bank National Association, not individually, but solely as trustee
                (the
“Supplemental Interest Trust Trustee”) on behalf of the supplemental interest
                trust with respect to the Bear Stearns Mortgage Funding Trust 2006-SL4
                Mortgage-Backed Certificates, Series 2006-SL4 (the “Supplemental Interest
                Trust”) 

              (hereinafter
                referred to as “Party
                B”
                or
“Secured
                Party”).

              

              For
                the
                avoidance of doubt, and notwithstanding anything to the contrary
                that may be
                contained in the Agreement, this Credit Support Annex shall relate
                solely to the
                Transaction documented in the Confirmation dated November 29, 2006,
                between
                Party A and Party B, Reference Number FXNSC8957 .

              

               

              Paragraph
                13. Elections and Variables.

               

              	(a)  	
                      Security
                        Interest for “Obligations”.
                        The term “Obligations”
                        as
                        used in this Annex includes the following additional
                        obligations:

                    

               

              With
                respect to Party A: not applicable.

               

              With
                respect to Party B: not applicable.

               

              	(b)  	
                      Credit
                        Support Obligations.

                    

               

              	(i)  	
                      Delivery
                        Amount, Return Amount and Credit Support
                        Amount.

                    

               

              	(A)  	
                      “Delivery
                        Amount”
                        has the meaning specified in Paragraph 3(a) as amended (I)
                        by deleting the
                        words “upon a demand made by the Secured Party on or promptly following
                        a
                        Valuation Date” and inserting in lieu thereof the words “not later than
                        the close of business on each Valuation Date” and (II) by deleting in its
                        entirety the sentence beginning “Unless otherwise specified in Paragraph
                        13” and ending “(ii) the Value as of that Valuation Date of all Posted
                        Credit Support held by the Secured Party.” and inserting in lieu thereof
                        the following:

                    

               

              The
                “Delivery
                Amount”
                applicable to the Pledgor for any Valuation Date will equal the greatest
                of

               

              
                	 	
                        (1)
                          

                      	
                        the
                          amount by which (a) the S&P Credit Support Amount for such Valuation
                          Date exceeds (b) the S&P Value as of such Valuation Date of all Posted
                          Credit Support held by the Secured Party,

                      

              

               

              
                	 	
                        (2)
                          

                      	
                        the
                          amount by which (a) the Moody’s First Trigger Credit Support Amount for
                          such Valuation Date exceeds (b) the Moody’s First Trigger Value as of such
                          Valuation Date of all Posted Credit Support held by the
                          Secured Party,
                          and

                      

              

               

              
                	 	
                        (3)
                          

                      	
                        the
                          amount by which (a) the Moody’s Second Trigger Credit Support Amount for
                          such Valuation Date exceeds (b) the Moody’s Second Trigger Value as of
                          such Valuation Date of all Posted Credit Support held by
                          the Secured
                          Party.

                      

              

               

              	(B)  	
                      “Return
                        Amount”
                        has the meaning specified in Paragraph 3(b) as amended by
                        deleting in its
                        entirety the sentence beginning “Unless otherwise specified in Paragraph
                        13” and ending “(ii) the Credit Support Amount.” and inserting in lieu
                        thereof the following:

                    

               

              The
                “Return
                Amount”
                applicable to the Secured Party for any Valuation Date will equal
                the least of

               

              
                	 	
                        (1)
                          

                      	
                        the
                          amount by which (a) the S&P Value as of such Valuation Date of all
                          Posted Credit Support held by the Secured Party exceeds
                          (b) the S&P
                          Credit Support Amount for such Valuation Date,

                      

              

               

              
                	 	
                        (2)
                          

                      	
                        the
                          amount by which (a) the Moody’s First Trigger Value as of such Valuation
                          Date of all Posted Credit Support held by the Secured Party
                          exceeds (b)
                          the Moody’s First Trigger Credit Support Amount for such Valuation
                          Date,
                          and

                      

              

               

              
                	 	
                        (3)
                          

                      	
                        the
                          amount by which (a) the Moody’s Second Trigger Value as of such Valuation
                          Date of all Posted Credit Support held by the Secured Party
                          exceeds (b)
                          the Moody’s Second Trigger Credit Support Amount for such Valuation
                          Date.

                      

              

               

              	(C)  	
                      “Credit
                        Support Amount”
                        shall not apply. For purposes of calculating any Delivery
                        Amount or Return
                        Amount for any Valuation Date, reference shall be made to
                        the S&P
                        Credit Support Amount, the Moody’s First Trigger Credit Support Amount, or
                        the Moody’s Second Trigger Credit Support Amount, in each case for
                        such
                        Valuation Date, as provided in Paragraphs 13(b)(i)(A) and
                        13(b)(i)(B),
                        above.

                    

               

              	(ii)  	
                      Eligible
                        Collateral.
                        

                    

               

              On
                any
                date, the following items will qualify as “Eligible
                Collateral”
(for
                the avoidance of doubt, all Eligible Collateral to be denominated
                in
                USD):

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

              

               

              
                	
                         

                         

                        ISDA
                          Collateral Asset Definition
                          (ICAD) Code 

                         

                      	
                        Remaining
                          Maturity in Years

                         

                      	
                        S&P
                          

                         

                        Valuation
                          

                         

                        Percentage

                         

                      	
                        Moody’s

                        First
                          Trigger Valuation
                          Percentage

                         

                      	
                        Moody’s

                        Second
                          Trigger

                        Valuation

                        Percentage

                         

                      
	
                         

                        (A)
                          US-CASH

                         

                      	
                         

                        N/A

                         

                      	
                         

                        100%

                         

                      	
                         

                        100%

                         

                      	
                         

                        100%

                         

                      
	
                         

                        (B)
                          US-TBILL

                        US-TNOTE

                        US-TBOND

                         

                      	 	 	 	 
	 	
                         

                        1
                          or less

                         

                      	
                         

                        98.9%

                         

                      	
                         

                        100%

                         

                      	
                         

                        100%

                         

                      
	 	
                         

                        More
                          than 1 but not more than 2

                         

                      	
                         

                        98.0%

                         

                      	
                         

                        100%

                         

                      	
                         

                        99%

                         

                      
	 	
                         

                        More
                          than 2 but not more than 3

                         

                      	
                         

                        97.4%

                         

                      	
                         

                        100%

                         

                      	
                         

                        98%

                         

                      
	 	
                         

                        More
                          than 3 but not more than 5

                         

                      	
                         

                        95.5%

                         

                      	
                         

                        100%

                         

                      	
                         

                        97%

                         

                      
	 	
                         

                        More
                          than 5 but not more than 7

                         

                      	
                         

                        93.7%

                         

                      	
                         

                        100%

                         

                      	
                         

                        96%

                         

                      
	 	
                         

                        More
                          than 7 but not more than 10

                         

                      	
                         

                        95.5%

                         

                      	
                         

                        100%

                         

                      	
                         

                        94%

                         

                      
	 	
                         

                        More
                          than 10 but not more than 20

                         

                      	
                         

                        91.1%

                         

                      	
                         

                        100%

                         

                      	
                         

                        90%

                         

                      
	 	
                         

                        More
                          than 20

                         

                      	
                         

                        88.6%

                         

                      	
                         

                        100%

                         

                      	
                         

                        88%

                         

                      
	
                         

                        (C)
                          US-GNMA

                        US-FNMA

                        US-FHLMC

                         

                      	 	 	 	 
	 	
                         

                        1
                          or less

                         

                      	
                         

                        98.5%

                         

                      	
                         

                        100%

                         

                      	
                         

                        99%

                         

                      
	 	
                         

                        More
                          than 1 but not more than 2

                         

                      	
                         

                        97.7%

                         

                      	
                         

                        100%

                         

                      	
                         

                        99%

                         

                      
	 	
                         

                        More
                          than 2 but not more than 3

                         

                      	
                         

                        97.3%

                         

                      	
                         

                        100%

                         

                      	
                         

                        98%

                         

                      
	 	
                         

                        More
                          than 3 but not more than 5

                         

                      	
                         

                        94.5%

                         

                      	
                         

                        100%

                         

                      	
                         

                        96%

                         

                      
	 	
                         

                        More
                          than 5 but not more than 7

                         

                      	
                         

                        93.1%

                         

                      	
                         

                        100%

                         

                      	
                         

                        93%

                         

                      
	 	
                         

                        More
                          than 7 but not more than 10

                         

                      	
                         

                        90.7%

                         

                      	
                         

                        100%

                         

                      	
                         

                        93%

                         

                      
	 	
                         

                        More
                          than 10 but not more than 20

                         

                      	
                         

                        87.7%

                         

                      	
                         

                        100%

                         

                      	
                         

                        89%

                         

                      
	 	
                         

                        More
                          than 20

                         

                      	
                         

                        84.4%

                         

                      	
                         

                        100%

                         

                      	
                         

                        87%

                         

                      

              

              

               

              The
                ISDA
                Collateral Asset Definition (ICAD) Codes used in this Paragraph 13(b)(ii)
                are
                taken from the Collateral Asset Definitions (First Edition - June
                2003) as
                published and copyrighted in 2003 by the International Swaps and
                Derivatives
                Association, Inc.

               

              	(iii)  	
                      Other
                        Eligible Support. 

                    

               

              The
                following items will qualify as “Other
                Eligible Support”
                for the
                party specified: 

               

              Not
                applicable.

               

              	(iv)  	
                      Threshold.

                    

               

              	(A)  	
                      “Independent
                        Amount”
                        means zero with respect to Party A and Party
                        B.

                    

               

              	(B)  	
                      “Threshold”
                        means, with respect to Party A and any Valuation Date, zero
                        if a
                        Collateral Event has occurred and has been continuing (x)
                        for at least 30
                        days or (y) since this Annex was executed; otherwise,
                        infinity.

                    

               

                “Threshold”
                means,
                with respect to Party B and any Valuation Date, infinity.

               

              	(C)  	
                      “Minimum
                        Transfer Amount” means
                        USD 100,000 with respect to Party A and Party B; provided,
                        however, that
                        if the aggregate Certificate Principal Balance of the Certificates
                        and the
                        aggregate principal balance of the Notes rated by S&P is at the time
                        of any transfer less than USD 50,000,000, the “Minimum
                        Transfer Amount”
                        shall be USD 50,000.

                    

               

              	(D)  	
                      Rounding:
                        The Delivery Amount will be rounded up to the nearest integral
                        multiple of
                        USD 10,000. The Return Amount will be rounded down to the
                        nearest integral
                        multiple of USD 1,000.

                    

               

              	(c)  	
                      Valuation
                        and Timing.

                    

               

              	(i)  	
                      “Valuation
                        Agent”
                        means Party A; provided, however, that if an Event of Default
                        shall have
                        occurred with respect to which Party A is the Defaulting
                        Party, Party B
                        shall have the right to designate as Valuation Agent an independent
                        party,
                        reasonably acceptable to Party A, the cost for which shall
                        be borne by
                        Party A. All calculations by the Valuation Agent must be
                        made in
                        accordance with standard market practice, including, in the
                        event of a
                        dispute as to the Value of any Eligible Credit Support or
                        Posted Credit
                        Support, by making reference to quotations received by the
                        Valuation Agent
                        from one or more Pricing Sources.

                    

               

              	(ii)  	
                      “Valuation
                        Date” means
                        each Local Business Day on which any of the S&P Credit Support Amount,
                        the Moody’s First Trigger Credit Support Amount or the Moody’s Second
                        Trigger Credit Support Amount is greater than
                        zero.

                    

               

              	(iii)  	
                      “Valuation
                        Time” means
                        the close of business in the city of the Valuation Agent
                        on the Local
                        Business Day immediately preceding the Valuation Date or
                        date of
                        calculation, as applicable; provided
                        that the calculations of Value and Exposure will be made
                        as of
                        approximately the same time on the same date.

                    

               

              	(iv)  	
                      “Notification
                        Time” means
                        11:00 a.m., New York time, on a Local Business Day.
                        

                    

               

              	(v)  	
                      External
                        Verification.
                        Notwithstanding anything to the contrary in the definitions
                        of Valuation
                        Agent or Valuation Date, at any time at which Party A (or,
                        to the extent
                        applicable, its Credit Support Provider) does not have a
                        long-term
                        unsubordinated and unsecured debt rating of at least “BBB+” from S&P,
                        the Valuation Agent shall (A) calculate the Secured Party’s Exposure and
                        the S&P Value of Posted Credit Suppport on each Valuation Date
                        based
                        on internal marks and (B) verify such calculations with external
                        marks
                        monthly by obtaining on the last Local Business Day of each
                        calendar month
                        two external marks for each Transaction to which this Annex
                        relates and
                        for all Posted Credit Suport; such verification of the Secured
                        Party’s
                        Exposure shall be based on the higher of the two external
                        marks. Each
                        external mark in respect of a Transaction shall be obtained
                        from an
                        independent Reference Market-maker that would be eligible
                        and willing to
                        enter into such Transaction in the absence of the current
                        derivative
                        provider, provided that an external mark may not be obtained
                        from the same
                        Reference Market-maker more than four times in any 12-month
                        period. The
                        Valuation Agent shall obtain these external marks directly
                        or through an
                        independent third party, in either case at no cost to Party
                        B. The
                        Valuation Agent shall calculate on each Valuation Date (for
                        purposes of
                        this paragraph, the last Local Business Day in each calendar
                        month
                        referred to above shall be considered a Valuation Date) the
                        Secured
                        Party’s Exposure based on the greater of the Valuation Agent’s internal
                        marks and the external marks received. If the S&P Value on any such
                        Valuation Date of all Posted Credit Support then held by
                        the Secured Party
                        is less than the S&P Credit Support Amount on such Valuation Date (in
                        each case as determined pursuant to this paragraph), Party
                        A shall, within
                        three Local Business Days of such Valuation Date, Transfer
                        to the Secured
                        Party Eligible Credit Support having an S&P Value as of the date of
                        Transfer at least equal to such deficiency.

                    

               

              	(vi)  	
                      Notice
                        to S&P.
                        At
                        any time at which Party A (or, to the extent applicable,
                        its Credit
                        Support Provider) does not have a long-term unsubordinated
                        and unsecured
                        debt rating of at least “BBB+” from S&P, the Valuation Agent shall
                        provide to S&P not later than the Notification Time on the Local
                        Business Day following each Valuation Date its calculations
                        of the Secured
                        Party’s Exposure and the S&P Value of any Eligible Credit Support or
                        Posted Credit Support for that Valuation Date. The Valuation
                        Agent shall
                        also provide to S&P any external marks received pursuant to the
                        preceding paragraph.

                    

               

              	(d)  	
                      Conditions
                        Precedent and Secured Party’s Rights and
                        Remedies.
                        The following Termination Events will be a “Specified
                        Condition”
                        for the party specified (that party being the Affected Party
                        if the
                        Termination Event occurs with respect to that party): With
                        respect to
                        Party A: any Additional Termination Event with respect to
                        which Party A is
                        the sole Affected Party. With respect to Party B:
                        None.

                    

               

              	(e)  	
                      Substitution.

                    

               

              	(i)  	
                      “Substitution
                        Date”
                        has the meaning specified in Paragraph
                        4(d)(ii).

                    

               

              	(ii)  	
                      Consent.
                        If
                        specified here as applicable, then the Pledgor must obtain
                        the Secured
                        Party’s consent for any substitution pursuant to Paragraph 4(d):
                        Inapplicable.

                    

               

              	(f)  	
                      Dispute
                        Resolution.

                    

               

              	(i)  	
                      “Resolution
                        Time”
                        means 1:00 p.m. New York time on the Local Business Day following
                        the date
                        on which the notice of the dispute is given under Paragraph
                        5.

                    

               

              	(ii)  	
                      Value.
                        Notwithstanding anything to the contrary in Paragraph 12,
                        for the purpose
                        of Paragraphs 5(i)(C) and 5(ii), the S&P Value, Moody’s First Trigger
                        Value, and Moody’s Second Trigger Value, on any date, of Eligible
                        Collateral other than Cash will be calculated as follows:
                        

                    

               

              For
                Eligible Collateral in the form of securities listed in Paragraph
                13(b)(ii): the
                sum of (A) the product of (1)(x) the bid-side quotation at the Valuation
                Time
                for such securities on the principal national securities exchange
                on which such
                securities are listed, or (y) if such securities are not listed on
                a national
                securities exchange, the arithmetic mean of the bid-side quotations
                for such
                securities quoted at the Valuation Time by any three principal market
                makers for
                such securities selected by the Valuation Agent, provided that if
                only two
                bid-side quotations are obtained, then the arithmetic mean of such
                two bid-side
                quotations will be used, and if only one bid-side quotation is obtained,
                such
                quotation shall be used, or (z) if no such bid price is listed or
                quoted for
                such date, the bid price listed or quoted (as the case may be) at
                the Valuation
                Time for the day next preceding such date on which such prices were
                available
                and (2) the applicable Valuation Percentage for such Eligible Collateral,
                and
                (B) the accrued interest on such securities (except to the extent
                Transferred to
                the Pledgor pursuant to Paragraph 6(d)(ii) or included in the applicable
                price
                referred to in the immediately preceding clause (A)) as of such
                date.

               

              	(iii)  	
                      Alternative.
                        The provisions of Paragraph 5 will apply.

                    

               

              	(g)  	
                      Holding
                        and Using Posted
                        Collateral.

                    

               

              	(i)  	
                      Eligibility
                        to Hold Posted Collateral; Custodians. Party
                        B (or any Custodian) will be entitled to hold Posted Collateral
                        pursuant
                        to Paragraph 6(b). 

                    

               

              Party
                B
                may appoint as Custodian (A) the entity then serving as Trustee or
                (B) any
                entity other than the entity then serving as Trustee if such other
                entity (or,
                to the extent applicable, its parent company or credit support provider)
                shall
                then have a short-term unsecured and unsubordinated debt rating from
                S&P of
                at least “A-1.”

               

              Initially,
                the Custodian
                for
                Party B is: Not applicable.

               

              	(ii)  	
                      Use
                        of Posted Collateral.
                        The provisions of Paragraph 6(c) will not apply to Party
                        B, and Party B
                        shall not take any action specified in such Paragraph 6(c).
                        

                    

               

              	(h)  	
                      Distributions
                        and Interest Amount.

                    

               

              	(i)  	
                      Interest
                        Rate.
                        The “Interest
                        Rate”
                        will be the actual interest rate earned on Posted Collateral
                        in the form
                        of Cash that is held by Party B or its
                        Custodian.

                    

               

              	(ii)  	
                      Transfer
                        of Interest Amount.
                        The Transfer of the Interest Amount will be made on the second
                        Local
                        Business Day following the end of each calendar month and
                        on any other
                        Local Business Day on which Posted Collateral in the form
                        of Cash is
                        Transferred to the Pledgor pursuant to Paragraph 3(b); provided,
                        however,
                        that the obligation of Party B to Transfer any Interest Amount
                        to Party A
                        shall be limited to the extent that Party B has earned and
                        received such
                        funds and such funds are available to Party B.

                    

               

              	(iii)  	
                      Alternative
                        to Interest Amount.
                        The provisions of Paragraph 6(d)(ii) will
                        apply.

                    

               

              	(i)  	
                      Additional
                        Representation(s).
                        There are no additional representations by either
                        party.

                    

               

              	(j)  	
                      Other
                        Eligible Support and Other Posted Support.

                    

               

              	(i)  	
                      “Value”
                        with respect to Other Eligible Support and Other Posted Support
                        means: not
                        applicable. 

                    

               

              	(ii)  	
                      “Transfer”
                        with respect to Other Eligible Support and Other Posted Support
                        means: not
                        applicable.

                    

               

              	(k)  	
                      Demands
                        and Notices.All
                        demands, specifications and notices under this Annex will
                        be made pursuant
                        to the Notices Section of this Agreement, except that any
                        demand,
                        specification or notice shall be given to or made at the
                        following
                        addresses, or at such other address as the relevant party
                        may from time to
                        time designate by giving notice (in accordance with the terms
                        of this
                        paragraph) to the other party:

                    

               

              If
                to
                Party A, at the address specified pursuant to the Notices Section
                of this
                Agreement.

               

              If
                to
                Party B, at the address specified pursuant to the Notices Section
                of this
                Agreement.

               

              If
                to
                Party B’s Custodian: at the address designated in writing from time to
                time.

               

              	(l)  	
                      Address
                        for Transfers.
                        Each Transfer hereunder shall be made to the address specified
                        below or to
                        an address specified in writing from time to time by the
                        party to which
                        such Transfer will be made.

                    

               

              [Party
                A
                account details]

               

              Party
                B
                account details

              

                LaSalle
                  Bank National Association

                135
                  South
                  LaSalle Street, Suite 1511

                Chicago,
                  IL 60603

                Attn:
                  Global Securities and Trust Services - Bear Stearns Mortgage Funding
                  Trust
                  2006-SL4

                

                	(a)  	
                        Other
                          Provisions.

                      

                 

                	(i)  	
                        Collateral
                          Account.
                          Party B shall open and maintain a segregated account, which
                          shall be an
                          Eligible Account, and hold, record and identify all Posted
                          Collateral in
                          such segregated account.

                      

                 

                	(ii)  	
                        Agreement
                          as to Single Secured Party and Single Pledgor.
                          Party A and Party B hereby agree that, notwithstanding
                          anything to the
                          contrary in this Annex, (a) the term “Secured Party” as used in this Annex
                          means only Party B, (b) the term “Pledgor” as used in this Annex means
                          only Party A, (c) only Party A makes the pledge and grant
                          in Paragraph 2,
                          the acknowledgement in the final sentence of Paragraph
                          8(a) and the
                          representations in Paragraph 9.

                      

                 

                	(iii)  	
                        Calculation
                          of Value.
                          Paragraph 4(c) is hereby amended by deleting the word “Value” and
                          inserting in lieu thereof “S&P Value, Moody’s First Trigger Value,
                          Moody’s Second Trigger Value”. Paragraph 4(d)(ii) is hereby amended by (A)
                          deleting the words “a Value” and inserting in lieu thereof “an S&P
                          Value, Moody’s First Trigger Value, and Moody’s Second Trigger Value” and
                          (B) deleting the words “the Value” and inserting in lieu thereof “S&P
                          Value, Moody’s First Trigger Value, and Moody’s Second Trigger Value”.
                          Paragraph 5 (flush language) is hereby amended by deleting
                          the word
                          “Value” and inserting in lieu thereof “S&P Value, Moody’s First
                          Trigger Value, or Moody’s Second Trigger Value”. Paragraph 5(i) (flush
                          language) is hereby amended by deleting the word “Value” and inserting in
                          lieu thereof “S&P Value, Moody’s First Trigger Value, and Moody’s
                          Second Trigger Value”. Paragraph 5(i)(C) is hereby amended by deleting the
                          word “the Value, if” and inserting in lieu thereof “any one or more of the
                          S&P Value, Moody’s First Trigger Value, or Moody’s Second Trigger
                          Value, as may be”. Paragraph 5(ii) is hereby amended by (1) deleting the
                          first instance of the words “the Value” and inserting in lieu thereof “any
                          one or more of the S&P Value, Moody’s First Trigger Value, or Moody’s
                          Second Trigger Value” and (2) deleting the second instance of the words
                          “the Value” and inserting in lieu thereof “such disputed S&P Value,
                          Moody’s First Trigger Value, or Moody’s Second Trigger Value”. Each of
                          Paragraph 8(b)(iv)(B) and Paragraph 11(a) is hereby amended
                          by deleting
                          the word “Value” and inserting in lieu thereof “least of the S&P
                          Value, Moody’s First Trigger Value, and Moody’s Second Trigger Value”.
                          

                      

                 

                	(iv)  	
                        Form
                          of Annex. Party
                          A and Party B hereby agree that the text of Paragraphs
                          1 through 12,
                          inclusive, of this Annex is intended to be the printed
                          form of ISDA Credit
                          Support Annex (Bilateral Form - ISDA Agreements Subject
                          to New York Law
                          Only version) as
                          published and copyrighted in 1994 by the International
                          Swaps and
                          Derivatives Association, Inc.

                      

                 

                	(v)  	
                        Events
                          of Default.
                          Paragraph 7 will not apply to cause any Event of Default
                          to exist with
                          respect to Party B except that Paragraph 7(i) will apply
                          to Party B solely
                          in respect of Party B’s obligations under Paragraph 3(b) of the Credit
                          Support Annex. Notwithstanding anything to the contrary
                          in Paragraph 7,
                          any failure by Party A to comply with or perform any obligation
                          to be
                          complied with or performed by Party A under the Credit
                          Support Annex shall
                          only be an Event of Default if (A) a Required Ratings Downgrade
                          Event has
                          occurred and been continuing for 30 or more Local Business
                          Days and (B)
                          such failure is not remedied on or before the third Local
                          Business Day
                          after notice of such failure is given to Party
                          A.

                      

                 

                	(vi)  	
                        Expenses.
                          Notwithstanding anything to the contrary in Paragraph 10,
                          the Pledgor will
                          be responsible for, and will reimburse the Secured Party
                          for, all transfer
                          and other taxes and other costs involved in any Transfer
                          of Eligible
                          Collateral.

                      

                 

                	(vii)  	
                        Withholding.
                          Paragraph 6(d)(ii) is hereby amended by inserting immediately
                          after “the
                          Interest Amount” in the fourth line thereof the words “less any applicable
                          withholding taxes.”

                      

                 

                	(viii)  	
                        Notice
                          of Failure to Post Collateral. Upon
                          any failure by Party A to post collateral as required under
                          this
                          Agreement, Party B shall, no later than the next Local
                          Business Day after
                          the date such collateral was required to be posted, give
                          a written notice
                          of such failure to Party A and to the Depositor. For the
                          avoidance of
                          doubt, notwithstanding anything in this Agreement to the
                          contrary, the
                          failure of Party B to comply with the requirements of this
                          paragraph shall
                          not constitute an Event of Default or Termination Event.
                          

                      

                 

                (ix) Additional
                  Definitions.
                  As used
                  in this Annex:

                 

                “Collateral
                  Event” means
                  that no Relevant Entity has credit ratings at least equal to the
                  Approved
                  Ratings Threshold.

                 

                “DV01”
                  means,
                  with respect to a Transaction and any date of determination, the
                  estimated
                  change in the Secured Party’s Transaction Exposure with respect to such
                  Transaction that would result from a one basis point change in
                  the relevant swap
                  curve on such date, as determined by the Valuation Agent in good
                  faith and in a
                  commercially reasonable manner. The Valuation Agent shall, upon
                  request of Party
                  B, provide to Party B a statement showing in reasonable detail
                  such
                  calculation.

                 

                “Exposure”
                  has the
                  meaning specified in Paragraph 12, except that after the word “Agreement” the
                  words “(assuming, for this purpose only, that Part 1(f) of the Schedule
                  is
                  deleted)” shall be inserted. 

                 

                “Local
                  Business Day”
means:
                  any day on which (A) commercial banks are open for business (including
                  dealings
                  in foreign exchange and foreign currency deposits) in New York
                  and the location
                  of Party A, Party B and any Custodian, and (B) in relation to a
                  Transfer of
                  Eligible Collateral, any day on which the clearance system agreed
                  between the
                  parties for the delivery of Eligible Collateral is open for acceptance
                  and
                  execution of settlement instructions (or in the case of a Transfer
                  of Cash or
                  other Eligible Collateral for which delivery is contemplated by
                  other means a
                  day on which commercial banks are open for business (including
                  dealings in
                  foreign exchange and foreign deposits) in New York and the location
                  of Party A,
                  Party B and any Custodian. 

                 

                “Moody’s
                  First Trigger Event” means
                  that no Relevant Entity has credit ratings from Moody’s at least equal to the
                  Moody’s First Trigger Ratings Threshold.

                 

                “Moody’s
                  First Trigger Credit Support Amount” means,
                  for any Valuation Date, the excess, if any, of

                 

                
                  	 	
                          (I)

                        	
                          (A)

                        	
                          for
                            any Valuation Date on which (I) a Moody’s First Trigger Event has occurred
                            and has been continuing (x) for at least 30 Local Business
                            Days or (y)
                            since this Annex was executed and (II) it is not the
                            case that a Moody’s
                            Second Trigger Event has occurred and been continuing
                            for at least 30
                            Local Business Days, the sum, for each Transaction to
                            which this Annex
                            relates, of an amount equal to the
                            following:

                        

                

                 

                the
                  greater of (a) zero and (b) the sum of (i) the Secured Party’s Transaction
                  Exposure for such Transaction and such Valuation Date and (ii)
                  the lesser of (x)
                  the product of the Moody’s First Trigger DV01 Multiplier and DV01 for such
                  Transaction and such Valuation Date and (y) the product of Moody’s First Trigger
                  Notional Amount Multiplier and the Notional Amount for such Transaction
                  for the
                  Calculation Period which includes such Valuation Date; or 

                 

                
                  	 	
                          (B)

                        	
                          for
                            any other Valuation Date, zero,
                            over

                        

                

                 

                (II) the
                  Threshold for Party A such Valuation Date.

                 

                “Moody’s
                  First Trigger DV01 Multiplier”
                  means
                  15.

                 

                “Moody’s
                  First Trigger Value”
                  means,
                  on any date and with respect to any Eligible Collateral other than
                  Cash, the bid
                  price obtained by the Valuation Agent multiplied by the Moody’s First Trigger
                  Valuation Percentage for such Eligible Collateral set forth in
                  Paragraph
                  13(b)(ii).

                 

                “Moody’s
                  First Trigger Notional Amount Multiplier”
                  means
                  2%.

                 

                “Moody’s
                  Second Trigger Event” means
                  that no Relevant Entity has credit ratings from Moody’s at least equal to the
                  Moody’s Second Trigger Ratings Threshold.

                 

                “Moody’s
                  Second Trigger Credit Support Amount”
                  means,
                  for any Valuation Date, the excess, if any, of

                 

                
                  	 	
                          (I)

                        	
                          (A)

                        	
                          for
                            any Valuation Date on which it is the case that a Moody’s Second Trigger
                            Event has occurred and been continuing for at least 30
                            Local Business
                            Days, the sum, for each Transaction to which this Annex
                            relates, of an
                            amount equal to the following:

                        

                

                 

                	(1)  	
                        if
                          such Transaction is not a Transaction-Specific Hedge,
                          

                      

                 

                the
                  greatest of (a) zero, (b) the amount of the next payment due to
                  be paid by Party
                  A under such Transaction, and (c) the sum of (x) the Secured Party’s Transaction
                  Exposure for such Transaction and such Valuation Date and (y) the
                  lesser of (i)
                  the product of the Moody’s Second Trigger DV01 Multiplier and DV01 for such
                  Transaction and such Valuation Date and (ii) the product of the
                  Moody’s Second
                  Trigger Notional Amount Multiplier and the Notional Amount for
                  such Transaction
                  for the Calculation Period which includes such Valuation Date;
                  or

                 

                	(2)  	
                        if
                          such Transaction is a Transaction-Specific Hedge,
                          

                      

                 

                the
                  greatest of (a) zero, (b) the amount of the next payment due to
                  be paid by Party
                  A under such Transaction, and (c) the sum of (x) the Secured Party’s Transaction
                  Exposure for such Transaction and such Valuation Date and (y) the
                  lesser of (i)
                  the product of the Moody’s Second Trigger Transaction-Specific Hedge DV01
                  Multiplier and DV01 for such Transaction and such Valuation Date
                  and (ii) the
                  product of the Moody’s Second Trigger Transaction-Specific Hedge Notional Amount
                  Multiplier and the Notional Amount for such Transaction for the
                  Calculation
                  Period which includes such Valuation Date; or 

                 

                
                  	 	
                          (B)

                        	
                          for
                            any other Valuation Date, zero,
                            over

                        

                

                 

                (II) the
                  Threshold for Party A for such Valuation Date.

                 

                “Moody’s
                  Second Trigger DV01 Multiplier”
                  means
                  50.

                 

                “Moody’s
                  Second Trigger Transaction-Specific Hedge DV01
                  Multiplier”
                  means
                  65.

                 

                “Moody’s
                  Second Trigger Transaction-Specific Hedge Notional Amount
                  Multiplier”
                  means
                  10%.

                 

                “Moody’s
                  Second Trigger Value”
                  means,
                  on any date and with respect to any Eligible Collateral other than
                  Cash, the bid
                  price obtained by the Valuation Agent multiplied by the Moody’s Second Trigger
                  Valuation Percentage for such Eligible Collateral set forth in
                  Paragraph
                  13(b)(ii).

                 

                “Moody’s
                  Second Trigger Notional Amount Multiplier”
                  means
                  8%.

                 

                “Pricing
                  Sources”
                  means
                  the sources of financial information commonly known as Bloomberg,
                  Bridge
                  Information Services, Data Resources Inc., Interactive Data Services,
                  International Securities Market Association, Merrill Lynch Securities
                  Pricing
                  Service, Muller Data Corporation, Reuters, Wood Gundy, Trepp Pricing,
                  JJ Kenny,
                  S&P and Telerate.

                 

                “S&P
                  Credit Support Amount”
                  means,
                  for any Valuation Date, the excess, if any, of

                 

                
                  	 	
                          (I)

                        	
                          (A)
                            

                        	
                          for
                            any Valuation Date on which an S&P Rating Threshold Event has occurred
                            and been continuing for at least 30 days, an amount equal
                            to the sum, for
                            each Transaction to which this Annex relates, of the
                            sum of (1) 100.0% of
                            the Secured Party’s Transaction Exposure for such Valuation Date and (2)
                            the product of the Volatility Buffer for such Transaction
                            and the Notional
                            Amount of such Transaction for the Calculation Period
                            of such Transaction
                            which includes such Valuation Date, or

                        

                

                 

                
                  	 	
                          (B)

                        	
                          for
                            any other Valuation Date, zero,
                            over

                        

                

                 

                (II) the
                  Threshold for Party A for such Valuation Date.

                 

                “S&P
                  Rating Threshold Event”
                  means,
                  on any date, no Relevant Entity has credit ratings from S&P which exceed the
                  S&P Approved Ratings Threshold.

                 

                “S&P
                  Value”
                  means,
                  on any date and with respect to any Eligible Collateral other than
                  Cash, the
                  product of (A) the bid price obtained by the Valuation Agent for
                  such Eligible
                  Collateral and (B) the S&P Valuation Percentage for such Eligible Collateral
                  set forth in paragraph 13(b)(ii).

                 

                “Swap
                  Provider Trigger Event”
                  means:
                  (A) an Event of Default with respect to which Party A is a Defaulting
                  Party, (B)
                  a Termination Event with respect to which Party A is the sole Affected
                  Party or
                  (C) an Additional Termination Event with respect to which Party
                  A is the sole
                  Affected Party.

                 

                “Transaction
                  Exposure”
                  means,
                  for any Transaction, Exposure determined as if such Transaction
                  were the only
                  Transaction between the Secured Party and the Pledgor.

                 

                “Transaction-Specific
                  Hedge” means
                  any
                  Transaction that is an interest rate cap, interest rate floor or
                  interest rate
                  swaption, or an interest rate swap if (x) the notional amount of
                  the interest
                  rate swap is “balance guaranteed” or (y) the notional amount of the interest
                  rate swap for any Calculation Period otherwise is not a specific
                  dollar amount
                  that is fixed at the inception of the Transaction.

                 

                “Valuation
                  Percentage”
                  shall
                  mean, for purposes of determining the S&P Value, Moody’s First Trigger
                  Value, or Moody’s Second Trigger Value with respect to any Eligible Collateral
                  or Posted Collateral, the applicable S&P Valuation Percentage, Moody’s First
                  Trigger Valuation Percentage, or Moody’s Second Trigger Valuation Percentage for
                  such Eligible Collateral or Posted Collateral, respectively, in
                  each case as set
                  forth in Paragraph 13(b)(ii).

                

                  “Value” shall
                    mean, in respect of any date, the related S&P Value, the related Moody’s
                    First Trigger Value, and the related Moody’s Second Trigger Value. 

                  

                    “Volatility
                      Buffer”
                      means,
                      for any Transaction, the related percentage set forth in the
                      following table.

                     

                    
                      	
                               

                              The
                                higher of the S&P short-term credit rating of (i) Party A and (ii)
                                the
                                Credit Support Provider of Party A, if applicable

                            	
                               

                              Remaining
                                Weighted Average Maturity 

                              up
                                to 3 years

                               

                            	
                               

                              Remaining
                                Weighted Average Maturity

                              up
                                to 5 years

                               

                            	
                               

                              Remaining
                                Weighted Average Maturity

                              up
                                to 10 years

                               

                            	
                               

                              Remaining
                                Weighted Average Maturity

                              up
                                to 30 years

                               

                            
	
                              At
                                least “A-2”

                            	
                              2.75%

                            	
                              3.25%

                            	
                              4.00%

                            	
                              4.75%

                            
	
                              “A-3”

                            	
                              3.25%

                            	
                              4.00%

                            	
                              5.00%

                            	
                              6.25%

                            
	
                              “BB+”
                                or
                                lower

                            	
                              3.50%

                            	
                              4.50%

                            	
                              6.75%

                            	
                              7.50%

                            

                    

                    

                     

                    

                     

                    

                     

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                      of this page intentionally left blank]

                     

                    
                      
                        
                        

                      

                      
                        
                        

                        
                          

                        

                      

                      
                        
                        

                      

                    

                    IN
                      WITNESS WHEREOF, the parties have executed this Annex by their
                      duly authorized
                      representatives as of the date of the Agreement.

                     

                    
                      	
                              Bear
                                Stearns Financial Products Inc.

                               

                            	
                              LaSalle
                                Bank National Association, not individually, but
                                solely as Supplemental
                                Interest Trust Trustee on behalf of the Supplemental
                                Interest Trust with
                                respect to the Bear Stearns Mortgage Funding Trust
                                2006-SL4
                                Mortgage-Backed Certificates, Series 2006-SL4

                               

                            
	
                              By:
                                __________________________________

                              Name
                                

                              Title:
                                

                              Date:
                                

                            	
                              By:_____________________________________

                              Name:
                                

                                  Title:
                                

                                  Date:

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