Document:

EX-4.1

 

Ex-4.1

EXECUTION VERSION

 

$1,600,000,000 LOAN AGREEMENT

Dated as of March 23, 2007

Among

US AIRWAYS GROUP, INC.,

as Borrower,

ITS SUBSIDIARIES FROM

TIME TO TIME PARTY HERETO,

THE SEVERAL LENDERS FROM

TIME TO TIME PARTY HERETO,

and

CITICORP NORTH AMERICA, INC.,

as Administrative Agent and Collateral Agent

* * *

CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arranger and Bookrunner

MORGAN STANLEY SENIOR FUNDING, INC.,

as Joint Lead Arranger and Bookrunner and Syndication Agent

* * *

GENERAL ELECTRIC CAPITAL CORPORATION

as Documentation Agent

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS	 	 	1	 
	 
	 	Section 1.1	 	Defined Terms	 	 	1	 
	 
	 	Section 1.2	 	Computation of Time Periods	 	 	37	 
	 
	 	Section 1.3	 	Accounting Terms and Principles	 	 	37	 
	 
	 	Section 1.4	 	Certain Terms	 	 	37	 
	ARTICLE II THE LOAN	 	 	38	 
	 
	 	Section 2.1	 	Commitment to Lend	 	 	38	 
	 
	 	Section 2.2	 	Repayment of the Loans	 	 	38	 
	 
	 	Section 2.3	 	Evidence of Debt	 	 	38	 
	 
	 	Section 2.4	 	Optional Prepayments	 	 	39	 
	 
	 	Section 2.5	 	Mandatory Prepayments	 	 	40	 
	 
	 	Section 2.6	 	Interest	 	 	41	 
	 
	 	Section 2.7	 	Fees	 	 	42	 
	 
	 	Section 2.8	 	Payments and Computations	 	 	42	 
	 
	 	Section 2.9	 	Certain Provisions Governing the Loan	 	 	44	 
	 
	 	Section 2.10	 	Capital Adequacy	 	 	45	 
	 
	 	Section 2.11	 	Taxes	 	 	45	 
	 
	 	Section 2.12	 	Substitution of Lenders	 	 	47	 
	ARTICLE III CONDITIONS PRECEDENT	 	 	48	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES	 	 	50	 
	 
	 	Section 4.1	 	Organization, Qualification, Subsidiaries, etc.	 	 	50	 
	 
	 	Section 4.2	 	Authorization of Loan Documents, etc.	 	 	51	 
	 
	 	Section 4.3	 	Financial Condition	 	 	52	 
	 
	 	Section 4.4	 	No Material Adverse Change; No Defaults	 	 	52	 
	 
	 	Section 4.5	 	Title to Properties; Liens	 	 	52	 
	 
	 	Section 4.6	 	Litigation; Adverse Facts	 	 	53	 
	 
	 	Section 4.7	 	Payment of Taxes	 	 	53	 
	 
	 	Section 4.8	 	Performance of Agreements; Materially Adverse Agreements	 	 	53	 
	 
	 	Section 4.9	 	Governmental Regulation	 	 	54	 
	 
	 	Section 4.10	 	Securities Activities	 	 	54	 
	 
	 	Section 4.11	 	Employee Benefit Plans	 	 	54	 

i 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	Section 4.12	 	Environmental Protection	 	 	54	 
	 
	 	Section 4.13	 	Disclosure	 	 	55	 
	 
	 	Section 4.14	 	Compliance with Laws	 	 	55	 
	 
	 	Section 4.15	 	Indebtedness	 	 	56	 
	 
	 	Section 4.16	 	Insurance	 	 	56	 
	 
	 	Section 4.17	 	Perfected Security Interests	 	 	56	 
	 
	 	Section 4.18	 	Absence of Labor Disputes	 	 	56	 
	 
	 	Section 4.19	 	Compliance with certain Gates	 	 	56	 
	 
	 	Section 4.20	 	Slot Utilization	 	 	56	 
	 
	 	Section 4.21	 	Deposit Accounts and Securities Accounts	 	 	56	 
	 
	 	Section 4.22	 	Use of Proceeds	 	 	56	 
	ARTICLE V AFFIRMATIVE COVENANTS	 	 	56	 
	 
	 	Section 5.1	 	Accounting Controls; Financial Statements and Other Reports	 	 	57	 
	 
	 	Section 5.2	 	Corporate Existence	 	 	61	 
	 
	 	Section 5.3	 	Payment of Taxes and Claims	 	 	62	 
	 
	 	Section 5.4	 	Maintenance of Properties; Insurance	 	 	62	 
	 
	 	Section 5.5	 	Inspection	 	 	62	 
	 
	 	Section 5.6	 	Compliance with Laws, Etc.	 	 	63	 
	 
	 	Section 5.7	 	Remedial Action Regarding Hazardous Materials	 	 	63	 
	 
	 	Section 5.8	 	Additional Obligors; Collateral	 	 	64	 
	 
	 	Section 5.9	 	Employee Benefit Plans	 	 	65	 
	 
	 	Section 5.10	 	FAA Matters; Citizenship	 	 	65	 
	 
	 	Section 5.11	 	[Reserved]	 	 	65	 
	 
	 	Section 5.12	 	[Reserved]	 	 	65	 
	 
	 	Section 5.13	 	Slot Utilization	 	 	65	 
	 
	 	Section 5.14	 	[Reserved]	 	 	66	 
	 
	 	Section 5.15	 	Further Assurances	 	 	66	 
	 
	 	Section 5.16	 	Credit Rating	 	 	66	 
	 
	 	Section 5.17	 	Collateral Reports and Appraisals	 	 	66	 
	 
	 	Section 5.18	 	Software	 	 	67	 
	 
	 	Section 5.19	 	Cape Town Convention	 	 	67	 
	 
	 	Section 5.20	 	Post Closing Matters	 	 	68	 
	ARTICLE VI NEGATIVE COVENANTS	 	 	68	 
	 
	 	Section 6.1	 	Liens and Related Matters	 	 	68	 

ii 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	Section 6.2	 	Investments	 	 	71	 
	 
	 	Section 6.3	 	Restricted Payments	 	 	71	 
	 
	 	Section 6.4	 	Financial Covenants	 	 	72	 
	 
	 	Section 6.5	 	Restriction on Acquisitions; Change in Fiscal Year	 	 	74	 
	 
	 	Section 6.6	 	Sales-Leasebacks	 	 	74	 
	 
	 	Section 6.7	 	Transactions with Affiliates	 	 	75	 
	 
	 	Section 6.8	 	Conduct of Business	 	 	76	 
	 
	 	Section 6.9	 	Merger or Consolidation	 	 	76	 
	 
	 	Section 6.10	 	Limitations on Amendments	 	 	76	 
	 
	 	Section 6.11	 	No Further Negative Pledges	 	 	77	 
	 
	 	Section 6.12	 	Speculative Transactions	 	 	77	 
	 
	 	Section 6.13	 	Asset Sales	 	 	77	 
	 
	 	Section 6.14	 	Hazardous Materials	 	 	78	 
	 
	 	Section 6.15	 	ERISA Events	 	 	78	 
	ARTICLE VII EVENTS OF DEFAULT	 	 	78	 
	 
	 	Section 7.1	 	Events of Default	 	 	78	 
	 
	 	Section 7.2	 	Remedies	 	 	81	 
	ARTICLE VIII THE ADMINISTRATIVE AGENT	 	 	81	 
	 
	 	Section 8.1	 	Appointment, Powers and Immunities	 	 	81	 
	 
	 	Section 8.2	 	Reliance by Administrative Agent	 	 	82	 
	 
	 	Section 8.3	 	Defaults	 	 	82	 
	 
	 	Section 8.4	 	Rights as a Lender	 	 	82	 
	 
	 	Section 8.5	 	Indemnification	 	 	82	 
	 
	 	Section 8.6	 	Non-Reliance on Administrative Agent and Other Lenders	 	 	83	 
	 
	 	Section 8.7	 	Failure to Act	 	 	83	 
	 
	 	Section 8.8	 	Resignation or Removal of Administrative Agent	 	 	83	 
	 
	 	Section 8.9	 	Release of Collateral or Guarantors	 	 	84	 
	 
	 	Section 8.10	 	Joint Lead Arrangers, Bookrunner, Syndication Agent and Documentation Agent	 	 	84	 
	ARTICLE IX MISCELLANEOUS	 	 	85	 
	 
	 	Section 9.1	 	Amendments, Waivers, Etc.	 	 	85	 
	 
	 	Section 9.2	 	Assignments and Participations; Successors and Assigns	 	 	86	 
	 
	 	Section 9.3	 	Costs and Expenses	 	 	88	 
	 
	 	Section 9.4	 	Indemnities	 	 	88	 

iii 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	Section 9.5	 	Right of Set-Off	 	 	89	 
	 
	 	Section 9.6	 	Sharing of Payments, Etc.	 	 	90	 
	 
	 	Section 9.7	 	Notices	 	 	90	 
	 
	 	Section 9.8	 	No Waiver; Remedies	 	 	91	 
	 
	 	Section 9.9	 	Governing Law	 	 	91	 
	 
	 	Section 9.10	 	Submission to Jurisdiction; Service of Process	 	 	92	 
	 
	 	Section 9.11	 	Waiver of Jury Trial	 	 	92	 
	 
	 	Section 9.12	 	Marshaling; Payments Set Aside	 	 	92	 
	 
	 	Section 9.13	 	Section Titles	 	 	92	 
	 
	 	Section 9.14	 	Execution in Counterparts	 	 	92	 
	 
	 	Section 9.15	 	Severability	 	 	93	 
	 
	 	Section 9.16	 	Confidentiality	 	 	93	 
	 
	 	Section 9.17	 	Independence of Representations, Warranties and Covenants	 	 	93	 
	 
	 	Section 9.18	 	Non-Public Information	 	 	94	 
	 
	 	Section 9.19	 	Patriot Act Notice	 	 	94	 

iv 

 

	 	 	 
	Annexes
	 	 
	Annex A

	 	Addresses for Notices
	 
	 	 
	Schedules
	 	 
	Schedule I

	 	Commitments
	 
	 	 
	Schedule 1.1(a)

	 	Excluded Asset Sales
	Schedule 1.1(b)

	 	Baseline Appraisal
	Schedule 4.1(b)

	 	Operating Authority
	Schedule 4.1(c)

	 	Subsidiaries
	Schedule 4.1(d)

	 	Obligor Information
	Schedule 4.2(c)

	 	Consents, Approvals, etc.
	Schedule 4.6

	 	Material Litigation
	Schedule 4.7(a)

	 	Payment of Taxes
	Schedule 4.7(b)

	 	Government Tax Claims
	Schedule 4.11(a)

	 	Plans and Multiemployer Plans
	Schedule 4.12(b)

	 	Hazardous Material Activity
	Schedule 4.12(c)

	 	Environmental Claims
	Schedule 4.15

	 	Indebtedness
	Schedule 4.16

	 	Insurance
	Schedule 4.19

	 	Gates
	Schedule 4.21

	 	Deposit Accounts and Securities Accounts
	Schedule 5.20

	 	Post-Closing Matters
	Schedule 6.1(a)

	 	Permitted Liens
	Schedule 6.1(b)

	 	Permitted Payment Restrictions
	Schedule 6.2

	 	Investments
	Schedule 6.6

	 	Sale-Leasebacks
	Schedule 6.7(b)

	 	Transactions with Affiliates
	 
	 	 
	Exhibits
	 	 
	Exhibit A

	 	Form of Assignment and Acceptance
	Exhibit B

	 	Form of Note
	Exhibit C

	 	Aircraft Mortgage
	Exhibit D

	 	SGR Security Agreement
	Exhibit E

	 	Security Agreement
	Exhibit F

	 	Form of Mortgage
	Exhibit G

	 	Form of Collateral Value Certificate
	Exhibit H

	 	Guaranty
	Exhibit I

	 	Form of Slot Utilization Report
	Exhibit J

	 	Form of Subsidiary Joinder
	Exhibit K

	 	[Reserved]
	Exhibit L

	 	Form of Notice of Conversion/Continuation
	Exhibit M

	 	Investment Guidelines
	Exhibit N

	 	Form of Notice of Borrowing

v 

 

          LOAN AGREEMENT, dated as of March 23, 2007, among US AIRWAYS GROUP, INC., a Delaware
corporation (the “Borrower”), the direct and indirect Subsidiaries of the Borrower party
hereto from time to time, the several banks and other financial institutions or entities from time
to time party to this Agreement as Lenders, and CITICORP NORTH AMERICA, INC. (“Citicorp”),
as administrative agent and collateral agent for the Lenders (in such capacity, together with its
successors and permitted assigns, the “Administrative Agent”).

W I T N E S S E T H:

          WHEREAS the Borrower proposes to borrow from the Lenders solely (a) to repay in full all
amounts owing under the Existing Loan Agreement, (b) if elected by the Borrower, to repay in whole
or in part the Juniper Financing and (c) to pay related fees and expenses and for general corporate
purposes, and the Lenders, severally but not jointly, propose to lend to the Borrower, an aggregate
amount of U.S.$1,600,000,000 for such purposes on the terms hereof.

          NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained
herein, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS

          Section 1.1 Defined Terms. As used in this Agreement, the following terms have the
following meanings (such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

          “Account Debtor” means any Person who may become obligated to any Obligor under, with
respect to, or on account of, an Account.

          “Accounts” means all “accounts”, as such term is defined in the UCC.

          “Acquisition” has the meaning specified in Section 6.5(a).

          “Adjusted Loan Balance” means, at any time, the amount equal to the sum of (i) the
then aggregate outstanding principal amount of the Loan plus (ii) the amount of all prepayments of
the Loan with proceeds of any Asset Sale that constitutes Eligible Collateral on or after the
Closing Date.

          “Administrative Agent” has the meaning specified in the preamble to this Agreement.

          “Affiliate” means, with respect to any Person, any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such Person. For purposes
of this definition, “control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether through the ownership
of voting securities, by contract or otherwise.

          “Affiliate Transaction” has the meaning specified in Section 6.7(a).

          “Aggregate Amounts Due” has the meaning specified in Section 9.6.

          “Agreement” means this Loan Agreement.

 

 

          “Airbus Financing Letter Agreement” means the A350/A330 Financing Letter Agreement,
dated as of September 27, 2005, among US Airways, AWA, the Borrower, and AVSA, S.A.R.L., or any
financing pursuant thereto, as amended, restated, supplemented or modified.

          “Air Carrier” means each of US Airways and, if and so long as any of AWA, Piedmont or
PSA Airlines owns or operates Aircraft Related Equipment (of the type described in Section 1110 of
the Bankruptcy Code or any analogous successor provision of the Bankruptcy Code), each such entity
so owning or operating Aircraft Related Equipment.

          “Aircraft” has the meaning ascribed to it in the Aircraft Mortgage.

          “Aircraft Mortgage” means the Aircraft, Engines and Spare Parts Mortgage and Security
Agreement among the Obligors party thereto and the Administrative Agent, in substantially the form
of Exhibit C.

          “Aircraft Related Equipment” means each Obligor’s aircraft fleet (including engines,
airframes, propellers and appliances), spare aircraft engines and propellers, spare parts, aircraft
parts, simulators and other training devices, passenger loading bridges or other flight or ground
equipment and Aircraft Related Facilities.

          “Aircraft Related Facilities” means (i) airport terminal facilities, including without
limitation, baggage systems, loading bridges and related equipment, building, infrastructure and
maintenance, club rooms, apron, fueling systems or facilities, signage/image systems,
administrative offices, information technology systems and security systems, (ii) airline support
facilities, including without limitation, cargo, catering, mail, ground service equipment, ramp
control, deicing, hangars, aircraft parts/storage, training and reservations facilities and (iii)
all equipment used in connection with the foregoing.

          “Applicable Index Margin” means the per annum interest rate from time to time in
effect and payable in addition to the Index Rate applicable to the Loan, as determined by reference
to the definition of “Applicable Margin”.

          “Applicable LIBOR Margin” means the per annum interest rate from time to time in
effect and payable in addition to the LIBOR Rate applicable to the Loan, as determined by reference
to the definition of “Applicable Margin”.

          “Applicable Margin” means a percentage equal to (a) during the period commencing on
the Closing Date and ending on the earlier of (i) the next date of determination that is at least
180 days after the Closing Date and (ii) the date of determination for the fiscal quarter ending
September 30, 2007, the percentage set forth in the applicable column opposite Level III in the
table set forth in clause (b) below and (b) thereafter, as of each date of determination (and until
the next such date of determination), a percentage equal to the percentage set forth below in the
applicable column opposite the level corresponding to the Adjusted Loan Balance as of the last day
of the most recently ended fiscal quarter:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Adjusted Loan	 	Applicable Index	 	Applicable LIBOR
	Level:	 	Balance:	 	Margin:	 	Margin:
	I
	 	< $600 million	 	 	1.00	%	 	 	2.00	%
	II
	 	> $600 million and <	 	 	1.25	%	 	 	2.25	%
	 
	 	$1 billion	 	 	 	 	 	 	 	 
	III
	 	> $1 billion	 	 	1.50	%	 	 	2.50	%

2

 

          ; provided, however, that (i) if the Credit Rating improves from the
credit rating in effect at the close of business New York time on the Closing Date by one subgrade
from Moody’s and S&P as of the last day of the most recently ended fiscal quarter, then (A) the
Applicable LIBOR Margin will be the lower of 2.25% and the rate otherwise applicable based upon the
Adjusted Loan Balance and (B) the Applicable Index Margin will be the lower of 1.25% and the rate
otherwise applicable based upon the Adjusted Loan Balance and (ii) if the Credit Rating improves
from the credit rating in effect at the close of business New York time on the Closing Date by two
or more subgrades from Moody’s and S&P as of the last day of the most recently ended fiscal
quarter, then the Applicable LIBOR Margin will be 2.00% and the Applicable Index Margin will be
1.00%.

          Each date of determination for the “Applicable Margin” shall be the date that is 3 Business
Days after delivery by the Borrower to the Administrative Agent of a new Officer’s Certificate
pursuant to Section 5.1(b)(iv). Notwithstanding anything to the contrary set forth in this
Agreement (including the then effective Adjusted Loan Balance and the Credit Rating), the
Applicable Margin shall equal the percentage set forth in the appropriate column opposite Level III
in the table above, effective immediately upon the occurrence of any Event of Default and for as
long as such Event of Default shall be continuing.

          “Appraisal Report” means, with respect to each category of Appraised Collateral, (i)
the Baseline Appraisal and (ii) each subsequent appraisal pursuant to Section 5.17, each in form
and substance reasonably satisfactory to the Administrative Agent and prepared by an Appraiser,
which certifies, at the time of determination, the current market value of the assets subject to
such appraisal; provided that except as otherwise agreed to by the Administrative Agent,
each Appraisal Report obtained subsequent to the preparation of the Baseline Appraisal with respect
to each category of Appraised Collateral shall be (A) prepared by the same Appraiser used in the
Baseline Appraisal for such category of Appraised Collateral, unless such Appraiser is no longer
providing appraisals for such type of property or the Administrative Agent determines (if no
Default or Event of Default has occurred and is continuing, with the consent of the Borrower not to
be unreasonably withheld) to change Appraisers and (B) in any event, based on the same
methodologies and assumptions (including, without limitation, the time period for the disposition
of such Appraised Collateral and the market conditions perceived to exist at the time) used in the
Baseline Appraisal for such category of Appraised Collateral.

          “Appraised Collateral” means Spare Engines, Spare Parts, Ground Service Equipment,
Flight Simulators, Real Estate, Slots, Gates, Aircraft and such other assets as are acceptable to
the Administrative Agent in its sole discretion that constitute Collateral and for which the
Obligors elect to obtain Appraisal Reports.

          “Appraised Value” means, with respect to any item of Appraised Collateral, the current
market value of such Collateral as reflected in the most recent Appraisal Report obtained in
respect of such Appraised Collateral in accordance with this Agreement.

          “Appraiser” means (i) with respect to Spare Parts, Sage Popovich, Inc., (ii) with
respect to Real Estate, CB Richard Ellis, (iii) with respect to all other Appraised Collateral,
Simat Helliesen & Eichner, Inc. or (iv) any other firm of nationally recognized, independent
appraisers as may be selected by the Administrative Agent and, so long as no Default or Event of
Default has occurred and is continuing, reasonably acceptable to the Borrower.

3

 

          “Approved Fund” means, with respect to any Lender, any Person (other than a natural
Person) that (a) is or will be engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course and (b) is advised or
managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person (other than an
individual) or any Affiliate of any Person (other than an individual) that administers or manages
such Lender.

          “Asset Sale” means any sale, transfer or other disposition (including by way of
merger, consolidation, exchange of assets or sale-leaseback transactions) by an Obligor to any
Person other than another Obligor of (i) all or any of the Capital Stock of any Obligor other than
the Borrower or (ii) any Collateral of any Obligor (including spare parts); provided that
the term “Asset Sale” shall not include (a) any sale or disposition of spare parts, inventory
(including available seat miles and frequent flier miles (including dividend and flightfund miles))
and fuel, in each case in the ordinary course of business; provided that with respect to a
sale or disposition of spare parts, the aggregate Appraised Value of the remaining spare parts
which would be counted in the computation of Collateral Value as of such date is not less than 90%
of the Appraised Value of the spare parts set forth in the Baseline Appraisal; (b) any licensing or
sublicensing of intellectual property in the ordinary course of business of the Obligors; (c) any
leasing or subleasing of property in the ordinary course of business; (d) a sale, transfer or other
disposition resulting from a casualty or a condemnation by a Governmental Authority; (e) any sale
or disposition (in a single transaction or related series of transactions) of obsolete or worn out
property (other than spare parts) in the ordinary course of business that generate(s) consideration
to the Obligors of $250,000 or less; provided, however, that all such sales or
dispositions pursuant to this clause (e) shall not exceed $5,000,000 in the aggregate during the
term of this Agreement; (f) the contemporaneous exchange (or other exchange qualifying under
Section 1031 of the Internal Revenue Code, as amended), in the ordinary course of business, of
property for property of a like kind; (g) the sale, transfer or other disposition of an engine in
a Lessor Engine Transaction; (h) a sale or disposition of cash or Cash Equivalents; (i) any sale or
disposition of receivables in the ordinary course of business, provided that the face
amount of all receivables sold or disposed of pursuant to this clause (i) shall not exceed
$5,000,000 per Fiscal Year; (j) any sale or disposition of the Tempe Property or any Investment
permitted pursuant to Section 6.2(xiii); (k) any sale or disposition of the airframes and engines
listed on Schedule 1.1(a); or (l) any sale or disposition of Credit Card holdbacks in connection
with the financing thereof, provided that the amount financed pursuant to this clause (l) shall be
consistent with the Obligors’ historical holdback amounts.

          “Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Lender, consented to by the Borrower (if applicable) and accepted by the
Administrative Agent (unless consummated pursuant to Section 9.2(d)), in substantially the form of
Exhibit A.

          “Aviation Authority” means any nation or government or national or governmental
authority of any nation, state, province or other political subdivision thereof, and any agency,
department, regulator, airport authority, air navigation authority or other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to
government in respect of the regulation of commercial aviation or the registration, airworthiness
or operation of civil aircraft and having jurisdiction over the Obligors including, without
limitation, the FAA and the United States Department of Transportation.

          “AWA” means America West Airlines, Inc., a Delaware corporation.

          “AWA Holdings” means America West Holdings Corporation, a Delaware corporation.

4

 

          “Bankruptcy Code” means Title 11 of the United States Code as now and hereafter in
effect, or any successor statute.

          “Baseline Appraisal” means, as to each category of Appraised Collateral, the initial
or, if applicable, updated, Appraisal Report with respect to such category of Appraised Collateral
addressed to the Administrative Agent and listed in Schedule 1.1(b).

          “Borrower” has the meaning specified in the preamble to this Agreement.

          “Business Day” means a day of the year on which banks are not required or authorized
to close in New York, New York or Phoenix, Arizona and, if the applicable Business Day relates to
notices, determinations, fundings and payments in connection with the LIBOR Rate, a day on which
dealings in Dollar deposits are also carried on in the London interbank market.

          “Cape Town Convention” means the Cape Town Convention on International Interests in
Mobile Equipment and the Cape Town Protocol to the Convention on International Interests in Mobile
Equipment on Matters Specific to Aircraft Equipment prepared under the joint auspices of the
International Institute for the Unification of Private Law and the International Civil Aviation
Organization.

          “Capital Lease”, as applied to any Person, means any lease of any property (whether
real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is required to be
accounted for as a capital lease on the balance sheet of that Person, and the amount of
Indebtedness represented by such lease shall be the capitalized amount of the obligations evidenced
thereby determined in accordance with GAAP.

          “Capital Stock” means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated, whether voting or non-voting) of such
Person’s capital stock, or corresponding equity rights in any partnership, limited liability
company or other entity, whether now outstanding or issued after the date of this Agreement,
including, without limitation, all Common Stock.

          “Cash Equivalents” means, as at any date of determination, (i) marketable securities
(a) issued or directly and unconditionally guaranteed as to interest and principal by the United
States government or (b) issued by any agency or instrumentality of the United States the
obligations of which are backed by the full faith and credit of the United States, in each case
maturing within one year after such date; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or any instrumentality
thereof, in each case maturing within one year after such date and having, at the time of the
acquisition thereof, the highest rating obtainable from either S&P or Moody’s; (iii) commercial
paper not issued by the Borrower maturing no more than one year after such date and having, at the
time of the acquisition thereof, a rating of at least A-2 from S&P or at least P-2 from Moody’s;
(iv) certificates of deposit or bankers’ acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking regulator) and (b) has
Tier 1 capital (as defined in such regulations) of not less than $500,000,000; (v) shares of any
money market mutual fund that (a) has at least 95% of its assets invested continuously in the types
of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or Moody’s; (vi) auction
rate preferred securities that have the highest rating obtainable from either S&P or Moody’s and
with a maximum reset date at least every 30 days and (vii) investments made pursuant to the
Investment Guidelines, so long as an

5

 

amount equal to 100% of the Minimum Control Cash Amount required to be maintained at such time
pursuant to Section 6.4(a) is maintained in cash and/or investments covered in clauses (i) through
(vi) above.

          “Cash Proceeds” means, (a) with respect to any Asset Sale, the cash or Cash
Equivalents proceeds of such Asset Sale, including payments of deferred payment obligations (to the
extent corresponding to the principal, but not the interest component thereof) when received in the
form of cash or Cash Equivalents and proceeds from the conversion of other property received when
converted to cash or Cash Equivalents and (b) with respect to any Replacement Secured Financing,
the cash proceeds of such Replacement Secured Financing.

          “CFC” means a “controlled foreign corporation” under Section 957 of the Internal
Revenue Code.

          “Change of Control” means:

          (a) at any time prior to the consummation of a Permitted Holder Acquisition: (i) the
acquisition after the Closing Date of ownership, directly or indirectly, beneficially or of record,
by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of
the SEC thereunder as in effect on the date hereof) of more than 40% of the Voting Stock of the
Borrower, other than pursuant to a Permitted Holder Acquisition, or (ii) during any period of 24
consecutive months, the occupation of a majority of the seats (other than vacant seats) on the
Board of Directors of the Borrower by Persons who were neither (A) directors on the Closing Date
nor (B) approved by the Board of Directors of the Borrower nor (C) appointed by directors so
approved; and

          (b) if a Permitted Holder Acquisition has been consummated, at any time after the consummation
thereof, (i) the acquisition of or subsistence of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and
the rules of the SEC thereunder as in effect on the date hereof) of more than 40% of the Voting
Stock of the Permitted Holder, or (ii) during any period of 24 consecutive months, the occupation
of a majority of the seats (other than vacant seats) on the Board of Directors of the Permitted
Holder by Persons who were neither (A) directors on the date the Permitted Holder Acquisition was
consummated nor (B) approved by the Board of Directors of the Permitted Holder nor (C) appointed by
directors so approved, or (iii) the Permitted Holder at any time owning, directly or indirectly,
beneficially and of record, less than 100% of the Capital Stock of the Borrower; and

          (c) the Borrower at any time owning, directly or indirectly, beneficially and of record, less
than 100% of the Capital Stock of US Airways and AWA without prejudice to the right, to the extent
otherwise permitted in this Agreement, of US Airways and/or AWA to merge with or consolidate into
the Borrower or a wholly-owned Subsidiary of the Borrower, provided that the Borrower or such
wholly-owned Subsidiary of the Borrower, as the case may be, shall be the surviving entity.

          “Closing Date” means the date on which the Administrative Agent notifies the Borrower
it has received the documents and other evidence referred to in Article III.

          “Collateral” means all of the properties and assets that are (or are purported to be)
from time to time subject to the Liens granted to the Administrative Agent pursuant to the
Collateral Documents as security for the Obligations.

          “Collateral Account” means a deposit account or securities account in the name of the
Borrower with banks or financial institutions with which they and the Administrative Agent have
entered

6

 

into Control Agreements in form and substance reasonably satisfactory to the Administrative
Agent and under the sole control (as defined in the applicable UCC) of the Administrative Agent for
the deposit of Cure Collateral and other cash and Cash Equivalents from the Obligors required to be
deposited in a Collateral Account pursuant to the Loan Documents and (a) in the case of a deposit
account, from which the Borrower may not make withdrawals except as permitted by the Administrative
Agent and (b) in the case of a securities account, with respect to which the Administrative Agent
shall be the entitlement holder and the only Person authorized to give entitlement orders with
respect thereto.

          “Collateral Coverage Ratio” means, at any date for which such ratio is to be
determined, the ratio expressed as a percentage of (a) the Collateral Value at such time to (b) the
aggregate outstanding principal amount of the Loan at such time.

          “Collateral Documents” means, collectively, (i) the Aircraft Mortgage; (ii) the SGR
Security Agreement; (iii) the Security Agreement; (iv) the IP Security Agreement (as defined in the
Security Agreement); (v) the Mortgages; (vi) each other certificate, agreement or document executed
and delivered by any Obligor pursuant to any of the foregoing agreements, and any Control
Agreement, certificate, agreement or document delivered pursuant hereto or to the terms of Section
5.8; and (vii) any consents of lessors of any of the Collateral to the pledge of such Collateral
pursuant to the agreements or documents listed in (i) through (v) above.

          “Collateral Release Value” means, for each item of Appraised Collateral with respect
to which the Lien of the Administrative Agent is being released (or subordinated) in connection
with a Replacement Secured Financing, an amount equal to the Appraised Value of such Collateral
(based on the then most current Appraisal Report).

          “Collateral Value” means, as of any date of determination, the sum of (a) the
Appraised Value of all Eligible Appraised Collateral, as stated in the then most current Appraisal
Report(s) therefor, (b) 85% of the Eligible Accounts as of such date, (c) Unrestricted Cash of the
Obligors as of the Business Day immediately prior to such date of determination in an amount up to
50% of the Minimum Control Cash Amount at such time and (d) 100% of the Cure Collateral as of such
date; provided that Ineligible Collateral shall not be included in the computation of
Collateral Value.

          “Collateral Value Certificate” means a certificate executed by a Responsible Officer
of the Borrower in substantially the form of Exhibit G annexed hereto (provided that such
certificate may be incorporated into a certificate contemporaneously delivered pursuant to clause
(iv) of Section 5.1(b)).

          “Collection Account” means that certain account of the Administrative Agent, account
number 3885-8061 in the name of the Administrative Agent at Citibank, N.A. in New York, New York,
ABA No. 021000089, Account Name: Citicorp Industrial Credit, Ref: U.S. Airways, or such other
account as may be specified in writing by the Administrative Agent as the “Collection Account.”

          “Commitment” means, with respect to each Lender, the commitment of such Lender to make
Loans to the Borrower, which commitment is in the amount set forth opposite such Lender’s name on
Schedule I under the caption “Commitment”, as amended to reflect each Assignment and Acceptance
executed by such Lender and as such amount may be reduced pursuant to this Agreement. The
aggregate amount of the Commitments on the date hereof equals $1,600,000,000.

          “Commitment Letter” means the letter agreement, dated February 27, 2007, addressed to
the Borrower from the Administrative Agent and Morgan Stanley Senior Funding, Inc. and accepted by
the Borrower, with respect to certain fees to be paid from time to time to the Administrative Agent
and its Affiliates.

7

 

          “Commodity Agreement” means any agreement or arrangement the value of which fluctuates
based on the value of a commodity.

          “Common Stock” means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated, whether voting or non-voting) of such
Person’s common stock, whether now outstanding or issued after the date of this Agreement,
including, without limitation, all series and classes of such common stock.

          “Consolidated EBITDAR” means, with respect to any Person, for any period, the sum of
(i) the operating income of such Person for such period, (ii) rental expenses of such Person for
such period under aircraft Operating Leases and (iii) depreciation and amortization and stock
compensation expenses and extraordinary charges and non-cash unusual items of such Person that were
recognized in arriving at the amount of such operating income for such period, all as determined on
a consolidated basis in accordance with GAAP.

          “Consolidated Fixed Charges” means, with respect to any Person, for any period, the
sum of (a) the aggregate gross interest expense relating to Indebtedness of such Person for such
period (calculated without regard to any limitations on the payment thereof), including the
corresponding amounts for such period under Capital Lease obligations and Synthetic Lease
obligations of such Person, (b) the aggregate rental expenses of such Person for such period under
aircraft Operating Leases, and (c) dividends or any other payments or distributions in respect of
any class of Capital Stock of such Person, including in connection with any redemption, purchase,
retirement or other acquisition, directly or indirectly of any such class of Capital Stock, paid or
payable during such period (but only to the extent payment thereof is permitted under this
Agreement), all determined on a consolidated basis.

          “Contractual Obligation” means, as applied to any Person, any provision of any equity
security issued by that Person or of any indenture, mortgage, deed of trust, contract, lease,
license, undertaking, agreement or other instrument to which that Person is a party or by which it
or any of its properties is bound or to which it or any of its properties is subject.

          “Control Agreement” has the meaning specified in Section 6.4(a).

          “Covenant Suspension Conditions” means, at any time, the satisfaction of each of the
following conditions: (i) the Collateral Coverage Ratio shall be greater than 225%, (ii) the
aggregate outstanding principal amount of the Loan shall be less than $600,000,000 and (iii) no
Default or Event of Default shall have occurred and be continuing.

          “Covenant Suspension Period” means any period (i) beginning on the first Business Day
on which the Covenant Suspension Conditions have been satisfied and notice of such satisfaction is
provided to the Administrative Agent pursuant to Section 5.1(b)(xxi) and (ii) ending on the first
Business Day on which any of clauses (i) through (iii) of the Covenant Suspension Conditions are no
longer satisfied.

          “Credit Card” means any agreement or plan relating to a credit card, debit card,
charge card, purchasing card or other similar system, including but not limited to the American
Express Card, Diners Club, MasterCard, Visa Card, Carte Blanche and Discover Card.

          “Credit Card Receivables” means any right to payment in Dollars (including, but not
limited to, rights to payment for goods, services, insurance, fees, taxes, prepayment penalties and
finance charges) from (i) any issuer of a Credit Card arising from goods or services provided or to
be provided by an Obligor or (ii) to the extent that the right to such payment described in clause
(i) has been transferred

8

 

in whole or part to JPMorgan Chase Bank, N.A. (“JPMCB”), Bank of America, N.A.
(“BOA”) or any other settlement and/or processing system, or, alternatively, to the extent
JPMCB, BOA or any other settlement and/or processing system has received any collections with
respect to such right of payment, any right to payment from JPMCB, BOA or any other settlement
and/or processing system arising from the transfer to or by JPMCB, BOA or any other settlement
and/or processing system of such claims against an issuer of a Credit Card.

          “Credit Rating” means, as of any date, the credit rating by Moody’s or S&P, as the
case may be, for the Loan Facility. For purposes of the foregoing, (a) if any credit rating
established by Moody’s or S&P shall be changed, such change shall be effective as of the date on
which such change is announced by the rating agency making such change, (b) if Moody’s or S&P shall
change the basis on which credit ratings are established by it, each reference to the Credit Rating
announced by Moody’s or S&P shall refer to the then equivalent credit rating by Moody’s or S&P, as
the case may be, and (c) if Moody’s or S&P shall cease to be in the business of rating corporate
debt obligations, the Applicable Margin shall be determined using the Credit Rating by Moody’s or
S&P, as the case may be, most recently in effect prior to such cessation.

          “Cure Collateral” means Unrestricted Cash that is deposited in the Collateral Account
pursuant to Section 5.8(c) and other assets pledged to the Administrative Agent pursuant to Section
5.8(c).

          “Currency Agreement” means any foreign exchange contract, currency swap agreement,
futures contract, option contract, synthetic cap or other similar agreement or arrangement.

          “DCA” means Ronald Reagan Washington National Airport.

          “Default” means any condition or event which with the required passing of time or the
giving of any required notice or both would, unless cured or waived, become an Event of Default.

          “Desk-top Spare Parts Appraisal Methodology” means, in determining an opinion as to
the current market value of Eligible Spare Parts, including but not limited to taking at least the
following actions: (i) reviewing the most recent Appraisal Report; (ii) reviewing the Appraiser’s
internal value database for values applicable to Spare Parts; (iii) developing a representative
sampling of a reasonable number of the different Spare Parts for which a market check will be
conducted; (iv) checking other sources, such as manufacturers, other airlines, U.S. government
procurement data and airline parts pooling price lists, for orderly liquidation prices of the
sample Spare Parts referred to in clause (iii); (v) conducting a limited review of the inventory
reporting system applicable to the Spare Parts, including checking information reported in such
system against information determined through physical inspection; and (vi) reviewing a sampling of
the Spare Parts’ serviceability tags, books and records (including tear-down reports).

          “Dilution” means, for any period, the ratio (defined as a percentage) of (a) the
aggregate amount of all non-cash credits and other offsets against the Obligors’ Accounts, to (b)
the aggregate amount of the Obligors’ sales, in each case for such period.

          “Dollars” and the sign “$” each mean the lawful money of the United States of
America.

          “Eligible Accounts” means, as of any date of determination, all Accounts shown on the
consolidated balance sheet of the Borrower as of the end of the then most recently ended fiscal
quarter, net of, without duplication, all reserves against such Accounts and all Accounts owed by
another Obligor, and except, without duplication, any Account of the Obligors:

9

 

     (a) that does not arise from the air transportation of passengers, freight and cargo or
the sale of goods or performance of services by the Obligors in the ordinary course of their
business;

     (b) (i) upon which any Obligor’s right to receive payment is not absolute or is
contingent upon the fulfillment of any condition whatsoever or (ii) as to which any Obligor
is not able to bring suit or otherwise enforce its remedies against the Account Debtor
through judicial process, or (iii) if the Account represents a progress billing consisting
of an invoice for goods sold or used or services rendered pursuant to a contract under which
the Account Debtor’s obligation to pay that invoice is subject to any Obligor’s completion
of further performance under such contract or is subject to the equitable lien of a surety
bond issuer; provided, that clauses (i) and (iii) above shall not apply to
receivables in respect of the transportation of passengers in the ordinary course of
business;

     (c) to the extent that any defense, counterclaim, setoff or dispute is asserted as to
such Account;

     (d) that is not a true and correct statement of bona fide indebtedness incurred in the
amount of the Account for goods and services sold to or services rendered, or to be rendered
with respect to receivables in respect of the transportation of passengers, and goods
accepted by the applicable Account Debtor;

     (e) with respect to which an invoice, reasonably acceptable to the Administrative Agent
in form and substance (it being understood that the form of invoice customarily used by the
applicable Obligor on the Closing Date shall be deemed to be satisfactory to the
Administrative Agent), has not been sent to the applicable Account Debtor;

     (f) that is owed by any director, officer, other employee or Affiliate of any Obligor;

     (g) that is the obligation of an Account Debtor that is the United States government or
a political subdivision thereof, or any state, county or municipality or department, agency
or instrumentality thereof unless the Obligor, if necessary or desirable, has complied with
respect to such obligation with the Federal Assignment of Claims Act of 1940, or any
applicable state, county or municipal law restricting the assignment thereof with respect to
such obligation and such assignment has been accepted and acknowledged by the appropriate
governmental officers;

     (h) that is the obligation of an Account Debtor located in a foreign country other than
Canada unless payment thereof is assured by a letter of credit assigned and delivered to the
Administrative Agent, satisfactory to the Administrative Agent as to form, amount and
issuer;

     (i) with respect to receivables in respect of the transportation of passengers, to the
extent any Obligor owed the applicable Account Debtor for services sold or rendered by such
Account Debtor to such Obligor but only to the extent of the potential offset, including,
without limitation under code share arrangements, interline agreements or other agreements
between airlines in which tickets may be purchased on one airline and honored by another
airline;

     (j) that is in default and such default is reasonably likely to result in such Account
Debtor’s failure to make payment with respect to such Account; provided, that,
without limiting the generality of the foregoing, an Account shall be deemed in default upon
the occurrence of any of the following: (i) the Account is not paid within ninety (90) days
following its original invoice date (and in determining the aggregate amount from the same
Account Debtor that is unpaid

10

 

hereunder there shall be excluded the amount of any notes receivable held by an Account
Debtor which are unpaid more than 90 days after the due date for payment), (ii) the Account
Debtor obligated upon such Account suspends business, makes a general assignment for the
benefit of creditors or fails to pay its debts generally as they come due or (iii) a
petition is filed by or against any Account Debtor obligated upon such Account under any
bankruptcy law or any other federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the relief of debtors;

     (k) that is the obligation of an Account Debtor if fifty percent (50%) or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under the other
criteria set forth in clause (j) above;

     (l) as to which the Lien of the Administrative Agent for the benefit of the Secured
Parties is not a first priority perfected Lien;

     (m) as to which any of the representations or warranties in the Loan Documents with
respect to such specific Account are untrue;

     (n) to the extent such Account is evidenced by a judgment, instrument or chattel paper;

     (o) except with respect to Credit Card Receivables, to the extent that such Account,
together with all other Accounts owing by such Account Debtor and its Affiliates as of any
date of determination exceed 10% of all Eligible Accounts;

     (p) that is payable in any currency other than Dollars;

     (q) that arises from interline activity including services and billings performed
between airlines (but excluding the transportation of passengers) and the payment of which
is handled through third party domestic or foreign clearing houses; or

     (r) which Obligor has not been subject to a field examination;

provided, however, that to the extent that Dilution exceeds 5%, the Eligible
Accounts as of such date shall be reduced by the amount of such excess multiplied by the aggregate
of all Accounts of the Obligors.

          “Eligible Aircraft” means all of the Aircraft owned by the Obligors and reflected in
the most recent Collateral Value Certificate delivered by the Borrower to the Administrative Agent,
except any Aircraft that constitutes Ineligible Collateral.

          “Eligible Appraised Collateral” means Appraised Collateral constituting Eligible Spare
Engines, Eligible Spare Parts, Eligible Ground Service Equipment, Eligible Flight Simulators,
Eligible Real Estate, Eligible Slots, Eligible Gates, Eligible Aircraft and such other assets as
are acceptable to the Administrative Agent in its sole discretion that constitute Collateral and
for which the Obligors elect to obtain Appraisal Reports, in each case other than Ineligible
Collateral.

          “Eligible Collateral” means Eligible Accounts and Eligible Appraised Collateral.

          “Eligible Flight Simulators” means all of the Flight Simulators owned by the Obligors
and reflected in the most recent Collateral Value Certificate delivered by the Borrower to the
Administrative Agent, except any Flight Simulators that constitute Ineligible Collateral;
provided,

11

 

however, that the Administrative Agent shall provide the Borrower with an Appraisal
Report with respect to any Flight Simulators for which an assignment of the applicable flight
simulator software to the Administrative Agent requires the consent of a third party within 30 days
after the Closing Date, and if such consent is not obtained on or before June 30, 2007, the
Appraised Value for such Flight Simulators shall be based on the methodologies and assumptions
contained in such Appraisal Report until such consent is obtained.

          “Eligible Gates” means all of the Gates leased by the Obligors and reflected in the
most recent Collateral Value Certificate delivered by the Borrower to the Administrative Agent,
except (i) any Gate subject to a lease or other agreement under which the applicable Obligor is in
default and (ii) any Gates that constitute Ineligible Collateral.

          “Eligible Ground Service Equipment” means all Ground Service Equipment owned by the
Obligors and reflected in the most recent Collateral Value Certificate delivered by the Borrower to
the Administrative Agent, except any Ground Service Equipment that constitutes Ineligible
Collateral.

          “Eligible Leased Real Estate” means, as of any date of determination, any parcel of
Real Estate in the United States leased by the Obligors as to which each of the following
conditions has been satisfied at such time:

     (a) a valid and enforceable first priority Lien on such leasehold interest (subject
only to Permitted Encumbrances and other Liens approved by the Administrative Agent) shall
have been granted by the applicable Obligor in favor of the Administrative Agent for the
benefit of the Secured Parties pursuant to a Mortgage;

     (b) except as otherwise permitted by the Administrative Agent, the Administrative Agent
and, where applicable, the relevant title insurance company shall have received in form and
substance reasonably satisfactory to the Administrative Agent all Mortgage Supporting
Documents in respect of such leasehold interest;

     (c) the Administrative Agent shall have received an appraisal conforming to FIRREA with
respect to such leasehold interest in form and substance reasonably satisfactory to the
Administrative Agent and performed by an appraiser that is reasonably satisfactory to the
Administrative Agent;

     (d) no casualty shall have occurred materially affecting the use, operation or value of
such leasehold interest if such casualty has not been restored or repaired in accordance
with the Mortgage encumbering such leasehold interest;

     (e) no condemnation or taking by eminent domain shall have occurred nor shall any
written notice of any pending or threatened condemnation or other similar proceeding against
such parcel of Real Estate have been delivered to the lessee or, to the knowledge of the
lessee, the owner of such parcel of Real Estate that would materially affect the use,
operation or value of such parcel of Real Estate;

     (f) no default shall exist beyond any notice and cure period under the relevant
Mortgage encumbering such leasehold interest;

     (g) each written sublease, license or other use or occupancy agreement now or hereafter
affecting all or any portion of the leasehold interest shall, by its express terms, be
subject and subordinate to the relevant Mortgage;

12

 

     (h) each lease, license, or other use or occupancy agreement between an Obligor, as
sublessor, and any Affiliate thereof, as sublessee, now or hereafter affecting all or any
portion of such leasehold interest shall be subject and subordinate to the relevant Mortgage
or shall be terminable (without fee) on 60 days’ prior written notice by the sublessor of
such leasehold interest;

     (i) an environmental assessment report has been completed and delivered to the
Administrative Agent in form and substance reasonably satisfactory to the Administrative
Agent and which does not indicate any pending, threatened or existing Environmental Claim or
noncompliance with, or liability under, any Environmental Law (except if a reserve
satisfactory to the Administrative Agent has been established with respect thereto); and

     (j) the applicable Obligor shall not be in default beyond any notice and grace period
with the terms of any such lease, license, or other use or occupancy agreement between such
Obligor and the applicable landlord.

          “Eligible Lender” means (a) a Lender or an Affiliate or Approved Fund of any Lender,
(b) a commercial bank having total assets whose Dollar equivalent exceeds $5,000,000,000, (c) a
finance company, insurance company or any other financial institution or fund, in each case
reasonably acceptable to the Administrative Agent and regularly engaged in making, purchasing or
investing in loans and having a net worth, determined in accordance with GAAP, whose Dollar
equivalent exceeds $250,000,000 (or, to the extent net worth is less than such amount, a finance
company, insurance company, other financial institution or fund, reasonably acceptable to the
Administrative Agent and the Borrower) or (d) a savings and loan association or savings bank
organized under the laws of the United States or any State thereof having a net worth, determined
in accordance with GAAP, whose Dollar equivalent exceeds $250,000,000; provided,
however, that the following Persons shall not be deemed to be an “Eligible Lender”: (i) an
airline, a commercial aircraft operator, an air freight forwarder or an entity principally engaged
in the business of parcel transport by air, (ii) an Affiliate of any Person described in clause (i)
above or (iii) the Persons designated by the Borrower in writing to the Administrative Agent on or
prior to the Closing Date.

          “Eligible Owned Real Estate” means, as of any date of determination, any parcel of
Real Estate in the United States owned in fee simple by the Obligors as to which each of the
following conditions has been satisfied at such time:

     (a) a valid and enforceable first priority Lien on such parcel of Real Estate (subject
only to Permitted Encumbrances and other Liens approved by the Administrative Agent) shall
have been granted by the applicable Obligor in favor of the Administrative Agent for the
benefit of the Secured Parties pursuant to a Mortgage;

     (b) except as otherwise permitted by the Administrative Agent, the Administrative Agent
and, where applicable, the relevant title insurance company shall have received in form and
substance reasonably satisfactory to the Administrative Agent all Mortgage Supporting
Documents in respect of such parcel of Real Estate;

     (c) the Administrative Agent shall have received an appraisal conforming to FIRREA with
respect to such parcel of Real Estate in form and substance reasonably satisfactory to the
Administrative Agent and performed by an appraiser that is reasonably satisfactory to the
Administrative Agent;

13

 

     (d) no casualty shall have occurred materially affecting the use, operation or value of
such parcel of Real Estate if such casualty has not been restored or repaired in accordance
with the Mortgage encumbering such parcel of Real Estate;

     (e) no condemnation or taking by eminent domain shall have occurred nor shall any
notice of any pending or threatened condemnation or other similar proceeding against such
parcel of Real Estate have been delivered to the owner of such parcel of Real Estate that
would materially affect the use, operation or value of such parcel of Real Estate;

     (f) no default shall exist beyond any notice and cure period under the relevant
Mortgage encumbering such parcel of Real Estate;

     (g) each written lease, license or other use or occupancy agreement now or hereafter
affecting all or any portion of such parcel of Real Estate shall, by its express terms, be
subject and subordinate to the relevant Mortgage;

     (h) each lease, license, or other use or occupancy agreement between an Obligor, as
landlord, and any Affiliate thereof, as tenant, now or hereafter affecting all or any
portion of such parcel of Real Estate shall be subject and subordinate to the relevant
Mortgage or shall be terminable (without fee) on 60 days’ prior written notice by the owner
of such Real Estate; and

     (i) an environmental assessment report has been completed and delivered to the
Administrative Agent in form and substance reasonably satisfactory to the Administrative
Agent and which does not indicate any pending, threatened or existing Environmental Claim or
noncompliance with, or liability under, any Environmental Law (except if a reserve
satisfactory to the Administrative Agent has been established with respect thereto).

          “Eligible Real Estate” means Eligible Owned Real Estate and Eligible Leased Real
Estate.

          “Eligible Slots” means Slots at DCA, John F. Kennedy International Airport, LGA or any
other airport acceptable to the Administrative Agent in its sole discretion, except any such Slots
that constitute Ineligible Collateral.

          “Eligible Spare Engines” means all of the Spare Engines owned by the Obligors and
reflected in the most recent Collateral Value Certificate delivered by the Borrower to the
Administrative Agent, except for any Spare Engines that constitute Ineligible Collateral.

          “Eligible Spare Parts” means all of the Spare Parts owned by the Obligors and
reflected in the most recent Collateral Value Certificate delivered by the Borrower to the
Administrative Agent, except for any Spare Parts that constitute Ineligible Collateral.

          “Environmental Claim” means any investigation, notice, claim, suit, proceeding, demand
or order, by any Governmental Authority or any Person arising in connection with any alleged or
actual violation of Environmental Laws or with any Hazardous Materials Activity, or any actual or
alleged damage, or harm to health, safety, property or the environment.

          “Environmental Laws” means any and all current or future statutes, ordinances, orders,
rules, regulations, guidance documents, judgments, governmental authorizations, or any other
requirement of Governmental Authorities relating to (a) the prevention or control of pollution or
protection of the environment, (b) solid, gaseous or liquid waste generation, handling, treatment,
storage,

14

 

disposal, discharge, Release, emission or transportation, or (c) exposure to Hazardous
Materials. “Environmental Laws” shall include, but not be limited to, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the National Environmental
Policy Act (42 U.S.C. 4321 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
1801 et seq.), the Toxic Substances Control Act (49 U.S.C. 2601 et seq.), the Clean
Air Act (42 U.S.C. 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251
et seq.), the Safe Drinking Water Act (42 U.S.C. 3007 et seq.), the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the Occupational Safety
and Health Act (29 U.S.C. 641 et seq.), and the State of Arizona Environmental Quality Act
(A.R.S. 49-101 et seq.).

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

          “ERISA Affiliate” means, with respect to any Obligor, (i) any corporation which is, or
(other than for purposes of the first sentence of each of Section 4.11(a) and Section 5.1(b)(viii))
was at any time in the preceding six (6) years, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which the Obligor is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code
of which the Obligor is a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which the Obligor, any corporation
described in clause (i) above or any trade or business described in clause (ii) above is a member.

          “ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan or Multiemployer Plan (other than an event
for which the thirty-day notice is waived); (b) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Internal Revenue Code or Section
302 of ERISA); (c) the filing pursuant to Section 412(d) of the Internal Revenue Code or Section
303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any
Plan or Multiemployer Plan; (d) the imposition of a lien under Section 412 of the Code or Section
302 of ERISA on any Obligor or any of its ERISA Affiliates; (e) the incurrence by any Obligor or
any of its ERISA Affiliates of any liability (contingent or otherwise) under Title IV of ERISA with
respect to the termination of any Plan; (f) (i) the receipt by any Obligor or any of its ERISA
Affiliates from the PBGC of a notice of determination that PBGC intends to seek termination of any
Plan or Multiemployer Plan or to have a trustee appointed for any Plan or Multiemployer Plan, or
(ii) the filing by any Obligor or any of its ERISA Affiliates of a notice of intent to terminate
any Plan or the treatment of any Plan amendment as a termination under Section 4041 of ERISA; (g)
the incurrence by any Obligor or any of its ERISA Affiliates of any liability (contingent or
otherwise) (i) with respect to the withdrawal from any Plan pursuant to Section 4063 of ERISA, (ii)
with respect to the termination of any Plan pursuant to Section 4064 of ERISA, (iii) with respect
to any facility closing pursuant to Section 4062(e) of ERISA, or (iv) the complete or partial
withdrawal of any Obligor or any of its ERISA Affiliates from any Multiemployer Plan; (h) the
receipt by any Obligor or any of its ERISA Affiliates of any notice concerning the imposition of
Withdrawal Liability or a determination that any Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA; (i) the failure of any
Obligor or any of its ERISA Affiliates to make when due required contributions to any Plan subject
to Title IV of ERISA or any Multiemployer Plan; or (j) any other event or condition that would
reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan subject to Title IV of ERISA or Multiemployer
Plan or the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due
but not delinquent under Section 4007 of ERISA.

15

 

          “Event of Default” has the meaning specified in Section 7.1.

          “Excess Cash Flow” means, for any period, (i) Consolidated EBITDAR of the Borrower for
such period, minus (plus) (ii) any increase (decrease) in Working Capital of the Borrower from the
first day of such period to the last day of such period, minus (iii) the sum of (A) payments by the
Obligors of principal and interest with respect to the consolidated Indebtedness of the Borrower
(but excluding Indebtedness that is solely the obligation of any Subsidiary that is not an Obligor)
during such period, to the extent such payments are not prohibited under this Agreement, (B)
receipt by the Obligors of principal related to this Agreement or, without prejudice to any other
provision herein, any other debt refinancing, (C) income taxes paid during such period, (D)
aircraft rentals paid during such period under Operating Leases, (E) cash used during such period
for capital expenditures, (F) deposit and pre-delivery payments made in respect of Aircraft Related
Equipment, and (G) an amount equal to pension or FASB 106 payments made in excess, if any, of
pension or FASB 106 expenses, plus (iv) an amount equal to the excess of pension or FASB 106
expense in excess, if any, of pension or FASB 106 payments.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, and any successor statute.

          “Excluded Cash” means cash and Cash Equivalents maintained in accounts that are
segregated from all Unrestricted Cash and not subject to Control Agreements to the extent that such
accounts are any of the following:

     (i) subject to Liens arising or granted in the ordinary course of business in favor of
Persons performing credit card processing services, travel charge processing services or
clearinghouse services for any Obligor, including IATA, Diners Club, Discover Card, NPC, ARC
and American Express, so long as such Liens are on cash and Cash Equivalents that are
subject to holdbacks by, or are pledged to, such Persons to secure amounts that may be owed
to such Persons under the Obligors’ agreements with them in connection with their provision
of credit card processing, travel charge processing or clearinghouse services to the
Obligors;

     (ii) subject to Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of goods in
the ordinary course of business;

     (iii) subject to Liens incurred or deposits made in each case required under or in
connection with the Trust Agreements (not including the Obligors’ residuary interest in,
claims to or refunds of any such trust funds);

     (iv) subject to Liens securing reimbursement obligations in respect of letters of
credit issued for the account of any Obligor in the ordinary course of business and
consistent with past practice, so long as the aggregate amount of such cash and Cash
Equivalents does not exceed 115% of the maximum available amount under the secured letters
of credit;

     (v) subject to Liens securing reimbursement or other margin requirements in connection
with, in the case of Liens contemplated in this clause (v), (x) transactions designed to
hedge against fluctuations in fuel costs, entered into in the ordinary course of business,
consistent with past business practice or then current industry practice, and not entered
into for speculative purposes, (y) transactions designed to hedge interest rates entered
into with respect to notional amounts not to exceed actual or anticipated Indebtedness, not
entered into for speculative purposes and (z) transactions designed to hedge against risks
associated with fluctuations in currencies entered into in the ordinary course of business;

16

 

     (vi) subject to Liens securing prepaid fuel and healthcare expenses in the ordinary
course of business and consistent with past practice;

     (vii) subject to Liens incurred or deposits (other than with respect to the Plans
described in Section 4.11) made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money bonds,
reimbursement obligations and chargeback rights of Persons performing services for an
Obligor (including Liens securing Trade Payables arising from the Obligors’ use in the
ordinary course of business, consistent with past practice, of credit advance facilities to
purchase goods and services) and other similar obligations (exclusive of obligations for the
payment of borrowed money); or

     (viii) payroll, trust, or fiduciary accounts, including the Trust Accounts.

          “Excluded Property” means (i) any lease or other written agreement under which an
Obligor leases real property (other than Gates and the Philadelphia Airport Lease) and (1) that
requires such Obligor to pay annual rentals of $10,000,000 or more but where the grant of a Lien in
favor of the Administrative Agent would violate such lease or other written agreement, (2) that
requires such Obligor to pay annual rentals of less than $10,000,000, or (3) that the
Administrative Agent has agreed in its sole discretion is not material; (ii) any Aircraft Related
Equipment (including Flight Simulators and Spare Engines), Slots, Routes, Gates and Supporting
Route Facilities to the extent the same is not Collateral on the Closing Date nor at any time
thereafter required to be subjected to the Lien of any Collateral Document in accordance with the
provisions of this Agreement and the applicable Collateral Document; (iii) any property which is on
the Closing Date subject to a Lien described in Section 6.1(a)(ix), (x), (xi) or (xii), or,
following the Closing Date, is released from any such Lien (unless such property is required by the
terms of any Collateral Document or this Agreement to be subjected to the Lien of any Collateral
Document); (iv) any right in any agreement (A) the grant of a security interest in which would
violate the agreement under which such right arises except to the extent provided under Sections
9-406, 9-407, 9-408 or 9-409 of the UCC, if such Obligor has failed to obtain a waiver or other
relief from such provision, or (B) to the extent that the pledge or assignment of such agreement
requires the consent of any third party, unless such third party has consented thereto, except to
the extent provided under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC; (v) Excluded Cash; (vi)
100% of the Capital Stock of Excluded Subsidiaries, 35% of the Voting Stock of Subsidiaries of the
Obligors that are CFCs, and all beneficiary interests of third parties in the trusts created by or
pursuant to the Trust Agreements (which does not include the Obligors’ residuary interest in,
claims to or refunds of any trust funds in respect of such trusts); (vii) aircraft purchase
agreements which by their terms are not assignable; and (viii) the Tempe Property and any
Investments permitted under Section 6.2(xiii); provided that if an Obligor nonetheless
elects not to treat such assets as “Excluded Property” and pledges to the Administrative Agent
pursuant to Section 5.8 or otherwise assets that otherwise would constitute Excluded Property
absent this proviso, unless or until the Lien with respect to such assets is released in accordance
with this Agreement and the applicable Collateral Document, such assets shall constitute Collateral
for all purposes under this Agreement and under the other Loan Documents and shall not be treated
as Excluded Property.

          “Excluded Subsidiaries” means (i) FTCHP LLC, a Delaware limited liability company, if
and for so long as (A) the assets of and ownership interests in FTCHP LLC are pledged to secure its
obligations under that certain Senior Secured Term Loan Agreement dated as of December 23, 2004
among FTCHP LLC, AWA, Heritage Bank, SSB, Citibank, N.A. and the other lenders named therein (and
any amendments, restatements, supplements, modifications, refinancings or replacements thereof) or
(B) restrictions contained in its constituent documents prevent it from becoming an Obligor under
the

17

 

Loan Documents, (ii) Airways Assurance Limited LLC, (iii) AWHQ LLC and (iv) America West
Company Store LLC.

          “Existing Loan Agreement” means the Amended and Restated Loan Agreement, dated as of
April 7, 2006 among the Borrower, the other Obligors party thereto, the lenders party thereto and
GE Capital Corporation, as administrative agent for the lenders party thereto.

          “FAA” means the Federal Aviation Administration, and any successor Governmental
Authority.

          “FAA Slots” means all of the rights and operational authority granted under the Slot
Regulations and now or hereafter acquired or held by each Obligor to conduct one instrument flight
rule landing or takeoff operation in a specified time period at DCA, John F. Kennedy International
Airport, LGA, or any other airport.

          “Facilities” means any and all real property now, hereafter or heretofore owned,
leased, operated or used by an Obligor.

          “Fair Market Value” means, with respect to any asset subject to an Asset Sale, the
price that could be obtained for such asset by a seller in an arm’s-length transaction between an
informed and willing seller under no compulsion to sell and an informed and willing buyer.

          “FASB” means the Financial Accounting Standards Board.

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

          “Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or
any successor thereto.

          “Final FAA Slot Rule” means the rule proposed by the FAA and described in Docket
FAA-2006-25709 related to the scheduled and unscheduled operations at LGA (or any replacement,
substituted or modified rule adopted in lieu thereof).

          “Fiscal Year” means the Borrower’s fiscal year referenced in the financial statements
to be delivered by the Borrower pursuant to Section 5.1.

          “Fixed Charges Coverage Ratio” means, for any period, the ratio of (i) Consolidated
EBITDAR for such period to (ii) Consolidated Fixed Charges for such period.

          “Flight Simulators” means the flight simulators and flight training devices of the
Borrower or any other Obligor.

          “Foreign Slots” means all of the rights and operational authority, now held or
hereafter acquired, of the Obligors to conduct one landing or takeoff operation during a specific
hour or other period at each non-U.S. airport as necessary to operate any of the Routes.

18

 

          “GAAP” means, subject to the limitations on the application thereof set forth in
Section 1.3, generally accepted accounting principles in the United States, as in effect from time
to time as set forth in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and pronouncements of FASB
approved by a significant segment of the accounting profession in the United States.

          “Gates” shall have the meaning ascribed to it in the SGR Security Agreement.

          “Gatwick Routes” means any Routes operated by any Obligor to or from London’s Gatwick
airport in the United Kingdom.

          “GE 2001 Credit Agreement” means the Credit Agreement, dated as of November 16, 2001,
among US Airways, the Borrower, and General Electric Capital Corporation, as amended, restated,
supplemented or modified, including pursuant to that certain Credit Agreement Amendment No. 1,
dated as of January 30, 2003, that certain Credit Agreement Amendment No. 2, dated as of March 31,
2003, among the parties thereto, and that certain Amended and Restated Credit Agreement, dated as
of July 15, 2005 among US Airways, the Borrower and General Electric Capital Corporation.

          “GE Capital” has the meaning specified in the preamble to this Agreement.

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

          “Governmental Authorization” means any permit, license, certificate, authorization,
plan, directive, consent order or consent decree or agreement of, from or with any Governmental
Authority.

          “Ground Service Equipment” means the ground service equipment, de-icers, ground
support equipment, aircraft cleaning devices, materials handling equipment, passenger walkways and
other similar equipment used to service equipment of the Borrower and the other Obligors.

          “Guarantee” means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Indebtedness of any other Person and, without limiting the generality
of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such first Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise), (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part), including any pledge of any assets
to secure indebtedness of another or (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of such other Person so
as to enable such Person to pay such Indebtedness. The term “Guarantee” used as a verb has a
corresponding meaning.

          “Guaranty” means the Guaranty Agreement executed and delivered by the Borrower and the
Subsidiary Guarantors in favor of the Administrative Agent, in substantially the form of
Exhibit H.

          “Hazardous Materials” means all substances defined as Hazardous Substances, Oil,
Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan,
40 C.F.R. § 300.5, or defined as such by or regulated as such under, any Environmental Law.

19

 

          “Hazardous Materials Activity” means any past, current, proposed, or threatened use,
storage, Release, generation, treatment, remediation or transportation of any Hazardous Material
(i) from, under, in, into or on the Facilities or surrounding property; and (ii) caused by, or
undertaken by or on behalf of, an Obligor or any of their respective predecessors or Affiliates.

          “Heathrow Routes” means any Routes operated by any Obligor to or from London’s
Heathrow airport in the United Kingdom.

          “Indebtedness” means, with respect to any Person at any date of determination (without
duplication), (i) all indebtedness of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of
such Person in respect of letters of credit or other similar instruments (including reimbursement
obligations with respect thereto); (iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, which purchase price is due more than six (6) months
after the date of placing such property in service or taking delivery and title thereto or the
completion of such services, except Trade Payables; (v) all Capital Lease obligations of such
Person (the amount of the Indebtedness in respect of Capital Lease obligations to be determined as
provided in the definition of Capital Lease in this Section 1.1); (vi) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed
by such Person, provided that the amount of such Indebtedness shall be the lesser of (A) the fair
market value of such asset at such date of determination and (B) the stated principal amount of
such Indebtedness, provided, however, that if such Indebtedness is assumed by such
Person or provides for recourse against such Person, the amount of such Indebtedness shall be the
greater of (A) and (B) above; (vii) all Indebtedness of other Persons Guaranteed by such Person to
the extent such Indebtedness is Guaranteed by such Person; (viii) to the extent not otherwise
included in this definition and to the extent treated as a liability under GAAP, obligations under
Currency Agreements, Interest Rate Agreements and Commodity Agreements; (ix) the capitalized amount
of remaining lease payments owing by such Person under Synthetic Leases that would appear on the
balance sheet of such Person if such lease were treated as a Capital Lease; (x) the aggregate
amount of uncollected accounts receivable of such Person subject at such time to a sale of
receivables (or similar transaction) to the extent such transaction is effected with recourse to
such Person (whether or not such transaction would be reflected on the balance sheet of such Person
in accordance with GAAP); (xi) the Indebtedness of any partnership or unincorporated joint venture
in which such Person is a general partner or a joint venturer to the extent such Indebtedness is
recourse to such Person; and (xii) all prepaid forward sales in bulk of dividend miles or available
seat miles or like transactions other than in the ordinary course of business. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such date;
provided that the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the remaining unamortized portion of
the original issue discount of such Indebtedness at such time as determined in conformity with
GAAP.

          “Indemnified Matters” has the meaning specified in Section 9.4(a).

          “Indemnified Taxes” has the meaning specified in Section 2.11(a).

          “Indemnitees” has the meaning specified in Section 9.4(a).

          “Index Rate” means, for any day, a floating rate equal to the higher of (i) the rate
publicly quoted from time to time by The Wall Street Journal as the “prime rate” (or, if
The Wall Street Journal ceases quoting a prime rate, the highest per annum rate of interest
published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
“Selected Interest Rates” as the Bank prime loan

20

 

rate or its equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.
Each change in any interest rate provided for in this Agreement based upon the Index Rate shall
take effect at the time of such change in the Index Rate.

          “Index Rate Loan” means a Loan or portion thereof bearing interest by reference to the
Index Rate.

          “Ineligible Collateral” means any Appraised Collateral that:

     (a) is not subject to a valid and enforceable first priority Lien on such Collateral
(subject only to Permitted Encumbrances and other Liens approved by the Administrative
Agent) granted by the applicable Obligor in favor of the Administrative Agent for the
benefit of the Secured Parties pursuant to a Collateral Document;

     (b) is placed on consignment, is in transit or is out for repair, except for Collateral
(other than Spare Parts) in transit between domestic locations of Obligors as to which the
Liens of the Administrative Agent for the benefit of the Secured Parties have been perfected
at origin and destination, and except for aircraft, airframes and engines located outside of
the United States pursuant to flight operations in the ordinary course of business which
would be Eligible Collateral but for this clause (b);

     (c) is covered by a negotiable document of title, unless such document has been
delivered to the Administrative Agent with all necessary endorsements;

     (d) is not of a type used in the ordinary course of the Obligors’ business;

     (e) as to which any of the representations or warranties pertaining to Collateral set
forth in the Loan Documents are untrue;

     (f) consists of Hazardous Materials or goods that can be transported or sold only with
licenses that are not readily available;

     (g) is not covered by casualty insurance as required to be maintained under the Loan
Documents;

     (h) is subject to any patent or trademark license requiring the payment of royalties or
fees or requiring the consent of the licensor for a sale thereof by the Administrative
Agent;

     (i) constitutes Technology Equipment;

     (j) has not been appraised in accordance with Section 5.17;

     (k) is property or assets subject to any event of loss, damage or other casualty that
has materially and adversely affected the value of such Collateral, whether insured or not,
if such loss, damage or other casualty has not been restored or repaired; provided,
however, that such property or assets shall not be deemed “Ineligible Collateral” to
the extent of its current market value after such event of loss, damage or other casualty
(excluding any insurance proceeds);

     (l) with respect to Spare Parts, is located at a location other than a Spare Parts
Location; or

21

 

     (m) the applicable Obligor is not in compliance with the terms of, or there shall exist
a default under, any lease, license, use or occupancy agreement between such Obligor and the
applicable landlord, lessor or licensor now or hereafter affecting all or any portion of
such Collateral that could reasonably be expected to have an adverse effect on the ability
of the Administrative Agent to access, or exercise remedies against such Collateral.

          “Initial Indebtedness” has the meaning specified in Section 6.10(a).

          “Interest Payment Date” means (a) as to any Index Rate Loan, the first Business Day of
each calendar quarter to occur while such Loan is outstanding, and (b) as to any LIBOR Loan, the
last day of each LIBOR Period; provided, that in the case of any LIBOR Period greater than
three months in duration, interest shall be payable at three month intervals and on the last day of
such LIBOR Period; provided, further, that in addition to the foregoing, each of
(x) the date upon which all of the Loans have been paid in full and (y) the Maturity Date shall be
deemed to be an “Interest Payment Date” with respect to any interest that has then accrued under
this Agreement.

          “Interest Rate Agreement” means any interest rate future agreement, interest rate
option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or arrangement.

          “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the
date hereof and from time to time hereafter.

          “International Interest” has the meaning as expressed in the Cape Town Convention.

          “Investment” means with respect to any Person, any direct or indirect advance, loan
(other than loans or advances to customers in the ordinary course of business that are recorded as
accounts receivable on the balance sheet of such Person or its Subsidiaries) or other extensions of
credit or capital contribution or other equity investment by such Person to any other Person,
including by means of any transfer of cash or other property to others or any payment for property
or services for the account or use of others, any Guarantee (including any support for a letter of
credit issued on behalf of such Person) incurred for the benefit of such Person or any purchase or
acquisition by such Person of Capital Stock (or warrants, options or rights convertible into or
exercisable for Capital Stock), bonds, notes, debentures or other similar instruments issued by any
other Person; provided that advances or loans by any Obligor to any other Obligor,
Guarantees (including any support for a letter of credit issued on behalf of another Obligor)
incurred by any Obligor for the benefit of any other Obligor, capital contributions or other equity
investments by an Obligor in any other Obligor and deposits made by any Obligor in connection with
the purchase by an Obligor of Aircraft Related Equipment, Slots or other property shall not
constitute an “Investment.”

          “Investment Guidelines” means investment guidelines in the form attached hereto as
Exhibit M, together with any amendments, restatements, supplements or other modifications
thereof permitted in accordance with Section 6.10(c).

          “IRS” means the Internal Revenue Service of the United States or any successor
thereto.

          “Juniper Financing” means the America West Co-Branded Card Agreement, dated January
25, 2005, between AWA and Juniper Bank, as amended, restated, supplemented or modified, including
pursuant to the Assignment and First Amendment to the America West Co-Branded Card Agreement, dated
as of August 8, 2005, among AWA, the Borrower and Juniper Bank.

22

 

          “Lender” means any Person that (a) is listed on the signature pages hereof as a
“Lender” or (b) from time to time becomes a party hereto by execution of an Assignment and
Acceptance, in each case together with its successors.

          “Lending Office” means, with respect to any Lender, the office of such Lender
specified as its “Lending Office” opposite its name on Annex A or on the Assignment and
Acceptance by which it became a Lender or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.

          “Lessor Engine Transaction” means any sale, transfer or other disposition of up to
four IAE V2527-A5 aircraft engines to a lessor of Aircraft or Engines designed to satisfy an
Obligor’s obligation to substitute one or more engines under an Aircraft or Engine lease.

          “LGA” means LaGuardia Airport.

          “Liabilities” means all claims, actions, suits, judgments, damages, losses, liability,
obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes, commissions,
charges, disbursements and expenses, in each case of any kind or nature (including interest accrued
thereon or as a result thereto and fees, charges and disbursements of financial, legal and other
advisors and consultants), whether joint or several, whether or not indirect, contingent,
consequential, actual, punitive, treble or otherwise.

          “LIBOR Loan” means a Loan or any portion thereof bearing interest by reference to the
LIBOR Rate.

          “LIBOR Period” means, with respect to any LIBOR Loan, each period commencing on a
Business Day selected by the Borrower pursuant to this Agreement and ending one, two, three or six
months thereafter, as selected by the Borrower’s irrevocable notice (or deemed notice) to the
Administrative Agent as set forth in Section 2.6(d); provided, that the foregoing provision
relating to LIBOR Periods is subject to the following:

     (a) if any LIBOR Period would otherwise end on a day that is not a Business Day, such
LIBOR Period shall be extended to the next succeeding Business Day unless the result of such
extension would be to carry such LIBOR Period into another calendar month in which event
such LIBOR Period shall end on the immediately preceding Business Day;

     (b) any LIBOR Period that would otherwise extend beyond any Principal Payment Date
shall end on such Principal Payment Date;

     (c) any LIBOR Period that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar month at the end of
such LIBOR Period) shall end on the last Business Day of a calendar month;

     (d) the Borrower shall select LIBOR Periods so that there shall be no more than 10
separate LIBOR Loans in existence at any one time; and

     (e) the provisions in Section 2.6(d) with respect to conversions into and continuations
of LIBOR Loans.

          “LIBOR Rate” means for each LIBOR Period, a rate of interest determined by the
Administrative Agent equal to the offered rate for deposits in Dollars for the applicable LIBOR
Period

23

 

that appears on Telerate Page 3750 as of 11:00 a.m. (London time), on the second full Business
Day next preceding the first day of such LIBOR Period (unless such date is not a Business Day, in
which event the next succeeding Business Day will be used). If such interest rates shall cease to
be available from Telerate News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to the Administrative Agent
and Borrower.

          “Lien” means any lien, mortgage, pledge, assignment for security, security interest,
charge, hypothecation, lease or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, any easement, right of way or other
encumbrance on title to real property and any agreement to give any security interest).

          “Loan” has the meaning specified in Section 2.1(a).

          “Loan Documents” means, collectively, this Agreement, the Notes, the Collateral
Documents, the Guaranty, and each certificate, agreement or document executed by an Obligor and
delivered to the Administrative Agent or the Lenders in connection with or pursuant to this
Agreement.

          “Loan Facility” means the Commitments and the provisions herein related to the Loans.

          “Marketing and Service Agreements” means those certain business, marketing and service
agreements among an Obligor and any of Mesa Airlines, Inc., Chautauqua Airlines, Inc., Trans States
Airlines, Inc., United Air Lines, Inc., Republic Airline, Inc., and Air Wisconsin Airlines
Corporation and such other parties or agreements from time to time that include, but are not
limited to, code-sharing, pro-rate, capacity purchase, service, frequent flyer, ground handling and
marketing agreements that are entered into in the ordinary course of business.

          “Material Adverse Effect” means (a) a material adverse effect on (i) the business,
condition (financial or otherwise), operations, performance, prospects, assets or properties of the
Obligors, taken as a whole or (ii) the legality, validity, binding effect or enforceability against
any Obligor of any Loan Document, or the rights and remedies of the Administrative Agent or any
Lender under any Loan Document, or (b) any material adverse effect on or material impairment of (i)
the ability of the Obligors, taken as a whole, to perform their payment or other material
obligations under the Loan Documents or (ii) the value of the Collateral or the validity and
priority of the Liens on the Collateral in each case taken as a whole.

          “Maturity Date” means March 23, 2014, except that if such date is not a Business Day,
then the Maturity Date shall be the immediately preceding Business Day.

          “Minimum Control Cash Amount” has the meaning specified in Section 6.4(a).

          “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a
nationally recognized rating agency.

          “Mortgage” means any mortgage, deed of trust or other similar document executed or
required herein to be executed by any Obligor and granting a security interest over real property
or leasehold interests in real property in substantially the form of Exhibit F or otherwise
in form and substance reasonably satisfactory to the Administrative Agent.

          “Mortgage Supporting Documents” means, with respect to any Mortgage, each document
(including title policies or marked-up unconditional insurance binders (in each case, together with
copies of all exception documents referred to therein), maps, ALTA (or TLTA, if applicable)
as-built surveys (in

24

 

form and as to date that is sufficiently acceptable to the title insurer issuing title
insurance to the Administrative Agent for such title insurer to deliver endorsements to such title
insurance as reasonably requested by the Administrative Agent), environmental assessments and
reports and evidence regarding recording and payment of fees, insurance premium and taxes) that the
Administrative Agent may reasonably request, to create, register, perfect, maintain, evidence the
existence, substance, form or validity of or enforce a valid lien on such parcel of or leasehold
interest in real property in favor of the Administrative Agent for the benefit of the Secured
Parties, subject only to Permitted Encumbrances and such other Liens as the Administrative Agent
may approve.

          “Multiemployer Plan” means a multiemployer plan as defined Section 4001(a)(3) of
ERISA, and in respect of which any Obligor or any of its ERISA Affiliates is (or with the
application of Section 4212(c) of ERISA would be) (a) an “employer” as defined in Section 3(5) of
ERISA or (b) a “seller” as defined in Section 4204 of ERISA.

          “Net Cash Proceeds” means, with respect to any Asset Sale, the Cash Proceeds of such
Asset Sale, net of (i) reasonable and customary brokerage commissions and other reasonable and
customary fees and expenses (including reasonable fees and expenses of counsel, investment bankers,
accountants and other professionals, consultants and advisors) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale without regard to the consolidated
results of operations of the Borrower and its Subsidiaries, taken as a whole, (iii) payments made
to repay Indebtedness or any other obligation outstanding at the time of such Asset Sale (or any
related expenses required to be paid to third parties pursuant to documentation related to the
financing of the assets subject to such Asset Sale) that (A) is secured by a Lien on the property
or assets sold and (B) is required by its terms to be paid as a result of such Asset Sale and (iv)
appropriate amounts to be provided by any Obligor as a reserve against any liabilities associated
with such Asset Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in conformity with GAAP, but limited
to the period of the required reserve.

          “Net Condemnation Proceeds” means an amount equal to: (i) any cash payments or
proceeds received by an Obligor as a result of any condemnation or other taking or temporary or
permanent requisition of any property, any interest therein or right appurtenant thereto, or any
change of grade affecting any such property, as the result of the exercise of any right of
condemnation or eminent domain by a Governmental Authority (including a transfer to a Governmental
Authority in lieu or anticipation of a condemnation), minus (ii) (a) any actual and reasonable
costs incurred by an Obligor in connection with any such condemnation or taking (including
reasonable fees and expenses of counsel), (b) provisions for all taxes payable as a result of such
condemnation, without regard to the consolidated results of operations of the Borrower and its
Subsidiaries, taken as a whole, and (c) any amounts required to be paid to any Person (other than
an Obligor) owning a beneficial interest in the property subject to such condemnation or taking.

          “Net Insurance Proceeds” means an amount equal to: (i) any cash payments or proceeds
received by an Obligor under any casualty insurance policy in respect of a covered loss thereunder
with respect to tangible, real or personal property, minus (ii) (a) any actual and reasonable costs
incurred by an Obligor in connection with the adjustment or settlement of any claims of an Obligor
in respect thereof (including reasonable fees and expenses of counsel), (b) provisions for all
taxes payable as a result of such event, without regard to the consolidated results of operations
of the Borrower and its Subsidiaries, taken as a whole, and (c) any amounts required to be paid to
any Person (other than an Obligor) owning a beneficial interest in the property subject to such
loss.

25

 

          “Net Issue Proceeds” means, with respect to any Replacement Secured Financing, the
Cash Proceeds of such Replacement Secured Financing net of (i) any reasonable and customary
brokers’ and advisors’ fees, any underwriting discounts and commissions and other costs incurred in
connection with such transaction (provided that evidence of such fees, discounts, commissions and
costs is provided to the Administrative Agent), (ii) provisions for all taxes payable as a result
of such transaction without regard to the consolidated results of operations of the Borrower and
its Subsidiaries, taken as a whole, and (iii) payments made to repay Indebtedness or any other
obligation outstanding at the time of such Replacement Secured Financing that is secured by a Lien
on the property or assets pledged to secure such Replacement Secured Financing.

          “Non-Consenting Lender” has the meaning specified in Section 9.1(c).

          “Non-U.S. Person” means a Person that is not a United States person as defined in
Section 7701(a)(30) of the Internal Revenue Code.

          “Note” and “Notes” have the meanings specified in Section 2.3(d).

          “Notice of Borrowing” means a Notice of Borrowing, in substantially the form of
Exhibit N.

          “Notice of Conversion/Continuation” has the meaning specified in Section 2.6(d).

          “Obligations” means all payment and performance obligations of every nature of any
Obligor from time to time owed to the Administrative Agent and the Lenders (together with their
respective permitted successors and assigns), or any of their respective Affiliates, officers,
directors, employees, agents or advisors under or in respect of any Loan Document, whether for
principal, interest, fees, expenses, indemnification or otherwise, whether direct or indirect
(regardless of whether acquired by assignment), absolute or contingent, due or to become due,
whether liquidated or not, now existing or hereafter arising and however acquired, and whether or
not evidenced by any instrument or for the payment of money, including, without limitation, (a) if
such Obligor is the Borrower, the Loans, (b) all interest, whether or not accruing after the filing
of any petition in bankruptcy or after the commencement of any insolvency, reorganization or
similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed
in any such proceeding, and (c) all other fees, expenses (including fees, charges and disbursement
of counsel), interest, commissions, charges, costs, disbursements, indemnities and reimbursement of
amounts paid and other sums chargeable to such Obligor under any Loan Document.

          “Obligors” means the Borrower and each Subsidiary Guarantor and, if a Permitted Holder
Acquisition has been consummated, then solely for the purpose of clauses (f), (g) and (l) of
Section 7.1, the Permitted Holder and their respective successors and assigns.

          “Officer” means, as applied to any corporation, each Responsible Officer, the Chairman
of the board of directors (if an officer), Assistant Treasurer, Secretary or Assistant Secretary.

          “Officer’s Certificate” means, as applied to the Borrower, a certificate executed by a
Responsible Officer of the Borrower in his/her capacity as such; provided that every
Officer’s Certificate shall include a statement that, in the opinion of the signer, such
Responsible Officer has made or has caused to be made such examination or investigation as is
necessary to enable such Responsible Officer to express an informed opinion as to the substance of
such Officer’s Certificate in light of the provisions hereof pursuant to which it is being
delivered.

26

 

          “Operating Lease” means, as applied to any Person, any lease (including, without
limitation, leases that may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) under which such Person is lessee, that is not a Capital Lease.

          “Other Taxes” has the meaning specified in Section 2.11(b).

          “Participant” has the meaning specified in Section 9.2(e) hereof.

          “Payee” has the meaning specified in Section 9.12.

          “Payment Restriction” means, with respect to a Subsidiary of any Person, any
encumbrance, restriction or limitation, whether by operation of the terms of its charter or by
reason of any agreement or instrument, on the ability of (i) such Subsidiary to (a) pay dividends
or make other distributions on its Capital Stock or make payments on any obligation, liability or
Indebtedness owed to such Person or any other Subsidiary of such Person, (b) make loans or advances
to such Person or any other Subsidiary of such Person or (c) transfer any of its property or assets
to such Person or any other Subsidiary of such Person or (ii) such Person or any other Subsidiary
of such Person to receive or retain any such (a) dividend, distributions or payments, (b) loans or
advances or (c) property or assets.

          “PBGC” means the Pension Benefit Guaranty Corporation.

          “Permitted Acquisition” means any acquisition, whether by merger, consolidation or
otherwise:

          (x) permitted by the terms of Section 6.5 and/or Section 6.9; or

          (y) by a Permitted Holder of 100% of the Capital Stock of the Borrower, but only so long as:

     (i) (A) no Event of Default has occurred and is continuing immediately prior or
immediately after giving effect to the proposed transaction and (B) all transactions related
thereto are consummated in all material respects in accordance with applicable laws;

     (ii) the Borrower has provided the Administrative Agent with written notice 10 days (or
such shorter period as reasonably agreed by the Administrative Agent) prior to the Permitted
Holder Acquisition and copies of the material acquisition documents promptly after
consummation of such acquisition;

     (iii) after giving effect to such acquisition, the Borrower shall be in compliance on a
Pro Forma Basis with Section 6.4;

     (iv) the Borrower has delivered to the Administrative Agent an Officer’s Certificate to
the effect set forth in (i) through (iii) above, together with supporting financial
information demonstrating compliance with Section 6.4; and

     (v) the Permitted Holder has become a Guarantor by delivering to the Administrative
Agent a duly executed joinder agreement to the Guaranty together with a legal opinion from
counsel reasonably satisfactory to the Administrative Agent.

          “Permitted Acquisition Financing” means Indebtedness incurred by an Obligor in
connection with an acquisition, merger or consolidation which is permitted by Section 6.5 and/or
Section

27

 

6.9 (as applicable) if and to the extent used (i) to refinance existing Indebtedness of the
Person acquired or Indebtedness secured by the assets acquired or (ii) to pay consideration or
related expenses in connection with such transaction; provided, however, that both
immediately before and after giving effect thereto, (a) no Default or Event of Default shall have
occurred and be continuing and (b) the Borrower shall be in compliance on a Pro Forma Basis with
the financial covenants in Section 6.4.

          “Permitted Counterparty” means any counterparty to a Secured Hedging Contract that (a)
(i) at the time such Person entered into such Secured Hedging Contract, was the Administrative
Agent, a Lender, or an Affiliate of the Administrative Agent or a Lender and (ii) is designated by
the Borrower to the Administrative Agent as a “Permitted Counterparty”, or (b) (i) is reasonably
acceptable to the Administrative Agent, (ii) is designated by the Borrower to the Administrative
Agent as a “Permitted Counterparty” and (iii) has executed and delivered to the Administrative
Agent an acknowledgement in form and substance reasonably satisfactory to the Administrative Agent
to the extent requested by the Administrative Agent pursuant to Section 8.11.

          “Permitted Encumbrances” means the following types of Liens (other than any such Lien
imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA) as
applied to property:

     (i) Liens for taxes, assessments or governmental charges or claims the payment of which
is either (a) not delinquent for a period of more than 30 days or (b) being contested in
good faith by appropriate proceedings, if such reserve or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor, as set forth in Section
5.3;

     (ii) statutory Liens of landlords and Liens of carriers, vendors, warehousemen,
repairmen, mechanics and materialmen and other Liens imposed by law incurred in the ordinary
course of business for sums either (a) not delinquent for a period of more than thirty (30)
days or (b) being contested in good faith by appropriate proceedings, if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall have been made
therefor;

     (iii) (A) Liens incurred or deposits (other than with respect to the Plans described in
Section 4.11) made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds, reimbursement
obligations and chargeback rights of Persons performing services for an Obligor (including
Liens securing Trade Payables arising from the Obligors’ use in the ordinary course of
business, consistent with past practice, of credit advance facilities to purchase goods and
services) and other similar obligations (exclusive of obligations for the payment of
borrowed money) and (B) Liens arising or granted in the ordinary course of business in favor
of Persons performing credit card processing services, travel charge processing services or
clearinghouse services for any Obligor, including IATA, Diners Club, Discover Card, NPC, ARC
and American Express, so long as such Liens are on cash and Cash Equivalents that are
subject to holdbacks by, or are pledged to, such Persons to secure amounts that may be owed
to such Persons under the Obligors’ agreements with them in connection with their provision
of credit card processing, travel charge processing or clearinghouse services to the
Obligors;

     (iv) with respect to real property, easements, rights-of-way, restrictions, defects,
encroachments or irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the business of an Obligor;
provided that

28

 

such charges or encumbrances, if affecting any of the Eligible Real Estate, do not
violate the terms of the applicable Mortgage;

     (v) Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods in the ordinary
course of business;

     (vi) any interest or title of a lessor in property leased by an Obligor under any
Capital Lease obligation or Operating Lease which, in each case, is not prohibited under
this Agreement;

     (vii) Liens in favor of collecting or payor banks and other banks providing cash
management services, in each case, having a right of setoff, revocation, refund or
chargeback against money or instruments of any Obligor on deposit with or in possession of
such bank arising for the payments of bank fees and other similar amounts owed in the
ordinary course of business;

     (viii) Liens of creditors of any Person to whom any Obligor’s assets are consigned for
sale in the ordinary course of business;

     (ix) Liens incurred or deposits made in connection with the Trust Agreements;

     (x) any renewal of or substitution for any Lien permitted by any of the preceding
clauses; provided that the Indebtedness secured is not increased nor the Lien
extended to any additional assets;

     (xi) any licensing or sublicensing of intellectual property in the ordinary course of
business of the Obligors;

     (xii) Liens arising from precautionary UCC and similar financing statements relating to
Operating Leases not otherwise prohibited under any Loan Document; and

     (xiii) Liens created under the Collateral Documents.

          “Permitted Holder” shall mean any corporation or limited liability company organized
under the laws of the United States of America or any state thereof organized for the purpose of
consummating any Permitted Acquisition so long as the Person controlling such entity, or such
entity itself, is a publicly traded major U.S. airline or a publicly traded holding company which
has (or will simultaneously acquire) as its other principal investment another major U.S. airline.

          “Permitted Holder Acquisition” shall mean an acquisition consummated by a Permitted
Holder in accordance with clause (y) of the definition of Permitted Acquisition.

          “Permitted Refinancing Indebtedness” means Indebtedness of any Obligor the cash
proceeds of which are used to refinance (for purposes of this definition, “Refinancing
Indebtedness”) then outstanding Indebtedness (for purposes of this definition, “Old
Indebtedness”) (including by way of an extension, renewal or replacement of, or substitution
for, such Old Indebtedness) in an amount not to exceed the then outstanding principal amount of the
Old Indebtedness, plus accrued and unpaid interest, premiums, fees and expenses; provided
that: (a) if the Old Indebtedness is subordinated in right of payment to the Loan, the Refinancing
Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which it is
outstanding, is expressly made subordinate in right of payment to the Loan, (b) the Refinancing
Indebtedness does not have a final scheduled maturity prior to the final

29

 

scheduled maturity of the Old Indebtedness, (c) the average life of the Refinancing
Indebtedness calculated as of the consummation of the refinancing is not less than the remaining
average life of the Old Indebtedness and (d) if the Old Indebtedness is secured, the Liens securing
the Refinancing Indebtedness do not extend to any assets other than the assets securing the Old
Indebtedness.

          “Permitted Reinvestment Collateral” means, (i) with respect to Net Cash Proceeds,
replacement assets useful in the Obligors’ business; provided, however, with
respect to Net Cash Proceeds from Asset Sales of Appraised Collateral, such replacement assets must
constitute Appraised Collateral, and (ii) with respect to Net Insurance Proceeds or Net
Condemnation Proceeds, assets acquired in connection with the acquisition, construction, repair,
restoration, or replacement (including through acquisition or construction) of the Collateral from
which such Net Insurance Proceeds or Net Condemnation Proceeds derived.

          “Person” means an individual, partnership, corporation (including a business trust),
joint stock company, estate, trust, limited liability company, unincorporated association, joint
venture or other entity, or a Governmental Authority.

          “Philadelphia Airport Lease” means that certain Lease between The City of Philadelphia
and The United States Postal Service, dated December 23, 1974, as assigned pursuant to the
Assignment of Lease dated May 26, 1998 between The United States Postal Service and US Airways.

          “Piedmont” means Piedmont Airlines, Inc.

          “Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is,
or (other than for purposes of the first sentence of Section 4.11(a)) was at any time during the
preceding six (6) years, maintained or contributed to, or required to be contributed to, by any
Obligor or any of its ERISA Affiliates, other than a multiemployer plan, within the meaning of
Section 4001(a)(3) of ERISA.

          “Platform” has the meaning specified in Section 9.7(c).

          “Primary Slots” has the meaning specified in the SGR Security Agreement.

          “Principal Obligors” means the Borrower, US Airways and AWA.

          “Principal Payment Date” means each of the anniversaries of the Closing Date,
commencing on the first anniversary of the Closing Date and ending on the Maturity Date, except
that if such date is not a Business Day, then the Principal Payment Date shall be the immediately
preceding Business Day.

          “Pro Forma Basis” means, with respect to compliance with any covenant hereunder,
compliance with such covenant after giving effect to the acquisition (whether by purchase, merger
or otherwise) or disposition (whether by sale, merger or otherwise) of any company, entity or
business or any asset by any Obligor or any other action which requires compliance on a Pro Forma
Basis. In making any determination of compliance on a Pro Forma Basis, such determination shall be
performed using the consolidated financial statements of such Obligor which shall be reformulated
as if any such acquisition, disposition or other action had been consummated at the beginning of
the period specified in the covenant with respect to which Pro Forma Basis compliance is required.

          “Proceedings” has the meaning specified in Section 5.1(b)(vii).

          “PSA Airlines” means PSA Airlines, Inc., a Pennsylvania corporation.

30

 

          “Real Estate” means the fee or leasehold interests in real property of a Person,
together with the right, title and interest of such Person, if any, in and to the streets, the real
property lying in the bed of any streets, roads or avenues, opened or proposed, the air space and
development rights pertaining to the real property and the right to use such air space and
development rights, all rights of way, privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining thereto, all fixtures, all easements now or
hereafter benefiting the real property and all royalties and rights appertaining to the use and
enjoyment of the real property, including all alley, vault, drainage, mineral, water, oil and gas
rights, together with all of the buildings and other improvements now or hereafter erected on the
real property and any fixtures appurtenant thereto.

          “Redeemable Stock” means any class or series of Capital Stock of any Person that by
its terms or otherwise (i) is required to be redeemed prior to the Maturity Date, (ii) may be
required to be redeemed at the option of the holder of such class or series of Capital Stock at any
time prior to the Maturity Date or (iii) is convertible into or exchangeable for (a) Capital Stock
referred to in clause (i) or (ii) above or (b) Indebtedness having a scheduled maturity prior to
the Maturity Date; provided that any Capital Stock that would constitute Redeemable Stock
solely because of the provisions thereof offering holders thereof the right to require the issuer
thereof to repurchase or redeem such Capital Stock upon the occurrence of an “asset sale” occurring
prior to the Maturity Date shall not constitute Redeemable Stock if the asset sale provisions
contained in such Capital Stock specifically provide that, in respect of any particular asset sale
proceeds, the issuer thereof will not be required to repurchase or redeem any such Capital Stock
pursuant to such provisions so long as the Borrower applies the full amount of such proceeds (net
of associated taxes and transaction costs) to the permanent reduction of the aggregate outstanding
principal amount of the Loan.

          “Register” has the meaning specified in Section 2.3(e).

          “Reinvestment Event” means the date on which Net Cash Proceeds, Net Insurance Proceeds
or Net Condemnation Proceeds are deposited in the Collateral Account.

          “Reinvestment Prepayment Date” means, with respect to any Reinvestment Event, the
earliest of (a) the date occurring 365 days after such Reinvestment Event, unless, prior to any
such date, the Borrower or the applicable Subsidiary has (i) entered into an agreement for the
acquisition of or replacement with Permitted Reinvestment Collateral or (ii) commenced the
construction of Permitted Reinvestment Collateral or the repair or restoration of the original
assets, (b) the date that is five (5) Business Days after the date on which the Borrower shall have
notified the Administrative Agent of the Borrower’s determination not to acquire or construct
Permitted Reinvestment Collateral or repair or restore the original assets with all or any portion
of such Net Cash Proceeds, Net Insurance Proceeds or Net Condemnation Proceeds and (c) the date the
Administrative Agent delivers a notice of the occurrence of an Event of Default to the Borrower.

          “Reinvestment Release Request” means a written notice executed by a Responsible
Officer of the Borrower stating that no Event of Default has occurred and is continuing, that the
Borrower (directly or indirectly through one of the Subsidiary Guarantors) requests the release of
Net Cash Proceeds, Net Insurance Proceeds or Net Condemnation Proceeds, as applicable, from the
Collateral Account for the acquisition or construction of or replacement with (or for payments or
reimbursement with respect to) Permitted Reinvestment Collateral, or for the repair or restoration
of the original assets as specified therein.

          “Related Person” means, with respect to any Person, each Affiliate of such Person and
each director, officer, employee, agent, advisor and trustee of or to such Person or any of its
Affiliates.

31

 

          “Release” means any release, spill, emission, leaking, pumping, pouring, injection,
escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Materials into the indoor or outdoor environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facilities, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.

          “Replacement Secured Financing” means any financing transaction, whether structured as
Indebtedness, sale-leaseback or otherwise, (a) which is secured by any of the Obligors’ Appraised
Collateral and (b) the Net Issue Proceeds of which are at least equal to the Collateral Release
Value of any Eligible Appraised Collateral released in connection with such transaction.

          “Requirements of Law” means, with respect to any Person, collectively, the common law
and all federal, state, local, foreign, multinational or international laws, statutes, codes,
treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs,
injunctions, decrees (including administrative or judicial precedents or authorities) and the
interpretation or administration thereof by, and other determinations, directives, requirements or
requests of, any Governmental Authority, in each case whether or not having the force of law and
that are applicable to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.

          “Requisite Lenders” means, at any time, Lenders having at such time in excess of 50%
of the aggregate principal amount of the Loan then outstanding.

          “Responsible Officer” means with respect to an Obligor, any of its Chief Executive
Officer, President, Chief Financial Officer, General Counsel, Treasurer or Controller, but in any
event, with respect to financial matters, its Chief Financial Officer, Treasurer or Controller.

          “Restricted Payment” means, with respect to any Person (i) any declaration or payment
of dividends on or making of any distributions in respect of the Capital Stock of such Person
(other than dividends or distributions payable solely in shares of Capital Stock (other than
Redeemable Stock) or in options, warrants, or other rights to purchase Capital Stock (other than
Redeemable Stock)) to holders of Capital Stock of such Person, (ii) any purchase, redemption or
other acquisition or retirement for value (other than through the issuance solely of Capital Stock
(other than Redeemable Stock) or options, warrants or other rights to purchase Capital Stock (other
than Redeemable Stock)) of any Capital Stock or warrants, rights (other than exchangeable or
convertible Indebtedness of such Person not prohibited under clause (iii) below) or options to
acquire Capital Stock of such Person, and (iii) any prepayment, redemption, repurchase, defeasance
(including, but not limited to, in substance or legal defeasance) or other acquisition or
retirement for value (other than through the issuance solely of Capital Stock (other than
Redeemable Stock) or warrants, rights or options to acquire Capital Stock (other than Redeemable
Stock)) of Indebtedness of such Person or any Subsidiary of such Person, directly or indirectly
(including by way of setoff or amendment of the terms of any Indebtedness in connection with any
retirement or acquisition of such Indebtedness), which is made other than at any scheduled maturity
thereof or by any scheduled repayment or scheduled sinking fund payment (collectively, a
“prepayment”); provided that the following shall not constitute Restricted
Payments: (a) any declaration, payment, distribution, purchase, redemption, acquisition or
retirement for value, repurchase or defeasance referred to in clauses (i) through (iii) above in
each case solely among Obligors, (b) repayment of the Loan, (c) payments of cash in lieu of
fractional shares in connection with repurchases or conversions of securities of an Obligor not
prohibited hereunder and (d) any mandatory prepayment of Indebtedness (other than Indebtedness that
is contractually subordinated to the Loan) of the Borrower or any of its Subsidiaries in accordance
with the terms thereof.

32

 

          “Routes” means all of the Routes as defined in the SGR Security Agreement.

          “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto that is a nationally recognized rating agency.

          “SEC” means the Securities and Exchange Commission of the United States or any
successor thereto.

          “Secondary Slots” has the meaning specified in the SGR Security Agreement.

          “Section 1110 Equipment” means airframes, aircraft, aircraft engines, propellers and
appliances which are not spare parts (as such terms are used in Section 1110 of the Bankruptcy
Code).

          “Secured Hedging Contract” means any Currency Agreement or Interest Rate Agreement
between an Obligor and a Permitted Counterparty that is designated by the Borrower to the
Administrative Agent as a “Secured Hedging Contract”.

          “Secured Obligations” means (i) the Obligations and (ii) all amounts, obligations,
covenants and duties owing by the Borrower to the Permitted Counterparties under the Secured
Hedging Contracts; provided, however, that the aggregate amount of all Secured
Obligations under this clause (ii) shall not exceed $50,000,000.

          “Secured Parties” means the Lenders, the Administrative Agent, the Permitted
Counterparties and any other holder of any Secured Obligation.

          “Securities Act” means the Securities Act of 1933, as amended from time to time, and
any successor statute.

          “Security Agreement” means a Security Agreement among the Obligors and the
Administrative Agent, in substantially the form of Exhibit E.

          “SGR Security Agreement” means a Slot, Gate and Route Security Agreement among US
Airways, AWA, Piedmont, PSA Airlines and the Administrative Agent, in substantially the form of
Exhibit D.

          “Slot Regulations” means 49 U.S.C. § 40103 and 14 C.F.R. §§ 93.211 – 93.227, and any
amendment, supplement or other modification thereto, or successor, replacement or substitute
federal law or regulation, or any foreign law or regulation, as applicable, concerning the right or
operational authority to conduct landing or takeoff operations at any airports.

          “Slots” means all FAA Slots and all Foreign Slots.

          “Slot Utilization” means, with respect to any FAA Slot, (a) a Slot which is used for a
take-off or landing operation, (b) if, by regulation or other regulatory notice, the FAA considers
such Slot as “used” for purposes of the Slot Regulations, regardless whether or not such Slot was,
in fact, used (e.g., holidays, labor actions), (c) if, by waiver, the FAA considers such Slot as
“used” for purposes of the Slot Regulations, or (d) if the FAA otherwise waives the utilization
requirement of the Slot Regulations.

          “Slot Utilization Report” has the meaning specified in Section 5.13(a).

33

 

          “Solvent” means, with respect to any Person, that as of the date of determination (a)
the then fair saleable value of the business of such Person is not less than the amount that will
be required to pay the probable liabilities on such Person’s then existing debts as they become
absolute and matured considering all financing alternatives and potential asset sales reasonably
available to such Person; (b) such Person’s capital is not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and (c) such Person does not intend to
incur, or believes that it will not incur, debts beyond its ability to pay such debts as they
become due. For purposes of this definition, the amount of any contingent liability at any time
shall be computed as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an actual or matured
liability.

          “Spare Engines” means all of the “Engines” as defined in the Aircraft Mortgage.

          “Spare Parts” means all of the “Spare Parts” as defined in the Aircraft Mortgage.

          “Spare Parts Location” has the meaning specified in the Aircraft Mortgage.

          “SPV” means any special purpose funding vehicle identified as such in a writing by any
Lender to the Administrative Agent.

          “Subgrade” means with respect to any credit rating, a sub-category of such rating as
measured by (i) in the case of an S&P rating, a plus (+) or minus (-), or (ii) in the case of a
Moody’s rating, a one (1) or two (2) or three (3). For purposes of illustration, a change in
credit rating from “BBB” to “BBB+” or “BBB-“ by S&P and a change in credit rating from “Baa2” to
“Baa1” or “Baa3” by Moody’s, in each case in accordance with the ratings system of such rating
agency in effect on the date hereof, would be a change of one credit rating “Subgrade” by such
rating agency.

          “Subsidiary” means, with respect to any Person, any corporation, partnership,
association, limited liability company, trust or estate, joint venture or other business entity of
which more than 50% of the issued and outstanding shares of Voting Stock at the time of
determination are owned or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.

          “Subsidiary Guarantor” means each Person that is a direct or indirect Subsidiary of
the Borrower as of the Closing Date (other than the Excluded Subsidiaries) and each other
Subsidiary of the Borrower that becomes a party to the Guaranty pursuant to Section 5.8(a), but
excluding in each case any Subsidiary that is a CFC and any Person that is released as a guarantor
pursuant to Section 8.10(a). As of the Closing Date the Subsidiary Guarantors are US Airways, AWA
Holdings, AWA, Piedmont, Material Services Company, Inc., a Delaware corporation, and PSA Airlines.

          “Supporting Route Facilities” has the meaning given to that term in the SGR Security
Agreement.

          “Synthetic Lease” means (a) a so-called synthetic, off-balance sheet lease or lease in
which the lessee is contractually entitled to the tax benefits of ownership of the leased assets,
or (b) an agreement for the use or possession of property creating obligations that do not appear
on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person,
would be characterized as the indebtedness of such Person (without regard to accounting treatment).

34

 

          “Taxes” means any and all present or future taxes, levies, fees, duties, imposts,
deductions, charges or withholdings of any nature, and all interest, penalties and other
liabilities thereon or computed by reference thereto imposed by any Governmental Authority.

          “Technology Equipment” means technology assets including mainframe computers, servers,
general computer equipment, printers, monitors, hard drives, memory, storage devices and call
centers/ACD systems but excluding Flight Simulators.

          “Tempe Property” means AWA’s fee interests in the real property (i) located at 250
West Rio Salado Parkway, Tempe, Arizona 85281 (commonly known as “Pennysaver”) and (ii) identified
as OFFICE PLAZA 222 condominium plat according to Book 236 of Maps, Page 48, Maricopa Country,
Arizona and any adjacent parcels thereto (commonly known as the “Headquarters Campus”).

          “Title 49” means Title 49 of the United States Code, as amended and in effect from
time to time, and the regulations promulgated pursuant thereto.

          “Trade Payables” means, with respect to any Person, any accounts payable or any other
indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such
Person or any of its Subsidiaries and arising in the ordinary course of business in connection with
the acquisition of goods or services but limited to current liabilities in accordance with GAAP.

          “Trust Agreements” means all special purpose trust funds established by any Obligor to
manage the collection and payment of amounts collected by the Obligors for the express benefit of
third-party beneficiaries relating to (a) federal income tax withholding and backup withholding
tax, employment taxes, transportation excise taxes and security related charges, including (i)
federal payroll withholding taxes, as described in Sections 3101, 3111 and 3402 of the Internal
Revenue Code; (ii) federal Unemployment Tax Act taxes, as described in Chapter 23 of Subtitle C of
the Internal Revenue Code; (iii) federal air transportation excise taxes, as described in Sections
4261 and 4271 of the Internal Revenue Code; (iv) federal security charges, as described in Title 49
of the Code of Federal Regulations of 2002 (referred to in this definition as the “CFR”), Chapter
XII, Part 1510; (v) federal Animal and Plant Health Inspection Service of the United States
Department of Agriculture (APHIS) user fees, as described in Title 21 United States Code (2002)
(referred to in this definition as “U.S.C.”) Section 136a and 7 CFR Section 354.3; (vi) U.S.
Citizenship and Immigration Services fees, as described in 8 U.S.C. Section 1356 and 8 CFR Part
286; (vii) federal customs fees as described in 19 U.S.C. Section 58c and 19 CFR Section 24.22; and
(viii) federal jet fuel taxes as described in Sections 4091 and 4092 of the Internal Revenue Code
collected on behalf of and owed to the federal government, (b) any and all state and local income
tax withholding, employment taxes and related charges and fees and similar taxes, charges and fees,
including, but not limited to, state and local payroll withholding taxes, unemployment and
supplemental unemployment taxes, disability taxes, workman’s or workers’ compensation charges and
related charges and fees that are analogous to those described in Subtitle C of the Internal
Revenue Code and that are described in or are analogous to Chapter 23 of Title 19 Delaware Code
Annotated (2002) (referred to in this definition as “D.C.A.”) collected on behalf of and owed to
state and local authorities, agencies and entities, (c) Passenger Facility Charges as described in
Title 49 United States Code Section 40117 (2004) and Title 14 of the Code of Federal Regulations,
Subchapter 1, Part 158 collected on behalf of and owed to various administrators, institutions,
authorities, agencies and entities and (d) voluntary and/or other non-statutorily required employee
payroll deductions, whether authorized by the employee, imposed by court order, agreed to pursuant
to collective bargaining arrangement or otherwise, including (i) employee contributions made for
the purpose of participating in any employer-sponsored retirement plan as described and defined in
Section 401(k) of the Internal Revenue Code (including repayment of any 401(k) related loans made
to the employee but excluding any funds matched and/or contributed by the employer on behalf of any
employee), (ii) employee payments made for the

35

 

purpose of participating in any employer-sponsored medical, dental or related health plan,
(iii) employee payments made for the purpose of satisfying periodic union dues, (iv) employee
payments made for the purpose of purchasing United States Savings Bonds, (v) employee payments made
for the purpose of making deposits to an account at or making repayment of an extension of credit
from an employer-associated credit union, (vi) employee payments made for the purpose of purchasing
life, accident, disability or other insurance, (vii) employee payments made for the purpose of
participating in any employer-sponsored cafeteria plan as described and defined in Section 125 of
the Internal Revenue Code, (viii) employee-directed donations to charitable organizations and (ix)
levies, garnishments and other attachments on employee compensation (as described in Sections 6305
and 6331 of the Internal Revenue Code, in Section 4913 of Title 10 of D.C.A. or in any analogous
provision of other applicable federal, state or local law) collected on behalf of any Governmental
Authority or any other Person authorized to receive funds of the type described in this clause (d).

          “Two-Month FAA Reporting Period” means the period for which air carriers provide slot
utilization reports to the FAA pursuant to 14 C.F.R. § 93.227(i).

          “UCC” means the Uniform Commercial Code as the same may, from time to time, be enacted
and in effect in the State of New York; provided, that to the extent that the UCC is used
to define any term herein or in any Loan Document and such term is defined differently in different
Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9
shall govern; provided, further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or remedies with
respect to, the Administrative Agent’s or Lender’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New
York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions.

          “United States Citizen” has the meaning specified in Section 4.1(b).

          “Unrestricted Cash” means cash and Cash Equivalents of the Obligors that (i) may be
classified, in accordance with GAAP, as “unrestricted” on the consolidated balance sheets of the
Borrower or (ii) may be classified, in accordance with GAAP, as “restricted” on the consolidated
balance sheets of the Borrower solely in favor of the Administrative Agent and the Lenders pursuant
to the Loan Documents; provided, however, that Unrestricted Cash shall not include
(a) Cure Collateral held in the Collateral Account, (b) passenger facility charges, (c) Excluded
Cash or (d) cash, Cash Equivalents or other assets carried in deposit accounts and securities
accounts referred to in Section 6.4(a) during any period when a “Notice of Exclusive Control” or
the equivalent is in effect with respect thereto.

          “US Airways” means US Airways, Inc., a Delaware corporation.

          “US Airways Convertible Notes” means the Borrower’s 7% Senior Convertible Notes due
2020 issued pursuant to the Indenture, dated as of September 30, 2005, between the Borrower, the
guarantors listed therein and U.S. Bank National Association, as Trustee.

          “Voting Stock” means any class or classes of Capital Stock pursuant to which the
holders thereof have the general voting power under ordinary circumstances to vote for the election
of directors, managers or trustees of any Person (or Persons performing similar functions)
irrespective of whether or not at the time stock of any such class or classes will have or might
have such voting power by the reason of the happening of any contingency.

36

 

          “Warrants” means the Warrant to purchase up to 386,925 shares of the Borrower’s Common
Stock issued by the Borrower to AFS Cayman Limited, which Warrant is being issued in replacement
for the Warrant to purchase up to 938,000 shares of AWA Holdings’ class B common stock issued by
AWA Holdings to AFS Cayman Limited on January 18, 2002.

          “Withdrawal Liability” means liability (whether or not assessed) with respect to a
Multiemployer Plan as a result of (i) a complete or partial withdrawal from such Multiemployer Plan
pursuant to Section 4201 of ERISA or (ii) increases in contributions required to be made pursuant
to Section 4243 of ERISA.

          “Working Capital” means, as of any date, (i) the current assets (excluding cash and
Cash Equivalents) of the Borrower minus (ii) the current liabilities of the Borrower (other than
the current portion of long term debt), in each case, determined on a consolidated basis and
otherwise, in accordance with GAAP as of such date.

          Section 1.2 Computation of Time Periods. In this Agreement, in the computation of
periods of time from a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding” and the word “through” means
“to and including”.

          Section 1.3 Accounting Terms and Principles.

          (a) Accounting Terms. All accounting terms not specifically defined herein shall be
construed in conformity with GAAP and all accounting determinations required to be made pursuant
hereto shall, unless expressly otherwise provided herein, be made in conformity with GAAP.

          (b) Change in GAAP. If any change in accounting principles used in the preparation of
the most recent financial statements referred to in Section 5.1 is hereafter required or permitted
by the rules, regulations, pronouncements and opinions of FASB or the American Institute of
Certified Public Accountants (or any successor thereto) and such change is adopted by an Obligor
with the agreement of its independent public accountants and results in a change in any of the
calculations required by Article VI had such accounting change not occurred, the parties hereto
agree to promptly enter into good faith negotiations in order to amend such provisions so as to
equitably reflect such change with the desired result that the criteria for evaluating compliance
with such covenants by the Obligors shall be the same after such change as if such change had not
been made; provided, however, that no change in GAAP that would affect a calculation that measures
compliance with any covenant contained in Article VI shall be given effect until such provisions
are amended to reflect such changes in GAAP.

          Section 1.4 Certain Terms.

          (a) Certain References. The words “herein,” “hereof” and “hereunder” and similar
words refer to this Agreement as a whole, and not to any particular Article, Section, subsection or
clause in, this Agreement.

          (b) References to Exhibits, Schedules, etc. References in this Agreement to an
Exhibit, Schedule, Article, Section, subsection or clause refer to the appropriate Exhibit or
Schedule to, or Article, Section, subsection or clause in this Agreement unless otherwise
indicated.

          (c) References to Agreements. Each agreement defined in this Article I shall include
all appendices, exhibits and schedules thereto. If the prior written consent of any Person is
required
hereunder for an amendment, restatement, supplement or other modification to any such
agreement and

37

 

the consent of each such Person is obtained, references in this Agreement to such
agreement shall be to such agreement as so amended, restated, supplemented or modified. If no such
consent is required, references in this Agreement to such agreement shall be to such agreement as
so amended, restated, supplemented or modified.

          (d) References to Statutes. References in this Agreement to any statute shall be to
such statute as amended or modified and in effect at the time any such reference is operative.

          (e) Miscellaneous. The term “including” when used in any Loan Document means
“including without limitation” except when used in the computation of time periods.

ARTICLE II

THE LOAN

          Section 2.1 Commitment to Lend. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make one loan to the Borrower, in dollars, at its
applicable lending office on the Closing Date, in an amount up to, but not exceeding, the
commitment of such Lender and as to all Lenders in an aggregate amount up to, but not exceeding,
$1,600,000,000. Each loan by a Lender hereunder is herein called a “Loan” and all Loans are herein
collectively referred to as “the Loan”. The obligations of each Lender hereunder shall be several
and not joint. Amounts of the Loan repaid or prepaid may not be reborrowed.

          Section 2.2 Repayment of the Loans. The Borrower agrees to repay the full principal
amount of the Loans in seven annual installments, one such installment on each Principal Payment
Date, each of the first six installments to be in an amount equal to 1% of the initial aggregate
principal amount of the Loans and the final installment to be in the amount of the full remaining
balance of the Loans.

          Section 2.3 Evidence of Debt.

          (a) Lenders’ Accounts. Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing such Lender’s portion of the Loan outstanding from time
to time, including the amounts of principal and interest payable and paid to such Lender from time
to time under this Agreement.

          (b) Administrative Agent’s Records of Loan. The Administrative Agent shall establish
and maintain a register for recording with respect to the Loan (i) the date and amount of each
payment on the Loan made by or on behalf of, or collected from, the Borrower, (ii) the amount of
each such payment applied in accordance with Section 2.8(d) and (e) or other applicable terms
hereof to scheduled principal of or interest on the Loan, and (iii) the then outstanding principal
balance of the Loan (without reliance on the Lenders’ accounts).

          (c) Entries Prima Facie Evidence. The entries made in the accounts maintained
pursuant to this Section 2.3 shall, to the extent permitted by applicable law, be prima facie
evidence of the existence and amounts of the obligations recorded therein; provided,
however, that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of the Borrower to
repay the Loan in accordance with its terms.

          (d) Notes. Any Lender may elect, by notice to the Borrower and the Administrative
Agent, to have such Lender’s Loan be evidenced by a Note issued to that Lender. Upon such request,
the Borrower shall execute and deliver a promissory note substantially in the form of Exhibit
B (each a

38

 

“Note” and collectively the “Notes”) to the applicable Lender, in the
principal amount of the Loan owing to such Lender, and appropriately completed. Each Note shall be
made payable to the applicable Lender at the office of the Administrative Agent. If no such Note
is requested, such Lender may rely on the Register as evidence of the amount of Obligations with
respect to the Loan from time to time owing to it. If a Note is mutilated, lost, stolen or
destroyed, the Borrower shall issue a new Note, in the same principal amount and having the same
interest rate, date and maturity as the Note so mutilated, lost, stolen or destroyed endorsed to
indicate all payments thereon. In the case of any lost, stolen or destroyed Note, there shall
first be furnished to the Borrower an instrument of indemnity from the applicable Lender and
evidence of such loss, theft or destruction reasonably satisfactory to each of them.

          (e) Register. The Administrative Agent will establish and maintain a record of
ownership (the “Register”) in which the Administrative Agent agrees to register by book
entry the Administrative Agent’s and each Lender’s interest in the Loan, the Notes and this
Agreement, and in the right to receive any payments hereunder or thereunder and any assignment of
any such interest or rights. In connection with any assignment pursuant to Section 9.2, the
Administrative Agent shall maintain a copy of each Assignment and Acceptance delivered to and
accepted by it and shall record the names and addresses of the Lenders and principal amount of the
Loan owing to each Lender from time to time. Solely for purposes of this Section 2.3(e), the
Administrative Agent shall be the Borrower’s agent for purposes of establishing and maintaining the
Register. The entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Register as a Lender for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower, the Administrative Agent or any Lender
(with respect to information regarding its Loan) at any reasonable time and from time to time upon
reasonable prior notice.

          Section 2.4 Optional Prepayments.

          (a) Notice. The Borrower may, upon at least fifteen (15) days’ prior revocable notice
to the Administrative Agent stating the proposed date and aggregate principal amount of the
prepayment, elect to prepay the outstanding principal amount of the Loan, in whole or in part (but
not less than a minimum amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof), together with accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that upon any prepayment of all or a portion of the
Loan by the Borrower, or if the Borrower revokes such notice pursuant to clause (b) below, the
Borrower shall also pay any amounts owing pursuant to Section 2.9(d).

          (b) Amounts Due upon Notice. Upon the giving of any notice of prepayment under
Section 2.4(a), the principal amount of the Loan specified to be prepaid together with accrued and
unpaid interest thereon shall (subject to the proviso below) become due and payable on the date
specified for such prepayment; provided, however, that the Borrower may revoke any
notice of prepayment given under Section 2.4(a) by notice to the Administrative Agent no later than
10:00 a.m. (New York City time) on the date specified for such prepayment (which notice may be
provided telephonically or in person if promptly confirmed in writing).

          (c) Application of Optional Prepayments. Any partial prepayment of the Loan under
this Section 2.4 shall be applied to the outstanding principal amount of the Loan ratably as to
each Lender. Any such prepayment shall be paid to the Administrative Agent for application as
provided in
Section 2.8. The Borrower shall have no right to optionally prepay the principal amount of
the Loan other than as provided in this Section 2.4.

39

 

          Section 2.5 Mandatory Prepayments.

          (a) Replacement Secured Financing. Upon receipt by an Obligor of any Cash Proceeds
from any Replacement Secured Financing, the Borrower shall prepay the Loan from the proceeds
thereof in the manner provided below in an aggregate amount equal to the Collateral Release Value
for each item or category (as applicable) of Collateral subject to such Replacement Secured
Financing. Any prepayment of the Loan under this subsection shall be made on the Business Day
following the receipt by such Obligor of the proceeds of the applicable Replacement Secured
Financing.

          (b) Asset Sales. Upon receipt by an Obligor of any Cash Proceeds from an Asset Sale
permitted under Section 6.13, the Borrower shall prepay the Loan in an aggregate amount equal to
one hundred percent (100%) of the Net Cash Proceeds from such Asset
Sales; provided,
however, that the Borrower shall not be obligated to so prepay the Loan (A) if the Borrower
deposits 100% of such Net Cash Proceeds in the Collateral Account, to be applied in accordance with
Section 2.5(g), (B) with Net Cash Proceeds from Asset Sales (other than a Spare Engine) to the
extent such Net Cash Proceeds do not exceed $5,000,000 in the aggregate per Fiscal Year, or (C)
from the sale or disposition of Investments permitted to be made pursuant to Section 6.2 hereof,
other than the Investments permitted under clauses (ii), (vii), (viii), (x), (xi) and (xiv) of
Section 6.2 (except to the extent the Investment is permitted under another clause of Section 6.2).

Any prepayment of the Loan under this subsection (b) shall be made no later than three (3) Business
Days following the receipt by such Obligor of the proceeds of such Asset Sale.

          (c) Insurance/Condemnation Proceeds. No later than three (3) Business Days following
the date of receipt by an Obligor of any Net Insurance Proceeds of any Collateral or Net
Condemnation Proceeds of any Collateral or such other time as may be provided in the applicable
Collateral Document, the Borrower shall prepay the Loan in an amount equal to the amount by which
the aggregate amount of the sum of such Net Insurance Proceeds and Net Condemnation Proceeds
exceeds $5,000,000 in the aggregate per Fiscal Year (or if in the case of the proceeds of any Spare
Engine, the amount thereof); provided the Borrower shall not be obligated to so prepay the
Loan if and to the extent that the Borrower deposits 100% of such Net Insurance Proceeds or Net
Condemnation Proceeds in excess of $5,000,000 in any Fiscal Year in the Collateral Account (or in
the case of the proceeds of any Spare Engine, the amount thereof), to be applied in accordance with
Section 2.5(g); provided, further, that any Net Insurance Proceeds, Net
Condemnation Proceeds and Insurance Proceeds (as defined in the Aircraft Mortgage) received by the
Administrative Agent and not required to be applied pursuant to this clause (c) or the applicable
Collateral Document shall be returned by the Administrative Agent to the Borrower.

          (d) Change of Control. Upon the occurrence of a Change of Control, the Borrower shall
prepay the Loan in full, together with accrued interest thereon to the date of such prepayment.
Any prepayment of the Loan under this subsection (d) shall be made on the date of occurrence of
such Change of Control.

          (e) Collateral Coverage Ratio; Slots.

     (i) If at any time the Borrower is not in compliance with the Collateral Coverage
Ratio, the Borrower shall prepay the Loan to the extent required pursuant to Section 5.8(c).

     (ii) If at any time Primary Slots shall have been withdrawn by the FAA or otherwise
revoked or terminated by or with the FAA on a final basis after all appeals have been
exhausted during the term of the Loan as the result of failure by any Obligor or by any
lessee or licensee of

40

 

any Obligor to comply with the Slot Regulations, the Borrower shall
prepay the Loan in an amount equal to 100% of the Appraised Value of such Slots (which
Appraised Value shall be based on the then most current Appraisal Report as of the date of
such withdrawal, revocation or termination). Any prepayment of the Loan under this clause
(ii) shall be made no later than three (3) Business Days following the date of such
withdrawal, revocation or termination.

          (f) Application of Prepayments. Any partial prepayments of the Loan made by the
Borrower in accordance with this Section 2.5 shall be applied to the outstanding principal balance
of the Loan ratably as to each Lender. The Borrower shall also pay any amounts owing pursuant to
Section 2.9(d) in connection with any prepayment under this Section 2.5. All prepayments under
this Section 2.5 shall be paid to the Administrative Agent for application as provided in Section
2.8.

          (g) Reinvestment. Except as otherwise provided in the Aircraft Mortgage, any Net Cash
Proceeds, Net Insurance Proceeds or Net Condemnation Proceeds deposited in the Collateral Account
pursuant to Section 2.5(b), Section 2.5(c) or any other provision in the Loan Documents shall,
within five (5) Business Days of delivery of a Reinvestment Release Request, be released to the
Borrower to acquire, construct, or replace with Permitted Reinvestment Collateral, or repair or
restore the original assets, or to reimburse any Obligor for payments or disbursements with regard
to any of the foregoing, until the Reinvestment Prepayment Date corresponding thereto, on which
date the Net Cash Proceeds, Net Insurance Proceeds or Net Condemnation that are subject to such
Reinvestment Prepayment Date, if any, shall be applied to prepay the Loan.

          Section 2.6 Interest.

          (a) Rate of Interest. Except as otherwise provided in Section 2.6(c) and Section 2.9,
the Borrower shall pay interest (i) in the case of the Loan, at the Index Rate plus the Applicable
Index Margin per annum or, at the election (or deemed election) of the Borrower, the applicable
LIBOR Rate plus the Applicable LIBOR Margin per annum and (ii) in the case of all other Obligations
that are due and payable, at the Index Rate plus the Applicable Index Margin per annum.

          (b) Interest Payments. Interest accrued on the Loan shall be payable to the
Administrative Agent, for the ratable benefit of the Lenders, in arrears on each Interest Payment
Date, upon the payment or prepayment thereof in whole or in part, and, if not previously paid in
full, at maturity (whether by acceleration or otherwise). Interest on the Loan shall be calculated
on the basis of a year of 360 days (or in the case of interest calculated based upon the Index
Rate, a 365/366 day year) and actual number of days elapsed.

          (c) Default Interest. Notwithstanding the rate of interest specified in Section
2.6(a), effective immediately upon (i) the occurrence of any Event of Default under Sections 7.1(a)
(with respect to principal due on the Maturity Date and scheduled interest payments only), 7.1(f)
or 7.1(g) or (ii) the delivery of a notice by the Administrative Agent or the Requisite Lenders to
the Borrower declaring default interest to be payable during the continuance of any other Event of
Default and, in each case, for as long as such Event of Default shall be continuing, the principal
balance of all Obligations (including any Obligation that bears interest by reference to the rate
applicable to any other Obligation) then due and payable shall bear interest at a rate that is 2%
per annum in excess of the interest rate applicable to such Obligations from time to time, payable
on demand or, in the absence of demand, on the date that would otherwise be applicable.

          (d) Conversion/Continuation. So long as no Event of Default has occurred and is
continuing, the Borrower shall have the option to (i) convert at any time all or any part of the
outstanding Loans from Index Rate Loans to LIBOR Loans, (ii) convert any LIBOR Loan to an Index
Rate Loan,

41

 

subject to payment of LIBOR breakage costs in accordance with Section 2.9(d) if such
conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iii)
continue all or any portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR
Period, and the succeeding LIBOR Period of that continued Loan shall commence on the first day
after the last day of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans
having the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan
must be in a minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of such
amount. Any such election must be made by 11:00 a.m. (New York time) on the third Business Day
prior to (1) the date of any proposed Loan which is to bear interest at the LIBOR Rate, (2) the end
of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on
which the Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period
designated by the Borrower in such election. If no election is received with respect to a LIBOR
Loan by 11:00 a.m. (New York time) on the third Business Day prior to the end of the LIBOR Period
with respect thereto (or if an Event of Default has occurred and is continuing), the Borrower shall
be deemed to have elected to continue such Loan as a LIBOR Loan pursuant to clause (iii) above with
the same duration LIBOR Period as the LIBOR Period applicable to the Loan being continued. In each
case except in the case of a deemed election in accordance with the preceding sentence, the
Borrower must make such election by notice to the Administrative Agent in writing, by telecopy or
overnight courier and, in the case of any conversion or continuation, such election must be made
pursuant to a written notice (a “Notice of Conversion/Continuation”) in the form of
Exhibit L. No Loan may be made as or converted into a LIBOR Loan until after five (5)
Business Days following the Closing Date (unless otherwise agreed by the Administrative Agent) and,
until the earlier of ninety (90) days following the Closing Date and completion of primary
syndication of the Loans as determined by the Administrative Agent, no Loan may be converted into
or continued as a LIBOR Loan that has an interest period of more than one month.

          Section 2.7 Fees.

          (a) Agency Fees. The Borrower shall pay to the Administrative Agent and its
Affiliates the fees described in the Commitment Letter.

          (b) Fees Non-refundable. All fees paid under this Section 2.7 shall be
non-refundable.

          (c) Interest on Fees. If any fee or other amount payable by the Borrower hereunder is
not paid when due, such overdue amount shall bear interest at a rate which is two percent (2.0%)
per annum in excess of the then applicable interest rate on Index Rate Loans.

          Section 2.8 Payments and Computations.

          (a) Payments. The Borrower shall make each payment hereunder (including fees and
expenses) not later than 12:00 noon (New York City time) on the day when due, in Dollars, to the
Administrative Agent at the Collection Account, in immediately available funds without set-off,
defense, recoupment or counterclaim. All payments in respect of any Obligations shall at all times
be made to the Administrative Agent, whether or not a demand shall have been made. The
Administrative Agent will promptly cause all such payments received by it to be distributed to the
Person entitled thereto in accordance with the priorities of payment set forth below in Section
2.8(d) or (e), or both, as applicable. Payments received by the Administrative Agent after 12:00
noon (New York City time) shall be deemed to be received on the next Business Day.

          (b) Computation. Each determination by the Administrative Agent of an interest rate
and fees hereunder shall be conclusive and binding for all purposes, absent manifest error.

42

 

          (c) Payments on Business Days. Except as otherwise expressly provided herein,
whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or fees, as the case may be.

          (d) Application of Payments — No Event of Default. So long as no Event of Default
under any of clauses (a) (including any failure to pay all amounts hereunder upon acceleration as a
result of any other Event of Default), (f) or (g) of Section 7.1 has occurred and is continuing or
would result therefrom, the Administrative Agent shall apply all payments in respect of any
Obligations in the following order:

     (i) first, to pay any fees then due and payable under Section 2.7(a) to the
Administrative Agent;

     (ii) second, to pay interest then due and payable in respect of the Loan to the Lenders
on a pro rata basis;

     (iii) third, to pay principal then due and payable on the Loan to the Lenders, on a pro
rata basis; and

     (iv) fourth, to pay any other Obligations then due and payable to the Administrative
Agent and the Lenders, on a pro rata basis.

          (e) Application of Payments After Event of Default. After the occurrence and during
the continuance of an Event of Default under any of clauses (a) (including any failure to pay all
amounts hereunder upon acceleration as a result of any other Event of Default), (f) or (g) of
Section 7.1, the Administrative Agent shall apply all payments in respect of any Secured
Obligations (including amounts received by the Administrative Agent upon the exercise of remedies
under the Collateral Documents) in the following order:

     (i) first, to pay Obligations in respect of any expenses, fees, indemnities or other
sums (excluding principal and interest) owing hereunder then due to the Administrative Agent
in its capacity as such;

     (ii) second, to pay Obligations in respect of any expenses, fees, indemnities or other
sums owing hereunder not referred to in clauses (iii) and (iv) below then due to the
Lenders, on a pro rata basis;

     (iii) third, to pay on a pro rata basis interest then due and payable in respect of the
Loan to the Lenders;

     (iv) fourth, to pay or prepay principal payments on the Loan to the Lenders and to pay
amounts owing with respect to the Secured Hedging Contracts, on a pro rata basis; and

     (v) fifth, to pay any other Secured Obligations then due and payable to the Secured
Parties, on a pro rata basis.

          (f) Funding Defaults. Unless the Borrower has notified the Administrative Agent,
prior to the date any payment is required to be made by it to the Administrative Agent hereunder,
that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower
has timely made such payment and may (but shall not be so required to), in reliance thereon, make
available a

43

 

corresponding amount to the Person entitled thereto. If and to the extent that such
payment was not in fact made to the Administrative Agent in immediately available funds, then each
Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed
payment that was made available to such Lender in immediately available funds, together with
interest thereon in respect of each day from and including the date such amount was made available
by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative
Agent in immediately available funds (at the applicable Federal Funds Rate from time to time in
effect for the first Business Day and thereafter, at the rate applicable to Index Rate Loans). A
notice of the Administrative Agent to the Lenders with respect to any amount owing under this
subsection (f) shall be conclusive, absent manifest error.

          Section 2.9 Certain Provisions Governing the Loan.

          (a) Interest Rate Unascertainable, Inadequate or Unfair. In the event that (i) the
Administrative Agent determines that adequate and fair means do not exist for ascertaining the
applicable interest rates by reference to which the LIBOR Rate is determined or (ii) the Requisite
Lenders notify the Administrative Agent that the LIBOR Rate for any LIBOR Period will not
adequately reflect the cost to the Lenders of making or maintaining the Loan for such LIBOR Period,
the Administrative Agent shall promptly so notify the Borrower and the Lenders, whereupon the
obligation of each Lender to make or to continue LIBOR Loans shall be suspended as provided in
clause (e) below until the Administrative Agent shall notify the Borrower that the Requisite
Lenders have determined that the circumstances causing such suspension no longer exist.

          (b) Increased Costs. If at any time any Lender shall determine that as a result of
the introduction of or any change after the date hereof in or in the interpretation of any law,
treaty or governmental rule, regulation or order or the compliance by such Lender with any
guideline, request or directive after the date hereof from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase in the cost to such
Lender of agreeing to make or making, funding, guaranteeing or maintaining any portion of the Loan
(except in respect of Taxes), then the Borrower shall from time to time, within five (5) Business
Days of a demand (which demand shall be accompanied by a statement setting forth the basis for such
demand and a calculation of the amount thereof in reasonable detail) by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such increased cost;
provided that no Lender shall be entitled to claim any such additional amount for amounts
incurred more than six (6) months prior to the making of such demand. A certificate as to the
amount of such increased cost, submitted to the Borrower (and the Administrative Agent) by such
Lender shall be conclusive and binding for all purposes, absent manifest error. Each Lender shall
promptly notify in writing the Borrower and the Administrative Agent of any event of which such
Lender has knowledge, occurring after the date hereof, which would entitle such Lender to
compensation pursuant to this Section 2.9(b) and will designate a different lending office if such
designation will avoid the need for, or reduce the amount of, such compensation and will not, in
the judgment of such Lender be otherwise disadvantageous to it.

          (c) Illegality. If any Lender determines that the introduction of, or any change in
or in the interpretation of, any Requirement of Law after the date of this Agreement shall make it
unlawful, or any Governmental Authority shall assert that it is unlawful, for any Lender or its
applicable lending office to make LIBOR Loans or to continue to fund or maintain LIBOR Loans, then,
on notice thereof and demand therefor by such Lender to the Borrower through the Administrative
Agent, the obligation of
such Lender to make or to continue LIBOR Loans shall be suspended as provided in clause (e)
below until such Lender shall, through the Administrative Agent, notify the Borrower that it has
determined that it may lawfully make LIBOR Loans.

44

 

          (d) Breakage Costs. In addition to all amounts required to be paid by the Borrower
pursuant to Section 2.5, the Borrower shall compensate each Lender upon demand, for all losses,
expenses and liabilities (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender or the termination of any other
financial arrangement it may have entered into to fund or maintain or support such Lender’s portion
of the Loan, but excluding Taxes) which that Lender may sustain (i) if for any reason any portion
of the Loan is prepaid (including mandatorily pursuant to Section 2.5 or this Section 2.9) on a
date which is not the last day of the applicable LIBOR Period or (ii) as a consequence of any
failure by a Borrower to repay any portion of the Loan when required by the terms hereof. The
Lender making demand for such compensation shall deliver to the Borrower (with a copy to the
Administrative Agent) concurrently with such demand a written statement as to such losses, expenses
and liabilities, and this statement shall be conclusive as to the amount of compensation due to
that Lender absent manifest error, and such compensation shall be paid to the Administrative Agent
for the account of such Lender.

          (e) Effect of Suspension. If the obligation of any Lender to make or to continue
LIBOR Loans is suspended, (i) the obligation of such Lender to convert Index Rate Loans into LIBOR
Loans shall be suspended, (ii) such Lender shall make an Index Rate Loan at any time such Lender
would otherwise be obligated to make a LIBOR Loan, (iii) the Borrower may revoke any pending Notice
of Conversion/Continuation to make or continue any LIBOR Loan or to convert any Index Rate Loan
into a LIBOR Rate Loan and (iv) each LIBOR Loan of such Lender shall automatically and immediately
(or, in the case of any suspension pursuant to clause (a) above, on the last day of the current
LIBOR Period thereof) be converted into an Index Rate Loan.

          Section 2.10
Capital Adequacy. If at any time any Lender determines that (a) the
adoption of or any change in or in the interpretation of any law, treaty or governmental rule,
regulation or order after the date of this Agreement regarding capital adequacy, (b) compliance
with any such law, treaty, rule, regulation, or order or (c) compliance with any guideline or
request or directive from any central bank or other Governmental Authority or any accounting board
or authority (whether or not a Governmental Authority) which is responsible for the establishment
or interpretation of national or international accounting principles (in each case, whether or not
having the force of law) shall have the effect of reducing the rate of return on such Lender’s (or
any corporation controlling such Lender’s) capital as a consequence of its obligations hereunder
(other than with respect to Taxes) to a level below that which such Lender or corporation could
have achieved but for such adoption, change, compliance or interpretation, then, upon demand from
time to time by such Lender (with a copy of such demand to the Administrative Agent), the Borrower
shall within five (5) Business Days of such demand pay to the Administrative Agent for the account
of such Lender from time to time as specified by such Lender additional amounts sufficient to
compensate such Lender for such reduction; provided that the Borrower shall not be required
to compensate a Lender pursuant to this Section 2.10 for any amounts incurred more than six (6)
months prior to the date of such demand. A certificate as to such amounts submitted to the
Borrower (and the Administrative Agent) by such Lender shall be conclusive and binding for all
purposes absent manifest error. Each Lender shall promptly notify the Borrower and the
Administrative Agent of any event of which such Lender or has knowledge, occurring after the date
hereof, which would entitle such Lender to compensation pursuant to this Section 2.10 and will
designate a different lending office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment of such Lender, be otherwise
disadvantageous to it. For the avoidance of doubt, any interpretation of Accounting Research
Bulletin No. 51 by FASB (including Interpretation No. 46 – Consolidation of Variable Interest
Entities) shall constitute an adoption, change, request or directive, and any implementation
thereof shall be, subject to this Section 2.10.

45

 

          Section 2.11 Taxes.

          (a) No Withholding, etc. Except as otherwise provided in the next sentence and
Section 9.2, any and all payments by the Obligors under each Loan Document shall be made free and
clear of and without deduction for any and all Taxes, excluding (i) in the case of each Lender,
each Participant and the Administrative Agent, Taxes measured by its net income and franchise
Taxes, in each case if imposed on it as a result of such Person being organized under the laws of
the jurisdiction imposing such Taxes or doing business in such jurisdiction unrelated to the
transactions contemplated by any Loan Document, (ii) in the case of each Lender and each
Participant, Taxes measured by its net income and franchise Taxes imposed on it by the jurisdiction
in which its Lending Office is located or in which it booked its participation for tax accounting
purposes, (iii) in the case of each Lender, each Participant and the Administrative Agent, Taxes
imposed on it as a result of its failure to comply with its obligations under Section 2.11(f),
Section 2.11(g) or Section 9.2, (iv) in the case of each Lender, each Participant and the
Administrative Agent (A) that is a party hereto or Participant, as the case may be, on the Closing
Date, United States federal withholding Taxes except to the extent imposed as a result of a change
in applicable law, including income tax conventions, after the Closing Date and (B) that becomes a
party hereto or Participant, as the case may be, after the Closing Date, United States federal
withholding Taxes except to the extent imposed as a result of a change in applicable law, including
income tax conventions, after the date of the Assignment and Acceptance pursuant to which it
becomes a Lender or after the date such Person becomes a Participant, or the Administrative Agent,
as applicable, and (v) Taxes imposed as a result of such Person’s gross negligence or willful
misconduct (all such non-excluded Taxes being hereinafter referred to as “Indemnified
Taxes”). If any Indemnified Taxes shall be required by law to be deducted from or in respect
of any sum payable under any Loan Document to any Lender, or the Administrative Agent (1) the sum
payable shall be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 2.11) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (2) the Obligors shall make such deductions, and (3) the
Obligors shall pay the full amount deducted to the relevant taxing authority or other authority in
accordance with applicable law.

          (b) Other Taxes. In addition, the Obligors agree to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar levies of the United
States or any political subdivision thereof or any applicable foreign jurisdiction which arise from
any payment made under any Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, any Loan Document (collectively, “Other Taxes”) to the
Administrative Agent for the account of the affected party.

          (c) Tax Indemnity. The Obligors will indemnify each Lender and the Administrative
Agent for the full amount of Indemnified Taxes or Other Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 2.11) paid by such Lender or the Administrative
Agent (as the case may be) and any liability (including for penalties, interest and expenses)
arising therefrom or with respect thereto, other than any liability, including for penalties,
interest and expenses, arising from the gross negligence or willful misconduct of the Lender or the
Administrative Agent, as the case may be. This indemnification shall be made to the Administrative
Agent for account of the relevant Lender or the Administrative Agent, as the case may be, within 30
days from the date such Lender or the Administrative Agent (as the case may be) makes written
demand therefor (with a copy to the Administrative Agent if made by a Lender and accompanied by a
statement setting forth the basis for such taxation and the calculation of the amount thereof in
reasonable detail).

          (d) Evidence of Payment. Within 30 days after the date of any payment of Indemnified
Taxes or Other Taxes, the Obligors will furnish to the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof or other documentation reasonably
satisfactory to the Administrative Agent.

46

 

          (e) Survival. Without prejudice to the survival of any other agreement of the
Obligors hereunder, the agreements and obligations of the parties contained in this Section 2.11
shall survive the payment in full of the Obligations.

          (f) Certain Withholding Tax Matters. Each Lender, each Participant and the
Administrative Agent that is a Non-U.S. Person and that is entitled at such time to an exemption
from United States withholding tax, or that is subject to such tax at a reduced rate under an
applicable tax treaty, shall, on or prior to the Closing Date or on or prior to the date of the
Assignment and Acceptance pursuant to which it becomes a Lender or on or prior to the date such
Person becomes a Participant or the Administrative Agent, as applicable, and from time to time
thereafter if requested by the Administrative Agent or the Borrower, provide the Administrative
Agent and the Borrower with two completed copies of either IRS Form W-8BEN or W-8ECI or other
applicable form, certificate or document prescribed by the IRS certifying as to such Non-U.S.
Person’s entitlement to such exemption from United States withholding tax or reduced rate with
respect to all payments to be made to such Non-U.S. Person under the Loan Documents. In addition,
each Lender, each Participant and the Administrative Agent that is a Non-U.S. Person, as the case
may be, shall deliver to the Borrower and the Administrative Agent, notice of any event (other than
a change in applicable law, including income tax conventions) requiring a change in the most recent
form previously delivered by such Person to the Borrower and the Administrative Agent. Each
Lender, each Participant and the Administrative Agent (other than an entity treated as a
corporation for U.S. federal income tax purposes) that is a “United States person” within the
meaning of Section 7701(a)(30) of the Internal Revenue Code shall deliver two duly signed and
completed copies of IRS Form W-9 to the Administrative Agent and the Borrower, at the times and in
the manner described above with respect to IRS Forms W-8. Unless the Administrative Agent and the
Borrower have received forms or other documents satisfactory to them indicating that payments under
the Loan Documents are not subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Administrative Agent or the Borrower shall,
notwithstanding the provisions of Section 2.11(a) and (c) and without impairing any obligation of
the Obligors under this Section 2.11 with respect to such tax, withhold such United States
withholding taxes from such payments at the appropriate rate; provided that if such Person
is a Lender, Participant, or Administrative Agent and shall have satisfied the requirement of this
Section 2.11(f) on the date it became a Lender, Participant, or Administrative Agent, nothing in
this Section 2.11(f) shall relieve the Obligors of their obligation to pay any amounts pursuant to
this Section 2.11 in the event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in governmental interpretation,
administration or application thereof, such Lender, Participant, or Administrative Agent is no
longer properly entitled to deliver forms, certificates or other evidence at a subsequent date
establishing that it is not subject to withholding or is subject to withholding at a reduced rate.
The obligation of the Obligors under this Section 2.11 shall survive the repayment of all other
Obligations hereunder and the resignation of the Administrative Agent.

          (g) Mitigation. Any Lender claiming any additional amounts payable pursuant to this
Section 2.11 shall use its reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to change the jurisdiction of its Lending Office if the making of such a
change would avoid the need for, or reduce the amount of, any such additional amounts which would
be payable or may thereafter accrue and would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender.

          Section 2.12 Substitution of Lenders.

          (a) Substitution Right. In the event that any Lender (an “Affected Lender”)
(i) makes a claim under Section 2.9(b) or Section 2.10, (ii) notifies the Borrower pursuant to
Section 2.9(c) that it becomes illegal for such Lender to continue to fund or make any LIBOR Loans,
or (iii) is entitled

47

 

to (and does not waive) any increased payment attributable to Indemnified
Taxes or makes a claim for payment pursuant to Section 2.11(a) or 2.11(c), the Borrower may either
pay in full the Obligations owed to such Affected Lender or substitute for such Affected Lender any
Lender or any Affiliate or Approved Fund of any Lender or any other Eligible Lender acceptable
(which acceptance shall not be unreasonably withheld or delayed) to the Administrative Agent (in
each case, a “Substitute Lender”).

          (b) Procedure. To substitute such Affected Lender or pay in full the Obligations owed
to such Affected Lender, the Borrower shall deliver a notice to the Administrative Agent and such
Affected Lender. The effectiveness of such payment or substitution shall be subject to the
delivery to the Administrative Agent by the Borrower (or, as may be applicable in the case of a
substitution, by the Substitute Lender) of (i) payment for the account of such Affected Lender, of,
to the extent accrued through, and outstanding on, the effective date for such payment or
substitution, all Obligations owing to such Affected Lender (including those that will be owed
because of such payment), and (ii) in the case of a substitution, (A) payment of the assignment fee
set forth in Section 9.2(b) and (B) an assumption agreement in form and substance satisfactory to
the Administrative Agent whereby the Substitute Lender shall, among other things, agree to be bound
by the terms of the Loan Documents.

          (c) Effectiveness. Upon satisfaction of the conditions set forth in clause (b) above,
the Administrative Agent shall record such substitution or payment in the Register, whereupon in
the case of any substitution, (i) the Affected Lender shall sell and be relieved of, and the
Substitute Lender shall purchase and assume, all rights and claims of such Affected Lender under
the Loan Documents, except that the Affected Lender shall retain such rights expressly providing
that they survive the repayment of the Obligations and the termination of the Commitments, (ii) the
Substitute Lender shall become a “Lender” hereunder and (iii) the Affected Lender shall execute and
deliver to the Administrative Agent an Assignment and Acceptance to evidence such substitution and
deliver any Note in its possession; provided, however, that the failure of any
Affected Lender to execute any such Assignment and Acceptance or deliver any such Note shall not
render such sale and purchase (or the corresponding assignment) invalid.

ARTICLE III

CONDITIONS PRECEDENT

          The obligation of each Lender to make the Loan to be made by it hereunder is subject to the
following conditions being satisfied on the Closing Date:

          (a) Certain Agreements and Documents. The Administrative Agent shall have received on
or prior to the Closing Date each of the following, each dated as of the Closing Date, in form and
substance satisfactory to the Administrative Agent and the Lenders:

     (i) this Agreement, duly executed and delivered by the parties hereto;

     (ii) the Notes, duly executed by the Borrower and conforming to the requirements set
forth in Section 2.3(d), to the extent requested by each Lender;

     (iii) The Guaranty, duly executed and delivered by each Obligor;

     (iv) each Collateral Document, duly executed and delivered by the applicable obligors,
together in each case with evidence of the perfection and first priority of the Liens
created thereby, subject to Section 5.20;

48

 

     (v) a Collateral Value Certificate, duly executed and delivered by the Borrower;

     (vi) a Notice of Borrowing, duly executed by the Borrower;

     (vii) the favorable opinions of (A) Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to the Obligors, (B) Janet Dhillon, Esq., Senior Vice President and General Counsel
of the Borrower, (C) McGuire Woods LLP, special local counsel to the Obligors in Maryland,
and (D) Kozloff Stoudt, special local counsel to the Obligors in Pennsylvania;

     (viii) a certificate of each Obligor signed on behalf of such Person by its Secretary
or an Assistant Secretary (A) certifying the names and true signatures of each officer of
such Person who has been authorized to execute and deliver each Loan Document required to be
executed and delivered on or prior to the Closing Date by or on behalf of such Person
hereunder or thereunder (or that there have been no changes from the officers so authorized
on the Closing Date), (B) attaching the organizational documents of such Person, and (C) the
resolutions of such Person’s board of directors approving and authorizing the execution,
delivery and performance of each Loan Document required to be executed and delivered on or
prior to the Closing Date to which it is a party;

     (ix) an Officer’s Certificate of the Borrower certifying (A) that all representations
and warranties in Article IV hereof are true and correct in all material respects on and as
of the Closing Date, as though made on and as of such date, and (B) that no Default or Event
of Default has occurred and is continuing;

     (x) an Officer’s Certificate of the Borrower certifying that after giving effect to the
Loans to be made on the Closing Date and the payment of all transaction costs in connection
with the foregoing, the Obligors taken as a whole are Solvent; and

     (xi) a copy of a good standing certificate for each Obligor in the state of its
incorporation or organization.

          (b) Fees and Expenses Paid. The Borrower shall have paid all fees due and payable on
the Closing Date (including, without limitation, the fees referenced in Section 2.7), and all
expenses of the Administrative Agent and its Affiliates due and payable on or before the Closing
Date.

          (c) Consents, Etc. The Obligors shall have received all consents and authorizations
required pursuant to any material Contractual Obligation with any other Person in form and
substance reasonably satisfactory to the Administrative Agent and the Lenders and shall have
obtained all consents, waivers and authorizations of, and effected all notices to and filings with,
any Governmental Authority as may be necessary to allow the Obligors lawfully to execute, deliver
and perform, in all material respects, their obligations under the Loan Documents to which they
are, or shall be, a party and each other agreement or instrument to be executed and delivered by
them, pursuant thereto or in connection therewith.

          (d) No Illegality. No law or regulation shall be applicable in the judgment of the
Administrative Agent that restrains, prevents or imposes materially adverse conditions upon the
transactions contemplated hereby.

          (e) Representations and Warranties of the Obligors. All representations and
warranties set forth in Article IV hereof shall be true and correct in all material respects on and
as of the Closing Date as though made on and as of such date (except to the extent any such
representation or

49

 

warranty by its terms is made as of a different specified date in which event
such representation or warranty shall be true and correct in all material respects as of such
specified date).

          (f) No Event of Default. No Default or Event of Default shall have occurred and be
continuing.

          (g) Corporate and Other Proceedings. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to the Administrative Agent.

          (h) Existing Loan Agreement. The Administrative Agent and the Lenders shall have
received satisfactory evidence that all amounts owing under the Existing Loan Agreement (including,
without limitation, interest, fees and expenses) have been repaid in full.

          (i) Baseline Appraisal. The Administrative Agent and the Lenders shall have received
the Baseline Appraisal.

          (j) Certificate. A certificate of a financial officer of the Borrower, dated the
Closing Date, evidencing compliance as of the Closing Date with Sections 6.4(a) and 6.4(c).

          (k) Documents and Information. The Administrative Agent and the Lenders shall have
received such other certificates, documents, agreements and information respecting the Obligors as
each of them may have reasonably requested.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

          To induce the other parties (excluding any other Obligors) to enter into this Agreement, each
of the Obligors represents and warrants to each other party hereto (excluding any other Obligors)
that, on and as of the Closing Date:

          Section 4.1 Organization, Qualification, Subsidiaries, etc.

          (a) Organization, Power and Authority. Each Obligor is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of organization. Each
Obligor has all requisite corporate power and authority to own and operate its properties, to carry
on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents
to which it is a party and to carry out the transactions contemplated hereby and thereby.

          (b) Foreign Qualification; “Air Carrier Status”. Each Obligor is qualified to do
business and in good standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, except in jurisdictions where the failure to be
so qualified or in good standing could not reasonably be expected to have a Material Adverse
Effect. Each Air Carrier holds a certificate under Section 41102 of Title 49. Each Air Carrier
and any other Obligor engaged in operations as an “air carrier” is a “citizen of the United States”
within the meaning of Section 40102(a)(15) of Title 49, as interpreted by the United States
Department of Transportation (a “United States Citizen”) and holds an air carrier operating
certificate issued pursuant to Chapter 447 of Title 49 for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo. Each Obligor possesses all
necessary certificates, franchises, licenses, permits, rights and concessions and consents which
are material to the conduct of its business and operations as currently conducted (including in the
case of each Obligor

50

 

engaged in operations as an “air carrier”, the operation of the routes flown
by it), a true and complete list of which are set forth on Schedule 4.1(b).

          (c) Subsidiaries. All of the Subsidiaries of each Obligor, in each case, as of the
Closing Date, are identified in Schedule 4.1(c). Schedule 4.1(c) correctly sets
forth as of the Closing Date the equity and voting interest of the Borrower in each of the
Subsidiaries identified therein. There are no limitations on the rights of the Borrower to vote
the Capital Stock it owns of any Person listed on Schedule 4.1(c). Airways Assurance
Limited, a Bermuda corporation, is a wholly-owned Subsidiary of the Borrower whose business is
limited to securing insurance for the Obligors. AWHQ LLC, an Arizona limited liability company, is
a wholly-owned Subsidiary of the Obligors, owned 99% by Holdings and 1% by AWA, whose business is
limited to acting as a real estate holding company. America West Company Store LLC, an Arizona
limited liability company, is a wholly-owned Subsidiary of AWA whose business is limited to
operation of the America West company store.

          (d) Obligor Information. Schedule 4.1(d) sets forth as of the Closing Date
the name, address of principal place of business and taxpayer identification number of the Borrower
and each other Obligor.

          Section 4.2 Authorization of Loan Documents, etc.

          (a) Authorization. Each Obligor has duly authorized by all necessary corporate action
the execution, delivery and performance of the Loan Documents to which it is a party.

          (b) No Conflicts. The execution, delivery and performance by each Obligor of the Loan
Documents and the consummation of the transactions contemplated by the Loan Documents to which it
is a party do not and will not (i) violate any provision of any law or any governmental rule or
regulation applicable to any Obligor, the certificate or articles of incorporation or bylaws of any
Obligor or any order, judgment or decree of any court or other agency of government binding on any
Obligor, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time
or both) a default or require any payment under (A) any Loan Document or (B) any other Contractual
Obligation of any Obligor, except that with respect to clause (B), for any such conflict, breach,
default or requirement of payment which could not reasonably be expected to have a Material Adverse
Effect, (iii) result in or require the creation or imposition of any Lien upon any of the
properties or assets of any Obligor (other than the Liens created under the Collateral Documents)
or (iv) require any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of any Obligor, except for such approvals or consents (A) which will have
been obtained on or before the Closing Date and have been disclosed in writing to the
Administrative Agent or (B) with respect to any Contractual Obligation, which if not obtained,
could not reasonably be expected to have a Material Adverse Effect.

          (c) No Consents, Approvals, etc. The execution, delivery and performance by each
Obligor of the Loan Documents to which it is a party and the consummation of the transactions
contemplated by the Loan Documents to which it is a party do not and will not require (i) any
registration with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other Governmental Authority or (ii) any registration with, consent or approval
of, or material notice to, or other action to, with or by, any other Person, in each case, which is
required to be obtained or made on or prior to the Closing Date and which has not been obtained or
made, except as is disclosed on Schedule 4.2(c).

          (d) Execution, Delivery, Enforceability. Each Obligor has duly executed and delivered
each of the Loan Documents to which it is party and each such Loan Document is the legal, valid and
binding obligation of such Obligor, enforceable against such Obligor in accordance with its

51

 

respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws relating to or affecting the enforcement of creditors’
rights generally, including materiality, reasonableness, good faith and fair dealing, and by
general principles of equity (regardless of whether considered in a proceeding in equity or at
law).

          Section 4.3 Financial Condition.

          (a) The Borrower has heretofore delivered to the Administrative Agent (i) the audited
consolidated balance sheet of the Borrower as at December 31, 2006, and the related consolidated
statements of income, stockholders’ equity and cash flows of the Borrower for the Fiscal Year then
ended, and (ii) the unaudited consolidated balance sheet of the Borrower as at January 31, 2007 and
the related unaudited consolidated statements of income, stockholders’ equity and cash flows of the
Borrower for the one month then ended. All such financial statements were prepared in accordance
with GAAP (except that any unaudited financial statements are subject to normal year-end
adjustments and may not be accompanied by footnotes) and fairly present, in all material respects,
the consolidated financial position of such Persons as at the date thereof and the consolidated
results of operations and cash flows of such Person for the respective periods then ended.

          (b) After giving effect to the Loans made on the Closing Date and the payment of all
transaction costs in connection with the foregoing, (i) the Obligors taken as a whole are Solvent
and (ii) no Obligor has any material liability, including reasonably likely contingent liability or
liability for taxes, long-term lease or any unusual forward or long-term commitment of a type
required to be reflected in financial statements prepared in conformity with GAAP, that is not
reflected in the projections and pro forma financial information delivered pursuant to clause (j)
of Article III. After giving effect to the Loans to be made on the Closing Date and the payment of
all transaction costs in connection with the foregoing, the Obligors taken as a whole are Solvent.

          (c) The Borrower maintains disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Obligors and has (i) caused such disclosure
controls and procedures to be designed to ensure that material information relating to the Obligors
is reported internally, and (ii) caused such internal controls over financial reporting to be
designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP.

          Section 4.4 No Material Adverse Change; No Defaults. Since December 31, 2006, no
material adverse change, individually or in the aggregate, has occurred in the business, financial
or other condition of the Borrower and its Subsidiaries taken as a whole, the industry in which the
Borrower or any Subsidiary operates, the Collateral, or in the prospects or projections of the
Borrower and its Subsidiaries taken as a whole, or in the Borrower’s ability to repay the Loan or
perform its obligations under the Loan Documents or with respect to the matters included in the
financial projections delivered to the Administrative Agent on February 23, 2007. No event or
occurrence which would constitute a Default or Event of Default has occurred and is continuing.

          Section 4.5 Title to Properties; Liens . Each Obligor has (i) good and insurable fee title to
(in the case of fee interests in real
property), (ii) valid, and in the case of leasehold interests in real property, insurable,
leasehold interests in (in the case of leasehold interests in real or personal property) or (iii)
good title to (in the case of all other personal property) all of the properties and assets
necessary to the conduct of its business including property and assets reflected in the financial
statements referred to in Section 4.3, except for assets disposed of since the date of such
financial statements in the ordinary course

52

 

of business. Except as otherwise permitted by this
Agreement and the Collateral Documents, all such properties and assets are free and clear of Liens.

          Section 4.6 Litigation; Adverse Facts. Except as disclosed in the Borrower’s Form
10-K for the fiscal year ended December 31, 2006 or on Schedule 4.6, there are no material
actions, suits, proceedings, arbitrations or investigations (whether or not purportedly on behalf
of the Borrower or any other Obligor) at law or in equity or before or by any Governmental
Authority pending or, to the knowledge of any Responsible Officer of any Principal Obligor,
threatened against or affecting (in either case, whether asserted or unasserted) any of the
Obligors or any property of the Obligors. Except as disclosed in the Borrower’s Form 10-K for the
fiscal year ended December 31, 2006 or on Schedule 4.6, there are no actions, suits,
proceedings, arbitrations or investigations (whether or not purportedly on behalf of the Borrower
or any other Obligor) at law or in equity or before or by any Governmental Authority pending or, to
the knowledge of any Responsible Officer of any Principal Obligor, threatened against or affecting
(in either case, whether asserted or unasserted) any of the Obligors or any property of the
Obligors that challenge the legality, validity or binding effect of, or seek to restrain or enjoin
any Obligor from entering into or performing under, any Loan Document including, without
limitation, this Agreement or any Collateral Document. No Obligor is subject to any final
judgments, writs, injunctions or decrees of any court or any Governmental Authority, compliance
with which could reasonably be expected to have a Material Adverse Effect, or is in default with
respect to any such judgments, writs, injunctions or decrees, which default could reasonably be
expected to have a Material Adverse Effect.

          Section 4.7 Payment of Taxes.

          (a) Except as otherwise set forth on Schedule 4.7(a): (i) the Obligors have timely
filed all material Tax returns and reports required to have been filed, and have paid or made
adequate provision for payment of all material Taxes levied or imposed upon them or their
properties (including the Collateral), income or assets that have become due and payable, except in
those instances in which such Taxes are being contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves have been made in accordance with GAAP; (ii)
there is no proposed Tax assessment against any Obligor that relates to a material amount of Taxes,
and no Principal Obligor knows of any basis for any such assessment; and (iii) no Obligor is party
to any Tax sharing agreement with any Person other than another Obligor, other than tax indemnity
agreements in leasing transactions entered into in the ordinary course of business.

          (b) Schedule 4.7(b) is a true and complete list of each claim of a governmental unit
of the kind entitled to priority in payment, as specified in section 502(i) and 507(a)(8) of the
Bankruptcy Code, that the Obligors will or expect to pay or to be required to pay during the six
(6) years immediately following the Closing Date.

          Section 4.8 Performance of Agreements; Materially Adverse Agreements.

          (a) No Default. No Obligor is in default in the performance, observance or
fulfillment of any Contractual Obligations other than defaults which are not reasonably expected to
have a Material Adverse Effect, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default.

          (b) No Adverse Agreements. No Obligor is a party to or is otherwise subject to any
agreements or instruments or any charter or other internal restrictions which, individually or in
the aggregate, could reasonably be expected to impair the ability of the Obligors, taken as a
whole, to perform their payment or other material obligations under the Loan Documents.

53

 

          Section 4.9 Governmental Regulation. No Obligor is subject to regulation under the
Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute
or regulation (other than the Bankruptcy Code) which may limit its ability to incur Indebtedness or
which may otherwise render all or any portion of its Obligations unenforceable.

          Section 4.10 Securities Activities. No Obligor is engaged principally in the business
of extending credit for the purpose of purchasing or carrying any Margin Stock (as defined below),
and no proceeds of the Loan will be used to buy or carry Margin Stock or to extend credit to any
Person for the purpose of buying or carrying any Margin Stock in a manner that violates or causes a
violation of Regulations T, U or X of the Federal Reserve Board or any other regulation of such
Board. For purposes of this Section 4.10, the term “Margin Stock” has the meaning assigned to that
term in Regulation T, U or X of the Federal Reserve Board as in effect from time to time.

          Section 4.11 Employee Benefit Plans.

          (a) Schedule 4.11(a) lists each Plan and each Multiemployer Plan maintained or
contributed to, or required to be contributed to, by each Obligor or any of its ERISA Affiliates as
of the Closing Date. Each Plan has been operated and administered in compliance with its terms and
all applicable requirements of ERISA, the Code and other laws, except where the failure to do so
could not reasonably be expected to have, taking all instances in the aggregate, a Material Adverse
Effect. Each Plan intended to qualify under Section 401 of the Internal Revenue Code does so
qualify, and any trust created thereunder is exempt from tax under the provisions of Section 501 of
the Internal Revenue Code, except where the failure to do so could not reasonably be expected to
have, taking all instances in the aggregate, a Material Adverse Effect.

          (b) Full payment has been made by each Obligor and any of its ERISA Affiliates of all minimum
amounts which such entities are required to pay under the terms of each Plan and Multiemployer Plan
except where the failure to so comply, taking all instances in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

          (c) No ERISA Event has occurred or is reasonably expected to occur that, when taken together
with all other ERISA Events for which liability is reasonably expected to occur, could reasonably
be expected to have a Material Adverse Effect.

          (d) Neither any Obligor nor any of its ERISA Affiliates maintains or contributes to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which provides benefits to
retired employees or other former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA), other than a Plan the
obligations with respect to which, when taken together with the projected contributions thereto
reflected in the projections and pro forma financial information, could not reasonably be expected
to have a Material Adverse Effect.

          (e) No Plan maintained by any Obligor or any of its ERISA Affiliates is underfunded (based on
the present value of all accumulated benefit obligations thereunder) except to the extent that the
aggregate amount of underfunding with respect to all such plans, when taken together with the
projected contributions thereto reflected in the projections and pro forma financial information
heretofore delivered to the Lenders, could not reasonably be expected to have a Material Adverse
Effect.

54

 

          Section 4.12 Environmental Protection.

          (a) Compliance with Environmental Laws. All Facilities and operations of each Obligor
are, and have been to the knowledge of each Principal Obligor, in compliance with all Environmental
Laws except for any noncompliance which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

          (b) Hazardous Materials Activity. Except as disclosed in the Borrower’s Form 10-K for
the fiscal year ended December 31, 2006 or on Schedule 4.12(b), there are no, and have been
no, conditions, occurrences, or Hazardous Materials Activity (i) arising at any Facilities or (ii)
arising in connection with the operations of the Obligors or of past or current Affiliates of any
Obligor (while under the control of a Principal Obligor or otherwise to the knowledge of a
Principal Obligor) (including the transportation of Hazardous Materials in accordance with
applicable regulations), which conditions, occurrences or Hazardous Materials Activity could
reasonably be expected to form the basis of a material Environmental Claim against any Obligor.

          (c) Environmental Claims. Except as disclosed in the Borrower’s Form 10-K for the
fiscal year ended December 31, 2006 or on Schedule 4.12(c), there are no pending or, to the
knowledge of any Principal Obligor, threatened material Environmental Claims against any Obligor,
and no Principal Obligor has received any notices, inquiries, or requests for information with
respect to any material Environmental Claims.

          (d) Orders, Decrees, etc. No Obligor is currently operating or required to be
operating under any compliance order, schedule, decree or agreement, any consent decree, order or
agreement, and/or any corrective action decree, order or agreement issued or entered into under any
Environmental Law the failure to comply with which could reasonably be expected to have a Material
Adverse Effect.

          (e) Absence of Control. Each Obligor hereby acknowledges and agrees that the
Administrative Agent (i) is not now, and has not ever been, in control of any of the Real Estate of
the Obligors or of any Obligor’s affairs, and (ii) does not have the capacity through the
provisions of the
Loan Documents or otherwise to influence any Obligor’s conduct with respect to the ownership,
operation or management of any of its Real Estate or compliance with Environmental Laws.

          Section 4.13 Disclosure. No representation or warranty or certification of any
Obligor or of any Responsible Officer of the Borrower or any other Officer of any Obligor contained
in this Agreement, any other Loan Document or in any other document, certificate or written
statement furnished to the Administrative Agent or the Lenders by or on behalf of any Obligor (as
modified or supplemented by other written information so furnished) for use in connection with the
negotiation and closing of the transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state any material fact necessary to make the statements
therein at the time, and in light of the circumstances under which they were made, not misleading;
provided that with respect to projected financial information contained in any such
document or furnished to any party hereto by or on behalf of the Obligors, the Obligors represent
only that such information was prepared in good faith based upon assumptions believed to be
reasonable at the time, it being recognized that such projections as to future events are not to be
viewed as facts and that actual results during the period or periods covered thereby may differ
from the projected results.

          Section 4.14 Compliance with Laws. Each Obligor is in compliance with all laws,
statutes, rules, regulations and orders binding on or applicable to such Obligor, and all of its
properties, except to the extent failure to so comply (either individually or in the aggregate)
could not reasonably be expected to have a Material Adverse Effect.

55

 

          Section 4.15 Indebtedness. Schedule 4.15 correctly sets forth the
consolidated Indebtedness of the Borrower and its Subsidiaries as of the Closing Date and
identifies each primary obligor and each guarantor or other secondary obligor thereof, if any.

          Section 4.16 Insurance. Schedule 4.16 sets forth as of the Closing Date a
summary of all insurance policies maintained by the Borrower and its Subsidiaries. The properties,
business and operations of the Obligors are insured or reinsured with financially sound and
reputable insurance companies or by the United States of America, in such amounts, with such
deductibles and covering such risks as are insured against (including, but not limited to, war risk
and third party liability) and carried in accordance with applicable law and prudent industry
practice by major U.S. commercial air carriers similarly situated with the Obligors and owning or
operating similar properties, aircraft and engines.

          Section 4.17 Perfected Security Interests. The Administrative Agent, on behalf of the
Lenders and the other Secured Parties, has valid, first priority (other than Permitted
Encumbrances) security interests in the Collateral, which security interests are perfected to such
extent as is provided in the Collateral Documents.

          Section 4.18 Absence of Labor Disputes. No strikes, boycotts, work stoppages or lockouts with respect to any of the Obligors exist,
and no Obligor has received written notice, sanctioned by any collective bargaining unit
representing employees of such Obligor, threatening a strike, boycott or work stoppage.

          Section 4.19 Compliance with certain Gates. Each Obligor is in compliance in all
material respects with all Gates with respect to the airports listed on Schedule 4.19.

          Section 4.20 Slot Utilization. The Obligors maintain personnel, policies, procedures
and a computer database for the monitoring, utilization and management of the FAA Slots in
compliance with the Slot Regulations so as to ensure, to the greatest extent operationally
feasible, that the Slot Regulations are complied with and no FAA Slot becomes subject to withdrawal
by the FAA.

          Section 4.21 Deposit Accounts and Securities Accounts. Schedule 4.21 contains
a true, complete and correct list of all deposits accounts and securities accounts of the Obligors,
including, with respect to each account, the name of such account, the account number, the bank or
financial institution with which such account is maintained and, with respect to the deposit
accounts and securities accounts subject to Control Agreements pursuant to Section 6.4(a), the
balance therein as of March 22, 2007.

          Section 4.22 Use of Proceeds. The proceeds of the Loan are being used by the Borrower
solely to (a) repay in full all amounts owing under the Existing Loan Agreement, (b) if elected by
the Borrower, to repay in whole or in part the Juniper Financing and (c) to pay related fees and
expenses and for general corporate purposes.

ARTICLE V

AFFIRMATIVE COVENANTS

          To induce the other parties to enter into this Agreement (excluding any other Obligor), the
Obligors agree with each other party hereto (excluding any other Obligor) that, so long as any of
the Obligations (other than contingent indemnification obligations) remain outstanding:

56

 

          Section 5.1 Accounting Controls; Financial Statements and Other Reports.

          (a) Accounting Controls. Each Obligor will maintain a system of accounting
established and administered in accordance with sound business practices and applicable law, rules
and regulations issued by any Governmental Authority to permit preparation of financial statements
in conformity with GAAP, including, without limitation, as set forth in Section 4.3(c).

          (b) Financial Certificates; Information. The Borrower will deliver to the
Administrative Agent (provided, that in the case of a Permitted Holder Acquisition, the
provisions of clauses (i), (ii) and (iii) below will apply to the Permitted Holder in the same
manner as such sections apply to the Borrower):

     (i) Quarterly Financials: within two (2) Business Days after the date on which
the Borrower files or is required to file its Form 10-Q under the Exchange Act (after giving
effect to any extension pursuant to Rule 12b-25 under the Exchange Act (or any successor
rule)) (or, if the Borrower is not required to file a Form 10-Q under the Exchange Act,
within 45 days after the end of each of the first 3 fiscal quarters of each Fiscal Year),
(A) the consolidated balance sheets of the Borrower as at the end of such fiscal quarter and
the related consolidated statements of income of the Borrower for such fiscal quarter for
the period from the beginning of the then current Fiscal Year to the end of such fiscal
quarter and cash flows of such Person for the period from the beginning of the then current
Fiscal Year to the end of such fiscal quarter, setting forth in each case in comparative
form the corresponding figures from the corresponding dates and periods of the previous
Fiscal Year, all prepared in accordance with GAAP (except that any unaudited financial
statements are subject to normal year-end adjustments and may not be accompanied by
footnotes) and in reasonable detail and certified by the Chief Financial Officer,
Controller, Chief Executive Officer or Treasurer of the Borrower that they fairly present in
all material respects the consolidated financial condition of such Person as at the dates
indicated and the results of its operations and its cash flows for the periods indicated,
and (B) a narrative report describing the operations of the Borrower in the form prepared
for presentation to senior management for such fiscal quarter and for the period from the
beginning of the then current Fiscal Year to the end of such fiscal quarter;
provided that delivery of the Borrower’s Form 10-Q for such fiscal quarter shall be
deemed to satisfy all of the requirements of this clause (i); provided,
further, that in lieu of delivering a hard copy of Form 10-Q hereunder, the Borrower
may transmit an electronic copy of such document;

     (ii) Monthly Reporting: commencing with the month ending May 31, 2007, within
45 days after the end of each calendar month, the consolidated balance sheet of the Borrower
as at the end of such month and the related consolidated statements of income of the
Borrower for such calendar month and for the period from the beginning of the then current
Fiscal Year to the end of such month and cash flows of the Borrower for the period from the
beginning of the then current Fiscal Year to the end of such calendar month, all prepared in
accordance with GAAP (except that any unaudited financial statements are subject to normal
year-end adjustments and may not be accompanied by footnotes) and in reasonable detail and
certified by the Chief Financial Officer, Chief Executive Officer, Controller or Treasurer
of the Borrower that they fairly present in all material respects the consolidated financial
condition of the Borrower at the dates indicated and the results of its operations and its
cash flows for the periods indicated;

     (iii) Year-End Financials: within two (2) Business Days after the date on
which the Borrower files or is required to file its Form 10-K under the Exchange Act (after
giving effect to any extension pursuant to Rule 12b-25 under the Exchange Act (or any
successor rule)) (or, if the Borrower is not required to file a Form 10-K under the Exchange
Act, within 90 days after the

57

 

end of each Fiscal Year), (A) the consolidated balance sheet
of the Borrower at the end of such Fiscal Year and the related consolidated statements of
income, stockholders’ equity and cash flows of the Borrower for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the previous Fiscal
Year and the corresponding figures from the annual financial plan delivered pursuant to
clause (ix) of this Section 5.1(b) for the Fiscal Year covered by such financial statements
of the Borrower, all in reasonable detail, and certified by the Chief Financial Officer or
the Chief Executive Officer of the Borrower that they fairly present in all material
respects the consolidated financial condition of the Borrower as at the date indicated and
the results of its operations and its cash flows for the periods indicated, (B) a narrative
report describing the operations of the Borrower in the form prepared for presentation to
senior management for such Fiscal Year, and (C) an accountant’s report thereon of KPMG LLP
or other independent certified public accountants of recognized national standing selected
by the
Borrower, which report (1) shall be unqualified as to scope, (2) shall not contain a
going concern qualification, and (3) shall state that such consolidated financial statements
fairly present the consolidated financial position of the Borrower as at the dates indicated
and the results of their operations and their cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years, and that the
examination by such accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing standards; provided
that (x) references in such report to changes in GAAP, changes in accounting standards,
highlighting contents of footnotes, limitations in the scope of the audit or exclusions from
the audit information not required by GAAP that are, in each case, customary in industry
practice and not prejudicial to the opinion stated therein shall not be deemed to be
“qualifications” for the purpose of clause (C) of this Section 5.1(b)(iii) and (y) delivery
of the Borrower’s Form 10-K for such Fiscal Year, and which satisfy the requirements of
clause (C) above, shall be deemed to satisfy the requirements of this Section 5.1(b)(iii);
provided, further, that in lieu of delivering a hard copy of Form 10-K
hereunder, the Borrower may transmit an electronic copy of such document;

     (iv) Officers’ Certificates: together with each delivery of financial
statements pursuant to clauses (i) and (iii) above, an Officer’s Certificate of the Borrower
(which certificate may incorporate the Collateral Value Certificate deliverable on such date
pursuant to clause (xix) of this Section 5.1(b)) (A) stating that the signer has made, or
caused to be made under his or her supervision, a review of the terms of this Agreement and
of the transactions and condition of the Obligors during the accounting period covered by
such financial statements and that such review has not disclosed the existence, and that the
signer does not have knowledge of the existence as at the date of such Officer’s
Certificate, of any condition or event that constitutes a Default or an Event of Default,
or, if any such condition or event existed at the date of the certificate, specifying the
nature and period of existence thereof and what action the Obligors have taken, are taking
and propose to take with respect thereto, (B) demonstrating in reasonable detail compliance
(or noncompliance) during and at the end of the applicable accounting periods with the
restrictions contained in Section 6.4, (C) with respect to the delivery of financial
statements pursuant to clause (iii) above, stating whether any change in GAAP or in the
application thereof has occurred since the date of delivery of the preceding year-end
financial statements, and if any such change has occurred, describing the effect of such
change on the financial statements of the Borrower, (D) stating the Credit Rating obtained
as of the end of the preceding fiscal quarter pursuant to Section 5.16, (E) stating the
Adjusted Loan Balance as of the last day of the most recently ended fiscal quarter, (F) with
respect to the delivery of financial statements pursuant to clause (iii) above, setting
forth computations in reasonable detail of Excess Cash Flow for the preceding Fiscal Year
and (G) certifying that all certificates, statements, notices, updates and other documents
required to be delivered pursuant to the Collateral Documents by any Obligor in the
preceding fiscal quarter (including notice of any locations of Spare Parts that are not
Spare

58

 

Parts Locations, other than locations with Spare Parts with a fair market value less
than $200,000 individually and $2,000,000 in the aggregate) have been delivered thereunder
(or, to the extent not previously delivered, providing the information required thereunder);
provided, however, that the reporting requirements set forth in this clause
(G) are in addition to, and are not intended to and shall not replace or otherwise modify,
any obligation of any Obligor under any Collateral Document;

     (v) SEC Filings and Press Releases: promptly upon their filing, copies of (A)
all financial statements, reports, notices and proxy statements sent or made available
generally by the Borrower to its security holders and (B) all regular, periodic and current
reports (including all Form 8-K reports) and all registration statements and prospectuses,
if any, filed by the Borrower with any securities exchange or with the SEC or any
Governmental Authority or private
regulatory authority; provided that in lieu of delivering a hard copy of any
such document, the Borrower may transmit an electronic copy of such document;

     (vi) Notice of Events of Default, etc.: promptly upon any Responsible Officer
of a Principal Obligor obtaining knowledge of (A) any condition or event that constitutes a
Default or an Event of Default or (B) the occurrence of any event or change that has had, or
is reasonably expected to have, a Material Adverse Effect (disregarding for purposes of this
clause (vi) publicly known facts, circumstances, events or conditions applicable to the
airline and travel industries generally), an Officer’s Certificate of the Borrower
specifying the nature and period of existence of such Default or Event of Default or
condition, event or change and what action the Obligors have taken, are taking and propose
to take with respect thereto;

     (vii) Litigation or Other Proceedings: to the extent not otherwise disclosed
pursuant to this Section 5.1, promptly upon any Responsible Officer of a Principal Obligor
obtaining knowledge of (A) the institution of, or threat of, any action, suit, proceeding
(whether administrative, judicial or otherwise), governmental investigation or arbitration
against or affecting any Obligor or any property of any Obligor, unless the Borrower’s
general counsel or outside legal counsel has determined that a favorable outcome to such
Obligor is reasonably likely (collectively, “Proceedings”) or (B) any material
development in any Proceeding that, in either case:

     (1) would be reasonably likely to have a Material Adverse Effect; or

     (2) seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated hereby;

written notice thereof together with such other information as may be reasonably available
to the Obligors to enable the Administrative Agent and its counsel to evaluate such matters;

     (viii) ERISA Reports: promptly after the receipt by the Borrower of a request
therefor by the Administrative Agent, copies of any annual and other reports (including
Schedule B thereto) with respect to a Plan filed by an Obligor or any ERISA Affiliate with
the United States Department of Labor, the IRS or the PBGC;

     (ix) Financial Plan and Projections: annually, as soon as practicable after
preparation thereof in the ordinary course of business but in no event later than February
28 of each year, copies of the Borrower’s annual financial plans and projections for such
Fiscal Year, on a monthly basis;

59

 

     (x) Environmental Audits and Assessments: as soon as practicable following
receipt thereof by a Principal Obligor, copies of all environmental audits and assessments,
whether prepared by personnel of an Obligor or by independent consultants (except to the
extent protected by the “attorney work product” privilege or similar privilege expressly
granted by statute with respect to the work product of environmental consultants), with
respect to material environmental matters at any Facility or which relate to an
Environmental Claim which could reasonably be expected to result in an Obligor incurring
Liabilities pursuant to Environmental Laws in excess of $1,000,000;

     (xi) Ratings Change: promptly after any private release by S&P or Moody’s
raising or lowering (i) an Obligor’s general unsecured credit rating or (ii) the Credit
Rating obtained pursuant to Section 5.16 hereof, notice of such change;

     (xii) Insurance Reports: no later than January 30 of each year, insurance
brokers reports with respect to all insurance maintained by the Obligors, together with
schedules detailing the type and amount of coverage provided and the insurance carrier;

     (xiii) Insurance/Condemnation Proceeds: in addition to any similar reporting
obligations under the Collateral Documents but without the duplication of any such
obligation, upon (A) a Responsible Officer of a Principal Obligor obtaining knowledge of the
occurrence of an event of loss or damage to, or any taking, condemnation or requisition by
any Governmental Authority of, any property of any Obligor having fair market value in
excess of $5,000,000 whether or not such loss or damage is expected to result in receipt of
insurance or condemnation proceeds or of any other event of loss or damage that the Obligors
reasonably expect to result in proceeds reasonably estimated by them to exceed $5,000,000
and (B) the receipt of insurance proceeds or condemnation proceeds from an event of loss or
material damage to, or any taking, condemnation or requisition by any Governmental Authority
of, any property of any Obligor giving rise to a mandatory prepayment obligation under
Section 2.5, notice of such occurrence;

     (xiv) Replacement Secured Financings and Asset Sales: prior to an Obligor
consummating any Replacement Secured Financing or Asset Sale greater than $1,000,000 in an
individual transaction or series of related transactions giving rise to a mandatory
prepayment obligation under Section 2.5, notice of such event; provided that in the
case of a Replacement Secured Financing, the applicable Obligor shall give no less than
fifteen (15) Business Days’ prior notice of such event and include therein (A) a specific
identification of the Collateral proposed to be pledged, (B) the Collateral Release Values
therefor together with copies of the Appraisal Reports upon which such Collateral Release
Values are based, if applicable, and (C) a detailed summary of the terms and conditions of
such Replacement Secured Financing;

     (xv) Plan Audits and Liabilities: promptly after (A) an Obligor or any ERISA
Affiliate contacts the IRS or the PBGC for the purpose of participating in a closing
agreement or any voluntary resolution program with respect to a Plan or Multiemployer Plan
which could reasonably be expected to have a Material Adverse Effect, or (B) a Responsible
Officer of a Principal Obligor knows or has reason to know that any event with respect to
any Plan or Multiemployer Plan occurred that could reasonably be expected to have a Material
Adverse Effect, notice of such contact or the occurrence of such event;

     (xvi) Funding Changes and New Plan Benefits: promptly after the change, a
notification of any material increases in the benefits, or material change in funding
method, with respect to which an Obligor may have any liability, under any Plan or
Multiemployer Plan or the establishment of any material new Plan or Multiemployer Plan with
respect to which an Obligor

60

 

may have any liability or the commencement of contributions to
any Plan or Multiemployer Plan to which an Obligor or any ERISA Affiliate was not previously
contributing, except to the extent that such an event could not reasonably be expected to
have a Material Adverse Effect;

     (xvii) Claims and Proceedings: promptly after receipt of written notice of
commencement thereof, notification of all (A) claims made by participants or beneficiaries
with respect to any Plan and (B) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting an Obligor or any ERISA Affiliate with respect to any Plan, except those
which, in the aggregate, if adversely determined, could not reasonably be expected to have a
Material Adverse Effect;

     (xviii) ERISA Event: promptly after the occurrence of any ERISA Event (A) that
could reasonably be expected to have a Material Adverse Effect or (B) that relates to the
occurrence or
existence of an event or condition that could reasonably be expected to have a Material
Adverse Effect, notice of such ERISA Event;

     (xix) Collateral Value Certificates: no later than the date upon which monthly
financial statements are required to be delivered under clause (ii) of this Section 5.1(b)
(or, with respect to the month ending April 30, 2007, no later than the date that is 45 days
after the end of such month), a Collateral Value Certificate certifying the Collateral Value
(with respect to the Eligible Appraised Collateral, based on the most recently completed
Appraisal Report), in each case as of a date no earlier than the end of the calendar month
to which such financial statements relate, together with the Appraisal Report upon which
such Collateral Value Certificate is based, and any supporting detail and documentation as
requested by the Administrative Agent in its reasonable discretion;

     (xx) Controlled Cash: within one Business Day following the end of each
calendar week, the cash and Cash Equivalents held in deposit accounts and securities
accounts subject to Control Agreements in accordance with Section 6.4(a) as of the last
Business Day of the prior calendar week;

     (xxi) Covenant Suspension Conditions: promptly after the occurrence thereof, an
Officer’s Certificate from a Responsible Officer of the Borrower certifying the satisfaction
of the Covenant Suspension Conditions or the termination of a Covenant Suspension Period,
together with all information reasonably requested by the Administrative Agent to determine
such satisfaction or termination; and

     (xxii) Other Information: with reasonable promptness, such other information
and data with respect to an Obligor as from time to time may be reasonably requested by the
Administrative Agent.

          Section 5.2 Corporate Existence. Except as permitted by Section 6.9, each Obligor
will do or cause to be done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each Obligor and the
material rights, permits, licenses (charter and statutory) and franchises of each Obligor;
provided that subject to Section 5.10, no Obligor shall be required to preserve any such
right, permit, license or franchise, and, subject to compliance with Section 6.9, as applicable, no
Obligor (other than the Borrower) shall be required to preserve any such corporate, partnership or
other existence, if in each case, the Chief Executive Officer of the Borrower shall determine in
the exercise of his or her business judgment that the preservation thereof is no longer desirable
in the conduct of the business of the Obligors taken as a whole and that

61

 

abandonment of any such
right, permit, license or franchise or failure to preserve such existence could not reasonably be
expected to have a Material Adverse Effect.

          Section 5.3 Payment of Taxes and Claims. Each Obligor will pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all material Taxes levied or
imposed upon such Obligor or upon the income, profits or property of such Obligor except where the
amount, applicability or validity of such Taxes are being contested in good faith by appropriate
proceedings and for which adequate reserves have been made in accordance with GAAP and (ii) all
lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien on the
property of such Obligor. No Obligor will file or consent to the filing
of, any consolidated income tax return with any Person (other than any other Obligor or any
Subsidiary of any Obligor).

          Section 5.4 Maintenance of Properties; Insurance.

          (a) Maintenance of Properties. Each Obligor will maintain all properties used or
useful in the conduct of the business of the Obligors in good condition, repair and working order
(ordinary wear and tear excepted) and supply such properties with all necessary equipment and make
all necessary repairs, renewals, replacements, betterments and improvements thereto, all as in the
reasonable judgment of such Obligor may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that no Obligor shall be restricted from discontinuing the operation and
maintenance of any such properties if such discontinuance is, in the good faith judgment of the
Borrower, desirable in the conduct of the business of such Obligor and could not reasonably be
expected to have a Material Adverse Effect, but subject in each case to all applicable provisions
of the Collateral Documents.

          (b) Insurance. Each Obligor will (a) insure and keep insured or reinsured with
financially sound and reputable insurance companies that are not Affiliates of the Obligors or by
the United States of America, their businesses and operations and such of their respective
properties, in such amounts, with such deductibles and covering such risks as are insured against
(including, but not limited to, war risk and third party liability) and carried in accordance with
applicable law and prudent industry practice by U.S. commercial air carriers similarly situated
with the Obligors and owning or operating similar properties, aircraft and engines, including such
insurance coverage as is required to be maintained under the Collateral Documents, and (b) cause
all such insurance relating to any Collateral or any other property of any Obligor to name the
Administrative Agent as additional insured or loss payee, as appropriate, and to provide not less
than thirty (30) days’ (or in the case of war risk coverage, the maximum time as is available)
prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance or
reinsurance; provided that this Section 5.4(b) shall not prohibit any Obligor from
procuring and maintaining all or any portion of its insurance through Airways Assurance Limited LLC
so long as Airways Assurance Limited LLC reinsures 100% of such risk as provided above in this
Section 5.4(b) and such reinsurance policies contain a cut-through endorsement.

          Section 5.5 Inspection. Each Obligor will permit any authorized representatives
designated by the Administrative Agent to visit and inspect any of the properties of the Obligors,
including their financial and accounting records, and to make copies and take extracts therefrom,
and to discuss their affairs, finances and accounts with its and their officers and independent
public accountants (it being understood that a representative of an Obligor will be present), at
the Borrower’s expense, all upon reasonable notice and at such reasonable times during normal
business hours and as often as may be reasonably requested; provided that so long as no
Default or Event of Default has occurred and is continuing, (a) such inspection shall not be
materially disruptive to the business of the Obligors and (b) the Obligors shall not be required to
pay the expenses of more than one such visit per Fiscal Year. Without limiting the generality of
the foregoing, but subject to the proviso contained in the immediately

62

 

preceding sentence, the
Obligors will meet with the Administrative Agent on a quarterly basis (in person or, if deemed
appropriate by the Administrative Agent, telephonically) to review the Obligors’ financial and
accounting records and will make their officers and independent public accountants available to
discuss with the Administrative Agent the Obligors’ affairs, financial condition, results of
operations, business plan,
prospects, projections, accounts and other related matters, and otherwise will cooperate with
the Administrative Agent and provide such information as it may reasonably request.

          Section 5.6 Compliance with Laws, Etc. Each Obligor will comply with all applicable
statutes, rules, regulations, orders, restrictions and Governmental Authorizations of any
applicable Governmental Authority, in respect of the conduct of the businesses of the Obligors and
the ownership of their respective properties (including, without limitation, Gates and Slots),
except such as are being contested in good faith by appropriate proceedings and except for such
noncompliance as could not in any case or in the aggregate reasonably be expected to have a
Material Adverse Effect. None of the Obligors shall conduct any Hazardous Materials Activity at
any Facility or at any other location in a manner that does not comply with Environmental Laws,
except for such noncompliance as could not in any case or in the aggregate reasonably be expected
to have a Material Adverse Effect. Each Obligor will use commercially reasonable efforts to cause
all other Persons operating or occupying any of their properties to comply with Environmental Laws,
except for such noncompliance as could not in any case or in the aggregate reasonably be expected
to have a Material Adverse Effect.

          Section 5.7 Remedial Action Regarding Hazardous Materials.

          (a) To the extent required by Environmental Laws, each Obligor will take any and all necessary
remedial action (except to the extent that such remedial action is taken by other Persons
responsible for such remedial action through contractual arrangements with an Obligor) in
connection with the presence, storage, use, disposal, transportation, Release or threatened Release
of any Hazardous Materials on, under or about any Facility in order to comply timely with all
applicable Environmental Laws and Governmental Authorizations except for such non-compliance as
could not in any case or in the aggregate reasonably be expected to have a Material Adverse Effect.
In the event any Obligor undertakes any remedial action with respect to any Hazardous Materials
on, under or about any Facility, the Borrower or such Obligor will conduct and complete such
remedial action (or will cause such action to be taken pursuant to contractual rights of such
Obligor against third parties) in compliance with all applicable Environmental Laws, and in
accordance with the policies, orders and directives of all federal, state and local Governmental
Authorities except when, and only to the extent that, such Obligor’s liability for such presence,
storage, use, disposal, transportation or discharge of any Hazardous Materials is being contested
in good faith and by appropriate proceedings diligently conducted by such Obligor or except for
such non-compliance as could not in any case or in the aggregate reasonably be expected to have a
Material Adverse Effect.

          (b) The Requisite Lenders may request (i) from time to time, if and when such Person(s) have
reason to believe that an Environmental Claim or Release of Hazardous Materials which could
reasonably be expected to have a Material Adverse Effect may exist at or with respect to any
Facility, and (ii) not more than once during any twelve month period for the purpose of determining
whether there is belief that an Environmental Claim or Release of Hazardous Materials which could
reasonably be expected to have a Material Adverse Effect exists at or with respect to any Facility,
and in the case of any such request, the Borrower will provide to the Lenders, within sixty (60)
days after such request, at the expense of the Borrower, an environmental site assessment report
for any of its, or any other Obligor’s properties described in such request, prepared by an
environmental consulting firm reasonably acceptable to the Administrative Agent evaluating the
Environmental Claim or Release of Hazardous Materials and estimating the cost of any required
compliance, removal or remedial action in connection with the Environmental Claim or Release of
Hazardous Materials. Without limiting

63

 

the generality of the foregoing clause (b), if the Administrative Agent determines at any time
that a material risk exists that any such report will not be provided in the time referred to
above, the Administrative Agent may retain an environmental consulting firm to prepare such report
at the expense of the Borrower, and each Obligor hereby agrees to grant at the time of such
request, to the Administrative Agent, the Lenders, such firm and any agents or representatives
thereof an irrevocable non-exclusive license, subject to the rights of tenants, to enter into their
respective properties to undertake such an assessment.

          Section 5.8 Additional Obligors; Collateral.

          (a) With reasonable promptness (and in any event within 30 days) following the formation or
acquisition by any Obligor of a Subsidiary, the Borrower (i) shall provide the Administrative Agent
the name, corporate structure and allocation of Voting Stock and equity interests of such
Subsidiary, (ii) in the case of any such Subsidiary that is not a CFC, shall cause such Subsidiary
to execute and deliver to the Administrative Agent a Subsidiary Joinder in the form of Exhibit
J hereto, pursuant to which such Subsidiary shall become a party to this Agreement, and a
joinder to the Guaranty pursuant to which such Subsidiary shall become a guarantor thereunder, and
(iii) shall deliver to the Administrative Agent documents of the types referred to in clauses
(a)(vii) and (a)(viii) of Article III, all in form, content and scope reasonably satisfactory to
the Administrative Agent.

          (b) Each Obligor (including, without limitation, each Subsidiary created or acquired after the
Closing Date that is required to be a Subsidiary Guarantor) will cause all of its properties and
assets which are (or intended to be) on the Closing Date Collateral or at any time thereafter are
required by the terms of any Collateral Document or this Agreement to become subject to the Lien of
such Collateral Document (including the Capital Stock of each Subsidiary created after the Closing
Date having a fair market value in excess of $25,000 (other than any Capital Stock subject to a
Lien as referred to in clause (a)(x) of Section 6.1)), other than Excluded Property and any other
assets as to which the Administrative Agent shall determine that the cost of obtaining such Lien is
excessive in relation to the benefit to the Lenders of the security afforded thereby, to be pledged
to the Administrative Agent, with such priority and perfected to such extent as is provided in the
Collateral Documents, to secure the Obligations, and will take all such actions as the
Administrative Agent deems reasonably necessary or advisable in connection with the foregoing,
including without limitation, (i) delivering to the Administrative Agent duly executed joinders and
amendments to the Collateral Documents, (ii) delivering all certificates, if any, and instruments
representing all Capital Stock and other securities pledged pursuant to clause (i) above, together
with undated powers or endorsements duly executed in blank and (iii) to the extent reasonably
requested by the Administrative Agent, delivering to the Administrative Agent legal opinions
relating to the matters described in this clause (b), which opinions shall be in form and substance
and from counsel reasonably satisfactory to, the Administrative Agent; provided, that
Control Agreements for deposit accounts and securities accounts shall only be required to the
extent required pursuant to clause (d) below and Section 6.4(a).

          (c) If as of the date of delivery of any Collateral Value Certificate pursuant to Section
5.1(b)(xix) there exists a default under Section 6.4(b), the Borrower shall, to the extent (but
only to the extent) necessary to cure such default: (i) prepay the Loan, (ii) deposit additional
Unrestricted Cash in the Collateral Account as Cure Collateral, (iii) cause assets that are not
then part of the Collateral, but that if constituting Collateral would be Eligible Appraised
Collateral, to be made part of the Collateral (“pledged”) as Cure Collateral or (iv) do any
combination of (i), (ii) and (iii) above, in each case until such default no longer exists.

          (d) If additional Cure Collateral is being deposited or pledged in accordance with Section
5.8(c), such additional Cure Collateral shall be free and clear of any Liens (other than Liens

64

 

pursuant to the Collateral Documents and Liens expressly permitted by the applicable Control
Agreements) and the pledgor(s) shall promptly execute and deliver to the Administrative Agent such
Control Agreements (in form and substance reasonably satisfactory to the Administrative Agent) and
such supplemental security agreements or other documentation as may be necessary to grant a
security interest to the Administrative Agent and shall take all other actions (as are in the
reasonable judgment of the Administrative Agent) necessary or desirable to cause the Liens created
thereby to be perfected first priority Liens (other than Liens expressly permitted by the
applicable Control Agreements) under applicable law and shall otherwise comply with the provisions
of the applicable Collateral Documents that apply to a pledge of such Collateral.

          (e) In connection with each prepayment or pledge of additional Cure Collateral pursuant to
subsection (c) of this Section 5.8, the Borrower shall deliver to the Administrative Agent a
Collateral Value Certificate which establishes that the default under Section 6.4(b) no longer
exists.

          Section 5.9 Employee Benefit Plans. Each Obligor will ensure that the Plans and
Multiemployer Plans with respect to which the Obligors may have any liability are operated in
compliance with all applicable laws, except to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

          Section 5.10 FAA Matters; Citizenship. Each Air Carrier shall at all times hereunder
hold a certificate under 49 U.S.C. Section 41102(a)(1) as currently in effect or as may be amended
or recodified from time to time. Each Air Carrier and any other Obligor engaged in operations as
an “air carrier” will at all times hereunder be a United States Citizen holding an air carrier
operating certificate issued pursuant to Chapter 447 of Title 49 for aircraft capable of carrying
10 or more individuals or 6,000 pounds or more of cargo.

          Section 5.11 [Reserved]

          Section 5.12 [Reserved]

          Section 5.13
Slot Utilization.

          (a) As soon as available, but in any event no later than the date on which each report
referred to in clause (i) below is submitted to the FAA, the Borrower shall deliver to the
Administrative Agent each of the following: (i) a true and complete copy of each Slot Utilization
report required to be delivered to the FAA under the Slot Regulations, (ii) any related requests
for waivers or other documentation provided to the FAA in connection therewith, and (iii) a Slot
Utilization Report, in the form of Exhibit I (a “Slot Utilization Report”), of Slot
Utilization during the period covered by the report to the FAA referred to in (i) above.

          (b) Subject to transfers, exchanges and other dispositions permitted by this Agreement and the
SGR Security Agreement, from and after the Closing Date, each Obligor shall cause the FAA Slots to
have sufficient Slot Utilization, for purposes of the Slot Regulations, and shall at the end of
Week 4 of any respective Two-Month FAA Reporting Period for Slots, present to the Administrative
Agent a certification from the Borrower that the Borrower intends to effectuate full compliance
with all of the slot utilization covenants pursuant to exchanging slots at such airports with third
party air carriers and such officer has no reason to believe that the Borrower will fail to comply
with the Slot Regulations; provided, however, that the Obligors shall not be
required to so utilize Secondary Slots to the extent the Obligors determine that such Secondary
Slots are no longer commercially required.

65

 

          (c) Subject to transfers, exchanges and other dispositions permitted by this Agreement and the
SGR Security Agreement, each Obligor shall utilize any Foreign Slots in a manner consistent in all
material respects with applicable regulations and contracts in order reasonably to preserve its
right to hold and operate the Foreign Slots, taking into account any waivers or other relief
granted by any applicable Aviation Authority; provided, however, that the Obligors
shall not be required to so utilize Foreign Slots that do not constitute Appraised Collateral and
are not associated with any Primary Routes (as defined in the SGR Security Agreement).

          (d) The Obligors shall maintain personnel, policies, procedures and a computer database for
the monitoring, utilization and management of the FAA Slots in compliance with the Slot Regulations
so as to ensure, to the greatest extent operationally feasible, that no FAA Slot becomes subject to
withdrawal by the FAA or is otherwise revoked or terminated based upon the failure to comply with
the Slot Regulations.

          Section 5.14 [Reserved].

          Section 5.15 Further Assurances. Promptly upon the request of the Administrative
Agent, each Obligor will, at its expense, promptly execute, acknowledge and deliver such further
documents and do such other acts and things as the Administrative Agent may reasonably request in
order to effect fully the purposes of the Loan Documents and to maintain and ensure the validity,
effectiveness, priority and perfection of the Administrative Agent’s Liens pursuant to the
Collateral Documents.

          Section 5.16 Credit Rating. The Borrower agrees to obtain at the end of each fiscal
quarter (or, if the aggregate outstanding principal amount of the Loan is less than $600,000,000,
each Fiscal Year) for the term of the Loan, and at the expense of the Borrower, Credit Ratings from
S&P and Moody’s, which ratings may be obtained by subscribing to S&P’s and Moody’s’ ongoing rating
monitoring services, if available.

          Section 5.17 Collateral Reports and Appraisals. The Borrower shall deliver or cause
to be delivered to the Administrative Agent the following:

          (a) Appraisal Reports. Appraisal Reports, and each Obligor shall permit the
Administrative Agent to have an Appraiser conduct appraisals for such Appraisal Reports, at the
Borrower’s expense, for purposes of determining eligibility and monitoring the value of such
Collateral as follows:

     (i) with respect to Spare Engines, one time per Fiscal Year based on physical
inspection;

     (ii) with respect to Spare Parts, one time per Fiscal Year using the Desk-top Spare
Parts Appraisal Methodology and one time per Fiscal Year based on physical inspection;

     (iii) with respect to Aircraft, one time per Fiscal Year based on physical inspection;

     (iv) with respect to Slots, (A) during the period from the Closing Date until the date
on which the Final FAA Slot Rule is issued, semi-annually or upon reasonable request by the
Administrative Agent, (B) promptly upon the issuance of the Final FAA Slot Rule and (C)
thereafter, once per Fiscal Year;

     (v) with respect to the Gatwick Routes and the Heathrow Routes and any related
Supporting Route Facilities, (A) prior to the execution of any “open skies” agreement
between

66

 

the U.S. and the European Union, once per Fiscal Year, (B) promptly upon the
execution of any “open skies” agreement between the U.S. and the European Union, one time
and (C) thereafter, once per Fiscal Year; and

     (vi) with respect to all other Collateral, once per Fiscal Year;

          provided, however, that if a Default or Event of Default has occurred and is
continuing, the Administrative Agent may request, at the Borrower’s expense, additional Appraisal
Reports of any or all of the Collateral in the Administrative Agent’s discretion; provided,
further, that if additional assets become Appraised Collateral, the Administrative Agent
may request, at the Borrower’s expense, such additional Appraisal Reports with respect to assets in
the Administrative Agent’s discretion.

          (b) Field Examinations. Field examination reports with respect to Accounts, and each
Obligor shall permit the Administrative Agent to conduct field examinations for such reports, at
the Borrower’s expense, for purposes of determining eligibility and monitoring the value of such
Collateral, one time per Fiscal Year; provided, however, that so long as a Default
or Event of Default shall not have occurred and be continuing, such field examination shall not be
materially disruptive to the business of the Obligors; provided, further, that if a
Default or Event of Default has occurred and is continuing, the Administrative Agent may request,
at the Borrower’s expense, additional field examinations in the Administrative Agent’s discretion.

          (c) Engine Reports. By the tenth Business Day of January, April, July and October of
each year, commencing with such date in July, 2007, a report stating, with respect to each Eligible
Spare Engine as of the last day of the calendar month immediately preceding the date of such report
prior to the date of such report: (i) if such Engine is then installed on an airframe, the
applicable Obligor’s tail number of such airframe, or, if not so installed, the status and location
of such Engine, (ii) the hours and cycles of operation of such Engine since new and since its last
major overhaul and (iii) the most limiting life limited part on such engine (the “limiter”) and the
cycles remaining on such limiter.

          (d) Other Information. Such other reports, statements and reconciliations with
respect to the Eligible Collateral or any of the other Collateral of any or all of the Obligors as
the Administrative Agent shall from time to time request in its reasonable discretion.

          Section 5.18 Software. The Borrower hereby agrees that it shall maintain a spare
parts inventory tracking system at all times prior to the Maturity Date.

          Section 5.19 Cape Town Convention. With respect to the Cape Town Convention which has
been ratified by, and is in full force and effect in the United States of America, the parties
hereto hereby agree to permit the interests created under the Loan Documents to constitute
International Interests under the Cape Town Convention. Upon request by the Administrative Agent,
the Borrower at its own cost and expense shall from time to time do or cause to be done any and all
acts and things (other than acts and things under the control of the Administrative Agent) which
may be required or desirable (in the reasonable opinion of Administrative Agent) to ensure that
each of the Secured Parties has the full benefit of the Cape Town Convention in connection with any
Aircraft and Spare Engines, including:

          (a) any matters connected with registering, perfecting, preserving and/or enhancing any
International Interest vested in the Secured Parties with respect to any Aircraft and Spare Engines
and constituted by the Loan Documents;

          (b) entry in to agreements (subordination or otherwise) to protect and/or enhance and/or,
improve the priority of any International Interest referred to in the foregoing paragraph (a);

67

 

          (c) excluding, in writing, the application of any provisions of the Cape Town Convention that
the Administrative Agent may deem desirable in connection with the foregoing, provided in each case
that such acts and things do not result in any of the Borrower’s other obligations under the Loan
Documents being made any greater; and

          (d) if any subsequent action taken by any party, including any permitted sublease or
re-registration of any Aircraft or Spare Engines, gives rise to a new International Interest under
the Cape Town Convention, registering such interest with the International Registry (as such term
is defined in the Cape Town Convention) with the consent of the Administrative Agent, or any duly
authorized agent thereof, and any other party hereto as necessary to complete such registration.

          Section 5.20 Post Closing Matters. The Obligors shall deliver each of the documents,
instruments and agreements and take each of the actions set forth on Schedule 5.20 within the time
periods set forth on such Schedule.

ARTICLE VI

NEGATIVE COVENANTS

          To induce the other parties to enter into this Agreement (excluding any other Obligor), the
Obligors agree with each other party hereto (excluding any other Obligor) that, so long as any of
the Obligations (other than contingent indemnification obligations) remain outstanding:

          Section 6.1 Liens and Related Matters.

          (a) Prohibition on Liens. No Obligor will, nor will it permit any other Obligor to,
directly or indirectly create, incur, assume or permit to exist any Lien on or with respect to any
property or asset of any kind (including any document or instrument in respect of goods or accounts
receivable) of any Obligor, whether now owned or hereafter acquired, or any income or profits
therefrom, or file or consent to the filing of any financing statement or other similar notice of
any Lien with respect to any such property, asset, income or profits under the UCC of any state or
under any similar recording or notice statute, except:

     (i) Permitted Encumbrances;

     (ii) (A) Liens existing on the Closing Date on Aircraft Related Equipment, Gates, Slots
or Supporting Route Facilities, and on any other assets customarily securing Indebtedness
used to acquire, finance or refinance such Aircraft Related Equipment, Gates, Slots or
Supporting Route Facilities to the extent specified in the grant of the security interest or
collateral assignment creating such Lien, in each case, securing Indebtedness used to
acquire, finance or refinance such Aircraft Related Equipment, Gates, Slots or Supporting
Route Facilities, (B) Liens in connection with a Lessor Engine Transaction, (C) Liens on
Aircraft Related Equipment and related property as contemplated under the GE 2001 Credit
Agreement, (D) Liens on Aircraft Related Equipment, Gates, Slots or Supporting Route
Facilities securing Permitted Refinancing Indebtedness in respect of Indebtedness previously
secured by such Aircraft Related Equipment, Gates, Slots or Supporting Route Facilities in
accordance with subclause (A) above, including in each case, Liens securing special facility
revenue bonds that finance Aircraft Related Facilities, (E) Liens incurred or deposits made
in the ordinary course of business to secure the performance of contracts for the purchase
of aircraft, (F) Liens in existence on the Closing Date (1) on aircraft and engines (other
than Collateral covered by the Aircraft Mortgage) and (2) securing special facility revenue
bonds; (G) Liens on assets described on Schedule 1.1(a) and (H) Liens on any

68

 

insurance and
requisition proceeds received with respect to any Aircraft, the benefit of all standard
airframe and engine warranties relating to such Aircraft and such other security as is being
made available and/or has been made available by any of the Obligors during the 12 months
preceding any financing to financiers in the international aviation finance markets for
similar aircraft financing transactions, in each case as contemplated under the Airbus
Financing Letter Agreement;

     (iii) [Reserved];

     (iv) Liens in existence on the Closing Date and described in Schedule 6.1(a);

     (v) judgment and attachment Liens not (A) giving rise to an Event of Default or (B)
relating to an action or judgment giving rise to an Event of Default under Section 7.1(h);

     (vi) Liens on the assets of any entity or on any asset existing at the time such entity
or asset is acquired by an Obligor, whether by merger, consolidation, purchase of assets or
otherwise; provided that (A) such Liens are not created, incurred or assumed by such
entity in contemplation of or in connection with the financing of such entity’s being
acquired by an Obligor, (B) such Liens were created to secure the financing of Aircraft
Related Equipment or other specific assets, (C) such Liens do not extend to any other assets
of any Obligor other than the assets acquired with such financing and (D) the Indebtedness
secured by such Liens is permitted pursuant to this Agreement;

     (vii) (A) leases or subleases of real or personal property granted by any Obligor to
other Persons not interfering in any material respect with the ordinary conduct of the
business of
the Obligors, taken as a whole, (B) leases and/or subleases of Aircraft Related
Equipment, Gates, Slots or Supporting Route Facilities to any Obligor or any US Airways
Express affiliate that is not an Obligor and operates such Aircraft Related Equipment,
Gates, Slots or Supporting Route Facilities for the Borrower or another Obligor pursuant to
a services agreement with the Borrower or such Obligor, which lease or sublease is entered
into in connection with the debt financing or leasing of such Aircraft Related Equipment,
Gates, Slots or Supporting Route Facilities, as applicable, and the assignment of any such
lease or sublease and the proceeds thereof, in the case of a lease, to any Person owed
Indebtedness used to acquire such Aircraft Related Equipment, Gates, Slots or Supporting
Route Facilities or, in the case of a sublease, to any Person leasing such Aircraft Related
Equipment, Gates, Slots or Supporting Route Facilities to the Borrower or such Obligor, and
(C) Liens on an Obligor’s interest as lessee or sublessor in respect of any Aircraft Related
Equipment, Gates, Slots or Supporting Route Facilities or interests related thereto
(including without limitation subleases, refunds or rebates, security deposits, rent,
supplemental rent, reserves, or return condition adjustment payments);

     (viii) Liens on cash and Cash Equivalents securing (A) reimbursement obligations in
respect of letters of credit issued for the account of any Obligor in the ordinary course of
business and consistent with past practice, so long as the aggregate amount of such cash and
Cash Equivalents does not exceed 115% of the maximum available amount under the secured
letters of credit, (B) reimbursement or other margin requirements in connection with
transactions contemplated by the proviso in Section 6.12, (C) prepaid fuel and healthcare
expenses in the ordinary course of business and consistent with past practice and (D)
obligations in respect of the financing of Credit Card holdbacks, so long as the aggregate
amount of such cash and Cash Equivalents does not exceed the amount of the holdbacks subject
to such financing;

69

 

     (ix) Liens on assets pledged in connection with a Replacement Secured Financing;
provided that the Borrower prepays the Loan with the Net Issue Proceeds of such
Replacement Secured Financing as provided in Section 2.5(a);

     (x) Liens on assets pledged to secure a Permitted Acquisition Financing;
provided, that the Liens attach only to assets acquired in connection with the
Permitted Acquisition financed by such Permitted Acquisition Financing or any Capital Stock
issued, or the Capital Stock of any Person formed in connection with, or the Capital Stock
of the surviving entity of, such Permitted Acquisition;

     (xi) any renewal or substitution of any Lien for any of the preceding clauses (ii),
(iv),(vi), (ix), (x) or (xiv); provided that any such Liens are not extended to
additional assets;

     (xii) (A) purchase money Liens granted by the Borrower or any of its Subsidiaries
securing purchase money Indebtedness in an aggregate principal amount not to exceed
$10,000,000 incurred by the Borrower or any of its Subsidiaries to finance 50% or more of
the cost of acquiring any fixed assets and limited in each case to the property purchased
with the proceeds of such purchase money Indebtedness and (B) purchase money Liens granted
by the Borrower or any of its Subsidiaries securing purchase money Indebtedness incurred by
the Borrower or any of its Subsidiaries to finance all or more than 90% of the cost of
acquiring any fixed assets and limited in each case to the property purchased with the
proceeds of such purchase money Indebtedness; provided, however, that in
each case, such Liens exist prior to the acquisition of, or attach substantially
simultaneously with, or within 90 days after, the acquisition, repair, improvement or
construction of, such property financed;

     (xiii) [Reserved];

     (xiv) Liens on the Tempe Property and any Investments permitted pursuant to Section
6.2(xiii), in each case granted in connection with financing the development of such
property;

     (xv) Liens not otherwise permitted by the terms of this Section 6.1(a), provided that
the aggregate amount of Indebtedness secured thereby shall not at any time exceed
$25,000,000; and

     (xvi) Liens on Excluded Property,

provided that the Obligors may not utilize clauses (ii)(H) or (xv) above for any property
of any Obligor if such property constitutes Collateral (other than, with respect to clause (ii)(H),
Collateral consisting of cash and Cash Equivalents).

          (b) No Restrictions on Subsidiary Distributions. Except (i) as provided herein or in
the other Loan Documents, (ii) as described on Schedule 6.1(b), (iii) for restrictions on
the use of proceeds from a permitted financing of Aircraft Related Equipment, Slots or Gates, (iv)
Payment Restrictions contained in refinancings or replacements of the financings listed in clause
(a)(ii) or (vi) above that are not more restrictive in a material respect than the corresponding
Payment Restrictions in the original financing, or (v) for restrictions binding on an entity at the
time such entity first becomes a Subsidiary of an Obligor, whether by merger, consolidation,
purchase of assets or otherwise (provided that such restrictions are not created, incurred or
assumed by such entity in contemplation of or in connection with the financing of such entity’s
becoming a Subsidiary of an Obligor), no Obligor will, nor will it permit any other Obligor to,
create or otherwise cause to exist any Payment Restriction with respect to any Subsidiary of any
Obligor.

70

 

          Section 6.2 Investments. No Obligor will, nor will it permit any other Obligor to,
make any Investment other than (i) Investments consisting of Cash Equivalents; (ii) accounts
receivable if credited or acquired in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms; (iii) payroll advances and advances for business and
travel expenses in the ordinary course of business; (iv) Investments made by way of any endorsement
of negotiable instruments received by any Obligor in the ordinary course of its business and
presented by it to any bank for collection or deposit; (v) stock, obligations or securities
received in settlement of amounts owing to any Obligor in the ordinary course of business or in a
distribution received in respect of an Investment permitted hereunder; (vi) Investments made in
connection with the Trust Agreements; (vii) in addition to any other permitted investments, any
other Investments by the Obligors in an aggregate outstanding amount not exceeding $50,000,000 at
any time; (viii) Investments pursuant to and in compliance with Section 6.5 or Section 6.9; (ix)
Investments made in Excluded Subsidiaries consistent with past practice and not to exceed
$10,000,000 per Fiscal Year in the aggregate; (x) Investments in travel or airline related
businesses made in connection with Marketing and Service Agreements, alliance agreements,
distribution agreements, agreements with respect to fuel consortium or fuel supply, agreements
relating to flight training, agreements relating to insurance arrangements, agreements relating to
spare parts management systems and other similar agreements which Investments under this clause (x)
(excluding Investments existing on the date hereof) shall not exceed $100,000,000 in the aggregate
at any time outstanding; (xi) Investments constituting non-cash consideration received in respect
of a transaction pursuant to and in compliance with Section 6.13; (xii) Investments existing on the
date hereof and set forth on Schedule 6.2; (xiii) Investments received in consideration of
the contribution or other disposition of the Tempe Property to a joint venture, partnership or
other entity for the purpose of developing the Tempe Property, (xiv) Investments in the Capital
Stock of Sabre Holdings Corp. received in connection with the exercise of options identified on
Schedule 6.2; (xv) ownership by each of the Obligors of the capital stock of each of its
wholly-owned
Subsidiaries, and (xvi) additional Investments not otherwise prohibited under this Agreement,
so long as both immediately before and after giving effect to such Investment pursuant to this
clause (xvi), a Covenant Suspension Period is in effect; provided, that if at the time of
the making of such Investment, such Investment was permitted under this clause (xvi) based on a
Covenant Suspension Period in effect at such time, the subsequent termination of such Covenant
Suspension Period shall not cause a violation of this Section 6.2.

          Section 6.3 Restricted Payments. No Obligor will, nor will it permit any other
Obligor to, directly or indirectly, declare, order, pay, make or set apart, or be obligated to
declare, order, pay, make or set apart, any sum for any Restricted Payment, except that:

          (a) the Obligors may prepay (i) Indebtedness which is secured by a Lien on property or assets
sold in an Asset Sale which is permitted hereunder or subject to a condemnation, taking, temporary
or permanent requisition, or change of grade, or a covered loss under a casualty insurance policy,
in each case in this clause (a)(i), to the extent that such Indebtedness is required by its terms
to be paid as a result of such Asset Sale, condemnation, taking, temporary or permanent
requisition, change of grade, or covered loss, as applicable, (ii) Indebtedness with the proceeds
of Permitted Refinancing Indebtedness, or (iii) a Capital Lease of property which is obsolete, worn
out or no longer required in the businesses of the Obligors;

          (b) the Obligors may purchase or redeem (i) the Warrants held by AFS Cayman Limited and (ii)
Capital Stock (including options on any such Capital Stock or related stock appreciation rights or
similar securities) that was issued as compensation from their officers, directors and employees
(or their estates or beneficiaries under their estates) upon death, disability, retirement,
termination of employment or pursuant to the terms of any plan or any other agreement under which
such Capital Stock or related rights were issued, in an amount not to exceed $1,000,000 per Fiscal
Year;

71

 

          (c) the Borrower may redeem the US Airways Convertible Notes in a principal amount up to
$74,000,000 if (A) (I) the closing sale price of the Borrower’s common stock is greater than $24.12
and the Borrower mails the applicable redemption notice to the holders of the US Airways
Convertible Notes within 30 days thereof and (II) after giving effect to such a redemption, no
Event of Default shall have occurred and be continuing; and (B) (I) the closing sale price of the
Borrower’s common stock is less than $24.12 per share and the Borrower mails the applicable
redemption notice to the holders of the US Airways Convertible Notes within 30 days thereof, (II)
at the time of mailing such redemption notice, the Borrower has, and after giving effect to such a
redemption, the Borrower expects in good faith to have Unrestricted Cash of at least $1,200,000,000
and (III) after giving effect to such a redemption, no Event of Default shall have occurred and be
continuing;

          (d) [Reserved]

          (e) the Borrower may pay dividends in respect of its Capital Stock in each Fiscal Year in an
amount up to 50% of Excess Cash Flow for the immediately preceding Fiscal Year, so long as, both
immediately before and after giving effect to such payment, (A) no Default or Event of Default has
occurred and is continuing at the time of and immediately after giving effect to the payment of
such dividends, and (B) the Borrower is in pro forma compliance with the financial covenants in
Section 6.4 at such times; provided, that after the consummation of a Permitted Holder
Acquisition, any dividends paid by the Borrower to the Permitted Holder shall be only for corporate
expenses, including, without limitation, taxes (provided that, after any Permitted Holder
Acquisition, the Borrower may not make any
dividend or distribution with respect to taxes in excess of the amount of taxes that the
Borrower would have paid in the absence of tax consolidation with the Permitted Holder) and
salaries;

          (f) the Borrower shall be permitted to make other payments in respect of subordinated
Indebtedness, so long as, both immediately before and after giving effect to such payment, a
Covenant Suspension Period is in effect;

          (g) the Borrower shall be permitted to make other payments in respect of Indebtedness (other
than Indebtedness that is contractually subordinated to the Loans) so long as, both immediately
before and after giving effect to such prepayment, the Borrower has pro forma Unrestricted Cash of
at least $1,200,000,000; and

          (h) the Borrower shall be permitted to pay other dividends in respect of its Capital Stock so
long as, in the case of this clause (h), both immediately before and after giving effect to such
dividend, a Covenant Suspension Period is in effect.

          Section 6.4 Financial Covenants.

          (a) Minimum Control Cash Amount. The Obligors shall maintain deposit accounts and
securities accounts (not including, for purposes of this Section 6.4(a), the Collateral Account)
with an aggregate balance at all times equal to at least the Minimum Control Cash Amount (as
hereinafter defined) with banks or financial institutions with which each relevant Obligor and the
Administrative Agent have entered into control agreements in form and substance reasonably
satisfactory to the Administrative Agent (each, a “Control Agreement”) and which are
subject to a Lien granted pursuant to the Security Agreement. Each such Control Agreement shall
provide that the relevant Obligor has access to the funds and other assets carried therein, but
only until a “Notice of Exclusive Control” or the equivalent is given by the Administrative Agent.
The term “Minimum Control Cash Amount” means, at any time, the amount set forth set forth
in the table below across from the then aggregate outstanding principal amount of the Loan:

72

 

	 	 	 	 	 
	Outstanding Principal Amount	 	Minimum Control Cash Amount
	 > $700,000,000
	 	$	750,000,000	 
	<
$700,000,000 and > $650,000,000
	 	$	700,000,000	 
	< $650,000,000 and > $600,000,000
	 	$	650,000,000	 
	< $600,000,000 and > $550,000,000
	 	$	600,000,000	 
	< $550,000,000 and > $500,000,000
	 	$	550,000,000	 
	< $500,000,000 and > $450,000,000
	 	$	500,000,000	 
	< $450,000,000 and > $400,000,000
	 	$	450,000,000	 
	< $400,000,000 and > $350,000,000
	 	$	400,000,000	 
	< $350,000,000 and > $300,000,000
	 	$	350,000,000	 
	< $300,000,000 and > $250,000,000
	 	$	300,000,000	 
	< $250,000,000 and > $200,000,000
	 	$	250,000,000	 
	< $200,000,000 and > $150,000,000
	 	$	200,000,000	 
	< $150,000,000 and > $100,000,000
	 	$	150,000,000	 
	< $100,000,000 and > $  50,000,000
	 	$	100,000,000	 
	< $50,000,000
	 	$	50,000,000	 

          (b) Minimum Collateral Coverage Ratio. The Borrower shall not permit the Collateral
Coverage Ratio to be less than 125% at any time; provided, however, that if at any
time, it is determined that the Borrower is not in compliance with the minimum Collateral Coverage
Ratio, the Borrower shall, within fifteen (15) Business Days of the date of such determination,
prepay the Loan and/or deposit or pledge additional Cure Collateral pursuant to Section 5.8(c), in
each case in an amount sufficient to enable the Borrower to comply with the minimum Collateral
Coverage Ratio.

          (c) Minimum Unrestricted Cash. The Borrower shall not, at the close of any Business
Day, permit the aggregate amount of Unrestricted Cash to be less than $1,250,000,000.

          (d) Minimum Fixed Charges Coverage Ratio. If (i) a Permitted Holder Acquisition shall
be consummated or (ii) the Obligors shall consummate an Acquisition or Acquisitions for an
aggregate purchase price in connection with all such Acquisitions (including therein any
Indebtedness assumed in connection therewith) of more than $300,000,000, the Borrower will not
thereafter permit the Fixed Charges Coverage Ratio for the period of four consecutive fiscal
quarters ending on the dates specified below, to be less than the applicable ratio specified below:

	 	 	 	 	 
	Period	 	Applicable Ratio
	June 30, 2007
	 	 	0.98 to 1.00	 
	September 30, 2007
	 	 	1.05 to 1.00	 
	December 31, 2007
	 	 	1.11 to 1.00	 
	March 31, 2008
	 	 	1.13 to 1.00	 
	June 30, 2008
	 	 	1.16 to 1.00	 
	September 30, 2008
	 	 	1.18 to 1.00	 
	December 31, 2008
	 	 	1.21 to 1.00	 
	March 31, 2009
	 	 	1.24 to 1.00	 
	June 30, 2009
	 	 	1.29 to 1.00	 
	September 30, 2009
	 	 	1.33 to 1.00	 
	December 31, 2009
	 	 	1.37 to 1.00	 
	March 31, 2010
	 	 	1.41 to 1.00	 
	June 30, 2010
	 	 	1.46 to 1.00	 

73

 

	 	 	 	 	 
	Period	 	Applicable Ratio
	September 30, 2010
	 	 	1.50 to 1.00	 
	December 31, 2010
	 	 	1.54 to 1.00	 
	March 31, 2011
	 	 	1.54 to 1.00	 
	June 30, 2011
	 	 	1.54 to 1.00	 
	September 30, 2011
	 	 	1.54 to 1.00	 
	December 31, 2011
	 	 	1.54 to 1.00	 
	March 31, 2012
	 	 	1.54 to 1.00	 
	June 30, 2012
	 	 	1.54 to 1.00	 
	September 30, 2012
	 	 	1.54 to 1.00	 
	December 31, 2012
	 	 	1.54 to 1.00	 
	March 31, 2013
	 	 	1.54 to 1.00	 
	June 30, 2013
	 	 	1.54 to 1.00	 
	September 30, 2013
	 	 	1.54 to 1.00	 
	December 31, 2013
	 	 	1.54 to 1.00	 
	March 31, 2014
	 	 	1.54 to 1.00	 

; provided, however, that the financial covenant in this clause (d) shall not be
applicable if a Covenant Suspension Period is then in effect.

          Section 6.5 Restriction on Acquisitions; Change in Fiscal Year.

          (a) No Obligor will, nor will it permit any other Obligor to, acquire by purchase or otherwise
all or substantially all of the business, property or assets of any Person or any division or line
of business of any Person (excluding purchases and acquisitions in the ordinary course of business
by an Obligor of property from any Person not constituting all or substantially all of the property
of such Person, each an “Acquisition”), or all or substantially all of the Capital Stock or
other evidence of beneficial ownership of any Person, or acquire any Person as a new Subsidiary,
except that the Obligors may make acquisitions of Capital Stock, the assets and/or the business of
another Person (including any division or line of business of such Person) or acquire any Person as
a new Subsidiary so long as (i) the acquisition primarily involves the acquisition of assets to be
used in the business of an Obligor as engaged in by such Obligor on the date hereof, (ii)
immediately before and after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing, (iii) immediately after giving effect to the acquisition, the Obligors
shall be in compliance on a Pro Forma Basis with Section 6.4 and such compliance shall be evidenced
by an Officer’s Certificate of the Borrower demonstrating such compliance, (iv) prior to the
consummation of such acquisition, neither S&P nor Moody’s shall have lowered the Credit Rating to
below B- and B3, respectively, as a result of such acquisition (whether or not in combination with
other factors), (v) if the acquisition is structured as a consolidation or merger, it complies with
Section 6.9, and (vi) the Obligors comply with their obligations under Section 5.8(a) and/or (b)
with respect to the properties, assets or Person so acquired (as applicable).

          (b) No Obligor shall change its Fiscal Year.

          Section 6.6 Sales-Leasebacks. Except with respect to Excluded Property, no Obligor
will, nor will it permit any other Obligor to, directly or indirectly, become liable after the
Closing Date as lessee or as a guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal or mixed), whether now
owned or hereafter acquired, in each case which (a) an Obligor has sold or transferred or is to
sell or transfer to any other Person (other than another Obligor) or (b) an Obligor intends to use
for substantially the same purpose as any other

74

 

property which has been or is to be sold or
transferred by such Obligor to any Person (other than another Obligor) in connection with such
lease; provided that after the Closing Date the Obligors may become and remain liable as
lessee, guarantor or other surety with respect to (i) any such lease if and to the extent that (A)
the annual aggregate rentals under all such leases (other than leases with respect to Excluded
Property) shall not exceed $30,000,000 and (B) the Obligors comply with any prepayment obligations
under Section 2.5(b), and (ii) in addition to those leases permitted under clause (i) above,
additional leases if and to the extent that (A) the annual aggregate rentals under all such leases
(other than leases with respect to Excluded Property) shall not exceed $20,000,000, (B) the
Obligors comply with any prepayment obligations under Section 2.5(b), and (C) both immediately
before and after giving effect to such lease pursuant to this clause (ii), a Covenant Suspension
Period is in effect; provided, that if at the time of entering into such lease, such lease
was permitted under this clause (ii) based on a Covenant Suspension Period in effect at such time,
the subsequent termination of such Covenant Suspension Period shall not cause a violation of this
Section 6.6; and provided, further, that the restrictions contained in this Section
6.6 shall not apply to the transactions described on Schedule 6.6.

          Section 6.7 Transactions with Affiliates.

          (a) No Obligor shall, directly or indirectly, (i) sell, lease, transfer or otherwise dispose
of any of its properties or assets, or issue securities to, (ii) purchase any property, assets or
securities from, (iii) make any Investment in or (iv) enter into any contract or agreement with or
for the benefit of, any Affiliate that is not an Obligor or holder (other than an Obligor) of 5% or
more of any class of Capital Stock (and any Affiliate of such holder) of any Obligor (an
“Affiliate Transaction”), other than (x) Affiliate Transactions permitted under Section
6.7(b) and (y) Affiliate Transactions (including lease transactions) which are on fair and
reasonable terms no less favorable to such Obligor than those as might reasonably have been
obtainable at such time from an unaffiliated party; provided that if an Affiliate
Transaction or series of related Affiliate Transactions involves or has a value in excess of
$10,000,000, such Obligor shall not enter into such Affiliate Transaction or series of Affiliate
Transactions unless a majority of the disinterested members of the board of directors of the
Borrower shall reasonably and in good faith determine that such Affiliate Transaction is fair and
reasonable to such Obligor or is on terms no less favorable to such Obligor than those that might
reasonably have been obtained at such time from an unaffiliated party. For purposes of this
Section 6.7, Section 9.9 notwithstanding, the determination of whether a transaction is “fair”
shall be governed by the Delaware General Corporation Law, including decisional law thereunder.

          (b) The provisions of Section 6.7(a) shall not apply to (i) the agreements listed on
Schedule 6.7(b) as in effect on the Closing Date or any transaction contemplated thereby;
(ii) reasonable and customary fees and compensation paid to, and indemnity provided on behalf of,
officers, directors and employees of any Obligor or Excluded Subsidiary, as determined by the board
of directors of such Obligor or the senior management of the Borrower in good faith; (iii) any
Restricted Payments permitted by Section 6.3; (iv) transactions contemplated by the Marketing and
Service Agreements; and (v) transactions between any Obligor with any employee labor unions or
other employee groups of such Obligor provided such transactions are not otherwise prohibited by
this Agreement. The Obligors expressly acknowledge and agree that, in the case of any sale,
transfer or other disposition of assets or property which are Collateral from one Obligor to
another Obligor (or to an Excluded Subsidiary), whether pursuant to this Section 6.7, Section 6.9
or otherwise, the Lien of the Administrative Agent in such assets or property immediately prior to
such sale, transfer or other disposition shall continue and survive such transaction and remain
attached to (and perfected in) such assets or property following such transaction, and each Obligor
which takes title to such assets or property acknowledges and agrees that such title is subject to
the Lien of the Administrative Agent.

75

 

          Section 6.8 Conduct of Business. From and after the date hereof, (a) no Obligor shall
engage in any principal line of business other than (i) the businesses engaged in by the Obligors
on the date hereof and related businesses and (ii) such other lines of business as may be consented
to by the Requisite Lenders, and (b) each of the Excluded Subsidiaries shall not engage in any
business other than the business engaged in by it on the Closing Date.

          Section 6.9 Merger or Consolidation. No Obligor will consolidate with or merge with
any other Person or convey, lease or transfer its properties and assets substantially as an
entirety to any Person, unless: (i) (a) in the case of a consolidation or merger involving a
Principal Obligor, either (x) a Principal Obligor is the surviving entity and, other than in the
case of the Borrower, the Principal Obligor remains a wholly-owned Subsidiary of the Borrower or
(y) only in respect of a Principal Obligor that is not the Borrower, a Permitted Holder is the
surviving entity and becomes, contemporaneously with such consolidation or merger, a wholly-owned
Subsidiary of the Borrower (and in such case the Permitted Holder shall thereafter be deemed an
“Obligor” and a “Principal Obligor” for the purposes of this Agreement) and
shall expressly assume, by an agreement executed and delivered to the Administrative Agent, in
form and substance reasonably satisfactory to the Administrative Agent, all of such Principal
Obligor’s obligations under each Loan Document to which it is a party), or (b) in the case of a
consolidation or merger involving any other Obligor, such Obligor is the surviving entity or if
such Obligor is not the surviving entity, such surviving entity or the Person that acquires by
conveyance, lease or transfer the properties and assets of such Obligor substantially as an
entirety, shall be a corporation organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia, and shall expressly assume, by an
agreement executed and delivered to the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent, all of such Obligor’s obligations under each Loan
Document to which it is a party; (ii) immediately before and after giving effect to such
transaction, no Default or Event of Default shall have occurred and be continuing and immediately
after giving effect to such transaction, the Borrower shall be in compliance, on a Pro Forma Basis,
with Section 6.4; and (iii) the Borrower has delivered to the Administrative Agent an Officer’s
Certificate and an opinion of counsel from counsel reasonably satisfactory to the Administrative
Agent, in form and substance reasonably satisfactory to the Administrative Agent, stating that such
consolidation, merger, conveyance, lease or transfer and such agreement comply with this Section
6.9 and that all conditions precedent herein provided for relating to such transaction have been
complied with and addressing such other matters as may be reasonably requested by the
Administrative Agent. Notwithstanding anything to the contrary contained in this Section 6.9, (A)
any Obligor may merge or consolidate with any other Obligor; provided that in the case of
each such merger or consolidation involving a Principal Obligor, such Principal Obligor shall be
the continuing or surviving Person, (B) any Obligor may convey, lease or transfer its properties
and assets substantially as an entirety to any other Obligor and (C) any Principal Obligor may
merge or consolidate with any other Principal Obligor; provided that in the case of each
such merger or consolidation involving the Borrower, the Borrower shall be the continuing or
surviving Person.

          Section 6.10 Limitations on Amendments.

          (a) No Obligor shall amend, waive or modify, nor shall it consent to or request any amendment,
waiver or modification, of any of the material terms, conditions, representations and covenants
contained in any Indebtedness for borrowed money that (i) shortens the final maturity date of such
Indebtedness to a date earlier than 180 days after the Maturity Date (without giving effect to any
amendment, waiver or modification, the “Initial Indebtedness”) or (ii) requires the
acceleration of the final scheduled maturity date and/or any principal payments, including but not
limited to scheduled payments and mandatory prepayments, and/or increases the principal amount
payable on any date (including, without limitation, pursuant to mandatory prepayments) prior to the
dates of analogous payments of such Initial Indebtedness; provided, however, that
this Section 6.10(a) shall not prohibit the

76

 

incurrence of Permitted Refinancing Indebtedness, the
repayment of the Indebtedness being refinanced, or any amendment, waiver or modification of the
terms of the Indebtedness being refinanced necessary to effect such repayment.

          (b) No Obligor will, nor will it permit any other Obligor to, amend, adopt or terminate any
Plan (i) unless such action could not reasonably be expected to have a Material Adverse Effect, or
(ii) in any manner that could reasonably be expected to give the PBGC a sound and just basis to
commence Proceedings against the Obligors on the basis that such action constitutes a subsequent
change in connection with the Obligor’s termination or replacement of the defined benefit
Retirement Income Plan for Pilots of US Airways, Inc. with the 2003 Pilots Defined Contribution
Plan.

          (c) No Obligor shall amend, restate, supplement or modify (or consent to or permit any
amendment, restatement, supplement or modification of) its Investment Guidelines without the prior
written consent of the Administrative Agent; provided, that, for the avoidance of
doubt, this Section 6.10(c) shall not be deemed to prohibit the adoption of the Investment
Guidelines by any Obligor.

          Section 6.11 No Further Negative Pledges. Except with respect to (a) specific
property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an
executed agreement with respect to a permitted Asset Sale (including sale-leaseback transactions
not prohibited by this Agreement), (b) restrictions by reason of customary provisions restricting
pledges, Liens, assignments, subletting or other transfers contained in leases, licenses and
similar agreements entered into in the ordinary course of business (provided that such
restrictions are limited to the property or assets secured by such Liens or the property or assets
subject to such leases, licenses or similar agreements, as the case may be), (c) negative pledges
contained in the Airbus Financing Letter Agreement and Permitted Acquisition Financing (and any
Permitted Refinancing Indebtedness thereof), and (d) Permitted Refinancing Indebtedness of
Indebtedness outstanding on the Closing Date, after the date hereof, no Obligor will, nor will it
permit any other Obligor to, enter into any agreement prohibiting the creation or assumption of any
Lien to secure the Obligations upon any of its properties or assets, whether now owned or hereafter
acquired to the extent that such properties or assets are required to be pledged to secure the
Obligations.

          Section 6.12 Speculative Transactions. No Obligor will, nor will it permit any other
Obligor to, become a general partner in any general or limited partnership or joint venture engaged
or involved in, nor will any Obligor engage in any transaction involving, commodity options or
future contracts or any similar speculative transactions; provided, however, that
the following transactions shall not be prohibited by this Section 6.12: (i) transactions designed
to hedge against fluctuations in fuel costs, entered into in the ordinary course of business,
consistent with past business practice or then current industry practice, and not entered into for
speculative purposes, (ii) transactions designed to hedge interest rates entered into in the
ordinary course of business with respect to notional amounts not to exceed actual or anticipated
Indebtedness and not entered into for speculative purposes and (iii) transactions designed to hedge
against risks associated with fluctuations in currencies entered into in the ordinary course of
business, and not entered into for speculative purposes.

          Section 6.13 Asset Sales. No Obligor will, nor will it permit any other Obligor to,
directly or indirectly, consummate any Asset Sale, except that the following Asset Sales shall be
permitted: (i) any Asset Sales if and to the extent that the aggregate Net Cash Proceeds from all
such Asset Sales does not exceed $250,000,000 per Fiscal Year (subject to compliance with Section
2.5(b), if applicable), (ii) sale-leasebacks not prohibited by Section 6.6 (subject to compliance
with Section 2.5(b), if applicable), (iii) any sale or disposition of Spare Parts in the ordinary
course of business (subject to compliance with Section 2.5(b), if applicable); provided,
however, that the aggregate Appraised Value of all Spare Parts sold or disposed of pursuant
to this clause (iii) shall not exceed 15% of the Appraised

77

 

Value of the Spare Parts set forth in
the Baseline Appraisal; and (iv) other Asset Sales so long as both immediately before and after
giving effect to such Asset Sale pursuant to this clause (iv), a Covenant Suspension Period is in
effect (subject to compliance with Section 2.5(b), if applicable); provided,
however, that with respect to each Asset Sale pursuant to this Section 6.13, (a) the
consideration received in respect of such Asset Sale is at least equal to the Fair Market Value of
the assets subject to such Asset Sale and (b) at least 85% of the value of the consideration
received by such Obligor in respect of such Asset Sale (net of the amount of any Indebtedness
secured by the assets sold in such Asset Sale which is assumed by the purchaser thereof) is in the
form of cash or Cash Equivalents.

          Section 6.14 Hazardous Materials. No Obligor shall cause or knowingly permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about any of the Collateral
where such Release would (a) violate in any respect, or form the basis for any Liabilities pursuant
to Environmental Laws, or (b) otherwise adversely effect the value or marketability of any of the
Collateral, other than in the case of each of clauses (a) and (b), such violations, Releases or
Liabilities pursuant to Environmental Laws that could not reasonably be expected to have a Material
Adverse Effect.

          Section 6.15 ERISA Events. No Obligor shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur (i) an event that could result in the imposition of a lien
under Section 412 of the Internal Revenue Code or Section 302 or 4068 of ERISA or (ii) an ERISA
Event, except in each case to the extent such lien or such ERISA Event could not reasonably be
expected to have a Material Adverse Effect.

ARTICLE VII

EVENTS OF DEFAULT

          Section 7.1 Events of Default. Each of the following events shall constitute an
“Event of Default”:

          (a) (i) failure by the Borrower to pay any installment of principal of the Loan when due,
whether at stated maturity, by acceleration, by mandatory prepayment or otherwise or (ii) failure
by the Borrower to pay any interest on the Loan or any fee or any other amount due under this
Agreement or any other Loan Document within five (5) Business Days after the date due; or

          (b) any Obligor (i) fails to make when due (after giving effect to applicable cure or grace
periods, and whether as primary obligor or as guarantor or other surety) payments in respect of
rents, principal, interest or premium or other payments, if any, under or in respect of one or more
Capital Leases or other Indebtedness or Operating Leases (other than Indebtedness referred to in
clause (a) of this Section 7.1 and the Juniper Financing) and such failure relates to Capital
Leases or other Indebtedness which has a principal amount that equals or exceeds $25,000,000 or
Operating Leases under which the aggregate net present value of the remaining basic rent payments
(as determined in accordance with the formulas for calculating “net present value” under the
applicable leases or for leases without such formulas, in accordance with formulas under leases for
comparable terms and comparable amounts) equals or exceeds $25,000,000 or (ii) fails to duly
observe, perform or comply with any agreement with any Person or any term or condition of any
instrument, if such failure, either individually or in the aggregate, shall have (A) resulted in
the acceleration of, or entitles any Person to accelerate, the payment of Indebtedness (other than
the Juniper Financing) owed by such Obligor which, together with all other accelerated Indebtedness
and Indebtedness that is entitled to be accelerated, has a principal amount that equals or exceeds
$25,000,000, (B) given rise under one or more Operating Leases to obligations by, or rights of any
other Person(s) to require, an Obligor to make payments that equal or exceed, or to return assets
leased by an Obligor and having a fair market value that equals or exceeds, $25,000,000 or (C)

78

 

resulted in the termination of or given rise to rights of any other Person(s) to terminate one or
more Operating Leases under which the aggregate net present value of the remaining basic rent
payments (as determined in accordance with the formulas for calculating “net present value” under
the applicable leases or for leases without such formulas, in accordance with formulas under leases
for comparable terms and comparable amounts) equals or exceeds $25,000,000; provided that
the failure by an Obligor to make one
or more payments that are attributable to and relate solely to return conditions under
aircraft leases shall not constitute an Event of Default under this Section 7.1(b) so long as the
Obligor is, in good faith, disputing the amount of such payments; or

          (c) failure by an Obligor to perform or comply with any term or condition contained in Section
5.2, Section 5.10 or Article VI of this Agreement (other than Section 6.4); or

          (d) any representation, warranty, certification or other statement made by any Obligor in any
Loan Document or in any statement or certificate at any time given by any Obligor in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false in any material
respect on the date as of which made; or

          (e) any default by any Obligor in the performance of or compliance with any provision
contained in this Agreement or any of the other Loan Documents required to be performed or complied
with by it (other than any such provision referred to in any other clause of this Section 7.1)
(which in the case of Section 6.4(b), shall be after giving effect to the Borrower’s right to cure
such default within the time period provided in Section 6.4(b)), (i) with respect to a default
under Section 6.4(c), such default shall not have been remedied or waived within two (2) Business
Days after the date of such default and (ii) with respect to any other default, such default shall
not have been remedied or waived within thirty (30) days after the earlier of (A) a Responsible
Officer of a Principal Obligor obtaining knowledge of such default (which, in the case of Section
6.4(d), will be presumed to have occurred no later than the date of the delivery of financial
statements pursuant to Section 5.1 for the end of the accounting period as of which such default
exists) or (B) receipt by the Borrower of notice from the Administrative Agent of such default; or

          (f) (i) a court shall enter a decree or order for relief in respect of any Obligor in an
involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or any other relief described in clause (ii) below or other
similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary
case shall be commenced against any Obligor seeking (A) relief under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, (B) the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over such Obligor, or over all or a substantial part of its property, or (C) the
appointment of an interim receiver, trustee or other custodian of any Obligor for all or a
substantial part of its property, and any such event described in this clause (ii) against such
Obligor shall continue for 60 days without being dismissed or discharged; or (iii) a warrant of
attachment, execution or similar process shall have been issued against all or any substantial part
of the property of any Obligor; or

          (g) (i) any Obligor shall have an order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking possession by a receiver, trustee or other
custodian of all or a substantial part of its property; or (ii) any Obligor shall make any
assignment for the benefit of creditors; or (iii) the board of directors of any Obligor (or any
committee thereof) shall adopt any resolution to approve any of the actions referred to in clauses
(i) or (ii) above; or

79

 

          (h) (i) one or more final judgments or orders for the payment of money in an aggregate amount
in excess of $25,000,000 and which are not covered by insurance (treating any deductibles,
self-insurance (except to the extent reinsured) or retention as not so covered) or (ii) one or more
non-monetary judgments or orders that could reasonably be expected to have a Material Adverse
Effect shall have been entered against one or more Obligors and, in each case, shall remain
undischarged or unstayed, by reason of a pending appeal or otherwise, for a period in excess of
sixty (60) days; or

          (i) any order, judgment or decree shall be entered against any Obligor decreeing the
dissolution of such Obligor and such order shall remain undischarged or unstayed for a period in
excess of thirty (30) days; or

          (j) (i) (A) any of the Loan Documents shall cease to be enforceable against any Obligor party
thereto or in full force and effect or (B) any Obligor shall so assert or (ii) (A) any Lien under
the Collateral Documents on any Eligible Collateral with a fair market value in excess of
$1,000,000 in the aggregate or a material portion of any other Collateral that does not constitute
Eligible Collateral shall cease to be valid and enforceable and of the same effect purported to be
created thereby or shall fail or cease to be a perfected Lien with the priority required by the
applicable Collateral Document, or (B) any Obligor shall so assert the invalidity or lack of
enforceability, perfection or priority of any such Lien and, in the case of clause (ii)(A) of this
subsection (j), such default shall continue unremedied for a period of ten (10) days; or

          (k) any Obligor shall fail to carry and maintain (or to cause to be carried and maintained) on
or with respect to the Aircraft Related Equipment airline liability insurance required to be
maintained pursuant hereto or in accordance with the provisions of the related Collateral
Documents; or

          (l) any Obligor shall fail generally, or shall admit in writing its inability, to pay its
debts as such debts become due; or

          (m) (i) Primary Slots, (x) shall have been withdrawn by the FAA or otherwise revoked or
terminated by or with the FAA on a final basis after all appeals have been exhausted during the
term of the Loan as the result of failure by any Obligor or by any lessee or licensee of any
Obligor to comply with the Slot Regulations and (y) the aggregate Appraised Value of such Slots
(which Appraised Value shall be based on the then current Appraisal Report as of the date of such
withdrawal, revocation or termination) shall have exceeded 50% of the aggregate Appraised Value of
all Slots set forth in the Baseline Appraisal; or (ii) any Obligor implements a cessation,
cancellation or curtailment of flight operations or a change in flight schedules which, assuming no
subsequent further action (such as the sale, lease or trade of the affected Slots or their
allocation to new or additional flights) is taken, could reasonably be expected to result in the
withdrawal by the FAA or other revocation or termination based upon failure to comply with the Slot
Regulations of Primary Slots, the aggregate Appraised Value of which (as of the date of such
cessation, cancellation or curtailment) exceeds 50% of the aggregate Appraised Value of all Slots
set forth in the Baseline Appraisal; it being understood, however, that an Event of Default shall
not have occurred under this clause (ii) if the Primary Slots otherwise affected are sold, leased
or traded in arm’s length transactions or allocated to new or additional flights prior to the
implementation of such cessation, cancellation or curtailment of flight operations or change in
flight schedules; or

          (n) (i) any ERISA Event occurs which could, individually or in the aggregate, reasonably be
expected to result in liability to any Obligor in an amount which would exceed $25,000,000, (ii)
any Lien shall arise on the assets of any Obligor in favor of the PBGC or a Plan to the extent that
such Lien could reasonably be expected to result in liability to any Obligor in an amount which

80

 

would exceed $25,000,000 or (iii) any Obligor makes any payment in excess of $25,000,000 as a
result of an ERISA Event; or

          (o) suspension of all or substantially all of the Obligors’ flight and other operations for
more than five consecutive days (excluding, however, any such suspension as a result of an order by
an Aviation Authority due to a force majeure or any other extraordinary event similarly affecting
all major U.S. commercial carriers).

          Section 7.2 Remedies. During the continuance of any Event of Default, the
Administrative Agent may, and at the request of the Requisite Lenders shall, declare the Loan, all
interest thereon and all other amounts and Obligations payable under this Agreement to be
immediately due and payable, whereupon the Loan, all such interest and all such amounts and
Obligations shall become and be immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by the Borrower;
provided, however, that upon the occurrence of an Event of Default specified in
clause (f) or (g) of Section 7.1, the Loan, all such interest and all such amounts and Obligations
shall automatically become and be immediately due and payable, without presentment, demand, protest
or any notice of any kind, all of which are hereby expressly waived by the Borrower. In addition
to the remedies set forth above, the Administrative Agent may exercise any remedies provided for by
the Collateral Documents or any other remedies provided by applicable law.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

          Section 8.1 Appointment, Powers and Immunities. Each Lender hereby appoints and
authorizes Citigroup North America, Inc. to act as its administrative agent and collateral agent
hereunder with such powers as are specifically delegated to the Administrative Agent by the terms
of this Agreement, together with such other powers as are reasonably incidental thereto. Without
limiting the foregoing, each Lender hereby authorizes the Administrative Agent to execute and
deliver each of the Collateral Documents. The Administrative Agent (which term as used in this
sentence and in Section 8.5 hereof and the first sentence of Section 8.6 hereof shall include
reference to its affiliates and its own and its affiliates’ officers, directors, employees and
agents):

          (a) shall have no duties or responsibilities except those expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this Agreement or the other Loan
Documents be a trustee or fiduciary for any party hereto;

          (b) shall not be responsible to the Lenders for any recitals, statements, representations or
warranties contained in this Agreement, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any Loan Document or any other
document referred to or provided for herein or therein or for any failure by the Borrower or any
other Person to perform any of its obligations hereunder or thereunder;

          (c) shall not be required to initiate or conduct any litigation or collection proceedings
hereunder (and shall not commence an action or proceeding on behalf of any Lender without obtaining
the consent of such Lender thereto); and

          (d) shall not be responsible for any computation made in good faith under Section 6.4 hereof
or for any other action taken or omitted to be taken by it hereunder or under any other

81

 

document or instrument referred to or provided for herein or therein or in connection herewith
or therewith, except for its own gross negligence or willful misconduct.

The Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct (except for the gross negligence or willful misconduct) of or for the
supervision of any such agents or attorneys-in-fact selected by it in good faith.

          Section 8.2 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to conclusively rely upon any certification, notice or other communication (including,
without limitation, any thereof by telephone, telecopy, email, telegram or cable) reasonably
believed by it to be genuine and correct and to have been signed, made or sent by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel and other experts
selected by the Administrative Agent, as the case may be. As to any matters not expressly provided
for by this Agreement, the Administrative Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder in accordance with instructions given by the Requisite
Lenders, and such instructions of the Requisite Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.

          Section 8.3 Defaults. The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of a Default (other than a failure to make a payment of principal of or
interest on the Loan) unless the Administrative Agent has received notice from a Lender or the
Borrower specifying such Default and stating that such notice is a “Notice of Default”. In the
event that the Administrative Agent receives a notice of a Default, the Administrative Agent shall
give prompt notice thereof to the Lenders. The Administrative Agent shall (subject to Section 8.7
hereof) take such action with respect to any such Default as shall be directed by the Requisite
Lenders, provided, that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem advisable in the
best interest of the Lenders except to the extent that this Agreement expressly requires that such
action be taken, or not be taken, only with the consent or upon the authorization of the Requisite
Lenders or all of the Lenders.

          Section 8.4 Rights as a Lender. With respect to its Commitment and the Loan, if any,
made by it, Citigroup (and any successor acting as Administrative Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as the Administrative Agent, and the term “Lender”
or “Lenders” shall, unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. Citigroup (and any successor acting as Administrative Agent) and its
affiliates may (without having to account therefor to any Lender) accept deposits from, lend money
to, make investments in and generally engage in any kind of banking, trust or other business with
the Borrower as if it were not acting as the Administrative Agent, and Citigroup (and any such
successor) and its affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to account for the same to
the Lenders.

          Section 8.5 Indemnification. The Lenders agree to indemnify the Administrative Agent
(to the extent not reimbursed under Section 9.4 hereof, but without limiting the obligations of the
Borrower under said Section 9.4) ratably in accordance with the aggregate principal amount of the
Loan held by the Lenders (or, if no Loan is at the time outstanding, ratably in accordance with
their respective Commitments), for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever (including without limitation legal fees and expenses) that may be imposed on, incurred
by or asserted against the Administrative Agent arising out of or by reason of any investigation in
any way relating to or arising out of this Agreement or any other documents contemplated by or
referred to herein or therein or the transactions

82

 

contemplated hereby or thereby (including,
without limitation, the costs and expenses that the Borrower is obligated to pay under Section 9.4
hereof, but excluding, unless an Event of Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency duties hereunder) or
the enforcement of any of the terms hereof or thereof or of any such other documents, provided,
that no Lender shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified. The obligations of the Lenders
under this Section 8.5 shall survive the termination of this Agreement, the repayment of the Loan
and the resignation or removal of the Administrative Agent.

          Section 8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed appropriate, made its own
credit analysis of the Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement and the Notes. The
Administrative Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement and the Notes or any other document referred to or
provided for herein or therein or to inspect the properties or books of the Borrower. Except for
notices, reports and other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower that may come into the possession of the
Administrative Agent or any of its affiliates.

          Section 8.7 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be fully justified in
failing or refusing to act hereunder or thereunder unless it shall receive further assurances to
its satisfaction from the Lenders of their indemnification obligations under Section 8.5 hereof
against any and all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.

          Section 8.8 Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving notice thereof to the Lenders and the
Borrower, and the Administrative Agent may be removed at any time with or without cause by the
Requisite Lenders at no cost to the Borrower other than the payment of the fees of any successor
Administrative Agent. Upon any such resignation or removal, the Requisite Lenders, in
consultation with the Borrower, shall have the right to appoint a successor Administrative Agent,
which shall be a bank that has an office in New York, New York or London, England. If no successor
Administrative Agent shall have been so appointed by the Requisite Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent’s giving of notice of
resignation or the Requisite Lenders’ removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative
Agent, which shall be a bank that has an office in New York, New York and that has a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as an
Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent and shall notify the Lenders and the Borrower thereof,
and the retiring Administrative Agent shall be discharged from its duties and obligations
hereunder. Notwithstanding the foregoing, no removal of the Administrative Agent shall be
effective until all amounts then due and owing to the removed Administrative Agent shall be paid in
full. After any retiring Administrative Agent’s resignation or removal hereunder as Administrative
Agent, the provisions of this

83

 

Section 10 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Administrative Agent.

          Section 8.9 Release of Collateral or Guarantors. Each Lender hereby consents to the
release and hereby directs the Administrative Agent to release (or, in the case of clause (b)(iii)
below, release or subordinate) the following:

          (a) any Subsidiary of the Borrower from its guaranty of any Obligation of any Obligor if all
of the Capital Stock of such Subsidiary owned by the Borrower or any of its Subsidiaries are sold
in a sale permitted under the Loan Documents (including pursuant to a waiver or consent), to the
extent that, after giving effect to such sale, such Subsidiary would not be required to guaranty
any Obligations pursuant to Section 5.8; and

          (b) any Lien held by the Administrative Agent for the benefit of the Secured Parties against
(i) any Collateral that is sold by an Obligor (A) in a sale permitted by the Loan Documents
(including pursuant to a valid waiver or consent), to the extent all Liens required to be granted
in such Collateral pursuant to Section 5.8 after giving effect to such sale have been granted and
with respect to which the relevant Obligor complies with Section 2.5(b), as applicable, or (B) in
connection with any Replacement Secured Financing with respect to which the relevant Obligor
complies with Section 2.5(a), (ii) any Collateral to the extent the release of any Lien in such
Collateral is permitted or required under any Loan Document (including, without limitation, the
proviso in Section 5.8(b)) and (iii) all of the Collateral and all Obligors, upon (A) termination
of the Commitments, (B) payment and satisfaction in full of all Loans and all other Obligations
that the Administrative Agent has been notified in writing are then due and payable, (C) deposit of
cash collateral with respect to all contingent Obligations as to which claims have been asserted or
are pending, in amounts and on terms and conditions and with parties satisfactory to the
Administrative Agent and each Indemnitee that is owed such Obligations and (D) to the extent
requested by the Administrative Agent, receipt by the Secured Parties of mutual liability releases
from the Obligors and the Administrative Agent, each in form and substance acceptable to the
Administrative Agent.

Each Lender hereby directs the Administrative Agent, and the Administrative Agent hereby agrees,
upon receipt of reasonable advance notice from the Borrower, to execute and deliver or file such
documents and to perform other actions reasonably necessary to release the guaranties and Liens
when and as directed in this Section 8.9; provided, that the Administrative Agent shall not
be obligated to release any guaranty or Lien pursuant to this Section 8.9 until its receipt from
the Borrower of an Officer’s Certificate
certifying that such release complies with this Section 8.9, and the Administrative Agent shall be
fully protected in relying on such Officer’s Certificate in connection therewith.

          Section 8.10 Joint Lead Arrangers, Bookrunner, Syndication Agent and Documentation
Agent. Notwithstanding anything herein to the contrary the Joint Lead Arrangers, the
Bookrunner, the Syndication Agent and the Documentation Agent named on the cover page of this
Agreement shall not, in their capacities as such, have any duties or liabilities under this
Agreement.

84

 

ARTICLE IX

MISCELLANEOUS

          Section 9.1 Amendments, Waivers, Etc.

          (a) Amendments and Waivers. No amendment, modification or waiver of any provision of
this Agreement or any other Loan Document nor consent to any departure by any Obligor therefrom
shall in any event be effective unless the same shall be in writing and signed by the Requisite
Lenders (or the Administrative Agent with the consent of the Requisite Lenders), and then any such
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given; provided, however, that:

     (i) no amendment, modification, waiver or consent shall, unless in writing and signed
by each Lender affected thereby, do any of the following:

     (1) increase the Commitment of such Lender or subject such Lender to any
additional obligations;

     (2) extend the scheduled final maturity of the Loan or change the amount of or
extend the scheduled date fixed for the payment of any principal of the Loan (it
being understood that the waiver of any mandatory prepayment of the Loan pursuant to
Section 2.5 shall not constitute an extension of any scheduled date fixed for the
payment of any principal of the Loan);

     (3) decrease the rate of interest on the Loan (other than as a result of
waiving the applicability of any post-default increase in interest rates) or any
fee, indemnity or other amount payable to such Lender or extend any date fixed for
payment of such interest, indemnity or other amount or fees (it being understood
that the waiver of any mandatory prepayment of the Loan pursuant to Section 2.5
shall not constitute an extension of any date fixed for payment of such interest,
indemnity or other amount or fees);

     (4) amend the definition of “Requisite Lenders,” or this Section 9.1;

     (5) release all or substantially all of the Collateral or any Subsidiary
Guarantor from its guaranty of any Obligation of the Borrower; and

     (6) modify the application of payments to the Loan under Section 2.8; and

     (ii) no amendment, modification, waiver or consent shall, unless in writing and signed
by the Administrative Agent, in addition to the Persons required above to take such action,
affect the rights or duties of the Administrative Agent under this Agreement or the other
Loan Documents.

          (b) Execution of Amendments and Waivers by the Administrative Agent. The
Administrative Agent may, but shall have no obligation to, with the written concurrence of any
Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Any
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which it was given. No notice to or demand on the Borrower in any case shall entitle the Borrower
to any other or further notice or demand in similar or other circumstances.

85

 

          (c) Non-Consenting Lenders. In connection with any proposed amendment, modification,
waiver or termination requiring the consent of all affected Lenders, if the consent of the
Requisite Lenders is obtained, but the consent of other Lenders whose consent is required is not
obtained (any such Lender whose consent is not obtained as described in this Section 9.1 being
referred to as a “Non-Consenting Lender”), then, so long as the Lender that is acting (or
an Affiliate of which is acting) as the Administrative Agent is not a Non-Consenting Lender, at the
Borrower’s request and at its sole cost and expense, the Administrative Agent or an Eligible Lender
that is acceptable to the Administrative Agent, and, so long as no Event of Default shall have
occurred and be continuing, the Borrower, shall have the right with the Administrative Agent’s
consent and in the Administrative Agent’s sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lender, and such Non-Consenting Lender agrees that it shall, upon
the Administrative Agent’s request, sell and assign to the Lender that is acting as the
Administrative Agent or such Eligible Lender, all of the portion of the Loan of such Non-Consenting
Lender for an amount equal to the principal balance of such portion of the Loan held by the
Non-Consenting Lender and all accrued interest and fees with respect thereto through the date of
sale, such purchase and sale to be consummated pursuant to an executed Assignment and Acceptance;
provided, however, that at the time of such replacement, such assignee consents to
the proposed amendment, modification, waiver or termination; provided, further,
that the failure of any Non-Consenting Lender to execute any such Assignment and Acceptance shall
not render such purchase and sale (or the corresponding assignment) invalid.

          Section 9.2 Assignments and Participations; Successors and Assigns.

          (a) Right to Assign. Each Lender may sell, transfer, negotiate or assign all or a
portion of its rights and obligations hereunder (including all or a portion of its Commitments and
its rights and obligations with respect to the Loan) to (i) any existing Lender, (ii) any Affiliate
or Approved Fund of any existing Lender or (iii) any other Eligible Lender acceptable (which
acceptance shall not be unreasonably withheld or delayed) to the Administrative Agent and, as long
as no Event of Default is continuing, the Borrower; provided, however, that (x)
such assignments must be ratable among the obligations owing to and owed by such Lender with
respect to the Loan Facility, (y) the aggregate outstanding principal amount (determined as of the
Closing Date of the applicable Assignment and Acceptance) of the Loan and Commitments subject to
any such assignment shall be an integral multiple of $1,000,000, unless such assignment is made to
an existing Lender or an Affiliate or Approved Fund of any existing Lender, is of the assignor’s
(together with its Affiliates and Approved Funds) entire interest in the Loan Facility or is made
with the prior consent of the Borrower and the Administrative Agent and (z) the consent of the
Borrower shall not be required for any assignment by the Lenders party hereto on the Closing Date
made in connection with the primary syndication of the Loan Facility of their respective
Commitments and Loan held on the Closing Date.

          (b) Procedure. The parties to each assignment made in reliance on clause (a) above
(other than those described in clause (d) or (e) below) shall deliver to the Administrative Agent
(and the Administrative Agent shall keep a copy of all documents required to be delivered) the
following: (i) an Assignment and Acceptance, executed by the assignor(s) and the assignees(s),
evidencing such assignment; (ii) any existing Note subject to such assignment (or any affidavit of
loss therefor acceptable to the Administrative Agent); (iii) any tax forms required to be delivered
pursuant to Section 2.11(f), and (iv) an assignment fee in the amount of $3,500; provided,
that (1) if an assignment by a Lender is made to an Affiliate or an Approved Fund of such assigning
Lender, then no assignment fee shall be due in connection with such assignment, and (2) if an
assignment by a Lender is made to an assignee that is not an Affiliate or Approved Fund of such
assigning Lender, and concurrently to one or more Affiliates or Approved Funds of such assignee,
then only one assignment fee of $3,500 shall be due in connection with such assignment. Upon
receipt of all the foregoing, and conditioned upon such receipt and upon the Administrative Agent
consenting to such Assignment and Acceptance, from and after the Closing Date

86

 

specified in such
Assignment and Acceptance, the Administrative Agent shall record or cause to be recorded in the
Register the information contained in such Assignment and Acceptance.

          (c) Effectiveness. Effective upon the entry of such record in the Register, (i) such
assignee shall become a party hereto and, to the extent that rights and obligations under the Loan
Documents have been assigned to such assignee pursuant to such Assignment and Acceptance, shall
have the rights and obligations of a Lender, (ii) any applicable Note shall be transferred to such
assignee through such entry and (iii) the assignor thereunder shall, to the extent that rights and
obligations under this Agreement have been assigned by it pursuant to such Assignment, relinquish
its rights (except for those surviving the termination of the Commitments and the payment in full
of the Obligations) and be released from its obligations under the Loan Documents, other than those
relating to events or circumstances occurring prior to such assignment (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and
obligations under the Loan Documents, such Lender shall cease to be a party hereto except that each
Lender agrees to remain bound by Article VIII, Section 9.5 and Section 9.6 to the extent provided
in Section 8.11); provided, however, that the Obligors shall not be obligated to
pay any greater amount under Section 2.9(b) or Section 2.11 to such assignee than the Obligors
would have been obligated to pay to the assigning Lender as of the date of such assignment in such
Sections prior to such assignment.

          (d) Grant of Security Interests. In addition to the other rights provided in this
Section 9.2, each Lender may, without the consent of the Administrative Agent or the Borrower,
grant a security interest in, or otherwise assign as collateral, any of its rights under this
Agreement, whether now owned or hereafter acquired (including rights to payments of principal or
interest on the Loan), to (A) any federal reserve bank (pursuant to Regulation A of the Federal
Reserve Board), without notice to the Administrative Agent or (B) any holder of, or trustee for the
benefit of the holders of, such Lender’s securities by notice to the Administrative Agent;
provided, however, that no such holder or trustee, whether because of such grant or
assignment or any foreclosure thereon (unless such foreclosure is made through an assignment in
accordance with clause (a) above), shall be entitled to any rights of such Lender hereunder and no
such Lender shall be relieved of any of its obligations hereunder.

          (e) Participants and SPVs. In addition to the other rights provided in this Section
9.2, each Lender may, (x) with notice to the Administrative Agent, grant to an SPV the option to
make all or any part of the Loan that such Lender would otherwise be required to make hereunder
(and the exercise of such option by such SPV and the making of the Loan pursuant thereto shall
satisfy the obligation of such Lender to make such Loan hereunder) and such SPV may assign to such
Lender the right to receive payment with respect to any Obligation and (y) without notice to or
consent from the Administrative Agent or the Borrower, sell participations to one or more Persons
in or to all or a portion of its rights and obligations under the Loan Documents (including all its
rights and obligations with respect to the Loan)
(any such purchaser of a participation being referred to as a “Participant”);
provided, however, that, whether as a result of any term of any Loan Document or of
such grant or participation, (i) no such SPV or Participant shall have a commitment, or be deemed
to have made an offer to commit, to make the Loan hereunder, and, except as provided in the
applicable option agreement, none shall be liable for any obligation of such Lender hereunder, (ii)
such Lender’s rights and obligations, and the rights and obligations of the Obligors and the
Secured Parties towards such Lender, under any Loan Document shall remain unchanged and each other
party hereto shall continue to deal solely with such Lender, which shall remain the holder of the
Obligations in the Register, except that (A) each such Participant and SPV shall be entitled to the
benefit of Sections 2.9, 2.10 and 2.11, but only to the extent such Participant or SPV delivers the
tax forms such Lender is required to collect pursuant to Section 2.11(f) and then only to the
extent of any amount to which such Lender would be entitled in the absence of any such grant or
participation and (B) each such SPV may receive other payments that would otherwise be made to such
Lender with respect to the Loan funded by such SPV to the extent provided in the applicable option

87

 

agreement and set forth in a notice provided to the Administrative Agent by such SPV and such
Lender, provided, however, that in no case (including pursuant to clause (A) or (B)
above) shall an SPV or Participant have the right to enforce any of the terms of any Loan Document,
and (iii) the consent of such SPV or Participant shall not be required (either directly, as a
restraint on such Lender’s ability to consent hereunder or otherwise) for any amendments, waivers
or consents with respect to any Loan Document or to exercise or refrain from exercising any powers
or rights such Lender may have under or in respect of the Loan Documents (including the right to
enforce or direct enforcement of the Obligations), except for those described in clauses (2) and
(3) of Section 9.1(a)(i) and, in the case of Participants, except for those described in Section
9.1(a)(i)(5). Notwithstanding the foregoing, each Lender agrees that none of the following
Persons shall become a Participant hereunder: (I) an airline, a commercial aircraft operator, an
air freight forwarder or an entity principally engaged in the business of parcel transport by air,
or (II) an Affiliate of any Person described in clause (I) above. No party hereto shall institute
(and the Borrower shall cause each other Obligor not to institute) against any SPV grantee of an
option pursuant to this clause (e) any bankruptcy, reorganization, insolvency, liquidation or
similar proceeding, prior to the date that is one year and one day after the payment in full of all
outstanding commercial paper of such SPV; provided, however, that each Lender
having designated an SPV as such agrees to indemnify each Indemnitee against any Liability that may
be incurred by, or asserted against, such Indemnitee as a result of failing to institute such
proceeding (including a failure to get reimbursed by such SPV for any such Liability). The
agreement in the preceding sentence shall survive the termination of the Commitments and the
payment in full of the Obligations.

          (f) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns;
provided that except as otherwise expressly provided herein, no Obligor may assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of
the Lenders and the Administrative Agent (and any attempted assignment or transfer by an Obligor
without such consent shall be null and void).

          Section 9.3 Costs and Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Obligors agree to pay promptly (i) all reasonable costs and expenses
incurred by the Administrative Agent in connection with the negotiation, preparation, execution and
delivery of the Loan Documents and all documents relating thereto (including reasonable legal fees
and expenses), (ii) all reasonable costs and expenses incurred by the Administrative Agent in
connection with any consents, amendments, waivers or other modifications hereto (including
reasonable legal fees and expenses) and (iii) all costs and expenses, including reasonable legal
fees and expenses incurred by the Administrative Agent and the Lenders in enforcing any Obligations
of, or in collecting any payments due from, the Obligors hereunder or under the
other Loan Documents, including any such costs and expenses incurred after the filing of a
bankruptcy or insolvency proceeding with respect to any Obligor.

          Section 9.4 Indemnities.

          (a) Each Obligor agrees to indemnify, hold harmless and defend the Administrative Agent, each
Lender and each of their respective Related Persons (each such Person being an
“Indemnitee”) from and against all Liabilities (including brokerage commissions, fees and
other compensation) that may be imposed on, incurred by or asserted against any such Indemnitee in
any matter relating to or arising out of, in connection with or as a result of (i) any Loan
Document, any Obligation (or the repayment thereof), the use or intended use of the proceeds of the
Loan or any securities filing of, or with respect to, the Borrower and its Subsidiaries, (ii) any
commitment letter, proposal letter or term sheet with any Person or any Contractual Obligation,
arrangement or understanding with any broker, finder or consultant, in each case entered into by or
on behalf of the Borrower, its Subsidiaries or any Affiliate of any of them in connection with any
of the foregoing and any Contractual Obligation entered into in connection with any Platform, (iii)
any actual or prospective investigation, litigation or other

88

 

proceeding, whether or not brought by
any such Indemnitee or any of its Related Persons, any holders of securities or creditors (and
including reasonable attorneys’ fees in any case), whether or not any such Indemnitee, Related
Person, holder or creditor is a party thereto, and whether or not based on any securities or
commercial law or regulation or any other Requirement of Law or theory thereof, including common
law, equity, contract, tort or otherwise, or (iv) any other act, event or transaction related,
contemplated in or attendant to any of the foregoing (collectively, the “Indemnified
Matters”); provided, however, that the Obligors shall not have any liability
under this Section 9.4 to any Indemnitee with respect to any Indemnified Matter, and no Indemnitee
shall have any liability with respect to any Indemnified Matter other than (to the extent otherwise
liable), to the extent such liability has resulted primarily from the gross negligence or willful
misconduct of such Indemnitee, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order. Furthermore, each Obligor waives and agrees not to assert
against any Indemnitee any right of contribution with respect to any Liabilities that may be
imposed on, incurred by or asserted against any Related Person. Each of the Borrower, the
Administrative Agent and the Lenders also agrees not to assert any claim against the Administrative
Agent, any Lender, the Borrower, any of their Affiliates, or any of their respective directors,
officers, employees, attorneys and agents, on any theory of liability, for consequential, indirect,
special or punitive damages arising out of or otherwise relating to this Agreement or any of the
other Loan Documents or any of the transactions contemplated hereby or thereby or the actual or
proposed use of the proceeds of the Loan.

          (b) Without limiting the foregoing, “Indemnified Matters” includes all Environmental Claims,
including those arising from, or otherwise involving, any property of the Borrower or any of its
Subsidiaries or any actual, alleged or prospective damage to property or natural resources or harm
or injury alleged to have resulted from any Release of Hazardous Materials on, upon or into such
property or natural resource or any property on or contiguous to any real property of the Borrower
or any of its Subsidiaries, whether or not, with respect to any such Environmental Claims, any
Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the
successor-in-interest to the Borrower or any of its Subsidiaries or the owner, lessee or operator
of any property of the Borrower or any of its Subsidiaries through any foreclosure action, in each
case except to the extent such Environmental Claims (i) are incurred solely following foreclosure
by any Secured Party or following any Secured Party having become the successor-in-interest to any
Obligor and (ii) are attributable solely to acts of such Indemnitee.

          Section 9.5 Right of Set-Off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default, to the fullest extent permitted by law, the
Administrative Agent, each Lender and each of their respective Affiliates are hereby authorized by
the Obligors at any time or from time to time, with notice to the Obligors and to each other Lender
and the Administrative Agent, to set off and to appropriate and to apply any and all deposits
(general or special, including, but not limited to, Indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other Indebtedness at any time held or owing by the
Administrative Agent or that Lender to or for the credit or the account of any Obligor against and
on account of the obligations and liabilities of such Obligor to the Administrative Agent or that
Lender under this Agreement, the Guaranty, the Notes and the other Loan Documents, including, but
not limited to, all claims of any nature or description arising out of or connected with this
Agreement, the Guaranty, the Notes, or any other Loan Document, irrespective of whether or not (i)
the Administrative Agent or that Lender shall have made any demand hereunder or (ii) the principal
of or the interest on the Loan or any other amounts due hereunder shall have become due and payable
pursuant to Section 7.2 and although said obligations and liabilities, or any of them, may be
contingent or unmatured.

89

 

          Section 9.6 Sharing of Payments, Etc. The Lenders hereby agree among themselves that
if any of them shall, whether by voluntary payment, by realization upon security, through the
exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, fees and other amounts then due and
owing to the Lenders hereunder or under the other Loan Documents (collectively, the “Aggregate
Amounts Due”) which is greater than the proportion received by any other Lender in respect of
the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately
greater payment shall (i) notify the Administrative Agent and each other Lender of the receipt of
such payment and (ii) apply a portion of such payment to purchase participations equal to the
portion of the Aggregate Amounts Due to the other Lenders (which participations shall be deemed to
have been purchased and payments made simultaneously upon the receipt by the seller of its portion
of such payment, and which participations will be permitted notwithstanding any prohibition to the
contrary in Section 9.2(e)) so that all such recoveries of Aggregate Amounts Due shall be shared by
all Lenders in proportion to the Aggregate Amounts Due to them, provided that if all or
part of such proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of the Borrower or otherwise,
those purchases or other payments shall be rescinded and the purchase prices paid for such
participations or other payments shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. The Borrower expressly consents to the foregoing
arrangement and agrees that any holder of a participation so purchased may exercise any and all
rights of banker’s lien, set-off or counterclaim with respect to any and all monies owing by the
Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the
participation held by that holder.

          Section 9.7 Notices.

          (a) Subject to the provisions of clauses (b), (c) and (d) below, all notices, requests,
instructions, directions and other communications provided for herein (including, without
limitation, any modifications of, or waivers, requests or consents under, this Agreement) shall be
given or made in
writing (including, without limitation, by telecopy) delivered, if to the Borrower to its
address specified in Annex A hereto, or the Administrative Agent, to its “Address for Notices”
specified opposite its name on its signature page hereto, and if to any Lender, to its “Address for
Notices” specified opposite its name on its signature page hereto; or, as to any party, at such
other address as shall be designated by such party in a notice to the Administrative Agent and the
Borrower. Except as otherwise provided in this Agreement, all such communications shall be deemed
to have been duly given upon receipt of a legible copy thereof, in each case given or addressed as
aforesaid. All such communications to the Administrative Agent provided for herein by telecopy
shall be confirmed in writing promptly after the delivery of such communication (it being
understood that non-receipt of written confirmation of such communication shall not invalidate such
communication).

          (b) The Borrower hereby agrees that it will provide to the Administrative Agent all
information, documents and other materials that it is obligated to furnish to the Administrative
Agent pursuant to this Agreement or the other Loan Documents, including, without limitation, all
notices, requests, financial statements, financial and other reports, certificates and other
information materials, but excluding any such communication that (i) relates to the payment of any
principal or other amount due under this Agreement or the other Loan Documents prior to the
scheduled date therefor, (ii) provides notice of any Default or Event of Default under this
Agreement or the other Loan Documents or (iii) is required to be delivered to satisfy any condition
precedent to the occurrence of the Closing Date (all such non-excluded communications being
referred to herein collectively as “Communications”), by transmitting the Communications in
an electronic/soft medium in a format acceptable to the Administrative Agent to
oploanswebadmin@citigroup.com. In addition, the Borrower agrees to continue

90

 

to provide the
Communications to the Administrative Agent in the manner specified herein but only to the extent
requested by the Administrative Agent.

          (c) The Borrower further agrees that the Administrative Agent may make the Communications
available to the Lenders by posting the Communications on Intralinks or a substantially similar
electronic transmission system (the “Platform”). THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF
THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR
OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY
LIABILITY TO THE BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND,
INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT
THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF
COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.

          (d) The Administrative Agent agrees that the receipt of the Communications by the
Administrative Agent at its e-mail address set forth above shall constitute effective delivery of
the
Communications to the Administrative Agent for purposes hereof. Each Lender agrees that
notice to it (as provided in the next sentence) specifying that the Communications have been posted
to the Platform shall constitute effective delivery of the Communications to such Lender for
purposes hereof. Each Lender agrees (i) to provide to the Administrative Agent in writing
(including by electronic communication), promptly after the date of this Agreement or the other
Loan Documents, an e-mail address to which the foregoing notice may be sent by electronic
transmission and (ii) that the foregoing notice may be sent to such e-mail address.

          (e) Nothing herein shall prejudice the right of the Administrative Agent or any Lender to
give any notice or other communication pursuant hereto in any other manner specified herein.

          Section 9.8 No Waiver; Remedies. No failure on the part of any Lender or the
Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

          Section 9.9 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.

91

 

          Section 9.10 Submission to Jurisdiction; Service of Process.

          (a) Submission to Jurisdiction. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
OBLIGOR HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT AGAINST IT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

          (b) Service of Process. EACH OF THE OBLIGORS HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY SUIT, ACTION OR
PROCEEDING BROUGHT IN THE UNITED STATES OF AMERICA ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS BY THE MAILING (BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID) OR DELIVERING OF A COPY OF SUCH PROCESS TO IT IN ACCORDANCE WITH THE PROVISIONS OF
Section 9.7.

          (c) No Limitation. Nothing contained in this Section 9.10 shall affect the right of
the Administrative Agent or any Lender or other party hereto to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against any Obligor in any
other jurisdiction.

          Section 9.11 Waiver of Jury Trial. EACH OBLIGOR IRREVOCABLY WAIVES TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

          Section 9.12 Marshaling; Payments Set Aside. Neither the Administrative Agent nor any
Lender shall be under any obligation to marshal any assets in favor of any Obligor or any other
party or against or in payment of any or all of the Obligations. To the extent that any Obligor
makes a payment or payments to the Administrative Agent for the account of any Lender (each, a
“Payee”) or any Payee receives payment from exercise of their rights of setoff, and such
payment or payments or the proceeds of such setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party, then (i) to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied, and all rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred and (ii) each Payee shall pay and return such amount to the
Administrative Agent as the Administrative Agent may be required to disgorge or otherwise pay to a
trustee, receiver or any other party in respect of the portion of the payment from such Obligor
distributed by the Administrative Agent to such Payee hereunder.

          Section 9.13 Section Titles. The Section titles and subtitles contained in this
Agreement are and shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.

          Section 9.14 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall constitute one and the same

92

 

agreement. Signature pages may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are attached to the same document. Delivery of an
executed signature page of this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed
by all parties shall be lodged with the Borrower and the Administrative Agent.

          Section 9.15 Severability. In case any provision in or obligation under this
Agreement, the Notes or the other Loan Documents shall be invalid, illegal or unenforceable in any
jurisdiction the validity, legality and enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

          Section 9.16 Confidentiality.

          (a) Each party hereto shall, and shall procure that its respective officers, employees and
agents shall, keep confidential and shall not, without the prior written consent of the other
parties, disclose to any third party this Agreement, any other Loan Document or any of the
information, reports or documents supplied by or on behalf of such other party not otherwise
publicly available, except that a party shall be entitled to disclose this Agreement, any other
Loan Document, and any such information, reports or documents:

     (i) in connection with any proceeding arising out of or in connection with this
Agreement or any of the other Loan Documents to the extent that such party may reasonably
consider necessary to protect its interest;

     (ii) to any potential assignee or transferee of any party’s rights under this Agreement
or any of the Loan Documents or any other person proposing to enter into contractual
arrangements with any party in relation to this Agreement or any of the other Loan
Documents, subject to the relevant party obtaining an undertaking from such potential
assignee or transferee or other person in corresponding terms to this Section 9.16;

     (iii) pursuant to any applicable laws, ordinances, judgments, decrees, injunctions,
writs, rules, regulations, orders, interpretations, licenses, permits and orders of any
competent court, arbitrator or governmental agency or authority in any relevant
jurisdiction;

     (iv) to bank examiners or any other regulatory authority or rating agencies or similar
entities, if requested to do so;

     (v) to its auditors, legal, tax or to other professional advisers;

     (vi) to its Affiliates and their respective directors, officers, employees and agents;
or

     (vii) in connection with the exercise of any remedy under any Loan Document.

          (b) The provisions of this Section 9.16 shall survive any termination of this Agreement or any
other Loan Document or any assignment, transfer or participation under this Agreement or any other
Loan Document.

          Section 9.17 Independence of Representations, Warranties and Covenants. All
representations and warranties made in and covenants under this Agreement shall be given
independent effect so that (a) if a particular representation and warranty is unqualified, the fact
that another representation and warranty is qualified shall not affect the operation of the former
provision; and (b) if a

93

 

particular action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of an Event of Default or Default
if such action is taken or condition exists.

          Section 9.18 Non-Public Information. Each Lender acknowledges and agrees that (a) it
may receive material non-public information hereunder concerning the Obligors and their Affiliates
and securities, (b) it will use such information in compliance with all relevant policies,
procedures and Contractual Obligations and applicable requirements of laws (including United States
federal and state security laws and regulations) and (c) it will designate to the Administrative
Agent an individual Person who will receive all such information and have the authority to act upon
such information on behalf of the Lender.

          Section 9.19 Patriot Act Notice. Each Lender subject to the USA Patriot Act of 2001
(31 U.S.C. 5318 et seq.) hereby notifies the Borrower that, pursuant to Section 326 thereof, it is
required to obtain, verify and record information that identifies the Borrower, including the name
and address of the Borrower and other information allowing such Lender to identify the Borrower in
accordance with such act.

[SIGNATURE PAGES FOLLOW]

94

 

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

	 	 	 	 	 	 	 
	 	 	US AIRWAYS GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Thomas T. Weir	 	 
	 

	 	Name:
	 	Thomas T. Weir

	 	 
	 

	 	Title:	 	Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	US AIRWAYS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Thomas T. Weir	 	 
	 

	 	Name:
	 	Thomas T. Weir

	 	 
	 

	 	Title:	 	Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	AMERICA WEST HOLDINGS CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Thomas T. Weir	 	 
	 

	 	Name:
	 	Thomas T. Weir

	 	 
	 

	 	Title:	 	Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	AMERICA WEST AIRLINES, INC.	 	 
	 
	 

	 	By:	 	/s/ Thomas T. Weir	 	 
	 

	 	Name:	 	Thomas T. Weir	 	 
	 

	 	Title:	 	Vice President and Treasurer	 	 
	 
	 	 	MATERIAL SERVICES COMPANY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Caroline B. Ray	 	 
	 

	 	Name:
	 	Caroline B. Ray

	 	 
	 

	 	Title:	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	PSA AIRLINES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Caroline B. Ray	 	 
	 

	 	Name:
	 	Caroline B. Ray

	 	 
	 

	 	Title:	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	PIEDMONT AIRLINES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Caroline B. Ray	 	 
	 

	 	Name:
	 	Caroline B. Ray

	 	 
	 

	 	Title:	 	Secretary	 	 

[signature page to loan agreement]

 

 

	 	 	 	 	 	 	 
	 	 	CITICORP NORTH AMERICA, INC., as

Administrative Agent and Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ William Washburn	 	 
	 

	 	Name:
	 	William Washburn	 	 
	 

	 	Title:	 	Director/Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	388 Greenwich Street, 20th Floor,

New York, NY 10013

Attention: William Washburn, Director

Facsimile: (212) 816-2613	 	 

[signature page to loan agreement ]<PAGE>

                                                                     Exhibit 4.1

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                    Depositor

                             WELLS FARGO BANK, N.A.,
                  Master Servicer and Securities Administrator

                          WILSHIRE CREDIT CORPORATION,
                                    Servicer

                            CENTRAL MORTGAGE COMPANY,
                                    Servicer

                                       and

                      HSBC BANK USA, NATIONAL ASSOCIATION,
                                     Trustee

                         POOLING AND SERVICING AGREEMENT

                          Dated as of February 1, 2007

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

            Mortgage Pass-Through Certificates, MANA Series 2007-OAR1

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                            <C>
ARTICLE I  DEFINITIONS.......................................................................................    13

         Section 1.02  Accounting............................................................................    62

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES...................................    62

         Section 2.01  Conveyance of Mortgage Loans to Trustee...............................................    62
         Section 2.02  Acceptance of Mortgage Loans by Trustee...............................................    65
         Section 2.03  Assignment of Interest in the Mortgage Loan Purchase Agreement........................    68
         Section 2.04  Substitution of Mortgage Loans........................................................    69
         Section 2.05  Issuance of Certificates..............................................................    70
         Section 2.06  Representations and Warranties Concerning the Depositor...............................    71
         Section 2.07  Representations and Warranties Concerning the Master Servicer and Securities
                       Administrator.........................................................................    72
         Section 2.08  Covenants of the Servicers............................................................    73

ARTICLE III ADMINISTRATION OF MORTGAGE LOANS.................................................................    73

         Section 3.01  Master Servicer.......................................................................    73
         Section 3.02  REMIC-Related Covenants...............................................................    74
         Section 3.03  Monitoring of Servicers...............................................................    75
         Section 3.04  Fidelity Bond.........................................................................    76
         Section 3.05  Power to Act; Procedures..............................................................    76
         Section 3.06  Due-on-Sale Clauses; Assumption Agreements............................................    77
         Section 3.07  [Reserved]............................................................................    77
         Section 3.08  Documents, Records and Funds in Possession of Master Servicer To Be Held for
                       Trustee...............................................................................    77
         Section 3.09  Standard Hazard Insurance and Flood Insurance Policies................................    78
         Section 3.10  Presentment of Claims and Collection of Proceeds......................................    78
         Section 3.11  Maintenance of the Primary Mortgage Insurance Policies................................    78
         Section 3.12  Trustee to Retain Possession of Certain Insurance Policies and Documents..............    79
         Section 3.13  Realization Upon Defaulted Mortgage Loans.............................................    79
         Section 3.14  Compensation for the Master Servicer..................................................    79
         Section 3.15  REO Property..........................................................................    79
         Section 3.16  Annual Statement as to Compliance.....................................................    80
         Section 3.17  Reports on Assessment of Compliance and Attestation...................................    81
         Section 3.18  Periodic Filings......................................................................    82
         Section 3.19  Compliance with Regulation AB.........................................................    89
         Section 3.20  Servicing Rights Owner................................................................    89

ARTICLE IV ACCOUNTS..........................................................................................    90

         Section 4.01  Protected Accounts....................................................................    90
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                            <C>
         Section 4.02  Master Servicer Collection Account....................................................    91
         Section 4.03  Permitted Withdrawals and Transfers from the Master Servicer Collection Account.......    92
         Section 4.04  Distribution Account..................................................................    93
         Section 4.05  Permitted Withdrawals and Transfers from the Distribution Account.....................    94

ARTICLE V CERTIFICATES.......................................................................................    96

         Section 5.01  The Certificates......................................................................    96
         Section 5.02  Certificate Register; Registration of Transfer and Exchange of Certificates...........    96
         Section 5.03  Mutilated, Destroyed, Lost or Stolen Certificates.....................................   100
         Section 5.04  Persons Deemed Owners.................................................................   101
         Section 5.05  Access to List of Certificateholders' Names and Addresses.............................   101
         Section 5.06  Book-Entry Certificates...............................................................   101
         Section 5.07  Notices to Depository.................................................................   102
         Section 5.08  Definitive Certificates...............................................................   102
         Section 5.09  Maintenance of Office or Agency.......................................................   103

ARTICLE VI PAYMENTS TO CERTIFICATEHOLDERS....................................................................   103

         Section 6.01  Distributions on the Certificates.....................................................   103
         Section 6.02  Distributions.........................................................................   113
         Section 6.03  Statements to Certificateholders......................................................   114
         Section 6.04  Monthly Advances......................................................................   117
         Section 6.05  Compensating Interest Payments........................................................   117

ARTICLE VII THE MASTER SERVICER AND THE DEPOSITOR............................................................   118

         Section 7.01  Liabilities of the Master Servicer....................................................   118
         Section 7.02  Merger or Consolidation of the Master Servicer........................................   118
         Section 7.03  Indemnification from the Master Servicer and the Depositor............................   118
         Section 7.04  Limitations on Liability of the Master Servicer and Others............................   118
         Section 7.05  Master Servicer Not to Resign.........................................................   120
         Section 7.06  Successor Master Servicer.............................................................   120
         Section 7.07  Sale and Assignment of Master Servicing...............................................   120

ARTICLE VIII DEFAULT.........................................................................................   121

         Section 8.01  Events of Default.....................................................................   121
         Section 8.02  Trustee to Act; Appointment of Successor..............................................   122
         Section 8.03  Notification to Certificateholders....................................................   124
         Section 8.04  Waiver of Defaults....................................................................   124
         Section 8.05  List of Certificateholders............................................................   124

ARTICLE IX CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR...........................................   124

         Section 9.01  Duties of Trustee.....................................................................   124

</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                                                            <C>
         Section 9.02  Certain Matters Affecting the Trustee and the Securities Administrator................   127
         Section 9.03  Trustee and Securities Administrator Not Liable for Certificates or Mortgage
                       Loans.................................................................................   128
         Section 9.04  Trustee and Securities Administrator May Own Certificates.............................   129
         Section 9.05  Trustee's and Securities Administrator's Fees and Expenses............................   129
         Section 9.06  Eligibility Requirements for Trustee and Securities Administrator.....................   130
         Section 9.07  Insurance.............................................................................   130
         Section 9.08  Resignation and Removal of the Trustee and Securities Administrator...................   131
         Section 9.09  Successor Trustee and Successor Securities Administrator..............................   131
         Section 9.10  Merger or Consolidation of Trustee or Securities Administrator........................   132
         Section 9.11  Appointment of Co-Trustee or Separate Trustee.........................................   132
         Section 9.12  Federal Information Returns and Reports to Certificateholders; REMIC Administration...   134

ARTICLE X TERMINATION........................................................................................   142

         Section 10.01 Termination upon Liquidation or Repurchase of all Mortgage Loans......................   142
         Section 10.02 Final Distribution on the Certificates................................................   143
         Section 10.03 Additional Termination Requirements...................................................   144

ARTICLE XI MISCELLANEOUS PROVISIONS..........................................................................   145

         Section 11.01 Intent of Parties.....................................................................   145
         Section 11.02 Amendment.............................................................................   145
         Section 11.03 Recordation of Agreement..............................................................   147
         Section 11.04 Limitation on Rights of Certificateholders............................................   147
         Section 11.05 Acts of Certificateholders............................................................   148
         Section 11.06 Governing Law.........................................................................   149
         Section 11.07 Notices...............................................................................   149
         Section 11.08 Severability of Provisions............................................................   150
         Section 11.09 Successors and Assigns................................................................   150
         Section 11.10 Article and Section Headings..........................................................   150
         Section 11.11 Counterparts..........................................................................   150
         Section 11.12 Notice to Rating Agencies.............................................................   150
         Section 11.13 Third Party Rights....................................................................   150

ARTICLE XII PROHIBITED TRANSACTIONS..........................................................................   151

         Section 12.01 [Reserved]............................................................................   151
         Section 12.02 Prohibited Transactions and Activities................................................   151
         Section 12.03 Indemnification with Respect to Prohibited Transactions or Loss of REMIC Status.......   151
         Section 12.04 REO Property..........................................................................   151

ARTICLE XIII SERVICING OF MORTGAGE LOANS.....................................................................   152
</TABLE>

                                       iv
<PAGE>

<TABLE>
<S>                                                                                                            <C>
         Section 13.01 Servicers to Service Mortgage Loans...................................................   152
         Section 13.02 Servicing and Subservicing; Enforcement of the Obligations of Servicers...............   154
         Section 13.03 Rights of the Depositor and the Trustee in Respect of the Servicer....................   155
         Section 13.04 Master Servicer to Act as Servicer....................................................   155
         Section 13.05 Collection of Mortgage Loan Payments; Collection Account; Certificate Account.........   156
         Section 13.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts...................   158
         Section 13.07 Access to Certain Documentation and Information Regarding the Mortgage Loans..........   159
         Section 13.08 Permitted Withdrawals from the Collection Account and Certificate Account.............   159
         Section 13.09 [RESERVED]............................................................................   161
         Section 13.10 Maintenance of Hazard Insurance.......................................................   161
         Section 13.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements.............................   162
         Section 13.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds;
                       Special Loss Mitigation...............................................................   163
         Section 13.13 Release of Mortgage Files.............................................................   167
         Section 13.14 Documents, Records and Funds in Possession of Servicer to be Held for
                       the Trustee...........................................................................   168
         Section 13.15 Servicing Compensation................................................................   168
         Section 13.16 Access to Certain Documentation.......................................................   169
         Section 13.17 Subordination of Liens................................................................   169
         Section 13.18 Information to the Master Servicer....................................................   170
         Section 13.19 Indemnification.......................................................................   170
         Section 13.20 Solicitation..........................................................................   170
         Section 13.21 High Cost Mortgage Loans..............................................................   171
         Section 13.22 Advances..............................................................................   171
         Section 13.23 Reduction of Servicing Compensation in Connection with Prepayment Interest
                       Shortfalls............................................................................   172

ARTICLE XIV THE DEPOSITOR AND THE SERVICER...................................................................   173

         Section 14.01 Respective Liabilities of the Depositor and the Servicer..............................   173
         Section 14.02 Merger or Consolidation of the Depositor or the Servicer..............................   173
         Section 14.03 Limitation on Liability of the Depositor, the Servicers and Others....................   173
         Section 14.04 Limitation on Resignation of Servicer.................................................   174
         Section 14.05 Errors and Omissions Insurance; Fidelity Bonds........................................   174

ARTICLE XV DEFAULT; TERMINATION OF A SERVICER................................................................   175

         Section 15.01 Servicer Events of Default............................................................   175
         Section 15.02 Master Servicer to Act; Appointment of Successor......................................   177
</TABLE>

                                       v
<PAGE>

<TABLE>
<S>                                                                                                            <C>
ARTICLE XVI Compliance With Regulation AB....................................................................   178

         Section 16.01 Intent of the Parties; Reasonableness.................................................   178
         Section 16.02 [Reserved]............................................................................   178
         Section 16.03 Information to Be Provided by the Servicer............................................   178
         Section 16.04 Servicer Compliance Statement.........................................................   179
         Section 16.05 Report on Assessment of Compliance and Attestation....................................   180
         Section 16.06 Use of Subservicers and Subcontractors................................................   181
         Section 16.07 Indemnification; Remedies.............................................................   182
</TABLE>

                                       vi
<PAGE>

EXHIBITS

Exhibit A-1  -  Form of Senior Certificates and Class M Certificates
Exhibit A-2  -  Form of Class B Certificates
Exhibit A-3  -  Form of Class R Certificate
Exhibit A-4  -  Form of Class P Certificate
Exhibit A-5  -  Form of Class C Certificate
Exhibit B    -  Mortgage Loan Schedule
Exhibit C    -  [Reserved]
Exhibit D    -  Request for Release of Documents
Exhibit E-1  -  Form of Transferee's Letter
Exhibit E-2  -  Form of Transferor Certificate
Exhibit F-1  -  Form of Transferor Representation Letter
Exhibit F-2  -  Form of Investor Representation Letter
Exhibit F-3  -  Form of Rule 144A Letter
Exhibit G    -  Form of Custodial Agreement
Exhibit H    -  One-Month LIBOR Cap Table
Exhibit I    -  [Reserved]
Exhibit J    -  Mortgage Loan Purchase Agreement
Exhibit K    -  Servicing Criteria To Be Addressed in Assessment of Compliance
Exhibit L    -  Form of Sarbanes-Oxley Certification
Exhibit M    -  Form of Back-up Sarbanes-Oxley Certification
Exhibit N    -  Form of Corridor Contract
Exhibit O    -  Additional Disclosure Notification
Exhibit P    -  Form of Item 1123 Certification of Servicer
Exhibit Q-1  -  Additional Form 10-D Disclosure
Exhibit Q-2  -  Additional Form 10-K Disclosure
Exhibit Q-3  -  Form 8-K Disclosure Information
Exhibit R    -  Form of Swap Agreement
Exhibit S    -  Form of Cap Contract

                                       vii
<PAGE>

      This Pooling and Servicing Agreement, dated as of February 1, 2007 (this
"Agreement" or this "Pooling and Servicing Agreement"), among MERRILL LYNCH
MORTGAGE INVESTORS, INC., as depositor (the "Depositor"), WELLS FARGO BANK,
N.A., as master servicer (in such capacity, the "Master Servicer") and as
securities administrator (in such capacity, the "Securities Administrator"),
WILSHIRE CREDIT CORPORATION, as servicer (in such capacity, a "Servicer"),
CENTRAL MORTGAGE COMPANY, as servicer (in such capacity, a "Servicer"), and HSBC
BANK USA, NATIONAL ASSOCIATION, as trustee (the "Trustee").

                              PRELIMINARY STATEMENT

      The Depositor has acquired the Mortgage Loans from the Sponsor and at the
Closing Date is the owner of the Mortgage Loans and the other related property
being conveyed by the Depositor to the Trustee hereunder on behalf of the
Issuing Entity for inclusion in the Trust Fund. On the Closing Date, the
Depositor will acquire the Certificates from the Trustee as consideration for
the Depositor's transfer to the Issuing Entity of the Mortgage Loans and the
other related property constituting that portion of the Trust Fund relating to
the Certificates. The Depositor has duly authorized the execution and delivery
of this Agreement to provide for the conveyance to the Issuing Entity of the
Mortgage Loans and the other related property constituting that portion of the
Trust Fund relating to the Certificates. All covenants and agreements made by
the Sponsor in the Mortgage Loan Purchase Agreement and in this Agreement and
all covenants and agreements made by the Depositor, the Trustee, the Securities
Administrator, the Servicers and the Master Servicer herein with respect to the
Mortgage Loans and the other related property constituting that portion of the
Trust Fund relating to the Certificates are for the benefit of the Holders from
time to time of the Certificates. The Depositor, the Trustee, the Securities
Administrator, the Servicers and the Master Servicer are entering into this
Agreement, and the Trustee on behalf of the Issuing Entity is accepting the
Trust Fund created hereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.

      As provided herein, the Securities Administrator shall elect that the
Trust Fund be treated for federal income tax purposes as consisting of (i) three
real estate mortgage investment conduits, (ii) the right to receive payments
distributable to the Class P Certificates, (iii) the Corridor Contract and the
Corridor Contract Account, (iv) the grantor trusts described in Section 9.12
hereof and (v) the Supplemental Interest Trust, which in turn will hold the Swap
Agreement and the Cap Contract. The SWAP REMIC will consist of all of the assets
constituting the Trust Fund (other than the assets described in clauses (ii),
(iii), (iv) and (v) above, other than the SWAP REMIC Regular Interests and other
than the Lower Tier REMIC Regular Interests) and will be evidenced by the SWAP
REMIC Regular Interests (which will be uncertificated and will represent the
"regular interests" in the SWAP REMIC) and the Class SWR Interest as the single
"residual interest" in the SWAP REMIC. The Lower Tier REMIC will consist of SWAP
REMIC Regular Interests and will be evidenced by the Lower Tier REMIC Regular
Interests (which will be uncertificated and will represent the "regular
interests" in the Lower Tier REMIC) and the Class LTR Interest as the single
"residual interest" in the Lower Tier REMIC. The Trustee will hold the Lower
Tier REMIC Regular Interests. The Upper Tier REMIC will consist of the Lower
Tier REMIC Regular Interests and will be evidenced by the REMIC Regular
Interests (which will represent the "regular interests" in the Upper Tier REMIC)
and the Residual Interest as the single "residual interest" in the Upper Tier
REMIC. The Class R Certificate will

<PAGE>

represent beneficial ownership of the Class SWR Interest, the Class LTR Interest
and the Residual Interest. The "latest possible maturity date" for federal
income tax purposes of all interests created hereby will be the Latest Possible
Maturity Date.

      THE SWAP REMIC

      The following table sets forth the designations, initial principal
balances and interest rates for each interest in the SWAP REMIC:

<TABLE>
<CAPTION>
Class   Initial Principal Balance  Interest Rate
------  -------------------------  -------------
<S>     <C>                        <C>
SW-Z          $35,890,698.240           (1)
SW-1A         $ 3,476,927.500           (2)
SW-1B         $ 3,476,927.500           (3)
SW-2A         $ 3,205,483.000           (2)
SW-2B         $ 3,205,483.000           (3)
SW-3A         $ 3,793,586.500           (2)
SW-3B         $ 3,793,586.500           (3)
SW-4A         $ 5,437,897.000           (2)
SW-4B         $ 5,437,897.000           (3)
SW-5A         $ 5,668,133.500           (2)
SW-5B         $ 5,668,133.500           (3)
SW-6A         $ 5,819,374.000           (2)
SW-6B         $ 5,819,374.000           (3)
SW-7A         $ 5,843,266.000           (2)
SW-7B         $ 5,843,266.000           (3)
SW-8A         $ 5,684,886.500           (2)
SW-8B         $ 5,684,886.500           (3)
SW-9A         $ 5,361,403.000           (2)
SW-9B         $ 5,361,403.000           (3)
SW-10A        $ 4,632,018.000           (2)
SW-10B        $ 4,632,018.000           (3)
SW-11A        $ 4,235,820.000           (2)
SW-11B        $ 4,235,820.000           (3)
SW-12A        $ 3,767,356.500           (2)
SW-12B        $ 3,767,356.500           (3)
SW-13A        $ 3,531,590.000           (2)
SW-13B        $ 3,531,590.000           (3)
SW-14A        $ 3,042,967.500           (2)
SW-14B        $ 3,042,967.500           (3)
SW-15A        $19,318,703.500           (2)
SW-15B        $19,318,703.500           (3)
SW-16A        $ 3,046,741.000           (2)
SW-16B        $ 3,046,741.000           (3)
SW-17A        $ 3,698,447.000           (2)
SW-17B        $ 3,698,447.000           (3)
</TABLE>

                                       -2-
<PAGE>
<TABLE>
<S>           <C>                       <C>
SW-18A        $ 3,401,182.000           (2)
SW-18B        $ 3,401,182.000           (3)
SW-19A        $ 3,185,965.500           (2)
SW-19B        $ 3,185,965.500           (3)
SW-20A        $ 4,406,817.000           (2)
SW-20B        $ 4,406,817.000           (3)
SW-21A        $ 2,852,665.000           (2)
SW-21B        $ 2,852,665.000           (3)
SW-22A        $ 2,418,965.500           (2)
SW-22B        $ 2,418,965.500           (3)
SW-23A        $ 2,299,973.000           (2)
SW-23B        $ 2,299,973.000           (3)
SW-24A        $ 2,071,534.000           (2)
SW-24B        $ 2,071,534.000           (3)
SW-25A        $ 1,885,178.500           (2)
SW-25B        $ 1,885,178.500           (3)
SW-26A        $ 1,616,726.500           (2)
SW-26B        $ 1,616,726.500           (3)
SW-27A        $ 1,625,724.500           (2)
SW-27B        $ 1,625,724.500           (3)
SW-28A        $ 2,136,745.000           (2)
SW-28B        $ 2,136,745.000           (3)
SW-29A        $ 2,245,742.500           (2)
SW-29B        $ 2,245,742.500           (3)
SW-30A        $ 9,125,921.000           (2)
SW-30B        $ 9,125,921.000           (3)
SW-31A        $ 1,324,096.000           (2)
SW-31B        $ 1,324,096.000           (3)
SW-32A        $ 1,789,258.500           (2)
SW-32B        $ 1,789,258.500           (3)
SW-33A        $ 1,722,629.000           (2)
SW-33B        $ 1,722,629.000           (3)
SW-34A        $ 1,505,770.500           (2)
SW-34B        $ 1,505,770.500           (3)
SW-35A        $ 1,526,324.500           (2)
SW-35B        $ 1,526,324.500           (3)
SW-36A        $ 1,411,795.500           (2)
SW-36B        $ 1,411,795.500           (3)
SW-37A        $ 1,368,540.000           (2)
SW-37B        $ 1,368,540.000           (3)
SW-38A        $ 1,259,701.500           (2)
SW-38B        $ 1,259,701.500           (3)
SW-39A        $ 1,359,461.500           (2)
SW-39B        $ 1,359,461.500           (3)
SW-40A        $ 1,704,297.000           (2)
</TABLE>

                                       -3-
<PAGE>

<TABLE>
<S>           <C>                       <C>
SW-40B        $ 1,704,297.000           (3)
SW-41A        $ 2,243,023.000           (2)
SW-41B        $ 2,243,023.000           (3)
SW-42A        $ 2,335,806.000           (2)
SW-42B        $ 2,335,806.000           (3)
SW-43A        $ 2,362,108.500           (2)
SW-43B        $ 2,362,108.500           (3)
SW-44A        $ 2,387,769.500           (2)
SW-44B        $ 2,387,769.500           (3)
SW-45A        $ 2,370,438.000           (2)
SW-45B        $ 2,370,438.000           (3)
SW-46A        $ 2,218,489.000           (2)
SW-46B        $ 2,218,489.000           (3)
SW-47A        $ 4,218,707.500           (2)
SW-47B        $ 4,218,707.500           (3)
SW-48A        $ 4,134,838.000           (2)
SW-48B        $ 4,134,838.000           (3)
SW-49A        $ 4,061,443.000           (2)
SW-49B        $ 4,061,443.000           (3)
SW-50A        $ 3,676,073.500           (2)
SW-50B        $ 3,676,073.500           (3)
SW-51A        $ 3,178,958.500           (2)
SW-51B        $ 3,178,958.500           (3)
SW-52A        $ 2,901,561.500           (2)
SW-52B        $ 2,901,561.500           (3)
SW-53A        $ 2,493,724.500           (2)
SW-53B        $ 2,493,724.500           (3)
SW-54A        $14,151,692.500           (2)
SW-54B        $14,151,692.500           (3)
SWR                  (4)                (4)
</TABLE>

(1) The interest rate on the Class SW-Z Interest shall be a per annum rate equal
to the Net WAC.

(2) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest ending with the designation "A" shall be a per annum rate equal to 2
times the Net WAC, subject to a maximum rate of 2 times the REMIC Swap Rate for
such Distribution Date.

(3) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest ending with the designation "B" shall be a per annum rate equal to the
greater of (x) the excess, if any, of (i) 2 times the Net WAC over (ii) 2 times
the REMIC Swap Rate for such Distribution Date and (y) 0.00%.

(4) The Class SWR Interest shall have no principal amount and shall bear no
interest.

                                       -4-
<PAGE>

THE LOWER TIER REMIC

The following table sets forth the designations, initial principal balances,
interest rates and Classes of Corresponding Certificates for each interest in
the Lower Tier REMIC:

<TABLE>
<CAPTION>
                                          Class(es) of
       Initial Principal                 Corresponding
Class       Balance       Interest Rate   Certificates
-----  -----------------  -------------  -------------
<S>    <C>                <C>            <C>
LTA-1        (1)               (3)            A-1, R
LTA-2        (1)               (3)            A-2
LTA-3        (1)               (3)            A-3
LTM-1        (1)               (3)            M-1
LTM-2        (1)               (3)            M-2
LTM-3        (1)               (3)            M-3
LTM-4        (1)               (3)            M-4
LTM-5        (1)               (3)            M-5
LTM-6        (1)               (3)            M-6
LTB-1        (1)               (3)            B-1
LTB-2        (1)               (3)            B-2
LTB-3        (1)               (3)            B-3
LTX          (2)               (3)            N/A
LT-IO        (4)               (4)            N/A
LTR          (5)               (5)            N/A
</TABLE>

(1) The initial principal balance of each of these Lower Tier REMIC Regular
Interests shall equal 1/2 of the initial Class Certificate Balance of its
Corresponding Certificates.

(2) The initial principal balance of the Class LTX Interest shall equal the
excess of (i) the aggregate Cut-off Date Principal Balance of the Mortgage Loans
over (ii) the initial principal balance of the Lower Tier REMIC Marker
Interests.

(3) For each Distribution Date, the interest rate for each of the Lower Tier
REMIC Regular Interests (other than the Class LT-IO Interest) shall be a per
annum rate (but not less than zero) equal to the product of (i) the weighted
average of the interest rates on the SWAP REMIC Regular Interests for such
Distribution Date and (ii) a fraction the numerator of which is 30 and the
denominator of which is the actual number of days in the Accrual Period for the
LIBOR Certificates, provided however, that for any Distribution Date on which
the Class LT-IO Interest is entitled to a portion of interest accruals on a SWAP
REMIC Regular Interest ending with a designation "A" as described in footnote 4
below, such weighted average shall be computed by first subjecting the rate on
such SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for such
Distribution Date.

(4) The Class LT-IO Interest is an interest-only class that does not have a
principal balance. For only those Distribution Dates listed in the first column
of the table below, the Class LT-IO Interest shall be entitled to interest
accrued on the SWAP REMIC Regular Interest listed in the second column below at
a per annum rate equal to the excess, if any, of (i) the interest rate for such
SWAP REMIC Regular Interest for such Distribution Date over (ii) Swap LIBOR for
such Distribution Date.

                                       -5-
<PAGE>

<TABLE>
<CAPTION>
Distribution Date  SWAP REMIC Regular Interest
<S>                <C>
7                       Class SW-1A
7-8                     Class SW-2A
7-9                     Class SW-3A
7-10                    Class SW-4A
7-11                    Class SW-5A
7-12                    Class SW-6A
7-13                    Class SW-7A
7-14                    Class SW-8A
7-15                    Class SW-9A
7-16                    Class SW-10A
7-17                    Class SW-11A
7-18                    Class SW-12A
7-19                    Class SW-13A
7-20                    Class SW-14A
7-21                    Class SW-15A
7-22                    Class SW-16A
7-23                    Class SW-17A
7-24                    Class SW-18A
7-25                    Class SW-19A
7-26                    Class SW-20A
7-27                    Class SW-21A
7-28                    Class SW-22A
7-29                    Class SW-23A
7-30                    Class SW-24A
7-31                    Class SW-25A
7-32                    Class SW-26A
7-33                    Class SW-27A
7-34                    Class SW-28A
7-35                    Class SW-29A
7-36                    Class SW-30A
7-37                    Class SW-31A
7-38                    Class SW-32A
7-39                    Class SW-33A
7-40                    Class SW-34A
7-41                    Class SW-35A
7-42                    Class SW-36A
7-43                    Class SW-37A
7-44                    Class SW-38A
7-45                    Class SW-39A
7-46                    Class SW-40A
7-47                    Class SW-41A
7-48                    Class SW-42A
7-49                    Class SW-43A
7-50                    Class SW-44A
7-51                    Class SW-45A
7-52                    Class SW-46A
7-53                    Class SW-47A
7-54                    Class SW-48A
7-55                    Class SW-49A
7-56                    Class SW-50A
7-57                    Class SW-51A
7-58                    Class SW-52A
7-59                    Class SW-53A
7-60                    Class SW-54A
</TABLE>

                                       -6-
<PAGE>

(5) The Class LTR Interest shall have no principal amount and shall bear no
interest.

UPPER TIER REMIC

The following table sets forth the designation, the initial principal balances,
the interest rates and Classes of Related Certificates for each of the interests
in the Upper Tier REMIC.

<TABLE>
<CAPTION>
                                 Initial Principal  Rate  Class of Related
Class                            Balance                  Certificates
<S>                              <C>                <C>   <C>
UTA-1                            (1)                (2)   A-1
UTA-2                            (1)                (2)   A-2
UTA-3                            (1)                (2)   A-3
UTM-1                            (1)                (2)   M-1
UTM-2                            (1)                (2)   M-2
UTM-3                            (1)                (2)   M-3
UTM-4                            (1)                (2)   M-4
UTM-5                            (1)                (2)   M-5
UTM-6                            (1)                (2)   M-6
UTB-1                            (1)                (2)   B-1
UTB-2                            (1)                (2)   B-2
UTB-3                            (1)                (2)   B-3
Uncertificated Class C Interest  (3)                (3)   N/A
UT-IO                            (4)                (4)   N/A
Residual Interest                (1)                (2)   R
</TABLE>

(1) The initial principal balance of each of these REMIC Regular Interests and
the Residual Interest shall equal the initial principal balance of its Class of
Related Certificates.

(2) The interest rates on each of these REMIC Regular Interests and the Residual
Interest shall be an annual rate equal to the Certificate Rate for the Class of
Related Certificates, provided that in lieu of the applicable Available Funds
Cap set forth in the definition of an applicable Certificate Rate, the
applicable Upper Tier REMIC Net WAC Cap shall be used.

(3) The Uncertificated Class C Interest shall have an initial principal balance
equal to the initial Overcollateralization Amount. The Uncertificated Class C
Interest shall accrue interest on a notional balance set forth in the definition
of Class C Current Interest at a rate equal to the Class C Distributable
Interest Rate. The Uncertificated Class C Interest shall be represented by the
Class C Certificates.

(4) The Class UT-IO Interest shall have no principal amount and will not have an
interest rate, but will be entitled to 100% of the interest accrued with respect
to the Class LT-IO Interest. The Class UT-IO Interest shall be represented by
the Class C Certificates.

THE CERTIFICATES

      The following table sets forth (or describes) the Class designation,
initial Class Certificate Balance or initial notional amount, integral dollar
multiples in excess thereof (except that one Certificate of each Class may be
issued in a different amount which must be in excess of

                                       -7-
<PAGE>

the applicable minimum dollar denomination) and minimum denomination for each
Class of Certificates comprising interests in the Trust Fund created hereunder.

<TABLE>
<CAPTION>
     Class     Initial Class Certificate Balance  Integral Multiples in  Minimum Denominations
  Designation     or Initial Notional Amount        Excess of Minimum    or Percentage Interest
-------------  ---------------------------------  ---------------------  ----------------------
<S>            <C>                                <C>                    <C>
Class A-1               $238,340,000                       $1.00              $  25,000.00
Class A-2               $ 99,309,000                       $1.00              $  25,000.00
Class A-3               $ 59,585,000                       $1.00              $  25,000.00
Class R                 $        100                         N/A              $        100
Class M-1               $  6,434,000                       $1.00              $  25,000.00
Class M-2               $  7,078,000                       $1.00              $  25,000.00
Class M-3               $  1,715,000                       $1.00              $  25,000.00
Class M-4               $  3,002,000                       $1.00              $  25,000.00
Class M-5               $  1,930,000                       $1.00              $  25,000.00
Class M-6               $  1,715,000                       $1.00              $  25,000.00
Class B-1               $  1,501,000                       $1.00              $  25,000.00
Class B-2               $  1,930,000                       $1.00              $  25,000.00
Class B-3               $  2,145,000                       $1.00              $  25,000.00
Class P                      N/A (1)                           1%                      100%

Class C                          (2)                           1%                       (2)
</TABLE>

(1)   The Class P Certificates shall not have minimum dollar denominations or
      Class Certificate Balance and shall be issued in a minimum percentage
      interest of 10% and an aggregate percentage interest of 100%. The Class P
      Certificates will be entitled to receive Prepayment Charges on the
      Prepayment Charge Mortgage Loans.

(2)   The Class C Certificates shall not have minimum dollar denominations as
      the Class Certificate Balance thereof shall vary over time as described
      herein and shall be issued in a minimum percentage interest of 10% and an
      aggregate percentage interest of 100%.

      As of the Cut-off Date, the Mortgage Loans had an aggregate Stated
Principal Balance of $428,979,193.24.

      In consideration of the mutual agreements herein contained, the Depositor,
the Trustee, the Initial Servicer, the Successor Servicer, the Securities
Administrator and the Master Servicer hereby agree as follows:

                                       -8-
<PAGE>

                                   ARTICLE I
                                  DEFINITIONS

      Whenever used in this Agreement, the following words and phrases, unless
otherwise expressly provided or unless the context otherwise requires, shall
have the meanings specified in this Article.

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

      Accepted Servicing Practices: Each Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions that service for their own account mortgage loans of the
same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.

      Account: The Master Servicer Collection Account, Distribution Account and
any Protected Account as the context may require.

      Accountant's Attestation: A report from a nationally or regionally
recognized firm of independent registered public accountants which is a member
of the American Institute of Certified Public Accountants to the effect that (i)
it has obtained a representation regarding certain matters from the management
of the Servicer, which includes an assertion as to whether the Servicer has
complied with the relevant Servicing Criteria, and (ii) on the basis of an
examination conducted by such firm in accordance with standards for attestation
engagements issued or adopted by the PCAOB, it is expressing an opinion as to
whether the Servicer's compliance with the relevant Servicing Criteria was
fairly stated in all material respects, or it cannot express an overall opinion
regarding the Servicer's assessment of compliance with the Relevant Servicing
Criteria.

      Accrual Period: With respect to the Certificates, their Corresponding
REMIC Regular Interests and the Lower Tier REMIC Interests and a Distribution
Date, the period from and including the preceding Distribution Date (or from the
Closing Date in the case of the first Distribution Date) to and including the
day prior to such Distribution Date and with respect to the SWAP REMIC Regular
Interests and any Distribution Date, the calendar month immediately preceding
the month in which such Distribution Date occurs. All calculations of interest
with respect to the Certificates, their Corresponding REMIC Regular Interests
and the Lower Tier REMIC Interests will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a 360 day year and all
calculations of interest on the SWAP REMIC Regular Interests will be made on the
basis of a 360-day year consisting of twelve 30-day months.

      Additional Disclosure Notification: As defined in Section 3.18(b).

      Additional Form 10-D Disclosure: As defined in Section 3.18(e).

                                       -9-
<PAGE>

      Additional Form 10-K Disclosure: As defined in Section 3.18(h).

      Adjustment Date: With respect to a Mortgage Loan, generally the first day
of the month or months specified in the related mortgage note.

      Advance: The aggregate of the advances required to be made by a Servicer
with respect to any Distribution Date pursuant to Section 13.22, the amount of
any such advances being equal to the sum of the aggregate amount of all payments
of principal and interest (or, with respect to the interest-only Mortgage Loans,
payments of scheduled interest) (net of the Servicing Fee) on the related
Mortgage Loans that were due during the applicable Due Period and not received
as of the close of business on the related Determination Date (based on the
Minimum Payment for such Mortgage Loan), except as provided in Section 13.22
hereof, less the aggregate amount of any such Delinquent payments that a
Servicer has determined would constitute a Non-Recoverable Advance were an
advance to be made with respect thereto; provided, however, that with respect to
(i) any Mortgage Loan that is 150 days delinquent or more (whether or not the
Mortgage Loan has been converted to an REO Property), (ii) shortfalls in
principal and interest due to bankruptcy proceedings or the application of the
Relief Act or similar laws and (iii) the principal portion of any amount paid on
a Balloon Loan, there will be no obligation to make advances and, provided
further, however, that with respect to any Mortgage Loan that has been converted
to an REO Property which is less than 150 days delinquent, the obligation to
make Advances shall only be to payments of interest (subject to the exceptions
described above and net of the Servicing Fees), to be calculated after taking
into account rental income.

      Advance Financing Person: A Person to whom either Servicer's rights under
this Agreement to be reimbursed for any Advances or Servicing Advances have been
assigned pursuant to Section 13.08(ii).

      Adverse REMIC Event: As defined in Section 9.12(g).

      Affiliate: As to any Person, any other Person controlling, controlled by
or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Master Servicer
may conclusively presume that a Person is not an Affiliate of another Person
unless a Responsible Officer of the Master Servicer has actual knowledge to the
contrary.

      Agreement: This Pooling and Servicing Agreement, dated as of February 1,
2007, by and among the Depositor, the Master Servicer, the Securities
Administrator, Wilshire, CMC and the Trustee, including the exhibits hereto, and
all amendments hereof and supplements hereto.

      Annual Statement of Compliance: The statement of compliance as required by
Section 16.04 hereto.

      Applicable Credit Rating: For any long-term deposit or security, a credit
rating of "AAA" in the case of S&P or "Aaa" in the case of Moody's. For any
short-term deposit or security, a rating of "A-l+" in the case of S&P or "P-1"
in the case of Moody's.

                                      -10-
<PAGE>

      Applied Realized Loss Amount: With respect to any class of Subordinate
Certificates and as to any Distribution Date, the sum of the Realized Losses
with respect to the Mortgage Loans which have been applied in reduction of the
Class Certificate Balance of such class.

      Appraised Value: For any Mortgaged Property related to a Mortgage Loan,
the amount set forth as the appraised value of such Mortgaged Property in an
appraisal made for the mortgage originator in connection with its origination of
the related Mortgage Loan.

      Assessment of Compliance: An officer's assessment of its compliance with
the Relevant Servicing Criteria during the preceding calendar year as required
by Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB.

      Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law and accompanied by an Opinion of Counsel to that effect.

      Auction: The one-time auction conducted by the Securities Administrator,
as described in Section 10.01(b) hereof.

      Available Funds Cap: With respect to a Distribution Date, the per annum
rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest on the Mortgage Loans based on the Net Mortgage Rates in
effect on the related Due Date, less any Net Swap Payments or Swap Termination
Payments (other than Defaulted Swap Termination Payments) owed to the Swap
Counterparty for such Distribution Date and (y) the aggregate Stated Principal
Balance of the Mortgage Loans as of the first day of the related Accrual Period
(or, in the case of the first Distribution Date, as of the Cut-off Date) and
(iii) a fraction, the numerator of which is 30, and the denominator of which is
the actual number of days in the related Accrual Period.

      Back-Up Certification: As defined in Section 3.18(k).

      Balloon Loan: A Mortgage Loan having an original term to stated maturity
of approximately 15 or 30 years which provides for level monthly payments of
principal and interest based on a 30-, 40- or 50-year amortization schedule,
with a balloon payment of the remaining outstanding principal balance due on
such Mortgage Loan at its stated maturity.

      Bankruptcy Code: The United States Bankruptcy Code, as amended as codified
in 11 U.S.C. Sections 101-1330.

      Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a Depository Participant, or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.02 hereof). On the Closing Date, the
Certificates (other than the Class R Certificate) shall be Book-Entry
Certificates.

                                      -11-
<PAGE>

      Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which the New York Stock Exchange or Federal Reserve is closed or on which
banking institutions in the jurisdiction in which the Trustee, the Master
Servicer, either Servicer or the Securities Administrator are authorized or
obligated by law or executive order to be closed.

      Cap Contract: The confirmation and agreement, including the schedule
thereto and the related credit support annex, between the Cap Contract
Counterparty and the Supplemental Interest Trust Trustee for the benefit of the
Certificateholders (in the form of Exhibit B of Exhibit Q attached hereto).

      Cap Contract Account: The separate Eligible Account created and maintained
by the Supplemental Interest Trust Trustee pursuant to Section 6.01(m) in the
name of the Supplemental Interest Trust Trustee for the benefit of the Issuing
Entity and designated "Wells Fargo Bank, National Association, as Supplemental
Interest Trust Trustee of Merrill Lynch Mortgage Investors, Inc., Mortgage
Pass-Through Certificates, MANA Series 2007-OAR1 - Cap Contract Account." Funds
in the Cap Contract Account shall be held in trust for the Issuing Entity for
the uses and purposes set forth in this Agreement.

      Cap Contract Counterparty: Bear Stearns Financial Products Inc. with whom
the Supplemental Interest Trust Trustee, on behalf of the Supplemental Interest
Trust, entered into the Corridor Contract and with whom the Supplemental
Interest Trust Trustee, on behalf of the Supplemental Interest Trust, entered
into the Cap Contract.

      Cap Payments: For each Distribution Date, the cap payment that the Cap
Counterparty is obligated to pay to the Supplemental Interest Trust if LIBOR (as
defined in the Cap Contract) is greater than 6.000%. The Cap Payment is based on
the lesser of (a) the Cap Contract Notional Balance for the Distribution Date
and (b) the excess if any, of (A) the beginning aggregate Certificate Principal
Balance for such Distribution Date over (B) the Swap Agreement Notional Balance
for such Distribution Date, if LIBOR exceeds 6.000%.

      Certificate: Any mortgage pass-through certificate issued pursuant to this
Agreement evidencing a beneficial ownership interest in that portion of the
Trust Fund related to the Mortgage Loans, signed and countersigned by the
Securities Administrator.

      Certificate Margin: Any of the Class A-1 Certificate Margin, the Class A-2
Certificate Margin, the Class A-3 Certificate Margin, the Class M-1 Certificate
Margin, the Class M-2 Certificate Margin, the Class M-3 Certificate Margin, the
Class M-4 Certificate Margin, the Class M-5 Certificate Margin, the Class M-6
Certificate Margin, the Class B-1 Certificate Margin, the Class B-2 Certificate
Margin, the Class B-3 Certificate Margin or the Class R Certificate Margin.

      Certificate Owner: With respect to each Book-Entry Certificate, any
beneficial owner thereof.

      Certificate Rate: With respect to any class of the LIBOR Certificates on
any Distribution Date, the lesser of (1) One-Month LIBOR plus the related
Certificate Margin for such class of Certificates, (2) the Available Funds Cap
and (3) the Maximum Rate Cap.

                                      -12-
<PAGE>

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

      Certificateholder or Holder: The Person in whose name a Regular
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of the Class
R Certificate for any purpose hereof.

      Certification Parties: As defined in Section 3.18(k).

      Certifying Person: As defined in Section 3.18(k).

      Class: Collectively, Certificates which have the same priority of payment
and bear the same class designation and the form of which is identical except
for variation in the Percentage Interest evidenced thereby.

      Class A-1 Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof substantially in the form annexed hereto as
Exhibit A-1, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein.

      Class A-1 Certificate Rate: For the first Distribution Date, 5.4900% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class A-1 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class A-1 Certificates.

      Class A-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1 Certificate Rate on
the Class A-1 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or a Class A-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class A-1 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class A-1
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class A-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-1 Certificate Rate for the related Accrual Period. The Class A-1
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class A-1 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.1700% per annum, and (ii) after the Initial
Optional Termination Date, 0.3400% per annum.

                                      -13-
<PAGE>

      Class A-2 Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to distributions as set forth herein.

      Class A-2 Certificate Rate: For the first Distribution Date, 5.5300% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class A-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2 Certificate Rate on
the Class A-2 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or a Class A-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class A-2 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class A-2
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class A-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-2 Certificate Rate for the related Accrual Period. The Class A-2
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class A-2 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.2100% per annum, and (ii) after the Initial
Optional Termination Date, 0.4200% per annum.

      Class A-3 Certificate: Any Certificate designated as a "Class A-3
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to distributions as set forth herein.

      Class A-3 Certificate Rate: For the first Distribution Date, 5.5800% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-3 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class A-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-3 Certificate Rate on
the Class A-3 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or a Class A-3 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class A-3 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class A-3
Certificates. For purposes of calculating

                                      -14-
<PAGE>

interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.

      Class A-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-3 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-3 Certificate Rate for the related Accrual Period. The Class A-3
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class A-3 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.2600% per annum, and (ii) after the Initial
Optional Termination Date, 0.5200% per annum.

      Class B Certificate: Any one of the Class B-1, Class B-2 or Class B-3
Certificates as designated on the face thereof substantially in the form annexed
hereto as Exhibit A-2, executed by the Securities Administrator and
authenticated and delivered by the Securities Administrator, representing the
right to distributions as set forth herein and therein.

      Class B Certificateholder: Any Holder of a Class B Certificate.

      Class B-1 Certificate: Any Certificate designated as "Class B-1
Certificate "on the face thereof in the form of Exhibit A-2 hereto, representing
the right to distributions as set forth herein.

      Class B-1 Certificate Rate: For the first Distribution Date, 6.1700% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) Maximum Rate Cap for such Distribution Date.

      Class B-1 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class B-1 Certificates.

      Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Certificate Rate on
the Class B-1 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class B-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class B-1 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class B-1
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1 Certificate Rate for the related Accrual Period. The Class B-1
Interest

                                      -15-
<PAGE>

Carry Forward Amount shall not include any amounts attributable to an allocation
of Deferred Interest.

      Class B-1 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.8500% per annum, and (ii) after the Initial
Optional Termination Date, 1.2750% per annum.

      Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the aggregate Class Certificate Balance of the Senior Certificates and Class M
Certificates has been reduced to zero and a Stepdown Trigger Event exists, or,
as long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the Class Certificate Balance of the Senior Certificates and the Class
Certificate Balance of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5
and Class M-6 Certificates (after taking into account distributions of the
related Principal Distribution Amount for such Distribution Date and after the
allocation of Deferred Interest, if any, for each Distribution Date) and (B) the
Class Certificate Balance of the Class B-1 Certificates immediately prior to
such Distribution Date over (2) the lesser of (A) (i) for any Distribution Date
on or prior to February 2013, 95.125% of the aggregate Stated Principal Balance
of the Mortgage Loans as of such Distribution Date and (ii) for any Distribution
Date after February 2013, 96.100% of the aggregate Stated Principal Balance of
the Mortgage Loans as of such Distribution Date and (B) the excess of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount. Notwithstanding the
above, (1) on any Distribution Date prior to the Stepdown Date on which the
aggregate Class Certificate Balance of the Senior Certificates and Class M
Certificates has been reduced to zero, the Class B-1 Principal Distribution
Amount will equal the lesser of (A) the outstanding Class Certificate Balance of
the Class B-1 Certificates and (B) 100% of the Principal Distribution Amount
remaining after any distributions on the Senior Certificates and Class M
Certificates and (2) in no event will the Class B-1 Principal Distribution
Amount with respect to any Distribution Date exceed the Class Certificate
Balance of the Class B-1 Certificates.

      Class B-2 Certificate: Any Certificate designated as "Class B-2
Certificate "on the face thereof in the form of Exhibit A-2 hereto, representing
the right to distributions as set forth herein.

      Class B-2 Certificate Rate: For the first Distribution Date, 6.4200% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-2 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class B-2 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class B-2 Certificates.

      Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Certificate Rate on
the Class B-2 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class B-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated

                                      -16-
<PAGE>

on such Distribution Date to the Class B-2 Certificates and less any Deferred
Interest allocated on such Distribution Date to the Class B-2 Certificates. For
purposes of calculating interest, principal distributions on a Distribution Date
will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.

      Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2 Certificate Rate for the related Accrual Period. The Class B-2
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class B-2 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 1.1000% per annum, and (ii) after the Initial
Optional Termination Date, 1.6500% per annum.

      Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the aggregate Class Certificate Balance of the Class A, Class M and Class B-1
Certificates has been reduced to zero and a Stepdown Trigger Event exists, or,
as long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the Class Certificate Balance of the Senior Certificates and the Class
Certificate Balance of the Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6 and Class B-1 Certificates (after taking into account
distributions of the related Principal Distribution Amount for such Distribution
Date and after the allocation of Deferred Interest, if any, for each
Distribution Date) and (B) the Class Certificate Balance of the Class B-2
Certificates immediately prior to such Distribution Date over (2) the lesser of
(A) (i) for any Distribution Date on or prior to February 2013, 96.250% of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date and (ii) for any Distribution Date after February 2013, 97.000% of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date and (B) the excess of the aggregate Stated Principal Balance of the
Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the above, (1) on any Distribution
Date prior to the Stepdown Date on which the aggregate Class Certificate Balance
of the Class A, Class M and Class B-1 Certificates has been reduced to zero, the
Class B-2 Principal Distribution Amount will equal the lesser of (A) the
outstanding Class Certificate Balance of the Class B-2 Certificates and (B) 100%
of the Principal Distribution Amount remaining after any distributions on the
Class A, Class M and Class B-1 Certificates and (2) in no event will the Class
B-2 Principal Distribution Amount with respect to any Distribution Date exceed
the Class Certificate Balance of the Class B-2 Certificates.

      Class B-3 Certificate: Any Certificate designated as "Class B-3
Certificate "on the face thereof in the form of Exhibit A-2 hereto, representing
the right to distributions as set forth herein.

      Class B-3 Certificate Rate: For the first Distribution Date, 6.7200% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-3 Margin,

                                      -17-
<PAGE>

(2) the Available Funds Cap for such Distribution Date and (3) the Maximum Rate
Cap for such Distribution Date.

      Class B-3 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class B-3 Certificates.

      Class B-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3 Certificate Rate on
the Class B-3 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class B-3 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class B-3 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class B-3
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-3 Certificate Rate for the related Accrual Period. The Class B-3
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class B-3 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 1.4000% per annum, and (ii) after the Initial
Optional Termination Date, 2.1000% per annum.

      Class B-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the aggregate Class Certificate Balance of the Class A, Class M, Class B-1 and
Class B-2 Certificates has been reduced to zero and a Stepdown Trigger Event
exists, or, as long as a Stepdown Trigger Event does not exist, the excess of
(1) the sum of (A) the Class Certificate Balance of the Senior Certificates and
the Class Certificate Balance of the Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class B-1 and Class B-2 Certificates (after taking into
account distributions of the related Principal Distribution Amount for such
Distribution Date and after the allocation of Deferred Interest, if any, for
each Distribution Date) and (B) the Class Certificate Balance of the Class B-3
Certificates immediately prior to such Distribution Date over (2) the lesser of
(A) (i) for any Distribution Date on or prior to February 2013, 97.500% of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date and (ii) for any Distribution Date after February 2013, 98.000% of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date and (B) the excess of the aggregate Stated Principal Balance of the
Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the above, (1) on any Distribution
Date prior to the Stepdown Date on which the aggregate Class Certificate Balance
of the Class A, Class M, Class B-1 and Class B-2 Certificates has been reduced
to zero, the Class B-3 Principal Distribution Amount will equal the lesser of
(A) the outstanding Class Certificate Balance of the

                                      -18-
<PAGE>

Class B-3 Certificates and (B) 100% of the Principal Distribution Amount
remaining after any distributions on the Class A, Class M, Class B-1 and Class
B-2 Certificates and (2) in no event will the Class B-3 Principal Distribution
Amount with respect to any Distribution Date exceed the Class Certificate
Balance of the Class B-3 Certificates.

      Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Realized Loss Amounts with respect to the Mortgage Loans which have been
applied to the reduction of the Class Certificate Balance of the Class C
Certificates.

      Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, in the form of Exhibit A-5 hereto, representing the right
to distributions as set forth herein.

      Class C Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class C Certificates.

      Class C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class C Distributable Interest
Rate on a notional amount equal to the aggregate principal balance of the Lower
Tier REMIC Regular Interests immediately prior to such Distribution Date, plus
the interest portion of any previous distributions on such Class that is
recovered as a voidable preference by a trustee in bankruptcy, less any
Prepayment Interest Shortfalls allocated on such Distribution Date to the Class
C Certificates and less any Deferred Interest allocated on such Distribution
Date to the Class C Certificates.

      Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
(other than the Class LT-IO Interest) over (b) two times the weighted average of
the interest rates on the Lower Tier REMIC Regular Interests (other than the
Class LT-IO Interest) (treating for purposes of this clause (b) the interest
rate on each of the Lower Tier REMIC Marker Interests as being subject to a cap
equal to the interest rate of the Corresponding REMIC Regular Interest of the
Corresponding Certificates (as adjusted, if necessary, to reflect the length of
the Accrual Period for the LIBOR Certificates) and treating the Class LTX
Interest as being capped at zero). The averages described in the preceding
sentence shall be weighted on the basis of the respective principal balances of
the Lower Tier REMIC Regular Interests immediately prior to any date of
determination.

      Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Class Certificate Balance of the Class C Certificates (other than amounts so
added attributable to Subsequent Recoveries or proceeds of the Swap Agreement or
Cap Contract). The Class C Interest Carry Forward Amount shall not include any
amounts attributable to an allocation of Deferred Interest.

      Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Class Certificate
Balance of such Class C Certificates (A) pursuant to the last

                                      -19-
<PAGE>

sentence of the definition of "Class Certificate Balance" or (B) attributable to
distributions of proceeds of the Swap Agreement or Cap Contract.

      Class Certificate Balance: As to any Certificate and as of any
Distribution Date, the Initial Class Certificate Balance of such Certificate (a)
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Class Certificate Balance thereof on previous Distribution
Dates pursuant to Section 6.01, and (2) any Realized Loss Amounts allocated to
such Certificate on previous Distribution Dates pursuant to Section 6.01(j), and
(b) plus any Deferred Interest allocated to such Certificate on previous
Distribution Dates. On each Distribution Date, after all distributions of
principal on such Distribution Date, a portion of the Class C Interest Carry
Forward Amount in an amount equal to the excess of the Overcollateralization
Amount on such Distribution Date over the Overcollateralization Amount as of the
preceding Distribution Date (or, in the case of the first Distribution Date, the
initial Overcollateralization Amount (based on the Stated Principal Balance of
the Mortgage Loans as of the Cut-Off Date)) will be added to the aggregate Class
Certificate Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the immediately preceding sentence, however, to the extent any
excess referred to in the immediately preceding sentence is attributable to
distributions of proceeds of the Swap Agreement or Cap Contract, such sentence
shall be applied by substituting "Class C Unpaid Realized Loss Amount" for
"Class C Interest Carry Forward Amount". Notwithstanding the foregoing on any
Distribution Date relating to a Due Period in which a Subsequent Recovery has
been received by the applicable Servicer, the Class Certificate Balance of any
Class of Certificates then outstanding for which any Realized Loss Amount has
been allocated will be increased, in order of seniority, by an amount equal to
the lesser of (i) the Unpaid Realized Loss Amount for such Class of Certificates
and (ii) the total of any Subsequent Recovery distributed on such date to the
Certificateholders (reduced by the amount of the increase in the Class
Certificate Balance of any more senior Class of Certificates pursuant to this
sentence on such Distribution Date).

      Class LT-IO Interest: An uncertificated regular interest in the Lower Tier
REMIC with the characteristics set forth in the description of the Lower Tier
REMIC in the Preliminary Statement.

      Class LTA-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificates and an interest rate equal to the Net
Rate.

      Class LTA-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTA-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

                                      -20-
<PAGE>

      Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTB-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) the aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date over (ii)
the aggregate initial principal balance of the Lower Tier REMIC Marker
Interests, and with an interest rate equal to the Net Rate.

      Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTM-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTM-4 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTM-5 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTM-6 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.

      Class LTR Interest: The sole class of "residual interest" in the Lower
Tier REMIC.

      Class M Certificate: Any one of the Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5 and Class M-6 Certificates as designated on the face thereof
substantially in the form annexed hereto as Exhibit A-1, executed by the
Securities Administrator and authenticated and delivered by the Securities
Administrator, representing the right to distributions as set forth herein and
therein.

      Class M Certificateholder: Any Holder of a Class M Certificate.

                                      -21-
<PAGE>

      Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-1 Certificate Rate: For the first Distribution Date, 5.6600% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class M-1 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class M-1 Certificates.

      Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Certificate Rate on
the Class M-1 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class M-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class M-1 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class M-1
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-1 Certificate Rate for the related Accrual Period. The Class M-1
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class M-1 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.3400% per annum, and (ii) after the Initial
Optional Termination Date, 0.5100% per annum.

      Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the aggregate Class Certificate Balance of the Senior Certificates has been
reduced to zero and a Stepdown Trigger Event exists, or, as long as a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the Class
Certificate Balance of the Senior Certificates (after taking into account
distributions of the Senior Principal Distribution Amount to the Senior
Certificates for such Distribution Date and after the allocation of Deferred
Interest, if any, for each Distribution Date) and (B) the Class Certificate
Balance of the Class M-1 Certificates immediately prior to such Distribution
Date over (2) the lesser of (A) (i) for any Distribution Date on or prior to
February 2013, 85.250% of the aggregate Stated Principal Balance of the Mortgage
Loans as of such Distribution Date and (ii) for any Distribution Date after
February 2013, 88.200% of the aggregate Stated Principal Balance of the Mortgage
Loans as of such Distribution Date and (B) the excess of the aggregate Stated
Principal Balance of the Mortgage Loans as of such

                                      -22-
<PAGE>

Distribution Date over the Minimum Required Overcollateralization Amount.
Notwithstanding the above, (1) on any Distribution Date prior to the Stepdown
Date on which the aggregate Class Certificate Balance of the Senior Certificates
has been reduced to zero, the Class M-1 Principal Distribution Amount will equal
the lesser of (A) the outstanding Class Certificate Balance of the Class M-1
Certificates and (B) 100% of the Principal Distribution Amount remaining after
any distributions on the Senior Certificates and (2) in no event will the Class
M-1 Principal Distribution Amount with respect to any Distribution Date exceed
the Class Certificate Balance of the Class M-1 Certificates.

      Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-2 Certificate Rate: For the first Distribution Date, 5.6800% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class M-2 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class M-2 Certificates.

      Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Certificate Rate on
the Class M-2 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class M-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class M-2 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class M-2
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-2 Certificate Rate for the related Accrual Period. The Class M-2
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class M-2 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.3600% per annum, and (ii) after the Initial
Optional Termination Date, 0.5400% per annum.

      Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the Class Certificate Balance of each class of Senior Certificates and Class M-1
Certificates has been reduced to zero and a Stepdown Trigger Event exists, or,
as long as a Stepdown Trigger Event does not exist, the

                                      -23-
<PAGE>

excess of (1) the sum of (A) the Class Certificate Balance of the Senior
Certificates and the Class Certificate Balance of the Class M-1 Certificates
(after taking into account distributions of the related Principal Distribution
Amount for such Distribution Date and after the allocation of Deferred Interest,
if any, for each Distribution Date) and (B) the Class Certificate Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (2) the
lesser of (A) (i) for any Distribution Date on or prior to February 2013,
89.375% of the aggregate Stated Principal Balance of the Mortgage Loans as of
such Distribution Date and (ii) for any Distribution Date after February 2013,
91.500% of the aggregate Stated Principal Balance of the Mortgage Loans as of
such Distribution Date and (B) the excess of the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date over the Minimum
Required Overcollateralization Amount. Notwithstanding the above, (1) on any
Distribution Date prior to the Stepdown Date on which the aggregate Class
Certificate Balance of the Senior Certificates and the Class M-1 Certificates
has been reduced to zero, the Class M-2 Principal Distribution Amount will equal
the lesser of (A) the outstanding Class Certificate Balance of the Class M-2
Certificates and (B) 100% of the Principal Distribution Amount remaining after
any distributions on the Senior Certificates and Class M-1 Certificates and (2)
in no event will the Class M-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Class Certificate Balance of the Class M-2
Certificates

      Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-3 Certificate Rate: For the first Distribution Date, 5.7100% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-3 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class M-3 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class M-3 Certificates.

      Class M-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-3 Certificate Rate on
the Class M-3 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class M-3 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class M-3 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class M-3
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class M-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-3 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-3 Certificate Rate for the related Accrual Period. The Class M-3
Interest

                                      -24-
<PAGE>

Carry Forward Amount shall not include any amounts attributable to an allocation
of Deferred Interest.

      Class M-3 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.3900% per annum, and (ii) after the Initial
Optional Termination Date, 0.5850% per annum.

      Class M-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the Class Certificate Balance of each class of Class A, Class M-1 and Class M-2
Certificates has been reduced to zero and a Stepdown Trigger Event exists, or,
as long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the Class Certificate Balance of the Senior Certificates and the Class
Certificate Balance of the Class M-1 and Class M-2 Certificates (after taking
into account distributions of the related Principal Distribution Amount for such
Distribution Date and after the allocation of Deferred Interest, if any, for
each Distribution Date) and (B) the Class Certificate Balance of the Class M-3
Certificates immediately prior to such Distribution Date over (2) the lesser of
(A) (i) for any Distribution Date on or prior to February 2013, 90.375% of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date and (ii) for any Distribution Date after February 2013, 92.300% of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date and (B) the excess of the aggregate Stated Principal Balance of the
Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the above, (1) on any Distribution
Date prior to the Stepdown Date on which the aggregate Class Certificate Balance
of the Class A, Class M-1 and Class M-2 Certificates has been reduced to zero,
the Class M-3 Principal Distribution Amount will equal the lesser of (A) the
outstanding Class Certificate Balance of the Class M-3 Certificates and (B) 100%
of the Principal Distribution Amount remaining after any distributions on the
Class A, Class M-1 and Class M-2 Certificates and (2) in no event will the Class
M-3 Principal Distribution Amount with respect to any Distribution Date exceed
the Class Certificate Balance of the Class M-3 Certificates.

      Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-4 Certificate Rate: For the first Distribution Date, 5.8000% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-4 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class M-4 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class M-4 Certificates.

      Class M-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-4 Certificate Rate on
the Class M-4 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class M-4 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated

                                      -25-
<PAGE>

on such Distribution Date to the Class M-4 Certificates and less any Deferred
Interest allocated on such Distribution Date to the Class M-4 Certificates. For
purposes of calculating interest, principal distributions on a Distribution Date
will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.

      Class M-4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-4 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-4 Certificate Rate for the related Accrual Period. The Class M-4
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class M-4 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.4800% per annum, and (ii) after the Initial
Optional Termination Date, 0.7200% per annum.

      Class M-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the Class Certificate Balance of each class of Class A, Class M-1, Class M-2 and
Class M-3 Certificates has been reduced to zero and a Stepdown Trigger Event
exists, or, as long as a Stepdown Trigger Event does not exist, the excess of
(1) the sum of (A) the Class Certificate Balance of the Senior Certificates and
the Class Certificate Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account distributions of the related Principal
Distribution Amount for such Distribution Date and after the allocation of
Deferred Interest, if any, for each Distribution Date) and (B) the Class
Certificate Balance of the Class M-4 Certificates immediately prior to such
Distribution Date over (2) the lesser of (A) (i) for any Distribution Date on or
prior to February 2013, 92.125% of the aggregate Stated Principal Balance of the
Mortgage Loans as of such Distribution Date and (ii) for any Distribution Date
after February 2013, 93.700% of the aggregate Stated Principal Balance of the
Mortgage Loans as of such Distribution Date and (B) the excess of the aggregate
Stated Principal Balance of the Mortgage Loans as of such Distribution Date over
the Minimum Required Overcollateralization Amount. Notwithstanding the above,
(1) on any Distribution Date prior to the Stepdown Date on which the aggregate
Class Certificate Balance of the Class A, Class M-1, Class M-2 and Class M-3
Certificates has been reduced to zero, the Class M-4 Principal Distribution
Amount will equal the lesser of (A) the outstanding Class Certificate Balance of
the Class M-4 Certificates and (B) 100% of the Principal Distribution Amount
remaining after any distributions on the Class A, Class M-1, Class M-2 and Class
M-3 Certificates and (2) in no event will the Class M-4 Principal Distribution
Amount with respect to any Distribution Date exceed the Class Certificate
Balance of the Class M-4 Certificates.

      Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-5 Certificate Rate: For the first Distribution Date, 5.8200% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-5 Margin,

                                      -26-
<PAGE>

(2) the Available Funds Cap for such Distribution Date and (3) the Maximum Rate
Cap for such Distribution Date.

      Class M-5 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class M-5 Certificates.

      Class M-5 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-5 Certificate Rate on
the Class M-5 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class M-5 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class M-5 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class M-5
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class M-5 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-5 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-5 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-5 Certificate Rate for the related Accrual Period. The Class M-5
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class M-5 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.5000% per annum, and (ii) after the Initial
Optional Termination Date, 0.7500% per annum.

      Class M-5 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the Class Certificate Balance of each class of Class A, Class M-1, Class M-2,
Class M-3 and Class M-4 Certificates has been reduced to zero and a Stepdown
Trigger Event exists, or, as long as a Stepdown Trigger Event does not exist,
the excess of (1) the sum of (A) the Class Certificate Balance of the Senior
Certificates and the Class Certificate Balance of the Class M-1, Class M-2,
Class M-3 and Class M-4 Certificates (after taking into account distributions of
the related Principal Distribution Amount for such Distribution Date and after
the allocation of Deferred Interest, if any, for each Distribution Date) and (B)
the Class Certificate Balance of the Class M-5 Certificates immediately prior to
such Distribution Date over (2) the lesser of (A) (i) for any Distribution Date
on or prior to February 2013, 93.125% of the aggregate Stated Principal Balance
of the Mortgage Loans as of such Distribution Date and (ii) for any Distribution
Date after February 2013, 94.600% of the aggregate Stated Principal Balance of
the Mortgage Loans as of such Distribution Date and (B) the excess of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount. Notwithstanding the
above, (1) on any Distribution Date prior to the Stepdown Date on which the
aggregate Class Certificate Balance of the Class A, Class M-1, Class M-2, Class
M-3 and Class M-4 Certificates has been reduced to zero, the Class M-5 Principal
Distribution Amount will equal the lesser of (A) the outstanding Class
Certificate Balance of the Class M-5

                                      -27-
<PAGE>

Certificates and (B) 100% of the Principal Distribution Amount remaining after
any distributions on the Class A, Class M-1, Class M-2, Class M-3 and Class M-4
Certificates and (2) in no event will the Class M-5 Principal Distribution
Amount with respect to any Distribution Date exceed the Class Certificate
Balance of the Class M-5 Certificates.

      Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-6 Certificate Rate: For the first Distribution Date, 5.8700% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-6 Margin, (2) the Available Funds Cap for such Distribution
Date and (3) the Maximum Rate Cap for such Distribution Date.

      Class M-6 Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class M-6 Certificates.

      Class M-6 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-6 Certificate Rate on
the Class M-6 Class Certificate Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Current
Interest or Class M-6 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Prepayment Interest
Shortfalls allocated on such Distribution Date to the Class M-6 Certificates and
less any Deferred Interest allocated on such Distribution Date to the Class M-6
Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

      Class M-6 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-6 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-6 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-6 Certificate Rate for the related Accrual Period. The Class M-6
Interest Carry Forward Amount shall not include any amounts attributable to an
allocation of Deferred Interest.

      Class M-6 Margin: As of any Distribution Date, (i) on or before the
Initial Optional Termination Date, 0.5500% per annum, and (ii) after the Initial
Optional Termination Date, 0.8250% per annum.

      Class M-6 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount if
the Class Certificate Balance of each class of Class A, Class M-1, Class M-2,
Class M-3, Class M-4 and Class M-5 Certificates has been reduced to zero and a
Stepdown Trigger Event exists, or, as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the Class Certificate Balance of the
Senior Certificates and the Class Certificate Balance of the Class M-1, Class
M-2, Class M-3, Class M-4 and Class M-5 Certificates (after taking into account
distributions of the related Principal Distribution Amount for such Distribution
Date and after the allocation of

                                      -28-
<PAGE>

Deferred Interest, if any, for each Distribution Date) and (B) the Class
Certificate Balance of the Class B-1 Certificates immediately prior to such
Distribution Date over (2) the lesser of (A) (i) for any Distribution Date on or
prior to February 2013, 94.250% of the aggregate Stated Principal Balance of the
Mortgage Loans as of such Distribution Date and (ii) for any Distribution Date
after February 2013, 95.400% of the aggregate Stated Principal Balance of the
Mortgage Loans as of such Distribution Date and (B) the excess of the aggregate
Stated Principal Balance of the Mortgage Loans as of such Distribution Date over
the Minimum Required Overcollateralization Amount. Notwithstanding the above,
(1) on any Distribution Date prior to the Stepdown Date on which the aggregate
Class Certificate Balance of the Class A, Class M-1, Class M-2, Class M-3, Class
M-4 and Class M-5 Certificates has been reduced to zero, the Class M-6 Principal
Distribution Amount will equal the lesser of (A) the outstanding Class
Certificate Balance of the Class M-6 Certificates and (B) 100% of the Principal
Distribution Amount remaining after any distributions on the Class A, Class M-1,
Class M-2, Class M-3, Class M-4 and Class M-5 Certificates and (2) in no event
will the Class M-6 Principal Distribution Amount with respect to any
Distribution Date exceed the Class Certificate Balance of the Class M-6
Certificates.

      Class P Certificate: Any one of the Class P Certificates as designated on
the face thereof substantially in the forum of annexed hereto as Exhibit A-4,
executed by the Securities Administrator and authenticated and delivered by the
Securities Administrator representing the right to distributions of Prepayment
Charges received on the Prepayment Charge Mortgage Loans as set forth herein.

      Class R Certificate: The Class R Certificate executed, authenticated and
delivered by the Securities Administrator substantially in the form annexed
hereto as Exhibit A-3 and evidencing the ownership of the residual interest in
each REMIC.

      Class R Certificate Rate: For the first Distribution Date, 5.4900% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Available Funds Cap for such Distribution Date
and (3) the Maximum Rate Cap for such Distribution Date.

      Class R Class Certificate Balance: As of any date of determination, the
aggregate Class Certificate Balance of the Class R Certificate.

      Class R Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R Certificate Rate on the
Class R Class Certificate Balance as of such Distribution Date plus the portion
of any previous distributions on such Class in respect of Current Interest or a
Class R Interest Carry Forward Amount that is recovered as a voidable preference
by a trustee in bankruptcy, less any Prepayment Interest Shortfalls allocated on
such Distribution Date to the Class R Certificate and less any Deferred Interest
allocated on such Distribution Date to the Class R Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class R Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the

                                      -29-
<PAGE>

amount actually distributed to the Class R Certificate with respect to interest
on such prior Distribution Dates and (2) interest on such excess (to the extent
permitted by applicable law) at the Class R Certificate Rate for the related
Accrual Period. The Class R Interest Carry Forward Amount shall not include
amounts attributable to an allocation of Deferred Interest.

      Class R Margin: With respect to any Distribution Date, (i) on or before
the Initial Optional Termination Date, 0.1700%, and (ii) after the Initial
Optional Termination Date, 0.3400%.

      Class Subordination Percentage: With respect to any Distribution Date and
each Class of Subordinate Certificates, the fraction (expressed as a percentage)
the numerator of which is the Class Certificate Balance of such Class of
Subordinate Certificates immediately prior to such Distribution Date and the
denominator of which is the aggregate of the Class Certificate Balances of all
Classes of Certificates immediately prior to such Distribution Date.

      Class SWR Interest: The sole class of "residual interest" in the SWAP
REMIC.

      Closing Date: March 9, 2007.

      CMC: Central Mortgage Company.

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

      Commission: The Securities and Exchange Commission.

      Compensating Interest: For any Distribution Date and all Principal
Prepayments in full in respect of a Mortgage Loan that are received during the
period from the first day of the related Prepayment Period through the last day
of the calendar month preceding such Distribution Date, a payment made by a
Servicer in an amount not to exceed the product of (i) with respect to the
Initial Servicer, (a) 50% of the Servicing Fee Rate and (b) the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date or (ii) with
respect to the Successor Servicer, (a) the Servicing Fee Rate and (b) the
aggregate Stated Principal Balance of the Mortgage Loans for such Distribution
Date, equal to the amount of interest at the Net Mortgage Rate for that Mortgage
Loan from the date of prepayment through the 30th day of such preceding calendar
month; provided that any month consisting of less than 30 days shall be deemed
to consist of 30 days.

      Compensating Interest Payment: As defined in Section 6.05.

      Cooperative: A corporation that has been formed for the purpose of
cooperative apartment ownership.

      Cooperative Assets: Shares issued by Cooperatives, the related Cooperative
Lease and any other collateral securing the Cooperative Loans.

      Cooperative Lease: With respect to a Cooperative Loan, the proprietary
lease or occupancy agreement with respect to the cooperative apartment occupied
by the Mortgagor and

                                      -30-
<PAGE>

relating to the related Cooperative Assets, which lease or agreement confers an
exclusive right to the holder of such Cooperative Assets to occupy such
apartment.

      Cooperative Loan: The indebtedness of a Mortgagor evidenced by a Mortgage
Note which is secured by Cooperative Assets and which is being sold to the
Depositor pursuant to this Agreement, the Mortgage Loans so sold being
identified in the Mortgage Loan Schedule.

      Cooperative Stock: With respect to a Cooperative Loan, the single
outstanding class of stock, partnership interest or other ownership instrument
in the related Cooperative.

      Corporate Trust Office: With respect to the Trustee, the principal
corporate trust office of the Trustee at which at any particular time its
corporate trust business in connection with this Agreement shall be
administered, which office at the date of the execution of this instrument is
located at HSBC Bank USA, National Association, 452 Fifth Avenue, New York, New
York 10018, Attention: Issuer Services - Merrill Lynch Mortgage Investors, Inc.,
MANA Series 2007-OAR1, or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor and the
Master Servicer and with respect to the Securities Administrator, for
Certificate transfer purposes, Wells Fargo Center, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479, Attn: Corporate Trust Services - MANA
2007-OAR1, and for all other purposes, 9062 Old Annapolis Road, Columbia,
Maryland, 21045, Attn: Client Service Manager - MANA 2007-OAR1.

      Corresponding Certificates: With respect to the Class LTA-1 Interest, the
Class A-1 and Class R Certificates. With respect to the Class LTA-2 Interest,
the Class A-2 Certificates. With respect to the Class LTA-3 Interest, the Class
A-3 Certificates. With respect to the Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class LTM-2 Interest, the Class M-2
Certificates. With respect to the Class LTM-3 Interest, the Class M-3
Certificates. With respect to the Class LTM-4 Interest, the Class M-4
Certificates. With respect to the Class LTM-5 Interest, the Class M-5
Certificates. With respect to the Class LTM-6 Interest, the Class M-6
Certificates. With respect to the Class LTB-1 Interest, the Class B-1
Certificates. With respect to the Class LTB-2 Interest, the Class B-2
Certificates. With respect to the Class LTB-3 Interest, the Class B-3
Certificates.

      Corresponding REMIC Regular Interest: For each Class of Certificates, the
interest in the Upper Tier REMIC listed on the same row in the table entitled
"Upper Tier REMIC" in the Preliminary Statement.

      Corridor Contract: The confirmation and agreement, including the schedule
thereto and the related credit support annex, between the Supplemental Interest
Trust Trustee on behalf of the Supplemental Interest Trust and the Cap Contract
Counterparty (in the form of Exhibit N-1 hereto).

      Corridor Contract Account: The separate Eligible Account created and
maintained by the Supplemental Interest Trust Trustee pursuant to Section
6.01(l) in the name of the Supplemental Interest Trust Trustee for the benefit
of the Issuing Entity and designated "Wells Fargo Bank, National Association, as
Supplemental Interest Trust Trustee for Merrill Lynch Mortgage Investors, Inc.,
Mortgage Pass-Through Certificates, MANA Series 2007-OAR1 - Corridor

                                      -31-
<PAGE>

Contract Account." Funds in the Corridor Contract Account shall be held in trust
for the Issuing Entity for the uses and purposes set forth in this Agreement.

      Corridor Contract Notional Balance: With respect to any Distribution Date,
the Corridor Contract Notional Balance set forth for such Distribution Date in
the One-Month LIBOR Cap Table attached hereto as Exhibit H.

      Corridor Contract Termination Date: The Distribution Date in August 2007.

      Current Interest: Any of the Class A-1 Current Interest, the Class A-2
Current Interest, the Class A-3 Current Interest, the Class R Current Interest,
the Class M-1 Current Interest, the Class M-2 Current Interest, the Class M-3
Current Interest, the Class M-4 Current Interest, the Class M-5 Current
Interest, the Class M-6 Current Interest, the Class B-1 Current Interest, the
Class B-2 Current Interest, the Class B-3 Current Interest and the Class C
Current Interest.

      Curtailment: Any Principal Prepayment made by a Mortgagor which is not a
Principal Prepayment in Full.

      Custodial Agreement: An agreement, dated as of the Closing Date among the
Depositor, the Master Servicer, the Securities Administrator, the Trustee and
the Custodian in substantially the form of Exhibit G hereto.

      Custodian: Wells Fargo Bank, N.A., including any successors in interest,
or any successor custodian appointed pursuant to the provisions hereof and of
the Custodial Agreement.

      Cut-off Date: February 1, 2007.

      Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
principal prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates after
the Cut-off Date.

      Debt Service Reduction: Any reduction of the Monthly Payments which a
Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.

      Defaulted Swap Termination Payment: Any payment required to be made by the
Supplemental Interest Trust to the Swap Counterparty pursuant to the Swap
Agreement as a result of an event of default under the Swap Agreement with
respect to which the Swap Counterparty is the defaulting party or a termination
event under that agreement (other than illegality or a tax event) with respect
to which the Swap Counterparty is the sole Affected Party (as defined in the
Swap Agreement).

      Defective Mortgage Loan: A Mortgage Loan replaced or to be replaced by one
or more Substitute Mortgage Loans.

      Deferred Interest: Any interest shortfall resulting from Net Negative
Amortization.

                                      -32-
<PAGE>

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

      Definitive Certificates: As defined in Section 5.08.

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

      Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
or any successor in interest.

      Depository: The Depository Trust Company, the nominee of which is Cede &
Co., or any successor thereto.

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

      Designated Depository Institution: A depository institution (commercial
bank, federal savings bank, mutual savings bank or savings and loan association)
or trust company (which may include the Trustee), the deposits of which are
fully insured by the FDIC to the extent provided by law.

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

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

      Distribution Account: The trust account or accounts created and maintained
pursuant to Section 4.04, which shall be denominated "Wells Fargo Bank, National
Association, as Securities Administrator for HSBC Bank USA, National
Association, as Trustee f/b/o holders of Merrill Lynch Mortgage Investors, Inc.,
Mortgage Pass-Through Certificates, MANA Series 2007-OAR1 - Distribution
Account." The Distribution Account shall be an Eligible Account.

      Distribution Account Deposit Date: The Business Day prior to each
Distribution Date.

                                      -33-
<PAGE>

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

      Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.

      Due Period: With respect to any Distribution Date and each Mortgage Loan,
the period commencing on the second day of the month preceding the month in
which the Distribution Date occurs and ending at the close of business on the
first day of the month in which the Distribution Date occurs.

      Eligible Account: Any of (i) a segregated account maintained with a
federal or state chartered depository institution (A) the short-term obligations
of which are rated A-1 or better by S&P and P-1 by Moody's at the time of any
deposit therein or (B) insured by the FDIC (to the limits established by such
Corporation), the uninsured deposits (as evidenced in writing by the Rating
Agencies that use of any such account as the Distribution Account will not have
an adverse effect on the then-current ratings assigned to the Classes of
Certificates then rated by the Rating Agencies) in which account are otherwise
secured such that, as evidenced by an Opinion of Counsel (obtained by the Person
requesting that the account be held pursuant to this clause (i)) delivered to
the Securities Administrator prior to the establishment of such account, the
Certificateholders will have a claim with respect to the funds in such account
and a perfected first priority security interest against any collateral (which
shall be limited to Permitted Investments, each of which shall mature not later
than the Business Day immediately preceding the Distribution Date next following
the date of investment in such collateral or the Distribution Date if such
Permitted Investment is an obligation of the institution that maintains the
Distribution Account) securing such funds that is superior to claims of any
other depositors or general creditors of the depository institution with which
such account is maintained, (ii) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company with trust powers acting in its fiduciary capacity or (iii) a segregated
account or accounts of a depository institution acceptable to the Rating
Agencies (as evidenced in writing by the Rating Agencies that use of any such
account as the Distribution Account will not have an adverse effect on the
then-current ratings assigned to the Classes of the Certificates then rated by
the Rating Agencies). Eligible Accounts may bear interest.

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

      ERISA Restricted Certificates: The Class C and the Class P Certificates
and any other Certificate, as long as the acquisition and holding of such
Certificate is not covered by and exempt under an underwriter's exemption.

      ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of
Prohibited Transaction Exemption 90-29, Exemption Application No. D-8012, 55
Fed. Reg. 21459 (1990), as amended, granted to the underwriter by the United
States Department of Labor (or any other applicable underwriter's exemption
granted by the United States Department of Labor), except, in relevant part, for
the requirement that the certificates have received a rating at the time of
acquisition that is in one of

                                      -34-
<PAGE>

the three (or four, in the case of a "designated transaction") highest generic
rating categories by at least one of the Rating Agencies.

      Escrow Account: As defined in Section 13.06 hereof.

      Event of Default: An event of default described in Section 8.01.

      Excess Interest: On any Distribution Date, for the Senior Certificates,
Class M and Class B Certificates, the excess, if any, of (1) the amount of
interest such Class of Certificates is entitled to receive on such Distribution
Date over (2) the amount of interest such Class of Certificates would have been
entitled to receive on such Distribution Date at an interest rate equal to the
REMIC Pass-Through Rate.

      Excess Liquidation Proceeds: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.

      Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Interest Rate from the Due Date as to which interest was last paid or
advanced to Certificateholders (and not reimbursed to the Servicer) up to the
Due Date in the month in which such Liquidation Proceeds are required to be
distributed on the unpaid principal balance of such Liquidated Loan outstanding
during each Due Period as to which such interest was not paid or advanced.

      Exchange Act: The Securities Exchange Act of 1934, as amended.

      Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess, if any, of (A) the sum of (x)
the aggregate Class Certificate Balance of the Certificates (other than the
Class C Certificates) reduced by the Principal Funds with respect to such
Distribution Date and (y) $4,289,791 over (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date and (2) on and after
the Stepdown Date, the excess, if any, of (A) the sum of (x) the aggregate Class
Certificate Balance of the Certificates (other than the Class C Certificates)
reduced by the Principal Funds with respect to such Distribution Date and (y)
the greater of (a) (I) on or prior to the Distribution Date in February 2013,
2.50% of the aggregate Stated Principal Balance of the Mortgage Loans as of such
Distribution Date and (II) after the Distribution Date in February 2013, 2.00%
of the aggregate Stated Principal Balance of the Mortgage Loans as of such
Distribution Date and (b) the Minimum Required Overcollateralization Amount less
(B) the aggregate Stated Principal Balance of the Mortgage Loans; provided,
however, that if on any Distribution Date a Stepdown Trigger Event is in effect,
the Extra Principal Distribution Amount will not be reduced to the applicable
percentage of then-current aggregate Stated Principal Balance of the Mortgage
Loans (and will remain fixed at the applicable percentage of the aggregate
Stated Principal Balance of

                                      -35-
<PAGE>

the Mortgage Loans as of the Due Date immediately prior to the Stepdown Trigger
Event) until the next Distribution Date on which the Stepdown Trigger Event is
not in effect.

      Extraordinary Trust Fund Expenses: Any amounts reimbursable to the Master
Servicer, the Servicers or the Depositor pursuant to this Agreement, including
but not limited to Sections 4.03, 4.05 and 7.04, any amounts reimbursable to the
Trustee and the Securities Administrator from the Trust Fund pursuant to this
Agreement, including but not limited to Section 9.05, and any other costs,
expenses, liabilities and losses borne by the Trust Fund (exclusive of any cost,
expense, liability or loss that is specific to a particular Mortgage Loan or REO
Property and is taken into account in calculating a Realized Loss in respect
thereof) for which the Trust Fund has not and, in the reasonable good faith
judgment of the Securities Administrator, shall not, obtain reimbursement or
indemnification from any other Person.

      Fannie Mae: Federal National Mortgage Association or any successor
thereto.

      FDIC: Federal Deposit Insurance Corporation or any successor thereto.

      Final Certification: The certification substantially in the form of
Exhibit Two to the Custodial Agreement.

      Fitch: Fitch Ratings or its successor in interest.

      Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Certificate Rate for a class of Senior, Class M or Class B
Certificates is based upon the Available Funds Cap or the Maximum Rate Cap, the
sum of (A) the excess of (1) the amount of interest that such Class would have
been entitled to receive on such Distribution Date had the Certificate Rate for
that Class not been calculated based on the Available Funds Cap or the Maximum
Rate Cap, up to but not exceeding the greater of (a) the Maximum Rate Cap or (b)
the sum of (i) the Available Funds Cap and (ii) the product of (AA) a fraction,
the numerator of which is 360 and the denominator of which is the actual number
of days in the related Accrual Period and (BB) the sum of (x) the quotient
obtained by dividing (I) an amount equal to the proceeds, if any, payable under
the Corridor Contract with respect to such Distribution Date and (II) the
aggregate Class Certificate Balance of each of the Classes of Certificates to
which such Corridor Contract relates for such Distribution Date and (y) the
quotient obtained by dividing (I) an amount equal to the sum of (xx) any Net
Swap Payments owed by the Swap Counterparty for such Distribution Date and (yy)
any Cap Payment owed by the Cap Contract Counterparty for such Distribution Date
by (II) the aggregate Stated Principal Balance of the Mortgage Loans as of the
immediately preceding Distribution Date over (2) the amount of interest such
Class was entitled to receive on such Distribution Date based on the Available
Funds Cap, (B) the unpaid portion of any such excess from prior Distribution
Dates (and interest accrued thereon at the then applicable Certificate Rate for
such class, without giving effect to the Available Funds Cap or the Maximum Rate
Cap) and (C) any amount previously distributed with respect to Floating Rate
Certificate Carryover for such Class that is recovered as a voidable preference
by a trustee in bankruptcy.

      Form 8-K Disclosure Information: As defined in Section 3.18(a).

                                      -36-
<PAGE>

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

      Gross Margin: As to each Mortgage Loan, the fixed percentage set forth in
the related Mortgage Note and indicated on the Mortgage Loan Schedule which
percentage is added to the related Index on each Interest Adjustment Date to
determine (subject to rounding, the minimum and maximum Mortgage Interest Rate
and the Periodic Rate Cap) the Mortgage Interest Rate until the next Interest
Adjustment Date.

      Indemnified Party: As defined in Section 16.07.

      Indemnified Persons: The Trustee, the Master Servicer, the Depositor, the
Servicers and the Securities Administrator and their officers, directors, agents
and employees and, with respect to the Trustee, any separate co-trustee and its
officers, directors, agents and employees.

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

      Index: The index, if any, specified in a Mortgage Note by reference to
which the related Mortgage Interest Rate will be adjusted from time to time.

      Initial Certification: The certification substantially in the form of
Exhibit One to the Custodial Agreement.

      Initial Class Certificate Balance: With respect to any Regular
Certificate, the amount designated "Initial Class Certificate Balance" on the
face thereof.

      Initial Optional Termination Date: The first Distribution Date following
the date on which the aggregate Stated Principal Balance of the Mortgage Loans
is less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.

      Initial Servicer: Wilshire.

      Insurance Policy: With respect to any Mortgage Loan, any standard hazard
insurance policy, flood insurance policy or title insurance policy.

      Insurance Proceeds: Amounts paid by the insurer under any Insurance Policy
covering any Mortgage Loan or Mortgaged Property other than amounts required to
be paid over to the Mortgagor pursuant to law or the related Mortgage Note or
Security Instrument and other than amounts used to repair or restore the
Mortgaged Property or to reimburse insured expenses.

                                      -37-
<PAGE>

      Interest Adjustment Date: With respect to a Mortgage Loan, the date, if
any, specified in the related Mortgage Note on which the Mortgage Interest Rate
is subject to adjustment.

      Interest Carry Forward Amount: Any of the Class A-1 Interest Carry Forward
Amount, the Class A-2 Interest Carry Forward Amount, the Class A-3 Interest
Carry Forward Amount, the Class R Interest Carry Forward Amount, the Class M-1
Interest Carry Forward Amount, the Class M-2 Interest Carry Forward Amount, the
Class M-3 Interest Carry Forward Amount, the Class M-4 Interest Carry Forward
Amount, the Class M-5 Interest Carry Forward Amount, the Class M-6 Interest
Carry Forward Amount, the Class B-1 Interest Carry Forward Amount, the Class B-2
Interest Carry Forward Amount, the Class B-3 Interest Carry Forward Amount or
the Class C Interest Carry Forward Amount, as the case may be.

      Interest Determination Date: Each date that is the second LIBOR Business
Day preceding the commencement of each Accrual Period for the Certificates.

      Interest Funds: With respect to any Distribution Date and the Mortgage
Loans, the sum, without duplication, of (1) all interest, if any, due during the
related Due Period that is received before the related Servicer Remittance Date
less the Servicing Fee, (2) all Advances relating to interest, (3) all
Compensating Interest Payments, (4) liquidation proceeds collected during the
related Prepayment Period (to the extent such liquidation proceeds relate to
interest), (5) proceeds of any Mortgage Loan purchased by the Depositor or any
transferor under the Pooling and Servicing Agreement during the related
Prepayment Period for document defects, breach of a representation or warranty,
realization upon default or optional termination (to the extent such proceeds
relate to interest), (6) Prepayment Charges received with respect to the related
Mortgage Loans, less all non-recoverable Advances and Servicing Advances
relating to interest and certain indemnification amounts, expenses reimbursed to
the Trustee, Securities Administrator, Master Servicer and the Servicers (not
limited to such Advances, interest, amounts and expenses set forth in this
clause (6)) and (7) as increased by the lesser of (x) the aggregate amount of
items (2), (3), (4) and (5) of the definition of Principal Funds collected
during the related Prepayment Period and (y) the aggregate amount of Negative
Amortization during the related Prepayment Period.

      Investor Representation Letter: As defined in Section 5.02(b).

      Issuing Entity: Merrill Lynch Alternative Note Asset Trust, Series
2007-OAR1.

      Latest Possible Maturity Date: With respect to the Certificates, the
Distribution Date in February 2047.

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

      LIBOR Certificates: Any of the Certificates (other than the Class C and
Class P Certificates).

      Liquidated Mortgage Loan: Any defaulted Mortgage Loan (including any REO
Property) as to which the applicable Servicer has determined that all amounts it
expects to recover from or on account of such Mortgage Loan have been recovered.

                                      -38-
<PAGE>

      Liquidation Date: With respect to any Liquidated Mortgage Loan, the date
on which the applicable Servicer has certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.

      Liquidation Expenses: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer or the applicable Servicer in connection with the liquidation of such
Mortgage Loan and the related Mortgaged Property, such expenses including (a)
property protection expenses, (b) property sales expenses, (c) foreclosure and
sale costs, including court costs and reasonable attorneys' fees, and (d)
similar expenses reasonably paid or incurred in connection with liquidation.

      Liquidation Proceeds: With respect to any Mortgage Loan, cash received in
connection with the liquidation of a defaulted Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise, and amounts received through
Insurance Proceeds and condemnation proceeds.

      Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the
Original Value of the related Mortgaged Property.

      Lower Collar: With respect to each Distribution Date, the applicable per
annum rate set forth under the heading "1ML Strike Lower Collar" in the
One-Month LIBOR Cap Table (set forth on Exhibit H).

      Lower Tier REMIC: As described in the Preliminary Statement and Section
9.12.

      Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the Class
LTA-2 Interest, the Class LTA-3 Interest, the Class LTM-1 Interest, the Class
LTM-2 Interest, the Class LTM-3 Interest, the Class LTM-4 Interest, the Class
LTM-5 Interest, the Class LTM-6 Interest, the Class LTB-1 Interest, the Class
LTB-2 Interest, the Class LTB-3 Interest, the Class LTX Interest, the Class
LT-IO Interest and the Class LTR Interest.

      Lower Tier REMIC Marker Interests: Each of the classes of Lower Tier REMIC
Regular Interests other than the Class LTX Interest and the Class LT-IO
Interest.

      Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.

      Lower Tier REMIC Subordinated Balance Ratio: Not applicable.

      Master Servicer: Wells Fargo Bank, N.A. including any successors in
interest who meet the qualifications for a master servicer set forth in this
Agreement, and any successor master servicer appointed hereunder.

      Master Servicer Collection Account: The trust account or accounts created
and maintained pursuant to Section 4.02, which shall be denominated "Wells Fargo
Bank, National Association as Master Servicer for HSBC Bank USA, National
Association, as Trustee f/b/o holders of Merrill Lynch Mortgage Investors, Inc.,
Mortgage Pass-Through Certificates, MANA

                                      -39-
<PAGE>

Series 2007-OAR1 - Master Servicer Collection Account." The Master Servicer
Collection Account shall be an Eligible Account.

      Master Servicing Compensation: The meaning specified in Section 3.14.

      Maximum Lifetime Mortgage Rate: The maximum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.

      Maximum Rate Cap: With respect to a Distribution Date, the per annum rate
equal to the product of (i) 12, (ii) the quotient of (x) the total scheduled
interest that would have been due on the Mortgage Loans had the Mortgage Loans
provided for interest at their maximum lifetime Net Mortgage Rates less any Net
Swap Payments or Swap Termination Payments owed to the Swap Counterparty for
such Distribution Date (other than Defaulted Swap Termination Payments), and (y)
the aggregate Stated Principal Balance of the Mortgage Loans as of the first day
of the related Accrual Period (or, in the case of the first Distribution Date,
as of the Cut-off Date) and (iii) a fraction, the numerator of which is 30 and
the denominator of which is the actual number of days in the related Accrual
Period.

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

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

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

      MIN: The loan number for any MERS Loan.

      Minimum Lifetime Mortgage Rate: The minimum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.

      Minimum Payment: The minimum Monthly Payment required to be paid by a
Mortgagor.

      Minimum Required Overcollateralization Amount: An amount equal to (i) on
or prior to the Distribution Date in February 2027, 0.50% of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date or (ii)
after the Distribution Date in February 2027, the greater of (A) 0.50% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
and (B) the aggregate Stated Principal Balance of the Mortgage Loans that have a
maturity term greater than 30 years plus 0.10% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date.

      MLML: Merrill Lynch Mortgage Lending, Inc., a Delaware corporation, or any
successor in interest.

      Monthly Advance: An advance of principal or interest required to be made
by the applicable Servicer pursuant to Section 13.22 or the Master Servicer
pursuant to Section 6.04.

                                      -40-
<PAGE>

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

      Monthly Statement: The statement distributed to Certificateholders
pursuant to Section 6.03.

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

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

      Mortgage File: The mortgage documents listed in Section 2.01(b) pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.

      Mortgage Interest Rate: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note.

      Mortgage Loan: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.

      Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement,
dated as of February 1, 2007, between the Sponsor and the Depositor, as
purchaser, and all amendments thereof and supplements thereto, attached hereto
as Exhibit J.

      Mortgage Loan Schedule: The Mortgage Loan Schedule, attached hereto as
Exhibit B, with respect to the Mortgage Loans and as amended from time to time
to reflect the repurchase or substitution of Mortgage Loans pursuant to this
Agreement.

      Mortgage Note: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.

      Mortgage Pool: The pool of Mortgage Loans, identified on Exhibit B from
time to time, and any REO Properties acquired in respect thereof.

      Mortgaged Property: Land and improvements securing the indebtedness of a
Mortgagor under the related Mortgage Loan or, in the case of REO Property, such
REO Property.

      Mortgagor: The obligor on a Mortgage Note.

                                      -41-
<PAGE>

      Negative Amortization: With respect to each Distribution Date, the amount
of interest on the Mortgage Loans that the related Mortgagors are not obligated
to pay as interest (and which shall be added to the Stated Principal Balance of
each such Mortgage Loan) due to the negative amortization feature of such
Mortgage Loans, in each case during the related Due Period.

      Negative Amortization Certificate: Any Certificate other than the Class P
Certificate.

      Net Excess Cashflow: Any Interest Funds and Principal Funds not otherwise
required to be distributed with respect to principal of and interest on the
Certificates and not otherwise required to be distributed to the Class P
Certificates.

      Net Liquidation Proceeds: As to any Liquidated Mortgage Loan, Liquidation
Proceeds net of (i) Liquidation Expenses which are payable therefrom by the
applicable Servicer or the Master Servicer in accordance with this Agreement and
(ii) unreimbursed advances by the applicable Servicer or the Master Servicer and
Monthly Advances.

      Net Mortgage Rate: With respect to each Mortgage Loan, the Mortgage
Interest Rate in effect from time to time less the Servicing Fee Rate (expressed
as a per annum rate).

      Net Negative Amortization: For any Distribution Date, the excess, if any,
of (i) the Negative Amortization with respect for the related calendar month
prior to that Distribution Date, over (ii) the aggregate amount of items (2),
(3), (4) and (5) of the definition of Principal Funds collected during the
related Prepayment Period.

      Net Rate: The per annum rate set forth in footnote 3 to the description of
the Lower Tier REMIC in the Preliminary Statement hereto (such rate being based
on the weighted average of the interest rates on the SWAP REMIC Regular
Interests as adjusted and as set forth in such footnote).

      Net Swap Payment: With respect to any Distribution Date, any net payment
(other than a Swap Termination Payment or Defaulted Swap Termination Payment)
made by the Supplemental Interest Trust to the Swap Counterparty on the related
Fixed Rate Payer Payment Date (as defined in the Swap Agreement) or made by the
Swap Counterparty to the Supplemental Interest Trust on the related Floating
Rate Payer Payment Date (as defined in the Swap Agreement). In each case, the
Net Swap Payment shall not be less than zero.

      Net WAC: With respect to any Distribution Date, the weighted average Net
Mortgage Rate for the Mortgage Loans calculated based on the respective Net
Mortgage Rates and the Stated Principal Balances of such Mortgage Loans as of
the preceding Distribution Date (or, in the case of the first Distribution Date,
as of the Cut-off Date).

      NIM Notes: The net interest margin or excess cashflow securities to be
issued pursuant to an indenture.

      Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of a
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by such Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise related to the Mortgage Loans.

                                      -42-
<PAGE>

      Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by a Servicer that, in the good faith
judgment of such Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by such Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise related to the Mortgage
Loans.

      Non-Supported Interest Shortfall: As defined in Section 13.23.

      Offered Certificate: Any Senior Certificate or Subordinate Certificate
issued hereunder.

      Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a Vice President or Assistant
Vice President or other authorized officer of the Servicers, the Master Servicer
or the Depositor, as applicable, and delivered to the Trustee, as required by
this Agreement.

      One-Month LIBOR: With respect to any Accrual Period, the rate determined
by the Securities Administrator on the related Interest Determination Date on
the basis of (a) the offered rates for one-month United States dollar deposits,
as such rates appear on Telerate page 3750, as of 11:00 a.m. (London time) on
such Interest Determination Date or (b) if such rate does not appear on Telerate
Page 3750 as of 11:00 a.m. (London time), the offered rates of the Reference
Banks for one-month United States dollar deposits, as such rates appear on the
Reuters Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest
Determination Date. If One-Month LIBOR is determined pursuant to clause (b)
above, on each Interest Determination Date, One-Month LIBOR for the related
Accrual Period will be established by the Securities Administrator as follows:

            (i) If on such Interest Determination Date two or more Reference
      Banks provide such offered quotations, One-Month LIBOR for the related
      Accrual Period shall be the arithmetic mean of such offered quotations
      (rounded upwards if necessary to the nearest whole multiple of 0.03125%).

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

      Opinion of Counsel: A written opinion of counsel who is or are acceptable
to the Trustee and who, unless required to be Independent (an "Opinion of
Independent Counsel"), may be internal counsel for the Master Servicer or the
Depositor.

      Optional Termination: The termination hereunder of that portion of the
Trust Fund related to the Certificates pursuant to Section 10.01(a) hereof.

      Optional Termination Amount: The amount received by the Securities
Administrator in connection with any purchase of all of the Mortgage Loans and
REO Properties pursuant to Section 10.01(b) hereof.

                                      -43-
<PAGE>

      Optional Termination Price: On any date after the Initial Optional
Termination Date, an amount equal to the sum of (A) the aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that has
become an REO Property) as of the Distribution Date on which the proceeds of the
Optional Termination are distributed to the Certificateholders, plus accrued
interest thereon at the applicable Mortgage Interest Rate as of the Due Date
preceding the Distribution Date on which the proceeds of the Optional
Termination are distributed to Certificateholders and the fair market value of
any REO Property, plus accrued interest thereon as of the Distribution Date on
which the proceeds of the Optional Termination are distributed to
Certificateholders, (B) any unreimbursed out-of-pocket costs and expenses, fees
and indemnity amounts owed to the Master Servicer, the Trustee, the Securities
Administrator (including any amounts incurred by the Securities Administrator in
connection with conducting the Auction), or a Servicer and any unpaid or
unreimbursed Servicing Fees, Monthly Advances and Servicing Advances, (C) any
unreimbursed costs, penalties and/or damages incurred by the Trust Fund in
connection with any violation relating to any of the Mortgage Loans of any
predatory or abusive lending law, (D) in the event an Auction has been
conducted, all reasonable fees and expenses incurred by the Securities
Administrator to conduct the Auction and (E) any unpaid Net Swap Payments, any
Swap Termination Payment and any other amounts owed to the Swap Counterparty and
determined in accordance with the Swap Agreement.

      Original Value: The lesser of (i) the Appraised Value or (ii) the sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except in instances where either clauses (i) or (ii) is unavailable, the other
may be used to determine the Original Value, or if both clauses (i) and (ii) are
unavailable, Original Value may be determined from other sources reasonably
acceptable to the Depositor.

      OTS: The Office of Thrift Supervision.

      Outstanding Mortgage Loan: With respect to any Due Date, a Mortgage Loan
which, prior to such Due Date, was not the subject of a Principal Prepayment in
Full, did not become a Liquidated Mortgage Loan and was not purchased or
replaced.

      Outstanding Principal Balance: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust Fund less any Net Liquidation Proceeds with respect
thereto to the extent applied to principal.

      Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the Class
Certificate Balance of the Certificates (other than the Class P Certificates and
the Class C Certificates).

      Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.

      Percentage Interest: With respect to any Certificate (other than the Class
R and Class P Certificates), a fraction, expressed as a percentage, the
numerator of which is the Initial Class

                                      -44-
<PAGE>

Certificate Balance represented by such Certificate and the denominator of which
is the Initial Class Certificate Balance of the related Class. With respect to
the Class R and Class P Certificates, the Percentage Interest evidenced thereby
shall be as specified on the face thereof, or otherwise, be equal to 100%.

      Periodic Rate Cap: With respect to each Mortgage Loan, the maximum
adjustment that can be made to the Mortgage Interest Rate on each Interest
Adjustment Date in accordance with its terms, regardless of changes in the
applicable Index.

      Permitted Investments: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders (provided that such obligation or security must be a
"permitted investment" within the meaning of such term as provided for in
Section 860G(a)(5) of the Code):

            (i) direct obligations of, and obligations the timely payment of
      which are fully guaranteed by the United States of America or any agency
      or instrumentality of the United States of America the obligations of
      which are backed by the full faith and credit of the United States of
      America;

            (ii) (a) demand or time deposits, federal funds or bankers'
      acceptances issued by any depository institution or trust company
      incorporated under the laws of the United States of America or any state
      thereof (including the Trustee or the Master Servicer or its Affiliates
      acting in its commercial banking capacity) and subject to supervision and
      examination by federal and/or state banking authorities, provided that the
      commercial paper and/or the short-term debt rating and/or the long-term
      unsecured debt obligations of such depository institution or trust company
      at the time of such investment or contractual commitment providing for
      such investment have the Applicable Credit Rating or better from each
      Rating Agency and (b) any other demand or time deposit or certificate of
      deposit that is fully insured by the Federal Deposit Insurance
      Corporation;

            (iii) repurchase obligations with respect to (a) any security
      described in clause (i) above or (b) any other security issued or
      guaranteed by an agency or instrumentality of the United States of
      America, the obligations of which are backed by the full faith and credit
      of the United States of America, in either case entered into with a
      depository institution or trust company (acting as principal) described in
      clause (ii)(a) above where the Trustee holds the security therefor;

            (iv) securities bearing interest or sold at a discount issued by any
      corporation (including the Trustee, the Securities Administrator or the
      Master Servicer or its Affiliates) incorporated under the laws of the
      United States of America or any state thereof that have the Applicable
      Credit Rating or better from each Rating Agency at the time of such
      investment or contractual commitment providing for such investment;
      provided, however, that securities issued by any particular corporation
      will not be Permitted Investments to the extent that investments therein
      will cause the then outstanding principal amount of securities issued by
      such corporation and held as part of the Issuing Entity to exceed 10% of
      the aggregate Outstanding Principal Balances of all the Mortgage Loans and
      Permitted Investments held as part of the Issuing Entity;

                                      -45-
<PAGE>

            (v) commercial paper (including both non-interest-bearing discount
      obligations and interest-bearing obligations payable on demand or on a
      specified date not more than one year after the date of issuance thereof)
      having the Applicable Credit Rating or better from each Rating Agency at
      the time of such investment;

            (vi) a Reinvestment Agreement issued by any bank, insurance company
      or other corporation or entity;

            (vii) any other demand, money market or time deposit, obligation,
      security or investment as may be acceptable to either Rating Agency as
      evidenced in writing by each Rating Agency to the Trustee, the Securities
      Administrator or Master Servicer;

            (viii) any money market or common trust fund having the Applicable
      Credit Rating or better from each Rating Agency (if such fund is rated by
      each such Rating Agency), including any such fund for which the Trustee,
      Securities Administrator or Master Servicer or any affiliate of the
      Trustee, Securities Administrator or Master Servicer acts as a manager or
      an advisor; provided, however, that no instrument or security shall be a
      Permitted Investment if such instrument or security evidences a right to
      receive only interest payments with respect to the obligations underlying
      such instrument or if such security provides for payment of both principal
      and interest with a yield to maturity in excess of 120% of the yield to
      maturity at par or if such instrument or security is purchased at a price
      greater than par; and

            (ix) units of a taxable money-market portfolio having the highest
      rating assigned by each Rating Agency (except if S&P is a Rating Agency,
      "AAAm" or "AAAM-G" by S&P) and restricted to obligations issued or
      guaranteed by the United States of America or entities whose obligations
      are backed by the full faith and credit of the United States of America
      and repurchase agreements collateralized by such obligations.

      Permitted Transferee: Any Person other than a Disqualified Organization or
an "electing large partnership" (as defined by Section 775 of the Code).

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

      Physical Certificate: The Residual Certificate.

      Pooling and Servicing Agreement: The Pooling and Servicing Agreement
relating to the Mortgage Pass-Through Certificates, MANA Series 2007-OAR1.

      Prepayment Charge: Any prepayment premium or fee payable by a Mortgagor in
connection with any Principal Prepayment on a Mortgage Loan pursuant to the
terms of the related Mortgage Note or Mortgage, as applicable.

      Prepayment Charge Mortgage Loans: Any of the Mortgage Loans that are
subject to existing prepayment charges.

                                      -46-
<PAGE>

      Prepayment Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day of the calendar month in which such Servicer Remittance Date occurs and the
last day of the related Prepayment Period, an amount equal to interest (to the
extent received) at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Servicer Remittance Date occurs and ending on the
date on which such Principal Prepayment is so applied.

      Prepayment Interest Shortfall: As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Principal Prepayment in Full during the portion of the
related Prepayment Period beginning on the first day of such Prepayment Period
through the last day of the month immediately preceding such Distribution Date,
an amount equal to the excess of one month's interest at the Net Mortgage Rate
on the Stated Principal Balance of such Mortgage Loan over the amount of
interest (adjusted to the Net Mortgage Rate) paid by the Mortgagor for such
Prepayment Period to the date of such Principal Prepayment in Full or (b) a
Curtailment during the prior calendar month, an amount equal to the shortfall
resulting from the receipt of principal prior to the next Due Date. The
obligations of the Master Servicer and the Servicers in respect of any
Prepayment Interest Shortfall are set forth in Section 6.05 and Section 13.23.

      Prepayment Period: With respect to any Mortgage Loan and any Distribution
Date (i) with respect to prepayments in full and any other payments received in
connection with a Prepayment in Full, the period from and including the 15th day
of the calendar month preceding the month in which such Distribution Date occurs
(or, in the case of the first Distribution Date, beginning on the Cut-off Date)
and including the 14th day of the calendar month in which such Distribution Date
occurs and (ii) with respect to partial prepayments and any other payments
received in connection with a Prepayment in Part, the calendar month preceding
the month of such Distribution Date.

      Primary Mortgage Insurance Policy: Any primary mortgage guaranty insurance
policy issued in connection with a Mortgage Loan which provides compensation to
a Mortgage Note holder in the event of default by the obligor under such
Mortgage Note or the related Security Instrument, if any or any replacement
policy therefor through the related Accrual Period for such Class relating to a
Distribution Date.

      Principal Distribution Amount: with respect to each Distribution Date, the
sum of (1) the Principal Funds for such Distribution Date and (2) any Extra
Principal Distribution Amount for such Distribution Date.

      Principal Funds: With respect to any Distribution Date and the Mortgage
Loans, the sum, without duplication, of (1) the principal, if any, due during
the related Due Period and received before the related Servicer Remittance Date
or advanced by the Servicer as and Advance on or before the related Servicer
Remittance Date, (2) Principal Prepayments in Full collected in the related
Prepayment Period, (3) the Stated Principal Balance of each Mortgage Loan that
was purchased by the Depositor or the applicable Servicer during the related
Prepayment Period or, in the case of a purchase in connection with an optional
termination, on the Business Day prior to such Distribution Date, (4) the
amount, if any, by which the aggregate unpaid principal balance of any
replacement Mortgage Loans is less than the aggregate unpaid principal balance
of any Mortgage Loans delivered by the Sponsor in connection with a substitution
of a Mortgage Loan, (5) all

                                      -47-
<PAGE>

liquidation proceeds collected during the related Prepayment Period (to the
extent such liquidation proceeds related to principal), (6) all Subsequent
Recoveries received during the related Due Period, (7) all other collections and
recoveries in respect of principal during the related Prepayment Period less
(A) all non-recoverable Advances relating to principal and all non-recoverable
Servicing Advances reimbursed during the related Prepayment Period, (B)
indemnification amounts and expenses reimbursable to the Trustee, Securities
Administrator, Master Servicer and the Servicers hereunder and (C) the lesser of
(i) the aggregate amount of items (2), (3), (4) and (5) above collected during
the related Prepayment Period and (ii) the aggregate amount of Negative
Amortization during the related Prepayment Period.

      Principal Prepayment: Any Principal Prepayment in Full or Curtailment or
other recovery of principal on a Mortgage Loan which is received in advance of
its scheduled Due Date to the extent that it is not accompanied by an amount as
to interest representing scheduled interest due on any date or dates in any
month or months subsequent to the month of prepayment, including Insurance
Proceeds and Repurchase Proceeds, but excluding the principal portion of Net
Liquidation Proceeds.

      Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor
of the entire unpaid principal balance of the Mortgage Loan.

      Prospectus Supplement: The Prospectus Supplement dated March 8, 2007,
relating to the public offering of the Offered Certificates.

      Protected Account: An account established and maintained for the benefit
of Certificateholders by each Servicer with respect to the related Mortgage
Loans and with respect to REO Property pursuant to this Agreement. The Protected
Account shall be an Eligible Account.

      PUD: A Planned Unit Development.

      Purchase Price: With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
confirmed by an Officers' Certificate from the Master Servicer to the Trustee,
an amount equal to the sum of (i) 100% of the Stated Principal Balance thereof
as of the date of purchase (or such other price as provided in Section 10.01),
(ii) accrued interest on such Stated Principal Balance at the applicable
Mortgage Interest Rate in effect from time to time from the Due Date as to which
interest was last covered by a payment by the Mortgagor or an advance by the
applicable Servicer or Master Servicer, which payment or advance had as of the
date of purchase been distributed to Certificateholders, through the end of the
calendar month in which the purchase is to be effected less any unreimbursed
Monthly Advances and any unpaid Servicing Fees payable to the purchaser of the
Mortgage Loan and (iii) any costs and damages incurred by the Issuing Entity in
connection with any violation by such Mortgage Loan or REO Property of any
predatory or abusive-lending law.

      Qualified Servicer: Any servicer with a servicer rating by each of the
Rating Agencies equal to or better than the servicer rating of Central Mortgage
Company at the time of any such servicing transfer.

      Rating Agencies: Moody's, and S&P.

                                      -48-
<PAGE>

      Rating Agency Condition: As defined in the Swap Agreement.

      Realized Loss: With respect to a Liquidated Mortgage Loan, the amount by
which the remaining unpaid principal balance of the Mortgage Loan exceeds the
amount of Liquidation Proceeds applied to the principal balance of the related
Mortgage Loan. To the extent the Master Servicer receives Subsequent Recoveries
with respect to any Mortgage Loan, the amount of the Realized Loss with respect
to that Mortgage Loan will be reduced to the extent such recoveries are applied
to reduce the Class Certificate Balance of any Class of Certificates on any
Distribution Date.

      Realized Loss Amount: With respect to any Distribution Date, the amount,
if any, by which the aggregate Class Certificate Balance of the Certificates
after distributions of principal on such Distribution Date exceeds the aggregate
Stated Principal Balance of the Mortgage Loans as of such Distribution Date.

      Record Date: With respect to each Distribution Date and each class of
Offered Certificates, the close of business on the last Business Day of the
month immediately preceding the month in which the related Distribution Date
occurs (or the Closing Date in the case of the first Distribution Date).

      Regular Certificates: Any of the Class A-1, Class A-2, Class A-3, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class B-2
or Class B-3 Certificates.

      Regulation AB: Subpart 22.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506-1,631 (January 7, 2005) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.

      Reinvestment Agreements: One or more reinvestment agreements, acceptable
to each of the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).

      Related Certificates: For each interest in the Upper Tier REMIC, the Class
of Certificates listed on the same row in the table entitled "Upper Tier REMIC"
in the Preliminary Statement.

      Relevant Servicing Criteria: The Servicing Criteria applicable to the
various parties, as set forth on Exhibit K hereto. For clarification purposes,
multiple parties can have responsibility for the same Relevant Servicing
Criteria. With respect to a Servicing Function Participant engaged by the Master
Servicer, the Securities Administrator, the Trustee, the Custodian or a
Servicer, the term "Relevant Servicing Criteria" may refer to one or more
discrete functions specified in the Relevant Servicing Criteria applicable to
such parties.

      Relief Act: The Servicemembers Civil Relief Act, as amended, or similar
state statute.

                                      -49-
<PAGE>

      Relief Act Mortgage Loan: Any Mortgage Loan as to which the Monthly
Payment or portion thereof has been reduced or postponed due to the application
of the Relief Act.

      Relief Act Shortfall: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest or principal collectible
on such Mortgage Loan for the most recently ended calendar month as a result of
the application of the Relief Act.

      REMIC: Each pool of assets in the Trust Fund designated as a REMIC as
described in the Preliminary Statement and Section 9.12.

      REMIC 1: Not applicable.

      REMIC 1 Interest: Not applicable.

      REMIC 1 Regular Interest: Not applicable.

      REMIC 1 Subordinate Balance Ratio: Not applicable.

      REMIC 2: Not applicable.

      REMIC 2 Interest: Not applicable.

      REMIC 2 Regular Interest: Not applicable.

      REMIC Opinion: An Opinion of Counsel to the effect that a contemplated
action will neither adversely affect the status as a REMIC of any REMIC created
hereunder nor subject any such REMIC to any tax under the REMIC Provisions.

      REMIC Pass-Through Rate: In the case of a Class of the Senior
Certificates, Class M Certificates and Class B Certificates, the Upper Tier
REMIC Net WAC Cap for the Corresponding REMIC Regular Interest.

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

      REMIC Regular Interests: Each of the interests in the Upper Tier REMIC as
set forth in the Preliminary Statement other than the Residual Interest.

      REMIC Swap Rate: For each Distribution Date (and the related Accrual
Period), a per annum rate equal to the Fixed Rate under the Swap Agreement for
such Distribution Date, as set forth in the Prospectus Supplement.

      REO Property: A Mortgaged Property acquired by a Servicer or Master
Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.15 in connection with a defaulted
Mortgage Loan.

                                      -50-
<PAGE>

      Reportable Event: As defined in Section 3.18(a).

      Reporting Servicer: As defined in Section 3.18(h).

      Repurchase Proceeds: The Repurchase Price in connection with any
repurchase of a Mortgage Loan by the Sponsor and any cash deposit in connection
with the substitution of a Mortgage Loan.

      Request for Release: A request for release in the form attached hereto as
Exhibit D.

      Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.

      Required Percentage: With respect to a Distribution Date, the quotient of
(x) the excess of (1) the aggregate Stated Principal Balance of the Mortgage
Loans over (2) the Class Certificate Balance of the most senior class of
Certificates outstanding as of such Distribution Date, prior to giving effect to
distributions to be made on such Distribution Date, and (y) the Stated Principal
Balances of the Mortgage Loans. As used herein, the Class Certificate Balance of
the most senior class of Certificates will equal the aggregate Class Certificate
Balance of the Senior Certificates as of such date of calculation.

      Reserve Interest Rate: The rate per annum that the Securities
Administrator determines to be either (1) the arithmetic mean (rounded upwards
if necessary to the nearest whole multiple of 0.03125%) of the one-month United
States dollar lending rates which New York City banks selected by the Securities
Administrator are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Securities Administrator can determine no such arithmetic
mean, the lowest one-month United States dollar lending rate which New York City
banks selected by the Securities Administrator are quoting on such Interest
Determination Date to leading European banks.

      Residual Certificate: The Class R Certificate.

      Residual Interest: An interest in the Upper Tier REMIC that is entitled to
all distributions of principal and interest on the Class R Certificate other
than (i) distributions in respect of the Class SWR Interest and the Class LTR
Interest and (ii) distributions on the Class R Certificate in respect of Excess
Interest.

      Responsible Officer: Any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee or Securities Administrator customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Agreement, and any
other officer of the Trustee or Securities Administrator to whom a matter
arising hereunder may be referred because of such officers familiarity with the
subject matter thereof.

                                      -51-
<PAGE>

      Reuter's Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks).

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

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

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

      Scheduled Payment: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note or, in the case of REO Property, would otherwise have
been payable under the related Mortgage Note as a Minimum Payment.

      Scheduled Principal: The principal portion of any Scheduled Payment.

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

      Securities Administrator: Wells Fargo Bank, N.A., or any successor in
interest, or any successor securities administrator appointed as herein
provided.

      Security Agreement: With respect to a Cooperative Loan, the agreement
creating a security interest in favor of the originator in the related
Cooperative Stock.

      Security Instrument: A written instrument creating a valid first lien on a
Mortgaged Property securing a Mortgage Note, which may be any applicable form of
mortgage, deed of trust, deed to secure debt or security deed, including any
riders or addenda thereto.

      Senior Class Certificate Balance: As of any date of determination, the sum
of the Class A-1 Class Certificate Balance, the Class A-2 Class Certificate
Balance, the Class A-3 Class Certificate Balance and the Class R Class
Certificate Balance.

                                      -52-
<PAGE>

      Senior Certificates: Any of the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates and the Class R Certificates.

      Senior Principal Distribution Amount: (1) With respect to any Distribution
Date prior to the related Stepdown Date or as to which a Stepdown Trigger Event
exists, 100% of the Principal Distribution Amount for such Distribution Date and
(2) with respect to any Distribution Date on or after the Stepdown Date and as
to which a Stepdown Trigger Event does not exist, the excess of (A) the Class
Certificate Balance of the Senior Certificates after the allocation of Deferred
Interest, if any, for each Distribution Date and immediately prior to such
Distribution Date over (B) the lesser of (i) (a) for each Distribution Date on
or prior to February 2013, 81.5000% of the aggregate Stated Principal Balance of
the Mortgage Loans as of such Distribution Date and (b) for each Distribution
Date after February 2013, 85.2000% of the aggregate Stated Principal Balance of
the Mortgage Loans as of such Distribution Date and (ii) the excess of the
aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount; provided, however,
that in no event will the Senior Principal Distribution Amount with respect to
any Distribution Date exceed the aggregate Class Certificate Balance of the
Senior Certificates.

      Servicer: With respect to each Mortgage Loan (i) from the Closing Date to
the Servicing Transfer Date, the Initial Servicer and (ii) on and after the
Servicing Transfer Date, the Successor Servicer.

      Servicer Event of Default: As defined in Section 15.01.

      Servicer Remittance Date: (i) With respect to the Initial Servicer, the
later of (x) two Business Days after the 15th day of the month in which such
Distribution Date occurs and (y) the 18th day (or if such 18th is not a Business
Day, the immediately following Business Day) of the month in which the related
Distribution occurs and (ii) with respect to the Successor Servicer, the 18th
day of each month (or if the 18th day is not a Business Day, the immediately
following Business Day) of the month in which the related Distribution occurs.

      Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, inspection, restoration and protection of a Mortgaged
Property, including without limitation advances in respect of prior liens, real
estate taxes and assessments, (2) any collection, enforcement or judicial
proceedings, including without limitation foreclosures, collections and
liquidations, (3) the conservation, management, sale and liquidation of any REO
Property, (4) executing and recording instruments of satisfaction, deeds of
reconveyance, substitutions of trustees on deeds of trust or Assignments of
Mortgage to the extent not otherwise recovered from the related Mortgagors or
payable under this Agreement, (5) correcting errors of prior servicers; costs
and expenses charged to the Servicer by the Trustee; tax tracking; title
research; flood certifications; and lender paid mortgage insurance, (6)
obtaining or correcting any legal documentation required to be included in the
Mortgage Files and reasonably necessary for the Servicer to perform its
obligations under this Agreement and (7) compliance with the obligations under
Sections 13.01 and 13.10.

                                      -53-
<PAGE>

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

      Servicing Fee: As to any Mortgage Loan and Distribution Date, an amount
equal to the product of (i) the Stated Principal Balance of such Mortgage Loan
as of the preceding Distribution Date and (ii) the applicable Servicing Fee
Rate. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respectively which any related interest payment on a
Mortgage Loan is computed. If the Index and/or Gross Margin are adjusted as
provided in the related Mortgage Note, the Servicing Fee shall be the rate per
annum in effect immediately prior to such adjustment.

      Servicing Fee Rate: 0.375% per annum.

      Servicing Function Participant: Any Subservicer, Subcontractor or any
other Person engaged by a Servicer, the Custodian, the Master Servicer, the
Paying Agent, the Securities Administrator or the Trustee required by Regulation
AB to provide an Assessment of Compliance and an Accountant's Attestation.

      Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
names and specimen signatures appear on a list of servicing officers furnished
to the Trustee by the Master Servicer, as such list may be amended from time to
time.

      Servicing Transfer Date: May 1, 2007, or such other date as is mutually
agreed upon by the Depositor, the Initial Servicer and the Successor Servicer.

      Significance Estimate: With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be an amount determined based
on the reasonable good-faith estimate by the Depositor or its affiliate (and
reported to the Securities Administrator) of the aggregate maximum probable
exposure of the outstanding Certificates to the Swap Agreement, the Cap Contract
and the Corridor Contract, as applicable.

      Significance Percentage: With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be a percentage equal to the
Significance Estimate divided by the aggregate outstanding Stated Principal
Balance of the Mortgage Loans, prior to the distribution of the Principal
Distribution Amount on such Distribution Date.

      Sponsor: Merrill Lynch Mortgage Lending, Inc., a Delaware corporation, or
any successor in interest.

      Startup Day: The Closing Date.

      Stated Principal Balance: With respect to any Mortgage Loan and
Distribution Date, the unpaid principal balance of such Mortgage Loan as of the
Due Date in the related Due Period, as specified in the amortization schedule at
the time relating thereto (before any adjustment to such amortization schedule
by reason of any moratorium or similar waiver or grace period), after giving
effect to any previous partial prepayments and Liquidation Proceeds received and
to the payment of principal due on such Due Date and irrespective of any
delinquency in payment by

                                      -54-
<PAGE>

the related Mortgagor and as increased by the amounts of any Negative
Amortization with respect to such Mortgage Loan after the Cut-off Date through
the Due Date in the related Due Period. With respect to any Mortgage Loan and
the Cut-off Date, the Cut-off Date Principal Balance thereof.

      Stepdown Date: The earlier of: (A) the first Distribution Date on which
the aggregate Class Certificate Balance of the Senior Certificates has been
reduced to zero and (B) the first Distribution Date on which the aggregate Class
Certificate Balance of the Senior Certificates (after giving effect to
distributions of the Principal Funds amount for such Distribution Date) is less
than or equal to (i) 81.50% of the aggregate Stated Principal Balance of the
Mortgage Loans (if such Distribution Date is on or prior to February 2013) or
(ii) 85.20% of the aggregate Stated Principal Balance of the Mortgage Loans (if
such Distribution Date is on or after February 2013); notwithstanding the
foregoing, the Stepdown Date calculated pursuant to clause (B) shall not occur
prior to March 2010.

      Stepdown Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the following
table:

<TABLE>
<CAPTION>
DISTRIBUTION DATE                   STEPDOWN REQUIRED
OCCURRING IN                        LOSS PERCENTAGE
---------------------------         -----------------------------------------
<S>                                 <C>
March 2009 -- February 2010         0.25% with respect to March 2009, plus an
                                    additional 1/12th of 0.35% for each month
                                    thereafter

March 2010 -- February 2011         0.60% with respect to March 2010, plus an
                                    additional 1/12th of 0.50% for each month
                                    thereafter

March 2011 -- February 2012         1.10% with respect to March 2011, plus an
                                    additional 1/12th of 0.50% for each month
                                    thereafter
</TABLE>

                                      -55-
<PAGE>

<TABLE>
<S>                                 <C>
March 2012 -- February 2013         1.60% with respect to March 2012, plus an
                                    additional 1/12th of 0.60% for each month
                                    thereafter

March 2013 -- February 2014         2.20% with respect to March 2013, plus an
                                    additional 1/12th of 0.20% for each month
                                    thereafter

March 2014 and thereafter           2.40%
</TABLE>

      Stepdown Trigger Event: The situation that exists with respect to any
Distribution Date on or after the Stepdown Date, if (a) the quotient of (1) the
aggregate Stated Principal Balance of all Mortgage Loans 60 or more days
delinquent, measured on a rolling three-month basis (including Mortgage Loans in
foreclosure, REO Properties and Mortgage Loans with respect to which the
applicable mortgagor is in bankruptcy) and (2) the Stated Principal Balance of
all of the Mortgage Loans as of the preceding Servicer Remittance Date, equals
or exceeds the product of (i) (a) on or prior to the Distribution Date in
February 2013, 38.00% and (b) after the Distribution Date in February 2013,
40.00% and (ii) the Required Percentage or (b) the quotient (expressed as a
percentage) of (1) the aggregate Realized Losses incurred from the Cut-off Date
through the last day of the calendar month preceding such Distribution Date and
(2) the aggregate principal balance of the Mortgage Loans as of the Cut-off Date
exceeds the Stepdown Required Loss Percentage.

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

      Subsequent Recoveries: Any amount recovered by a Servicer or the Master
Servicer (net of reimbursable expenses) with respect to a Liquidated Mortgage
Loan with respect to which a Realized Loss was incurred after the liquidation or
disposition of such Mortgage Loan.

      Subservicer: Any Person that services Mortgage Loans on behalf of a
Servicer, and is responsible for the performance (whether directly or through
subservicers or Subcontractors) of servicing functions required to be performed
under this Agreement or any subservicing agreement that are identified in Item
1122(d) of Regulation AB.

      Subservicing Agreement: As defined in Section 13.02(a).

      Substitute Mortgage Loan: With respect to any Mortgage Loan, which is
tendered to the Trustee pursuant to this Agreement, the related Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable, in each
case, (i) which has an Outstanding Principal Balance not greater nor materially
less than the Mortgage Loan for which it is to be substituted; (ii) which has a
Mortgage Interest Rate and Net Rate not less than, and not materially greater
than, such Mortgage Loan; (iii) which has a maturity date not materially earlier
or later than such Mortgage Loan and not later than the latest maturity date of
any Mortgage Loan; (iv) which is of the same property type and occupancy type as
such Mortgage Loan; (v) which has a Loan-to-Value

                                      -56-
<PAGE>

Ratio not greater than the Loan-to-Value Ratio of such Mortgage Loan; (vi) which
is current in payment of principal and interest as of the date of substitution;
(vii) as to which the payment terms do not vary in any material respect from the
payment terms of the Mortgage Loan for which it is to be substituted and (viii)
which has a Gross Margin, Periodic Rate Cap and Maximum Lifetime Mortgage Rate
no less than those of such Mortgage Loan, has the same Index and interval
between Interest Adjustment Dates as such Mortgage Loan, and a Minimum Lifetime
Mortgage Rate no lower than that of such Mortgage Loan.

      Subordinate Certificates: Any of the Class M and the Class B Certificates.

      Successor Servicer: CMC.

      Supplemental Interest Trust: The separate trust, established pursuant to
Section 6.01(m) of this Agreement and held by the Securities Administrator for
the benefit of the holders of the Certificates as a segregated subtrust of the
Trust Fund, (i) in which the Cap Contract, the Corridor Contract and the Swap
Agreement will be held, any Swap Termination Payments or Net Swap Payments
received from the Swap Counterparty will be deposited, any payments received
from the Cap Contract Counterparty pursuant to the Corridor Contract will be
deposited and any Cap Payments received from the Cap Contract Counterparty will
be deposited as set forth in Section 6.01 hereof and (ii) out of which certain
distributions to the Certificateholders will be made and any Swap Termination
Payments or Net Swap Payments owed to the Swap Counterparty will be paid.

      Supplemental Interest Trust Trustee: Wells Fargo Bank, N.A., a national
banking association, not in its individual capacity, but solely in its capacity
as trustee of the Supplemental Interest Trust for the benefit of the
Certificateholders under this Agreement, and any successor thereto, and any
corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.

      Swap Account: The separate Eligible Account created and maintained by the
Supplemental Interest Trust Trustee pursuant to Section 6.01(m) in the name of
the Supplemental Interest Trust Trustee for the benefit of the Supplemental
Interest Trust and designated "Wells Fargo Bank, N.A., as supplemental interest
trust trustee, in trust for registered holders of Merrill Lynch Alternative Note
Asset Trust, Series 2007-OAR1." Funds in the Swap Account shall be held in trust
for the Supplemental Interest Trust for the uses and purposes set forth in this
Agreement.

      Swap Agreement: The confirmation and agreement, including the schedule
thereto and the related credit support annex, between the Swap Counterparty and
the trustee of the Supplemental Interest Trust for the benefit of the
Certificateholders (attached as Exhibit R hereto) or any other swap agreement
(including any related schedules) held by the Supplemental Interest Trust
pursuant to Section 6.01(m) hereof.

      Swap Agreement Notional Balance: As defined in the Swap Agreement.

      Swap Counterparty: Bear Stearns Financial Products Inc., or any successor
counterparty who meets the requirements set forth in the Swap Agreement.

                                      -57-
<PAGE>

      Swap LIBOR: With respect to any Distribution Date (and the related Accrual
Period) the product of (i) the Floating Rate Option (as defined in the Swap
Agreement for the related Swap Payment Date), (ii) two and (iii) the quotient of
(a) the actual number of days in the Accrual Period for the Lower Tier REMIC
Interests divided by (b) 30.

      Swap Payment Date: For so long as the Swap Agreement is in effect or
amounts remain unpaid thereunder, the Business Day immediately preceding each
Distribution Date.

      SWAP REMIC: As described in the Preliminary Statement.

      SWAP REMIC Interests: Each of the interests in the SWAP REMIC as set forth
in the Preliminary Statement.

      SWAP REMIC Regular Interests: Each of the SWAP REMIC Interests other than
the Class SWR Interest.

      Swap Termination Payment: Any payment payable by the Supplemental Interest
Trust or the Swap Counterparty upon termination of the Swap Agreement determined
in accordance with the Swap Agreement.

      Tax Matters Person: The Securities Administrator or any successor thereto
or assignee thereof shall serve as tax administrator hereunder and as agent for
the Tax Matters Person. The Holder of the Residual Certificates shall be the Tax
Matters Person for the related REMIC, as more particularly set forth in Section
9.12 hereof.

      Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a certificate.

      Transferor Representation Letter: As defined in Section 5.02(b).

      Trust Fund: The corpus of the Issuing Entity created pursuant to Article
II of this Agreement.

      Trustee: HSBC Bank USA, National Association, or its successor in
interest, or any successor trustee appointed as herein provided.

      Uncertificated Class C Interest: An uncertificated REMIC Regular Interest
having the characteristics described in the Preliminary Statement.

      Uninsured Cause: Any cause of damage to a Mortgaged Property or related
REO Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
required to be maintained pursuant to this Agreement, without regard to whether
or not such policy is maintained.

      United States Person: A citizen or resident of the United States, a
corporation or partnership (including an entity treated as a corporation or
partnership for federal income tax purposes) created or organized in, or under
the laws of, the United States or any state thereof or the District of Columbia
(except, in the case of a partnership, to the extent provided in regulations),
provided that, for purposes solely of the Class R Certificate, no partnership or
other

                                      -58-
<PAGE>

entity treated as a partnership for United States federal income tax purposes
shall be treated as a United States Person unless all persons that own an
interest in such partnership either directly or through any entity that is not a
corporation for United States federal income tax purposes are United States
Persons, or an estate whose income is subject to United States federal income
tax regardless of its source, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more such United States Persons have the authority to control all
substantial decisions of the trust. To the extent prescribed in regulations by
the Secretary of the Treasury, which have not yet been issued, a trust which was
in existence on August 20, 1996 (other than a trust treated as owned by the
grantor under subpart E of part I of subchapter J of chapter 1 of the Code), and
which was treated as a United States person on August 20, 1996 may elect to
continue to be treated as a United States person notwithstanding the previous
sentence.

      Unpaid Realized Loss Amount: With respect to any class of the Subordinate
Certificates and as to any Distribution Date, the excess of (1) Applied Realized
Loss Amounts with respect to such class over (2) the sum of (x) all
distributions in reduction of the Unpaid Applied Realized Loss Amounts on all
previous Distribution Dates and (y) all increases in the Class Certificate
Balance of such class pursuant to the last sentence of the definition of "Class
Certificate Balance." Any amounts distributed to a class of Subordinate
Certificates in respect of any Unpaid Realized Loss Amount will not be applied
to reduce the Class Certificate Balance of such class.

      Upper Collar: With respect to each Distribution Date with respect to which
payments are received on the Corridor Contract, a rate equal to the lesser of
One-Month LIBOR and 10.261% per annum.

      Upper Tier REMIC: As described in the Preliminary Statement and Section
9.12.

      Upper Tier REMIC Net WAC Cap: For any Distribution Date, the Net Rate.

      Voting Rights: The portion of the voting rights of all of the Certificates
which is allocated to any Certificate. The Voting Rights allocated among Holders
of such Certificates outstanding shall be the fraction, expressed as a
percentage, the numerator of which is the aggregate Class Certificate Balance of
all the Certificates of such Class then outstanding and the denominator of which
is the aggregate Class Certificate Balance of all the Certificates then
outstanding (other than the Class R Certificate). 99.00% of all Voting Rights
will be allocated among all holders of the Certificates (other than the Class R
Certificate) in proportion to their then outstanding Class Certificate Balances,
and 1.00% of the Voting Rights shall be allocated to the Class R Certificate;
provided, however, that any Certificate registered in the name of the Master
Servicer, the Depositor or the Securities Administrator or any of their
respective affiliates shall not be included in the calculation of Voting Rights.
The Class P Certificates shall have no voting rights.

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

      Wilshire: Wilshire Credit Corporation.

   Section 1.02 Accounting.

                                      -59-
<PAGE>

      Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.

                                   ARTICLE II
                             CONVEYANCE OF MORTGAGE
                    LOANS; ORIGINAL ISSUANCE OF CERTIFICATES

   Section 2.01 Conveyance of Mortgage Loans to Trustee.

      (a) The Depositor concurrently with the execution and delivery of this
Agreement, sells, transfers and assigns to the Issuing Entity without recourse
all its right, title and interest in and to (i) the Mortgage Loans identified in
the Mortgage Loan Schedule, including all interest and principal due with
respect to the Mortgage Loans after the Cut-off Date, but excluding any payments
of principal and interest due on or prior to the Cut-off Date; (ii) such assets
as shall from time to time be credited or are required by the terms of this
Agreement to be credited to the Master Servicer Collection Account, (iii) such
assets relating to the Mortgage Loans as from time to time may be held by the
Servicers in Protected Accounts, the Master Servicer in the Master Servicer
Collection Account and the Securities Administrator in the Distribution Account
for the benefit of the Trustee on behalf of the Certificateholders, (iv) any REO
Property, (v) the Required Insurance Policies and any amounts paid or payable by
the insurer under any Insurance Policy (to the extent the mortgagee has a claim
thereto), (vi) the Mortgage Loan Purchase Agreement to the extent provided in
Section 2.03(a), (vii) the Corridor Contract and Corridor Contract Account,
(viii) the Cap Contract and Cap Contract Account, (ix) the Swap Agreement and
Swap Account and (x) any proceeds of the foregoing. Although it is the intent of
the parties to this Agreement that the conveyance of the Depositor's right,
title and interest in and to the Mortgage Loans and other assets in the Trust
Fund pursuant to this Agreement shall constitute a purchase and sale and not a
loan, in the event that such conveyance is deemed to be a loan, it is the intent
of the parties to this Agreement that the Depositor shall be deemed to have
granted to the Trustee a first priority perfected security interest in all of
the Depositor's right, title and interest in, to and under the Mortgage Loans
and other assets in the Trust Fund, and that this Agreement shall constitute a
security agreement under applicable law.

      (b) In connection with the above transfer and assignment, the Depositor
hereby deposits with the Trustee or the Custodian, as its agent, the following
documents or instruments

   (I) with respect to each Mortgage Loan, other than a Cooperative Loan:

            (i) the original Mortgage Note, endorsed in the following form: "Pay
      to the order of HSBC Bank USA, National Association, as Trustee for the
      registered holders of the Merrill Lynch Mortgage Investors, Inc., Mortgage
      Pass-Through Certificates, Series 2007-OAR1, without recourse," with all
      prior and intervening endorsements showing a complete chain of endorsement
      from the originator to the Person so endorsing to the Trustee;

                                      -60-
<PAGE>

            (ii) the original recorded Mortgage or a copy of the Mortgage
      certified by the public recording office in which such Mortgage has been
      recorded;

            (iii) an original Assignment of the Mortgage executed in the
      following form: "HSBC Bank USA, National Association, as Trustee for the
      registered holders of the Merrill Lynch Mortgage Investors, Inc., Mortgage
      Pass-Through Certificates, Series 2007-OAR1.

            (iv) the original recorded Assignment or Assignments of the Mortgage
      showing a complete chain of assignment from the originator to the Person
      assigning the Mortgage to the Trustee as contemplated by the immediately
      preceding clause (iii), if applicable and only to the extent available to
      the Depositor with evidence of recording thereon;

            (v) the originals of all assumption, modification, consolidation or
      extension agreements, with evidence of recording thereon, if any;

            (vi) the original of any guarantee executed in connection with the
      Mortgage Note;

            (vii) the original mortgagee title insurance policy;

            (viii) the original of any security agreement, chattel mortgage or
      equivalent document executed in connection with the Mortgage; and

            (ix) the original power of attorney, if applicable.

and (II) with respect to each Mortgage Loan that is a Cooperative Loan:

            (x) the original Mortgage Note, endorsed in the following form: "Pay
      to the order of HSBC Bank USA, National Association, as Trustee for the
      registered holders of the Merrill Lynch Mortgage Investors, Inc., Mortgage
      Pass-Through Certificates, Series 2007-OAR1, without recourse," with all
      prior and intervening endorsements showing a complete chain of endorsement
      from the originator to the Person so endorsing to the Trustee;

            (xi) the original duly executed assignment of Security Agreement to
      the Trustee;

            (xii) the acknowledgment copy of the original executed Form UCC-1
      (or certified copy thereof) with respect to the Security Agreement, and
      any required continuation statements;

            (xiii) the acknowledgment copy of the original executed Form UCC-3
      with respect to the Security Agreement, indicating the Trustee as the
      assignee of the secured party;

                                      -61-
<PAGE>

            (xiv) the stock certificate representing the Cooperative Assets
      allocated to the cooperative unit, with a stock power in blank attached;

            (xv) the original collateral assignment of the proprietary lease by
      Mortgagor to the originator;

            (xvi) a copy of the recognition agreement;

            (xvii) if applicable and to the extent available, the original
      intervening assignments, including warehousing assignments, if any,
      showing, to the extent available, an unbroken chain of the related
      Mortgage Loan to the Trustee, together with a copy of the related Form
      UCC-3 with evidence of filing thereon; and

            (xviii) the originals of each assumption, modification or
      substitution agreement, if any, relating to the Mortgage Loan;

provided, however, that in lieu of the foregoing, the Depositor may deliver the
following documents, under the circumstances set forth below: (w) the Depositor
may deliver a Mortgage Note pursuant to (a)(i) and (b)(i) endorsed in blank,
provided that the endorsement is completed within 60 days of the Closing Date;
(x) in lieu of the original Mortgage, assignments to the Trustee or its
Custodian, as applicable, or intervening assignments thereof which have been
delivered, are being delivered or will, upon receipt of recording information
relating to the Mortgage required to be included thereon, be delivered to
recording offices for recording and have not been returned to the Depositor in
time to permit their delivery as specified above, the Depositor may deliver a
true copy thereof with a certification by the Depositor on the face of such
copy, substantially as follows: "Certified to be a true and correct copy of the
original, which has been transmitted for recording"; and (y) in lieu of the
Mortgage, assignment to the Trustee or intervening assignments thereof, if the
applicable jurisdiction retains the originals of such documents (as evidenced by
a certification from the Depositor or the Master Servicer, to such effect) the
Depositor may deliver photocopies of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; and provided, further, however,
that in the case of Mortgage Loans which have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of delivering
the above documents, may deliver to the Trustee or its Custodian, as applicable,
a certification to such effect and shall deposit all amounts paid in respect of
such Mortgage Loans in the Distribution Account on the Closing Date. The
Depositor shall deliver such original documents (including any original
documents as to which certified copies had previously been delivered) to the
Trustee or its Custodian, as applicable, promptly after they are received. As of
the date hereof, recordation of the assignment of the Mortgage Loans to the
Trustee or the Custodian, as applicable, is not required in any state by either
Rating Agency to obtain the initial rating on the Certificates (upon which
statement the Master Servicer, the Trustee and the Custodian may each
conclusively rely).

      If any original Mortgage Note referred to in Section 2.01(b)(I)(i) or
2.01(b)(II)(i) above cannot be located, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon delivery to the
Trustee or its Custodian, as applicable, of a photocopy of such Mortgage Note,
if available, with a lost note affidavit. If any of the original Mortgage Notes
for

                                      -62-
<PAGE>

which a lost note affidavit was delivered to the Trustee or its Custodian,
as applicable, is subsequently located, such original Mortgage Note shall be
delivered to the Trustee or its Custodian, as applicable, within three Business
Days.

      (c) The parties hereto agree that it is not intended that any mortgage
loan be included in the Trust Fund that is, without limitation, a "High Cost
Loan" as defined by the Home Ownership and Equity Protection Act of 1994 or any
other applicable anti-predatory lending laws, including but not limited to (i) a
"High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective
November 27, 2003, (ii) a "High-Cost Home Loan" as defined in the New Mexico
Home Loan Protection Act effective January 1, 2004, (iii) a "High Cost Home
Mortgage Loan" as defined in the Massachusetts Predatory Home Loan Practices Act
effective November 7, 2004 or (iv) a "High-Cost Home Loan" as defined by the
Indiana High Cost Home Loan Law effective January 1, 2005.

      (d) Notwithstanding anything to the contrary contained herein, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of Mortgage Files, including but not
limited to certain insurance policies and documents contemplated by Section 3.12
of this Agreement, and preparation and delivery of the certifications shall be
performed by the Custodian(s) pursuant to the terms and conditions of the
Custodial Agreement(s).

   Section 2.02 Acceptance of Mortgage Loans by Trustee.

      (a) The Trustee acknowledges the sale, transfer and assignment of the
Trust Fund to it by the Depositor and its receipt thereof, subject to further
review and the exceptions which may be noted pursuant to the procedures
described below, and declares that it, or the Custodian on its behalf, holds the
documents (or certified copies thereof) delivered to it pursuant to Section
2.01, including a Corridor Contract (the form of which are attached hereto as
Exhibit N), and declares that it will continue to hold those documents and any
amendments, replacements or supplements thereto and all other assets of the
Trust Fund delivered to it as Trustee in trust for the use and benefit of all
present and future Holders of the Certificates. On or before the Closing Date
(or, with respect to any Substitute Mortgage Loan, within five Business Days
after the receipt by the Trustee or Custodian thereof), the Trustee agrees, for
the benefit of the Certificateholders, to review or cause to be reviewed by the
Custodian on its behalf (under the Custodial Agreement), each Mortgage File
delivered to it and to execute and deliver, or cause to be executed and
delivered, to the Depositor on the Closing Date a Initial Certification. In
conducting such review, the Trustee or Custodian will certify as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in the exception
report annexed thereto as not being covered by such certification), (i) all
documents constituting part of such Mortgage File (other than such documents
described in Section 2.01(b)(I)(iii)) required to be delivered to it pursuant to
this Agreement are in its possession, provided that with respect to the
documents described in Section 2.01(b)(I)(v), (vi), (viii) and (ix) and
2.01(b)(II)(viii) and (ix) to the extent the Trustee or the Custodian on its
behalf has actual knowledge that such documents exist, (ii) such documents have
been reviewed by it and are not torn, mutilated, defaced or otherwise altered
(except if initialed by the obligor) and appear to relate on their face to such
Mortgage Loan, (iii) based on its examination and only as to the foregoing, the
information set forth in the Mortgage Loan

                                      -63-
<PAGE>

Schedule corresponding to the loan number for the Mortgage Loan, the Mortgagor's
name, including the street address but excluding the zip code, the Mortgage
Interest Rate and the original principal balance of the Mortgage Loan accurately
reflects information set forth in the Mortgage File and (iv) with respect to
Mortgage Loans with a Mortgage Interest Rate subject to adjustment, the Gross
Margin, the lifetime cap and the periodic cap for such Mortgage Loan. In
performing any such review, the Trustee, or the Custodian, as its agent, may
conclusively rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon.
Notwithstanding anything to the contrary in this Agreement, it is herein
acknowledged that, in conducting such review, the Trustee or the Custodian on
its behalf is under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine whether they
are genuine, enforceable, or appropriate for the represented purpose or whether
they have actually been recorded or that they are other than what they purport
to be on their face, or to determine whether any Person executing any documents
is authorized to do so or whether any signature is genuine.

      If the Trustee or the Custodian, as its agent, finds any document
constituting part of the Mortgage File not to have been executed or received, or
to be unrelated to the Mortgage Loans identified in Exhibit B or to appear to be
defective on its face, the Trustee or the Custodian, as its agent, shall
promptly notify the Sponsor. In accordance with the Mortgage Loan Purchase
Agreement, the Sponsor shall correct or cure any such defect within ninety (90)
days from the date of notice from the Trustee or the Custodian, as its agent, of
the defect and if the Sponsor fails to correct or cure the defect within such
period, and such defect materially and adversely affects the interests of the
Certificateholders in the related Mortgage Loan, the Trustee, shall enforce the
Sponsor's obligation pursuant to the Mortgage Loan Purchase Agreement, within 90
days from the Trustee's or the Custodian's notification, to purchase such
Mortgage Loan at the Purchase Price; provided that, if such defect would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure or repurchase must occur within 90 days
from the date such breach was discovered; provided, however, that if such defect
relates solely to the inability of the Sponsor to deliver the original Security
Instrument or intervening assignments thereof, or a certified copy because the
originals of such documents, or a certified copy have not been returned by the
applicable jurisdiction, the Sponsor shall not be required to purchase such
Mortgage Loan if the Sponsor delivers such original documents or certified copy
promptly upon receipt, but in no event later than 360 days after the Closing
Date. The foregoing repurchase obligation shall not apply in the event that the
Sponsor cannot deliver such original or copy of any document submitted for
recording to the appropriate recording office in the applicable jurisdiction
because such document has not been returned by such office; provided that the
Sponsor shall instead deliver a recording receipt of such recording office or,
if such receipt is not available, a certificate confirming that such documents
have been accepted for recording, and delivery to the Trustee or the Custodian,
as its agent, shall be effected by the Sponsor within thirty days of its receipt
of the original recorded document.

      (b) No later than 180 days after the Closing Date, the Trustee or the
Custodian, as its agent, will review, for the benefit of the Certificateholders,
the Mortgage Files delivered to it and will execute and deliver or cause to be
executed and delivered to the Depositor a Final Certification. In conducting
such review, the Trustee or the Custodian, as its agent, will certify as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in the exception
report annexed thereto

                                      -64-
<PAGE>

as not being covered by such certification), that (i) all documents constituting
part of such Mortgage File (other than such documents described in Section
2.01(b)(I)(v) and (ix)) required to be delivered to it pursuant to this
Agreement are in its possession, provided that with respect to the documents
described in Section 2.01(b)(I)(v), (vi), (viii) and (ix) and 2.01(b)(II)(viii)
and (ix) to the extent the Trustee or the Custodian on its behalf has actual
knowledge that such documents exist, (ii) such documents have been reviewed by
it and are not torn, mutilated, defaced or otherwise altered (except if
initialed by the obligor) and appear regular on their face and relate to such
Mortgage Loan, (iii) based on its examination and only as to the foregoing, the
information set forth in the Mortgage Loan Schedule corresponding to the loan
number for the Mortgage Loan, the Mortgagor's name, including the street address
but excluding the zip code, the Mortgage Interest Rate and the original
principal balance of the Mortgage Loan accurately reflects information set forth
in the Mortgage File. In performing any such review, the Trustee, or the
Custodian, as its agent, may conclusively rely on the purported due execution
and genuineness of any such document and on the purported genuineness of any
signature thereon. Notwithstanding anything to the contrary in this Agreement,
it is herein acknowledged that, in conducting such review, the Trustee or the
Custodian on its behalf is under no duty or obligation (i) to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine whether they are genuine, enforceable, or appropriate for the
represented purpose or whether they have actually been recorded or that they are
other than what they purport to be on their face, or to determine whether any
Person executing any documents is authorized to do so or whether any signature
is genuine. If the Trustee or the Custodian, as its agent, finds any document
constituting part of the Mortgage File not to have been executed or received, or
to be unrelated to the Mortgage Loans identified in Exhibit B or to appear to be
defective on its face, the Trustee or the Custodian, as its agent, shall
promptly notify the Sponsor. In accordance with the Mortgage Loan Purchase
Agreement, the Sponsor shall correct or cure any such defect within 90 days from
the date of notice from the Trustee of the defect and if the Sponsor is unable
to cure such defect within such period, and if such defect materially and
adversely affects the interests of the Certificateholders in the related
Mortgage Loan, the Trustee shall enforce the Sponsor's obligation under the
Mortgage Loan Purchase Agreement to purchase such Mortgage Loan at the Purchase
Price, provided, however, that if such defect relates solely to the inability of
the Sponsor to deliver the original Security Instrument or intervening
assignments thereof, or a certified copy, because the originals of such
documents, or a certified copy, have not been returned by the applicable
jurisdiction, the Sponsor shall not be required to purchase such Mortgage Loan,
if the Sponsor delivers such original documents or certified copy promptly upon
receipt, but in no event later than 360 days after the Closing Date.

      (c) In the event that a Mortgage Loan is purchased by the Sponsor in
accordance with Sections 2.02(a) or (b) above, the Sponsor shall remit to the
Master Servicer the Purchase Price for deposit in the Master Servicer Collection
Account and the Sponsor shall provide to the Trustee written notification
detailing the components of the Purchase Price. Upon deposit of the Purchase
Price in the Master Servicer Collection Account, the Depositor shall give
written notice thereof to the Trustee and the Custodian and the Trustee or the
Custodian, as its agent (upon receipt of a Request for Release in the form of
Exhibit D attached hereto with respect to such Mortgage Loan), shall release to
the Sponsor the related Mortgage File and the Trustee shall execute and deliver
all instruments of transfer or assignment, without recourse, furnished to it by
the Sponsor as are necessary to vest in the Sponsor title to and rights under
the Mortgage Loan. Such purchase shall be deemed to have occurred on the date on
which the Purchase Price in

                                      -65-
<PAGE>

available funds is received by the Trustee. The Depositor or Master Servicer
shall amend the Mortgage Loan Schedule, to reflect such repurchase and shall
promptly notify the Rating Agencies and the Master Servicer of such amendment.
The obligation of the Sponsor to repurchase any Mortgage Loan as to which such a
defect in a constituent document exists shall be the sole remedy respecting such
defect available to the Certificateholders or to the Trustee on their behalf.

   Section 2.03 Assignment of Interest in the Mortgage Loan Purchase Agreement.

      (a) The Depositor hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Mortgage Loan
Purchase Agreement, including but not limited to Depositor's rights pursuant to
this Agreement (noting that the Sponsor has retained the right in the event of
breach of the representations, warranties and covenants, if any, with respect to
the related Mortgage Loans of the applicable Servicer under this Agreement to
enforce the provisions thereof and to seek all or any available remedies). The
obligations of the Sponsor to substitute or repurchase, as applicable, a
Mortgage Loan shall be the Trustee's and the Certificateholders' sole remedy for
any breach thereof. At the request of the Trustee, the Depositor shall take such
actions as may be necessary to enforce the above right, title and interest on
behalf of the Trustee and the Certificateholders or shall execute such further
documents as the Trustee may reasonably require in order to enable the Trustee
to carry out such enforcement. With respect to the representations and
warranties described in the Mortgage Loan Purchase Agreement that are made to
the best of the Sponsor's knowledge, if it is discovered by any of the
Depositor, the Sponsor, the Master Servicer, a Servicer, the Securities
Administrator or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Mortgage Loan, then notwithstanding the Sponsor's lack of
knowledge with respect to the substance of such representation and warranty,
such inaccuracy shall be deemed a breach of the applicable representation or
warranty.

      (b) If the Depositor, the Master Servicer, Securities Administrator or the
Trustee discovers a breach of any of the representations and warranties set
forth in the Mortgage Loan Purchase Agreement, which breach materially and
adversely affects the value of the interests of Certificateholders or the
Trustee in the related Mortgage Loan, the party discovering the breach shall
give prompt written notice of the breach to the other parties. The Sponsor,
within 90 days of its discovery or receipt of notice that such breach has
occurred (whichever occurs earlier), shall cure the breach in all material
respects or, subject to the Mortgage Loan Purchase Agreement or Section 2.04 of
this Agreement, as applicable, shall purchase the Mortgage Loan or any property
acquired with respect thereto from the Trustee; provided, however, that if there
is a breach of any representation set forth in the Mortgage Loan Purchase
Agreement or Section 2.04 of this Agreement, as applicable, and the Mortgage
Loan or the related property acquired with respect thereto has been sold, then
the Sponsor shall pay, in lieu of the Purchase Price, any excess of the Purchase
Price over the Net Liquidation Proceeds received upon such sale. (If the Net
Liquidation Proceeds exceed the Purchase Price, any excess shall be paid to the
Sponsor to the extent not required by law to be paid to the borrower.) Any such
purchase by the Sponsor shall be made by providing an amount equal to the
Purchase Price to the Master Servicer for deposit in the Master Servicer
Collection Account and written notification detailing the components of such
Purchase Price. The Depositor shall notify the Trustee in writing of the

                                      -66-
<PAGE>

deposit of the Purchase Price and submit to the Trustee or the Custodian, as its
agent, a Request for Release, and the Trustee shall release, or the Trustee
shall cause the Custodian to release, to the Sponsor the related Mortgage File
and the Trustee shall execute and deliver all instruments of transfer or
assignment furnished to it by the Sponsor, without recourse, as are necessary to
vest in the Sponsor title to and rights under the Mortgage Loan or any property
acquired with respect thereto. Such purchase shall be deemed to have occurred on
the date on which the Purchase Price in available funds is received by the
Master Servicer. The Depositor or the Master Servicer shall amend the Mortgage
Loan Schedule to reflect such repurchase and shall promptly notify the Master
Servicer and the Rating Agencies of such amendment. Enforcement of the
obligation of the Sponsor to purchase (or substitute a Substitute Mortgage Loan
for) any Mortgage Loan or any property acquired with respect thereto (or pay the
Purchase Price as set forth in the above proviso) as to which a breach has
occurred and is continuing shall constitute the sole remedy respecting such
breach available to the Certificateholders or the Trustee on their behalf.

      Section 2.04 Substitution of Mortgage Loans. Notwithstanding anything to
the contrary in this Agreement, in lieu of purchasing a Mortgage Loan pursuant
to the Mortgage Loan Purchase Agreement or Sections 2.02 or 2.03 of this
Agreement, the Sponsor may, no later than the date by which such purchase by the
Sponsor would otherwise be required, tender to the Trustee a Substitute Mortgage
Loan accompanied by a certificate of an authorized officer of the Sponsor that
such Substitute Mortgage Loan conforms to the requirements set forth in the
definition of "Substitute Mortgage Loan" in the Mortgage Loan Purchase Agreement
or this Agreement, as applicable; provided, however, that substitution pursuant
to the Mortgage Loan Purchase Agreement or Section 2.04 of this Agreement, as
applicable, in lieu of purchase shall not be permitted after the termination of
the two-year period beginning on the Startup Day; provided, further, that if the
breach would cause the Mortgage Loan to be other than a "qualified mortgage" as
defined in Section 860G(a)(3) of the Code, any such cure or substitution must
occur within 90 days from the date the breach was discovered. The Trustee or the
Custodian, as its agent, shall examine the Mortgage File for any Substitute
Mortgage Loan in the manner set forth in Section 2.02(a) and the Trustee or the
Custodian, as its agent, shall notify the Sponsor, in writing, within five
Business Days after receipt, whether or not the documents relating to the
Substitute Mortgage Loan satisfy the requirements of the fourth sentence of
Section 2.02(a). Within two Business Days after such notification, the Sponsor
shall provide to the Securities Administrator for deposit in the Distribution
Account the amount, if any, by which the Outstanding Principal Balance as of the
next preceding Due Date of the Mortgage Loan for which substitution is being
made, after giving effect to Scheduled Principal due on such date, exceeds the
Outstanding Principal Balance as of such date of the Substitute Mortgage Loan,
after giving effect to Scheduled Principal due on such date, which amount shall
be treated for the purposes of this Agreement as if it were the payment by the
Sponsor of the Purchase Price for the purchase of a Mortgage Loan by the
Sponsor. After such notification to the Sponsor and, if any such excess exists,
upon written notification of the receipt of such deposit, the Trustee shall
accept such Substitute Mortgage Loan which shall thereafter be deemed to be a
Mortgage Loan hereunder. In the event of such a substitution, accrued interest
on the Substitute Mortgage Loan for the month in which the substitution occurs
and any Principal Prepayments made thereon during such month shall be the
property of the Issuing Entity and accrued interest for such month on the
Mortgage Loan for which the substitution is made and any Principal Prepayments
made thereon during such month shall be the property of the Sponsor. The
Scheduled Principal on a Substitute Mortgage Loan due on the Due Date in the
month of substitution shall be the property

                                      -67-
<PAGE>

of the Sponsor and the Scheduled Principal on the Mortgage Loan for which the
substitution is made due on such Due Date shall be the property of the Issuing
Entity. Upon acceptance of the Substitute Mortgage Loan (and delivery to the
Trustee or Custodian of a Request for Release for such Mortgage Loan), the
Trustee shall release to the Sponsor the related Mortgage File related to any
Mortgage Loan released pursuant to the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, and shall execute and deliver all
instruments of transfer or assignment, without recourse, in form as provided to
it as are necessary to vest in the Sponsor title to and rights under any
Mortgage Loan released pursuant to the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable. The Sponsor shall deliver the
documents related to the Substitute Mortgage Loan in accordance with the
provisions of the Mortgage Loan Purchase Agreement or Sections 2.01(b) and
2.02(b) of this Agreement, as applicable, with the date of acceptance of the
Substitute Mortgage Loan deemed to be the Closing Date for purposes of the time
periods set forth in those Sections. The representations and warranties set
forth in the Mortgage Loan Purchase Agreement shall be deemed to have been made
by the Sponsor with respect to each Substitute Mortgage Loan as of the date of
acceptance of such Mortgage Loan by the Trustee. The Master Servicer shall amend
the Mortgage Loan Schedule to reflect such substitution and shall provide a copy
of such amended Mortgage Loan Schedule to the Trustee and the Rating Agencies.

      Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Mortgage Loan shall be made
unless the Securities Administrator and the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or prohibited
contribution pursuant to the REMIC provisions.

      Section 2.05 Issuance of Certificates. The Trustee acknowledges the
assignment to it on behalf of the Issuing Entity of the Mortgage Loans and the
other assets comprising the Trust Fund and, concurrently therewith, the
Securities Administrator has signed, and countersigned and delivered to the
Depositor, in exchange therefor, Certificates in such authorized denominations
representing such Percentage Interests as the Depositor has requested. The
Trustee agrees that it will hold the Mortgage Loans and such other assets as may
from time to time be delivered to it segregated on the books of the Trustee in
trust for the benefit of the Certificateholders.

      Section 2.06 Representations and Warranties Concerning the Depositor. The
Depositor hereby represents and warrants to the Trustee, the Master Servicer,
the Servicers and the Securities Administrator as follows:

            (i) the Depositor (a) is a corporation duly organized, validly
      existing and in good standing under the laws of the State of Delaware and
      (b) is qualified and in good standing as a foreign corporation to do
      business in each jurisdiction where such qualification is necessary,
      except where the failure so to qualify would not reasonably be expected to
      have a material adverse effect on the Depositor's business as presently

                                      -68-
<PAGE>

     conducted or on the Depositor's ability to enter into this Agreement and to
     consummate the transactions contemplated hereby;

          (ii) the Depositor has full corporate power to own its property, to
     carry on its business as presently conducted and to enter into and perform
     its obligations under this Agreement;

          (iii) the execution and delivery by the Depositor of this Agreement
     have been duly authorized by all necessary corporate action on the part of
     the Depositor; and neither the execution and delivery of this Agreement,
     nor the consummation of the transactions herein contemplated, nor
     compliance with the provisions hereof, will conflict with or result in a
     breach of, or constitute a default under, any of the provisions of any law,
     governmental rule, regulation, judgment, decree or order binding on the
     Depositor or its properties or the articles of incorporation or by-laws of
     the Depositor, except those conflicts, breaches or defaults which would not
     reasonably be expected to have a material adverse effect on the Depositor's
     ability to enter into this Agreement and to consummate the transactions
     contemplated hereby;

          (iv) the execution, delivery and performance by the Depositor of this
     Agreement and the consummation of the transactions contemplated hereby do
     not require the consent or approval of, the giving of notice to, the
     registration with, or the taking of any other action in respect of, any
     state, federal or other governmental authority or agency, except those
     consents, approvals, notices, registrations or other actions as have
     already been obtained, given or made;

          (v) this Agreement has been duly executed and delivered by the
     Depositor and, assuming due authorization, execution and delivery by the
     other parties hereto, constitutes a valid and binding obligation of the
     Depositor enforceable against it in accordance with its terms (subject to
     applicable bankruptcy and insolvency laws and other similar laws affecting
     the enforcement of the rights of creditors generally);

          (vi) there are no actions, suits or proceedings pending or, to the
     knowledge of the Depositor, threatened against the Depositor, before or by
     any court, administrative agency, arbitrator or governmental body (i) with
     respect to any of the transactions contemplated by this Agreement or (ii)
     with respect to any other matter which in the judgment of the Depositor
     will be determined adversely to the Depositor and will if determined
     adversely to the Depositor materially and adversely affect the Depositor's
     ability to enter into this Agreement or perform its obligations under this
     Agreement; and the Depositor is not in default with respect to any order of
     any court, administrative agency, arbitrator or governmental body so as to
     materially and adversely affect the transactions contemplated by this
     Agreement; and

          (vii) immediately prior to the transfer and assignment to the Trustee,
     each Mortgage Note and each Mortgage were not subject to an assignment or
     pledge, and the Depositor had good and marketable title to and was the sole
     owner thereof and had full right to transfer and sell such Mortgage Loan to
     the Trustee free and clear of any encumbrance, equity, lien, pledge,
     charge, claim or security interest.

                                      -69-
<PAGE>

     Section 2.07 Representations and Warranties Concerning the Master Servicer
and Securities Administrator. Wells Fargo Bank, N.A., in its capacity as Master
Servicer and Securities Administrator hereby represents and warrants to the
Sponsor, the Depositor, the Servicers and the Trustee as follows, as of the
Closing Date:

          (i) It is a national banking association duly formed, validly existing
     and in good standing under the laws of the United States of America and is
     duly authorized and qualified to transact any and all business contemplated
     by this Agreement to be conducted by the Master Servicer and the Securities
     Administrator, to the extent necessary to ensure its ability to master
     service the Mortgage Loans in accordance with the terms of this Agreement
     and to perform any of its other obligations under this Agreement in
     accordance with the terms hereof;

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

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

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

          (v) No consent, approval, authorization or order of any court or
     governmental agency or body is required for its execution, delivery and
     performance of, or compliance

                                      -70-
<PAGE>

     with, this Agreement or the consummation of the transactions contemplated
     hereby, or if any such consent, approval, authorization or order is
     required, it has obtained the same.

     Section 2.08 Representations, Warranties and Covenants of the Servicers.

     I. Each Servicer in its capacity as Servicer hereby represents and warrants
to the Sponsor, the Master Servicer, the Securities Administrator, the
Depositor and the Trustee as follows, as of the Closing Date:

          (i) It is duly authorized and qualified to transact any and all
     business contemplated by this Agreement to be conducted by a Servicer, to
     the extent necessary to ensure its ability to service the Mortgage Loans in
     accordance with the terms of this Agreement and to perform any of its other
     obligations under this Agreement in accordance with the terms hereof;

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

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

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

                                      -71-
<PAGE>

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

     II. Each Servicer hereby covenants to each of the other parties to this
Agreement as follows:

     (a) it shall comply in the performance of its obligations under this
Agreement with all reasonable rules and requirements of the insurer under each
Required Insurance Policy;

     (b) no written information, certificate of an officer, statement furnished
in writing or written report delivered to the Depositor, the Master Servicer or
the Trustee, any Affiliate of the Depositor, the Master Servicer or the Trustee
and prepared by it pursuant to this Agreement will be inaccurate in any material
respect; provided, however, that neither Servicer shall be responsible for
inaccurate information provided to it by third parties; provided further,
however, that the covenant referred to in this Section 2.08(b) shall not be
breached if the applicable Servicer corrects such material inaccuracy to the
reasonable satisfaction of the Depositor within five (5) Business Days of
receiving written notice of such inaccuracy.

                                  ARTICLE III
                        ADMINISTRATION OF MORTGAGE LOANS

     Section 3.01 Master Servicer. The Master Servicer shall supervise, monitor
and oversee the obligation of the Servicers to service and administer their
respective Mortgage Loans in accordance with the terms of this Agreement and
shall have full power and authority to do any and all things which it may deem
necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer
shall act in a manner consistent with Accepted Master Servicing Practices.
Furthermore, the Master Servicer shall oversee and consult with each Servicer as
necessary from time-to-time to carry out the Master Servicer's obligations
hereunder, shall receive, review and evaluate all reports, information and other
data provided to the Master Servicer by each Servicer and shall cause each
Servicer to perform and observe the covenants, obligations and conditions to be
performed or observed by such Servicer under this Agreement. The Master Servicer
shall independently and separately monitor each Servicer's servicing activities
with respect to each related Mortgage Loan, reconcile the results of such
monitoring with such information provided in the previous sentence on a monthly
basis and coordinate corrective adjustments to the Servicers' and Master
Servicer's records, and based on such reconciled and corrected information, the
Master Servicer shall provide such information to the Securities Administrator
as shall be necessary in order for it to prepare the statements specified in
Section 6.03, and prepare any other information and statements required to be
forwarded by the Master Servicer hereunder. The Master Servicer shall reconcile
the results of its monitoring with the actual remittances of the Servicers to
the Master Servicer Collection Account pursuant to this Agreement.

     If the Master Servicer and the Securities Administrator are the same
entity, then at any time the Master Servicer is terminated as Master Servicer,
the Securities Administrator shall likewise be removed as securities
administrator.

                                      -72-
<PAGE>

     The Trustee shall furnish the Servicers and the Master Servicer with any
limited powers of attorney and other documents in form acceptable to it
necessary or appropriate to enable the Servicers and the Master Servicer to
service and administer the related Mortgage Loans and REO Property. The Trustee
shall have no liability with respect to the use of any such limited power of
attorney.

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

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

     Section 3.02 REMIC-Related Covenants. For as long as each REMIC shall
exist, the Trustee and the Securities Administrator shall act in accordance
herewith to assure continuing treatment of such REMIC as a REMIC, and the
Trustee and the Securities Administrator shall comply with any directions of the
Depositor, the applicable Servicer or the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee and Securities
Administrator have received a REMIC Opinion prepared at the expense of the
Issuing Entity; and (b) other than with respect to a substitution pursuant to
the Mortgage Loan Purchase Agreement or Section 2.04 of this Agreement, as
applicable, accept any contribution to any REMIC after the Startup Day without
receipt of a REMIC Opinion.

                                      -73-
<PAGE>

     Section 3.03 Monitoring of Servicers.

     (a) The Master Servicer shall be responsible for reporting to the Trustee,
Securities Administrator and the Depositor the compliance by each Servicer with
its duties under this Agreement. In the review of each Servicer's activities,
the Master Servicer may rely upon an Officer's Certificate of the Servicer with
regard to such Servicer's compliance with the terms of this Agreement. In the
event that the Master Servicer, in its judgment, determines that a Servicer
should be terminated in accordance with Article XV, or that a notice should be
sent pursuant to Article XV with respect to the occurrence of an event that,
unless cured, would constitute grounds for such termination, the Master Servicer
shall notify the Depositor, Securities Administrator and the Trustee thereof and
the Master Servicer shall issue such notice or take such other action as it
deems appropriate.

     (b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer under this
Agreement, and shall, in the event that a Servicer fails to perform its
obligations in accordance with this Agreement, subject to the preceding
paragraph, terminate the rights and obligations of such Servicer hereunder and
act as servicer of the related Mortgage Loans or, if the Master Servicer is
unwilling or unable to act as a Servicer, the Master Servicer shall cause the
Trustee to appoint a successor servicer selected by the Master Servicer that is
eligible in accordance with the criteria specified in this Agreement; provided,
however, it is understood and acknowledged by the parties hereto that there will
be a period of transition (not to exceed 90 days) before the actual servicing
functions can be fully transferred to such successor servicer. In either event,
such enforcement, including, without limitation, the legal prosecution of claims
and the pursuit of other appropriate remedies, shall be in such form and carried
out to such an extent and at such time as the Master Servicer, in its good faith
business judgment, would require were it the owner of the related Mortgage
Loans. The Master Servicer shall pay the costs of such enforcement at its own
expense subject to Section 3.03(c), provided that the Master Servicer shall not
be required to prosecute or defend any legal action except to the extent that
the Master Servicer shall have received reasonable indemnity for its costs and
expenses in pursuing such action.

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

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

                                      -74-
<PAGE>

     (e) If the Master Servicer acts as Servicer, it will not assume liability
for the representations and warranties of such Servicer, if any, that it
replaces.

     Section 3.04 Fidelity Bond. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.

     Section 3.05 Power to Act; Procedures. The Master Servicer shall master
service the Mortgage Loans and shall have full power and authority, subject to
the REMIC Provisions and the provisions of Article X hereof, to do any and all
things that it may deem necessary or desirable in connection with the master
servicing and administration of the Mortgage Loans, including but not limited to
the power and authority (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement; provided, however, that the Master Servicer shall not (and,
consistent with its responsibilities under Section 3.03, shall not permit any
Servicer to) knowingly or intentionally take any action, or fail to take (or
fail to cause to be taken) any action reasonably within its control and the
scope of duties more specifically set forth herein, that, under the REMIC
Provisions, if taken or not taken, as the case may be, would cause any REMIC
created hereunder to fail to qualify as a REMIC or result in the imposition of a
tax upon the Issuing Entity (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) unless the
Master Servicer has received an Opinion of Counsel (but not at the expense of
the Master Servicer) to the effect that the contemplated action will not would
cause any REMIC created hereunder to fail to qualify as a REMIC or result in the
imposition of a tax upon any REMIC created hereunder. The Trustee shall furnish
the Master Servicer, upon written request from a Servicing Officer, with any
limited powers of attorney (in form acceptable to the Trustee) empowering the
Master Servicer or any Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with this Agreement, and the Trustee shall
execute and deliver such other documents, as the Master Servicer may request, to
enable the Master Servicer to master service and administer the Mortgage Loans
and carry out its duties hereunder, in each case in accordance with Accepted
Master Servicing Practices (and the Trustee shall have no liability for misuse
of any such powers of attorney by the Master Servicer or any Servicer). If the
Master Servicer or the Trustee has been advised that it is likely that the laws
of the state in which action is to be taken prohibit such action if taken in the
name of the Trustee or that the Trustee would be adversely affected under the
"doing business" or tax laws of such state if such action is taken in its name,
the Master Servicer shall join with the Trustee in the appointment of a
co-trustee pursuant to Section 9.11 hereof. In the performance of its duties
hereunder, the Master Servicer shall be an independent

                                      -75-
<PAGE>

contractor and shall not, except in those instances where it is taking action in
the name of the Trustee, be deemed to be the agent of the Trustee.

     Section 3.06 Due-on-Sale Clauses; Assumption Agreements. To the extent
provided in this Agreement, to the extent Mortgage Loans contain enforceable
due-on-sale clauses, the Master Servicer shall cause the Servicers to enforce
such clauses in accordance with this Agreement. If applicable law prohibits the
enforcement of a due-on-sale clause or such clause is otherwise not enforced in
accordance with this Agreement, and, as a consequence, a Mortgage Loan is
assumed, the original Mortgagor may be released from liability in accordance
with this Agreement.

     Section 3.07 [Reserved].

     Section 3.08 Documents, Records and Funds in Possession of Master Servicer
To Be Held for Trustee.

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

     (b) All Mortgage Files and funds collected or held by, or under the control
of, the Master Servicer, in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation Proceeds or
Insurance Proceeds, shall be held by the Master Servicer for and on behalf of
the Trustee and the Certificateholders and shall be and remain the sole and
exclusive property of the Trustee; provided, however, that the Master Servicer
and each Servicer shall be entitled to setoff against, and deduct from, any such
funds any amounts that are properly due and payable to the Master Servicer or
such Servicer under this Agreement.

     Section 3.09 Standard Hazard Insurance and Flood Insurance Policies.

                                      -76-
<PAGE>

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

     (b) Pursuant to Sections 4.01 and 4.02, any amounts collected by Master
Servicer, under any insurance policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or
released to the Mortgagor in accordance with this Agreement) shall be deposited
into the Master Servicer Collection Account, subject to withdrawal pursuant to
Sections 4.02 and 4.03. Any cost incurred by the Master Servicer or any Servicer
in maintaining any such insurance if the Mortgagor defaults in its obligation to
do so shall be added to the amount owing under the Mortgage Loan where the terms
of the Mortgage Loan so permit; provided, however, that the addition of any such
cost shall not be taken into account for purposes of calculating the
distributions to be made to Certificateholders and shall be recoverable by the
Master Servicer or such Servicer pursuant to Sections 4.02 and 4.03.

     Section 3.10 Presentment of Claims and Collection of Proceeds. The Master
Servicer shall (to the extent provided in this Agreement) cause the applicable
Servicer to, prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer (or disbursed to a Servicer and
remitted to the Master Servicer) in respect of such policies, bonds or contracts
shall be promptly deposited in the Master Servicer Collection Account upon
receipt, except that any amounts realized that are to be applied to the repair
or restoration of the related Mortgaged Property as a condition precedent to the
presentation of claims on the related Mortgage Loan to the insurer under any
applicable Insurance Policy need not be so deposited (or remitted).

     Section 3.11 Maintenance of the Primary Mortgage Insurance Policies.

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

                                      -77-
<PAGE>

     (b) The Master Servicer agrees to present, or to cause each Servicer (to
the extent required under this Agreement) to present, on behalf of the Trustee
and the Certificateholders, claims to the insurer under any Primary Mortgage
Insurance Policies and, in this regard, to take such reasonable action as shall
be necessary to permit recovery under any Primary Mortgage Insurance Policies
respecting defaulted Mortgage Loans. Pursuant to Section 4.01 and 4.02, any
amounts collected by the Master Servicer under any Primary Mortgage Insurance
Policies shall be deposited in the Master Servicer Collection Account, subject
to withdrawal pursuant to Section 4.03.

     Section 3.12 Trustee to Retain Possession of Certain Insurance Policies and
Documents. The Trustee or the Custodian shall retain possession and custody of
the originals (to the extent available) of any Primary Mortgage Insurance
Policies, or certificate of insurance if applicable, and any certificates of
renewal as to the foregoing as may be issued from time to time as contemplated
by this Agreement. Until all amounts distributable in respect of the
Certificates have been distributed in full and the Master Servicer otherwise has
fulfilled its obligations under this Agreement, the Trustee or its Custodian
shall also retain possession and custody of each Mortgage File in accordance
with and subject to the terms and conditions of this Agreement and the Custodial
Agreement. The Master Servicer shall promptly deliver or cause to be delivered
to the Trustee or the Custodian upon the execution or receipt thereof the
originals of any Primary Mortgage Insurance Policies, any certificates of
renewal, and such other documents or instruments that constitute portions of the
Mortgage File that come into the possession of the Master Servicer from time to
time.

     Section 3.13 Realization Upon Defaulted Mortgage Loans. The Master Servicer
shall cause each Servicer (to the extent required under this Agreement) to
foreclose upon, repossess or otherwise comparably convert the ownership of
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of Delinquent payments, all in accordance with the terms and
conditions of this Agreement.

     Section 3.14 Compensation for the Master Servicer. The Master Servicer will
be entitled to all income and gain realized from any investment of funds in the
Master Servicer Collection Account, pursuant to Article IV, for the performance
of its activities hereunder. Servicing compensation in the form of assumption
fees, if any, late payment charges, as collected, if any, or otherwise (but not
including any prepayment premium or penalty) shall be retained by the applicable
Servicer and need not be deposited in the Protected Account. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
activities hereunder and shall not be entitled to reimbursement therefor except
as provided in this Agreement.

     Section 3.15 REO Property.

     (a) In the event the Issuing Entity acquires ownership of any REO Property
in respect of any related Mortgage Loan, the deed or certificate of sale shall
be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders, which nominee shall not be the Servicer. The Master Servicer
shall, to the extent provided in this Agreement, cause the applicable Servicer
to comply with its obligations hereunder regarding any REO Property.

                                      -78-
<PAGE>
     Pursuant to its efforts to sell such REO Property, the Master Servicer
shall cause the applicable Servicer to, with regard to such REO Property comply
in the manner and to the extent required by this Agreement, in accordance with
the REMIC Provisions and in a manner that does not result in a tax on "net
income from foreclosure property" or cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code.

     (b) The Master Servicer shall, to the extent required by this Agreement,
cause the applicable Servicer to deposit all funds collected and received in
connection with the operation of any REO Property in a Protected Account.

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

     (d) To the extent provided in this Agreement, the Liquidation Proceeds from
the final disposition of the REO Property, net of any payment to the Master
Servicer and the applicable Servicer as provided above shall be deposited in a
Protected Account on or prior to the Determination Date in the month following
receipt thereof and be remitted by wire transfer in immediately available funds
to the Master Servicer for deposit into the related Master Servicer Collection
Account on the next succeeding Servicer Remittance Date.

     Section 3.16 Annual Statement as to Compliance.

     The Master Servicer and the Securities Administrator shall deliver (or
otherwise make available) (and the Master Servicer and Securities Administrator
shall cause any Servicing Function Participant engaged by it to deliver) to the
Depositor and the Securities Administrator on or before March 1 (with a
ten-calendar day cure period) of each year, commencing in March 2008, an
Officer's Certificate stating, as to the signer thereof, that (A) a review of
such party's activities during the preceding calendar year or portion thereof
and of such party's performance under this Agreement, or such other applicable
agreement in the case of a Servicing Function Participant, has been made under
such officer's supervision and (B) to the best of such officer's knowledge,
based on such review, such party has fulfilled all its obligations under this
Agreement, or such other applicable agreement in the case of a Servicing
Function Participant, in all material respects throughout such year or portion
thereof, or, if there has been a failure to fulfill any such obligation in any
material respect, specifying each such failure known to such officer and the
nature and status thereof.

     The Master Servicer shall include all annual statements of compliance
received by it from each Servicer with its own annual statement of compliance to
be submitted to the Securities Administrator pursuant to this Section.

                                      -79-
<PAGE>

     In the event the Master Servicer, the Securities Administrator or any
Servicing Function Participant engaged by any such party is terminated, assigns
its rights and obligations under or resigns pursuant to the terms of this
Agreement, or such other applicable agreement in the case of a Servicing
Function Participant, as the case may be, such party shall provide, an annual
statement of compliance pursuant to this Section 3.16 or to such applicable
agreement, as the case may be, notwithstanding any such termination, assignment
or resignation

     Section 3.17 Reports on Assessment of Compliance and Attestation.

     (a) By March 1 (with a ten-calendar day cure period) of each year,
commencing in March 2008, the Master Servicer, the Securities Administrator and
the Custodian each at its own expense, shall furnish or otherwise make
available, and each such party shall cause any Servicing Function Participant
engaged by it to furnish, each at its own expense, to the Securities
Administrator and the Depositor, a report on an assessment of compliance with
the Relevant Servicing Criteria that contains (A) a statement by such party of
its responsibility for assessing compliance with the Relevant Servicing
Criteria, (B) a statement that such party used the Relevant Servicing Criteria
to assess compliance with the Relevant Servicing Criteria, (C) such party's
assessment of compliance with the Relevant Servicing Criteria as of and for the
fiscal year covered by the Form 10-K required to be filed pursuant to Sections
3.18(h), (i), (j) and (k), including, if there has been any material instance of
noncompliance with the Relevant Servicing Criteria, a discussion of each such
failure and the nature and status thereof, and (D) a statement that a registered
public accounting firm has issued an attestation report on such party's
assessment of compliance with the Relevant Servicing Criteria as of and for such
period.

     No later than the end of each fiscal year for the Issuing Entity for which
a 10-K is required to be filed, the Master Servicer and the Custodian shall each
forward to the Securities Administrator and the Depositor the name of each
Servicing Function Participant engaged by it and what Relevant Servicing
Criteria will be addressed in the report on assessment of compliance prepared by
such Servicing Function Participant (provided, however, that the Master Servicer
need not provide such information to the Securities Administrator so long as the
Master Servicer and the Securities Administrator are the same Person). When the
Master Servicer, and the Securities Administrator (or any Servicing Function
Participant engaged by them) submit their assessments to the Securities
Administrator, such parties will also at such time include the assessment and
attestation pursuant to this Section 3.17 of each Servicing Function Participant
engaged by it.

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

     The Master Servicer shall include all annual reports on assessment of
compliance received by it from the Servicers with its own assessment of
compliance to be submitted to the Securities Administrator pursuant to this
Section.

                                      -80-
<PAGE>

     In the event the Master Servicer, the Securities Administrator or any
Servicing Function Participant engaged by any such party is terminated, assigns
its rights and obligations under or resigns pursuant to the terms of this
Agreement, or any other applicable agreement, as the case may be, such party
shall provide, an assessment of compliance pursuant to this Section 3.17,
coupled with an attestation as required in this Section 3.17, or such applicable
agreement notwithstanding any such termination, assignment or resignation.

     (b) By March 1 (with a ten-calendar day cure period) of each year,
commencing in March 2008, the Master Servicer, the Securities Administrator and
the Custodian, each at its own expense, shall cause, and each such party shall
cause any Servicing Function Participant engaged by it to cause, each at its own
expense, a registered public accounting firm (which may also render other
services to the Master Servicer, the Trustee, the Securities Administrator, or
such other Servicing Function Participants, as the case may be) and that is a
member of the American Institute of Certified Public Accountants to furnish an
attestation report to the Securities Administrator and the Depositor, to the
effect that (i) it has obtained a representation regarding certain matters from
the management of such party, which includes an assertion that such party has
complied with the Relevant Servicing Criteria, and (ii) on the basis of an
examination conducted by such firm in accordance with standards for attestation
engagements issued or adopted by the Public Company Accounting Oversight Board,
it is expressing an opinion as to whether such party's compliance with the
Relevant Servicing Criteria was fairly stated in all material respects, or it
cannot express an overall opinion regarding such party's assessment of
compliance with the Relevant Servicing Criteria. In the event that an overall
opinion cannot be expressed, such registered public accounting firm shall state
in such report why it was unable to express such an opinion. Such report must be
available for general use and not contain restricted use language.

     (c) Promptly after receipt of each assessment of compliance and attestation
report, the Securities Administrator shall confirm that each assessment
submitted pursuant to Section 3.17(a) is coupled with an attestation meeting the
requirements of Section 3.17(b) and notify the Depositor of any exceptions.

     The Master Servicer shall include each such attestation furnished to it by
the Servicers with its own attestation to be submitted to the Securities
Administrator pursuant to this Section.

     In the event the Master Servicer, the Securities Administrator, the
Custodian or any Servicing Function Participant engaged by any such party, is
terminated, assigns its rights and duties under, or resigns pursuant to the
terms of, this Agreement, or any applicable Custodial Agreement or Subservicing
Agreement, as the case may be, such party shall cause a registered public
accounting firm to provide an attestation pursuant to this Section 3.17, or such
other applicable agreement, notwithstanding any such termination, assignment or
resignation.

     Section 3.18 Periodic Filings.

     (a) Within four (4) Business Days after the occurrence of an event
requiring disclosure on Form 8-K (each such event, a "Reportable Event"), and if
requested by the Depositor, the Securities Administrator shall prepare and file
on behalf of the Issuing Entity a Form 8-K, as required by the Exchange Act,
provided that the Depositor shall file the initial

                                      -81-
<PAGE>

Form 8-K in connection with the issuance of the Certificates. Any disclosure or
information related to a Reportable Event or that is otherwise required to be
included on Form 8-K (other than the initial Form 8-K) ("Form 8-K Disclosure
Information") shall be reported by the parties set forth on Exhibit Q-3 to the
Depositor and the Securities Administrator and directed and approved by the
Depositor, and the Securities Administrator will have no duty or liability for
any failure hereunder to determine or prepare any Form 8-K Disclosure
Information or any Form 8-K except as set forth in the next paragraph.

     (b) For so long as the Issuing Entity is subject to the reporting
requirements of the Exchange Act, following the occurrence of a Reportable Event
(A) each party listed on Exhibit Q-3 hereto shall use commercially reasonable
best efforts to provide prompt notice to the Master Servicer, the Securities
Administrator and the Depositor, by fax and by phone or by e-mail and by phone,
(B) each such party shall be required to provide to the Securities Administrator
and the Depositor, to the extent known, in EDGAR-compatible format or in such
other format as agreed upon by the Securities Administrator and such party, the
form and substance of any Form 8-K Disclosure Information if applicable,
together with the form set forth on Exhibit O (the "Additional Disclosure
Notification") by the close of business New York City time on the 2nd Business
Day following the occurrence of such Reportable Event and (C) the Depositor,
shall approve, as to form and substance, or disapprove, as the case may be, the
inclusion of the Form 8-K Disclosure Information on Form 8-K. The Securities
Administrator has no duty under this Agreement to monitor or enforce the
performance by the parties listed on Exhibit Q-3 of their duties under this
paragraph or proactively solicit or procure from such parties any Form 8-K
Disclosure Information. The Depositor will be responsible for any reasonable
fees and expenses assessed or incurred by the Securities Administrator in
connection with including any Form 8-K Disclosure Information on Form 8-K
pursuant to this paragraph.

     (c) After preparing the Form 8-K, the Securities Administrator shall, upon
request, forward electronically a copy of the Form 8-K to the Depositor.
Promptly, but no later than the close of business on the third Business Day
after the Reportable Event, the Depositor shall notify the Securities
Administrator in writing (which may be furnished electronically) of any changes
to or approval of such Form 8-K. In the absence of receipt of any written
changes or approval, or if the Depositor does not request a copy of a Form 8-K,
the Securities Administrator shall be entitled to assume that such Form 8-K is
in final form and the Securities Administrator may proceed with the process for
execution and filing of the Form 8-K. A duly authorized representative of the
Master Servicer shall sign each Form 8-K. If a Form 8-K cannot be filed on time
or if a previously filed Form 8-K needs to be amended, the Securities
Administrator will follow the procedures set forth in Section 3.18(n).

     (d) Promptly (but no later than one Business Day) after filing with the
Commission, the Securities Administrator will make available on its internet
website a final executed copy of each Form 8-K prepared and filed by the
Securities Administrator. The parties to this Agreement acknowledge that the
performance by the Master Servicer and the Securities Administrator of its
duties under this Section 3.18 related to the timely preparation, execution and
filing of Form 8-K is contingent upon the other parties hereto strictly
observing all applicable deadlines in the performance of their duties under this
Section 3.18. The Depositor acknowledges that the performance by the Master
Servicer and the Securities Administrator of its duties under this

                                      -82-
<PAGE>

Section 3.18 related to the timely preparation, execution and filing of Form 8-K
is also contingent upon the Servicers, the Custodian and any Servicing Function
Participant strictly observing deadlines no later than those set forth in this
paragraph that are applicable to the parties to this Agreement in the delivery
to the Securities Administrator of any necessary Form 8-K Disclosure Information
pursuant to this Agreement, the Custodial Agreement or any other applicable
agreement. Neither the Master Servicer nor the Securities Administrator shall
have any liability for any loss, expense, damage or claim arising out of or with
respect to any failure to properly prepare, execute and/or timely file such Form
8-K, where such failure results from the Securities Administrator's inability or
failure to obtain or receive, on a timely basis, any information from any other
party hereto or any Servicer, Custodian or Servicing Function Participant needed
to prepare, arrange for execution or file such Form 8-K.

     (e) Within fifteen (15) days after each Distribution Date (subject to
permitted extensions under the Exchange Act), the Securities Administrator
shall, on behalf of the Issuing Entity and in accordance with industry
standards, prepare and file with the Commission via the Electronic Data
Gathering and Retrieval System (EDGAR), a Form 10-D with a copy of the Monthly
Statement for such Distribution Date as an exhibit thereto. Any disclosure in
addition to the Monthly Statement that is required to be included on Form 10-D
("Additional Form 10-D Disclosure") shall be reported by the parties set forth
on Exhibit Q-1 to the Depositor and the Securities Administrator and directed
and approved by the Depositor pursuant to the following paragraph, and the
Securities Administrator will have no duty or liability for any failure
hereunder to determine or prepare any Additional Form 10-D Disclosure except as
set forth in the next paragraph.

     (f) As set forth in Exhibit Q-1 hereto, for so long as the Issuing Entity
is subject to the reporting requirements of the Exchange Act, within five (5)
calendar days after the related Distribution Date (i) each party listed on
Exhibit Q-1 hereto shall be required to provide to the Depositor and the
Securities Administrator, to the extent known, in EDGAR-compatible format or in
such other format as agreed upon by the Securities Administrator and such party,
the form and substance of any Additional Form 10-D Disclosure if applicable
together with an Additional Disclosure Notification, and (ii) the Depositor will
approve, as to form and substance, or disapprove, as the case may be, the
inclusion of the Additional Form 10-D Disclosure on Form 10-D. The Securities
Administrator has no duty under this Agreement to monitor or enforce the
performance by the parties listed on Exhibit Q-1 of their duties under this
paragraph or proactively solicit or procure from such parties any Additional
Form 10-D Disclosure Information. The Depositor will be responsible for any
reasonable fees and expenses incurred by the Securities Administrator in
connection with including any Additional Form 10-D Disclosure on Form 10-D
pursuant to this paragraph.

     (g) After preparing the Form 10-D, the Securities Administrator shall, upon
request, forward electronically a copy of the Form 10-D to the Depositor
(provided that such Form 10-D includes any Additional Form 10-D Disclosure).
Within two Business Days after receipt of such copy, but no later than the 12th
calendar day after the Distribution Date, the Depositor shall notify the
Securities Administrator in writing (which may be furnished electronically) of
any changes to or approval of such Form 10-D. In the absence of receipt of any
written changes or approval, or if the Depositor does not request a copy of a
Form 10-D, the Securities Administrator shall be entitled to assume that such
Form 10-D is in final form and the Securities

                                      -83-
<PAGE>

Administrator may proceed with the process for execution and filing of the Form
10-D. A duly authorized representative of the Master Servicer shall sign each
Form 10-D. If a Form 10-D cannot be filed on time or if a previously filed Form
10-D needs to be amended, the Securities Administrator will follow the
procedures set forth in Section 3.18(n). Promptly (but not later than one
Business Day) after filing with the Commission, the Securities Administrator
will make available on its internet website a final executed copy of each Form
10-D prepared and filed by the Securities Administrator. Form 10-D requires the
registrant to indicate (by checking "yes" or "no") that it "(1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days." The Depositor hereby represents to the
Securities Administrator that the Depositor has filed all such required reports
during the preceding 12 months and that it has been subject to such filing
requirement for the past 90 days. The Depositor shall notify the Securities
Administrator in writing, no later than the fifth calendar day after the related
Distribution Date with respect to the filing of a report on Form 10-D, if the
answer to the questions should be "no." The Securities Administrator shall be
entitled to rely on such representations in preparing, executing and/or filing
any such Form 10-D. The parties to this Agreement acknowledge that the
performance by the Master Servicer and the Securities Administrator of its
respective duties under this Section 3.18 related to the timely preparation,
execution and filing of Form 10-D is contingent upon the other parties hereto
strictly observing all applicable deadlines in the performance of their duties
under this Section 3.18. The Depositor acknowledges that the performance by the
Master Servicer and the Securities Administrator of its duties under this
Section 3.18 related to the timely preparation, execution and filing of Form
10-D is also contingent upon the Servicers, the Custodian and any Servicing
Function Participant strictly observing deadlines no later than those set forth
in this paragraph that are applicable to the parties to this Agreement in the
delivery to the Securities Administrator of any necessary Additional Form 10-D
Disclosure pursuant to this Agreement, the Custodial Agreement or any other
applicable agreement. Neither the Master Servicer nor the Securities
Administrator will have any liability for any loss, expense, damage or claim
arising out of or with respect to any failure to properly prepare, execute
and/or timely file such Form 10-D resulting from the Securities Administrator's
inability or failure to obtain or receive any information needed to prepare,
arrange for execution or file such Form 10-D on a timely basis.

     (h) On or prior to the 90th calendar day after the end of the fiscal year
for the Issuing Entity or such earlier date as may be required by the Exchange
Act (the "10-K Filing Deadline") (it being understood that the fiscal year for
the Issuing Entity ends on December 31st of each year) commencing in March 2008,
the Securities Administrator shall, on behalf of the Issuing Entity and in
accordance with industry standards, prepare and file with the Commission via
EDGAR a Form 10-K with respect to the Issuing Entity. Such Form 10-K shall
include the following items, in each case, as applicable, to the extent they
have been delivered to the Securities Administrator within the applicable time
frames set forth in this Agreement and Custodial Agreement: (i) an annual
compliance statement for the Master Servicer, each Servicer, the Securities
Administrator and any Servicing Function Participant engaged by any such party
(together with the Custodian, each a "Reporting Servicer"), as described in
Section 3.16 or Section 16.04 of this Agreement, as applicable, and the
Custodial Agreement; provided, however, that the Securities Administrator, at
its discretion, may omit from the Form 10-K any annual compliance statement that
is not required to be filed with such Form 10-K pursuant to

                                      -84-
<PAGE>

Regulation AB; (ii)(A) the annual reports on assessment of compliance with
Servicing Criteria for each Reporting Servicer (unless the Depositor has
determined that such compliance statement is not required by Regulation AB), as
described in Section 3.17 or Section 16.05 of this Agreement, as applicable, and
the Custodial Agreement, and (B) if any Reporting Servicer's report on
assessment of compliance with Servicing Criteria described in Section 3.17 or
Section 16.05, as applicable, identifies any material instance of noncompliance,
disclosure identifying such instance of noncompliance, or if any Reporting
Servicer's report on assessment of compliance with Servicing Criteria described
in Section 3.17 or Section 16.05 of this Agreement, as applicable, is not
included as an exhibit to such Form 10-K, disclosure that such report is not
included and an explanation why such report is not included; provided, however,
that the Securities Administrator, at its discretion, may omit from the Form
10-K any assessment of compliance or attestation report described in clause
(iii) below that is not required to be filed with such Form 10-K pursuant to
Regulation AB; (iii)(A) the registered public accounting firm attestation report
for each Reporting Servicer, as described in Section 3.17 and Section 16.05 of
this Agreement and the Custodial Agreement, and (B) if any registered public
accounting firm attestation report described under Section 3.17 or Section
16.05, as applicable, of this Agreement identifies any material instance of
noncompliance, disclosure identifying such instance of noncompliance, or if any
such registered public accounting firm attestation report is not included as an
exhibit to such Form 10-K, disclosure that such report is not included and an
explanation why such report is not included, and (iv) a Sarbanes-Oxley
Certification in the form attached hereto as Exhibit L, executed by the senior
officer in charge of securitizations of the Master Servicer. Any disclosure or
information in addition to (i) through (iv) above that is required to be
included on Form 10-K ("Additional Form 10-K Disclosure") shall be reported by
the parties as set forth in Exhibit Q-2 to the Depositor and the Securities
Administrator and directed and approved by the Depositor pursuant to the
following paragraph and the Securities Administrator will have no duty or
liability for any failure hereunder to determine or prepare any Additional Form
10-K Disclosure except or set forth in the next paragraph.

     (i) As set forth in Exhibit Q-2 hereto, no later than March 1 (with a ten
calendar day cure period) of each year that the Issuing Entity is subject to the
Exchange Act reporting requirements, commencing in March 2008, (i) the parties
listed on Exhibit Q-2 hereto shall be required to provide to the Depositor and
the Securities Administrator, to the extent known, in EDGAR-compatible format or
in such other format as agreed upon by the Securities Administrator and such
party, the form and substance of any Additional Form 10-K Disclosure, if
applicable together with an Additional Disclosure Notification, and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the case may
be, the inclusion of the Additional Form 10-K Disclosure and shall forward such
Additional Form 10-K Disclosure. The Securities Administrator has no duty under
this Agreement to monitor or enforce the performance by the parties listed on
Exhibit Q-2 of their duties under this paragraph or proactively solicit or
procure from such parties any Additional Form 10-K Disclosure Information. The
Depositor will be responsible for any reasonable fees and expenses incurred by
the Securities Administrator in connection with including any Additional Form
10-K Disclosure on Form 10-K pursuant to this paragraph.

     (j) After preparing the Form 10-K, the Securities Administrator shall, upon
request, forward electronically a copy of the Form 10-K to the Depositor. Within
three Business Days after receipt of such copy, but no later than March 25th,
the Depositor shall notify the Securities

                                      -85-
<PAGE>

Administrator in writing (which may be furnished electronically) of any changes
to or approval of such Form 10-K. In the absence of receipt of any written
changes or approval, or if the Depositor does not request a copy of a Form 10-K,
the Securities Administrator shall be entitled to assume that such Form 10-K is
in final form and the Securities Administrator may proceed with the process for
execution and filing of the Form 10-K. A senior officer of the Master Servicer
in charge of the master servicing function shall sign the Form 10-K. If a Form
10-K cannot be filed on time or if a previously filed Form 10-K needs to be
amended, the Securities Administrator will follow the procedures set forth in
Section 3.18(n). Promptly (but no later than one Business Day) after filing with
the Commission, the Securities Administrator will make available on its internet
website a final executed copy of each Form 10-K prepared and filed by the
Securities Administrator. Form 10-K requires the registrant to indicate (by
checking "yes" or "no") that it "(1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days." The
Depositor hereby represents to the Securities Administrator that the Depositor
has filed all such required reports during the preceding 12 months and that it
has been subject to such filing requirement for the past 90 days. The Depositor
shall notify the Securities Administrator in writing, no later than the 15th
calendar day of March in any year in which the Trust is subject to the reporting
requirements of the Exchange Act, if the answer to the questions should be "no."
The Securities Administrator shall be entitled to rely on such representations
in preparing, executing and/or filing any such Form 10-K. The parties to this
Agreement acknowledge that the performance by the Master Servicer and the
Securities Administrator of its duties under this Section 3.18 related to the
timely preparation, execution and filing of Form 10-K is contingent upon such
parties (and any Servicing Function Participant) strictly observing all
applicable deadlines in the performance of their duties under this Section 3.18,
Section 3.16 and Section 3.17. The Depositor acknowledges that the performance
by the Master Servicer and the Securities Administrator of its duties under this
Section 3.18 related to the timely preparation, execution and filing of Form
10-K is also contingent upon the Servicers, the Custodian and any Servicing
Function Participant strictly observing deadlines no later than those set forth
in this paragraph that are applicable to the parties to this Agreement in the
delivery to the Securities Administrator of any necessary Additional Form 10-K
Disclosure, any annual statement of compliance and any assessment of compliance
and attestation pursuant to this Agreement, the Custodial Agreement or any other
applicable agreement. Neither the Master Servicer nor the Securities
Administrator shall have any liability for any loss, expense, damage or claim
arising out of or with respect to any failure to properly prepare, execute
and/or timely file such Form 10-K resulting from the Securities Administrator's
inability or failure to obtain or receive any information from any other party
hereto or any Servicer, Custodian or Servicing Function Participant needed to
prepare, execute or file such Form 10-K.

     (k) Each Form 10-K shall include a Sarbanes-Oxley Certification, which
shall be in the form attached hereto as Exhibit L. Each Servicer (with respect
to any year that it acted as a servicer hereunder) shall sign and provide and
cause each subcontractor and subservicer determined by each Servicer to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, if any, to provide a Sarbanes Certification as defined in Section
16.05 hereof pursuant to and in accordance with the time frames set forth in
Section 16.05 hereof, and each of the Master Servicer and the Securities
Administrator shall cause any Servicing Function Participant engaged by it to
sign and provide, to the person who signs the

                                      -86-
<PAGE>

Sarbanes-Oxley Certification (the "Certifying Person") by March 1 (with a ten
day cure period) of each year in which the Issuing Entity is subject to the
reporting requirements of the Exchange Act and otherwise within a reasonable
period of time upon request, a certification (a "Back-Up Certification") (in the
form attached hereto as Exhibit M) upon which the Certifying Person, the entity
for which the Certifying Person acts as an officer and such entity's officers,
directors and affiliates (collectively, with the Certifying Person, the
"Certification Parties") can reasonably rely. The senior officer of the Master
Servicer in charge of the master servicing function shall serve as the
Certifying Person on behalf of the Issuing Entity. Such officer of the
Certifying Person can be contacted by e-mail at
cts.sec.notifications@wellsfargo.com or by facsimile at 410-715-2380. In the
event any such party or Servicing Function Participant engaged by any such party
is terminated or resigns pursuant to the terms of this Agreement, or any other
applicable agreement, as the case may be, such party shall provide a Back-Up
Certification to the Master Servicer pursuant to this Section 3.18 with respect
to the period of time it was subject to this Agreement or any other applicable
agreement, as the case may be. Notwithstanding the foregoing, (i) the Master
Servicer and the Securities Administrator shall not be required to deliver a
Back-Up Certification to each other if both are the same Person and the Master
Servicer is the Certifying Person and (ii) the Master Servicer shall not be
obligated to sign the Sarbanes-Oxley Certification in the event that it does not
receive any Back-Up Certification required to be furnished to it pursuant to
this Agreement or the Custodial Agreement.

     (l) The Securities Administrator shall have no responsibility to file any
items with the Commission other than those specified in this Section and the
Master Servicer shall execute any and all Form 10-Ds, 8-Ks and 10-Ks required
hereunder.

     (m) On or prior to January 30 of the first year in which the Securities
Administrator is able to do so under applicable law, the Securities
Administrator shall prepare and file a Form 15 Suspension Notification relating
to the automatic suspension of reporting in respect of the Issuing Entity under
the Exchange Act.

     (n) In the event that the Securities Administrator is unable to timely file
with the Commission all or any required portion of any Form 8-K, 10-D or 10-K
required to be filed by this Agreement because required disclosure information
was either not delivered to it or delivered to it after the delivery deadlines
set forth in this Agreement or for any other reason, the Securities
Administrator will promptly notify electronically the Depositor of such
inability to make a timely filing with the Commission. In the case of Form 10-D
and 10-K, the parties to this Agreement will cooperate to prepare and file a
Form 12b-25 and a 10-D/A and 10K/A, as applicable, pursuant to Rule 12b-25 of
the Exchange Act. In the case of Form 8-K, the Securities Administrator will,
upon receipt of all required Form 8-K Disclosure Information and upon the
approval and direction of the Depositor, include such disclosure information on
the next succeeding Form 10-D to be filed for the Issuing Entity. In the event
that any previously filed Form 8-K, 10-D or 10-K needs to be amended, in
connection with any Additional Form 10-D Disclosure (other than, in the case of
Form 10-D, for the purpose of restating any Monthly Statement), Additional Form
10-K Disclosure or Form 8-K Disclosure Information, the Securities Administrator
will electronically notify the Depositor and such other parties to the
transaction as are affected by such amendment, and such parties will cooperate
to prepare any necessary 8-K/A, 10-D/A or 10-K/A. Any Form 15, Form 12b-25 or
any amendment to Form 8-K, 10-D or 10-K shall be signed by duly authorized
representative or a senior officer in charge of

                                      -87-
<PAGE>

master servicing, as applicable, of the Master Servicer. The parties to this
Agreement acknowledge that the performance by the Master Servicer of its duties
under this Section 3.18 related to the timely preparation, execution and filing
of Form 15, a Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K is
contingent upon each such party performing its duties under this Section.
Neither the Master Servicer nor the Securities Administrator shall have any
liability for any loss, expense, damage or claim arising out of or with respect
to any failure to properly prepare, execute and/or timely file any such Form 15,
Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, where such failure
results from the Securities Administrator's inability or failure to receive, on
a timely basis, any information from any other party hereto or any Servicer, any
Custodian or any Servicing Function Participant needed to prepare, arrange for
execution or file such Form 15, Form 12b-25 or any amendments to Forms 8-K, 10-D
or 10-K.

     (o) The Depositor and the Securities Administrator agree to use their good
faith efforts to cooperate in complying with the requirements of this Section
3.18.

     (p) Each of the parties agrees to provide to the Securities Administrator
such additional information related to such party as the Securities
Administrator may reasonably request, including evidence of the authorization of
the person signing any certificate or statement, financial information and
reports, and such other information related to such party or its performance
hereunder.

     (q) Any notice or notification required to be delivered by the Securities
Administrator or Master Servicer to the Depositor pursuant to this Section 3.18,
may be delivered via facsimile to (212) 449-2700, via email to paul_park@ml.com
or telephonically by calling Paul Park at (212) 449-6380.

     Section 3.19 Compliance with Regulation AB. Each of the parties hereto
acknowledges and agrees that the purpose of Sections 3.16, 3.17 and 3.18 is to
facilitate compliance by the Depositor with the provisions of Regulation AB, as
such may be amended or clarified from time to time. Therefore, each of the
parties agrees that the parties' obligations hereunder will be supplemented and
modified as necessary to be consistent with any such amendments, interpretive
advice or guidance, convention or consensus among active participants in the
asset-backed securities markets, advice of counsel, or otherwise in respect of
the requirements of Regulation AB and the parties shall comply with requests
made by the Depositor (consistent with any such amendments, interpretive advice
or guidance, convention, consensus or advice of counsel) for delivery of
additional or different information as the Depositor may determine in good faith
is necessary to comply with the provisions of Regulation AB. Any such
supplementation or modification shall be made in accordance with Section 11.02
without the consent of the Certificateholders, and may result in a change in the
reports filed by the Securities Administrator on behalf of the Issuing Entity
under the Exchange Act.

                                   ARTICLE IV
                                    ACCOUNTS

     Section 4.01 Protected Accounts.

                                      -88-
<PAGE>

     (a) The Master Servicer shall enforce the obligation of each Servicer to
establish and maintain a Protected Account in accordance with this Agreement,
with records to be kept with respect thereto on a Mortgage Loan by Mortgage Loan
basis, into which accounts shall be deposited within two Business Days (or as of
such other time specified in this Agreement) of receipt all collections of
principal and interest on any Mortgage Loan and with respect to any REO Property
received by a Servicer, including Principal Prepayments, Insurance Proceeds,
Liquidation Proceeds, Subsequent Recoveries and advances made from the
Servicer's own funds (less servicing compensation as permitted by this Agreement
in the case of the Servicer) and all other amounts to be deposited in the
Protected Account. The Servicer is hereby authorized to make withdrawals from
and deposits to the related Protected Account for purposes required or permitted
by this Agreement. To the extent provided in this Agreement, the Protected
Account shall be held in a Designated Depository Institution and segregated on
the books of such institution in the name of the Trustee for the benefit of
Certificateholders.

     (b) To the extent provided in this Agreement, amounts on deposit in a
Protected Account may be invested in Permitted Investments in the name of the
Trustee for the benefit of Certificateholders and, except as provided in the
preceding paragraph, not commingled with any other funds, such Permitted
Investments to mature, or to be subject to redemption or withdrawal, no later
than the date on which such funds are required to be withdrawn for deposit in
the Master Servicer Collection Account, and shall be held until required for
such deposit. The income earned from Permitted Investments made pursuant to this
Section 4.01 or other benefits arising from the Protected Account shall be paid
to the applicable Servicer under this Agreement, and the risk of loss of moneys
required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the applicable Servicer, as set
forth in this Agreement. The applicable Servicer (to the extent provided in this
Agreement) shall deposit the amount of any such loss in the Protected Account
within two Business Days of receipt of notification of such loss but not later
than the second Business Day prior to the Distribution Date on which the moneys
so invested are required to be distributed to the Certificateholders.

     (c) [Reserved].

     (d) Withdrawals by the Master Servicer may be made from the Master Servicer
Collection Account only to make remittances as provided in Sections 4.02, 4.03
and 13.05; to reimburse the Master Servicer or a Servicer for Monthly Advances
which have been recovered by subsequent collection from the related Mortgagor;
to remove amounts deposited in error; to remove fees, charges or other such
amounts deposited on a temporary basis; or to clear and terminate the account at
the termination of this Agreement in accordance with Section 10.01. As provided
in Sections 4.02(b) and 13.05 certain amounts otherwise due to the Servicers may
be retained by them as set forth in this Agreement and need not be deposited in
the Master Servicer Collection Account.

     Section 4.02 Master Servicer Collection Account.

     (a) The Master Servicer shall establish and maintain in the name of the
Trustee, for the benefit of the Certificateholders, the Master Servicer
Collection Account as a segregated trust account or accounts. The Master
Servicer Collection Account may be a sub-account of the Distribution Account.
The Master Servicer will deposit in the Master Servicer Collection

                                      -89-
<PAGE>

Account as identified by the Master Servicer and as received by the Master
Servicer, the following amounts:

          (i) Any amounts withdrawn from a Protected Account or other permitted
     account;

          (ii) Any Monthly Advance and any Compensating Interest Payments;

          (iii) Any Insurance Proceeds, Liquidation Proceeds or Subsequent
     Recoveries received by or on behalf of the Master Servicer or which were
     not deposited in a Protected Account or other permitted account;

          (iv) The repurchase price with respect to any Mortgage Loans
     repurchased and all proceeds of any Mortgage Loans or property acquired in
     connection with the optional termination of the trust;

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

          (vi) Any other amounts received by or on behalf of the Master Servicer
     and required to be deposited in the Master Servicer Collection Account
     pursuant to this Agreement.

     (b) All amounts deposited to the Master Servicer Collection Account shall
be held by the Master Servicer in the name of the Trustee in trust for the
benefit of the Certificateholders in accordance with the terms and provisions of
this Agreement. The requirements for crediting the Master Servicer Collection
Account or the Distribution Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of (i) prepayment or late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges and (ii) the items enumerated in Sections 4.05(a)(i), (ii),
(iii), (iv), (vi), (vii), (viii), (ix), (xi) and (xii) with respect to the
Securities Administrator, need not be credited by the Master Servicer or the
applicable Servicer to the Distribution Account or the Master Servicer
Collection Account, as applicable. In the event that the Master Servicer shall
deposit or cause to be deposited to the Distribution Account any amount not
required to be credited thereto, the Securities Administrator, upon receipt of a
written request therefor signed by a Servicing Officer of the Master Servicer,
shall promptly transfer such amount to the Master Servicer from the Distribution
Account, any provision herein to the contrary notwithstanding.

     (c) The amount at any time credited to the Master Servicer Collection
Account shall be invested, in the name of the Trustee, or its nominee, for the
benefit of the Certificateholders, in Permitted Investments as directed by
Master Servicer. All Permitted Investments shall mature or be subject to
redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Account Deposit Date. Any and all investment earnings on
amounts on deposit in the Master Servicer Collection Account from time to time
shall be for the account of the Master Servicer. The Master Servicer from time
to time shall be permitted to withdraw or receive distribution of any and all
investment earnings from the Master Servicer Collection Account. The risk of
loss of moneys required to be distributed to the Certificateholders resulting

                                      -90-
<PAGE>

from such investments shall be borne by and be the risk of the Master Servicer.
The Master Servicer shall deposit the amount of any such loss in the Master
Servicer Collection Account within two Business Days of receipt of notification
of such loss but not later than the second Business Day prior to the
Distribution Date on which the moneys so invested are required to be distributed
to the Certificateholders.

     Section 4.03 Permitted Withdrawals and Transfers from the Master Servicer
Collection Account.

     (a) The Master Servicer will, from time to time on demand of the Master
Servicer, the Trustee or the Securities Administrator, make or cause to be made
such withdrawals or transfers from the Master Servicer Collection Account as the
Master Servicer has designated for such transfer or withdrawal pursuant to this
Agreement. The Master Servicer may clear and terminate the Master Servicer
Collection Account pursuant to Section 10.01 and remove amounts from time to
time deposited in error.

     (b) On an ongoing basis, the Master Servicer shall withdraw from the Master
Servicer Collection Account (i) any expenses recoverable by the Trustee, the
Master Servicer or the Securities Administrator pursuant to this Agreement,
including but not limited to Sections 2.01(b), 3.03, 7.04 and 9.05 and (ii) any
amounts payable to the Master Servicer as set forth in Section 3.14.

     (c) In addition, on or before each Distribution Account Deposit Date, the
Master Servicer shall deposit in the Distribution Account (or remit to the
Securities Administrator for deposit therein) any Monthly Advances required to
be made by the Master Servicer with respect to the Mortgage Loans.

     (d) No later than 3:00 p.m. New York time on each Distribution Account
Deposit Date, the Master Servicer will transfer all Available Funds on deposit
in the Master Servicer Collection Account with respect to the related
Distribution Date to the Securities Administrator for deposit in the
Distribution Account.

     Section 4.04 Distribution Account.

     (a) The Securities Administrator shall establish and maintain in the name
of the Trustee, for the benefit of the Certificateholders, the Distribution
Account as a segregated trust account or accounts.

     (b) All amounts deposited to the Distribution Account shall be held by the
Securities Administrator in the name of the Trustee in trust for the benefit of
the Certificateholders in accordance with the terms and provisions of this
Agreement.

     (c) The Distribution Account shall constitute a trust account of the Trust
Fund segregated on the books of the Securities Administrator and held by the
Securities Administrator in trust in its Corporate Trust Office, and the
Distribution Account and the funds deposited therein shall not be subject to,
and shall be protected to the maximum extent permitted by applicable law from,
all claims, liens, and encumbrances of any creditors or depositors of the
Securities Administrator, the Trustee or the Master Servicer (whether made
directly, or indirectly

                                      -91-
<PAGE>

through a liquidator or receiver of the Securities Administrator, the Trustee or
the Master Servicer). The Distribution Account shall be an Eligible Account. The
amount at any time credited to the Distribution Account shall be (i) fully
insured by the FDIC to the maximum coverage provided thereby or (ii) invested in
the name of the Trustee, in such Permitted Investments selected by the Master
Servicer or deposited in demand deposits with such depository institutions as
selected by the Master Servicer, provided that time deposits of such depository
institutions would be a Permitted Investment. All Permitted Investments shall
mature or be subject to redemption or withdrawal on or before, and shall be held
until, the next succeeding Distribution Date if the obligor for such Permitted
Investment is the Master Servicer or, if such obligor is any other Person, the
Business Day preceding such Distribution Date. All investment earnings on
amounts on deposit in the Distribution Account or benefit from funds uninvested
therein from time to time shall be for the account of the Securities
Administrator. The Securities Administrator shall be permitted to withdraw or
receive distribution of any and all investment earnings from the Distribution
Account on each Distribution Date. If there is any loss on a Permitted
Investment or demand deposit, the Securities Administrator shall deposit such
amount in the Distribution Account. With respect to the Distribution Account and
the funds deposited therein, the Securities Administrator shall take such action
as may be necessary to ensure that the Certificateholders shall be entitled to
the priorities afforded to such a trust account (in addition to a claim against
the estate of the Trust) as provided by 12 U.S.C. Section 92a(e), and applicable
regulations pursuant thereto, if applicable, or any applicable comparable state
statute applicable to state chartered banking corporations.

     Section 4.05 Permitted Withdrawals and Transfers from the Distribution
Account.

     (a) The Securities Administrator will, from time to time on demand of the
Master Servicer, make or cause to be made such withdrawals or transfers from the
Distribution Account as the Master Servicer has designated for such transfer or
withdrawal pursuant to this Agreement for the following purposes (limited in the
case of amounts due the Master Servicer to those not withdrawn from the Master
Servicer Collection Account in accordance with the terms of this Agreement):

          (i) to reimburse the Master Servicer or either Servicer for any
     Monthly Advance of its own funds or any advance of such Servicer's own
     funds, the right of the Master Servicer or a Servicer to reimbursement
     pursuant to this subclause (i) being limited to amounts received on a
     particular Mortgage Loan (including, for this purpose, the Purchase Price
     therefor, Insurance Proceeds and Liquidation Proceeds) which represent late
     payments or recoveries of the principal of or interest on such Mortgage
     Loan respecting which such Monthly Advance or advance was made;

          (ii) to reimburse the Master Servicer or either Servicer from
     Insurance Proceeds or Liquidation Proceeds relating to a particular
     Mortgage Loan for amounts expended by the Master Servicer or such Servicer
     in good faith as a Servicing Advance in connection with the restoration of
     the related Mortgaged Property which was damaged by an Uninsured Cause or
     in connection with the liquidation of such Mortgage Loan;

          (iii) to reimburse the Master Servicer or either Servicer from
     Insurance Proceeds relating to a particular Mortgage Loan for insured
     expenses incurred with

                                      -92-
<PAGE>

     respect to such Mortgage Loan and to reimburse the Master Servicer or such
     Servicer from Liquidation Proceeds from a particular Mortgage Loan for
     Liquidation Expenses incurred with respect to such Mortgage Loan; provided
     that the Master Servicer shall not be entitled to reimbursement for
     Liquidation Expenses with respect to a Mortgage Loan to the extent that (i)
     any amounts with respect to such Mortgage Loan were paid as Excess
     Liquidation Proceeds pursuant to clause (xi) of this Section 4.05(a) to the
     Master Servicer; and (ii) such Liquidation Expenses were not included in
     the computation of such Excess Liquidation Proceeds;

          (iv) to pay the Master Servicer or either Servicer, as appropriate,
     from Liquidation Proceeds or Insurance Proceeds received in connection with
     the liquidation of any Mortgage Loan, the amount which it or such Servicer
     would have been entitled to receive under subclause (ix) of this Section
     4.05(a) as servicing compensation on account of each defaulted scheduled
     payment on such Mortgage Loan if paid in a timely manner by the related
     Mortgagor;

          (v) to pay the Master Servicer or either Servicer from the Purchase
     Price for any Mortgage Loan, the amount which it or such Servicer would
     have been entitled to receive under subclause (ix) of this Section 4.05(a)
     as servicing compensation;

          (vi) to reimburse the Master Servicer or either Servicer for advances
     of funds pursuant to Sections, and the right to reimbursement pursuant to
     this subclause being limited to amounts received on the related Mortgage
     Loan (including, for this purpose, the Purchase Price therefor, Insurance
     Proceeds and Liquidation Proceeds) which represent late recoveries of the
     payments for which such advances were made;

          (vii) to reimburse the Master Servicer or either Servicer for any
     Monthly Advance or advance, after a Realized Loss has been allocated with
     respect to the related Mortgage Loan if the Monthly Advance or advance has
     not been reimbursed pursuant to clauses (i) and (vi);

          (viii) to pay the Master Servicer as set forth in Section 3.14;

          (ix) to reimburse the Master Servicer for expenses, costs and
     liabilities incurred by and reimbursable to it pursuant to this Agreement,
     including but not limited to Sections 3.03, 7.04(c) and (d);

          (x) to pay to the Master Servicer, as additional servicing
     compensation, any Excess Liquidation Proceeds to the extent not retained by
     the applicable Servicer;

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

          (xii) to reimburse the Trustee or the Securities Administrator for
     expenses, costs and liabilities incurred by or reimbursable to it pursuant
     to this Agreement;

          (xiii) to remove amounts deposited in error; and

                                      -93-
<PAGE>

          (xiv) to clear and terminate the Distribution Account pursuant to
     Section 9.01.

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

     (c) On each Distribution Date, the Securities Administrator shall
distribute the Available Funds for the Mortgage Loans to the Holders of the
Certificates in accordance with Section 6.01.

                                   ARTICLE V
                                  CERTIFICATES

     Section 5.01 The Certificates. The Certificates shall be executed by manual
or facsimile signature on behalf of the Securities Administrator by an
authorized officer. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Securities Administrator shall bind the Issuing Entity,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such authentication and delivery. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form set forth as attached hereto executed
by the Securities Administrator by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Securities Administrator shall authenticate the
Certificates to be issued at the written direction of the Depositor, or any
Affiliate thereof.

Section 5.02 Certificate Register; Registration of Transfer and Exchange of
Certificates.

     (a) The Securities Administrator shall maintain, or cause to be maintained
in accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of Sections (b) and (c)
below and to such reasonable regulations as it may prescribe, the Securities
Administrator shall provide for the registration of Certificates and of
Transfers and exchanges of Certificates as herein provided. Upon surrender for
registration of Transfer of any Certificate, the Securities Administrator shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class and of like
aggregate Percentage Interest.

     At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Securities Administrator. Whenever any
Certificates are so surrendered for exchange, the Securities Administrator shall
execute, authenticate and deliver the Certificates that the

                                      -94-
<PAGE>

Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of Transfer or exchange shall be
accompanied by a written instrument of Transfer in form satisfactory to the
Securities Administrator duly executed by the holder thereof or his attorney
duly authorized in writing.

     No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by the Securities Administrator in
accordance with such Securities Administrator's customary procedures.

     (b) No Transfer of a Class C or Class P Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall (except with
respect to the initial transfer of a Class C or Class P Certificate by Merrill
Lynch & Co.) each certify to each Securities Administrator in writing the facts
surrounding the Transfer in substantially the form set forth in Exhibit F-1 (the
"Transferor Representation Letter") and (i) deliver a letter in substantially
the form of either Exhibit F-2 (the "Investor Representation Letter") or Exhibit
F-3 (the "Rule 144A Letter") or (ii) there shall be delivered to the Securities
Administrator an Opinion of Counsel that such Transfer may be made pursuant to
an exemption from the Securities Act, which Opinion of Counsel shall not be an
expense of the Depositor or the Securities Administrator. The Depositor shall
provide to any Holder of a Class C or Class P Certificate and any prospective
transferee designated by any such Holder, information regarding the related
Certificates and the Mortgage Loans and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
for Transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A. The
Securities Administrator shall cooperate with the Depositor in providing the
Rule 144A information referenced in the preceding sentence, including providing
to the Depositor such information in the possession of the Securities
Administrator regarding the Certificates, the Mortgage Loans and other matters
regarding the Trust Fund as the Depositor shall reasonably request to meet its
obligation under the preceding sentence. Each Holder of a Class C or Class P
Certificate desiring to effect such Transfer shall, and does hereby agree to,
indemnify the Depositor and the Securities Administrator against any liability
that may result if the Transfer is not so exempt or is not made in accordance
with such federal and state laws.

     No transfer of a Certificate that is neither an ERISA Restricted
Certificate nor a Class R Certificate shall be registered unless the transferee
provides the Securities Administrator with a representation that either (i) such
transferee is not, and is not acting for, on behalf of or with any assets of, an
employee benefit plan or other arrangement subject to Title I of ERISA or plan
subject to Section 4975 of the Code, or (ii) until the termination of the Swap
Agreement and the Cap Agreement, the acquisition and holding of the Certificate
will not constitute or result in a nonexempt prohibited transaction under Title
I of ERISA or Section 4975 of the Code.

                                      -95-
<PAGE>

     No transfer of an ERISA Restricted Certificate or a Class R Certificate
will be registered unless the Securities Administrator has received (A) a
representation to the effect that such transferee is not an employee benefit
plan subject to Title I of ERISA, a plan subject to Section 4975 of the Code or
a plan subject to any state, local, federal, non-U.S. or other law substantively
similar to the foregoing provisions of ERISA or the Code ("Similar Law")
(collectively, a "Plan"), and is not directly or indirectly acquiring such
Certificate for, on behalf of, or with any assets of any such Plan, or (B)
solely in the case of an ERISA Restricted Certificate (I) if the Certificate has
been the subject of an ERISA-Qualifying Underwriting, a representation to the
effect that such transferee is an insurance company that is acquiring the
Certificate with assets contained in an "insurance company general account," as
defined in Section V(e) of Prohibited Transaction Class Exemption ("PTCE")
95-60, and the acquisition and holding of the Certificate are covered and exempt
under Sections I and III of PTCE 95-60, or (II) solely in the case of a
Definitive Certificate, an Opinion of Counsel satisfactory to the Securities
Administrator, and upon which the Securities Administrator shall be entitled to
rely, to the effect that the acquisition and holding of such Certificate will
not constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975 of the Code, or a violation of Similar Law, and will not
subject the Securities Administrator, the Master Servicer, the Trustee or the
Depositor to any obligation in addition to those expressly undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Securities
Administrator, the Master Servicer, the Trustee or the Depositor.

     Except in the case of a Definitive Certificate, the representations set
forth in the two immediately preceding paragraphs of this Section 5.02(b), other
than clause (B)(II) in the immediately preceding paragraph, shall be deemed to
have been made to the Securities Administrator by the transferee's acceptance of
a Certificate (or the acceptance by a Certificate Owner of the beneficial
interest in any Class of Certificate).

     Notwithstanding any other provision herein to the contrary, any purported
transfer of a Certificate or a Class R Certificate to or on behalf of a Plan
without the delivery to the Securities Administrator of a representation or an
Opinion of Counsel satisfactory to the Securities Administrator as described
above shall be void and of no effect. The Securities Administrator shall not be
under any liability to any Person for any registration or transfer of any
Certificate that is in fact not permitted by this Section 5.02(b), nor shall the
Trustee or the Securities Administrator be under any liability for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered by the Securities Administrator in
accordance with the foregoing requirements. The Trustee or the Securities
Administrator shall be entitled, but not obligated, to recover from any Holder
of any Certificate that was in fact a Plan and that held such Certificate in
violation of this Section 5.02(b) all payments made on such Certificate at and
after the time it commenced such holding. Any such payments so recovered shall
be paid and delivered to the last preceding Holder of such Certificate that is
not a Plan.

     (c) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions, and the rights
of each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:

                                      -96-
<PAGE>

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

          (ii) No Ownership Interest in a Class R Certificate may be purchased,
     transferred or sold, directly or indirectly, except in accordance with the
     provisions hereof. No Ownership Interest in a Class R Certificate may be
     registered on the Closing Date or thereafter transferred, and the
     Securities Administrator shall not register the Transfer of any Class R
     Certificate unless, in addition to the certificates required to be
     delivered to the Securities Administrator under subparagraph (b) above, the
     Securities Administrator shall have been furnished with an affidavit (a
     "Transferee's Letter") of the initial owner or the proposed transferee in
     the form attached hereto as Exhibit E-1 and an affidavit (a "Transferor
     Certificate") of the proposed transferor in the form attached hereto as
     Exhibit E-2. In the absence of a contrary instruction from the transferor
     of a Class R Certificate, declaration (11) in Appendix A of the
     Transferee's Letter may be left blank. If the transferor requests by
     written notice to the Securities Administrator prior to the date of the
     proposed transfer that one of the two other forms of declaration (11) in
     Appendix A of the Transferee's Letter be used, then the requirements of
     this Section 5.02(c)(ii) shall not have been satisfied unless the
     Transferee's Letter includes such other form of declaration.

          (iii) Each Person holding or acquiring any Ownership Interest in a
     Class R Certificate shall agree (A) to obtain a Transferee's Letter from
     any other Person to whom such Person attempts to Transfer its Ownership
     Interest in a Class R Certificate, (B) to obtain a Transferee's Letter from
     any Person for whom such Person is acting as nominee, trustee or agent in
     connection with any Transfer of a Class R Certificate and (C) not to
     Transfer its Ownership Interest in a Class R Certificate or to cause the
     Transfer of an Ownership Interest in a Class R Certificate to any other
     Person if it has actual knowledge that such Person is not a Permitted
     Transferee. Further, no transfer, sale or other disposition of any
     Ownership Interest in a Class R Certificate may be made to a person who is
     not a U.S. Person (within the meaning of Section 7701 of the Code) unless
     such person furnishes the transferor and the Securities Administrator with
     a duly completed and effective Internal Revenue Service Form W-8ECI (or any
     successor thereto) and the Securities Administrator consents to such
     transfer, sale or other disposition in writing.

          (iv) Any attempted or purported Transfer of any Ownership Interest in
     a Class R Certificate in violation of the provisions of this Section
     5.02(c) shall be absolutely null and void and shall vest no rights in the
     purported Transferee. If any purported transferee shall become a Holder of
     a Class R Certificate in violation of the provisions of this Section
     5.02(c), then the last preceding Permitted Transferee shall be restored to
     all rights as Holder thereof retroactive to the date of registration of
     Transfer of such Class R Certificate. The Securities Administrator shall be
     under no liability to any Person for any registration of Transfer of a
     Class R Certificate that is in fact not permitted by Section 5.02(b) and
     this Section 5.02(c) or for making any payments due on such Certificate to
     the Holder thereof or taking any other action with respect to such Holder
     under the provisions of this Agreement so long as the Transfer was
     registered after receipt of the related Transferee's Letter. The Securities
     Administrator shall be entitled but not

                                      -97-
<PAGE>

     obligated to recover from any Holder of a Class R Certificate that was in
     fact not a Permitted Transferee at the time it became a Holder or, at such
     subsequent time as it became other than a Permitted Transferee, all
     payments made on such Class R Certificate at and after either such time.
     Any such payments so recovered by the Securities Administrator shall be
     paid and delivered by the Securities Administrator to the last preceding
     Permitted Transferee of such Certificate.

          (v) At the option of the Holder of the Class R Certificate, the Class
     SWR Interest, the Class LTR Interest and the Residual Interest may be
     severed and represented by separate certificates (with the separate
     certificate that represents the Residual Interest also representing all
     rights of the Class R Certificate to distributions attributable to an
     interest rate on the Class R Certificate in excess of the REMIC
     Pass-Through Rate); provided, however, that such separate certification may
     not occur until the Securities Administrator receives a REMIC Opinion to
     the effect that separate certification in the form and manner proposed
     would not result in the imposition of federal tax upon the Issuing Entity
     or any of the REMICs provided for herein or cause any of the REMICs
     provided for herein to fail to qualify as a REMIC; and provided further,
     that the provisions of Sections 5.02(b) and (c) will apply to each such
     separate certificate as if the separate certificate were a Class R
     Certificate. If, as evidenced by a REMIC Opinion, it is necessary to
     preserve the REMIC status of any of the REMICs provided for herein, the
     Class SWR Interest, the Class LTR Interest and the Residual Interest shall
     be severed and represented by separate Certificates (with the separate
     certificate that represents the Residual Interest also representing all
     rights of the Class R Certificate to distributions attributable to an
     interest rate on the Class R Certificate in excess of the REMIC
     Pass-Through Rate).

     The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Securities Administrator of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Securities Administrator or
the Depositor, to the effect that the elimination of such restrictions will not
cause any of the REMICs provided for herein to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Issuing Entity, any REMIC provided for herein, a Certificateholder or
another Person. Each Person holding or acquiring any Ownership Interest in a
Class R Certificate hereby consents to any amendment of this Agreement that,
based on an Opinion of Counsel furnished to the Securities Administrator, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Class R Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.

     (d) The transferor of the Class R Certificate shall notify the Securities
Administrator in writing upon the transfer of the Class R Certificate.

     (e) The preparation and delivery of all certificates, opinions and other
writings referred to above in this Section 5.02 shall not be an expense of the
Issuing Entity, the Depositor or the Securities Administrator.

                                      -98-
<PAGE>

     Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate is surrendered to the Securities Administrator or the
Securities Administrator receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and of the ownership thereof and
(b) there is delivered to the Securities Administrator such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Securities Administrator that such Certificate has been
acquired by a bona fide purchaser, the Securities Administrator shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and Percentage Interest. In connection with the issuance of any new Certificate
under this Section 5.03, the Securities Administrator may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Securities Administrator) connected therewith. Any replacement
Certificate issued pursuant to this Section 5.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time. All Certificates surrendered to the Securities Administrator under the
terms of this Section 5.03 shall be canceled and destroyed by the Securities
Administrator in accordance with its standard procedures without liability on
its part.

     Section 5.04 Persons Deemed Owners. The Securities Administrator and any
agent of the Securities Administrator may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Securities Administrator, nor any agent of the
Securities Administrator shall be affected by any notice to the contrary.

     Section 5.05 Access to List of Certificateholders' Names and Addresses. If
three or more Certificateholders (a) request such information in writing from
the Securities Administrator, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor shall request such information in writing from the Securities
Administrator, then the Securities Administrator shall, within ten Business Days
after the receipt of such request, provide the Depositor or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Securities Administrator, if
any. The Depositor and every Certificateholder, by receiving and holding a
Certificate, agree that the Securities Administrator shall not be held
accountable by reason of the disclosure of any such information as to the list
of the Certificateholders hereunder, regardless of the source from which such
information was derived.

     Section 5.06 Book-Entry Certificates. The Regular Certificates, upon
original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates, to be delivered to the
Depository by or on behalf of the Depositor. The Book-Entry Certificates shall
initially be registered on the Certificate Register in the name of the
Depository or its nominee, and no Certificate Owner of a Book-Entry Certificate
will receive a definitive certificate representing such Certificate Owner's
interest in such Certificates, except as provided in Section 5.08. Unless and
until definitive, fully registered Certificates ("Definitive

                                      -99-
<PAGE>

Certificates") have been issued to the Certificate Owners of the Book-Entry
Certificates pursuant to Section 5.08:

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

     (b) the Depositor and the Securities Administrator may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;

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

     (d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;

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

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

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

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

     Section 5.07 Notices to Depository. Whenever any notice or other
communication is required to be given to Certificateholders of the Class with
respect to which Book-Entry Certificates have been issued, unless and until
Definitive Certificates shall have been issued to the related Certificate
Owners, the Securities Administrator shall give all such notices and
communications to the Depository.

     Section 5.08 Definitive Certificates. If, after Book-Entry Certificates
have been issued with respect to any Certificates, (a) the Depository or the
Depositor advises the Securities Administrator that the Depository is no longer
willing, qualified or able to discharge properly its responsibilities under the
Depository Agreement with respect to such Certificates and the Securities
Administrator or the Depositor is unable to locate a qualified successor, (b)
the Depositor notifies the Securities Administrator and the Depository of its
intent to terminate the

                                     -100-
<PAGE>

book-entry system through the Depository and, upon receipt of notice of such
intent from the Depository, the Certificate Owners of the Book-Entry
Certificates agree to initiate such termination or (c) after the occurrence and
continuation of an Event of Default, Certificate Owners of such Book-Entry
Certificates having not less than 51% of the Voting Rights evidenced by any
Class of Book-Entry Certificates advise the Securities Administrator and the
Depository in writing through the Depository Participants that the continuation
of a book-entry system with respect to Certificates of such Class through the
Depository (or its successor) is no longer in the best interests of the
Certificate Owners of such Class, then the Securities Administrator shall notify
all Certificate Owners of such Book-Entry Certificates, through the Depository,
of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Class requesting the same. The
Depositor shall provide the Securities Administrator with an adequate inventory
of certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon surrender to the Securities Administrator of any such
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Securities Administrator shall authenticate
and deliver such Definitive Certificates. Neither the Depositor nor the
Securities Administrator shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Securities Administrator, to the extent applicable with respect to such
Definitive Certificates and the Securities Administrator shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.

     Section 5.09 Maintenance of Office or Agency. The Securities Administrator
will maintain or cause to be maintained at its expense an office or offices or
agency or agencies where Certificates may be surrendered for registration of
transfer or exchange. The Securities Administrator initially designates its
offices at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479,
Attention: Client Service Manager - Merrill Lynch Alternative Note Asset Trust,
Series 2007-OAR1 as offices for such purposes. The Securities Administrator will
give prompt written notice to the Certificateholders of any change in such
location of any such office or agency.

                                   ARTICLE VI
                         PAYMENTS TO CERTIFICATEHOLDERS

     Section 6.01 Distributions on the Certificates.

     (a) [Reserved]

     (b) On each Distribution Date, amounts on deposit in the Distribution
Account shall be treated for federal income tax purposes as applied to
distributions on the interests in each of the SWAP REMIC and the Lower Tier
REMIC in an amount sufficient to make the distributions on the respective
Certificates on such Distribution Date in accordance with the provisions of this
Section 6.01.

     On each Distribution Date, the interest distributable with respect to each
class of Certificates is the interest which has accrued thereon at the then
applicable related Certificate

                                     -101-
<PAGE>

Rate during the related Accrual Period less applicable related Prepayment
Interest Shortfalls and Deferred Interest, if any, allocated to that class.

     All calculations of interest on the Certificates will be made on the basis
of a 360-day year and the actual number of days elapsed in the applicable
Accrual Period.

     (c) On each Distribution Date (or on the related Swap Payment Date, with
respect to payments to the Supplemental Interest Trust), the Interest Funds for
such Distribution Date are required to be distributed in the following order of
priority, until such Interest Funds have been fully distributed:

               (i) to the Class P Certificates, any Prepayment Charges collected
          on the Prepayment Charge Mortgage Loans and (A) any amounts paid by
          the Sponsor or the applicable Servicer in respect of Prepayment
          Charges pursuant to this Agreement and (B) any amounts received in
          respect of any indemnification paid as a result of a Prepayment Charge
          being unenforceable in breach of the representations and warranties
          set forth in the Mortgage Loan Purchase Agreement received during the
          related Prepayment Period;

               (ii) to the Supplemental Interest Trust, any Net Swap Payments
          owed to the Swap Counterparty;

               (iii) to the Supplemental Interest Trust, any Swap Termination
          Payment owed by the Supplemental Interest Trust to the Swap
          Counterparty (other than any Defaulted Swap Termination Payment);

               (iv) concurrently, to each class of the Senior Certificates, the
          Current Interest and any Interest Carry Forward Amount with respect to
          each such class; provided, however, that if Interest Funds are
          insufficient to make a full distribution of the aggregate Current
          Interest and the aggregate Interest Carry Forward Amount to the Senior
          Certificates, Interest Funds will be distributed pro rata among each
          class of the Senior Certificates based upon the ratio of (x) the
          Current Interest and Interest Carry Forward Amount for each class of
          the Senior Certificates to (y) the total amount of Current Interest
          and any Interest Carry Forward Amount for the Senior Certificates in
          the aggregate;

               (v) to the Class M-1 Certificates, the Current Interest for such
          class and any Interest Carry Forward Amount with respect to such
          class;

               (vi) to the Class M-2 Certificates, the Current Interest for such
          class and any Interest Carry Forward Amount with respect to such
          class;

               (vii) to the Class M-3 Certificates, the Current Interest for
          such class and any Interest Carry Forward Amount with respect to such
          class;

               (viii) to the Class M-4 Certificates, the Current Interest for
          such class and any Interest Carry Forward Amount with respect to such
          class;

                                     -102-
<PAGE>

               (ix) to the Class M-5 Certificates, the Current Interest for such
          class and any Interest Carry Forward Amount with respect to such
          class;

               (x) to the Class M-6 Certificates, the Current Interest for such
          class and any Interest Carry Forward Amount with respect to such
          class;

               (xi) to the Class B-1 Certificates, the Current Interest for each
          such class and any Interest Carry Forward Amount with respect to each
          such class;

               (xii) to the Class B-2 Certificates, the Current Interest for
          each such class and any Interest Carry Forward Amount with respect to
          each such class;

               (xiii) to the Class B-3 Certificates, the Current Interest for
          each such class and any Interest Carry Forward Amount with respect to
          each such class; and

               (xiv) any remainder pursuant to Section 6.01(g) hereof.

     With respect to any Distribution Date, to the extent that the Prepayment
Interest Shortfall exceeds the Compensating Interest Payment payable by the
Servicers or the Master Servicer, such amount shall reduce the Current Interest
with respect to each Class of Certificates, pro rata, based upon the amount of
interest each such Class would otherwise be entitled to receive on such
Distribution Date.

Any interest shortfall resulting from Deferred Interest on the Mortgage Loans
will be allocated to the Offered Certificates pro rata based on and up to
Current Interest accrued on such classes, in reduction of the amount of interest
otherwise distributable to such class of Certificates; provided, however, that
to the extent the amount of Net Negative Amortization otherwise allocable to the
Offered Certificates exceeds the amount of Current Interest accrued on the
Corresponding REMIC Regular Interest of such Certificates (as reduced by each
such class's share of any Prepayment Interest Shortfalls for such Distribution
Date) accrued on such classes of Certificates, then such excess Net Negative
Amortization shall be allocated to the Class C Certificates to the extent
payments would otherwise be made to the Class C Certificates in respect of the
Uncertificated Class C Interest. The amount of the reduction of Current Interest
distributable to each class of Certificates attributable to Net Negative
Amortization will be added to the Class Certificate Balance of that class.

     (d) [RESERVED]

     (e) On each Distribution Date (or in the case of any Net Swap Payments owed
to the Swap Counterparty, one business day (as defined in the Swap Agreement)
prior to such Distribution Date), the Securities Administrator shall, to the
extent of funds then available, make the following distributions from the
Distribution Account of an amount equal to the Principal Distribution Amount in
the following order of priority, and each such distribution shall be made only
after all distributions pursuant to Section 6.01(c) above shall have been made
until such amount shall have been fully distributed for such Distribution Date:

               (i) to the Supplemental Interest Trust, any Net Swap Payments
          owed to the Swap Counterparty, to the extent not paid pursuant to
          Section 6.01(c)(ii);

                                     -103-
<PAGE>

               (ii) to the Supplemental Interest Trust, any Swap Termination
          Payment owed by the Supplemental Interest Trust to the Swap
          Counterparty (other than any Defaulted Swap Termination Payment), to
          the extent not paid pursuant to Section 6.01(c)(iii);

               (iii) to the Senior Certificates, the Senior Principal
          Distribution Amount as follows: first, to the Class R Certificate
          until its Class Certificate Balance has been reduced to zero, and
          second, pro rata to the Class A-1 Certificates, Class A-2 Certificates
          and Class A-3 Certificates until the Class Certificate Balance of each
          such Class has been reduced to zero; provided, however, that on and
          after the Distribution Date on which the aggregate Class Certificate
          Balance of the Class M, Class B and Class C Certificates has been
          reduced to zero and the Stated Principal Balance of the Mortgage Loans
          is equal to or less than the aggregate Class Certificate Balance of
          the Senior Certificates, any principal distributions shall be
          allocated sequentially to the Class R, Class A-1, Class A-2 and Class
          A-3 Certificates, in that order, until the Class Certificate Balance
          of each such Class has been reduced to zero;

               (iv) to the Class M-1 Certificates, the Class M-1 Principal
          Distribution Amount;

               (v) to the Class M-2 Certificates, the Class M-2 Principal
          Distribution Amount;

               (vi) to the Class M-3 Certificates, the Class M-3 Principal
          Distribution Amount;

               (vii) to the Class M-4 Certificates, the Class M-4 Principal
          Distribution Amount;

               (viii) to the Class M-5 Certificates, the Class M-5 Principal
          Distribution Amount;

               (ix) to the Class M-6 Certificates, the Class M-6 Principal
          Distribution Amount;

               (x) to the Class B-1 Certificates, the Class B-1 Principal
          Distribution Amount;

               (xi) to the Class B-2 Certificates, the Class B-2 Principal
          Distribution Amount;

               (xii) to the Class B-3 Certificates, the Class B-3 Principal
          Distribution Amount; and (xiii) any remainder pursuant to Section
          6.01(g) hereof.

     (f) [RESERVED]

                                     -104-
<PAGE>

     (g) On each Distribution Date (or in the case of any Net Swap Payments owed
to the Swap Counterparty, one business day (as defined in the Swap Agreement)
prior to such Distribution Date), the Securities Administrator shall, to the
extent of Interest Funds and Principal Funds then available, make the following
distributions up to the following amounts from the Distribution Account of the
remainders pursuant to Section 6.01(c)(xiv) and (e)(xiii) hereof and each such
distribution shall be made only after all distributions pursuant to Sections
6.01(c) and (e) above shall have been made until such remainders shall have been
fully distributed for such Distribution Date:

               (i) to the Senior Certificates, any amounts due as described in
          the same order of priority as set forth in Section 6.01(c)(iv) to the
          extent unpaid by Interest Funds;

               (ii) to the Subordinate Certificates, any amounts due as
          described in the same order of priority as set forth in Section
          6.01(c)(v) through (xiii) to the extent unpaid by Interest Funds;

               (iii) the Extra Principal Distribution Amount;

               (iv) to the Class M-1 Certificates, any Unpaid Realized Loss
          Amount for such class;

               (v) to the Class M-2 Certificates, any Unpaid Realized Loss
          Amount for such class;

               (vi) to the Class M-3 Certificates, any Unpaid Realized Loss
          Amount for such class;

               (vii) to the Class M-4 Certificates, any Unpaid Realized Loss
          Amount for such class;

               (viii) to the Class M-5 Certificates, any Unpaid Realized Loss
          Amount for such class;

               (ix) to the Class M-6 Certificates, any Unpaid Realized Loss
          Amount for such class;

               (x) to the Class B-1 Certificates, any Unpaid Realized Loss
          Amount for such class;

               (xi) to the Class B-2 Certificates, any Unpaid Realized Loss
          Amount for such class;

               (xii) to the Class B-3 Certificates, any Unpaid Realized Loss
          Amount for such class;

                                     -105-
<PAGE>

               (xiii) to the Offered Certificates, on a pro rata basis, based
          upon outstanding Floating Rate Certificate Carryover for each such
          Class, the Floating Rate Certificate Carryover for each such Class;

               (xiv) to the Supplemental Interest Trust, any Defaulted Swap
          Termination Payment to the extent not already paid; and

               (xv) the remainder pursuant to Section 6.01(h) hereof.

     (h) on each Distribution Date, the Securities Administrator shall allocate
the remainders pursuant to Section 6.01(g)(xv) as follows:

               (i) to the Class C Certificates in the following order of
          priority, (I) the Class C Current Interest, (II) the Class C Interest
          Carry Forward Amount, (III) as principal on the Class C Certificate
          until the Class Certificate Balance of the Class C Certificates has
          been reduced to zero and (IV) the Class C Unpaid Realized Loss Amount;
          and

               (ii) the remainder pursuant to Section 6.01(i) hereof.

     (i) On each Distribution Date, the Securities Administrator shall allocate
the remainder pursuant to Section 6.01(h)(ii) hereof (i) to the Securities
Administrator to reimburse amounts or pay indemnification amounts owing to the
Securities Administrator from the Issuing Entity pursuant to Section 7.03 and
(ii) to the Class R Certificate and such distributions shall be made only after
all preceding distributions shall have been made until such remainder shall have
been fully distributed.

     (j) On each Distribution Date, after giving effect to distributions on such
Distribution Date, the Securities Administrator shall allocate the Realized Loss
Amount for the Certificates to reduce the Class Certificate Balances of the
Class C Certificates and the Subordinate Certificates in the following order of
priority:

               (i) to the Class C Certificates, until the Class C Class
          Certificate Balance is reduced to zero;

               (ii) to the Class B-3 Certificates until the Class B-3 Class
          Certificate Balance is reduced to zero;

               (iii) to the Class B-2 Certificates until the Class B-2 Class
          Certificate Balance is reduced to zero;

               (iv) to the Class B-1 Certificates until the Class B-1 Class
          Certificate Balance is reduced to zero;

               (v) to the Class M-6 Certificates until the Class M-6 Class
          Certificate Balance is reduced to zero;

                                     -106-
<PAGE>

               (vi) to the Class M-5 Certificates until the Class M-5 Class
          Certificate Balance is reduced to zero;

               (vii) to the Class M-4 Certificates until the Class M-4 Class
          Certificate Balance is reduced to zero;

               (viii) to the Class M-3 Certificates until the Class M-3 Class
          Certificate Balance is reduced to zero;

               (ix) to the Class M-2 Certificates until the Class M-2 Class
          Certificate Balance is reduced to zero; and

               (x) to the Class M-1 Certificates until the Class M-1 Class
          Certificate Balance is reduced to zero.

     (k) Subject to Section 10.02 hereof respecting the final distribution, on
each Distribution Date the Securities Administrator shall make distributions to
each Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if such Holder has so
notified the Securities Administrator at least five (5) Business Days prior to
the related Record Date or, if not, by check mailed by first class mail to such
Certificateholder at the address of such holder appearing in the Certificate
Register. Notwithstanding the foregoing, but subject to Section 10.02 hereof
respecting the final distribution, distributions with respect to Certificates
registered in the name of a Depository shall be made to such Depository in
immediately available funds.

     In accordance with this Agreement, the Master Servicer shall prepare and
deliver an electronic report (the "Remittance Report") to the Securities
Administrator (or by such other means as the Master Servicer and the Securities
Administrator may agree from time to time) containing such data and information
as to permit the Securities Administrator to prepare the Monthly Statement to
Certificateholders and make the required distributions for the related
Distribution Date. The Securities Administrator will prepare the Monthly Report
based solely upon the information received from the Master Servicer, which in
turn shall be based on information from the Servicers and the Cap Contract
Counterparty.

     (l) The Supplemental Interest Trust Trustee is hereby directed by the
Depositor to execute the Corridor Contract on behalf of the Supplemental
Interest Trust in the form presented to it by the Depositor and shall have no
responsibility for the contents of such Corridor Contract, including, without
limitation, the representations and warranties contained therein. Any funds
payable by the Supplemental Interest Trust under the Corridor Contract at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Corridor Contract, except as set forth in Section 2
of the Corridor Contract, the Supplemental Interest Trust shall not be required
to make any payments to the counterparty under the Corridor Contract. Any
payments received under the terms of the Corridor Contract will be available to
pay the holders of the Certificates up to the amount of any Floating Rate
Certificate Carryovers remaining after all other distributions required under
this Section 6.01 are made on such Distribution Date, other than Floating Rate
Certificate Carryovers attributable to the fact that

                                     -107-
<PAGE>

Realized Loss Amounts are not allocated to the Senior Certificates. Any amounts
received under the terms of the Corridor Contract on a Distribution Date that
are not used to pay such Floating Rate Certificate Carryovers will be
distributed to the holders of the Class C Certificates. Payments in respect of
such Floating Rate Certificate Carryovers from proceeds of the Corridor Contract
shall be paid to the Certificates, pro rata based upon such Floating Rate
Certificate Carryovers for each such class of Certificates. Amounts received on
the Corridor Contract will be available to make payments on the Offered
Certificates.

               (i) The Supplemental Interest Trust Trustee shall establish and
          maintain, for the benefit of the Supplemental Interest Trust and the
          Certificateholders, the Corridor Contract Account. On or prior to the
          Corridor Contract Termination Date, amounts, if any, received by the
          Supplemental Interest Trust Trustee for the benefit of the Trust Fund
          in respect of the Corridor Contract shall be deposited by the
          Supplemental Interest Trust Trustee into the Corridor Contract Account
          and will be used to pay Floating Rate Certificate Carryovers on the
          Certificates to the extent provided in the immediately preceding
          paragraph. With respect to any Distribution Date on or prior to the
          Corridor Contract Termination Date, the amount, if any, payable by the
          Cap Contract Counterparty under the Corridor Contract will equal the
          product of (i) the excess of (x) One-Month LIBOR (as determined by the
          Cap Contract Counterparty and subject to a cap equal to the rate with
          respect to such Distribution Date as shown under the heading "1ML
          Upper Collar" in the schedule to the Corridor Contract), over (y) the
          rate with respect to such Distribution Date as shown under the heading
          "1ML Strike Lower Collar" in the schedule to the Corridor Contract,
          (ii) an amount equal to the lesser of (x) the Corridor Contract
          Notional Balance for such Distribution Date and (y) the outstanding
          Class Certificate Balance of the related classes of Certificates and
          (iii) the number of days in such Accrual Period, divided by 360. If a
          payment is made to the Supplemental Interest Trust under the Corridor
          Contract and the Securities Administrator is required to distribute
          excess amounts to the holders of the Class C Certificates as described
          above, information regarding such distribution will be included in the
          monthly statement made available on the Securities Administrator's
          website pursuant to Section 6.03 hereof.

               (ii) Amounts on deposit in the Corridor Contract Account will
          remain uninvested pending distribution to Certificateholders.

               (iii) The Corridor Contract is scheduled to remain in effect
          until the Corridor Contract Termination Date and will be subject to
          early termination only in limited circumstances. Such circumstances
          include certain insolvency or bankruptcy events in relation to the Cap
          Contract Counterparty, the termination of the Trust Fund, the Corridor
          Contract becoming illegal or subject to certain kinds of taxation and
          certain other events of default and termination events (as further
          detailed in the Corridor Contract).

               (iv) On the Closing Date, the Cap Contract Counterparty and the
          Supplemental Interest Trust Trustee (which is hereby authorized and
          directed to

                                     -108-
<PAGE>

          enter into such credit support annex) will enter into a credit support
          annex in relation to the Corridor Contract, which annex is intended to
          protect the Issuing Entity from certain ratings downgrades that might
          hinder the ability of the Cap Contract Counterparty to continue its
          obligations under the Corridor Contract.

     (m) On the Closing Date, the Supplemental Interest Trust shall be
established and maintained pursuant to this Agreement, as a separate trust, the
corpus of which shall be held by the Supplemental Interest Trust Trustee for the
benefit of the holders of the Certificates as a segregated subtrust of the Trust
Fund. The Supplemental Interest Trust shall hold the Corridor Contract Account,
the Cap Contract Account and the Swap Account, each of which shall be an
Eligible Account, and funds deposited in each Account therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including, without limitation, other moneys of the Securities Administrator or
the Supplemental Interest Trust Trustee held pursuant to this Agreement. In no
event shall any funds deposited in each Account within the Supplemental Interest
Trust be credited to or made available to any other Account of the Trust Fund.
The records of the Securities Administrator shall at all times reflect that the
Supplemental Interest Trust is a subtrust of the Trust Fund, the assets of which
are segregated from other assets of the Trust Fund.

     The Supplemental Interest Trust Trustee is hereby directed by the Depositor
to execute the Swap Agreement and the Cap Contract on behalf of the Supplemental
Interest Trust in the forms presented to it by the Depositor and shall have no
responsibility for the contents of such Swap Agreement and Cap Contract,
including, without limitation, the representations and warranties contained
therein. The Supplemental Interest Trust Trustee shall have all of the rights
and protections of the Securities Administrator hereunder.

     The Supplemental Interest Trust Trustee shall enforce all of the rights of
the Supplemental Interest Trust and exercise any remedies under the Swap
Agreement, Corridor Contract or Cap Contract and, in the event the Swap
Agreement is terminated as a result of the designation by either party thereto
of an Early Termination Date (as defined in the Swap Agreement), at the
direction of the Depositor, enter into a replacement swap agreement with a
replacement counterparty appointed by the Depositor utilizing the amounts of the
net Swap Termination Payments received.

     For each Distribution Date, through and including the Distribution Date in
February 2012, the Supplemental Interest Trust Trustee shall, based on the
Significance Estimate (which shall be provided to the Supplemental Interest
Trust Trustee by the Depositor within five (5) Business Days prior to the
Distribution Date), calculate the Significance Percentage of each of the Swap
Agreement, the Corridor Contract and the Cap Contract. If on any such
Distribution Date, the Significance Percentage is equal to or greater than 9%,
the Supplemental Interest Trust Trustee shall promptly notify the Depositor and
the Depositor shall obtain the financial information required to be delivered by
the Swap Counterparty or the Cap Contract Counterparty, as applicable, pursuant
to the terms of the Swap Agreement or the Cap Contract, respectively. If, on any
succeeding Distribution Date through and including the Distribution Date in
February 2012, the Significance Percentage is equal to or greater than 10%, the
Supplemental Interest Trust Trustee shall promptly notify the Depositor and the
Depositor shall, within five (5) Business Days following such Distribution Date,
deliver to the Securities

                                     -109-
<PAGE>

Administrator the financial information provided to it by the Swap Counterparty
or Cap Contract Counterparty, as applicable, in Edgar-compatible format for
inclusion in the Form 10-D relating to such Distribution Date.

      Any Swap Termination Payment received by the Supplemental Interest Trust
Trustee shall be deposited in the Swap Account and shall be used to make any
upfront payment required under a replacement swap agreement and any upfront
payment received from the counterparty to a replacement swap agreement shall be
used to pay any Swap Termination Payment owed to the Swap Counterparty.

      Notwithstanding anything contained herein, in the event that a replacement
swap agreement cannot be obtained within thirty (30) days after receipt by the
Supplemental Interest Trust Trustee of the Swap Termination Payment paid by the
terminated Swap Counterparty, the Supplemental Interest Trust Trustee shall
deposit such Swap Termination Payment into a separate, segregated non-interest
bearing account established by the Supplemental Interest Trust Trustee and the
Supplemental Interest Trust Trustee shall, on each Distribution Date following
receipt of such Swap Termination Payment, withdraw from such account, an amount
equal to the Net Swap Payment, if any, that would have been paid to the
Supplemental Interest Trust by the original Swap Counterparty (computed in
accordance with the original Swap Agreement) and distribute such amount in
accordance with Section 6.01(m)(i)-(viii) of this Agreement. Any such account
shall not be an asset of any REMIC. Any amounts remaining in such account shall
be distributed to the holders of the Class C Certificates on the Distribution
Date following the earlier of (i) the termination of the Trust Fund pursuant to
Section 10.01 and (ii) February 25, 2012.

      On any Distribution Date (or in the case of any Net Swap Payments, on the
related Swap Payment Date), any Swap Termination Payments or Net Swap Payments
owed to the Swap Counterparty will be paid out of and any Net Swap Payments or
Swap Termination Payments received from the Swap Counterparty will be deposited
into the Swap Account, any payments received from the Cap Contract Counterparty
pursuant to the Corridor Contract will be deposited into the Corridor Contract
Account and any Cap Payments received from the Cap Contract Counterparty will be
deposited into the Cap Contract Account (each account within the Supplemental
Interest Trust). The Supplemental Interest Trust will not be an asset of any
REMIC. Funds in the Swap Account, the Corridor Contract Accounts and the Cap
Contract Account within the Supplemental Interest Trust shall be distributed in
the following order of priority by the Securities Administrator (provided,
however, amounts relating to Cap Payments on deposit in the Cap Contract Account
will not be used to make any portion of the payments in paragraphs (i), (ii) and
(ix) below):

            (i) to the Swap Counterparty, all Net Swap Payments, if any, owed to
      the Swap Counterparty for such Distribution Date;

            (ii) to the Swap Counterparty, any Swap Termination Payment, other
      than a Defaulted Swap Termination Payment, if any, owed to the Swap
      Counterparty;

                                     -110-
<PAGE>

            (iii) to each class of the Senior Certificates, on a pro rata basis,
      any Current Interest and any Interest Carry Forward Amount with respect to
      such class to the extent unpaid;

            (iv) sequentially, to the Class M-1 Certificates, the Class M-2
      Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
      Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
      Certificates, the Class B-2 Certificates and the Class B-3 Certificates in
      that order, any Current Interest for such class to the extent unpaid;

            (v) sequentially, to the Class M-1 Certificates, the Class M-2
      Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
      Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
      Certificates, the Class B-2 Certificates and the Class B-3 Certificates in
      that order, any Interest Carry Forward with respect to such class to the
      extent unpaid;

            (vi) to the Offered Certificates, to pay principal as described and
      in the same manner and order of priority as set forth in Sections
      6.01(e)(iii) through 6.01(e)(xii) in order to restore levels of the
      Overcollateralization Amount, and after giving effect to distributions
      from Principal Distribution Amount for each such Class;

            (vii) sequentially, to the Class M-1 Certificates, the Class M-2
      Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
      Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
      Certificates, the Class B-2 Certificates and the Class B-3 Certificates,
      in that order, any Unpaid Realized Loss Amount for such class to the
      extent unpaid;

            (viii) to the Offered Certificates, on a pro rata basis, any
      Floating Rate Certificate Carryover to the extent not paid based on the
      amount of such unpaid Floating Rate Certificate Carryover;

            (ix) to the Swap Counterparty, any Defaulted Swap Termination
      Payment owed to the Swap Counterparty to the extent not already paid; and

            (x) to the Class C Certificates any remaining amount.

      Notwithstanding the foregoing, however, after giving effect to proposed
distributions on any Distribution Date, the sum of the cumulative amounts
distributed pursuant to clause (vi) above and the cumulative amounts distributed
pursuant to clause (vii) above shall be limited to the aggregate amount of
cumulative Realized Losses incurred from the Cut-off Date through the last day
of the related Prepayment Period.

      Upon termination of the Trust Fund, any amounts remaining in the Swap
Account and the Cap Contract Account within the Supplemental Interest Trust
shall be distributed pursuant to the priorities set forth in this Section
6.01(m).

                                     -111-
<PAGE>

      With respect to the failure of the Swap Counterparty to perform any of its
obligations under the Swap Agreement, the breach by the Swap Counterparty of any
of its representations and warranties made pursuant to the Swap Agreement, or
the termination of the Swap Agreement, the Supplemental Interest Trust Trustee
shall send any notices and make any demands required hereunder (to the extent
that a Responsible Officer of the Securities Administrator has actual knowledge
or written notice of any such failure, breach or termination).

      Section 6.02 Distributions.

      (a) On each Distribution Date, other than the final Distribution Date, the
Securities Administrator shall distribute to each Certificateholder of record on
the directly preceding Record Date the Certificateholder's pro rata share of its
Class (based on the aggregate Percentage Interest represented by such Holder's
Certificates) of all amounts required to be distributed on such Distribution
Date to such Class, based solely on information provided to the Securities
Administrator by the Master Servicer. The Securities Administrator shall
calculate the amount to be distributed to each Class and, based on such amounts,
the Securities Administrator shall determine the amount to be distributed to
each Certificateholder. All of the Securities Administrator's calculations of
payments shall be based solely on information provided to the Securities
Administrator by the Master Servicer or the applicable Servicer. The Securities
Administrator shall not be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.

      (b) Payment of the above amounts to each Certificateholder shall be made
(i) by check mailed to each Certificateholder entitled thereto at the address
appearing in the Certificate Register or (ii) upon receipt by the Securities
Administrator on or before the fifth Business Day preceding the Record Date of
written instructions from a Certificateholder by wire transfer to a United
States dollar account maintained by the payee at any United States depository
institution with appropriate facilities for receiving such a wire transfer;
provided, however, that the final payment in respect of each Class of
Certificates will be made only upon presentation and surrender of such
respective Certificates at the office or agency of the Securities Administrator
specified in the notice to Certificateholders of such final payment.

      Section 6.03 Statements to Certificateholders.

      (a) On each Distribution Date, the Securities Administrator will make
available to each Certificateholder and any other interested party a statement
(the "Monthly Statement"), based in part on information provided by the Master
Servicer and the Servicers generally setting forth among other information with
respect to the Certificates and Mortgage Loans:

      (1)   the amount of the related distribution to holders of each class of
            certificates allocable to principal, separately identifying (A) the
            aggregate amount of any principal prepayments included therein, (B)
            the aggregate amount of all scheduled payments of principal included
            therein and (C) any Extra Principal Distribution Amount;

      (2)   the amount of such distribution to holders of each class of
            Certificates allocable to interest;

                                     -112-
<PAGE>

      (3)   the Interest Carry Forward Amount for each class of Certificates;

      (4)   the Class Certificate Balance of each class of Certificates after
            giving effect to the distribution of principal on such Distribution
            Date;

      (5)   the aggregate outstanding principal balance of each class of
            Certificates for the following Distribution Date;

      (6)   the amount of the Servicing Fee paid to or retained by the Servicers
            and any amounts constituting reimbursement or indemnification of the
            Servicers, the Master Servicer, the Trustee or the Securities
            Administrator;

      (7)   the Certificate Rate for each class of Certificates for such
            Distribution Date;

      (8)   the amount of Monthly Advances on Mortgage Loans included in the
            distribution on such Distribution Date;

      (9)   the cumulative amount of (A) Realized Losses and (B) Applied
            Realized Loss Amounts to date;

      (10)  the amount of (A) Realized Losses and (B) Applied Realized Loss
            Amounts with respect to such Distribution Date;

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

      (12)  with respect to any Mortgage Loan that became an REO Property during
            the preceding calendar month, the loan number and Stated Principal
            Balance of such Mortgage Loan as of the close of business on the
            Determination Date and the date of acquisition thereof, in the
            aggregate;

      (13)  whether a Stepdown Trigger Event has occurred and is in effect;

      (14)  the total number and principal balance of any REO Properties as of
            the close of business on the related Determination Date, in the
            aggregate;

      (15)  any Floating Rate Certificate Carryover paid and all Floating Rate
            Certificate Carryover remaining on each class of the Certificates on
            such Distribution Date;

      (16)  the number and amount of Prepayment Charges received during the
            related Prepayment Period in the aggregate;

      (17)  as of each Distribution Date, the amount, if any, received pursuant
            to each Corridor Contract and the amount thereof to be paid to each
            class of Certificates;

      (18)  as of each Distribution Date, the amount of any Cap Payments paid or
            received by the Supplemental Interest Trust pursuant to the Cap
            Contract;

                                     -113-
<PAGE>

      (19)  as of each Distribution Date, the amount of any Net Swap Payments or
            Swap Termination Payments paid or received by the Supplemental
            Interest Trust pursuant to the Swap Agreement and the amount of any
            Defaulted Swap Termination Payments paid by the Supplemental
            Interest Trust;

      (20)  the number of Mortgage Loans with respect to which (i) a reduction
            in the Mortgage Interest Rate has occurred or (ii) the related
            borrower's obligation to repay interest on a monthly basis has been
            suspended or reduced pursuant to the Relief Act; and the amount of
            interest not required to be paid with respect to any such Mortgage
            Loans during the related Due Period as a result of such reductions;

      (21)  the amounts distributed as interest in respect of the portion of
            each class of Certificates that represents a regular or residual
            interest in a REMIC and the amount of distributions on each class of
            certificates not treated as distributions on a regular or residual
            interest in a REMIC;

      (22)  the aggregate amount of all Advances with respect to the Mortgage
            Loans recovered during the preceding calendar month:

      (23)  the allocation to each Class of Certificates of any Realized Losses
            during the related Due Period:

      (24)  with respect to each Class of Certificates, the amount of any
            Prepayment Interest Shortfalls on such Distribution Date; and

      (25)  information regarding any pool asset changes (other than in
            connection with a pool asset converting into cash in accordance with
            its terms), such as additions or removals in connection with pool
            asset substitutions and repurchases (and purchase rates, if
            applicable).

      The Securities Administrator may make available each month, to any
interested party, the monthly statement via the Securities Administrator's
website. The Securities Administrator will also make available on its website
any reports on Form 10-D, 10-K and 8-K that have been prepared and filed by the
Securities Administrator with respect to the Issuing Entity promptly after such
material is electronically filed with, or furnished to, the Securities and
Exchange Commission. The Securities Administrator's website will be located at
www.ctslink.com, and assistance in using the website can be obtained by calling
the Securities Administrator's customer service desk at (301) 815-6600. Parties
that are unable to use the above distribution option are entitled to have a
paper copy mailed to them via first class mail by notifying the Securities
Administrator at the following address: Wells Fargo Bank, N.A., 9062 Old
Annapolis Road, Columbia, Maryland 21045, Attention: Client Manager -- MLMI
2007-OAR1. The Securities Administrator will have the right to change the way
such reports are distributed in order to make such distributions more convenient
and/or more accessible, and the Securities Administrator will provide timely and
adequate notification to such parties regarding any such changes.

                                     -114-
<PAGE>

      In addition, within a reasonable period of time after the end of each
calendar year, the Securities Administrator will, upon request, prepare and
deliver to each Holder of a Certificate of record during the previous calendar
year a statement containing information necessary to enable Holders of the
Certificates to prepare their tax returns. These statements will not have been
examined and reported upon by an independent public accountant.

      (b) By January 30 of each year beginning in 2008, if so requested in
writing, the Securities Administrator will furnish such report to each Holder of
the Certificates of record at any time during the prior calendar year as to the
aggregate of amounts reported pursuant to subclauses (a)(ii) and (a)(v) above
with respect to the Certificates, plus information with respect to the amount of
servicing compensation and such other customary information as the Securities
Administrator may determine to be necessary and/or to be required by the
Internal Revenue Service or by a federal or state law or rules or regulations to
enable such Holders to prepare their tax returns for such calendar year. Such
obligations shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Securities
Administrator pursuant to the requirements of the Code.

      Section 6.04 Monthly Advances. If the Monthly Payment on a Mortgage Loan
that was due on a related Due Date and is Delinquent other than as a result of
application of the Relief Act and for which the applicable Servicer was required
to make an advance pursuant to this Agreement exceeds the amount deposited in
the Master Servicer Collection Account that will be used for a Monthly Advance
with respect to such Mortgage Loan, the Master Servicer will deposit in the
Master Servicer Collection Account not later than the Distribution Account
Deposit Date immediately preceding the related Distribution Date an amount equal
to such deficiency, net of the Servicing Fee for such Mortgage Loan, except to
the extent the Master Servicer determines any such Monthly Advance to be
nonrecoverable from Liquidation Proceeds, Insurance Proceeds or future payments
on the Mortgage Loan for which such Monthly Advance was made. If the Master
Servicer has not deposited the amount described above as of the related
Distribution Account Deposit Date, the Trustee will, subject to applicable law
and its determination of recoverability, deposit in the Master Servicer
Collection Account not later than the related Distribution Date, an amount equal
to the remaining deficiency as of the Distribution Account Deposit Date. Subject
to the foregoing, the Master Servicer shall continue to make such Monthly
Advances through the date that the applicable Servicer is required to do so
under this Agreement. If applicable, on the Distribution Account Deposit Date,
the Master Servicer shall present an Officer's Certificate to the Securities
Administrator (i) stating that the Master Servicer elects not to make a Monthly
Advance in a stated amount and (ii) detailing the reason it deems the advance to
be nonrecoverable.

      Section 6.05 Compensating Interest Payments. The Master Servicer shall
deposit in the Master Servicer Collection Account not later than each
Distribution Account Deposit Date an amount equal to the aggregate amounts
required to be paid by the Servicers under this Agreement with respect to
subclause (a) of the definition of Prepayment Interest Shortfall with respect to
the Mortgage Loans for the related Distribution Date, and not so paid by the
applicable Servicer (such amount, the "Compensating Interest Payment"). The
Master Servicer shall not be entitled to any reimbursement of any Compensating
Interest Payment; provided, however, the aggregate compensating interest
payments made by the Master Servicer shall not exceed the Master Servicing
Compensation.

                                     -115-
<PAGE>

                                   ARTICLE VII
                      THE MASTER SERVICER AND THE DEPOSITOR

      Section 7.01 Liabilities of the Master Servicer. The Master Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Master Servicer, as the case may
be, herein. The Depositor shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Depositor.

      Section 7.02 Merger or Consolidation of the Master Servicer.

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

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

      Section 7.03 Indemnification from the Master Servicer and the Depositor.

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

      (b) The Depositor will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise referred to in
Section (a) above.

      Section 7.04 Limitations on Liability of the Master Servicer and Others.
Subject to the obligation of the Master Servicer to indemnify the Indemnified
Persons pursuant to Section 7.03:

                                     -116-
<PAGE>

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

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

      (c) The Master Servicer, the Custodian and any director, officer, employee
or agent of the Master Servicer or the Custodian shall be indemnified by the
Issuing Entity and held harmless thereby against any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or related to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement or the Certificates (except to the extent
that the Master Servicer or the Custodian, as the case may be, is indemnified by
a Servicer thereunder), other than (i) any such loss, liability or expense
related to the Master Servicer's failure to perform its duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement), or to the Custodian's
failure to perform its duties under the Custodial Agreement, respectively, or
(ii) any such loss, liability or expense incurred by reason of the Master
Servicer's or the Custodian's willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or under the Custodial Agreement, as
applicable, or by reason of reckless disregard of obligations and duties
hereunder or under the Custodial Agreement, as applicable.

      (d) The Master Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, the Master Servicer may in its discretion,
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Issuing Entity, and the Master Servicer
shall be entitled to be reimbursed therefor out of the Master Servicer
Collection Account as provided by Section 4.03. Nothing in this Section 7.04(d)
shall affect the Master Servicer's obligation to supervise, or to take such
actions as are necessary to ensure, the servicing and administration of the
Mortgage Loans pursuant to Section 3.01(a).

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

                                     -117-
<PAGE>

      (f) The Master Servicer shall not be liable for any acts or omissions of
either Servicer, except as otherwise expressly provided herein.

      Section 7.05 Master Servicer Not to Resign. Except as provided in Section
7.07, the Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon a determination that any such duties hereunder
are no longer permissible under applicable law and such impermissibility cannot
be cured. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Independent Counsel to such effect
delivered to the Trustee. No such resignation by the Master Servicer shall
become effective until MLML or the Trustee or a successor to the Master Servicer
reasonably satisfactory to the Trustee shall have assumed the responsibilities
and obligations of the Master Servicer in accordance with Section 8.02 hereof.
The Trustee shall notify the Rating Agencies of the resignation of the Master
Servicer. If the Master Servicer and the Securities Administrator are the same
entity, then at any time the Master Servicer is terminated as master servicer,
the Securities Administrator shall likewise be removed as securities
administrator.

      Section 7.06 Successor Master Servicer. In connection with the appointment
of any successor Master Servicer or the assumption of the duties of the Master
Servicer, MLML or the Trustee may make such arrangements for the compensation of
such successor master servicer out of payments on the Mortgage Loans as MLML or
the Trustee and such successor master servicer shall agree. If the successor
master servicer does not agree that such market value is a fair price, such
successor master servicer shall obtain two quotations of market value from third
parties actively engaged in the servicing of single-family mortgage loans.

            Notwithstanding anything herein to the contrary, in no event shall
the Trustee be liable for any Servicing Fee or Master Servicing Compensation or
for any differential in the amount of the Servicing Fee or Master Servicing
Compensation paid hereunder and the amount necessary to induce any successor
servicer or successor master servicer to act as successor servicer or successor
master servicer, as applicable, under this Agreement and the transactions set
forth or provided for herein.

      Section 7.07 Sale and Assignment of Master Servicing. The Master Servicer
may sell and assign its rights and delegate its duties and obligations in its
entirety as Master Servicer under this Agreement; provided, however, that: (i)
the purchaser or transferee accepting such assignment and delegation (a) shall
be a Person which shall be qualified to service mortgage loans for Fannie Mae or
Freddie Mac; (b) shall have a net worth of not less than $10,000,000 (unless
otherwise approved by each Rating Agency pursuant to clause (ii) below); (c)
shall be reasonably satisfactory to the Trustee (as evidenced in a writing
signed by the Trustee); and (d) shall execute and deliver to the Trustee an
agreement, in form and substance reasonably satisfactory to the Trustee, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by it as
master servicer under this Agreement, any custodial agreement from and after the
effective date of such agreement; (ii) each Rating Agency shall be given prior
written notice of the identity of the proposed successor to the Master Servicer
and each Rating Agency's rating of the Certificates in effect immediately prior
to such assignment, sale and delegation will not be downgraded, qualified or
withdrawn as a result of such assignment, sale and delegation, as evidenced by a
letter to such effect delivered to the Master Servicer and the Trustee; and
(iii) the Master Servicer

                                     -118-
<PAGE>

assigning and selling the master servicing shall deliver to the Trustee an
Officer's Certificate and an Opinion of Independent Counsel, each stating that
all conditions precedent to such action under this Agreement have been completed
and such action is permitted by and complies with the terms of this Agreement.
No such assignment or delegation shall affect any liability of the Master
Servicer arising prior to the effective date thereof.

                                  ARTICLE VIII
                                     DEFAULT

      Section 8.01 Events of Default. "Event of Default," wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
only with respect to the defaulting Master Servicer:

            (i) The Master Servicer fails to cause to be deposited in the
      Distribution Account any amount so required to be deposited pursuant to
      this Agreement, and such failure continues unremedied for a period of
      three Business Days after the date upon which written notice of such
      failure, requiring the same to be remedied, shall have been given to the
      Master Servicer; or

            (ii) The Master Servicer fails to observe or perform in any material
      respect any other material covenants and agreements set forth in this
      Agreement to be performed by it, which covenants and agreements materially
      affect the rights of Certificateholders, and such failure continues
      unremedied for a period of 60 days after the date on which written notice
      of such failure, properly requiring the same to be remedied, shall have
      been given to the Master Servicer by the Trustee or to the Master Servicer
      and the Trustee by the Holders of Certificates evidencing Percentage
      Interests aggregating not less than 25% of the Trust Fund; or

            (iii) There is entered against the Master Servicer a decree or order
      by a court or agency or supervisory authority having jurisdiction in the
      premises for the appointment of a conservator, receiver or liquidator in
      any insolvency, readjustment of debt, marshaling of assets and liabilities
      or similar proceedings, or for the winding up or liquidation of its
      affairs, and the continuance of any such decree or order is unstayed and
      in effect for a period of 60 consecutive days, or an involuntary case is
      commenced against the Master Servicer under any applicable insolvency or
      reorganization statute and the petition is not dismissed within 60 days
      after the commencement of the case; or

            (iv) The Master Servicer consents to the appointment of a
      conservator or receiver or liquidator in any insolvency, readjustment of
      debt, marshaling of assets and liabilities or similar proceedings of or
      relating to the Master Servicer or substantially all of its property; or
      the Master Servicer admits in writing its inability to pay its debts
      generally as they become due, files a petition to take advantage of any
      applicable insolvency or reorganization statute, makes an assignment for
      the benefit of its creditors, or voluntarily suspends payment of its
      obligations;

                                     -119-
<PAGE>

            (v) The Master Servicer assigns or delegates its duties or rights
      under this Agreement in contravention of the provisions permitting such
      assignment or delegation under Sections 7.05 or 7.07; or

            (vi) The Master Servicer fails to comply with items 1122 and 1123 of
      Regulation AB.

In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Percentage Interests aggregating not less
than 51% of the Class Certificate Balance of the Certificates, by notice in
writing to the Master Servicer (and to the Trustee if given by such
Certificateholders), with a copy to the Rating Agencies, and with the consent of
the Sponsor, may terminate all of the rights and obligations (but not the
liabilities) of the Master Servicer under this Agreement and in and to the
Mortgage Loans and/or the REO Property serviced by the Master Servicer and the
proceeds thereof. Upon the receipt by the Master Servicer of the written notice,
all authority and power of the Master Servicer under this Agreement, whether
with respect to the Certificates, the Mortgage Loans, REO Property or under any
other related agreements (but only to the extent that such other agreements
relate to the Mortgage Loans or related REO Property) shall, subject to Section
8.02, automatically and without further action pass to and be vested in the
Trustee pursuant to this Section 8.01; and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Issuing Entity or which thereafter become part of the Issuing Entity; and (ii)
originals or copies of all documents of the Master Servicer reasonably requested
by the Trustee to enable it to assume the Master Servicer's duties thereunder.
In addition to any other amounts which are then, or, notwithstanding the
termination of its activities under this Agreement, may become payable to the
Master Servicer under this Agreement, the Master Servicer shall be entitled to
receive, out of any amount received on account of a Mortgage Loan or related REO
Property, that portion of such payments which it would have received as
reimbursement under this Agreement if notice of termination had not been given.
The termination of the rights and obligations of the Master Servicer shall not
affect any obligations incurred by the Master Servicer prior to such
termination.

      Section 8.02 Trustee to Act; Appointment of Successor.

      (a) Upon the receipt by the Master Servicer of a notice of termination
pursuant to Section 8.01 or an Opinion of Independent Counsel pursuant to
Section 7.05 to the effect that the Master Servicer is legally unable to act or
to delegate its duties to a Person which is legally able to act, the Trustee
shall automatically become the successor in all respects to the Master Servicer
in its capacity under this Agreement and the transactions set forth or provided
for herein and shall thereafter be subject to all the responsibilities, duties,
liabilities and limitations on liabilities relating thereto placed on the Master
Servicer by the terms and provisions hereof; provided, however, that MLML shall
have the right to either (a) immediately assume the duties of the Master
Servicer or (b) select a successor master servicer; provided further, however,
that the Trustee shall have no obligation whatsoever with respect to any
liability (other than advances

                                     -120-
<PAGE>

deemed recoverable and not previously made) incurred by the Master Servicer at
or prior to the time of termination. As compensation therefor, the Trustee shall
be entitled to all funds relating to the Mortgage Loans which the Master
Servicer would have been entitled to retain if the Master Servicer had continued
to act hereunder, except for those amounts due the Master Servicer as
reimbursement permitted under this Agreement for advances previously made or
expenses previously incurred. Notwithstanding the above, or anything herein to
the contrary, the Trustee, if it becomes Master Servicer, shall have no
responsibility or obligation (i) to repurchase or substitute any Mortgage Loan,
(ii) for any representation or warranty of the Master Servicer hereunder, and
(iii) for any act or omission of either a predecessor or successor Master
Servicer other than the Trustee. The Trustee may conduct any activity required
of it as Master Servicer hereunder through an Affiliate or through an agent.
Neither the Trustee (as successor Master Servicer) nor any other successor
Master Servicer shall be deemed to be in default hereunder due to any act or
omission of a predecessor Master Servicer, including but not limited to failure
to timely deliver to the Trustee distribution instructions, any funds required
to be deposited to the Trust Fund, or any breach of its duty to cooperate with a
transfer of master servicing. Neither the Trustee nor any other successor Master
Servicer shall be deemed to be in default hereunder by reason of any failure to
make, or any delay in making, any distribution hereunder or any portion thereof
or any failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused solely by the failure of the
Master Servicer to deliver or provide, or any delay in delivering or providing,
any cash, information, documents or records required to be provided to it by the
Master Servicer. Notwithstanding the above, the Trustee may, if it shall be
unwilling so to act, or shall, if it is legally unable so to act, appoint or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution which is a Fannie Mae- or Freddie Mac-approved
servicer, and with respect to a successor to the Master Servicer only, having a
net worth of not less than $10,000,000 and meeting such other standards for a
successor Master Servicer as are set forth in this Agreement, as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on the Mortgage Loans as it and
such successor shall agree; provided, however, in the event that the provisions
of Section 7.06 shall apply, no such compensation shall be in excess of that
permitted the Trustee under this Section 8.02(a), and that such successor shall
undertake and assume the obligations of the Trustee to pay compensation to any
third Person acting as an agent or independent contractor in the performance of
master servicing responsibilities hereunder. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.

      (b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.

                                     -121-
<PAGE>

      Section 8.03 Notification to Certificateholders. Upon any termination or
appointment of a successor to the Master Servicer, the Trustee shall give prompt
written notice thereof to Certificateholders at their respective addresses
appearing in the Certificate Register and to the Rating Agencies.

      Section 8.04 Waiver of Defaults. The Trustee shall transmit by mail to all
Certificateholders, within 60 days after the occurrence of any Event of Default
known to the Trustee, unless such Event of Default shall have been cured, notice
of each such Event of Default hereunder known to the Trustee. The Holders of
Certificates evidencing Percentage Interests aggregating not less than 51% of
the Class Certificate Balance of the Certificates may, on behalf of all
Certificateholders, waive any default by the Master Servicer in the performance
of its obligations hereunder and the consequences thereof, except a default in
the making of or the causing to be made any required distribution on the
Certificates. Upon any such waiver of a past default, such default shall be
deemed to cease to exist, and any Event of Default arising therefrom shall be
deemed to have been timely remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived. The Trustee shall
give notice of any such waiver to the Rating Agencies.

      Section 8.05 List of Certificateholders. Upon reasonable, prior written
request of three or more Certificateholders of record, for purposes of
communicating with other Certificateholders with respect to their rights under
this Agreement, the Trustee will afford such Certificateholders access during
business hours to the most recent list of Certificateholders held by the
Trustee.

                                   ARTICLE IX
                           CONCERNING THE TRUSTEE AND
                          THE SECURITIES ADMINISTRATOR

      Section 9.01 Duties of Trustee.

      (a) The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred, and the
Securities Administrator each undertake to perform such duties and only such
duties as are specifically set forth in this Agreement as duties of the Trustee
and the Securities Administrator, respectively. If an Event of Default has
occurred and has not been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and subject to Section
8.02(b) use the same degree of care and skill in their exercise, as a prudent
person would exercise under the circumstances in the conduct of his own affairs.

      (b) Upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments which are specifically required
to be furnished to the Trustee and the Securities Administrator pursuant to any
provision of this Agreement, the Trustee and the Securities Administrator,
respectively, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that neither the Trustee nor the
Securities Administrator shall be responsible for the accuracy or content of any
resolution,

                                     -122-
<PAGE>

certificate, statement, opinion, report, document, order or other instrument
furnished by the Master Servicer; provided, further, that neither the Trustee
nor the Securities Administrator shall be responsible for the accuracy or
verification of any calculation provided to it pursuant to this Agreement. If
any such instrument is found not to conform to the requirements of this
Agreement in a material manner, the Trustee shall take such action as it deems
appropriate to have the instrument corrected and if the instrument is not
corrected to its satisfaction, the Trustee will provide notice thereof to the
Certificateholders and take such further action as directed by the
Certificateholders.

      (c) On each Distribution Date, the Securities Administrator shall make
monthly distributions and the final distribution to the Certificateholders from
funds in the Distribution Account as provided in Sections 6.01 and 10.01 herein
based solely on the report of the Master Servicer or the Servicers.

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

            (i) Prior to the occurrence of an Event of Default, and after the
      curing or waiver of all such Events of Default which may have occurred,
      the duties and obligations of the Trustee and the Securities Administrator
      shall be determined solely by the express provisions of this Agreement,
      neither the Trustee nor the Securities Administrator shall be liable
      except for the performance of their respective duties and obligations as
      are specifically set forth in this Agreement, no implied covenants or
      obligations shall be read into this Agreement against the Trustee or the
      Securities Administrator and, in the absence of bad faith on the part of
      the Trustee or the Securities Administrator, respectively, the Trustee or
      the Securities Administrator, respectively, may conclusively rely, as to
      the truth of the statements and the correctness of the opinions expressed
      therein, upon any certificates or opinions furnished to the Trustee or the
      Securities Administrator, respectively, and conforming to the requirements
      of this Agreement;

            (ii) Neither the Trustee nor the Securities Administrator shall be
      liable in its individual capacity for an error of judgment made in good
      faith by a Responsible Officer or Responsible Officers of the Trustee or
      an officer of the Securities Administrator, respectively, unless it shall
      be proved that the Trustee or the Securities Administrator, respectively,
      was negligent in ascertaining the pertinent facts;

            (iii) Neither the Trustee nor the Securities Administrator shall be
      liable with respect to any action taken, suffered or omitted to be taken
      by it in good faith in accordance with the directions of the Holders of
      Certificates evidencing Percentage Interests aggregating not less than 25%
      of the Class Certificate Balance of the Certificates, if such action or
      non-action relates to the time, method and place of conducting any
      proceeding for any remedy available to the Trustee or the Securities
      Administrator, respectively, or exercising any trust or other power
      conferred upon the Trustee or the Securities Administrator, respectively,
      under this Agreement;

                                     -123-
<PAGE>

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

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

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

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

      Neither the Trustee nor the Securities Administrator shall be required to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the Trustee or the Securities Administrator to
perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer hereunder, except during such time, if any,
as the Trustee shall be the successor to, and be vested with the rights, duties,
powers and privileges of, the Master Servicer in accordance with the terms of
this Agreement.

      (e) All funds received by the Master Servicer and the Securities
Administrator and required to be deposited in the Master Servicer Collection
Account or Distribution Account pursuant to this Agreement will be promptly so
deposited by the Master Servicer and the Securities Administrator.

      (f) The Issuing Entity hereby authorizes and directs the Securities
Administrator to enter into the Corridor Contract on behalf of the Issuing
Entity and to perform the duties and obligations of the Issuing Entity under the
Corridor Contract and any other agreement or instrument related thereto, in each
case in such form as the Depositor shall direct or shall approve in writing, the
execution and delivery of any such agreement by the Depositor to be conclusive
evidence of its approval thereof.

      (g) Except for those actions that the Trustee or the Securities
Administrator is required to take hereunder, neither the Trustee nor the
Securities Administrator shall have any

                                     -124-
<PAGE>

obligation or liability to take any action or to refrain from taking any action
hereunder in the absence of written direction as provided hereunder.

      Section 9.02 Certain Matters Affecting the Trustee and the Securities
Administrator. Except as otherwise provided in Section 9.01:

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

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

            (iii) Neither the Trustee nor the Securities Administrator shall be
      under any obligation to exercise any of the trusts or powers vested in it
      by this Agreement, other than its obligation to give notices pursuant to
      this Agreement, or to institute, conduct or defend any litigation
      hereunder or in relation hereto at the request, order or direction of any
      of the Certificateholders pursuant to the provisions of this Agreement,
      unless such Certificateholders shall have offered to the Trustee
      reasonable security or indemnity against the costs, expenses and
      liabilities which may be incurred therein or thereby. Nothing contained
      herein shall, however, relieve the Trustee of the obligation, upon the
      occurrence of an Event of Default of which a Responsible Officer of the
      Trustee's Corporate Trust Office has actual knowledge (which has not been
      cured or waived), subject to Section 8.02(b), to exercise such of the
      rights and powers vested in it by this Agreement, and to use the same
      degree of care and skill in their exercise, as a prudent person would
      exercise under the circumstances in the conduct of his own affairs;

            (iv) Prior to the occurrence of an Event of Default hereunder and
      after the curing or waiver of all Events of Default which may have
      occurred, neither the Trustee nor the Securities Administrator shall be
      liable in its individual capacity for any action taken, suffered or
      omitted by it in good faith and believed by it to be authorized or within
      the discretion or rights or powers conferred upon it by this Agreement;

            (v) Neither the Trustee nor the Securities Administrator shall be
      bound to make any investigation into the facts or matters stated in any
      resolution, certificate, statement, instrument, opinion, report, notice,
      request, consent, order, approval, bond or other paper or document, unless
      requested in writing to do so by Holders of Certificates evidencing
      Percentage Interests aggregating not less than 25% of the Class
      Certificate Balance of the Certificates and provided that the payment
      within a reasonable time to the Trustee or the Securities Administrator,
      as applicable, of the costs, expenses or liabilities likely to be incurred
      by it in the making of such investigation is, in the opinion of the
      Trustee or the Securities Administrator, as applicable, reasonably assured
      to the Trustee

                                     -125-
<PAGE>

or the Securities Administrator, as applicable, by the security afforded to it
by the terms of this Agreement. The Trustee or the Securities Administrator may
require reasonable indemnity against such expense or liability as a condition to
taking any such action. The reasonable expense of every such examination shall
be paid by the Certificateholders requesting the investigation;

            (vi) The Trustee and the Securities Administrator may execute any of
      the trusts or powers hereunder or perform any duties hereunder either
      directly or through Affiliates, agents or attorneys; provided, however,
      that the Trustee may not appoint any agent to perform its custodial
      functions with respect to the Mortgage Files or paying agent functions
      under this Agreement without the express written consent of the Securities
      Administrator, which consent will not be unreasonably withheld. Neither
      the Trustee nor the Securities Administrator shall be liable or
      responsible for the misconduct or negligence of any of the Trustee's or
      the Securities Administrator's agents or attorneys or a custodian or
      paying agent appointed hereunder by the Trustee or the Securities
      Administrator with due care and, when required, with the consent of the
      Securities Administrator;

            (vii) Should the Trustee or the Securities Administrator deem the
      nature of any action required on its part, other than a payment or
      transfer under Section 4.01(b) or Section 4.02, to be unclear, the Trustee
      or the Securities Administrator, respectively, may require prior to such
      action that it be provided by the Depositor with reasonable further
      instructions;

            (viii) The right of the Trustee or the Securities Administrator to
      perform any discretionary act enumerated in this Agreement shall not be
      construed as a duty, and neither the Trustee nor the Securities
      Administrator shall be accountable for other than its negligence or
      willful misconduct in the performance of any such act;

            (ix) Neither the Trustee nor the Securities Administrator shall be
      required to give any bond or surety with respect to the execution of the
      trust created hereby or the powers granted hereunder, except as provided
      in Section 9.07; and

            (x) Neither the Trustee nor the Securities Administrator shall have
      any duty to conduct any affirmative investigation as to the occurrence of
      any condition requiring the repurchase of any Mortgage Loan by the Sponsor
      pursuant to this Agreement or the Mortgage Loan Purchase Agreement, as
      applicable, or the eligibility of any Mortgage Loan for purposes of this
      Agreement.

            (xi) Any permissive right of the Trustee hereunder shall not be
      construed as a duty.

      Section 9.03 Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans. The recitals contained herein and in the
Certificates (other than the signature and countersignature of the Securities
Administrator on the Certificates) shall be taken as the statements of the
Depositor, and neither the Trustee nor the Securities Administrator shall have
any responsibility for their correctness. Neither the Trustee nor the Securities
Administrator

                                     -126-
<PAGE>

makes any representation as to the validity or sufficiency of the Certificates
(other than the signature and countersignature of the Securities Administrator
on the Certificates) or of any Mortgage Loan except as expressly provided in
Sections 2.02 and 2.05 hereof; provided, however, that the foregoing shall not
relieve the Trustee or the Custodian of the obligation to review the Mortgage
Files pursuant to Sections 2.02 and 2.04. The Securities Administrator's
signature and countersignature (or countersignature of its agent) on the
Certificates shall be solely in its capacity as Securities Administrator of the
Trust Fund and shall not constitute the Certificates an obligation of the
Securities Administrator in any other capacity. Neither the Trustee or the
Securities Administrator shall be accountable for the use or application by the
Depositor of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Depositor with respect to
the Mortgage Loans. Subject to the provisions of Section 2.05, neither the
Trustee nor the Securities Administrator shall be responsible for the legality
or validity of this Agreement or any document or instrument relating to this
Agreement, the validity of the execution of this Agreement or of any supplement
hereto or instrument of further assurance, or the validity, priority, perfection
or sufficiency of the security for the Certificates issued hereunder or intended
to be issued hereunder. Neither the Trustee nor the Securities Administrator
shall at any time have any responsibility or liability for or with respect to
the legality, validity and enforceability of any Mortgage or any Mortgage Loan,
or the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. Neither the Trustee nor the Securities
Administrator shall have any responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.

      Section 9.04 Trustee and Securities Administrator May Own Certificates.
The Trustee and the Securities Administrator in its individual capacity or in
any capacity other than as Trustee hereunder may become the owner or pledgee of
any Certificates with the same rights it would have if it were not Trustee or
the Securities Administrator, as applicable, and may otherwise deal with the
parties hereto.

      Section 9.05 Trustee's and Securities Administrator's Fees and Expenses.
The fees and expenses of the Trustee and the Securities Administrator shall be
paid by the Master Servicer in accordance with a side letter agreement. In
addition, the Trustee and the Securities Administrator will be entitled to
recover from the Master Servicer Collection Account pursuant to Section 4.03(b)
all reasonable out-of-pocket expenses, disbursements and advances and the
expenses of the Trustee and the Securities Administrator, respectively, in
connection with any Event of Default, any breach of this Agreement or any claim
or legal action (including any pending or threatened claim or legal action)
incurred or made by the Trustee or the Securities Administrator, respectively,
in the administration of the trusts hereunder (including the reasonable
compensation, expenses and disbursements of its counsel) except any such
expense, disbursement or advance as may arise from its negligence or intentional
misconduct or which is the responsibility of the Certificateholders or the Trust
Fund hereunder. If funds in the Master Servicer Collection Account are
insufficient therefor, the Trustee and the Securities Administrator shall
recover such expenses from the Depositor. Such compensation and reimbursement
obligation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust.

                                     -127-
<PAGE>

      Section 9.06 Eligibility Requirements for Trustee and Securities
Administrator.

      (a) The Trustee and any successor Trustee and the Securities Administrator
and any successor Securities Administrator shall during the entire duration of
this Agreement be a state bank or trust company or a national banking
association organized and doing business under the laws of such state or the
United States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus and undivided profits of at least
$40,000,000 or, in the case of a successor Trustee, $50,000,000, subject to
supervision or examination by federal or state authority and, in the case of the
Trustee, rated "BBB" or higher by S&P and "Aaa1" or higher by Moody's with
respect to their long-term rating and rated "BBB" or higher by S&P and "Baa1" or
higher by Moody's with respect to any outstanding long-term unsecured
unsubordinated debt, and, in the case of a successor Trustee or successor
Securities Administrator other than pursuant to Section 9.10, rated in one of
the two highest long-term debt categories of, or otherwise acceptable to, each
of the Rating Agencies. If the Trustee publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 9.06 the combined
capital and surplus of such corporation shall be deemed to be its total equity
capital (combined capital and surplus) as set forth in its most recent report of
condition so published. In case at any time the Trustee or the Securities
Administrator shall cease to be eligible in accordance with the provisions of
this Section 9.06, the Trustee or the Securities Administrator shall resign
immediately in the manner and with the effect specified in Section 9.08.

      (b) In addition, the Securities Administrator (i) may not be an
Originator, Master Servicer, Servicer, the Depositor or an affiliate of the
Depositor unless the Securities Administrator is in an institutional trust
department of the relevant entity, (ii) must be authorized to exercise corporate
trust powers under the laws of its jurisdiction of organization, and (iii) must
be rated at least "A" by S&P or "A" Moody's. If no successor Securities
Administrator shall have been appointed and shall have accepted appointment
within 60 days after the Securities Administrator ceases to be the Securities
Administrator pursuant to Section 9.08, then the Trustee shall either (i)
perform the duties of the Securities Administrator pursuant to this Agreement
until such time as a new Securities Administrator is appointed or (ii) petition
a court of competent jurisdiction to appoint a successor securities
administrator. The Trustee shall notify the Rating Agencies of any change of
Securities Administrator.

      Section 9.07 Insurance. The Securities Administrator, at its own expense,
shall at all times maintain and keep in full force and effect: (i) fidelity
insurance, (ii) theft of documents insurance and (iii) forgery insurance (which
may be collectively satisfied by a "Financial Institution Bond" and/or a
"Bankers' Blanket Bond"). All such insurance shall be in amounts, with standard
coverage and subject to deductibles, as are customary for insurance typically
maintained by banks or their affiliates which act as custodians for
investor-owned mortgage pools. A certificate of an officer of the Securities
Administrator as to the Securities Administrator's compliance with this Section
9.07 shall be furnished to any Certificateholder upon reasonable written
request.

                                     -128-
<PAGE>

      Section 9.08 Resignation and Removal of the Trustee and Securities
Administrator.

      (a) The Trustee and the Securities Administrator may at any time resign
and be discharged from the trust hereby created by giving written notice thereof
to the Depositor and the Master Servicer, with a copy to the Rating Agencies.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor Trustee or successor Securities Administrator, as applicable, by
written instrument, in triplicate, one copy of which instrument shall be
delivered to each of the resigning Trustee or Securities Administrator, as
applicable, the successor Trustee or Securities Administrator, as applicable. If
no successor Trustee or Securities Administrator shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Securities Administrator may petition any
court of competent jurisdiction for the appointment of a successor Trustee or
Securities Administrator. If the Securities Administrator and the Master
Servicer are the same entity, then at any time the Securities Administrator
resigns or is removed as Securities Administrator, the Master Servicer shall
likewise be terminated as Master Servicer.

      (b) If at any time the Trustee or the Securities Administrator shall cease
to be eligible in accordance with the provisions of Section 9.06 and shall fail
to resign after written request therefor by the Depositor or if at any time the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator, as applicable, or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or the
Securities Administrator, as applicable, or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Depositor shall
promptly remove the Trustee, or shall be entitled to remove the Securities
Administrator, as applicable, and appoint a successor Trustee or Securities
Administrator, as applicable, by written instrument, in triplicate, one copy of
which instrument shall be delivered to each of the Trustee or Securities
Administrator, as applicable, so removed, the successor Trustee or Securities
Administrator, as applicable.

      (c) The Holders of Certificates evidencing Percentage Interests
aggregating not less than 51% of the Trust Fund may at any time remove the
Trustee or the Securities Administrator and appoint a successor Trustee or
Securities Administrator by written instrument or instruments, in quadruplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Depositor, the Trustee, the
Securities Administrator (if the Trustee is removed), the Trustee (if the
Securities Administrator is removed), and the Trustee or Securities
Administrator so removed and the successor so appointed.

      (d) No resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor Trustee or Securities Administrator
pursuant to any of the provisions of this Section 9.08 shall become effective
except upon appointment of and acceptance of such appointment by the successor
Trustee or Securities Administrator as provided in Section 9.09.

      Section 9.09 Successor Trustee and Successor Securities Administrator.

      (a) Any successor Trustee or Securities Administrator appointed as
provided in Section 9.08 shall execute, acknowledge and deliver to the
Depositor, the Master Servicer and its

                                     -129-
<PAGE>

predecessor Trustee or Securities Administrator an instrument accepting such
appointment hereunder. The resignation or removal of the predecessor Trustee or
Securities Administrator shall then become effective and such successor Trustee
or Securities Administrator, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee or
Securities Administrator herein. The predecessor Trustee or Securities
Administrator shall after payment of its outstanding fees and expenses promptly
deliver to the successor Trustee or Securities Administrator, as applicable, all
assets and records of the Trust held by it hereunder, and the Depositor and the
predecessor Trustee or Securities Administrator, as applicable, shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
Trustee or Securities Administrator, as applicable, all such rights, powers,
duties and obligations.

      (b) No successor Trustee or Securities Administrator shall accept
appointment as provided in this Section 9.09 unless at the time of such
acceptance such successor Trustee or Securities Administrator shall be eligible
under the provisions of Section 9.06.

      (c) Upon acceptance of appointment by a successor Trustee or Securities
Administrator as provided in this Section 9.09, the successor Trustee or
Securities Administrator shall mail notice of the succession of such Trustee or
Securities Administrator hereunder to all Certificateholders at their addresses
as shown in the Certificate Register and to the Rating Agencies. The Depositor
shall pay the cost of any mailing by the successor Trustee or Securities
Administrator.

      Section 9.10 Merger or Consolidation of Trustee or Securities
Administrator. Any state bank or trust company or national banking association
into which the Trustee or the Securities Administrator may be merged or
converted or with which it may be consolidated or any state bank or trust
company or national banking association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator,
respectively, shall be a party, or any state bank or trust company or national
banking association succeeding to all or substantially all of the corporate
trust business of the Trustee or the Securities Administrator, respectively,
shall be the successor of the Trustee or the Securities Administrator,
respectively, hereunder, provided such state bank or trust company or national
banking association shall be eligible under the provisions of Section 9.06. Such
succession shall be valid without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

      Section 9.11 Appointment of Co-Trustee or Separate Trustee.

      (a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or property constituting the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Depositor to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other

                                     -130-
<PAGE>

provisions of this Section 9.11, such powers, duties, obligations, rights and
trusts as the Depositor and the Trustee may consider necessary or desirable.

      (b) If the Depositor shall not have joined in such appointment within 15
days after the receipt by it of a written request so to do, the Trustee shall
have the power to make such appointment without the Depositor.

      (c) No co-Master Servicer or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 9.06
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.

      (d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.

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

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

      (g) No Trustee under this Agreement shall be personally liable by reason
of any act or omission of another Trustee under this Agreement. The Depositor
and the Trustee acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee.

                                     -131-
<PAGE>

      Section 9.12 Federal Information Returns and Reports to
Certificateholders; REMIC Administration.

      (a) REMIC elections as set forth in the Preliminary Statement and this
Section 9.12 shall be made on Forms 1066 or other appropriate federal tax or
information return for the taxable year ending on the last day of the calendar
year in which the Certificates are issued. The regular interests and residual
interest in each REMIC shall be as designated in the Preliminary Statement and
this Section 9.12.

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

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

      (d) The Securities Administrator shall represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. The Securities Administrator
shall pay any and all tax-related expenses (not including taxes) of each REMIC,
including but not limited to any professional fees or expenses related to audits
or any administrative or judicial proceedings with respect to such REMIC that
involve the Internal Revenue Service or state tax authorities, but only to the
extent that (i) such expenses are ordinary or routine expenses, including
expenses of a routine audit but not expenses of litigation (except as described
in (ii)); or (ii) such expenses or liabilities (including taxes and penalties)
are attributable to the negligence or willful misconduct of the Securities
Administrator in fulfilling its duties hereunder (including its duties as tax
return preparer). The Securities Administrator shall be entitled to
reimbursement of expenses to the extent provided in clause (i) above from the
Distribution Account, provided, however, the Securities Administrator shall not
be entitled to reimbursement for expenses incurred in connection with the
preparation of tax returns and other reports as required by this Section.

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

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

                                     -132-
<PAGE>

      (g) The Securities Administrator and the Holders of Certificates shall
take any action or cause any REMIC to take any action necessary to create or
maintain the status of any REMIC as a REMIC under the REMIC Provisions and shall
assist each other as necessary to create or maintain such status. None of the
Servicers, the Securities Administrator nor the Holder of any Residual
Certificate shall knowingly take any action, cause any REMIC to take any action
or fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of any REMIC as a REMIC or (ii) result in the imposition of a tax upon
any REMIC (including but not limited to the tax on prohibited transactions as
defined in Code Section 860F(a)(2) and the tax on prohibited contributions set
forth on Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless the Securities Administrator has received a REMIC Opinion (at the
expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status or result in the imposition of
such a tax. In addition, prior to taking any action with respect to any REMIC or
the assets therein, or causing any REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Servicer or Holder of
a Residual Certificate will consult with the Securities Administrator, in
writing, with respect to whether such action could cause an Adverse REMIC Event
to occur with respect to any REMIC, and no such Person shall take any such
action or cause any REMIC to take any such action as to which the Securities
Administrator has advised it in writing that an Adverse REMIC Event could occur;
provided, however, that if no Adverse REMIC Event would occur but such action
could result in the imposition of additional taxes on the Residual
Certificateholders, no such Person shall take any such action, or cause any
REMIC to take any such action without the written consent of the Residual
Certificateholders.

      (h) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental authorities.
To the extent that such taxes are not paid by a Residual Certificateholder, the
Securities Administrator shall pay any remaining REMIC taxes out of current or
future amounts otherwise distributable to the Holder of the Residual Certificate
in any such REMIC or, if no such amounts are available, out of other amounts
held in the Distribution Account, and shall reduce amounts otherwise payable to
holders of regular interests in any such REMIC, as the case may be.

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

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

                                     -133-
<PAGE>

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

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

      (m) The Securities Administrator shall prepare or cause to be prepared on
behalf of the Trust Fund, based upon information calculated in accordance with
this Agreement pursuant to instructions given by the Depositor, the Trustee
shall sign, and the Securities Administrator shall file federal tax returns, all
in accordance with Section 9.12 hereof. The Securities Administrator shall
prepare and file, and the Trustee shall sign, such state income tax returns and
such other returns as may be required by applicable law relating to the Trust
Fund, and, if required by state law, and shall file any other documents to the
extent required by applicable state tax law (to the extent such documents are in
the Securities Administrator's possession). The Securities Administrator shall
forward copies to the Depositor of all such returns and Form 1099 supplemental
tax information and such other information within the control of the Securities
Administrator as the Depositor may reasonably request in writing, and shall
distribute to each Certificateholder such forms and furnish such information
within the control of the Securities Administrator as are required by the Code
and the REMIC Provisions to be furnished to them, and will prepare and
distribute to Certificateholders Form 1099 (supplemental tax information) (or
otherwise furnish information within the control of the Securities
Administrator) to the extent required by applicable law.

      (n) None of the Servicers, the Securities Administrator, the Trustee or
the Depositor, as assignees under this Agreement, shall provide any consent
pursuant to this Agreement or knowingly take any action under this Agreement
that would conflict with or violate the provisions of this Section 9.12.

      (o) The parties intend that the portion of the Trust Fund consisting of
the right to receive the payments distributable to the Class P Certificates
shall be treated as a "grantor trust" under the Code, for the benefit of the
holders of the Class P Certificates, and the provisions hereof shall be
interpreted consistently with this intention. In furtherance of such intention,
the Securities Administrator shall (i) furnish or cause to be furnished to the
holders of the Class P Certificates information regarding their allocable share
of the income with respect to such grantor trust and (ii) file or cause to be
filed with the Internal Revenue Service, and the Trustee shall sign, Form 1041
(together with any necessary attachments) and such other forms as may be
applicable.

      (p) Notwithstanding any other provision of this Agreement, the Trustee and
the Securities Administrator shall comply with all federal withholding
requirements respecting payments to Certificateholders of interest or original
issue discount on the Mortgage Loans, that the Trustee or the Securities
Administrator reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee or the Securities Administrator withholds any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee or the Securities
Administrator shall, together with its monthly report to such
Certificateholders, indicate such amount withheld.

                                     -134-
<PAGE>

      (q) Each Servicer, the Trustee and the Securities Administrator agree to
indemnify the Trust Fund and the Depositor for any taxes and costs including,
without limitation, any reasonable attorneys fees imposed on or incurred by the
Trust Fund, the Depositor or the Trustee, as a result of a breach of such
Servicer's covenants, the Trustee's covenants and the Securities Administrator's
covenants, respectively, set forth in this Section 9.12; provided, however, such
liability and obligation to indemnify in this paragraph shall not be joint and
several and none of the Servicers, the Trustee nor the Securities Administrator
shall be liable or be obligated to indemnify the Trust Fund for the failure by
any other to perform any duty under this Agreement or the breach by any other of
any covenant in this Agreement.

      (r) The Securities Administrator covenants and agrees that it shall act as
agent (and the Securities Administrator is hereby appointed to act as agent) of
the Tax Matters Person on behalf of each of the REMICs provided for herein and
that in such capacity it shall: (a) to the extent that they are under its
control conduct the affairs of each of the REMICs provided for herein at all
times that any Certificates are outstanding so as to maintain the status of each
of the REMICs provided for herein as a REMIC under the REMIC Provisions; (b) not
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of any of the REMICs provided for
herein or result in the imposition of tax upon any such REMIC; (c) not knowingly
or intentionally take any action or omit to take any action that would cause the
termination of the grantor trust status under Subpart E, Part I of Subchapter J
of the Code of any of the grantor trusts provided for herein or result in the
imposition of tax upon any such grantor trust; and (d) as and when necessary and
appropriate, represent each of the REMICs provided for herein in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of any of the REMICs provided for herein, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein,
and otherwise act on behalf of each of the REMICs provided for herein in
relation to any tax matter involving any of such REMICs or any controversy
involving the Trust Fund.

      (s) Each of the Depositor, the Servicers, the Master Servicer, the
Securities Administrator and the Trustee agrees not to take or omit to take
knowingly or intentionally, any action or omit to take any action that would
cause the termination of the REMIC status of any of the REMICs provided for
herein or result in the imposition of a tax upon any of the REMICs provided for
herein.

      (t) [reserved].

      (u) The Depositor hereby instructs and authorizes the Securities
Administrator to make an appropriate election to treat each of the Upper Tier
REMIC, the Lower Tier REMIC and the SWAP REMIC as a REMIC. The Trustee shall
sign the returns providing for such elections and such other tax or information
returns which are provided to it. This Agreement shall be construed so as to
carry out the intention of the parties that each of the Upper Tier REMIC, the
Lower Tier REMIC and the SWAP REMIC be treated as a REMIC at all times prior to
the date on which the Trust Fund is terminated.

                                     -135-
<PAGE>

            The SWAP REMIC shall consist of all of the assets of the Trust Fund,
other than (i) amounts distributable to the Class P Certificates, (ii) the
interests issued by the SWAP REMIC and the interests issued by the Lower Tier
REMIC, (iii) the grantor trusts described in Section 9.12 hereof, (iv) each
Corridor Contract and the Corridor Contract Account, (v) the Swap Agreement, the
Cap Contract and the Supplemental Interest Trust. The SWAP REMIC shall issue the
SWAP REMIC Regular Interests, which shall be designated as regular interests of
such REMIC, and shall issue the Class SWR Interest, which shall be designated as
the sole class of residual interest in the SWAP REMIC. Each of the SWAP REMIC
Regular Interests shall have the characteristics set forth in the Preliminary
Statement and this Section 9.12.

      (v) The Lower Tier REMIC shall consist of the SWAP REMIC Regular
Interests. The Lower Tier REMIC shall issue the Lower Tier REMIC Regular
Interests, which shall be designated as regular interests of such REMIC, and
shall issue the Class LTR Interest that shall be designated as the sole class of
residual interest in the Lower Tier REMIC. Each of the Lower Tier REMIC Regular
Interests shall have the characteristics set forth in its definition, the
Preliminary Statement and this Section 9.12.

            The assets of the Upper Tier REMIC shall be the Lower Tier REMIC
Regular Interests. The REMIC Regular Interests shall be designated as the
regular interests in the Upper Tier REMIC and the Residual Interest shall be
designated as the sole class of residual interest in the Upper Tier REMIC. For
federal income tax purposes, the pass-through rate on each REMIC Regular
Interest (other than the Uncertificated Class C Interest and the Class UT-IO
Interest) and on the sole class of residual interest in the Upper Tier REMIC
shall be subject to a cap equal to the Upper Tier REMIC Net WAC Cap.

            The beneficial ownership of the Class SWR Interest and the Class LTR
Interest and the Residual Interest shall be represented by the Class R
Certificate. The Class SWR Interest and the Class LTR Interest shall not have a
principal balance or bear interest.

      (w) (i) It is intended that the rights of each Class of the Certificates
(other than the Class C and Class P Certificates) to receive payments in respect
of Excess Interest shall be treated as a right in interest rate cap agreements
written by the Class C Certificateholders in favor of the holders of each Class
of the Certificates (other than the Class C and Class P Certificates) and such
shall be accounted for as property held separate and apart from the regular
interests in the Upper Tier REMIC held by the holders of the Senior Certificates
(other than the Class R Certificate), Class M Certificates, Class B Certificates
and the residual interest in the Upper Tier REMIC held by the holder of the
Class R Certificate. For information reporting requirements, the rights of the
Certificates (other than the Class C and Class P Certificates) to receive
payments in respect of Excess Interest shall be assumed to have zero or a de
minimis value. This provision is intended to satisfy the requirements of
Treasury Regulations Section 1.860G-2(i) for the treatment of property rights
coupled with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that
any of the Certificates (other than the Class C and Class P Certificates)
receive payments in respect of Excess Interest, such amounts, to the extent not
derived from payments on the Corridor Contract, the Cap Contract or the Swap
Agreement, or from payments in respect of Class C Shortfalls as set forth in
Section 9.12(z), will be treated as distributed by the Upper Tier REMIC to the
Class C Certificates pro rata in payment of the amounts specified in Section

                                     -136-
<PAGE>

6.01(h) and then paid to the relevant Class of Certificates pursuant to the
related interest rate cap agreement.

            (ii) It is intended that the beneficial owners of the Certificates
(other than the Class P and Class C Certificates) shall be treated as having
entered into a notional principal contract with respect to the beneficial owners
of the Class C Certificates. Pursuant to each such notional principal contract,
all beneficial owners of each Class of Certificates (other than the Class P and
Class C Certificates) shall be treated as having agreed to pay, on each
Distribution Date, to the beneficial owners of the Class C Certificates an
aggregate amount equal to the excess, if any, of (i) the amount payable on such
Distribution Date on the Corresponding REMIC Regular Interest of such Class of
Certificates over (ii) the amount payable on such Class of Certificates on such
Distribution Date (such excess, a "Class Payment Shortfall"). A Class Payment
Shortfall shall be allocated to each Class of Certificates to the extent that
interest accrued on such Class for the related Accrual Period at the Certificate
Rate for a Class, computed by substituting "Upper Tier REMIC Net WAC Cap" for
the Available Funds Cap set forth in the definition thereof, exceeds the amount
of interest accrued on such Certificate at the Certificate Rate (without such
substitution) for the related Accrual Period, and a Class Payment Shortfall
payable from principal collections shall be allocated to the most subordinate
Class of Certificates with an outstanding principal balance to the extent of
such balance.

      (x) The parties intend that the portion of the Trust Fund consisting of
the Uncertificated Class C Interest, the uncertificated Class UT-IO Interest,
the rights to receive payments deemed made by the Certificates (other than the
Class P and Class C Certificates) in respect of notional principal contracts
described in Section 9.12(w)(ii), the Corridor Contract, the Corridor Contract
Account, the Supplemental Interest Trust which holds the Swap Agreement and the
Cap Contract, the right to receive payments in respect of Class C Shortfalls as
set forth in Section 9.12(z), and the obligation of the holders of the Class C
Certificates to pay amounts in respect of Excess Interest to the holders of the
Certificates (other than the Class C and Class P Certificates) shall be treated
as a "grantor trust" under the Code, for the benefit of the holders of the Class
C Certificates, and the provisions hereof shall be interpreted consistently with
this intention. In furtherance of such intention, the Securities Administrator
shall (i) furnish or cause to be furnished to the holders of the Class C
Certificates information regarding their allocable share, if any, of the income
with respect to such grantor trust, (ii) file or cause to be filed with the
Internal Revenue Service Form 1041 (together with any necessary attachments) and
such other forms as may be applicable and (iii) comply with such information
reporting obligations with respect to payments from such grantor trust to the
holders of Certificates (other than the Class P Certificates) as may be
applicable under the Code.

      (y) The parties intend that amounts paid to the Swap Counterparty under
the Swap Agreement shall be deemed for federal income tax purposes to be paid by
the Class C Certificates first, out of funds deemed received in respect of the
Class UT-IO Interest, second, out of funds deemed received in respect of the
Uncertificated Class C Interest and third, out of funds deemed received in
respect of notional principal contracts described in Section 9.12(w)(ii), and
the provisions hereof shall be interpreted consistently with this intention. On
each Distribution Date, to the extent that amounts paid to the Swap Counterparty
are deemed paid out of funds received in respect of the Uncertificated Class C
Interest, such amounts will be treated as distributed by the Upper Tier REMIC to
the Class C Certificates pro rata in payment of the

                                     -137-
<PAGE>

amounts specified in Section 6.01(h) and then paid to the Swap Counterparty
pursuant to the Swap Agreement.

            The Supplemental Interest Trust shall be an "outside reserve fund"
for federal income tax purposes and not an asset of any REMIC. Furthermore, the
Holders of the Class C Certificates shall be the beneficial owners of the
Supplemental Interest Trust for all federal income tax purposes, and shall be
taxable on all income earned thereon.

         (z) All payments of principal and interest at the Net Mortgage Rate on
   each of the Mortgage Loans (other than amounts distributable to the Class P
   Certificates) received by the SWAP REMIC with respect to the Mortgage Loans
   shall be paid to the SWAP REMIC Regular Interests until the principal balance
   of all such interests have been reduced to zero and any losses allocated to
   such interests have been reimbursed. Any available funds remaining in the
   SWAP REMIC on a Distribution Date after distributions to the SWAP REMIC
   Regular Interests shall be distributed to the Class R Certificates on account
   of the Class SWR Interest. On each Distribution Date, the Securities
   Administrator shall distribute the aggregate Interest Funds (net of expenses
   (other than any Net Swap Payment or Swap Termination Payment required to be
   made to the Swap Counterparty) and payments to the Class P Certificates) with
   respect to each of the SWAP REMIC Regular Interests based on the interest
   rates for each such SWAP REMIC Regular Interest. On each Distribution Date,
   the Securities Administrator shall distribute the aggregate Principal Funds
   with respect to the Mortgage Loans first to the Class SW-Z Interest until its
   principal balance is reduced to zero and then sequentially to each of the
   other SWAP REMIC Regular Interests in ascending order of their numerical
   class designation, in equal amounts to each such class in such numerical
   designation, until the principal balance of each such class is reduced to
   zero. All losses with respect to the Mortgage Loans shall be allocated among
   the SWAP REMIC Regular Interests in the same manner that principal
   distributions are allocated. Subsequent Recoveries with respect to the
   Mortgage Loans and loss reimbursements shall be allocated among the SWAP
   REMIC Regular Interests in the reverse fashion from the manner in which
   losses are allocated. Increases in principal amount as a result of Net
   Negative Amortization with respect to the Mortgage Loans for any Distribution
   Date shall be allocated among the SWAP REMIC Regular Interests, first to the
   Class SW-Z Interest up to an amount equal to the accrued interest thereon for
   such Distribution Date, and then sequentially, to the other SWAP REMIC
   Regular Interests in ascending order of their numerical Class designation,
   and, with respect to each pair of Classes having the same numerical
   designation, in equal amounts to each such Class, up to an amount equal to
   the accrued interest thereon for such Distribution Date.

      All payments received by the Lower Tier REMIC with respect to the SWAP
REMIC Regular Interests shall be paid to the Lower Tier REMIC Regular Interests
until the principal balance of all such interests have been reduced to zero and
any losses allocated to such interests have been reimbursed. Any excess amounts
shall be distributed to the Class LTR Interest.

      On each Distribution Date,

                  (i) interest shortfalls with respect to the Mortgage Loans
      (other than interest shortfalls attributable to Negative Amortization)
      shall be allocated to the Lower

                                     -138-
<PAGE>

      Tier REMIC Regular Interests (other than the Class LT-IO Interest) pro
      rata based on the interest otherwise accrued thereon;

                  (ii) the principal balance of each Lower Tier REMIC Regular
      Interest shall be increased by the amount of interest accrued thereon (net
      of interest shortfalls allocated thereto pursuant to the immediately
      preceding clause (i));

                  (iii) cash received by the Lower Tier REMIC with respect to
      the SWAP REMIC Regular Interests shall be distributed first to the Class
      LT-IO Interest in reduction of its principal balance so that its principal
      balance is as close as possible to zero. Any remaining cash shall be
      distributed to, and losses with respect to the Mortgage Loans shall be
      allocated to:

                        first, to each class of Lower Tier REMIC Marker
            Interest, sequentially, beginning with the Lower Tier REMIC Marker
            Interest the Corresponding Certificate of which has the highest
            Certificate Rate through the Lower Tier REMIC Marker Interest the
            Corresponding Certificate of which has the lowest Certificate Rate,
            in reduction of its principal balance so that its principal balance
            is as close as possible to 50% of the principal balance of its
            Corresponding Certificate; and

                        second, to the Class LTX Interest in reduction of its
            principal balance so that its principal balance is as close as
            possible to the sum of (x) 50% of the aggregate Stated Principal
            Balance of the Mortgage Loans and (y) 50% of the
            Overcollateralization Amount.

                  If on any Distribution Date there is an increase in the Class
      Certificate Balance of any LIBOR Certificate pursuant to the last sentence
      of the definition of Class Certificate Balance, then there shall be a
      corresponding increase in the principal amount of the Lower Tier REMIC
      Regular Interests allocated as follows:

                        first, to each of the Lower Tier REMIC Regular Interests
            (other than the Class LTX Interest and other than the Class LT-IO
            Interest) so that the principal balance of each such interest is as
            close as possible to 50% of the principal balances of its
            Corresponding Certificate; and

                        second, to the Class LTX Interest so that the principal
            balance of such interest is as close as possible to the sum of (x)
            50% of the aggregate Stated Principal Balance of the Mortgage Loans
            and (y) 50% of the Overcollateralization Amount.

                  The excess, if any, of amounts payable with respect to the
      REMIC regular interests held by the Upper Tier REMIC over the amounts
      payable with respect to the REMIC Regular Interests with respect to each
      Accrual Period shall, solely for purposes of the REMIC Provisions, be
      deemed earned by the Securities Administrator as an additional fee, which
      amount shall be deemed paid by the Securities Administrator to the holders
      of the Class C Certificates. It is intended that the rights of the holders
      of the Class C Certificates to receive such deemed payments ("Class C
      Shortfalls") shall be

                                     -139-
<PAGE>

      treated as rights in respect of an interest rate cap contract written by
      the Securities Administrator in favor of the holders of the Class C
      Certificates and shall be accounted for as property separate and apart
      from the REMIC regular interests represented by the Class C Certificates.
      This provision is intended to comply with the requirements of Treasury
      Regulations Section 1.860G-2(i) for the treatment of property rights
      coupled with regular interests to be separately respected and shall be
      interpreted consistently with such regulation. For information reporting
      purposes, it will be assumed that the right to receive deemed payments in
      respect of Class C Shortfalls has no value. The Securities Administrator
      and the beneficial holders of the Class C Certificates by their acceptance
      of such Certificates agree that they will take tax reporting positions
      that allocate no more than a nominal value to such right and that they
      will adopt tax reporting positions consistent with the payments deemed
      made to the Class C Certificates in respect of Class C Shortfalls as
      payments in respect of interest rate cap agreements written by the
      Securities Administrator.

                                     -140-
<PAGE>

                                    ARTICLE X
                                   TERMINATION

      Section 10.01 Termination upon Liquidation or Repurchase of all Mortgage
Loans.

      (a) Subject to Section 10.03, the obligations and responsibilities of the
Depositor, the Master Servicer, the Securities Administrator and the Trustee
created hereby with respect to that portion of the Trust Fund relating to the
Certificates shall terminate upon the earlier of (a) an Optional Termination and
(b) the later of (i) the maturity or other liquidation of the last Mortgage Loan
remaining in the Trust Fund (or any Monthly Advance with respect thereto) and
the disposition of all REO Property and (ii) the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
this Agreement, as applicable. In no event shall the trusts created hereby
continue beyond the earlier of (i) the expiration of 21 years from the death of
the last survivor of the descendants of Joseph P. Kennedy, the late Ambassador
of the United States to the Court of St. James's, living on the date hereof and
(ii) the Latest Possible Maturity Date.

      (b) On or before the Determination Date following the Initial Optional
Termination Date, the Securities Administrator shall attempt to terminate that
portion of the Trust Fund relating to the Certificates by conducting an auction
of all of the Mortgage Loans and REO Properties via a solicitation of bids from
at least three (3) bidders, each of which shall be a nationally recognized
participant in mortgage finance (the "Auction"). The Depositor and the
Securities Administrator agree to work in good faith to develop bid procedures
in advance of the Initial Optional Termination Date to govern the operation of
the Auction. The Securities Administrator shall be entitled to retain an
investment banking firm and/or other agents in connection with the Auction, the
cost of which shall be included in the Optional Termination Price (unless an
Optional Termination does not occur in which case such costs shall be an expense
of the Issuing Entity). The Securities Administrator shall accept the highest
bid received at the Auction; provided that the amount of such bid equals or
exceeds the Optional Termination Price. The Securities Administrator shall
determine the Optional Termination Price based upon information provided by (i)
the Master Servicer with respect to the amounts described in clauses (A) and (B)
of the definition of "Optional Termination Price" (other than Securities
Administrator's expenses) and (ii) the Depositor with respect to the information
described in clause (C) of the definition of "Optional Termination Price." The
Securities Administrator may conclusively rely upon the information provided to
it in accordance with the immediately preceding sentence and shall not have any
liability for the failure of any party to provide such information.
Notwithstanding anything herein to the contrary, only an amount equal to the
Optional Termination Price, reduced by the portion thereof consisting of the sum
of (x) any Swap Termination Payment and (y) the amount of any unpaid Net Swap
Payments and any other amounts owed to the Swap Counterparty that would not
otherwise be funded by the Optional Termination Price but for clause (E) of the
definition of "Optional Termination Price" (such portion, the "Swap Optional
Termination Payment"), shall be made available for distribution to the
Certificates. The Swap Optional Termination Payment shall be withdrawn by the
Securities Administrator from the Distribution Account and remitted to the
Supplemental Interest Trust for payment to the Swap Counterparty. The Swap
Optional Termination Payment shall not be part of any REMIC and shall not be
paid into any account which is part of any REMIC.

                                     -141-
<PAGE>

      If an Optional Termination does not occur as a result of the Auction's
failure to achieve the Optional Termination Price, the Master Servicer may, on
any Distribution Date following such Auction, at its option, terminate that
portion of the Trust Fund relating to the Certificates by purchasing all of the
Mortgage Loans and REO Properties at a price equal to the Optional Termination
Price. In connection with such termination, the Optional Termination Price shall
be delivered to the Securities Administrator no later than the Business Day
immediately preceding the related Distribution Date. Notwithstanding anything to
the contrary herein, the Optional Termination Amount paid to the Securities
Administrator by the winning bidder at the Auction or by the Master Servicer
shall be deposited by the Securities Administrator directly into the
Distribution Account immediately upon receipt. Upon any termination as a result
of an Auction, the Securities Administrator shall, out of the Optional
Termination Amount deposited into the Distribution Account, (x) pay the
Securities Administrator its costs and expenses necessary to conduct the Auction
and any other unreimbursed amounts owing to it and (y) pay to the Master
Servicer or Servicer, the aggregate amount of any unreimbursed out-of-pocket
costs and expenses owed to the Master Servicer or Servicer and any unpaid or
unreimbursed Servicing Fees, Monthly Advances and Servicing Advances.

      (c) Notwithstanding anything to the contrary in clause (b) above, in the
event that the Securities Administrator and the Trustee receive the written
opinion of a nationally recognized participant in mortgage finance acceptable to
the Sponsor that the Mortgage Loans and REO Properties to be included in the
Auction will not be saleable at a price sufficient to achieve the Optional
Termination Price, the Securities Administrator need not conduct the Auction. In
such event, the Master Servicer shall have the option to purchase the Mortgage
Loans and REO Properties at the Optional Termination Price as of the Initial
Optional Termination Date.

      Section 10.02 Final Distribution on the Certificates.

      If on any Determination Date, (i) the Securities Administrator determines
that there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund relating to the Mortgage Loans other than the funds in the Master
Servicer Collection Account, the Securities Administrator shall send a final
distribution notice promptly to each Certificateholder or (ii) the Securities
Administrator determines that a Class of Certificates shall be retired after a
final distribution on such Class, the Securities Administrator shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Securities Administrator.

      Notice of any partial termination of the Issuing Entity, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Securities Administrator by letter to Certificateholders mailed no later
than the last calendar day of the month immediately preceding the month of such
final distribution (or with respect to an Auction, mailed no later than one
Business Day following completion of such Auction). Any such notice shall
specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of Certificates at the
office therein designated, (b) the location of the

                                     -142-
<PAGE>

office or agency at which such presentation and surrender must be made, and (c)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Securities Administrator will
give such notice to the Swap Counterparty and to each Rating Agency at the time
such notice is given to Certificateholders.

      In the event such notice is given, the Master Servicer shall cause all
funds in the Master Servicer Collection Account to be deposited in the
Distribution Account on the Business Day prior to the applicable Distribution
Date in an amount equal to the final distribution in respect of the
Certificates. Upon receipt of written notice of such final deposit with respect
to the Issuing Entity and the receipt by the Trustee, or its Custodian, of a
Request for Release therefor, the Trustee, or its Custodian, shall promptly
release to the Securities Administrator or the Master Servicer, as applicable,
the Mortgage Files for the Mortgage Loans.

      Upon presentation and surrender of the Certificates, the Securities
Administrator shall cause to be distributed to Certificateholders of each Class
the amounts allocable to such Certificates held in the Distribution Account in
the order and priority set forth in Section 6.01 hereof on the final
Distribution Date and in proportion to their respective Percentage Interests.

      In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Securities Administrator shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Securities
Administrator may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain a part of the Issuing Entity. If within one
year after the second notice all Certificates shall not have been surrendered
for cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets of the Issuing Entity that remain subject
hereto. Upon payment to the Class R Certificateholders of such funds and assets,
the Securities Administrator shall have no further duties or obligations with
respect thereto.

      Section 10.03 Additional Termination Requirements.

      (a) In the event the Securities Administrator or the Master Servicer
exercises its purchase option as provided in Section 10.01, that portion of the
Trust Fund relating to the Mortgage Loans shall be terminated in accordance with
the following additional requirements, unless the Securities Administrator shall
have been furnished with an Opinion of Counsel to the effect that the failure of
the Issuing Entity to comply with the requirements of this Section will not (i)
result in the imposition of taxes on "prohibited transactions" of the Issuing
Entity as defined in Section 860F of the Code or (ii) cause any REMIC
constituting part of the Issuing Entity to fail to qualify as a REMIC at any
time that any Certificates are outstanding:

            (i) Within 90 days prior to the final Distribution Date, the
      Securities Administrator shall adopt and sign a plan of complete
      liquidation of the Issuing Entity as

                                     -143-
<PAGE>

      provided to it by the terminating purchaser, meeting the requirements of a
      "qualified liquidation" under Section 860F of the Code and any regulations
      thereunder; and

            (ii) At or after the time of adoption of such a plan of complete
      liquidation and at or prior to the final Distribution Date, the Securities
      Administrator shall sell all of the assets of the Issuing Entity for cash
      pursuant to the terms of the plan of complete liquidation.

      (b) By their acceptance of Certificates, the Holders thereof hereby agree
to appoint the Securities Administrator as their attorney in fact to: (i) adopt
such a plan of complete liquidation (and the Certificateholders hereby appoint
the Securities Administrator as their attorney in fact to sign such plan) as
appropriate and (ii) to take such other action in connection therewith as may be
reasonably required to carry out such plan of complete liquidation all in
accordance with the terms hereof.

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

      Section 11.01 Intent of Parties. The parties intend that each REMIC shall
be treated as a REMIC for federal income tax purposes and that the provisions of
this Agreement should be construed in furtherance of this intent.

      Section 11.02 Amendment.

      (a) This Agreement may be amended from time to time by the Depositor, the
Master Servicer, the Securities Administrator, the Initial Servicer, the
Successor Servicer and the Trustee, and without the consent of any of the
Certificateholders to:

                  (i) to cure any ambiguity or correct any mistake,

                  (ii) to correct, modify or supplement any provision herein
      which may be inconsistent with any other provision herein,

                  (iii) to add any other provisions with respect to matters or
      questions arising under this Agreement, or

                  (iv) to modify, alter, amend, add to or rescind any of the
      terms or provisions contained in this Agreement; provided, however, that,
      in the case of clauses (iii) and (iv), such amendment will not, as
      evidenced by an Opinion of Counsel addressed to the Securities
      Administrator to such effect, adversely affect in any material respect the
      interests of any Certificateholder; provided, further, however, that such
      amendment will be deemed to not adversely affect in any material respect
      the interest of any Holder if the Person requesting such amendment obtains
      a letter from each Rating Agency stating that such amendment will not
      result in a reduction or withdrawal of its rating of any Class of the
      Certificates, it being understood and agreed that any such letter in and
      of itself will

                                     -144-
<PAGE>

      not represent a determination as to the materiality of any such amendment
      and will represent a determination only as to the credit issues affecting
      any such rating.

      The Securities Administrator shall not enter into any amendment to this
Agreement that could have a materially adverse effect on the Cap Contract
Counterparty or the Swap Counterparty without first obtaining the prior written
consent of the Cap Contract Counterparty or Swap Counterparty, respectively.

      Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Master Servicer, the Securities
Administrator, the Servicers and the Trustee may at any time and from time to
time amend this Agreement to modify, eliminate or add to any of its provisions
to such extent as shall be necessary or appropriate to maintain the
qualification of any of the REMICs provided for herein as REMICs under the Code
or to avoid or minimize the risk of the imposition of any tax on the Issuing
Entity or any of the REMICs provided for herein pursuant to the Code that would
be a claim against the Issuing Entity at any time prior to the final redemption
of the Certificates, provided that the Trustee and the Securities Administrator
shall have been provided an Opinion of Counsel addressed to the Trustee and the
Securities Administrator, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the Trustee
and the Securities Administrator, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.

      (b) This Agreement may also be amended from time to time by the Master
Servicer, the Depositor, the Securities Administrator, the applicable Servicer
and the Trustee, with the consent of the Holders of Certificates evidencing
Percentage Interests aggregating not less than 51% of the Class Certificate
Balance of the Certificates or of the applicable Class or Classes, if such
amendment affects only such Class or Classes, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Regular Certificate
without the consent of the Holder of such Regular Certificate, or (ii) reduce
the aforesaid percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding. Any Amendment hereunder shall be binding only
upon the applicable Servicers executing the Amendment. Notwithstanding any
contrary provision of this Agreement, the Trustee shall not consent to any
amendment to this Agreement unless it shall have first received an Opinion of
Counsel addressed to the Trustee, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment is permitted hereunder and will not
cause the imposition of any tax on the Issuing Entity, any of the REMICs
provided for herein or the Certificateholders or cause any of the REMICs
provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding.

      (c) Promptly after the execution of any such amendment, the Securities
Administrator shall furnish a copy of such amendment or written notification of
the substance of such amendment to each Certificateholder, with a copy to the
Rating Agencies.

                                     -145-
<PAGE>

      (d) In the case of an amendment under Section 11.02(b) above, it shall not
be necessary for the Certificateholders to approve the particular form of such
an amendment. Rather, it shall be sufficient if the Certificateholders approve
the substance of the amendment. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable regulations as the Trustee may prescribe.

      (e) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
will not adversely affect the status of any REMIC created hereunder. The Trustee
and the Securities Administrator may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's or the Securities Administrator's
own respective rights, duties or immunities under this Agreement.

      Section 11.03 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Depositor
shall effect such recordation, at the expense of the Issuing Entity upon the
request in writing of a Certificateholder, but only if such direction is
accompanied by an Opinion of Counsel (provided at the expense of the
Certificateholder requesting recordation) to the effect that such recordation
would materially and beneficially affect the interests of the Certificateholders
or is required by law.

      Section 11.04 Limitation on Rights of Certificateholders.

      (a) The death or incapacity of any Certificateholder shall not terminate
this Agreement or the Issuing Entity, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Issuing Entity, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.

      (b) Except as expressly provided in this Agreement, no Certificateholders
shall have any right to vote or in any manner otherwise control the operation
and management of the Issuing Entity, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to establish the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

      (c) No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon, under or with respect to this Agreement against the Depositor, the
Securities Administrator, the Master Servicer or any successor to any such
parties unless (i) such Certificateholder previously shall have given to the
Trustee a written notice of a continuing default, as herein provided, (ii) the
Holders of Certificates evidencing Percentage Interests aggregating not less
than 51% of the Trust Fund shall have made written request upon the Trustee to
institute such action, suit or

                                     -146-
<PAGE>

proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs and
expenses and liabilities to be incurred therein or thereby, and (iii) the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding.

      (d) No one or more Certificateholders shall have any right by virtue of
any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

      Section 11.05 Acts of Certificateholders.

      (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
an agent duly appointed in writing. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is expressly required, to the
Depositor. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Trustee and the Depositor, if made in the manner
provided in this Section 11.05.

      (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.

      (c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Regular Certificate presented in
accordance with Section 5.04) shall be proved by the Certificate Register, and
neither the Trustee, the Securities Administrator, the Depositor, the Master
Servicer nor any successor to any such parties shall be affected by any notice
to the contrary.

      (d) Any request, demand, authorization, direction, notice, consent, waiver
or other action of the holder of any Regular Certificate shall bind every future
holder of the same Regular Certificate and the holder of every Regular
Certificate issued upon the registration of transfer or exchange thereof, if
applicable, or in lieu thereof with respect to anything done, omitted or

                                     -147-
<PAGE>

suffered to be done by the Trustee, the Securities Administrator, the Depositor,
the Master Servicer or any successor to any such party in reliance thereon,
whether or not notation of such action is made upon such Certificates.

      (e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Percentage Interests have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
owned by the Trustee, the Securities Administrator, the Depositor, the Master
Servicer or any Affiliate thereof shall be disregarded, except as otherwise
provided in Section 11.02(b) and except that, in determining whether the
Securities Administrator or the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Certificates which a Responsible Officer of the Trustee knows to be so owned
shall be so disregarded. Certificates which have been pledged in good faith to
the Trustee, the Securities Administrator, the Depositor, the Master Servicer or
any Affiliate thereof may be regarded as outstanding if the pledgor establishes
to the satisfaction of the Securities Administrator the pledgor's right to act
with respect to such Certificates and that the pledgor is not an Affiliate of
the Trustee, the Securities Administrator, the Depositor, or the Master
Servicer, as the case may be.

      Section 11.06 Governing Law. THIS AGREEMENT AND THE CERTIFICATES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

      Section 11.07 Notices. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at (including delivery by
facsimile) or mailed by registered mail, return receipt requested, postage
prepaid, or by recognized overnight courier, to (i) in the case of the
Depositor, 4 World Financial Center, New York, New York 10281, Attention: Vice
President-Servicing, telecopier number: (212) 449-1000, or to such other address
as may hereafter be furnished to the other parties hereto in writing; (ii) in
the case of the Trustee, at its Corporate Trust Office, or such other address as
may hereafter be furnished to the other parties hereto in writing; (iii) in the
case of the Master Servicer or Securities Administrator, Wells Fargo Bank, N.A.,
P.O. Box 98, Columbia, Maryland 21046, Attention: Client Service Manager MANA
Series 2007-OAR1, or, in the case of overnight deliveries, 9062 Old Annapolis
Road, Columbia, Maryland 21045-1951, Attention: Client Service Manager MANA
Series 2007-OAR1, facsimile no.: (410) 715-2380, or such other address as may
hereafter be furnished to the other parties hereto in writing; (iv) in the case
of the Custodian, Wells Fargo Bank, N.A., 1015 10th Avenue Southeast, MS 0031,
Minneapolis, Minnesota 55414, Attention: MANA Series 2007-OAR1; or such other
address as may hereafter be furnished to the other parties hereto in writing;
(v) in the case of the Rating Agencies, Moody's Investors Service, Inc., 99
Church Street, 4th Floor, New York, New York 10007 and Standard & Poor's, a
division of The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York
10041; (vi) in the case of the Initial Servicer, Wilshire Credit Corporation,
14523 S.W. Millikan Way, Suite 200, Beaverton, Oregon 97005, Attention: V.P.
Client Services, (vii) in the case of the Successor Servicer, Central Mortgage
Company, 801 John Barrow Road, Little Rock, Arkansas 72205, or (viii) in the
case of the Cap Contract Counterparty, Bear Stearns Financial Products Inc., 383
Madison Avenue, New York, New York 10179. Any notice delivered to the Depositor,
the

                                     -148-
<PAGE>

Trustee, the Securities Administrator or the Master Servicer under this
Agreement shall be effective only upon receipt. Any notice required or permitted
to be mailed to a Certificateholder, unless otherwise provided herein, shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given when mailed, whether or not the Certificateholder receives
such notice.

      Section 11.08 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.

      Section 11.09 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.

      Section 11.10 Article and Section Headings. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.

      Section 11.11 Counterparts. This Agreement may be executed in two or more
counterparts each of which when so executed and delivered shall be an original
but all of which together shall constitute one and the same instrument.

      Section 11.12 Notice to Rating Agencies. The article and section headings
herein are for convenience of reference only, and shall not limited or otherwise
affect the meaning hereof. The Trustee shall promptly provide notice to each
Rating Agency with respect to each of the following of which it has actual
knowledge:

      1. Any material change or amendment to this Agreement;

      2. The occurrence of any Event of Default that has not been cured;

      3. The resignation or termination of the Trustee, the Master Servicer or
the Securities Administrator;

      4. The repurchase or substitution of Mortgage Loans;

      5. The final payment to Certificateholders; and

      6. Any change in the location of the Master Servicer Collection Account or
the Distribution Account.

      Section 11.13 Third Party Rights. The Cap Contract Counterparty and Swap
Counterparty shall be deemed third party beneficiaries of this Agreement
regarding provisions related to payments owed to the Cap Contract Counterparty
or Swap Counterparty, respectively,

                                     -149-
<PAGE>

so long as any of the Corridor Contract, the Cap Contract or the Swap Agreement,
as applicable, remain in effect.

                                   ARTICLE XII
                             PROHIBITED TRANSACTIONS

      Section 12.01 [Reserved].

      Section 12.02 Prohibited Transactions and Activities. None of the
Servicers, the Depositor nor the Securities Administrator shall sell, dispose
of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of each REMIC pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to any REMIC after
the Closing Date, unless it has received an Opinion of Counsel (at the expense
of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of any such REMIC as a REMIC or of the interests therein
other than the Residual Certificate as the regular interests therein, (b) affect
the distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause any such REMIC to be
subject to any tax including a tax on prohibited transactions or prohibited
contributions pursuant to the REMIC Provisions.

      Section 12.03 Indemnification with Respect to Prohibited Transactions or
Loss of REMIC Status.

      (a) In the event that a REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Securities Administrator of its duties and
obligations set forth herein, the Securities Administrator shall indemnify the
Certificateholders against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the
Securities Administrator shall not be liable for any such Losses attributable to
the action or inaction of the Depositor or the Holder of the Residual
Certificate, nor for any such Losses resulting from misinformation provided by
any of the foregoing parties on which the Securities Administrator has relied.
Notwithstanding the foregoing, however, in no event shall the Trustee or the
Securities Administrator have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement or the Mortgage
Loan Purchase Agreement, (2) for any Losses other than arising out of
malfeasance, willful misconduct or negligent performance by the Securities
Administrator with respect to its duties and obligations set forth herein, and
(3) for any special or consequential damages to Certificateholders of the
related Residual Certificate (in addition to payment of principal and interest
on the Certificates).

      (b) In the event that a REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited

                                     -150-
<PAGE>

contribution under the REMIC Provisions due to the negligent performance by any
Servicer of its duties and obligations set forth herein, such Servicer shall
indemnify the Certificateholders against any and all losses, claims, damages,
liabilities or expenses ("Losses") resulting from such negligence; provided,
however, that such Servicer shall not be liable for any such Losses attributable
to the action or inaction of the Depositor, the other Servicer, the Securities
Administrator or the Holder of the Residual Certificate, nor for any such Losses
resulting from misinformation provided by any of the foregoing parties on which
such Servicer has relied. Notwithstanding the foregoing, however, in no event
shall any Servicer have any liability (1) for any action or omission that is
taken in accordance with and in compliance with the express terms of, or which
is expressly permitted by the terms of, this Agreement or the Mortgage Loan
Purchase Agreement, (2) for any Losses other than arising out of malfeasance,
willful misconduct or negligent performance by such Servicer with respect to its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).

      Section 12.04 REO Property.

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

          (ii) Notwithstanding any other provision of this Agreement, no
Servicer shall rent, lease, otherwise earn income or take any other action on
behalf of any REMIC with respect to any REO Property which might cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
section 860G(a)(8) of the Code or result in the receipt by any REMIC of any
"income from non-permitted assets" within the meaning of section 860F(a)(2) of
the Code or any "net income from foreclosure property" which is subject to tax
under the REMIC Provisions unless the Servicer has provided to the Securities
Administrator an Opinion of Counsel concluding that, under the REMIC Provisions,
such action would not adversely affect the status of any REMIC as a REMIC and
any income generated for any REMIC by the REO Property would not result in the
imposition of a tax upon such REMIC.

      (b) (i) The Depositor shall cause each Servicer (to the extent provided in
this Agreement) to make reasonable efforts to sell any REO Property for its fair
market value. In any event, however, the Depositor shall, or shall cause the
Servicer (to the extent provided in this Agreement) to, dispose of any REO
Property within three years of its acquisition by the Issuing Entity unless the
Depositor or such Servicer (on behalf of the Issuing Entity) has received a
grant of extension from the Internal Revenue Service to the effect that, under
the REMIC Provisions

                                     -151-
<PAGE>

and any relevant proposed legislation and under applicable state law, the REMIC
may hold REO Property for a longer period without adversely affecting the REMIC
status of such REMIC or causing the imposition of a Federal or state tax upon
such REMIC. If such an extension has been received, then the Depositor, acting
on behalf of the Trustee hereunder, shall, or shall cause the Servicer to,
continue to attempt to sell the REO Property for its fair market value for such
period longer than three years as such extension permits (the "Extended
Period"). If such an extension has not been received and the Depositor or the
Servicer, acting on behalf of the Issuing Entity hereunder, is unable to sell
the REO Property within 33 months after its acquisition by the Issuing Entity or
if such an extension, has been received and the Depositor or the Servicer is
unable to sell the REO Property within the period ending three months before the
close of the Extended Period, the Depositor shall cause the Servicer, before the
end of the three year period or the Extended Period, as applicable, to (i)
purchase such REO Property at a price equal to the REO Property's fair market
value or (ii) auction the REO Property to the highest bidder (which may be the
Servicer) in an auction reasonably designed to produce a fair price prior to the
expiration of the three-year period or the Extended Period, as the case may be.

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

                                  ARTICLE XIII
                           SERVICING OF MORTGAGE LOANS

      Section 13.01 Servicers to Service Mortgage Loans.

      For and on behalf of the Certificateholders, the Servicers shall service
and administer the Mortgage Loans in accordance with the Accepted Servicing
Practices. In connection with such servicing and administration, the Servicers
shall have full power and authority, acting alone and/or through Subservicers,
as provided in Section 13.02 hereof, to do or cause to be done any and all
things that it may deem necessary or desirable in connection with such servicing
and administration, including but not limited to, the power and authority,
subject to the terms hereof

                                     -152-
<PAGE>

(i) to execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages (but only in the manner provided in this Agreement),
(iii) to collect any Insurance Proceeds and other Liquidation Proceeds and (iv)
subject to Section 13.12(a), to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan; provided
that, subject to Section 14.03, the Servicers shall not take any action that is
inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan serviced by it under this Agreement or
the rights and interests of the other parties to this Agreement except as
otherwise required by this Agreement or by law. Notwithstanding anything in this
Agreement to the contrary, the Servicers shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan that would
cause any of the REMICs provided for herein to fail to qualify as a REMIC or
result in the imposition of any tax under Section 860G(a) or 860G(d) of the
Code. Each Servicer shall represent and protect the interest of the Trust Fund
in the same manner as it currently protects its own interest in mortgage loans
in its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan, but in any case not in any manner that is a lesser standard than that
provided in the first sentence of this Section 13.01. Without limiting the
generality of the foregoing, each Servicer, in its own name or in the name of
the Depositor and the Trustee, is hereby authorized and empowered by the
Depositor and the Trustee, when such Servicer believes it appropriate in its
reasonable judgment, to execute and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge,
subordinations and all other comparable instruments, with respect to the
Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. Each Servicer shall prepare and deliver to
the Depositor and/or the Trustee such documents requiring execution and delivery
by any or all of them as are necessary or appropriate to enable such Servicer to
service and administer the Mortgage Loans, to the extent that such Servicer is
not permitted to execute and deliver such documents pursuant to the preceding
sentence. Upon receipt of such documents, the Depositor and/or the Trustee shall
execute such documents and deliver them to the applicable Servicer. For purposes
of this Section 13.01, the Trustee hereby grants to each Servicer a limited
power of attorney to execute and file any and all documents necessary to fulfill
the obligations of the Servicers under this Section 13.01.

      The Servicers shall not be required to make any Servicing Advance with
respect to a Mortgage Loan that is 150 days or more delinquent.

      The Servicers shall deliver a list of Servicing Officers to the Trustee by
the Closing Date.

      The Servicers will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02, and for each
Mortgage Loan, the applicable Servicer agrees that it shall report one of the
following statuses each month as follows: current, delinquent (30-, 60-,
90-days, etc.), foreclosed or charged-off.

      Each Servicer further is authorized and empowered by the Trustee, on
behalf of the Certificateholders and the Trustee, in its own name or in the name
of the Subservicer, when the applicable Servicer or the Subservicer, as the case
may be, believes it is appropriate in its best judgment to register any Mortgage
Loan on the MERS System, or cause the removal from the

                                     -153-
<PAGE>

registration of any Mortgage Loan on the MERS System, to execute and deliver, on
behalf of the Trustee and the Certificateholders or any of them, any and all
instruments of assignment and other comparable instruments with respect to such
assignment or re-recording of a Mortgage in the name of MERS, solely as nominee
for the Trustee and its successors and assigns. Any reasonable expenses incurred
in connection with the actions described in the preceding sentence or as a
result of MERS discontinuing or becoming unable to continue operations in
connection with the MERS System, shall be subject to withdrawal by the
applicable Servicer from the Protected Account (provided that such expenses
constitute "unanticipated expenses" within the meaning of Treasury Regulation
Section 1.860G-1(b)(3)(ii)).

      Section 13.02 Servicing and Subservicing; Enforcement of the Obligations
of Servicers.

     (a) Each Servicer may arrange for the subservicing of any Mortgage Loan by
a Subservicer, which may be an Affiliate (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement") including, at such
Servicer's option, if requested to do so by the Holder of the Class C
Certificate; provided, however, that (i) such subservicing arrangement and the
terms of the related subservicing agreement must provide for the servicing of
such Mortgage Loans in a manner consistent with the servicing arrangements
contemplated hereunder and (ii) that such agreement would not result in a
withdrawal or downgrading by any Rating Agency of the ratings of any
Certificates evidenced by a letter to that effect delivered by each Rating
Agency to the Depositor. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to agreements or
arrangements between a Servicer and a Subservicer or reference to actions taken
through a Subservicer or otherwise, the Servicers shall remain obligated and
liable to the Depositor, the Master Servicer and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicers alone were servicing and administering
the Mortgage Loans. Every subservicing agreement entered into by a Servicer
shall contain a provision giving any successor servicer the option to terminate
such agreement in the event a successor servicer is appointed. All actions of
the each Subservicer performed pursuant to the related subservicing agreement
shall be performed as an agent of the applicable Servicer with the same force
and effect as if performed directly by such Servicer. As set forth in Section
16.02, each Servicer shall deliver to the Master Servicer a copy of any
subservicing agreement executed by such Servicer. The Master Servicer agrees
that it will keep any such subservicing agreement confidential. The Master
Servicer shall have no obligations, duties or liabilities with respect to a
Subservicer, including without limitation, any obligation, duty or liability to
monitor such Subservicer or to pay a Subservicer's fees and expenses.

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

                                     -154-
<PAGE>

      (c) The Servicers shall not permit a Subservicer that would be required
under this Agreement or any sub-servicing agreement to deliver an Annual
Statement of Compliance, an Assessment of Compliance and an Accountant's
Attestation to perform any servicing responsibilities hereunder with respect to
the Mortgage Loans unless that Subservicer first agrees in writing with the
applicable Servicer to deliver such Annual Statement of Compliance, an
Assessment of Compliance and an Accountant's Attestation in such manner and at
such times that permits that Servicer to comply with Sections 16.04 and 16.05 of
this Agreement.

      Section 13.03 Rights of the Depositor and the Trustee in Respect of the
Servicer.

      Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicers, and neither of them
is obligated to supervise the performance of the Servicers hereunder or
otherwise.

      Section 13.04 Master Servicer to Act as Servicer.

      Subject to Sections 14.04 and 15.02, in the event that either Servicer
shall for any reason no longer be the Servicer hereunder (other than due to the
servicing transfer on the Servicing Transfer Date, but including by reason of a
Servicer Event of Default), the Master Servicer or its designee shall, within a
period of time not to exceed ninety (90) days from the date of notice of
termination or resignation, thereupon assume all of the rights and obligations
of the Servicer hereunder arising thereafter (except that the Master Servicer
shall not be (i) liable for losses of the Servicer pursuant to Section 13.10
hereof or any acts or omissions of such predecessor Servicer hereunder, (ii)
obligated to make Advances or Servicing Advances if it is prohibited from doing
so by applicable law, (iii) obligated to effectuate repurchases or substitutions
of Mortgage Loans hereunder, including pursuant to Section 2.02 or 2.06 hereof,
(iv) responsible for any expenses of the Servicer pursuant to Section 2.06 or
(v) deemed to have made any representations and warranties hereunder, including
pursuant to Section 2.07 or the first paragraph of Section 14.02 hereof;
provided, however that the Master Servicer (subject to clause (ii) above) or its
designee, in its capacity as the successor servicer, shall immediately assume
the terminated or resigning Servicer's obligation to make Advances and Servicing
Advances). No such termination or resignation shall affect any obligation of
either Servicer to pay amounts owed under this Agreement and to perform its
duties under this Agreement until its successor assumes all of its rights and
obligations hereunder. If a Servicer shall for any reason no longer be a
Servicer (other than due to the servicing transfer on the Servicing Transfer
Date, but including by reason of any Servicer Event of Default), the Master
Servicer (or any other successor servicer) may, at its option, succeed to any
rights and obligations of such Servicer under any subservicing agreement in
accordance with the terms thereof; provided, however, that the Master Servicer
(or any other successor servicer) shall not incur any liability or have any
obligations in its capacity as servicer under a subservicing agreement arising
prior to the date of such succession unless it expressly elects to succeed to
the rights and obligations of the Servicer thereunder; and the Servicer shall
not thereby be relieved of any liability or obligations under the subservicing
agreement arising prior to the date of such succession. To the extent any costs
or expenses, including without limitation, Servicing Transfer Costs incurred by
the Master Servicer in connection with this Section 13.04, are not paid by the
applicable Servicer pursuant to this Agreement within 30 days of the date of the
Master Servicer's invoice thereof, such amounts shall be payable to the Master
Servicer pursuant to this Agreement; provided that if a Servicer

                                     -155-
<PAGE>

has been terminated by reason of a Servicer Event of Default, the terminated
Servicer shall reimburse the Issuing Entity for any such expense incurred by the
Issuing Entity upon receipt of a reasonably detailed invoice evidencing such
expenses. If the Master Servicer is unwilling or unable to act as servicer, the
Master Servicer shall seek to appoint a successor servicer that is eligible in
accordance with the criteria specified in this Agreement.

      Each Servicer shall, upon request of the Master Servicer, but at the
expense of the Servicer if the Servicer has been terminated by reason of a
Servicer Event of Default, deliver to the assuming party all documents and
records relating to each subservicing agreement and the Mortgage Loans then
being serviced and otherwise use its best efforts to effect the orderly and
efficient transfer of the subservicing agreement to the assuming party.

      Section 13.05 Collection of Mortgage Loan Payments.

      (a) Each Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any default
interest charge, or (ii) subject to Section 13.01, extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, subject to Section 13.22, the
Servicer shall make any Advances on the related Mortgage Loan during the
scheduled period in accordance with its obligations under this Agreement without
modification thereof by reason of such arrangements. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 13.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Interest Rate, forgive the payment of principal or interest
or extend the final maturity date of such Mortgage Loan), accept payment from
the related Mortgagor of an amount less than the Stated Principal Balance in
final satisfaction of such Mortgage Loan, or consent to the postponement of
strict compliance with any such term or otherwise grant indulgence to any
Mortgagor (any and all such waivers, modifications, variances, forgiveness of
principal or interest, postponements, or indulgences collectively referred to
herein as "forbearance"), provided, however, that in determining which course of
action permitted by this sentence it shall pursue, the Servicer shall adhere to
the standards of Section 13.01. Each Servicer's analysis supporting any
forbearance and the conclusion that any forbearance meets the standards of
Section 13.01 shall be reflected in writing in the Mortgage File.

      (b) Neither Servicer will waive any Prepayment Charge or portion thereof
unless, (i) the enforceability thereof shall have been limited by bankruptcy,
insolvency, moratorium, receivership or other similar laws relating to
creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the Servicer has not
been provided with information sufficient to enable it to collect the Prepayment
Charge, or (iv) in the Servicer's

                                     -156-
<PAGE>

reasonable judgment as described in Section 13.01 hereof, (x) such waiver
relates to a default or a reasonably foreseeable default and (y) such waiver
would maximize recovery of total proceeds taking into account the value of such
Prepayment Charge and related Mortgage Loan, or (v) the collection of such
Prepayment Charge or portion thereof, or of a similar type of Prepayment Charge,
would be considered "predatory" or "illegal" pursuant to written guidance
published by any applicable federal, state or local regulatory authority having
jurisdiction over such matters or has been challenged by any such authority, or
only to the extent that there are no NIM Notes outstanding or to the extent that
the Depositor has notified the Servicer in writing that all previously issued
NIM Notes are no longer outstanding, there is a certificated class action in
which a similar type of prepayment charge is being challenged. Except as
provided in the preceding sentence, in no event will either Servicer waive a
Prepayment Charge in connection with a refinancing of a Mortgage Loan that is
not related to a default or a reasonably foreseeable default. If a Servicer
waives or does not collect all or a portion of a Prepayment Charge relating to a
Principal Prepayment in full or in part due to any action or omission of the
Servicer, other than as provided above, such Servicer shall deposit the amount
of such Prepayment Charge (or such portion thereof as had been waived for
deposit) into the applicable Protected Account for distribution in accordance
with the terms of this Agreement.

      (c) The Servicers shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that enforcing the
provision of the Mortgage or other instrument pursuant to which such payment is
required is prohibited by applicable law.

      (d) Each Servicer shall establish and initially maintain, on behalf of the
Certificateholders, a Protected Account. Each Servicer shall deposit into such
Protected Account daily, within two Business Days of receipt thereof, in
immediately available funds, the following payments and collections received or
made by it on and after the Cut-off Date with respect to the Mortgage Loans:

            (i) all payments on account of principal, including Principal
      Prepayments, on the Mortgage Loans, other than principal due on the
      Mortgage Loans on or prior to the Cut-off Date;

            (ii) all payments on account of interest on the Mortgage Loans net
      of the related Servicing Fee permitted under Section 13.15, other than (x)
      interest due on the Mortgage Loans on or prior to the Cut-off Date and (y)
      Prepayment Interest Excess;

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

            (iv) all Subsequent Recoveries;

            (v) all Compensating Interest;

            (vi) any amount required to be deposited by the Servicer pursuant to
      Section 13.05(f) in connection with any losses on Permitted Investments;

                                     -157-
<PAGE>

            (vii) any amounts required to be deposited by the Servicer pursuant
      to Section 13.10 hereof;

            (viii) all Advances made by the Servicer pursuant to Section 13.22;

            (ix) all Prepayment Charges; and

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

      The foregoing requirements for remittance by each Servicer into the
Protected Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property and other similar ancillary fees (other than
Prepayment Charges)) if collected, and any Prepayment Interest Excess need not
be remitted by the Servicers. Rather, such fees and charges may be retained by
the Servicers as additional servicing compensation. In the event that a Servicer
shall remit any amount not required to be remitted and not otherwise subject to
withdrawal pursuant to Section 13.08 hereof, it may at any time withdraw or
direct the Master Servicer, or such other institution maintaining the Protected
Account, to withdraw such amount from the Protected Account, any provision
herein to the contrary notwithstanding. The Servicers shall maintain adequate
records with respect to all withdrawals made pursuant to this Section. All funds
deposited in the Protected Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 13.08. In no event
shall the Master Servicer incur liability for withdrawals from the Protected
Account at the direction of a Servicer.

      Each Servicer shall give notice to the Master Servicer of the location of
the Protected Account maintained by it when established and prior to any change
thereof. Not later than twenty days after each Distribution Date, the Servicer
shall forward to the Master Servicer and the Depositor the most current
available bank statement for the Protected Account.

      (e) [Reserved]

      (f) Each institution that maintains a Protected Account may invest the
funds in each such account, as directed by the applicable Servicer in writing,
in Permitted Investments, which shall mature not later than the Business Day
preceding the related Servicer Remittance Date (except that if such Permitted
Investment is an obligation of the institution that maintains such Protected
Account or is otherwise immediately available, then such Permitted Investment
shall mature not later than the Servicer Remittance Date) and shall not be sold
or disposed of prior to its maturity. All such Permitted Investments shall be
made in the name of the Trustee for the benefit of the Certificateholders. All
income and gain net of any losses realized from amounts on deposit in each
Protected Account shall be for the benefit of the applicable Servicer as
servicing compensation and shall be remitted to it monthly as provided herein.
The amount of any losses incurred in the each Protected Account in respect of
any such investments shall be deposited by the applicable Servicer in the
Protected Account out of the Servicer's own funds immediately as realized.

      Section 13.06 Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.

                                     -158-
<PAGE>
     To the extent required by the related Mortgage Note, each Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicers to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.

     Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Servicers out of related collections for any payments made pursuant to Sections
13.01 hereof (with respect to taxes and assessments and insurance premiums,
condominium or PUD association dues or comparable items) and 13.10 hereof (with
respect to hazard insurance), to refund to any Mortgagors any sums as may be
determined to be overages, to pay interest, if required by law or the terms of
the related Mortgage or Mortgage Note, to Mortgagors on balances in the Escrow
Account or to clear and terminate the Escrow Account at the termination of this
Agreement in accordance with Section 10.01 hereof. The Escrow Accounts shall not
be a part of the Trust Fund.

     Section 13.07 Access to Certain Documentation and Information Regarding the
Mortgage Loans.

     Upon reasonable advance notice in writing if required by federal
regulation, each Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by
such Servicer in providing such reports and access.

     Each Servicer may from time to time provide the Depositor, the Master
Servicer, the Securities Administrator, the Trustee and any person designated by
the depositor, with reports and information regarding the Mortgage Loans,
including without limitation, information requested by the Depositor or an
originator of the Mortgage Loans for required institutional risk control. In
addition, subject to limitations of applicable privacy laws, the Servicers may
make public information regarding performance of the Mortgage Loans.

     Section 13.08 Permitted Withdrawals from the Protected Account.

     Each Servicer may from time to time, make withdrawals from the Protected
Accounts for the following purposes:

          (i) to pay to the applicable Servicer (to the extent not previously
     paid to or withheld by the applicable Servicer), as servicing compensation
     in accordance with Section 13.15, that portion of any payment of interest
     that equals the Servicing Fee for the period with respect to which such
     interest payment was made, and, as additional servicing compensation, those
     other amounts set forth in Section 13.15;

                                     -159-

<PAGE>

          (ii) to reimburse the applicable Servicer for Advances made by it (or
     to reimburse the Advance Financing Person for Advances made by it) with
     respect to the Mortgage Loans, such right of reimbursement pursuant to this
     subclause (ii) being limited to amounts received on particular Mortgage
     Loan(s) (including, for this purpose, Liquidation Proceeds) that represent
     late recoveries of payments of principal and/or interest on such particular
     Mortgage Loan(s) in respect of which any such Advance was made;

          (iii) to reimburse the applicable Servicer for any Non-Recoverable
     Advance previously made and any Non-Recoverable Servicing Advances
     previously made to the extent that, in the case of Non-Recoverable
     Servicing Advances, reimbursement therefor constitutes "unanticipated
     expenses" within the meaning of Treasury Regulation Section
     1.860G-1(b)(3)(ii);

          (iv) to pay to the applicable Servicer earnings on or investment
     income with respect to funds in or credited to the applicable Protected
     Account;

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

          (vi) [reserved];

          (vii) to pay to the applicable Servicer any unpaid Servicing Fees and
     to reimburse it for any unreimbursed Servicing Advances (to the extent that
     reimbursement for Servicing Advances would constitute an "unanticipated
     expense" within the meaning of Treasury Regulation Section
     1.860-1(b)(3)(ii)), the applicable Servicer's right to reimbursement of
     Servicing Advances pursuant to this subclause (vi) with respect to any
     Mortgage Loan being limited to amounts received on particular Mortgage
     Loan(s) (including, for this purpose, Liquidation Proceeds and purchase and
     repurchase proceeds) that represent late recoveries of the payments for
     which such advances were made pursuant to Section 13.01 or Section 13.06;

          (viii) to pay the applicable Servicer any unpaid Servicing Fees for
     any Mortgage Loan upon such Mortgage Loan being charged off and upon
     termination of the obligations of the Servicer;

          (ix) to pay to the Depositor or the applicable Servicer, as
     applicable, with respect to each Mortgage Loan or property acquired in
     respect thereof that has been purchased pursuant to Section 13.12, all
     amounts received thereon and not taken into account in determining the
     related Stated Principal Balance of such repurchased Mortgage Loan;

          (x) to reimburse the applicable Servicer, the Trustee or the Depositor
     for expenses incurred by any of them in connection with the Mortgage Loans
     or Certificates and reimbursable pursuant to Section 13.04, Section 13.19
     or Section 14.04 hereof provided that reimbursement therefor would
     constitute "unanticipated" expenses within the meaning of Treasury
     Regulation Section 1.860G-1(b)(3)(ii);

                                     -160-

<PAGE>

          (xi) to reimburse the Trustee for enforcement expenses reasonably
     incurred in respect of a breach or defect giving rise to the purchase
     obligation in Section 2.06 that were incurred in the Purchase Price of the
     Mortgage Loans including any expenses arising out of the enforcement of the
     purchase obligation; provided that any such expenses will be reimbursable
     under this subclause (xi) only to the extent that such expenses would
     constitute "unanticipated expenses" within the meaning of Treasury
     Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs provided
     for herein;

          (xii) [reserved];

          (xiii) to withdraw pursuant to Section 13.05 any amount deposited in
     the Protected Accounts and not required to be deposited therein; and

          (xiv) to clear and terminate the Protected Accounts upon termination
     of this Agreement pursuant to Section 10.01 hereof.

     In addition, the Servicers will use commercially reasonable efforts to
cause to be withdrawn from the Protected Account no later than 2:30 p.m. Eastern
Time, but in any case no later than 3:00 p.m. Eastern Time on the Servicer
Remittance Date, the Interest Funds and the Principal Funds (for this purpose
only, neither Interest Funds nor Principal Funds shall include a deduction for
any amount reimbursable to the Trustee unless such amounts have actually been
reimbursed from such funds at the discretion of the applicable Servicer and the
calculation of the Interest Funds and Principal Funds shall not include item (7)
of the definition of Interest Funds and item (C) of the definition of Principal
Funds), to the extent on deposit, and such amount shall be deposited in the
Master Servicer Collection Account; provided, however, if the Master Servicer
does not receive such Interest Funds and Principal Funds by 3:00 p.m. Eastern
Time, such Interest Funds and Principal Funds shall be deposited in the Master
Servicer Collection Account on the next Business Day. In the event such funds
are not deposited by 3:00 p.m. Eastern Time on the Servicer Remittance Date, the
Servicer shall pay, out of its own funds, interest on such amount at a rate
equal to the then current "prime rate" (as published by Wells Fargo Bank, N.A.)
for each date or part thereof until such amount is paid in full.

     The Servicers shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the applicable Protection Account.

     The Servicers shall provide written notification to the Master Servicer on
or prior to the next succeeding Servicer Remittance Date upon making any
withdrawals from the Protection Accounts pursuant to subclauses (iii) and (vii)
above.

     Unless otherwise specified, any amounts reimbursable to the Servicers from
amounts on deposit in the Protected Accounts shall be deemed to come from first,
Interest Funds, and thereafter, Principal Funds for the related Distribution
Date.

     Section 13.09 [RESERVED]

     Section 13.10 Maintenance of Hazard Insurance.

                                     -161-

<PAGE>

     The Servicers shall cause to be maintained, for each Mortgage Loan secured
by a first lien, fire and hazard insurance with extended coverage in an amount,
to the extent permitted by applicable law, that is at least equal to the lesser
of (i) the estimated replacement value of the improvements that are part of such
Mortgaged Property (which may be the last known coverage) and (ii) the greater
of (a) the outstanding principal balance of the Mortgage Loan and (b) an amount
such that the proceeds of such policy shall be sufficient to prevent the related
Mortgagor and/or mortgagee from becoming a co-insurer. Each such policy of
standard hazard insurance shall contain, or have an accompanying endorsement
that contains, a standard mortgagee clause. The Servicers shall also cause flood
insurance to be maintained on property acquired upon foreclosure or deed in lieu
of foreclosure of any Mortgage Loan, to the extent described below. Pursuant to
Section 13.05 hereof, any amounts collected by the Servicers under any such
policies (other than the amounts to be applied to the restoration or repair of
the related Mortgaged Property or property thus acquired or amounts released to
the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the applicable Protected Account. Any cost incurred by the
Servicers in maintaining any such insurance shall not, for the purpose of
calculating monthly distributions to the Certificateholders or remittances to
the Master Servicer for their benefit, be added to the principal balance of the
Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so permit.
Such costs shall be recoverable by the Servicers as a Servicing Advance to the
extent provided in Section 13.08(a)(vii) hereof. It is understood and agreed
that no earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired in respect of a Mortgage other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
with respect to a Mortgage Loan secured by a first lien is located at the time
of origination of the Mortgage Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Servicer shall cause flood insurance to be maintained with respect
to such Mortgage Loan. Such flood insurance shall be in an amount equal to the
lesser of (i) the outstanding principal balance of the related Mortgage Loan,
(ii) the estimated replacement value of the improvements that are part of such
Mortgaged Property (which may be the last known coverage), or (iii) the maximum
amount of such insurance available for the related Mortgaged Property under the
Flood Disaster Protection Act of 1973, as amended.

     In the event that a Servicer shall obtain and maintain a blanket policy
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 13.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 13.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
applicable Protected Account the amount not otherwise payable under the blanket
policy because of such deductible clause. In connection with its activities as
servicer of the Mortgage Loans, each Servicer agrees to present, on behalf of
itself, the Depositor and the Master Servicer for the benefit of the
Certificateholders, claims under any such blanket policy.

     Section 13.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements.

                                     -162-

<PAGE>

     When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law; provided further, that the Servicer shall not take any action in relation
to the enforcement of any "due-on-sale" clause that would adversely affect or
jeopardize coverage under any Required Insurance Policy. An Opinion of Counsel
at the expense of the Servicer (which expense shall constitute a Servicing
Advance) delivered to the Master Servicer and the Depositor shall conclusively
establish the reasonableness of the Servicer's belief that any "due-on-sale"
clause is not enforceable under applicable law, but which shall not be required.
In such event, the Servicer shall make reasonable efforts to enter into an
assumption and modification agreement with the Person to whom such property has
been or is about to be conveyed, pursuant to which such Person becomes liable
under the Mortgage Note and, unless prohibited by applicable law or the
Mortgage, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer is authorized to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Note. In addition to the foregoing, the
Servicer shall not be required to enforce any "due-on-sale" clause or take any
of the above actions if the Servicer believes the collections and other
recoveries in respect of the Mortgage Loan would be maximized if the Mortgage
Loan were not accelerated and such actions not taken. The Mortgage Loan, as
assumed, shall conform in all respects to the requirements, representations and
warranties of this Agreement. The Servicer shall notify the Master Servicer and
the Trustee that any such assumption or substitution agreement has been
completed by forwarding to the Trustee the original copy of such assumption or
substitution agreement (indicating the Mortgage File to which it relates), which
copy shall be added by the Trustee to the related Mortgage File and which shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. The Servicer
shall be responsible for recording any such assumption or substitution
agreements. In connection with any such assumption or substitution agreement,
the Monthly Payment on the related Mortgage Loan shall not be changed but shall
remain as in effect immediately prior to the assumption or substitution, the
stated maturity or outstanding principal amount of such Mortgage Loan shall not
be changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Servicer for consenting to any
such conveyance or entering into an assumption or substitution agreement shall
be retained by or paid to the Servicer as additional servicing compensation.

     Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicers shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicers may be
restricted by law from preventing, for any reason whatsoever.

     Section 13.12 Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds; Special Loss Mitigation.

                                     -163-

<PAGE>

     (a) The Servicers shall use reasonable efforts consistent with the
servicing standard set forth in Section 13.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicers shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that neither Servicer shall be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Protected Accounts pursuant to
Section 13.08 hereof). Each Servicer shall be responsible for all other costs
and expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the proceeds of liquidation of
the related Mortgaged Property, as contemplated in Section 13.08 hereof. Any
Mortgage Loan that is charged off may be sold to the majority Certificateholder
of the Class C Certificates, at its option, at its fair market value after the
time period specified in (e) below. If a Servicer has received written notice
that a Mortgaged Property that it is contemplating acquiring in foreclosure or
by deed-in-lieu of foreclosure is located within a one-mile radius of any site
with environmental or hazardous waste risks known to the Servicer, the Servicer
will, prior to acquiring the Mortgaged Property, consider such risks and only
take action in accordance with Accepted Servicing Practices.

     With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee or its nominee, which shall not be the
Servicer. Pursuant to its efforts to sell such REO Property, the Servicer shall
either itself or through an agent selected by the Servicer protect and conserve
such REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Servicer deems to be in the best interest of
itself and the Certificateholders for the period prior to the sale of such REO
Property. The Servicer shall prepare a statement with respect to each REO
Property that has been rented showing the aggregate rental income received and
all expenses incurred in connection with the management and maintenance of such
REO Property at such times as is necessary to enable the Servicer to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the applicable
Protected Account no later than the close of business on each Determination
Date. The Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.

     In the event that the Issuing Entity acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Issuing Entity or, at the expense of the Issuing Entity, obtain, in accordance
with applicable procedures for obtaining an automatic extension of the grace
period,

                                     -164-

<PAGE>

more than 60 days prior to the day on which such three-year period would
otherwise expire, an extension of the three-year grace period, in which case
such property must be disposed of prior to the end of such extension, unless the
Trustee, the Master Servicer and the Securities Administrator shall have been
supplied with an Opinion of Counsel (such Opinion of Counsel not to be an
expense of the Trustee, the Master Servicer and the Securities Administrator),
to the effect that the holding by the Issuing Entity of such Mortgaged Property
subsequent to such three-year period or extension will not result in the
imposition of taxes on "prohibited transactions" of the Issuing Entity or any of
the REMICs provided for herein as defined in section 860F of the Code or cause
any of the REMICs provided for herein to fail to qualify as a REMIC at any time
that any Certificates are outstanding, in which case the Issuing Entity may
continue to hold such Mortgaged Property (subject to any conditions contained in
such Opinion of Counsel). Notwithstanding any other provision of this Agreement,
no Mortgaged Property acquired by the Issuing Entity shall be held, rented (or
allowed to continue to be rented) or otherwise used for the production of income
by or on behalf of the Issuing Entity in such a manner or pursuant to any terms
that would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code or (ii) subject
the Issuing Entity or any REMIC provided for herein to the imposition of any
federal, state or local income taxes on the income earned from such Mortgaged
Property under section 860G(c) of the Code or otherwise, unless the Servicer or
the Depositor has agreed to indemnify and hold harmless the Issuing Entity with
respect to the imposition of any such taxes.

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

     The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
applicable Protected Account on the next succeeding Determination Date following
receipt thereof for distribution on the related Distribution Date.

     The proceeds of any Liquidated Loan, as well as any recovery resulting from
a partial collection of Liquidation Proceeds will be applied as between the
parties in the following order of priority: first, to reimburse the Servicer for
any related Servicing Advances and unpaid Servicing Fees, pursuant to Section
13.08(a)(vi) or this Section 13.12; second, to reimburse the Servicer for any
unreimbursed Advances, pursuant to Section 13.08(a)(ii) or this Section 13.12;
third, to accrued and unpaid interest (to the extent no Advance has been made
for such amount) on the Mortgage Loan, at the Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed;
fourth, as a recovery of principal of the Mortgage Loan; and fifth, to any
Prepayment Charges.

     The proceeds of any net income from an REO Property, will be applied as
between the parties in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and Servicing Fees,
pursuant to Section 13.08(a)(vi) or this Section 13.12; second, to reimburse the
Servicer for any unreimbursed Advances, pursuant to Section 13.08(a)(ii) or this
Section 13.12;

                                     -165-

<PAGE>

third, as a recovery of principal; and fourth, to accrued and unpaid interest
(to the extent no Advance has been made for such amount) on the related REO
Property, at the applicable Net Mortgage Rate to the Due Date occurring in the
month in which such amounts are required to be distributed.

     (b) On each Determination Date, the Servicer shall determine the respective
aggregate amounts of Excess Proceeds, if any, that occurred in the related
Prepayment Period.

     (c) Each Servicer, in its sole discretion, shall have the right to elect
(by written notice sent to the Securities Administrator) to purchase for its own
account from the Issuing Entity any Mortgage Loan that is 91 days or more
Delinquent at a price equal to the Purchase Price. The Purchase Price for any
Mortgage Loan purchased hereunder shall be delivered to the Securities
Administrator for deposit to the Distribution Account and the Securities
Administrator (or its custodian, as applicable) upon receipt of such
confirmation of deposit and a Request for Release from the Servicer in the form
of Exhibit D hereto, shall release to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, as shall be necessary to vest in
the Servicer any Mortgage Loan released pursuant hereto and the Servicer shall
succeed to all the Securities Administrator's right, title and interest in and
to such Mortgage Loan and all security and documents related thereto. Such
assignment shall be an assignment outright and not for security. The Servicer
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Certificateholders with respect thereto.

     (d) With respect to such of the Mortgage Loans as come into and continue in
default, the applicable Servicer will decide, in its reasonable business
judgment, whether to (i) foreclose upon the Mortgaged Properties securing those
Mortgage Loans pursuant to Section 13.12(a), (ii) write off the unpaid principal
balance of the Mortgage Loans as bad debt (provided that the Servicer has
determined that no net recovery is likely through foreclosure proceedings or
other liquidation of the related Mortgaged Property), (iii) take a deed in lieu
of foreclosure, (iv) accept a short sale or short refinance; (v) arrange for a
repayment plan, or (vi) agree to a modification of such Mortgage Loan. As to any
Mortgage Loan that becomes 120 days delinquent, the Servicer will be required to
have obtained or to obtain a broker's price opinion, the cost of which will be
reimbursable as a Servicing Advance. After obtaining the broker's price opinion,
the Servicer will determine, in its reasonable business judgment, whether a net
recovery is possible through foreclosure proceedings or other liquidation of the
related Mortgage Property. If the Servicer determines that no such recovery is
possible, it must charge off the related Mortgage Loan at the time it becomes
180 days delinquent. Once a Mortgage Loan has been charged off, the Servicer
will discontinue making Advances, the Servicer will not be entitled to future
Servicing Fees with

                                     -166-

<PAGE>

respect to such Mortgage Loan except as provided below, and the Mortgage Loan
will be treated as a Liquidated Mortgage Loan. If the Servicer determines that
such net recovery is possible through foreclosure proceedings or other
liquidation of the related Mortgaged Property on a Mortgage Loan that becomes
180 days delinquent, the Servicer need not charge off the Mortgage Loan and may
continue making Advances, the Servicer will continue to be entitled to Servicing
Fees and the Servicer will be required to notify the Master Servicer and the
Trustee of such decision.

     (e) Any Mortgage Loan that is charged off, pursuant to (d) above, may
continue to be serviced by the Servicer for the Certificateholders using
specialized collection procedures (including foreclosure, if appropriate). The
Servicer will be entitled to Servicing Fees and reimbursement of expenses in
connection with such Mortgage Loans after the date of charge off, only to the
extent of funds available from any recoveries on any such Mortgage Loans. Any
such Mortgage Loans serviced in accordance with the specialized collection
procedures shall be serviced for approximately six months. Any net recoveries
received on such Mortgage Loans during such six month period will be treated as
Subsequent Recoveries. On the date which is six months after the date on which
the Servicer begins servicing such Mortgage Loans using the specialized
collection procedures, unless specific net recoveries are anticipated by the
Servicer on a particular Mortgage Loan, such charged off loan will be released
to the majority holder of the Class C Certificates and thereafter, (i) the
majority holder of the Class C Certificates will be entitled to any amounts
subsequently received in respect of any such released loans, (ii) the majority
holder of the Class C Certificates may designate any servicer to service any
such released loan and (iii) the majority holder of the Class C Certificates may
sell any such released loan to a third party.

     Section 13.13 Release of Mortgage Files.

     Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Custodian by
delivering a Request for Release substantially in the form of Exhibit D. The
Servicers are authorized to cause the removal from the registration on the MERS
System of any such Mortgage if applicable, and the Servicer, on behalf of the
Trustee shall execute and deliver the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage together with the Mortgage Note with written evidence
of cancellation thereon. Expenses incurred by the Servicers in connection with
any instrument of satisfaction or deed of reconveyance shall be chargeable to
the Mortgagor to the extent permitted by law, and otherwise to the Issuing
Entity to the extent such expenses constitute "unanticipated expenses" within
the meaning of Treasury Regulations Section 1.860G-(1)(b)(3)(ii). Subject to the
further limitations set forth below, the Servicer shall cause the Mortgage File
or documents so released to be returned to the Trustee or its designee when the
need therefor by the Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the applicable Protected
Account.

     Each Request for Release may be delivered to the Trustee or the Custodian
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or the Custodian shall mutually agree.

                                     -167-

<PAGE>

     If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
may deliver or cause to be delivered to the Trustee or the Custodian, for
signature, as appropriate or on behalf of the Trustee, execute any court
pleadings, requests for trustee's sale or other documents necessary to
effectuate such foreclosure or any legal action brought to obtain judgment
against the Mortgagor on the Mortgage Note or the Mortgage or to obtain a
deficiency judgment or to enforce any other remedies or rights provided by the
Mortgage Note or the Mortgage or otherwise available at law or in equity.
Notwithstanding the foregoing, the Servicer shall cause possession of any
Mortgage File or of the documents therein that shall have been released by the
Trustee or the Custodian to be returned to the Trustee or the Custodian promptly
after possession thereof shall have been released by the Trustee or the
Custodian unless (i) the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the applicable
Protected Account, and the Servicer shall have delivered to the Trustee or the
Custodian a Request for Release in the form of Exhibit D or (ii) the Mortgage
File or document shall have been delivered to an attorney or to a public trustee
or other public official as required by law for purposes of initiating or
pursuing legal action or other proceedings for the foreclosure of the Mortgaged
Property and the Servicer shall have delivered to the Trustee or the Custodian
an Officer's Certificate of a Servicing Officer certifying as to the name and
address of the Person to which the Mortgage File or the documents therein were
delivered and the purpose or purposes of such delivery.

     Each Servicer shall have no liability for, and shall be excused from its
performance thereunder to the extent its non-performance is caused by the
failure of the Custodian to release the documents as requested by the Servicer.

     Section 13.14 Documents, Records and Funds in Possession of Servicer to be
Held for the Trustee.

     All Mortgage Files and funds collected or held by, or under the control of,
the Servicer in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the applicable Protected Account, shall be
held by the Servicer for and on behalf of the Trustee and shall be and remain
the sole and exclusive property of the Issuing Entity, subject to the applicable
provisions of this Agreement. The Servicer also agrees that it shall not create,
incur or subject any Mortgage File or any funds that are deposited in the
applicable Protected Account, the Master Servicer Collection Account, the
Distribution Account or in any Escrow Account, or any funds that otherwise are
or may become due or payable to the Master Servicer or the Securities
Administrator for the benefit of the Certificateholders, to any claim, lien,
security interest, judgment, levy, writ of attachment or other encumbrance, or
assert by legal action or otherwise any claim or right of set off against any
Mortgage File or any funds collected on, or in connection with, a Mortgage Loan,
except, however, that the Servicer shall be entitled to set off against and
deduct from any such funds any amounts that are properly due and payable to the
Servicer under this Agreement.

     Section 13.15 Servicing Compensation.

     As compensation for its activities hereunder, the Servicers shall be
entitled to retain or withdraw from the Protected Accounts out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.

                                     -168-

<PAGE>

     Additional servicing compensation in the form of any Excess Proceeds, late
payment fees, assumption fees (i.e. fees related to the assumption of a Mortgage
Loan upon the purchase of the related Mortgaged Property) and similar fees
payable by the Mortgagor, Prepayment Interest Excess, and all income and gain
net of any losses realized from Permitted Investments, together with other
benefits received from amounts in the Protected Accounts, shall be retained by
the Servicer to the extent not required to be deposited in the applicable
Protected Account pursuant to Sections 13.05, or 13.12(a) hereof. Each Servicer
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder and shall not be entitled to reimbursement
therefor except as specifically provided in this Agreement. In no event shall
the Master Servicer be liable for any Servicing Fee or for any differential
between the Servicing Fee and the amount necessary to induce a successor
servicer to act as successor servicer under this Agreement.

     Section 13.16 Access to Certain Documentation.

     Each Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, as
applicable, access to the documentation regarding the Mortgage Loans required by
applicable regulations of the OTS and the FDIC. Such access shall be afforded
without charge, but only upon reasonable and prior written request and during
normal business hours at the offices of the Servicer designated by it provided,
that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing such
reports and access. Nothing in this Section shall limit the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.

     Each Servicer may from time to time provide the Depositor, and any Person
designated by the Depositor, with reports and information regarding the Mortgage
Loans, including without limitation, information requested by the Depositor or
an originator of the Mortgage Loans for required institutional risk control. In
addition, subject to limitations of applicable privacy laws, the applicable
Servicer may make public information regarding performance of the Mortgage
Loans.

     Section 13.17 Subordination of Liens.

     In connection with any governmental program under which a Mortgagor may
obtain a benefit in the event the related Mortgaged Property is subject to a
disaster provided that the Mortgagor files a covenant or other lien against the
Mortgaged Property and is required to obtain the subordination thereto of the
Mortgage, the Servicers may cause such subordination to be executed and filed
provided that either (i) the related Mortgage Loan is in default or default with
respect to such Mortgage Loan is imminent or (ii) such subordination and
participation in such governmental program will not result in a change in
payment expectations with respect to such Mortgage Loan. For purposes of the
preceding sentence, a change in payment expectations occurs if, as a result of
such subordination and participation in such governmental program, (1) there is
a substantial enhancement of the Mortgagor's capacity to meet the payment
obligations under the Mortgage Loan and that capacity was primarily speculative
prior to such subordination

                                     -169-

<PAGE>

and participation in such governmental program and is adequate after such
subordination and participation in such governmental program or (2) there is a
substantial impairment of the Mortgagor's capacity to meet the payment
obligations under the Mortgage Loan and that capacity was adequate prior to such
subordination and participation in such governmental program and is primarily
speculative after such subordination and participation in such governmental
program. The preceding sentence and clause (ii) of the second preceding sentence
are intended to comply with Treasury Regulations Section 1.1001-3(e)(4) and
shall be interpreted in accordance therewith.

     Section 13.18 Information to the Master Servicer.

     No later than the tenth (10th) calendar day of each month (or if such tenth
day is not a Business Day, the Business Day immediately preceding such tenth
day), the Servicers shall forward to the Master Servicer reports in the format
set forth in Exhibit U-1, Exhibit U-2 and Exhibit U-3 hereto (or such other
format, with respect to Exhibit U-1 and Exhibit U-2, as mutually agreed by the
Servicers and the Master Servicer), with respect to monthly remittances,
defaulted Mortgage Loans and realized loss calculations, respectively.

     Section 13.19 Indemnification.

     Each Servicer shall indemnify the Sponsor, the Issuing Entity, the Master
Servicer, the Depositor and their officers, directors, employees and agents and
hold each of them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of such
parties may sustain in any way related to the negligence, willful misfeasance or
bad faith of the Servicer in the performance of its duties or by reason of
reckless disregard of its obligations and duties hereunder. Each Servicer
promptly shall notify the Sponsor, the Master Servicer and the Depositor or any
other relevant party if a claim is made by a third party with respect to such
party and this Agreement or the Mortgage Loans and, if subject to this
indemnification obligation, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any of such parties in respect of such
claim. Each Servicer shall provide the Depositor and the Master Servicer with a
written report of all expenses and advances incurred by the Servicer pursuant to
this 13.19, and the Servicer shall promptly reimburse itself from the assets of
the Issuing Entity in the applicable Protected Account for all amounts advanced
by it pursuant to the preceding sentence except when and to the extent a
determination has been made that the claim in any way relates to the gross
negligence, bad faith or willful misconduct of the Servicer. The provisions of
this paragraph shall survive the termination of this Agreement and the payment
of the outstanding Certificates.

     Section 13.20 Solicitation.

     The Initial Servicer may not solicit or refer to a mortgage originator, who
may or may not be an affiliate of the Depositor or the Initial Servicer, any
Mortgagor for refinancing or otherwise take action to encourage refinancing.

                                     -170-

<PAGE>

     For as long as the Successor Servicer services the Mortgage Loans, the
Successor Servicer covenants that it will not, and that it will ensure that its
Affiliates and agents will not, directly or indirectly solicit or provide
information for any other party to solicit for prepayment or refinancing of any
of the Mortgage Loans by the related Mortgagors. It is understood that the
promotions undertaken by the Servicer or its Affiliates or agents which are
directed to the general public at large, or certain segments thereof, shall not
constitute solicitation as that term is used in this Section 13.20. However, the
Successor Servicer is permitted to solicit Mortgagors for additional products,
including, without limitation, credit cards and credit life, provided that the
Successor Servicer does not use any of the names of the other parties to this
Agreement and in compliance with all laws, including telephone solicitation
laws.

     Section 13.21 High Cost Mortgage Loans.

     In the event that either Servicer reasonably determines that a Mortgage
Loan may be a "high cost mortgage loan," "high cost home," "covered," "high
cost," "high risk home," "predatory" or similarly classified loan under any
applicable state, federal or local law, the Servicer may notify the Depositor
and the Master Servicer thereof; such Servicer may terminate its servicing
thereof; and such determination shall be deemed to materially and adversely
affect the interests of the Certificateholders in such Mortgage Loan, and the
related Transferor or the Sponsor will repurchase the Mortgage Loan within a 30
day period from the date of the notice in the manner described in Section 2.04.

     Section 13.22 Advances.

     (a) Subject to the conditions of this Article 13, the applicable Servicer,
as required below, shall make an Advance and deposit such Advance in the
applicable Protected Account. Each such Advance shall be remitted to the
applicable Protected Account no later than 4:00 p.m. Eastern time, on the
Servicer Remittance Date in immediately available funds. The Servicer shall be
obligated to make any such Advance only to the extent that such advance would
not be a Non-Recoverable Advance. If the Servicer shall have determined that it
has made a Non-Recoverable Advance or that a proposed Advance or a lesser
portion of such Advance would constitute a Non-Recoverable Advance, the Servicer
shall deliver (i) to the Master Servicer for the benefit of the
Certificateholders, funds constituting the remaining portion of such Advance, if
applicable, and (ii) to the Depositor, each Rating Agency and the Master
Servicer an Officer's Certificate setting forth the basis for such
determination. The Servicer may, in its sole discretion, make an Advance with
respect to the principal portion of the final Scheduled Payment on a Balloon
Loan, but the Servicer is under no obligation to do so; provided, however, that
nothing in this sentence shall affect the Servicer's obligation under this
Section 13.22 to advance the interest portion of the final Scheduled Payment
with respect to a Balloon Loan based on the Minimum Payment. If a Mortgagor does
not pay its final Scheduled Payment on a Balloon Loan when due, the Servicer
shall advance (unless it determines in its good faith judgment that such amounts
would constitute a Non-Recoverable Advance) a full month of interest (net of the
Servicing Fee) on the Stated Principal Balance thereof based on the Minimum
Payment each month until its Stated Principal Balance is reduced to zero.

     In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the applicable Protected Account that any amount held for future distribution
has been used by the Servicer in discharge of its obligation to make any such
Advance and (ii) transfer such funds from the applicable

                                     -171-

<PAGE>

Protected Account to the Master Servicer Collection Account. In addition, the
Servicer shall have the right to reimburse itself for any such Advance from
amounts held from time to time in the applicable Protected Account to the extent
such amounts are not then required to be distributed. Any funds so applied and
transferred pursuant to the previous two sentences shall be replaced by the
Servicer by deposit in the applicable Protected Account no later than the close
of business on the Servicer Remittance Date on which such funds are required to
be distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the applicable Protected Account for all Advances of its own
funds made pursuant to this Section as provided in Section 13.08. The obligation
to make Advances with respect to any Mortgage Loan shall continue until the
earlier of (i) such Mortgage Loan is paid in full, (ii) the related Mortgaged
Property or related REO Property has been liquidated or until the purchase or
repurchase thereof (or substitution therefor) from the Master Servicer, the
Securities Administrator or the Issuing Entity pursuant to any applicable
provision of this Agreement, except as otherwise provided in this Section 13.22,
(iii) the Servicer determines in its good faith judgment that such amounts would
constitute a Non-Recoverable Advance as provided in the preceding paragraph or
(iv) the date on which such Mortgage Loan becomes 150 days delinquent as set
forth below.

     (b) Notwithstanding anything in this Agreement to the contrary (including,
but not limited to, Sections 13.01 and 13.22(a) hereof), no Advance or Servicing
Advance shall be required to be made hereunder by the Servicer if such Advance
or Servicing Advance would, if made, constitute a Non-Recoverable Advance or a
Non-Recoverable Servicing Advance. The determination by the Servicer that it has
made a Non-Recoverable Advance or a Non-Recoverable Servicing Advance or that
any proposed Advance or Servicing Advance, if made, would constitute a
Non-Recoverable Advance or a Non-Recoverable Servicing Advance, respectively,
shall be evidenced by an Officer's Certificate of the Servicer delivered to the
Depositor and the Master Servicer. In addition, the Servicer shall not be
required to advance any Relief Act Shortfalls.

     (c) Notwithstanding the foregoing, the Servicer shall not be required to
make any Advances for any Mortgage Loan after such Mortgage Loan becomes 150
days Delinquent. The Servicer shall identify such Delinquent Mortgage Loans in
the servicing reports referenced in Section 13.18. In addition, the Servicer
shall provide the Master Servicer with an Officer's Certificate listing such
delinquent Mortgage Loans and certifying that such loans are 150 days or more
delinquent.

     Section 13.23 Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.

     In the event that any Mortgage Loan is the subject of a Prepayment Interest
Shortfall, the Servicer shall, from amounts in respect of the Servicing Fee for
such Distribution Date, deposit into the applicable Protected Account, as a
reduction of the Servicing Fee for such Distribution Date, no later than the
Servicer Remittance Date immediately preceding such Distribution Date, an amount
up to the Prepayment Interest Shortfall for Mortgage Loans paid in full between
the 15th day and the last day of a month; provided that the amount so deposited
with respect to any Distribution Date shall be limited to the product of (x) one
twelfth of (i) with respect to the Initial Servicer, 0.1875% per annum and (ii)
with respect to the Successor Servicer, 0.375% per annum and (y) the aggregate
Stated Principal Balance of the Mortgage Loans. In case of such deposit,

                                     -172-

<PAGE>

the Servicer shall not be entitled to any recovery or reimbursement from the
Depositor, the Trustee, the Issuing Entity or the Certificateholders. With
respect to any Distribution Date, to the extent that the Prepayment Interest
Shortfall exceeds Compensating Interest (such excess, a "Non-Supported Interest
Shortfall"), such Non-Supported Interest Shortfall shall reduce the Current
Interest with respect to each Class of Certificates, pro rata based upon the
amount of interest each such Class would otherwise be entitled to receive on
such Distribution Date. Notwithstanding the foregoing, there shall be no
reduction of the Servicing Fee in connection with Prepayment Interest Shortfalls
related to the Relief Act and the Servicer shall not be obligated to pay a
Compensating Interest Payment with respect to Prepayment Interest Shortfalls
related to the Relief Act.

     Section 13.24 Special Servicing Agreements.

     The Servicers may enter into a special servicing advisory agreement with a
holder of the Class R Certificate and/or one or more other class of subordinated
certificates issued by the Issuing Entity or of a net interest margin trust
holding certificates issued by the Issuing Entity and/or an advisor designated
by the holder of the Class R Certificate. Pursuant to such agreement, the
Initial Servicer may provide such holder or advisor, in its capacity as special
servicing advisor, with loan-level information with respect to the Mortgage
Loans, and the holder of the Class R Certificate or the special servicing
advisor designated by the holder of the Class R Certificate may advise the
Initial Servicer with respect to the commencement of foreclosure proceedings or
other actions to liquidate such Mortgage Loans and/or any other efforts to
maximize recoveries with respect to such Mortgage Loans

     Section 13.25 Protected Accounts.

     To the extent provided in this Agreement and subject to this Article XIII,
on or before each Servicer Remittance Date, the applicable Servicer shall
withdraw or shall cause to be withdrawn from the Protected Accounts and shall
immediately deposit or cause to be deposited in the Master Servicer Collection
Account amounts representing the following collections and payments (other than
with respect to principal of or interest on the Mortgage Loans due on or before
the Cut-off Date) with respect to the Mortgage Loans:

          (i) Monthly Payments on the Mortgage Loans received or any related
     portion thereof advanced by such Servicer pursuant to this Agreement which
     were due on or before the related Due Date, net of the amount thereof
     comprising the Servicing Fees;

          (ii) Principal Prepayments in Full and any Liquidation Proceeds
     received by such Servicer with respect to such Mortgage Loans in the
     related Prepayment Period, with interest to the earlier of (a) the date of
     prepayment or liquidation and (b) the last day of the month prior to the
     Servicer Remittance Date, in both cases net of the amount thereof
     comprising the Servicing Fees;

          (iii) Curtailments received by such Servicer for such Mortgage Loans
     in the related Prepayment Period; and

          (iv) Any amount to be used as a Monthly Advance.

                                     -173-

<PAGE>

                                  ARTICLE XIV
                         THE DEPOSITOR AND THE SERVICER

     Section 14.01 Respective Liabilities of the Depositor and the Servicer.

     The Depositor and each Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.

     Section 14.02 Merger or Consolidation of the Depositor or the Servicer.

     Except as provided in the next paragraph, the Depositor and each Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

     Any Person into which the Depositor or either Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or either Servicer shall be a party, or any Person succeeding to
the business of the Depositor or either Servicer, shall be the successor of the
Depositor or such Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding (except for the
execution of an assumption agreement where such succession is not effected by
operation of law); provided, however, that the successor or surviving Person to
such Servicer shall be qualified to sell mortgage loans to, or to service
mortgage loans on behalf of, Fannie Mae or Freddie Mac.

     Section 14.03 Limitation on Liability of the Depositor, the Servicers and
Others.

     None of the Depositor, the Servicers nor any of the directors, officers,
employees or agents of the Depositor or the Servicers shall be under any
liability to the Indemnified Persons, Issuing Entity or the Certificateholders
for any action taken or for refraining from the taking of any action in good
faith pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Depositor, the Servicer or any such
Person against any breach of representations or warranties made by it herein or
protect the Depositor, the Servicer or any such Person from any liability that
would otherwise be imposed by reasons of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor and the Servicer and any
director, officer, employee or agent of the Depositor and the Servicer may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Depositor
or the Servicer and any director, officer, employee or agent of the Depositor or
the Servicer shall be indemnified by the Issuing Entity and held harmless
against any loss, liability or expense, incurred in connection with the
performance of their duties under this Agreement or incurred in connection with
any audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this

                                     -174-

<PAGE>

Agreement or the Certificates, other than any loss, liability or expense (i)
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder or (ii) which does not constitute an
"unanticipated expense" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii). Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that either of the
Depositor or the Servicer in its discretion may undertake any such action that
it may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and the interests of the Securities
Administrator and the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall
be, expenses, costs and liabilities of the Issuing Entity, and the Depositor and
the Servicer shall be entitled to be reimbursed therefor out of the Protected
Accounts as provided by Section 13.08 hereof.

     Section 14.04 Limitation on Resignation of Servicer.

     Neither Servicer shall resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Master Servicer. No such resignation shall become
effective until the Master Servicer or a successor servicer reasonably
acceptable to the Master Servicer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Section 15.01 and 15.02 as obligations that survive the resignation or
termination of the Servicer.

     Section 14.05 Errors and Omissions Insurance; Fidelity Bonds.

     Each Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of Fannie Mae or Freddie Mac for such Servicer.
The Servicer shall provide the Master Servicer, upon request, with copies of
such policies and fidelity bond or a certification from the insurance provider
evidencing such policies and fidelity bond. In the event that any such policy or
bond ceases to be in effect, the Servicer shall use its reasonable commercial
efforts to obtain a comparable replacement policy or bond from an insurer or
issuer meeting the requirements set forth above as of the date of such
replacement.

                                     -175-

<PAGE>

                                   ARTICLE XV
                       DEFAULT; TERMINATION OF A SERVICER

     Section 15.01 Servicer Events of Default.

     "Servicer Event of Default," wherever used herein, means any one of the
following events:

          (i) any failure by the Servicer to deposit in the applicable Protected
     Account, Master Servicer Collection Account or the Distribution Account or
     remit to the Master Servicer (a) any payment (excluding Advances) required
     to be made under the terms of this Agreement, which failure shall continue
     unremedied for three (3) Business Days or (b) Advances required to be made
     under Section 13.22 hereof, which failure shall continue unremedied as of
     3:00 p.m. New York City Time on the Distribution Account Deposit Date; or

          (ii) any failure by the Servicer to observe or perform in any material
     respect any other of the covenants or agreements on the part of the
     Servicer contained in this Agreement or any representation or warranty
     shall prove to be untrue, which failure or breach shall continue unremedied
     for a period of 60 days after the date on which written notice of such
     failure shall have been given to the Servicer by the Master Servicer; or

          (iii) a decree or order of a court or agency or supervisory authority
     having jurisdiction for the appointment of a receiver or liquidator in any
     insolvency, readjustment of debt, marshaling of assets and liabilities or
     similar proceedings, or for the winding-up or liquidation of its affairs,
     shall have been entered against the Servicer and such decree or order shall
     have remained in force undischarged or unstayed for a period of 60
     consecutive days; or

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

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

          (vi) (a) Any failure by the Servicer, any Subservicer or any
     Subcontractor to deliver any information, report, certification or
     accountants' letter when and as required under Section 16.04, 16.05 or
     16.06, which continues unremedied for a period of 16.03, fourteen calendar
     days after the date upon which written notice of such failure, requiring
     the same to be remedied, shall have been given to the Servicer, or[(b) any
     failure by the Servicer, any Subservicer or any Subcontractor to deliver
     any information, report or Exchange Act disclosure items, when and as
     required under Section 16.03 of

                                     -176-

<PAGE>

     this Agreement,] shall, immediately and automatically, without notice or
     grace period, constitute an Event of Default with respect to the Servicer
     under this Agreement, and shall entitle the Master Servicer and/or the
     Depositor, as applicable, to terminate the rights and obligations of the
     Servicer as servicer in accordance with the provisions of Section 15.01
     hereof; provided that to the extent that any provision of this Agreement
     expressly provides for the survival of certain rights or obligations
     following termination of the Servicer as servicer, such provision shall be
     given effect.

     If a Servicer Event of Default shall occur with respect to the Servicer
pursuant to subsection (i) of this Section 15.01, the Master Servicer shall by
notice in writing to the Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Servicer under this Agreement and in
and to the Mortgage Loans and the proceeds thereof. If a Servicer Event of
Default shall occur with respect to the Servicer pursuant to subsection (ii) -
(vi) of this Section 15.01, then, and in each and every such case, so long as
such Servicer Event of Default shall not have been remedied within the
applicable grace period, if any, the Master Servicer may, by notice in writing
to the Servicer (with a copy to each Rating Agency), terminate all of the rights
and obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof. On or after the receipt by the Servicer of any
such written notice, all authority and power of the Servicer hereunder, whether
with respect to the Mortgage Loans or otherwise, shall pass to and be vested in
the Master Servicer. To the extent the Servicer Event of Default resulted from
the failure of the Servicer to make a required Advance, the Master Servicer
shall thereupon make any Advance described in Section 13.22 hereof subject to
Section 13.04 hereof. The Master Servicer is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. Unless
expressly provided in such written notice, no such termination shall affect any
obligation of the Servicer to pay amounts owed pursuant to Article XIII. The
Servicer agrees to cooperate with the Master Servicer in effecting the
termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to the Master Servicer of all cash amounts
which shall at the time be credited to the Protected Accounts, or thereafter be
received with respect to the Mortgage Loans. The Servicer and the Master
Servicer shall promptly notify the Rating Agencies of the occurrence of a
Servicer Event of Default or an event that, with notice, passage of time, other
action or any combination of the foregoing would be a Servicer Event of Default,
such notice to be provided in any event within two Business Days of such
occurrence.

     Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Section 13.08(a), and any other amounts payable
to the Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder. Notwithstanding anything herein to the
contrary, upon termination of the Servicer hereunder, any liabilities of the
Servicer which accrued prior to such termination shall survive such termination.

                                     -177-

<PAGE>

     Section 15.02 Master Servicer to Act; Appointment of Successor.

     On and after the time a Servicer receives a notice of termination pursuant
to Section 15.01 hereof, the Master Servicer shall, when and to the extent
provided in Section 13.04, be the successor to the applicable Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof and applicable law including the obligation to make advances pursuant to
Section 13.22. As compensation therefor, subject to the last paragraph of
Section 15.01, the Master Servicer shall be entitled to all fees, compensation
and reimbursement for costs and expenses that the applicable Servicer would have
been entitled to hereunder if such Servicer had continued to act hereunder.
Notwithstanding the foregoing, if the Master Servicer has become the successor
to a Servicer in accordance with Section 15.01 hereof, the Master Servicer may,
if it shall be unwilling to so act, or shall, if it is prohibited by applicable
law from making Advances pursuant to Section 13.22 hereof or if it is otherwise
unable to so act, appoint, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution as the successor to
such Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Any successor
Servicer shall be an institution that is a Fannie Mae and Freddie Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000,
and that is willing to service the Mortgage Loans and executes and delivers to
the Master Servicer an agreement accepting such delegation and assignment, that
contains an assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer (other than
liabilities of the Servicer under Section 14.03 hereof incurred prior to
termination of the Servicer under Section 15.01), with like effect as if
originally named as a party to this Agreement. No appointment of a successor to
the Servicer hereunder shall be effective until the Master Servicer shall have
consented thereto and written notice of such proposed appointment shall have
been provided by the Master Servicer to each Certificateholder. The Master
Servicer shall not resign as servicer until a successor servicer has been
appointed and has accepted such appointment. Pending appointment of a successor
to the Servicer hereunder, the Master Servicer, unless the Master Servicer is
prohibited by law from so acting, shall, subject to Section 13.04 hereof, act in
such capacity as hereinabove provided. In connection with such appointment and
assumption, the Master Servicer may make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess of
that permitted the Servicer hereunder. The Master Servicer and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Neither the Master Servicer nor any other
successor servicer shall be deemed to be in default hereunder by reason of any
failure to make, or any delay in making, any distribution hereunder or any
portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.

     Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 14.05.

                                     -178-

<PAGE>

                                  ARTICLE XVI
                         COMPLIANCE WITH REGULATION AB

     Section 16.01 Intent of the Parties; Reasonableness.

     The Master Servicer and each Servicer acknowledge and agree that the
purpose of Article XVI of this Agreement is to facilitate compliance by the
Master Servicer and the Depositor with the provisions of Regulation AB and
related rules and regulations of the Commission. Neither the Master Servicer nor
the Depositor shall exercise its right to request delivery of information or
other performance under these provisions other than in good faith, or for
purposes other than compliance with the Securities Act, the Exchange Act and the
rules and regulations of the Commission thereunder. Each Servicer acknowledges
that interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Master
Servicer or the Depositor in good faith for delivery of information required
under these provisions on the basis of evolving interpretations of Regulation
AB. Each Servicer shall cooperate reasonably with the Master Servicer to deliver
to the Securities Administrator, the Master Servicer (including any of its
assignees or designees) and the Depositor, any and all statements, reports,
certifications, records and any other information necessary to permit the
Securities Administrator, the Master Servicer or the Depositor to comply with
the provisions of Regulation AB, together with such disclosures relating to each
Servicer, any Subservicer, or the servicing of the Mortgage Loans, to be
necessary in order to effect such compliance. The Initial Servicer shall not be
required to comply with this Article XVI with respect to any fiscal year as to
which the Initial Servicer was not servicing Mortgage Loans hereunder to the
extent that the Depositor determines that compliance is not required by law
after the Form 15 Suspension Notification is filed.

     Section 16.02 Subservicing Agreements. On or before March 1, each Servicer
shall deliver to the Master Servicer a copy of any subservicing agreement
executed by such Servicer not previously provided. The Master Servicer agrees
that it will keep any such subservicing agreement confidential.

     Section 16.03 Information to Be Provided by the Servicer.

     Each of the Initial Servicer and the Successor Servicer shall, as promptly
as practicable following notice to or discovery by such Servicer, provide to the
Master Servicer and the Depositor (in writing and in form and substance
reasonably satisfactory to the Master Servicer and the Depositor) the
information specified in paragraph (a) of this Section.

     (a) For the purpose of satisfying the reporting obligation under the
Exchange Act with respect to any class of asset-backed securities, each Servicer
shall (or shall cause each Subservicer to) (i) provide prompt notice to the
Master Servicer and the Depositor in writing of (A) any material litigation or
governmental proceedings involving such Servicer or any Subservicer, (B) any
affiliations or relationships as set forth in Items 1119(b) and (c) of
Regulation AB that develop following the Closing Date between such Servicer, any
Subservicer

                                      -179-

<PAGE>

or and any of the parties specified in Item 1119 of Regulation AB, (C) any
Servicer Event of Default under the terms of this Agreement, (D) any merger,
consolidation or sale of substantially all of the assets of such Servicer, and
(E) the Servicer's entry into an agreement with a Subservicer to perform or
assist in the performance of any of the Servicer's obligations under this
Agreement and (ii) provide to the Master Servicer and the Depositor a
description of such proceedings, affiliations or relationships, as set forth in
Sections 1119(b) and (c) of Regulation AB.

     (b) As a condition to the succession to a Servicer or any Subservicer as
servicer or subservicer under this Agreement by any Person (i) into which such
Servicer or such Subservicer may be merged or consolidated, or (ii) which may be
appointed as a successor to such Servicer or any Subservicer, such Servicer
shall provide to the Master Servicer and the Depositor, at least 15 calendar
days prior to the effective date of such succession or appointment, (x) written
notice to the Master Servicer and the Depositor of such succession or
appointment and (y) in writing and in form and substance reasonably satisfactory
to the Master Servicer and the Depositor, all information reasonably requested
by the Master Servicer or the Depositor in order to comply with its reporting
obligation under Item 6.02 of Form 8-K with respect to any class of asset-backed
securities.

     (c) In addition to such information as the Servicers, as servicer, are
obligated to provide pursuant to other provisions of this Agreement, not later
than ten days prior to the deadline for the filing of any distribution report on
Form 10-D in respect of the securitization transaction, each of the Initial
Servicer and the Successor Servicer or such Subservicer, as applicable, shall,
to the extent the applicable Servicer or such Subservicer has knowledge, provide
to the party responsible for filing such report (including, if applicable, the
Master Servicer) notice of the occurrence of any of the following events that
have not already been disclosed to such party through such Servicer's prior
notice or regular servicing data along with all information, data, and materials
related thereto as may be required to be included in the related distribution
report on Form 10-D (as specified in the provisions of Regulation AB referenced
below):

          (i) any material modifications, extensions or waivers of pool asset
     terms, fees, penalties or payments during the distribution period or that
     have cumulatively become material over time (Item 1121(a)(11) of Regulation
     AB); and

          (ii) material breaches of pool asset representations or warranties or
     transaction covenants (Item 1121(a)(12) of Regulation AB).

     (d) Each of the Initial Servicer and the Successor Servicer shall provide
to the Master Servicer and the Depositor, evidence of the authorization of the
person signing any certification or statement, copies or other evidence of
Fidelity Bond Insurance and Errors and Omission Insurance policy, financial
information and reports as required pursuant to this Agreement, and, upon
reasonable request, such other information related to the Servicer or any
Subservicer or the Servicer or such Subservicer's performance hereunder.

     Section 16.04 Servicer Compliance Statement.

                                     -180-

<PAGE>

     On or before March 1 of each calendar year, commencing in 2008, each of the
Initial Servicer and the Successor Servicer shall deliver to the Master Servicer
and the Depositor a statement of compliance addressed to the Master Servicer and
the Depositor and signed by an authorized officer of such Servicer, to the
effect that (i) a review of such Servicer's activities during the immediately
preceding calendar year (or applicable portion thereof) and of its performance
under this Agreement during such period has been made under such officer's
supervision, and (ii) to the best of such officers' knowledge, based on such
review, such Servicer has fulfilled all of its obligations under this Agreement
in all material respects throughout such calendar year (or applicable portion
thereof) or, if there has been a failure to fulfill any such obligation in any
material respect, specifically identifying each such failure known to such
officer and the nature and the status thereof.

     Section 16.05 Report on Assessment of Compliance and Attestation.

     (a) On or before March 1 of each calendar year, commencing in 2008, each
Servicer shall:

          (i) deliver to the Master Servicer and the Depositor a report (in form
     and substance reasonably satisfactory to the Master Servicer and the
     Depositor) regarding such Servicer's assessment of compliance with the
     Servicing Criteria during the immediately preceding calendar year, as
     required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
     Regulation AB. Such report shall be addressed to the Master Servicer and
     the Depositor and signed by an authorized officer of such Servicer, and
     shall address each of the "Applicable Servicing Criteria" specified on
     Exhibit V hereto, and solely for the purpose of Section 1122(d)(3)(iii) of
     Exhibit V, the term "investor" shall mean the Master Servicer;

          (ii) deliver to the Master Servicer and the Depositor a report of a
     registered public accounting firm reasonably acceptable to the Master
     Servicer and the Depositor that attests to, and reports on, the assessment
     of compliance made by such Servicer and delivered pursuant to the preceding
     paragraph. Such attestation shall be in accordance with Rules 1 02(a)(3)
     and 2-02(g) of Regulation S-X under the Securities Act and the Exchange
     Act;

          (iii) cause each Subservicer, and each Subcontractor determined by
     such Servicer pursuant to Section 16.06(b) to be "participating in the
     servicing function" within the meaning of Item 1122 of Regulation AB, if
     any, and deliver to the Master Servicer and the Depositor an assessment of
     compliance and accountants' attestation as and when provided in paragraphs
     (a) and (b) of this Section; and

          (iv) deliver, and cause each Subservicer and Subcontractor described
     in clause (iii), if any, to provide, to the Depositor, the Master Servicer
     and any other Person that will be responsible for signing the certification
     (a "Sarbanes Certification"), required by Rules 13a-14(d) and 15d-14(d)
     under the Exchange Act (pursuant to Section 302 of the Sarbanes-Oxley Act
     of 2002) on behalf of an asset-backed issuer with respect to the
     securitization transaction a certification, signed by the appropriate
     officer of such Servicer, in the form attached hereto as Exhibit T.

                                     -181-

<PAGE>

     Each of the Initial Servicer and the Successor Servicer acknowledges that
the parties identified in clause (a)(iv) above may rely on the certification
provided by each Servicer pursuant to such clause in signing a Sarbanes
Certification and filing such with the Commission.

     (b) Each assessment of compliance provided by a Subservicer pursuant to
Section 16.05(a)(i) shall address each of the Servicing Criteria specified on a
certification substantially in the form of Exhibit T hereto delivered to the
Master Servicer concurrently with the execution of this Agreement or, in the
case of a Subservicer subsequently appointed as such, on or prior to the date of
such appointment. An assessment of compliance provided by a Subcontractor
pursuant to Section 16.05(a)(iii) need not address any elements of the Servicing
Criteria other than those specified by the Servicer pursuant to Section 16.06.

     Section 16.06 Use of Subservicers and Subcontractors.

     Neither Servicer shall hire or otherwise utilize the services of any
Subservicer that is required to provide an Assessment of Compliance to fulfill
any of the obligations of the Servicer as servicer under this Agreement unless
the Servicer complies with the provisions of paragraph (a) of this Section.
Neither Servicer shall hire or otherwise utilize the services of any
Subcontractor that is required to provide an Assessment of Compliance, and shall
not permit any Subservicer to hire or otherwise utilize the services of any
Subcontractor that is required to provide an Assessment of Compliance, to
fulfill any of the obligations of the Servicer as servicer under this Agreement
unless the Servicer complies with the provisions of paragraph (b) of this
Section.

     (a) It shall not be necessary for the Servicer to seek the consent of the
Securities Administrator, the Master Servicer or the Depositor to the
utilization of any Subservicer. The Servicer shall cause any Subservicer used by
the Servicer (or by any Subservicer) for the benefit of the Master Servicer and
the Depositor to comply with the provisions of this Section and with Sections
16.03(b), (c) and (d), 16.04, 16.05 and 16.07 of this Agreement to the same
extent as if such Subservicer were the Servicer, and to provide the information
required with respect to such Subservicer under Section 16.03(d) of this
Agreement. The Servicer shall be responsible for obtaining from each such
Subservicer and delivering to the Master Servicer and the Depositor any servicer
compliance statement required to be delivered by such Subservicer under Section
16.04, any assessment of compliance and attestation required to be delivered by
such Subservicer under Section 16.05 and any certification required to be
delivered to the Person that will be responsible for signing the Sarbanes
Certification under Section 16.05 as and when required to be delivered.

     (b) It shall not be necessary for the Servicer to seek the consent of the
Securities Administrator, the Master Servicer or the Depositor to the
utilization of any Subcontractor. The Servicer shall promptly upon request
provide to the Master Servicer and the Depositor (or any designee of the
Depositor, such as an administrator) a written description (in form and
substance reasonably satisfactory to the Depositor and the Master Servicer) of
the role and function of each such Subcontractor utilized by the Servicer or any
Subservicer, specifying (i) the identity of each such Subcontractor, (ii) which
(if any) of such Subcontractors are "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB, and (iii) which elements of
the Servicing Criteria will be (x) addressed in assessments of compliance
provided by each

                                     -182-

<PAGE>

Subcontractor identified pursuant to clause (ii) of this paragraph or (y)
provided by the Servicer in accordance with Regulation AB telephone
interpretation 17.06.

     As a condition to the utilization of any Subcontractor determined by the
Servicer to be "participating in the servicing function" within the meaning of
Item 1122 of Regulation AB, the Servicer shall cause any such Subcontractor used
by the Servicer (or by any Subservicer) for the benefit of the Master Servicer
and the Depositor to comply with the provisions of Sections 16.05 and 16.07 of
this Agreement to the same extent as if such Subcontractor were the Servicer for
those criteria in Exhibit V for which the Subcontractor is responsible. The
Servicer shall be responsible for obtaining from each Subcontractor and
delivering to the Master Servicer and the Depositor any assessment of compliance
and attestation and the other certifications required to be delivered by such
Subcontractor under Section 16.05, in each case as and when required to be
delivered.

     Section 16.07 Indemnification; Remedies.

     Each Servicer shall indemnify the Master Servicer, each affiliate of the
Master Servicer, the Sponsor and the Issuing Entity; each Person (including, but
not limited to, the Master Servicer if applicable) responsible for the
preparation, execution or filing of any report required to be filed with the
Commission with respect to such Securitization Transaction, or for execution of
a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange
Act with respect to the securitization transaction; each broker dealer acting as
underwriter, placement agent or initial purchaser, each Person who controls any
of such parties or the Depositor (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the respective present
and former directors, officers, employees, agents and affiliates of each of the
foregoing and of the Depositor (each, an "Indemnified Party"), and shall hold
each of them harmless from and against any claims, losses, damages, penalties,
fines, forfeitures, legal fees and expenses and related costs, judgments, and
any other costs, fees and expenses that any of them may sustain arising out of
or based upon:

          (i)(A) any untrue statement of a material fact contained or alleged to
     be contained in any information, report, certification, data, accountants'
     letter or other material provided under this Article 16 by or on behalf of
     the Servicer, or provided under this Article 16 by or on behalf of any
     Subservicer or Subcontractor (collectively, the "Servicer Information"), or
     (B) the omission or alleged omission to state in the Servicer Information a
     material fact required to be stated in the Servicer Information or
     necessary in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading; provided, by way
     of clarification, that clause (B) of this paragraph shall be construed
     solely by reference to the Servicer Information and not to any other
     information communicated in connection with a sale or purchase of
     securities, without regard to whether the Servicer Information or any
     portion thereof is presented together with or separately from such other
     information;

          (ii) any breach by the Servicer of its obligations under this Article
     16, including particularly any failure by the Servicer, any Subservicer or
     any Subcontractor to deliver any information, report, certification,
     accountants' letter or other material when and as required under this
     Article 16, including any failure by the Servicer to identify

                                     -183-

<PAGE>

     pursuant to Section 16.06(b) any Subcontractor "participating in the
     servicing function" within the meaning of Item 1122 of Regulation AB; or

          (iii) the negligence bad faith or willful misconduct of the Servicer
     in connection with its performance under this Article 16.

     If the indemnification provided for herein is unavailable or insufficient
to hold harmless an Indemnified Party, then the Servicer agrees that it shall
contribute to the amount paid or payable by such Indemnified Party as a result
of any claims, losses, damages or liabilities incurred by such Indemnified Party
in such proportion as is appropriate to reflect the relative fault of such
Indemnified Party on the one hand and the Servicer on the other.

     This indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.

                                     -184-

<PAGE>

     IN WITNESS WHEREOF, the Depositor, the Trustee, the Master Servicer and the
Securities Administrator have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.

                                            MERRILL LYNCH MORTGAGE
                                            INVESTORS, INC.,
                                            as Depositor

                                            By:_________________________________
                                            Name:
                                            Title:

                                            HSBC BANK USA, NATIONAL ASSOCIATION,
                                            as Trustee

                                            By:_________________________________
                                            Name:  Elena Zheng
                                            Title: Assistant Vice President

                                            WELLS FARGO BANK, N.A.,
                                            as Master Servicer

                                            By:_________________________________
                                            Name:
                                            Title:

                                            WELLS FARGO BANK, N.A.,
                                            as Securities Administrator

                                            By:_________________________________
                                            Name:
                                            Title:

<PAGE>

                                            WILSHIRE CREDIT CORPORATION

                                            By: ________________________________
                                                Name:
                                                Title:

                                            CENTRAL MORTGAGE COMPANY

                                            By: ________________________________
                                                Name:
                                                Title:

<PAGE>

                                   EXHIBIT A-1

                    FORM OF CLASS A AND CLASS M CERTIFICATES

                             [INTENTIONALLY OMITTED]

                                      A-1-1

<PAGE>

                                   EXHIBIT A-2

                          FORM OF CLASS B CERTIFICATES

                             [INTENTIONALLY OMITTED]

                                      A-2-1

<PAGE>

                                   EXHIBIT A-3

                           FORM OF CLASS R CERTIFICATE

                             [INTENTIONALLY OMITTED]

                                      A-3-1

<PAGE>

                                   EXHIBIT A-4

                           FORM OF CLASS P CERTIFICATE

                             [INTENTIONALLY OMITTED]

                                      A-4-1

<PAGE>

                                   EXHIBIT A-5

                           FORM OF CLASS C CERTIFICATE

                             [INTENTIONALLY OMITTED]

                                      A-5-1

<PAGE>

                                   EXHIBIT B-1

                             MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                      B-1-1

<PAGE>

                                    EXHIBIT C

                                   [RESERVED]

                                       C-1

<PAGE>

                                    EXHIBIT D

                        REQUEST FOR RELEASE OF DOCUMENTS

To:    Wells Fargo Bank, N.A.
       1015 10th Avenue S.E.
       Minneapolis Minnesota 55414
       Attn: __________________________

       Re:     Custodial Agreement, dated as of March 9, 2007 among HSBC Bank
               USA, National Association, Merrill Lynch Mortgage Investors, Inc.
               and Wells Fargo Bank, N.A.

     In connection with the administration of the Mortgage Loans held by you as
Custodian for the Owner pursuant to the above-captioned Custodial Agreement, we
request the release, and hereby acknowledge receipt, of the Custodian's Mortgage
File for the Mortgage Loan described below, for the reason indicated.

               Mortgage Loan Number:

               Mortgagor Name, Address & Zip Code:

               Reason for Requesting Documents (check one):

_____________  1. Mortgage Paid in full

_____________  2. Foreclosure

_____________  3. Substitution

_____________  4. Other Liquidation (Repurchases, etc.)

_____________  5. Nonliquidation               Reason:__________________________

                                               By:______________________________
                                                       (authorized signer)

                                               Issuer:__________________________

                                               Address:_________________________

                                                       _________________________

                                               Date:   _________________________

                                      D-1

<PAGE>

          Custodian

          Wells Fargo Bank, N.A.

          Please acknowledge the execution of the above request by your
signature and date below:

          Please acknowledge the execution of the above request by your
signature and date below:

___________________________________            _________________
Signature                                      Date

             Documents returned to

Custodian:

___________________________________            _________________
Custodian                                      Date

                                      D-2
<PAGE>

                                   EXHIBIT E-1

                           FORM OF TRANSFEREE'S LETTER

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Alternative Note Asset
Trust, Series 2007-OAR1

           Ladies and Gentlemen:

           We propose to purchase Merrill Lynch Alternative Note Asset Trust,
Series 2007-OAR1 Mortgage Pass-Through Certificates, Class R, described in the
Prospectus Supplement, dated March 8, 2007, and the Prospectus, dated February
20, 2007. Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement, dated February 1, 2007
relating to this issuance of the Merrill Lynch Alternative Note Asset Trust,
Series 2007-OAR1 Mortgage Pass-Through Certificates (the "Pooling and Servicing
Agreement").

           1. We certify that (a) we are not a disqualified organization and (b)
we are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.

           2. We certify that (a) we have historically paid our debts as they
became due, (b) we intend, and believe that we will be able, to continue to pay
our debts as they become due in the future, (c) we understand that, as
beneficial owner of the Class R Certificate, we may incur tax liabilities in
excess of any cash flows generated by the Class R Certificate, and (d) we intend
to pay any taxes associated with holding the Class R Certificate as they become
due and (e) we will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of ours or another U.S. taxpayer.

                                     E-1-1
<PAGE>

           3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and: (1)

          ______________ The Class R Certificate will be registered in our name.

           _____________ The Class R Certificate will be held in the name of our
nominee, _________________, which is not a disqualified organization.

           4. We certify that we are not an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan subject to Section 4975 of the Code or a plan subject to
federal, state, local, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code (each, a "Plan"), and are not directly
or indirectly acquiring the Class R Certificate on behalf of or with any assets
of a Plan.

           5. We certify that (i) we are a U.S. person or (ii) we will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and have furnished the transferor and the Securities
Administrator with a duly completed and effective Internal Revenue Service Form
W-8ECI or successor form at the time and in the manner required by the Code; for
this purpose the term "U.S. person" means a citizen or resident of the United
States, a corporation, or partnership (unless, in the case of a partnership,
Treasury regulations are adopted that provide otherwise) created or organized in
or under the laws of the United States, any State thereof or the District of
Columbia, including an entity treated as a corporation or partnership for
federal income tax purposes, an estate whose income is subject to United States
federal income tax regardless of the source of its income, or a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more such U.S. persons have the authority
to control all substantial decisions of the trust (or, to the extent provided in
applicable Treasury regulations, certain trusts in existence on August 20, 1996
which are eligible to elect to be treated as U.S. Persons. We agree that any
breach by us of this certification shall render the transfer of any interest in
the Class R Certificate to us absolutely null and void and shall cause no rights
in the Class R Certificate to vest in us.

           6. We agree that in the event that at some future time we wish to
transfer any interest in the Class R Certificate, we will transfer such interest
in the Class R Certificate only (a) to a transferee that (i) is not a
disqualified organization and is not purchasing such interest in the Class R
Certificate on behalf of a disqualified organization, (ii) is a U.S. person or
will hold the Class R Certificate in connection with the conduct of a trade or
business within the United States and will furnish us and the Securities
Administrator with a duly completed and effective Internal Revenue Service Form
W-8ECI or successor form at the time and in the manner required by the Code and
(iii) has delivered to the Securities Administrator a letter in the form of this
letter (including the affidavit appended hereto) and, we will provide the
Securities Administrator a written statement substantially in the form of
Exhibit E-2 to the Pooling and Servicing Agreement.

----------------
1 Check  appropriate  box and if necessary fill in the name of the  Transferee's
nominee.

                                      E-1-2
<PAGE>

7. We hereby designate _______________________ as our fiduciary to act as the
tax matters person for each of the REMICs provided for in the Pooling and
Servicing Agreement in which the Class R Certificate represents the residual
interest.

                                Very truly yours,

                                [Purchaser]

                                By:_____________________________________________
                                Name:
                                Title:

Accepted as of __________ __, 200__

MERRILL LYNCH MORTGAGE INVESTORS, INC.

By:______________________________________
   Name:
   Title:

                                     E-1-3
<PAGE>

                                   APPENDIX A

           Affidavit pursuant to (i) Section 860E(e)(4) of the Internal Revenue
    Code of 1986, as amended, and (ii) certain provisions of the Pooling and
    Servicing Agreement

Under penalties of perjury, the undersigned declares that the following is true:

          1.   He or she is an officer of _________________________ (the
               "Investor"),

          2.   the Investor's Employer Identification number is __________,

          3.   the Investor is not a "disqualified organization" (as defined
               below), has no plan or intention of becoming a disqualified
               organization, and is not acquiring any of its interest in the
               Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1
               Mortgage Pass-Through Certificates, Class R Certificate on behalf
               of a disqualified organization or any other entity,

          4.   unless Merrill Lynch Mortgage Investors, Inc. ("MLMI") has
               consented to the transfer to the Investor, the Investor is a
               "U.S. person" (as defined below),

          5.   that no purpose of the transfer is to avoid or impede the
               assessment or collection of tax,

          6.   the Investor has historically paid its debts as they became due,

          7.   the Investor intends, and believes that it will be able, to
               continue to pay its debts as they become due in the future,

          8.   the Investor understands that, as beneficial owner of the Class R
               Certificate, it may incur tax liabilities in excess of any cash
               flows generated by the Class R Certificate,

          9.   the Investor intends to pay any taxes associated with holding the
               Class R Certificate as they become due,

          10.  the Investor consents to any amendment of the Pooling and
               Servicing Agreement that shall be deemed necessary by MLMI (upon
               advice of counsel) to constitute a reasonable arrangement to
               ensure that the Class R Certificate will not be owned directly or
               indirectly by a disqualified organization, and

          11.  IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
               transfer is not a direct or indirect transfer of the Class R
               Certificate to a foreign permanent establishment or fixed base
               (within the meaning of an applicable income tax treaty) of the
               Investor, and as to each of the residual interests represented by
               the Class R Certificate, the present value of the anticipated tax
               liabilities associated with holding such residual interest does
               not exceed the sum of:

                                     E-1-4
<PAGE>

                    A.   the present value of any consideration given to the
                         Investor to acquire such residual interest;

                    B.   the present value of the expected future distributions
                         on such residual interest; and

                    C.   the present value of the anticipated tax savings
                         associated with holding such residual interest as the
                         related REMIC generates losses.

               For purposes of this declaration, (i) the Investor is assumed to
               pay tax at a rate equal to the highest rate of tax specified in
               Section 11(b)(1) of the Code, but the tax rate specified in
               Section 55(b)(1)(B) of the Code may be used in lieu of the
               highest rate specified in Section 11(b)(1) of the Code if the
               Investor has been subject to the alternative minimum tax under
               Section 55 of the Code in the preceding two years and will
               compute its taxable income in the current taxable year using the
               alternative minimum tax rate, and (ii) present values are
               computed using a discount rate equal to the Federal short-term
               rate prescribed by Section 1274(d) of the Code for the month of
               the transfer and the compounding period used by the Investor;]

[(11) (A)      at the time of the transfer, and at the close of each of the
               Investor's two fiscal years preceding the Investor's fiscal year
               of transfer, the Investor's gross assets for financial reporting
               purposes exceed $100 million and its net assets for financial
               reporting purposes exceed $10 million; and

      (B)      the Investor is an eligible corporation as defined in Treasury
               regulations Section 1.860E-1(c)(6)(i) and has agreed in writing
               that any subsequent transfer of the Class R Certificate will be
               to another eligible corporation in a transaction that satisfies
               Treasury regulation Sections 1.860E-1(c)(4)(i),
               1.860E-1(c)(4)(ii), 1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and
               such transfer will not be a direct or indirect transfer to a
               foreign permanent establishment (within the meaning of an
               applicable income tax treaty) of a domestic corporation.

For purposes of this declaration, the gross and net assets of the Investor do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Investor to make this
declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]

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

                                     E-1-5
<PAGE>

For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).

                                     E-1-6
<PAGE>

IN WITNESS WHEREOF, the Investor has caused this instrument to be executed on
its behalf, pursuant to authority of its Board of Directors, by its
_____________ this ___ day of ______________, 20__.

                                          [INVESTOR]

                                          By:___________________________________
                                             Name:
                                             Title:

Personally appeared before me the above-named _______________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ____________________________of the Investor, and acknowledged to me that
he executed the same as his free act and deed and the free act and deed of the
Investor.

Subscribed and sworn before me this ___ day of ______________, 20__.

NOTARY PUBLIC

______________________________

COUNTY OF_____________________

STATE OF______________________

My commission expires the _____ day of __________ 20__.

                                     E-1-7
<PAGE>

                                   EXHIBIT E-2

                         FORM OF TRANSFEROR CERTIFICATE

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045
Attention: Corporate Trust Services - Merrill Lynch Alternative Note Asset
Trust, Series 2007-OAR1

Re: Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1

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

                                Very truly yours,

                                [Transferor]

                                By:_____________________________________________
                                   Name:
                                   Title:

                                     E-2-1

<PAGE>

                                   EXHIBIT F-1

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                          ______________, 200___

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center
New York, New York 10281

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045

     Re: Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1 Mortgage
         Pass-Through Certificates, Class [_____]

Ladies and Gentlemen:

     In connection with the sale by ___________ (the "Seller") to ________ (the
"Purchaser") of $_________ Initial Certificate Principal Balance of Mortgage
Pass-Through Certificates, Class _____ (the "Certificates"), issued pursuant to
the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of February 1, 2007 among Merrill Lynch Mortgage Investors, Inc., as
depositor (the "Depositor"), Wells Fargo Bank, N.A. as master servicer (in such
capacity, the "Master Servicer") and securities administrator (in such capacity,
the "Securities Administrator"), Wilshire Credit Corporation, as servicer,
Central Mortgage Company, as servicer and HSBC Bank USA, National Association,
as trustee (the "Trustee"). The Seller hereby certifies, represents and warrants
to, and covenants with, the Depositor and the Securities Administrator that:

     Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act in any
manner set forth in the foregoing sentence with respect to any Certificate. The

                                     F-1-1
<PAGE>

Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.

                                Very truly yours,

                                ________________________________________________
                                (Seller)

                                By:_____________________________________________
                                Name:___________________________________________
                                Title:__________________________________________

                                     F-1-2
<PAGE>

                                   EXHIBIT F-2

             FORM OF INVESTOR REPRESENTATION LETTER (NON-RULE 144A)

                                                               __________, 200__

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center
New York, New York 10281

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045

     Re: Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1 Mortgage
         Pass-Through Certificates, Class [ ]

Ladies and Gentlemen:

     In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (The "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
institutional "accredited investor," as defined in Regulation D under the Act,
and have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) solely in the case of an ERISA
Restricted Certificate, we (i) are not an employee benefit plan or arrangement
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code") or a plan subject to any provisions under any
federal, state, local, non-U.S. or other laws or regulations that are
substantively similar to foregoing provisions of ERISA or the Code ("Similar
Law") (collectively, a "Plan"), and are not directly or indirectly acquiring
this Certificate for, on behalf of or with any assets of any such Plan, (ii) if
the Certificate has been the subject of an ERISA-Qualifying Underwriting, are an
insurance company that is acquiring the Certificate with assets of an "insurance
company general account" as defined in Section V(E) of Prohibited Transaction
Class Exemption ("PTCE") 95-60, and the acquisition and holding of the
Certificate are covered and exempt under Sections I and III of PTCE 95-60, or
(iii) solely in the case of a Definitive Certificate, shall deliver herewith an
Opinion of Counsel satisfactory to the Securities Administrator, and upon which
the Securities Administrator shall be entitled to rely, to the effect that the
acquisition and holding of this certificate by the transferee will not result in
a nonexempt prohibited transaction under ERISA or the Code, or a violation of
Similar Law, and will not subject the Depositor, the Master Servicer, the
Securities Administrator or the Trustee to any obligation in addition to those
undertaken by such entities in the Pooling and Servicing Agreement, which
Opinion of Counsel

                                     F-2-1
<PAGE>

shall not be an expense of the Depositor, the Master Servicer, the Securities
Administrator or the Trustee, (e) we are acquiring the Certificates for
investment for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (g) below), (f)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, or taken any other action which would result in a
violation of Section 5 of the Act, and (g) we will not sell, transfer or
otherwise dispose of any Certificates unless (1) such sale, transfer or other
disposition is made pursuant to an effective registration statement under the
Act or is exempt from such registration requirements, and if requested, we will
at our expense provide an opinion of counsel satisfactory to the addressees of
this Certificate that such sale, transfer or other disposition may be made
pursuant to an exemption from the Act, (2) The purchaser or transferee of such
Certificate has executed and delivered to you a certificate to substantially the
same effect as this certificate, and (3) The purchaser or transferee has
otherwise complied with any conditions for transfer set forth in the Pooling and
Servicing Agreement.

                                Very truly yours,

                                ________________________________________________
                                Print Name of Transferee

                                By:_____________________________________________
                                   Authorized Officer

                                     F-2-2
<PAGE>

                                   EXHIBIT F-3

                            FORM OF RULE 144A LETTER

                                                             ____________, 200__

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center
New York, New York 10281

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045

     Re: Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1 Mortgage
         Pass-Through Certificates, Class [ ]

Ladies and Gentlemen:

     In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (The "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) solely in the case of an ERISA Restricted
Certificate, we (i) are not an employee benefit plan or arrangement subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code") or a plan subject to any provisions under any federal,
state, local, non-U.S. or other laws or regulations that are substantively
similar to foregoing provisions of ERISA or the Code ("Similar Law")
(collectively, a "Plan"), and are not directly or indirectly acquiring this
Certificate for, on behalf of or with any assets of any such Plan, (ii) if the
Certificate has been the subject of an ERISA-Qualifying Underwriting, are an
insurance company that is acquiring the Certificate with assets of an "insurance
company general account" as defined in Section V(E) of Prohibited Transaction
Class Exemption ("PTCE") 95-60, and the acquisition and holding of the
Certificate are covered and exempt under Sections I and III of PTCE 95-60, or
(iii) solely in the case of a Definitive Certificate, shall deliver herewith an
Opinion of Counsel satisfactory to the Securities Administrator, and upon which
the Securities Administrator shall be entitled to rely, to the effect that the
acquisition and holding of this certificate by the transferee will not result in
a nonexempt prohibited transaction under ERISA or the Code, or a violation of
Similar Law, and will not subject the Depositor, the Master Servicer, the
Securities Administrator or the Trustee to any obligation in addition to those
undertaken by such entities in the Pooling and Servicing Agreement, which
Opinion of Counsel shall not be an expense of the Depositor, the Master
Servicer, the Securities Administrator or the

                                     F-3-1
<PAGE>

Trustee, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Act or that would render the
disposition of the Certificates a violation of Section 5 of the Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Act ("Rule 144A") and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2, (g) we are
aware that the sale to us is being made in reliance on Rule 144A, and (h) we are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (A) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (B) pursuant to another
exemption from registration under the Act.

                                Very truly yours,

                                ________________________________________________
                                Print Name of Transferee

                                By:_____________________________________________
                                   Authorized Officer

                                     F-3-2
<PAGE>

                                                          ANNEX I TO EXHIBIT F-3

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

[For Transferees Other Than Registered Investment Companies]

     The undersigned (The "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

     1. As indicated below, The undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

     2. In connection with purchases by the Buyer, The Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) The Buyer owned and/or
invested on a discretionary basis $___________(1) in securities (except for the
1 excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) The Buyer satisfies the criteria in the category marked below.

     ___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or similar
business trust, partnership, or charitable organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended.

     ___ Bank. The Buyer (a) is a national bank or banking institution organized
under the laws of any State, territory or the District of Columbia, The business
of which is substantially confined to banking and is supervised by the State or
territorial banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual financial statements, a copy of which is
attached hereto.

     ___ Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association or
similar institution, which is supervised and examined by a State or Federal
authority having supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an audited net worth
of at least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.

     ___ Broker-dealer. The Buyer is a dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.

-----------------
1    Buyer must own and/or invest on a discretionary basis at least $100,000,000
     in securities unless Buyer is a dealer, and, in that case, Buyer must own
     and/or invest on a discretionary basis at least $10,000,000 in securities.

                                     F-3-3
<PAGE>

     ___ Insurance Company. The Buyer is an insurance company whose primary and
predominant business activity is the writing of insurance or the reinsuring of
risks underwritten by insurance companies and which is subject to supervision by
the insurance commissioner or a similar official or agency of a State, territory
or the District of Columbia.

     ___ State or Local Plan. The Buyer is a plan established and maintained by
a State, its political subdivisions, or any agency or instrumentality of the
State or its political subdivisions, for the benefit of its employees.

     ___ ERISA Plan. The Buyer is an employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974.

     ___ Investment Advisor. The Buyer is an investment advisor registered under
the Investment Advisors Act of 1940.

     ___ Small Business Investment Company. Buyer is a small business investment
company licensed by the U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958.

     ___ Business Development Company. Buyer is a business development company
as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.

     3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of an
unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.

     4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, The Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
The securities may be valued at market. Further, in determining such aggregate
amount, The Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

     5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

                                     F-3-4
<PAGE>

     6. Until the date of purchase of the Rule 144A Securities, The Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, The Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, The Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                        ________________________________________
                                        Print Name of Buyer

                                        By:_____________________________________
                                        Name:
                                        Title:

                                        Date:___________________________________

                                     F-3-5
<PAGE>

                                                         ANNEX II TO EXHIBIT F-3

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

     The undersigned (The "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

           1. As indicated below, The undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.

           2. In connection with purchases by Buyer, The Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) The Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, The Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, The cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, The securities may be valued at market.

     ___ The Buyer owned $ in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).

     ___ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $ in securities (other than the excluded securities referred to
below) as of the end of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).

           3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

           4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,

                                     F-3-6
<PAGE>

(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.

           5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, The Buyer will only purchase for the Buyer's own account.

           6. Until the date of purchase of the Certificates, The undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, The Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.

                                     ___________________________________________
                                     Print Name of Buyer or Adviser

                                     By:________________________________________
                                     Name:
                                     Title:

                                     IF AN ADVISER:

                                     ___________________________________________
                                     Print Name of Buyer

                                     Date:______________________________________

                                     F-3-7
<PAGE>

                                    EXHIBIT G

                           FORM OF CUSTODIAL AGREEMENT

                               CUSTODIAL AGREEMENT

           THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to
time, the "Agreement"), dated as of March 9, 2007, by and among HSBC BANK USA,
NATIONAL ASSOCIATION, as trustee (including its successors under the Pooling and
Servicing Agreement defined below, the "Trustee"), MERRILL LYNCH MORTGAGE
INVESTORS, INC., as company (together with any successor in interest, the
"Company"), WELLS FARGO BANK, N.A., as securities administrator and master
servicer (together with any successor in interest or successor under the Pooling
and Servicing Agreement referred to below, the "Master Servicer") and WELLS
FARGO BANK, N.A., as custodian (together with any successor in interest or any
successor appointed hereunder, the "Custodian").

                                WITNESSETH THAT:

           WHEREAS, the Company, the Master Servicer, Wilshire Credit
Corporation, as servicer, Central Mortgage Company, as servicer (collectively,
the "Servicers") and the Trustee have entered into a Pooling and Servicing
Agreement, dated as of February 1, 2007, relating to the issuance of Merrill
Lynch Alternative Note Asset Trust, Series 2007-OAR1 Mortgage Pass-Through
Certificates, (as amended and supplemented from time to time, the "Pooling and
Servicing Agreement"); and

           WHEREAS, the Custodian has agreed to act as agent for the Trustee for
the purposes of receiving and holding certain documents and other instruments
delivered by the Company, the Master Servicer or the Servicers under the Pooling
and Servicing Agreement, all upon the terms and conditions and subject to the
limitations hereinafter set forth;

           NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Trustee, the Company, the
Master Servicer and the Custodian hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

           Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned in the Pooling and Servicing Agreement, unless
otherwise required by the context herein.

                                       G-1
<PAGE>

                                   ARTICLE II
                          CUSTODY OF MORTGAGE DOCUMENTS

     2.01 Custodian to Act as Agent: Acceptance of Mortgage Files, Attestations
and Assessments of Compliance.

           (a) The Custodian, as the duly appointed agent of the Trustee for
these purposes, acknowledges (subject to any exceptions noted in the Initial
Certification referred to in Section 2.03(a)) receipt of the Mortgage Files
relating to the Mortgage Loans identified on the schedule attached hereto (the
"Mortgage Files") and declares that it holds and will hold such Mortgage Files
as agent for the Trustee, in trust, for the use and benefit of all present and
future Certificateholders.

           (b) On or before March 1st of each calendar year, beginning with
March 1, 2008, the Custodian shall, at its own expense, cause a firm of
independent public accountants (who may also render other services to
Custodian), that is a member of the American Institute of Certified Public
Accountants, to furnish to the Company and the Master Servicer a report to the
effect that such firm attests to, and reports on, the assessment made by such
asserting party pursuant to Section 2.01(c) below, which report shall be made in
accordance with standards for attestation engagements issued or adopted by the
Public Company Accounting Oversight Board.

           (c) On or before March 1st of each calendar year, beginning with
March 1, 2008, the Custodian shall deliver to the Company and the Master
Servicer a report regarding its assessment of compliance with the servicing
criteria identified in Exhibit Three attached hereto, as of and for the period
ending the end of the fiscal year ending no later than December 31 of the year
prior to the year of delivery of the report, with respect to asset-backed
security transactions taken as a whole in which the Custodian is performing any
of the servicing criteria specified in Exhibit Three and that are backed by the
same asset type backing such asset-backed securities. Each such report shall
include (a) a statement of the party's responsibility for assessing compliance
with the servicing criteria applicable to such party, (b) a statement that such
party used the criteria identified in Item 1122(d) of Regulation AB (section
229.1122(d)) to assess the compliance with the applicable servicing criteria,
(c) disclosure of any material instance of noncompliance identified by such
party, and (d) a statement that a registered public accounting firm has issued
an attestation report on such party's assessment of compliance with the
applicable servicing criteria, which report shall be delivered by the Custodian
as provided in this Section 2.01(c). However, the Custodian's obligation to
provide a report on assessment of compliance or an attestation with respect to
itself and with respect to any Subcontractor shall be suspended in any year in
which the Issuing Entity's reporting obligations under the Exchange Act are
suspended.

           (d) The Custodian has not and shall not engage any Subcontractor
which is "participating in the servicing function" within the meaning of Item
1122 of Regulation AB, unless such Subcontractor agrees to provide in any year
in which a Form 10-K will be filed by the Trust., no later than March 1st of
such year, an assessment and a statement of registered public accounting firm
certifying its compliance with the applicable servicing criteria in Item 1122(d)
of Regulation AB as of and for the period ending the end of the fiscal year
ending no later than December 31 of the year prior to the year of delivery of
the report. "Subcontractor" as

                                      G-2
<PAGE>

used herein means any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of the Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to the Mortgage Loans under the direction or authority of the
Custodian.

           (e) The Custodian agrees to indemnify the Company, the Master
Servicer, the Trust Fund and each of their respective directors, officers,
employees and agents and hold each of them harmless from and against any losses,
damages, penalties, fines, forfeitures, legal fees and expenses and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain arising out of or based upon the engagement of any Subcontractor in
violation of Section 2.01(d) or any failure by the Custodian to deliver any
information, report, certification, accountants' letter or other material when
and as required under this Agreement, including any report under Sections
2.01(b) or 2.01(c).

     2.02 Reserved.

     2.03 Review of Mortgage Files.

           (a) On or prior to the Closing Date, the Custodian agrees, for the
benefit of Certificateholders, to review, in accordance with the provisions of
Section 2.02 of the Pooling and Servicing Agreement, each such document, and
shall deliver to the Trustee an Initial Certification in the form annexed hereto
as Exhibit One evidencing receipt (subject to any exceptions noted therein) of a
Mortgage File for each of the Mortgage Loans listed on the Schedule attached
hereto (the "Mortgage Loan Schedule") and certifying that all such documents
have been executed and received and that such documents relate to the Mortgage
Loans identified on the Mortgage Loan Schedule, except for any exceptions listed
on Schedule A attached to such Initial Certification. The Custodian shall be
under no duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face.

           (b) Not later than 180 days after the Closing Date, the Custodian
shall review the Mortgage Files as provided in Section 2.02 of the Pooling and
Servicing Agreement and deliver to the Trustee a Final Certification in the form
annexed hereto as Exhibit Two evidencing the completeness of the Mortgage Files
(subject to any exceptions noted therein).

           (c) In reviewing the Mortgage Files as provided herein and in the
Pooling and Servicing Agreement, the Custodian shall make no representation as
to and shall not be responsible to verify (i) the validity, legality,
enforceability, due authorization, recordability, sufficiency or genuineness of
any of the documents included in any Mortgage File or (ii) the collectibility,
insurability, effectiveness or suitability of any of the documents in any
Mortgage File.

     Upon receipt of written request from the Trustee, the Custodian shall as
soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans then contained in the Mortgage Files.

                                      G-3
<PAGE>

     2.04 Notification of Breaches of Representations and Warranties. Upon
discovery by the Custodian of a breach of any representation or warranty made by
the Company as set forth in the Pooling and Servicing Agreement with respect to
a Mortgage Loan relating to a Mortgage File, the Custodian shall give prompt
written notice to the Company, the related Servicer and the Trustee.

     2.05 Custodian to Cooperate: Release of Mortgage Files. Upon receipt of
written notice from the Master Servicer that the Mortgage Loan Seller has
repurchased a Mortgage Loan pursuant to Article II of the Pooling and Servicing
Agreement, and that the purchase price therefor has been deposited in the Master
Servicer Collection Account or the Distribution Account, then the Custodian
agrees to promptly release to the Mortgage Loan Seller the related Mortgage
File.

     Upon the Custodian's receipt of a request for release (a "Request for
Release") substantially in the form of Exhibit D to the Pooling and Servicing
Agreement signed by a Servicing Officer of the related Servicer stating that it
has received payment in full of a Mortgage Loan or that payment in full will be
escrowed in a manner customary for such purposes, the Custodian agrees promptly
to release to such Servicer the related Mortgage File. The Company shall deliver
to the Custodian and the Custodian agrees to accept the Mortgage Note and other
documents constituting the Mortgage File with respect to any Substitute Mortgage
Loan.

     From time to time as is appropriate for the servicing or foreclosure of any
Mortgage Loan, including, for this purpose, collection under any Primary
Mortgage Insurance Policy, the related Servicer shall deliver to the Custodian a
Request for Release signed by a Servicing Officer requesting that possession of
all of the Mortgage File be released to such Servicer and certifying as to the
reason for such release and that such release will not invalidate any insurance
coverage provided in respect of the Mortgage Loan under any of the Insurance
Policies. Upon receipt of the foregoing, the Custodian shall deliver the
Mortgage File to such Servicer. The related Servicer shall cause each Mortgage
File or any document therein so released to be returned to the Custodian when
the need therefore by such Servicer no longer exists, unless (i) the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Master Servicer Collection Account or the
Distribution Account or (ii) the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the related Servicer has delivered to the Custodian a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery.

     At any time that a Servicer is required to deliver to the Custodian a
Request for Release, such Servicer shall deliver two copies of the Request for
Release if delivered in hard copy or such Servicer may furnish such Request for
Release electronically to the Custodian, in which event the Servicing Officer
transmitting the same shall be deemed to have signed the Request for Release. In
connection with any Request for Release of a Mortgage File because of a
repurchase of a Mortgage Loan, the related Servicer shall send to the Trustee an
assignment of mortgage,

                                      G-4
<PAGE>

without recourse, representation or warranty from the Trustee to the Mortgage
Loan Seller and the related Mortgage Note which shall be endorsed without
recourse, representation or warranty by the Trustee and the Trustee shall
forward such documents to the Mortgage Loan Seller. In connection with any
Request for Release of a Mortgage File because of the payment in full of a
Mortgage Loan, the related Servicer shall send to the Trustee a certificate of
satisfaction or other similar instrument to be executed by or on behalf of the
Trustee and returned to such Servicer.

     2.06 Assumption Agreements. In the event that any assumption agreement or
substitution of liability agreement is entered into with respect to any Mortgage
Loan subject to this Agreement in accordance with the terms and provisions of
the Pooling and Servicing Agreement, the Master Servicer, shall cause the
related Servicer to notify the Custodian that such assumption or substitution
agreement has been completed by forwarding to the Custodian the original of such
assumption or substitution agreement, which shall be added to the related
Mortgage File and, for all purposes, shall be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting
parts thereof.

                                  ARTICLE III
                            CONCERNING THE CUSTODIAN

     3.01 Custodian a Bailee and Agent of the Trustee. With respect to each
Mortgage Note, Mortgage and other documents constituting each Mortgage File
which are delivered to the Custodian, the Custodian is exclusively the bailee
and agent of the Trustee and has no instructions to hold any Mortgage Note or
Mortgage for the benefit of any person other than the Trustee and the
Certificateholders and undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.5 of this Agreement, no Mortgage Note, Mortgage or
Mortgage File shall be delivered by the Custodian to the Company, the Servicers
or the Master Servicer or otherwise released from the possession of the
Custodian.

     3.02 Reserved.

     3.03 Custodian May Own Certificates. The Custodian in its individual or any
other capacity may become the owner or pledgee of Certificates with the same
rights it would have if it were not Custodian.

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

                                      G-5
<PAGE>

     3.05 Custodian May Resign; Trustee May Remove Custodian. The Custodian may
resign from the obligations and duties hereby imposed upon it as such
obligations and duties relate to its acting as Custodian of the Mortgage Loans.
Upon receiving such notice of resignation, the Trustee shall either take custody
of the Mortgage Files itself and give prompt notice thereof to the Company, the
Master Servicer and the Custodian, or promptly appoint a successor Custodian by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Custodian and one copy to the successor Custodian. If
the Trustee shall not have taken custody of the Mortgage Files and no successor
Custodian shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Custodian may
petition any court of competent jurisdiction for the appointment of a successor
Custodian.

     The Trustee may remove the Custodian at any time with the consent of the
Master Servicer. In such event, the Trustee shall appoint, or petition a court
of competent jurisdiction to appoint, a successor Custodian hereunder. Any
successor Custodian shall be a depository institution subject to supervision or
examination by federal or state authority, shall be able to satisfy the other
requirements contained in Section 3.7 and shall be unaffiliated with the
Servicers or the Company.

     Any resignation or removal of the Custodian and appointment of a successor
Custodian pursuant to any of the provisions of this Section 3.5 shall become
effective upon acceptance of appointment by the successor Custodian. The Trustee
shall give prompt notice to the Company and the Master Servicer of the
appointment of any successor Custodian. No successor Custodian shall be
appointed by the Trustee without the prior approval of the Company and the
Master Servicer.

     3.06 Merger or Consolidation of Custodian. Any Person into which the
Custodian may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Custodian shall be a party, or any Person succeeding to the business of the
Custodian, shall be the successor of the Custodian hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

     3.07 Representations of the Custodian. The Custodian hereby represents that
it is a depository institution subject to supervision or examination by a
federal or state authority, has a combined capital and surplus of at least
$15,000,000 and is qualified to do business in the jurisdictions in which it
will hold any Mortgage File.

                                   ARTICLE IV
                            MISCELLANEOUS PROVISIONS

     4.01 Notices. All notices, requests, consents, demands and other
communications required under this Agreement or pursuant to any other instrument
or document delivered hereunder shall be in writing and, unless otherwise
specifically provided, may be delivered personally, by telegram or telex, or by
registered or certified mail, postage prepaid, return receipt requested, at the
addresses specified on the signature page hereof (unless changed by the

                                      G-6
<PAGE>

particular party whose address is stated herein by similar notice in writing),
in which case the notice will be deemed delivered when received.

     4.02 Amendments. No modification or amendment of or supplement to this
Agreement shall be valid or effective unless the same is in writing and signed
by all parties hereto, and neither the Company, the Master Servicer nor the
Trustee shall enter into any amendment hereof except as permitted by the Pooling
and Servicing Agreement. The Trustee shall give prompt notice to the Custodian
of any amendment or supplement to the Pooling and Servicing Agreement and
furnish the Custodian with written copies thereof.

     4.03 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     4.04 Recordation of Agreement. To the extent permitted by applicable law,
this Agreement is subject to recordation in all appropriate public offices for
real property records in all the counties or other comparable jurisdictions in
which any or all of the properties subject to the Mortgages are situated, and in
any other appropriate public recording office or elsewhere, such recordation to
be effected by the Company and at the Trust's expense on direction by the
Trustee, but only upon direction accompanied by an Opinion of Counsel (which
shall be at the expense of the party requesting such recordation and in no event
at the expense of the Trustee) reasonably satisfactory to the Company to the
effect that the failure to effect such recordation is likely to materially and
adversely affect the interests of the Certificateholders.

     For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.

     4.05 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.

     4.06 Third-Party Rights. Wilshire Credit Corporation shall be deemed a
third-party beneficiary of this Agreement to the same extent as if it were a
party hereto, and shall have the right to enforce the provisions of this
Agreement.

                                      G-7
<PAGE>

     IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.

Address:                                  HSBC BANK USA, NATIONAL ASSOCIATION,
                                          as Trustee

452 Fifth Avenue
New York, NY 10018                        By:__________________________________
                                          Name:
                                          Title:

Address:                                  MERRILL LYNCH MORTGAGE INVESTORS, INC.

4 World Financial Center
New York, NY 10281                        By:__________________________________
                                          Name:
                                          Title:

Address:                                  WELLS FARGO BANK, N.A.,
                                          as Master Servicer
9062 Old Annapolis Road
Columbia, Maryland 21045-1951
                                          By:__________________________________
                                          Name: Michael Pinzon
                                          Title: Vice President

Address:                                  WELLS FARGO BANK, N.A.,
                                          as Custodian
1015 10th Avenue Southeast, MS 0031
Minneapolis, MN 55414
                                          By:__________________________________
                                          Name:
                                          Title:

                                      G-8
<PAGE>

                                   EXHIBIT ONE

                     FORM OF CUSTODIAN INITIAL CERTIFICATION

                                                              ___________, 200__

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10281

HSBC Bank USA, National Association
452 Fifth Avenue
New York, NY 10018

     Re:  Pooling and Servicing Agreement, dated as of February 1, 2007, among
          Merrill Lynch Mortgage Investors, Inc., as depositor, Wells Fargo
          Bank, N.A., as master servicer and securities administrator, Wilshire
          Credit Corporation, as servicer, Central Mortgage Company, as
          servicer, and HSBC Bank USA, National Association, as trustee Mortgage
          Pass-Through Certificates, Series 2007-OAR1

          Ladies and Gentlemen:

     Attached is the Custodian's preliminary exception report delivered in
accordance with Section 2.02 of the referenced Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.

     The Custodian has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Custodian makes no representations as to
(i) the validity, legality, sufficiency, enforceability or genuineness of any of
the documents contained in the Mortgage File pertaining to the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) the existence of
any assumption, modification, written assurance, or substitution agreement, with
respect to any Mortgage File if no such documents appear in the Mortgage File
delivered to the Custodian.

                                                   WELLS FARGO BANK, N.A.,
                                                   as Custodian

                                                   By:__________________________
                                                   Name:
                                                   Title:

                                      G-9
<PAGE>

                                   EXHIBIT TWO

                      FORM OF CUSTODIAN FINAL CERTIFICATION

                                                              ____________, 200-

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10281
Attention: ____________________

HSBC Bank USA, National Association
452 Fifth Avenue
New York, NY 10018

     Re:  Pooling and Servicing Agreement, dated as of February 1, 2007, among
          Merrill Lynch Mortgage Investors, Inc., as depositor, Wells Fargo
          Bank, N.A., as master servicer and securities administrator, Wilshire
          Credit Corporation, as servicer, Central Mortgage Company, as
          servicer, and HSBC Bank USA, National Association, as trustee Mortgage
          Pass-Through Certificates, Series 2007-OAR1

          Ladies and Gentlemen:

     In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as noted on
the Schedule of Exceptions attached hereto, for each Mortgage Loan listed on the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto), it has received a complete Mortgage File which includes
the documents required to be included in the Mortgage File as set forth in the
Pooling and Servicing Agreement.

     The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The undersigned makes no
representation as to: (i) the validity, legality, sufficiency, enforceability or
genuineness of any documents contained in any Mortgage File for any of the
Mortgage Loans listed on the Mortgage Loan Schedule to the Pooling and Servicing
Agreement, (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan or (iii) whether any Mortgage File should include any
flood insurance policy, any rider, addends, surety or guaranty agreement, power
of attorney, buy down agreement, assumption agreement, modification agreement,
written assurance or substitution agreement.

                                      G-10
<PAGE>
      Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                                  WELLS FARGO BANK, N.A.,
                                                  as Custodian

                                                  By:___________________________
                                                  Name:

                                      G-11
<PAGE>
                                  EXHIBIT THREE

 FORM OF CERTIFICATION REGARDING SERVICING CRITERIA TO BE ADDRESSED IN REPORT ON
                              ASSESSMENT COMPLIANCE

 The assessment of compliance to be delivered by Wells Fargo Bank shall address,
 at a minimum, the criteria identified below as "Applicable Servicing Criteria":

<TABLE>
<CAPTION>
                                                                                                APPLICABLE SERVICING
                                 SERVICING CRITERIA                                                    CRITERIA
----------------------------------------------------------------------------------  ------------------------------------------------
  REFERENCE                                  CRITERIA
--------------  ------------------------------------------------------------------
<S>              <C>                                                                <C>
                                 GENERAL SERVICING CONSIDERATIONS

1122(d)(1)(i)    Policies and procedures are instituted to monitor any performance
                 or other triggers and events of default in accordance with the
                 transaction agreements.

1122(d)(1)(ii)   If any material servicing activities are outsourced to third
                 parties, policies and procedures are instituted to monitor the
                 third party's performance and compliance with such servicing
                 activities.

1122(d)(1)(iii)  Any requirements in the transaction agreements to maintain a
                 back-up servicer for the mortgage loans are maintained.

1122(d)(1)(iv)   A fidelity bond and errors and omissions policy is in effect on
                 the party participating in the servicing function throughout the
                 reporting period in the amount of coverage required by and
                 otherwise in accordance with the terms of the transaction
                 agreements.

                               CASH COLLECTION AND ADMINISTRATION

1122(d)(2)(i)    Payments on mortgage loans are deposited into the appropriate
                 custodial bank accounts and related bank clearing accounts no
                 more than two business days following receipt, or such other
                 number of days specified in the transaction agreements.

1122(d)(2)(ii)   Disbursements made via wire transfer on behalf of an obligor or
                 to an investor are made only by authorized personnel.

1122(d)(2)(iii)  Advances of funds or guarantees regarding collections, cash flows
                 or distributions, and any interest or other fees charged for such
                 advances, are made, reviewed and approved as specified in the
                 transaction agreements.

1122(d)(2)(iv)   The related accounts for the transaction, such as cash reserve
                 accounts or accounts established as a form of
                 overcollateralization, are separately maintained (e.g., with
                 respect to commingling of cash) as set forth in the transaction
                 agreements.

1122(d)(2)(v)    Each custodial account is maintained at a federally insured
                 depository institution as set forth in the transaction
                 agreements. For purposes of this criterion, "federally
                 insured depository institution" with respect to a foreign
                 financial institution means a foreign financial institution
                 that meets the requirements of Rule 13k-1(b)(1) of the Securities
                 Exchange Act.

1122(d)(2)(vi)   Unissued checks are safeguarded so as to prevent unauthorized
                 access.

1122(d)(2)(vii)  Reconciliations are prepared on a monthly basis for all asset-
                 backed securities related bank accounts, including custodial
                 accounts and related bank clearing accounts.These reconciliations
                 are (A) mathematically accurate; (B)prepared within 30 calendar
                 days after the bank statement cutoff date, or such other number
                 of days specified in the transaction agreements; (C) reviewed and
                 approved by someone other than the person who prepared the
                 reconciliation; and (D) contain explanations for reconciling
                 items. These reconciling items are resolved within 90 calendar
                 days of their original identification, or such other number of
                 days specified in the transaction agreements.
</TABLE>

                                      G-12
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 APPLICABLE SERVICING
                                 SERVICING CRITERIA                                                    CRITERIA
----------------------------------------------------------------------------------  ------------------------------------------------
  REFERENCE                                  CRITERIA
-------------    -----------------------------------------------------------------
<S>              <C>                                                                <C>
                                INVESTOR REMITTANCES AND REPORTING

1122(d)(3)(i)    Reports to investors, including those to be filed with the
                 Commission, are maintained in accordance with the transaction
                 agreements and applicable Commission requirements. Specifically,
                 such reports (A) are prepared in accordance with timeframes and
                 other terms set forth in the transaction agreements; (B) provide
                 information calculated in accordance with the terms specified in
                 the transaction agreements; (C) are filed with the Commission as
                 required by its rules and regulations; and (D) agree with
                 investors' or the trustee's records as to the total unpaid
                 principal balance and number of mortgage loans serviced by the
                 Servicer.

1122(d)(3)(ii)   Amounts due to investors are allocated and remitted in accordance
                 with timeframes, distribution priority and other terms set forth
                 in the transaction agreements.

1122(d)(3)(iii)  Disbursements made to an investor are posted within two business
                 days to the Servicer's investor records, or such other number of
                 days specified in the transaction agreements.

1122(d)(3)(iv)   Amounts remitted to investors per the investor reports agree with
                 cancelled checks, or other form of payment, or custodial bank
                 statements.

                                       POOL ASSET ADMINISTRATION

1122(d)(4)(i)    Collateral or security on mortgage loans is maintained as                                X
                 required by the transaction agreements or related mortgage loan
                 documents.

1122(d)(4)(ii)   Mortgage loan and related documents are safeguarded as required                          X
                 by the transaction agreements.

1122(d)(4)(iii)  Any additions, removals or substitutions to the asset pool are
                 made, reviewed and approved in accordance with any conditions or
                 requirements in the transaction agreements.

1122(d)(4)(iv)   Payments on mortgage loans, including any payoffs, made in
                 accordance with the related mortgage loan documents are posted to
                 the Servicer's obligor records maintained no more than two
                 business days after receipt, or such other number of days
                 specified in the transaction agreements, and allocated to
                 principal, interest or other items (e.g., escrow) in accordance
                 with the related mortgage loan documents.

1122(d)(4)(v)    The Servicer's records regarding the mortgage loans agree
                 with the Servicer's records with respect to an obligor's
                 unpaid principal balance.

1122(d)(4)(vi)   Changes with respect to the terms or status of an obligor's
                 mortgage loans (e.g., loan modifications or re-agings) are made,
                 reviewed and approved by authorized personnel in accordance with
                 the transaction agreements and related pool asset documents.

1122(d)(4)(vii)  Loss mitigation or recovery actions (e.g., forbearance plans,
                 modifications and deeds in lieu of foreclosure, foreclosures and
                 repossessions, as applicable) are initiated, conducted and
                 concluded in accordance with the timeframes or other requirements
                 established by the transaction agreements.

1122(d)(4)(viii) Records documenting collection efforts are maintained during the
                 period a mortgage loan is delinquent in accordance with the
                 transaction agreements. Such records are maintained on at least a
                 monthly basis, or such other period specified in the transaction
                 agreements, and describe the entity's activities in monitoring
                 delinquent mortgage loans including, for example, phone calls,
                 letters and payment rescheduling plans in cases where
                 delinquency is deemed temporary (e.g., illness or unemployment).

1122(d)(4)(ix)   Adjustments to interest rates or rates of return for mortgage
                 loans with variable rates are computed based on the related
                 mortgage loan documents.
</TABLE>

                                      G-13
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 APPLICABLE SERVICING
                               SERVICING CRITERIA                                                      CRITERIA
----------------------------------------------------------------------------------  ------------------------------------------------
  REFERENCE                                  CRITERIA
-------------    -----------------------------------------------------------------
<S>              <C>                                                                <C>

1122(d)(4)(x)    Regarding any funds held in trust for an obligor (such as escrow
                 accounts): (A) such funds are analyzed, in accordance with the
                 obligor's mortgage loan documents, on at least an annual basis,
                 or such other period specified in the transaction agreements; (B)
                 interest on such funds is paid, or credited, to obligors in
                 accordance with applicable mortgage loan documents and state
                 laws; and (C)such funds are returned to the obligor within 30
                 calendar days of full repayment of the related mortgage loans,
                 or such other number of days specified in the transaction
                 agreements.

1122(d)(4)(xi)   Payments made on behalf of an obligor (such as tax or insurance
                 payments) are made on or before the related penalty or expiration
                 dates, as indicated on the appropriate bills or notices for such
                 payments, provided that such support has been received by the
                 servicer at least 30 calendar days prior to these dates, or such
                 other number of days specified in the transaction agreements.

1122(d)(4)(xii)  Any late payment penalties in connection with any payment to be
                 made on behalf of an obligor are paid from the servicer's funds
                 and not charged to the obligor, unless the late payment was due
                 to the obligor's error or omission.

1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within two
                 business days to the obligor's records maintained by the servicer,
                 or such other number of days specified in the transaction
                 agreements.

1122(d)(4)(xiv)  Delinquencies, charge-offs and uncollectible accounts are
                 recognized and recorded in accordance with the transaction
                 agreements.

1122(d)(4)(xv)   Any external enhancement or other support, identified in Item
                 1114(a)(1) through (3) or Item 1115 of Regulation AB, is
                 maintained as set forth in the transaction agreements.
</TABLE>

                                      G-14
<PAGE>

                                    EXHIBIT H

                         ONE-MONTH LIBOR CORRIDOR TABLE

<TABLE>
<CAPTION>
                     BEGINNING          ENDING           NOTIONAL            1ML STRIKE             1ML STRIKE
    PERIOD          ACCRUAL(2)        ACCRUAL (2)       BALANCE ($)       LOWER COLLAR (%)       UPPER COLLAR (%)
---------------   ---------------   ---------------   ---------------   --------------------   --------------------
<S>               <C>               <C>               <C>               <C>                    <C>
      1             03/09/07          03/25/07           431,163,000          10.261                 10.261
      2             03/25/07          04/25/07           422,069,908           6.476                 10.261
      3             04/25/07          05/25/07           413,166,917           6.826                 10.261
      4             05/25/07          06/25/07           404,496,579           6.600                 10.261
      5             06/25/07          07/25/07           396,010,510           6.829                 10.261
      6             07/25/07          08/25/07           387,704,710           6.602                 10.261
</TABLE>

(1)  With respect to any Distribution Date, if One-Month LIBOR (as determined by
     the Cap  Contract  Counterparty  and  subject  to a cap  equal to  10.261%)
     exceeds the Lower Collar, the Issuing Entity will receive payments pursuant
     to the Corridor Contract.

(2)  The accrual  period is the period from and including the date in the column
     headed "Beginning Accrual" to, but excluding, the date in the column headed
     "Ending Accrual."

                                      H-1
<PAGE>

                                    EXHIBIT I

                                   [RESERVED]

                                      I-1
<PAGE>

                                    EXHIBIT J

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

                             [INTENTIONALLY OMITTED]

                                      J-1
<PAGE>

                                    EXHIBIT K

                       SERVICING CRITERIA TO BE ADDRESSED
                           IN ASSESSMENT OF COMPLIANCE
                          (RMBS UNLESS OTHERWISE NOTED)

   KEY:  X - obligation

WHERE THERE ARE MULTIPLE CHECKS FOR CRITERIA THE ATTESTING PARTY WILL IDENTIFY
IN ITS MANAGEMENT ASSERTION THAT IT IS ATTESTING ONLY TO THE PORTION OF THE
DISTRIBUTION CHAIN IT IS RESPONSIBLE FOR IN THE RELATED TRANSACTION AGREEMENTS.
CAPITALIZED TERMS USED HEREIN BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS
ASSIGNED TO THEM IN THE POOLING AND SERVICING AGREEMENT, DATED AS OF FEBRUARY 1,
2007, AMONG MERRILL LYNCH MORTGAGE INVESTORS, INC., AS DEPOSITOR, WELLS FARGO
BANK, N.A., AS MASTER SERVICER AND SECURITIES ADMINISTRATOR, WILSHIRE CREDIT
CORPORATION, AS SERVICER, CENTRAL MORTGAGE COMPANY, AS SERVICER, AND HSBC BANK
USA, NATIONAL ASSOCIATION, AS TRUSTEE.

<TABLE>
<CAPTION>
REG AB REFERENCE                  SERVICING CRITERIA                     SECURITIES ADMINISTRATOR     MASTER SERVICER
----------------    ------------------------------------------------     ------------------------     ---------------
<S>                 <C>                                                  <C>                          <C>
                    GENERAL SERVICING  CONSIDERATIONS

1122(d)(1)(i)       Policies and procedures are instituted to
                    monitor any performance or other triggers and                  X                          X
                    events of default in accordance with the
                    transaction agreements.

1122(d)(1)(ii)      If any material servicing activities are
                    outsourced to third parties, policies and
                    procedures are instituted to monitor the                       X                          X
                    third party's performance and compliance with
                    such servicing activities.

1122(d)(1)(iii)     Any requirements in the transaction agreements
                    to maintain a back-up servicer for the                        N/A                        N/A
                    Pool Assets are maintained.

1122(d)(1)(iv)      A fidelity bond and errors and omissions policy
                    is in effect on the party participating in the
                    servicing function throughout the reporting
                    period in the amount of coverage X required by
                    and otherwise in accordance with the terms of
                    the transaction agreements.

                    CASH COLLECTION AND ADMINISTRATION

1122(d)(2)(i)       Payments on pool assets are deposited into the
                    appropriate custodial bank accounts and related
                    bank clearing accounts no more than two business               X                          X
                    days following receipt, or such other
                    number of days specified in the transaction
                    agreements.

1122(d)(2)(ii)      Disbursements made via wire transfer on
                    behalf of an obligor or to an investor are                     X                          X
                    made only by authorized personnel.

1122(d)(2)(iii)     Advances of funds or guarantees regarding
                    collections, cash flows or distributions, and
                    any interest or other fees charged for such
                    advances, are made, reviewed and approved as                                              X
                    specified in the transaction agreements.

1122(d)(2)(iv)      The related accounts for the transaction,
                    such as cash reserve accounts or accounts
                    established as a form of over
                    collateralization, are separately                              X                          X
                    maintained (e.g., with respect to
                    commingling of cash) as set forth in the
                    transaction agreements.
</TABLE>

                                       K-1
<PAGE>

<TABLE>
<CAPTION>
REG AB REFERENCE                  SERVICING CRITERIA                     SECURITIES ADMINISTRATOR     MASTER SERVICER
----------------    ------------------------------------------------     ------------------------     ---------------
<S>                 <C>                                                  <C>                          <C>
1122(d)(2)(v)       Each custodial account is maintained at a
                    federally insured depository institution as set
                    forth in the transaction agreements. For
                    purposes of this criterion, "federally
                    insured depository institution" with respect to                X                          X
                    a foreign X X financial institution means a
                    foreign financial institution that meets the
                    requirements of Rule 13k-1(b)(1) of the
                    Securities Exchange Act.

1122(d)(2)(vi)      Unissued checks are safeguarded so as to prevent
                    unauthorized access.

1122(d)(2)(vii)     Reconciliations are prepared on a monthly basis
                    for all asset-backed securities related bank
                    accounts, including custodial accounts and
                    related bank clearing accounts. These
                    reconciliations are (A) mathematically accurate;
                    (B) prepared within 30 calendar days after the
                    bank statement cutoff date, or such other number
                    of days specified in the transaction agreements;
                    (C) reviewed and approved by someone other                     X                          X
                    than the person who prepared the reconciliation;
                    and (D) contain explanations for
                    reconciling items. These reconciling items
                    are resolved within 90 calendar days of
                    their original identification, or such
                    other number of days specified in the
                    transaction agreements.

                    INVESTOR REMITTANCES AND REPORTING

1122(d)(3)(i)       Reports to investors, including those to be
                    filed with the Commission, are maintained in
                    accordance with the transaction agreements and
                    applicable Commission requirements.
                    Specifically, such reports (A) are prepared in
                    accordance with timeframes and other terms set
                    forth in the transaction agreements; (B) provide              X                          X
                    information calculated in accordance with the
                    terms specified in the transaction agreements;
                    (C) are filed with the Commission as required by
                    its rules and regulations; and (D) agree with
                    investors' or the trustee's records as to the
                    total unpaid principal balance and number of
                    Pool Assets serviced by the Servicer.

1122(d)(3)(ii)      Amounts due to investors are allocated and
                    remitted in accordance with timeframes,
                    distribution priority and other terms                          X                          X
                    set forth in the transaction agreements.

1122(d)(3)(iii)     Disbursements made to an investor are posted
                    within two business days to the Servicer's
                    investor records, or such other number of                      X                          X
                    days specified in the transaction agreements.

1122(d)(3)(iv)      Amounts remitted to investors per the
                    investor reports agree with cancelled
                    checks, or other form of payment, or                           X                          X
                    custodial bank statements.

                    POOL ASSET ADMINISTRATION

1122(d)(4)(i)       Collateral or security on pool assets is
                    maintained as required by the transaction
                    agreements or related pool asset documents.

1122(d)(4)(ii)      Pool assets and related documents are
                    safeguarded as required by the transaction
                    agreements

1122(d)(4)(iii)     Any additions, removals or substitutions to the
                    asset pool are made, reviewed and approved in
                    accordance with any conditions or requirements
                    in the transaction agreements.
</TABLE>

                                       K-2
<PAGE>

<TABLE>
<CAPTION>
REG AB REFERENCE                  SERVICING CRITERIA                     SECURITIES ADMINISTRATOR     MASTER SERVICER
----------------    ------------------------------------------------     ------------------------     ---------------
<S>                 <C>                                                  <C>                          <C>
1122(d)(4)(iv)      Payments on pool assets, including any payoffs,
                    made in accordance with the related pool asset
                    documents are posted to the Servicer's obligor
                    records maintained no more than two business
                    days after receipt, or such other number of days
                    specified in the transaction agreements, and
                    allocated to principal, interest or other items
                    (e.g., escrow) in accordance with the related
                    pool asset documents.

1122(d)(4)(v)       The Servicer's records regarding the pool
                    assets agree with the Servicer's records
                    with respect to an obligor's unpaid
                    principal balance.

1122(d)(4)(vi)      Changes with respect to the terms or status of
                    an obligor's pool assets (e.g., loan
                    modifications or re-agings) are made, reviewed
                    and approved by authorized personnel in
                    accordance with the transaction agreements and
                    related pool asset documents.

1122(d)(4)(vii)     Loss mitigation or recovery actions (e.g.,
                    forbearance plans, modifications and deeds in
                    lieu of foreclosure, foreclosures and
                    repossessions, as applicable) are initiated,
                    conducted and concluded in accordance with the
                    timeframes or other requirements established by
                    the transaction agreements.

1122(d)(4)(viii)    Records documenting collection efforts are
                    maintained during the period a pool asset is
                    delinquent in accordance with the transaction
                    agreements. Such records are maintained on at
                    least a monthly basis, or such other period
                    specified in the transaction agreements, and
                    describe the entity's activities in monitoring
                    delinquent pool assets including, for example,
                    phone calls, letters and payment rescheduling
                    plans in cases where delinquency is deemed
                    temporary (e.g., illness or unemployment).

1122(d)(4)(ix)      Adjustments to interest rates or rates of
                    return for pool assets with variable rates
                    are computed based on the related pool
                    asset documents.

1122(d)(4)(x)       Regarding any funds held in trust for an obligor
                    (such as escrow accounts): (A) such funds are
                    analyzed, in accordance with the obligor's pool
                    asset documents, on at least an annual basis, or
                    such other period specified in the transaction
                    agreements; (B) interest on such funds is paid,
                    or credited, to obligors in accordance with
                    applicable pool asset documents and state laws;
                    and (C) such funds are returned to the obligor
                    within 30 calendar days of full repayment of the
                    related pool assets, or such other number of
                    days specified in the transaction agreements.

1122(d)(4)(xi)      Payments made on behalf of an obligor (such as
                    tax or insurance payments) are made on or before
                    the related penalty or expiration dates, as
                    indicated on the appropriate bills or notices
                    for such payments, provided that such support
                    has been received by the servicer at least 30
                    calendar days prior to these dates, or such
                    other number of days specified in the
                    transaction agreements.

1122(d)(4)(xii)     Any late payment penalties in connection with
                    any payment to be made on behalf of an obligor
                    are paid from the Servicer's funds and not
                    charged to the obligor, unless the late payment
                    was due to the obligor's error or omission.
</TABLE>

                                       K-3
<PAGE>

<TABLE>
<CAPTION>
REG AB REFERENCE                  SERVICING CRITERIA                     SECURITIES ADMINISTRATOR     MASTER SERVICER
----------------    ------------------------------------------------     ------------------------     ---------------
<S>                 <C>                                                  <C>                          <C>
1122(d)(4)(xiii)    Disbursements made on behalf of an obligor are
                    posted within two business days to the obligor's
                    records maintained by the servicer, or such
                    other number of days specified in the
                    transaction agreements.

1122(d)(4)(xiv)     Delinquencies, charge-offs and uncollectible
                    accounts are recognized and recorded in                                                   X
                    accordance with the transaction agreements.

1122(d)(4)(xv)      Any external enhancement or other support,
                    identified in Item 1114(a)(1) through (3) or
                    Item 1115 of Regulation AB, is maintained as set
                    forth in the transaction agreements.
</TABLE>

                                       K-4
<PAGE>

                                    EXHIBIT L

                          SARBANES-OXLEY CERTIFICATION

                                     [DATE]

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

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045

Re:   Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1

            I, [identify the certifying individual], certify that:

            1. I have reviewed the report on Form 10-K and all reports on Form
10-D required to be filed in respect of the period covered by this report on
Form 10-K of Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1 (the
"Exchange Act periodic reports");

            2. Based on my knowledge, the Exchange Act periodic reports, taken
as a whole, do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this report;

            3. Based on my knowledge, all of the distribution, servicing and
other information required to be provided under Form 10-D for the period covered
by this report is included in the Exchange Act periodic reports;

            4. [I am responsible for reviewing the activities performed by the
servicer(s) and based on my knowledge and the compliance review(s) conducted in
preparing the servicer compliance statement(s) required in this report under
Item 1123 of Regulation AB, and except as disclosed in the Exchange Act periodic
reports, the servicer(s) [has/have] fulfilled [its/their] obligations under the
servicing agreement(s) in all material respects; and]

            5. All of the reports on assessment of compliance with servicing
criteria for ABS and their related attestation reports on assessment of
compliance with servicing criteria for asset-backed securities required to be
included in this report in accordance with Item 1122 of Regulation AB and
Exchange Act Rules 13a-18 and 15d-18 have been included as an exhibit to this
report, except as otherwise disclosed in this report. Any material instances of
noncompliance described in such reports have been disclosed in this report on
Form 10-K.

                                       L-1
<PAGE>

            [In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties [name of
servicer, sub-servicer, co-servicer, depositor or trustee].]

            Date:

                                      ________________________
                                      [Signature]
                                      [Title]

                                       L-2
<PAGE>

                                    EXHIBIT M

                  FORM OF BACK-UP SARBANES-OXLEY CERTIFICATION

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

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045

Re:   Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1

            [_______], the [_______] of [_______] (the "Company") hereby
certifies to the Depositor, the Master Servicer and the Securities
Administrator, and each of their officers, directors and affiliates that:

            (1) I have reviewed [the servicer compliance statement of the
Company provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"),] the report on assessment of the Company's compliance with the
Servicing Criteria set forth in Item 1122(d) of Regulation AB (the "Servicing
Criteria"), provided in accordance with Rules 13a-18 and 15d-18 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Item 1122
of Regulation AB (the "Servicing Assessment"), the registered public accounting
firm's attestation report provided in accordance with Rules 13a-18 and 15d-18
under the Exchange Act and Section 1122(b) of Regulation AB (the "Attestation
Report"), and all servicing reports, officer's certificates and other
information relating to the servicing of the Mortgage Loans by the Company
during 200[ ] that were delivered by the Company to any of the Depositor, the
Master Servicer and the Trustee pursuant to the Agreement (collectively, the
"Company Servicing Information");

            (2) Based on my knowledge, the Company Servicing Information, taken
as a whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Company Servicing Information;

            (3) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been provided to
the Depositor, the Master Servicer and the Securities Administrator;

            (4) I am responsible for reviewing the activities performed by
[_______] as [_______] under the [_______] (the "Agreement"), and based on my
knowledge [and the compliance review conducted in preparing the Compliance
Statement] and except as disclosed in [the Compliance Statement,] the Servicing
Assessment or the Attestation Report, the Company has fulfilled its obligations
under the Agreement in all material respects; and

                                       M-1
<PAGE>

            (5) [The Compliance Statement required to be delivered by the
Company pursuant to the Agreement, and] [The] [the] Servicing Assessment and
Attestation Report required to be provided by the Company and [by any
Subservicer or Subcontractor] pursuant to the Agreement, have been provided to
the Depositor, the Master Servicer and the Securities Administrator. Any
material instances of noncompliance described in such reports have been
disclosed to the Depositor, the Master Servicer and the Securities
Administrator. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.

            Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated as of February 1,
2007, among Merrill Lynch Mortgage Investors, Inc., as depositor (the
"Depositor"), Wells Fargo Bank, N.A., as master servicer (in such capacity, the
"Master Servicer") and securities administrator (in such capacity, the
"Securities Administrator"), Wilshire Credit Corporation, as servicer, Central
Mortgage Company, as servicer (collectively, the "Servicers") and HSBC Bank USA,
National Association, as trustee (the "Trustee").

                                  [_________]
                                  as [       ]

                                  By:
                                      Name:
                                      Title:
                                      Date:

                                       M-2
<PAGE>

                                    EXHIBIT N

                            FORM OF CORRIDOR CONTRACT

[BEAR STEARNS LOGO]
                                            BEAR STEARNS FINANCIAL PRODUCTS INC.
                                                              383 MADISON AVENUE
                                                        NEW YORK, NEW YORK 10179
                                                                    212-272-4009

                                    EXHIBIT B

DATE:                 March 9, 2007

TO:                   Wells Fargo Bank, N.A., not in its individual capacity,
                      but solely as Supplemental Interest Trust Trustee on
                      behalf of the Supplemental Interest Trust with respect
                      to Merrill Lynch Alternative Note Asset, Series
                      2007-OAR1
ATTENTION:            Client Manager - MANA 2007-OAR1
TELEPHONE:            410-884-2000
FACSIMILE:            410-715-2380

FROM:                 Derivatives Documentation
TELEPHONE:            212-272-2711
FACSIMILE:            212-272-9857

SUBJECT:                 Fixed Income Derivatives Confirmation

REFERENCE NUMBER(S):  FXNEC9279

The purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into on the Trade Date specified below (the
"Transaction") between Bear Stearns Financial Products Inc. ("BSFP") and Wells
Fargo Bank, N.A., not in its individual capacity, but solely as Supplemental
Interest Trust Trustee on behalf of the Supplemental Interest Trust with respect
to Merrill Lynch Alternative Note Asset, Series 2007-OAR1 ("Counterparty"). This
letter agreement constitutes the sole and complete "Confirmation," as referred
to in the Master Agreement specified below, with respect to this Transaction.

1. This Confirmation is subject to and incorporates the 2000 ISDA Definitions
   (the "Definitions"), as published by the International Swaps and
   Derivatives Association, Inc. ("ISDA"). This Confirmation supplements,
   forms a part of and is subject to the ISDA Master Agreement dated as of
   March 9, 2007 between BSFP and Counterparty (the agreement, as amended and

                                       N-1
<PAGE>

   supplemented from time to time, being referred to herein as the "Master
   Agreement"). All provisions contained in, or incorporated by reference to,
   the Master Agreement shall govern the Transaction referenced in this
   Confirmation except as expressly modified herein. In the event of any
   inconsistency between this Confirmation and the Definitions or Master
   Agreement, this Confirmation shall prevail.

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

   Type of Transaction:               Rate Cap

   Notional Amount:                   With respect to any Calculation Period,
                                      the lesser of (i) the applicable Notional
                                      Amount for the Distribution Date specified
                                      in Schedule I attached hereto and (ii) the
                                      aggregate Certificate Principal Balance of
                                      the Certificates immediately prior to the
                                      related Floating Rate Payer Payment Date.

   Trade Date:                        March 9, 2007

   Effective Date:                    February 23, 2007

   Termination Date:                  August 25, 2007, subject to adjustment in
                                      accordance with the Business Day
                                      Convention.

   FIXED AMOUNTS (PREMIUM):           Inapplicable. Premium has been paid under
                                      the Old Transaction.

   FLOATING AMOUNTS:

      Floating Rate Payer:            BSFP

      Cap Rate:                       With respect to any Calculation Period,
                                      the rate set forth for such period as
                                      detailed in Schedule I attached hereto.

      Floating Rate Payer
      Period                          End Dates: The 25th calendar day of each
                                      month during the Term of this Transaction,
                                      commencing March 25, 2007 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 Dates shall be
                                      one Business Day preceding each Floating
                                      Rate Payer Period End Date.

      Floating Rate for initial
      Calculation Period:             To be determined.

                                       N-2
<PAGE>

      Floating Rate Option:           USD-LIBOR-BBA; provided, however,
                                      that if the Floating Rate Option for
                                      any Calculation Period is greater
                                      than 10.26100% then the Floating
                                      Rate Option for such Calculation
                                      Period shall be deemed to be
                                      10.26100%.

      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

   Business Day Convention:           Modified Following

   Calculation Agent:                 BSFP

Merrill Lynch Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the Supplemental Interest Trust Trustee, whereupon such Supplemental Interest
Trust Trustee will promptly remit such amounts to BSFP. MLML further agrees to
provide notice to BSFP upon any remittance to the Supplemental Interest Trust
Trustee; such delivery will be made to:

      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

   NEITHER THE BEAR STEARNS COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
   THE BEAR STEARNS COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
   SUPPORT PROVIDER ON THIS TRANSACTION.

3. Account Details and
   Settlement Information:    PAYMENTS TO BSFP:

                                       N-3
<PAGE>

                              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 COUNTERPARTY:

                              Wells Fargo Bank, N.A.
                              San Francisco, California
                              ABA#: 121-000-248
                              Account#: 3970771416
                              Account Name: SAS Clearing
                              FFC#: 50995403; Corridor Contract Account

ADDITIONAL PROVISIONS:

Non-Reliance. Each party represents to the other party that (a) it has not
received and is not relying upon any legal, tax, regulatory, accounting or other
advice (whether written or oral) of the other party regarding this Transaction,
other than representations expressly made by that other party in this
Confirmation and in the Master Agreement and (b) in respect of this Transaction,
(i) it has the capacity to evaluate (internally or through independent
professional advice) this Transaction and has made its own decision to enter
into this Transaction and (ii) it understands the terms, conditions and risks of
this Transaction and is willing to assume (financially and otherwise) those
risks. Counterparty acknowledges that BSFP has advised Counterparty to consult
its own tax, accounting and legal advisors in connection with this Transaction
evidenced by this Confirmation and that the Counterparty has done so.

                                       N-4
<PAGE>

                                   SCHEDULE I
(all such dates subject to adjustment in accordance with the Business Day
Convention)

<TABLE>
<CAPTION>
                                          NOTIONAL AMOUNT    CAP RATE
FROM AND INCLUDING    TO BUT EXCLUDING         (USD)           (%)
------------------    ----------------    ---------------    --------
<S>                   <C>                 <C>                <C>
  Effective Date          26-Mar-07       431,163,000.00     10.261%
    26-Mar-07             25-Apr-07       422,069,908.00      6.476%
    25-Apr-07             25-May-07       413,166,917.00      6.826%
    25-May-07             25-Jun-07       404,496,579.00      6.600%
    25-Jun-07             25-Jul-07       396,010,510.00      6.829%
    25-Jul-07         Termination Date    387,704,710.00      6.602%
</TABLE>

                                       N-5
<PAGE>

                                    EXHIBIT O

                       ADDITIONAL DISCLOSURE NOTIFICATION

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

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045

RE:   Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1
      **Additional Form [10-D][10-K][8-K] Disclosure** Required

Ladies and Gentlemen:

            In accordance with Section 3.18(b) of the Pooling and Servicing
Agreement, dated as of February 1, 2007, among Merrill Lynch Mortgage Investors,
Inc., as depositor, Wells Fargo Bank, N.A., as master servicer and securities
administrator, Wilshire Credit Corporation, as servicer, Central Mortgage
Company, as servicer, and HSBC Bank USA, National Association, as trustee, the
undersigned, as [ ], hereby notifies you that certain events have come to our
attention that [will] [may] need to be disclosed on Form [10-D][10-K][8-K].

Description of Additional Form [10-D][10-K][8-K] Disclosure:

List of any Attachments hereto to be included in the Additional Form
[10-D][10-K][8-K] Disclosure:

      Any inquiries related to this notification should be directed to [    ],
phone number: [    ]; email address: [    ].

                                             [NAME OF PARTY],
                                             as [role]

                                             By:
                                                 ____________________________
                                                 Name:
                                                 Title:

                                      O-1
<PAGE>

                                    EXHIBIT P

                   FORM OF ITEM 1123 CERTIFICATION OF SERVICER

                                     [DATE]

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

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045

Re:   Merrill Lynch Alternative Note Asset Trust, Series 2007-OAR1 Mortgage
      Pass-Through Certificates

I, [identify name of certifying individual], [title of certifying individual] of
[name of servicing company] (the "Servicer"), hereby certify that:

            (1) A review of the activities of the Servicer during the preceding
calendar year and of the performance of the Servicer under the Pooling and
Servicing Agreement (the "Servicing Agreement") has been made under my
supervision; and

            (2) To the best of my knowledge, based on such review, the Servicer
has fulfilled all its obligations under the Servicing Agreement in all material
respects throughout such year or a portion thereof[, or, if there has been a
failure to fulfill any such obligation in any material respect, I have specified
below each such failure known to me and the nature and status thereof].

Date:

                                [Servicer]

                                By:
                                   ____________________________________________
                                Name:
                                     __________________________________________
                                Title:
                                     _________________________________________ _

                                       P-1
<PAGE>

                                   EXHIBIT Q-1

                         ADDITIONAL FORM 10-D DISCLOSURE
<TABLE>
<CAPTION>
                                        ADDITIONAL FORM 10-D DISCLOSURE
                                        -------------------------------
                   ITEM ON FORM 10-D                                      PARTY RESPONSIBLE
                   -----------------                                      -----------------
<S>                                                              <C>
 ITEM 1: DISTRIBUTION AND POOL PERFORMANCE INFORMATION

     Information included in the [Monthly Statement]             Master Servicer Servicer Securities
                                                                           Administrator

 Any information required by 1121 which is NOT included                       Depositor
             on the [Monthly Statement]

   ITEM 2: LEGAL PROCEEDINGS

Any legal proceeding pending against the following
entities or their respective property, that is material
to Certificateholders, including any proceeding known
to be contemplated by governmental authorities:

- Issuing Entity (Trust Fund)                                   Trustee, Master Servicer, Securities
                                                                     Administrator andDepositor

- Sponsor (Seller)                                              Seller (if a party to the Pooling and
                                                                  Servicing Agreement) or Depositor

- Depositor                                                                  Depositor

- Trustee                                                                    Trustee

- Securities Administrator                                             Securities Administrator

- Master Servicer                                                           Master Servicer

- Custodian                                                                   Custodian

- 1110(b) Originator                                                          Depositor

- Any 1108(a)(2) Servicer (other than the Master                              Servicer
  Servicer or Securities Administrator)

- Any other party contemplated by 1100(d)(1)                                  Depositor

     ITEM 3: SALE OF SECURITIES AND USE OF PROCEEDS                           Depositor

Information from Item 2(a) of Part II of Form 10-Q:

With respect to any sale of securities by the sponsor,
depositor or issuing entity, that are backed by the same
asset pool or are otherwise issued by the issuing entity,
whether or not registered, provide the sales and use of
proceeds information in Item 701 of Regulation S-K.
Pricing information can be omitted if securities were not
registered.
</TABLE>

                                     Q-1-1
<PAGE>

<TABLE>
<CAPTION>
                                       ADDITIONAL FORM 10-D DISCLOSURE
                                       -------------------------------
                   ITEM ON FORM 10-D                                      PARTY RESPONSIBLE
                   -----------------                                      -----------------
<S>                                                               <C>
         ITEM 4: DEFAULTS UPON SENIOR SECURITIES                  Securities Administrator Trustee

Information from Item 3 of Part II of Form 10-Q:

Report the occurrence of any Event of Default (after
expiration of any grace period and provision of any
required notice)

   ITEM 5: SUBMISSION OF MATTERS TO A VOTE OF SECURITY            Securities Administrator Trustee
                         HOLDERS

Information from Item 4 of Part II of Form 10-Q

     ITEM 6: SIGNIFICANT OBLIGORS OF POOL ASSETS                             Depositor

Item 1112(b) - Significant Obligor Financial Information*

*This information need only be reported on the Form 10-D
 for the distribution period in which updated information
 is required pursuant to the Item.

  ITEM 7: SIGNIFICANT ENHANCEMENT PROVIDER INFORMATION

Item 1114(b)(2) - Credit Enhancement Provider Financial
Information*

- Determining applicable disclosure threshold                                 Depositor

- Requesting required financial information (including                        Depositor
  any required accountants' consent to the use thereof)
  or effecting incorporation by reference

    Item 1115(b) - Derivative Counterparty Financial
                    Information*

- Determining current maximum probable exposure                               Depositor

- Determining current significance percentage                                 Depositor

- Requesting required financial information (including                        Depositor
  any required accountants' consent to the use thereof)
  or effecting incorporation by reference

*This information need only be reported on the Form 10-D
 for the distribution period in which updated
 informationis required pursuant to the Items.
</TABLE>

                                     Q-1-2
<PAGE>

<TABLE>
<CAPTION>
                                       ADDITIONAL FORM 10-D DISCLOSURE
                                       -------------------------------
                   ITEM ON FORM 10-D                                      PARTY RESPONSIBLE
                   -----------------                                      -----------------
<S>                                                              <C>
                ITEM 8: OTHER INFORMATION                           Any party responsible for the
                                                                 applicable Form 8-K Disclosure item

Disclose any information required to be reported on Form
8-K during the period covered by the Form 10-D but not
reported

                    ITEM 9: EXHIBITS

         Monthly Statement to Certificateholders                      Securities Administrator

Exhibits required by Item 601 of Regulation S-K, such as                      Depositor
                   material agreements
</TABLE>

                                     Q-1-3
<PAGE>

                                   EXHIBIT Q-2

                         ADDITIONAL FORM 10-K DISCLOSURE
<TABLE>
<CAPTION>
                                       ADDITIONAL FORM 10-K DISCLOSURE
                                       -------------------------------
                   ITEM ON FORM 10-K                                      PARTY RESPONSIBLE
                   -----------------                                      -----------------
<S>                                                              <C>
           ITEM 1B: UNRESOLVED STAFF COMMENTS                                 Depositor

               ITEM 9B: OTHER INFORMATION                        Any party responsible for disclosure
                                                                         items on Form 8-K

Disclose any information required to be reported on Form
8-K during the fourth quarter covered by the Form 10-K
but not reported

          ITEM 15: EXHIBITS, FINANCIAL STATEMENT                      Securities Administrator
                         SCHEDULES                                            Depositor

REG AB ITEM 1112(b): SIGNIFICANT OBLIGORS OF POOL ASSETS

Significant Obligor Financial Information*                                    Depositor

*This information need only be reported on the Form 10-K
 if updated information is required pursuant to the Item.

   REG AB ITEM 1114(b)(2): CREDIT ENHANCEMENT PROVIDER
                  FINANCIAL INFORMATION

- Determining applicable disclosure threshold                                Depositor

- Requesting required financial information (including                       Depositor
  any required accountants' consent to the use thereof)
  or effecting incorporation by reference

 *This information need only be reported on the Form 10-K
  if updated information is required pursuant to the Item.

 REG AB ITEM 1115(b): DERIVATIVE COUNTERPARTY FINANCIAL
                       INFORMATION

- Determining current maximum probable exposure                               Depositor

- Determining current significance percentage                                 Depositor

- Requesting required financial information (including                        Depositor
  any required accountants' consent to the use thereof)
  or effecting incorporation by reference

*This information need only be reported on the Form 10-K
 if updated information is required pursuant to the Item.

           REG AB ITEM 1117: LEGAL PROCEEDINGS

Any legal proceeding pending against the following
entities or their respective property, that is material
to Certificateholders, including any proceeding known to
be contemplated by governmental authorities:
</TABLE>

                                     Q-2-1
<PAGE>

<TABLE>
<CAPTION>
                                        ADDITIONAL FORM 10-K DISCLOSURE
                                        -------------------------------
                   ITEM ON FORM 10-K                                      PARTY RESPONSIBLE
                   -----------------                                      -----------------
<S>                                                            <C>
- Issuing Entity (Trust Fund)                                   Trustee, Master Servicer, Securities
                                                                    Administrator and Depositor

- Sponsor (Seller)                                              Seller (if a party to the Pooling and
                                                                  Servicing Agreement) or Depositor

- Depositor                                                                   Depositor

- Trustee                                                                     Trustee

- Securities Administrator                                             Securities Administrator

- Master Servicer                                                          Master Servicer

- Custodian                                                                   Custodian

- 1110(b) Originator                                                          Depositor

- Any 1108(a)(2) Servicer (other than the Master                              Servicer
  Servicer or Securities Administrator)

- Any other party contemplated by 1100(d)(1)                                  Depositor

  REG AB ITEM 1119: AFFILIATIONS AND RELATIONSHIPS

Whether (a) the Sponsor (Seller), Depositor or Issuing                       Depositor as
to (a) Entity is an affiliate of the following parties,                 Sponsor/Seller as to (a)
and (b) to the extent known and material, any of the
following parties are affiliated with one another:

- Master Servicer                                                          Master Servicer

- Securities Administrator                                              Securities Administrator

- Trustee                                                                     Trustee

- Any other 1108(a)(3) servicer                                               Servicer

- Any 1110 Originator                                                     Depositor/Sponsor

- Any 1112(b) Significant Obligor                                         Depositor/Sponsor

- Any 1114 Credit Enhancement Provider                                    Depositor/Sponsor

- Any 1115 Derivate Counterparty Provider                                 Depositor/Sponsor

- Any other 1101(d)(1) material party                                     Depositor/Sponsor

Whether there are any "outside the ordinary course                        Depositor as to (a)
business arrangements" other than would be obtained in                  Sponsor/Seller as to (a)
an arm's length transaction between (a) the Sponsor
(Seller), Depositor or Issuing Entity on the one hand,
and (b) any of the following parties (or their
affiliates) on the other hand, that exist currently or
within the past two years and that are material to a
Certificateholder's understanding of the Certificates:

- Master Servicer                                                         Master Servicer

- Securities Administrator                                             Securities Administrator

- Trustee                                                                     Depositor

- Any other 1108(a)(3) servicer                                               Servicer

- Any 1110 Originator                                                     Depositor/Sponsor

- Any 1112(b) Significant Obligor                                         Depositor/Sponsor
</TABLE>

                                     Q-2-2
<PAGE>

<TABLE>
<CAPTION>
                                       ADDITIONAL FORM 10-K DISCLOSURE
                                       -------------------------------
                   ITEM ON FORM 10-K                                      PARTY RESPONSIBLE
                   -----------------                                      -----------------
<S>                                                                    <C>
- Any 1114 Credit Enhancement Provider                                    Depositor/Sponsor

- Any 1115 Derivate Counterparty Provider                                 Depositor/Sponsor

- Any other 1101(d)(1) material party                                     Depositor/Sponsor

Whether there are any specific relationships involving                    Depositor as to (a)
the transaction or the pool assets between (a) the                     Sponsor/Seller as to (a)
Sponsor (Seller), Depositor or Issuing Entity on the one
hand, and (b) any of the following parties (or their
affiliates) on the other hand, that exist currently or
within the past two years and that are material:

- Master Servicer                                                         Master Servicer

- Securities Administrator                                             Securities Administrator

- Trustee                                                                     Depositor

- Any other 1108(a)(3) servicer                                               Servicer

- Any 1110 Originator                                                     Depositor/Sponsor

- Any 1112(b) Significant Obligor                                         Depositor/Sponsor

- Any 1114 Credit Enhancement Provider                                    Depositor/Sponsor

- Any 1115 Derivate Counterparty Provider                                 Depositor/Sponsor

- Any other 1101(d)(1) material party                                     Depositor/Sponsor
</TABLE>

                                     Q-2-3
<PAGE>

                                   EXHIBIT Q-3

                         FORM 8-K DISCLOSURE INFORMATION
<TABLE>
<CAPTION>
                                        FORM 8-K DISCLOSURE INFORMATION
                                        -------------------------------
                    ITEM ON FORM 8-K                                       PARTY RESPONSIBLE
                    -----------------                                      -----------------
<S>                                                                   <C>
  ITEM 1.01- ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT                       All parties

Disclosure is required regarding entry into or amendment
of any definitive agreement that is material to the
securitization, even if depositor is not a party.

Examples: servicing agreement, custodial agreement.

Note: disclosure not required as to definitive
agreements that are fully disclosed in the prospectus

ITEM 1.02- TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT                     All parties

Disclosure is required regarding termination of any
definitive agreement that is material to the
securitization (other than expiration in accordance with
its terms), even if depositor is not a party.

Examples: servicing agreement, custodial agreement.

          ITEM 1.03- BANKRUPTCY OR RECEIVERSHIP                               Depositor

Disclosure is required regarding the bankruptcy or
receivership, with respect to any of the following:

- Sponsor (Seller)                                                    Depositor/Sponsor (Seller)

- Depositor                                                                   Depositor

- Master Servicer                                                          Master Servicer

- Affiliated Servicer                                                         Servicer

- Other Servicer servicing 20% or more of the pool                            Servicer
  assets at the time of the report

- Other material servicers                                                    Servicer

- Trustee                                                                     Trustee

- Securities Administrator                                             Securities Administrator

- Significant Obligor                                                         Depositor

- Credit Enhancer (10% or more)                                               Depositor

- Derivative Counterparty                                                     Depositor
</TABLE>

                                     Q-3-1
<PAGE>

<TABLE>
<CAPTION>
                                        FORM 8-K DISCLOSURE INFORMATION
                                        -------------------------------
                    ITEM ON FORM 8-K                                       PARTY RESPONSIBLE
                    -----------------                                      -----------------
<S>                                                               <C>
- Custodian                                                                   Custodian

ITEM 2.04- TRIGGERING EVENTS THAT ACCELERATE OR INCREASE                      Depositor
 A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN                    Master Servicer
              OFF-BALANCE SHEET ARRANGEMENT                            Securities Administrator

Includes an early amortization, performance trigger or
other event, including event of default, that would
materially alter the payment priority/distribution of
cash flows/amortization schedule.

Disclosure will be made of events other than waterfall
triggers which are disclosed in the monthly statements to
the certificateholders.

 ITEM 3.03- MATERIAL MODIFICATION TO RIGHTS OF SECURITY                Securities Administrator
                         HOLDERS                                              Trustee
                                                                              Depositor

Disclosure is required of any material modification to
documents defining the rights of Certificateholders,
including the Pooling and Servicing Agreement.

  ITEM 5.03- AMENDMENTS OF ARTICLES OF INCORPORATION OR                       Depositor
              BYLAWS; CHANGE OF FISCAL YEAR

Disclosure is required of any amendment "to the governing
documents of the issuing entity".

 ITEM 6.01- ABS INFORMATIONAL AND COMPUTATIONAL MATERIAL                      Depositor

ITEM 6.02- CHANGE OF SERVICER OR SECURITIES ADMINISTRATOR            Master Servicer/Securities
                                                                      Administrator/Depositor/
                                                                          Servicer/Trustee

Requires disclosure of any removal, replacement,
substitution or addition of any master servicer,
affiliated servicer, other servicer servicing 10% or more
of pool assets at time of report, other material
servicers or trustee.

Reg AB disclosure about any new servicer or master                Servicer/Master Servicer/Depositor
servicer is also required.

Reg AB disclosure about any new Trustee is also required.                     Trustee

   ITEM 6.03- CHANGE IN CREDIT ENHANCEMENT OR EXTERNAL            Depositor/Securities Administrator
                         SUPPORT

Covers termination of any enhancement in manner other
than by its terms, the addition of an enhancement, or a
material change in the
</TABLE>

                                     Q-3-2
<PAGE>

<TABLE>
<CAPTION>
                                        FORM 8-K DISCLOSURE INFORMATION
                                        -------------------------------
                    ITEM ON FORM 8-K                                       PARTY RESPONSIBLE
                    -----------------                                      -----------------
<S>                                                             <C>
enhancement provided.Applies to external credit
enhancements as well as derivatives.

Reg AB disclosure about any new enhancement provider is                       Depositor
also required.

   ITEM 6.04- FAILURE TO MAKE A REQUIRED DISTRIBUTION                 Securities Administrator
                                                                              Trustee

      ITEM 6.05- SECURITIES ACT UPDATING DISCLOSURE                           Depositor

If any material pool characteristic differs by 5% or more
at the time of issuance of the securities from the
description in the final prospectus, provide updated Reg
AB disclosure about the actual asset pool.

If there are any new servicers or originators required                        Depositor
to be disclosed under Regulation AB as a result of the
foregoing, provide the information called for in Items
1108 and 1110 respectively.

              ITEM 7.01- REG FD DISCLOSURE                                    All parties

                 ITEM 8.01- OTHER EVENTS                                      Depositor

  Any event, with respect to which information is not
 otherwise called for in Form 8-K, that the registrant
       deems of importance to certificateholders.

      ITEM 9.01- FINANCIAL STATEMENTS AND EXHIBITS                Responsible party for reporting/
                                                                disclosing the financial statement or
                                                                                exhibit
</TABLE>
                                     Q-3-3
<PAGE>

                                    EXHIBIT R

                             FORM OF SWAP AGREEMENT

[BEAR STEARNS LOGO]
                                            BEAR STEARNS FINANCIAL PRODUCTS INC.
                                                              383 MADISON AVENUE
                                                        NEW YORK, NEW YORK 10179
                                                                    212-272-4009

                                    EXHIBIT A

DATE:                      March 9, 2007

TO:                        Wells Fargo Bank, N.A., not in its individual
                           capacity, but solely as Supplemental Interest Trust
                           Trustee on behalf of the Supplemental Interest Trust
                           with respect to Merrill Lynch Alternative Note
                           Asset, Series 2007-OAR1
ATTENTION:                 Client Manager - MANA 2007-OAR1
TELEPHONE:                 410-884-2000
FACSIMILE:                 410-715-2380

FROM:                      Derivatives Documentation
TELEPHONE:                 212-272-2711
FACSIMILE:                 212-272-9857

SUBJECT:                      Fixed Income Derivatives Confirmation

REFERENCE NUMBER(S):       FXNCC9278

The purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into on the Trade Date specified below (the
"Transaction") between Bear Stearns Financial Products Inc. ("BSFP") and Wells
Fargo Bank, N.A., not in its individual capacity, but solely as Supplemental
Interest Trust Trustee for the Supplemental Interest Trust with respect to
Merrill Lynch Alternative Note Asset, Series 2007-OAR1 ("Counterparty"). This
letter agreement constitutes the sole and complete "Confirmation," as referred
to in the Master Agreement specified below, with respect to this Transaction.

2.    This Confirmation is subject to and incorporates the 2000 ISDA Definitions
      (the "Definitions"), as published by the International Swaps and
      Derivatives Association, Inc. ("ISDA"). This Confirmation supplements,
      forms a part of and is subject to the ISDA Master Agreement dated as of
      March 9, 2007 between BSFP and Counterparty (the agreement, as amended and
      supplemented from time to time, being referred to herein as the "Master
      Agreement"). All provisions contained in, or incorporated by reference to,
      the Master Agreement shall govern the Transaction referenced in this
      Confirmation except as expressly modified herein. In the event of

                                       R-1

<PAGE>

      any inconsistency between this Confirmation and the Definitions or
      Master Agreement, this Confirmation shall prevail.

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

      Type of Transaction:                  Rate Cap

      Notional Amount:                      With respect to any Calculation
                                            Period, the lesser of (i) the
                                            applicable Notional Amount for the
                                            Distribution Date specified in
                                            Schedule I attached hereto and (ii)
                                            the excess if any, of (A) the
                                            aggregate Certificate Principal
                                            Balance for the related Distribution
                                            Date over (B) the Notional Amount
                                            for the Transaction with BSFP's
                                            reference number FXNEC9287 for the
                                            related Distribution Date, if
                                            USD-LIBOR-BBA with a Designated
                                            Maturity of one month
                                            exceeds 6.00%.

      Trade Date:                           March 9, 2007

      Effective Date:                       August 25, 2007

      Termination Date:                     February 25, 2012, subject to
                                            adjustment in accordance with the
                                            Business Day Convention.

      FIXED AMOUNTS (PREMIUM):              Inapplicable. Premium has been paid
                                            under the Old Transaction.

      FLOATING AMOUNTS:

              Floating Rate Payer:          BSFP

              Cap Rate:                     6.00000%

              Floating Rate Payer
              Period End Dates:             The 25th calendar day of each month
                                            during the Term of this Transaction,
                                            commencing September 25, 2007 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
                                            Dates shall be one Business Day
                                            preceding each Floating Rate Payer
                                            Period End Date.

              Floating Rate for initial
              Calculation Period:           To be determined.

                                      R-2

<PAGE>

              Floating Rate Option:         USD-LIBOR-BBA

              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

       Business Day Convention:             Modified Following

       Calculation Agent:                   BSFP

Merrill Lynch Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the Supplemental Interest Trust Trustee, whereupon such Supplemental Interest
Trust Trustee will promptly remit such amounts to BSFP. MLML further agrees to
provide notice to BSFP upon any remittance to the Supplemental Interest Trust
Trustee; such delivery will be made to:

                  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

      NEITHER THE BEAR STEARNS COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
      THE BEAR STEARNS COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
      SUPPORT PROVIDER ON THIS TRANSACTION.

3.    Account Details and
      Settlement Information:              PAYMENTS TO BSFP:

                                           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

                                      R-3

<PAGE>

                                           Bear Stearns Financial Products Inc.
                                           Sub-account Number: 102-04654-1-3
                                           Attention: Derivatives Department

                                           PAYMENTS TO COUNTERPARTY:

                                           Wells Fargo Bank, N.A.
                                           San Francisco, California
                                           ABA#: 121-000-248
                                           Account#: 3970771416
                                           Account Name: SAS Clearing
                                           FFC#: 50995402; Cap Contract Account

ADDITIONAL PROVISIONS:

Non-Reliance. Each party represents to the other party that (a) it has not
received and is not relying upon any legal, tax, regulatory,accounting or other
advice (whether written or oral) of the other party regarding this Transaction,
other than representations expressly made by that other party in this
Confirmation and in the Master Agreement and (b) in respect of this Transaction,
(i) it has the capacity to evaluate (internally or through independent
professional advice) this Transaction and has made its own decision to enter
into this Transaction and (ii) it understands the terms, conditions and risks of
this Transaction and is willing to assume (financially and otherwise) those
risks. Counterparty acknowledges that BSFP has advised Counterparty to consult
its own tax, accounting and legal advisors in connection with this Transaction
evidenced by this Confirmation and that the Counterparty has done so.

am

                                      R-4

<PAGE>

                                   SCHEDULE I
(all such dates subject to adjustment in accordance with the Business Day
Convention)

<TABLE>
<CAPTION>
                                              Notional Amount
From and including   To but excluding             (USD)
------------------   ----------------         ---------------
<S>                  <C>                      <C>
Effective Date         25-Sep-2007             9,349,950.00
  25-Sep-2007          25-Oct-2007            11,007,612.00
  25-Oct-2007          26-Nov-2007            12,525,371.00
  26-Nov-2007          26-Dec-2007            14,350,715.00
  26-Dec-2007          25-Jan-2008            16,982,387.00
  25-Jan-2008          25-Feb-2008            19,620,702.00
  25-Feb-2008          25-Mar-2008            22,197,450.00
  25-Mar-2008          25-Apr-2008            24,673,833.00
  25-Apr-2008          27-May-2008            26,969,908.00
  27-May-2008          25-Jun-2008            29,022,097.00
  25-Jun-2008          25-Jul-2008            30,695,154.00
  25-Jul-2008          25-Aug-2008            32,143,333.00
  25-Aug-2008          25-Sep-2008            33,364,294.00
  25-Sep-2008          27-Oct-2008            34,459,815.00
  27-Oct-2008          25-Nov-2008            35,364,950.00
  25-Nov-2008          26-Dec-2008            64,392,332.00
  26-Dec-2008          26-Jan-2009            61,094,312.00
  26-Jan-2009          25-Feb-2009            59,200,211.00
  25-Feb-2009          25-Mar-2009            57,560,670.00
  25-Mar-2009          27-Apr-2009            55,900,236.00
  27-Apr-2009          26-May-2009            56,738,087.00
  26-May-2009          25-Jun-2009            55,114,533.00
  25-Jun-2009          27-Jul-2009            53,448,849.00
  27-Jul-2009          25-Aug-2009            52,052,273.00
  25-Aug-2009          25-Sep-2009            50,821,078.00
  25-Sep-2009          26-Oct-2009            49,799,157.00
  26-Oct-2009          25-Nov-2009            48,324,738.00
  25-Nov-2009          28-Dec-2009            47,230,095.00
  28-Dec-2009          25-Jan-2010            46,381,372.00
  25-Jan-2010          25-Feb-2010            45,664,951.00
  25-Feb-2010          25-Mar-2010            57,109,888.00
  25-Mar-2010          26-Apr-2010            53,295,757.00
  26-Apr-2010          25-May-2010            50,751,976.00
  25-May-2010          25-Jun-2010            48,517,326.00
  25-Jun-2010          26-Jul-2010            46,605,640.00
  26-Jul-2010          25-Aug-2010            45,127,013.00
  25-Aug-2010          27-Sep-2010            43,898,233.00
  27-Sep-2010          25-Oct-2010            42,799,846.00
  25-Oct-2010          26-Nov-2010            41,814,257.00
  26-Nov-2010          27-Dec-2010            40,958,037.00
  27-Dec-2010          25-Jan-2011            40,251,197.00
  25-Jan-2011          25-Feb-2011            39,721,031.00
</TABLE>

                                      R-5

<PAGE>

<TABLE>
<S>                  <C>                      <C>
  25-Feb-2011          25-Mar-2011            39,146,633.00
  25-Mar-2011          25-Apr-2011            38,560,961.00
  25-Apr-2011          25-May-2011            37,945,813.00
  25-May-2011          27-Jun-2011            37,301,578.00
  27-Jun-2011          25-Jul-2011            36,633,837.00
  25-Jul-2011          25-Aug-2011            36,721,414.00
  25-Aug-2011          26-Sep-2011            36,884,965.00
  26-Sep-2011          25-Oct-2011            36,972,840.00
  25-Oct-2011          25-Nov-2011            36,766,033.00
  25-Nov-2011          27-Dec-2011            36,205,240.00
  27-Dec-2011          25-Jan-2012            35,307,095.00
  25-Jan-2012        Termination Date         34,040,680.00
</TABLE>

                                R-6

<PAGE>

                                    EXHIBIT S

                              FORM OF CAP CONTRACT

[BEAR STEARNS LOGO]
                                            BEAR STEARNS FINANCIAL PRODUCTS INC.
                                                              383 MADISON AVENUE
                                                        NEW YORK, NEW YORK 10179
                                                                    212-272-4009

                                    EXHIBIT A

DATE:                      March 9, 2007

TO:                        Wells Fargo Bank, N.A., not in its individual
                           capacity, but solely as Supplemental Interest Trust
                           Trustee on behalf of the Supplemental Interest Trust
                           with respect to Merrill Lynch Alternative Note Asset,
                           Series 2007-OAR1
ATTENTION:                 Client Manager - MANA 2007-OAR1
TELEPHONE:                 410-884-2000
FACSIMILE:                 410-715-2380

FROM:                      Derivatives Documentation
TELEPHONE:                 212-272-2711
FACSIMILE:                 212-272-9857

SUBJECT:                      Fixed Income Derivatives Confirmation

REFERENCE NUMBER(S):       FXNCC9278

The purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into on the Trade Date specified below (the
"Transaction") between Bear Stearns Financial Products Inc. ("BSFP") and Wells
Fargo Bank, N.A., not in its individual capacity, but solely as Supplemental
Interest Trust Trustee for the Supplemental Interest Trust with respect to
Merrill Lynch Alternative Note Asset, Series 2007-OAR1 ("Counterparty"). This
letter agreement constitutes the sole and complete "Confirmation," as referred
to in the Master Agreement specified below, with respect to this Transaction.

3.    This Confirmation is subject to and incorporates the 2000 ISDA Definitions
      (the "Definitions"), as published by the International Swaps and
      Derivatives Association, Inc. ("ISDA"). This Confirmation supplements,
      forms a part of and is subject to the ISDA Master Agreement dated as of
      March 9, 2007 between BSFP and Counterparty (the agreement, as amended and
      supplemented from time to time, being referred to herein as the "Master
      Agreement"). All provisions contained in, or incorporated by reference to,
      the Master Agreement shall govern the

                                      S-1

<PAGE>

      Transaction referenced in this Confirmation except as expressly modified
      herein. In the event of any inconsistency between this Confirmation and
      the Definitions or Master Agreement, this Confirmation shall prevail.

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

     Type of Transaction:                   Rate Cap

     Notional Amount:                       With respect to any Calculation
                                            Period, the lesser of (i) the
                                            applicable Notional Amount for the
                                            Distribution Date specified in
                                            Schedule I attached hereto and (ii)
                                            the excess if any, of (A) the
                                            aggregate Certificate Principal
                                            Balance for the related Distribution
                                            Date over (B) the Notional Amount
                                            for the Transaction with BSFP's
                                            reference number FXNEC9287 for the
                                            related Distribution Date, if
                                            USD-LIBOR-BBA with a Designated
                                            Maturity of one month exceeds 6.00%.

     Trade Date:                            March 9, 2007

     Effective Date:                        August 25, 2007

     Termination Date:                      February 25, 2012, subject to
                                            adjustment in accordance with the
                                            Business Day Convention.

     FIXED AMOUNTS (PREMIUM):               Inapplicable. Premium has been paid
                                            under the Old Transaction.

     FLOATING AMOUNTS:

              Floating Rate Payer:          BSFP

              Cap Rate:                     6.00000%

              Floating Rate Payer
              Period End Dates:             The 25th calendar day of
                                            each month during the Term of this
                                            Transaction, commencing September
                                            25, 2007 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
                                            Dates shall be one Business Day
                                            preceding each Floating Rate Payer
                                            Period End Date.

                                      S-2

<PAGE>

              Floating Rate for initial
              Calculation Period:           To be determined.

              Floating Rate Option:         USD-LIBOR-BBA

              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

       Business Day Convention:             Modified Following

       Calculation Agent:                   BSFP

Merrill Lynch Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the Supplemental Interest Trust Trustee, whereupon such Supplemental Interest
Trust Trustee will promptly remit such amounts to BSFP. MLML further agrees to
provide notice to BSFP upon any remittance to the Supplemental Interest Trust
Trustee; such delivery will be made to:

                  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

     NEITHER THE BEAR STEARNS  COMPANIES  INC. NOR ANY SUBSIDIARY OR AFFILIATE
     OF THE BEAR STEARNS COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A
     CREDIT SUPPORT PROVIDER ON THIS TRANSACTION.

3.     Account Details and
       Settlement Information:         PAYMENTS TO BSFP:

                                       Citibank, N.A., New York

                                      S-3

<PAGE>

                                  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 COUNTERPARTY:

                                  Wells Fargo Bank, N.A.
                                  San Francisco, California
                                  ABA#: 121-000-248
                                  Account#: 3970771416
                                  Account Name: SAS Clearing
                                  FFC#:  50995402; Cap Contract Account

ADDITIONAL PROVISIONS:

Non-Reliance. Each party represents to the other party that (a) it has not
received and is not relying upon any legal, tax, regulatory, accounting or other
advice (whether written or oral) of the other party regarding this Transaction,
other than representations expressly made by that other party in this
Confirmation and in the Master Agreement and (b) in respect of this Transaction,
(i) it has the capacity to evaluate (internally or through independent
professional advice) this Transaction and has made its own decision to enter
into this Transaction and (ii) it understands the terms, conditions and risks of
this Transaction and is willing to assume (financially and otherwise) those
risks. Counterparty acknowledges that BSFP has advised Counterparty to consult
its own tax, accounting and legal advisors in connection with this Transaction
evidenced by this Confirmation and that the Counterparty has done so.

                                      S-4

<PAGE>

                                   SCHEDULE I
(all such dates subject to adjustment in accordance with the Business Day
Convention)

<TABLE>
<CAPTION>
                                               Notional Amount
From and including   To but excluding               (USD)
------------------   ----------------          ---------------
<S>                  <C>                       <C>
Effective Date          25-Sep-2007              9,349,950.00
  25-Sep-2007           25-Oct-2007             11,007,612.00
  25-Oct-2007           26-Nov-2007             12,525,371.00
  26-Nov-2007           26-Dec-2007             14,350,715.00
  26-Dec-2007           25-Jan-2008             16,982,387.00
  25-Jan-2008           25-Feb-2008             19,620,702.00
  25-Feb-2008           25-Mar-2008             22,197,450.00
  25-Mar-2008           25-Apr-2008             24,673,833.00
  25-Apr-2008           27-May-2008             26,969,908.00
  27-May-2008           25-Jun-2008             29,022,097.00
  25-Jun-2008           25-Jul-2008             30,695,154.00
  25-Jul-2008           25-Aug-2008             32,143,333.00
  25-Aug-2008           25-Sep-2008             33,364,294.00
  25-Sep-2008           27-Oct-2008             34,459,815.00
  27-Oct-2008           25-Nov-2008             35,364,950.00
  25-Nov-2008           26-Dec-2008             64,392,332.00
  26-Dec-2008           26-Jan-2009             61,094,312.00
  26-Jan-2009           25-Feb-2009             59,200,211.00
  25-Feb-2009           25-Mar-2009             57,560,670.00
  25-Mar-2009           27-Apr-2009             55,900,236.00
  27-Apr-2009           26-May-2009             56,738,087.00
  26-May-2009           25-Jun-2009             55,114,533.00
  25-Jun-2009           27-Jul-2009             53,448,849.00
  27-Jul-2009           25-Aug-2009             52,052,273.00
  25-Aug-2009           25-Sep-2009             50,821,078.00
  25-Sep-2009           26-Oct-2009             49,799,157.00
  26-Oct-2009           25-Nov-2009             48,324,738.00
  25-Nov-2009           28-Dec-2009             47,230,095.00
  28-Dec-2009           25-Jan-2010             46,381,372.00
  25-Jan-2010           25-Feb-2010             45,664,951.00
  25-Feb-2010           25-Mar-2010             57,109,888.00
  25-Mar-2010           26-Apr-2010             53,295,757.00
  26-Apr-2010           25-May-2010             50,751,976.00
  25-May-2010           25-Jun-2010             48,517,326.00
  25-Jun-2010           26-Jul-2010             46,605,640.00
  26-Jul-2010           25-Aug-2010             45,127,013.00
  25-Aug-2010           27-Sep-2010             43,898,233.00
  27-Sep-2010           25-Oct-2010             42,799,846.00
  25-Oct-2010           26-Nov-2010             41,814,257.00
  26-Nov-2010           27-Dec-2010             40,958,037.00
  27-Dec-2010           25-Jan-2011             40,251,197.00
</TABLE>

                                      S-5
<PAGE>

<TABLE>
<S>                  <C>                       <C>
  25-Jan-2011           25-Feb-2011             39,721,031.00
  25-Feb-2011           25-Mar-2011             39,146,633.00
  25-Mar-2011           25-Apr-2011             38,560,961.00
  25-Apr-2011           25-May-2011             37,945,813.00
  25-May-2011           27-Jun-2011             37,301,578.00
  27-Jun-2011           25-Jul-2011             36,633,837.00
  25-Jul-2011           25-Aug-2011             36,721,414.00
  25-Aug-2011           26-Sep-2011             36,884,965.00
  26-Sep-2011           25-Oct-2011             36,972,840.00
  25-Oct-2011           25-Nov-2011             36,766,033.00
  25-Nov-2011           27-Dec-2011             36,205,240.00
  27-Dec-2011           25-Jan-2012             35,307,095.00
  25-Jan-2012        Termination Date           34,040,680.00
</TABLE>

                                      S-6

<PAGE>

                                    EXHIBIT T

                          FORM OF ANNUAL CERTIFICATION

            Re: The Pooling and Servicing Agreement dated as of February 1, 2007
            (the "Agreement"), among Merrill Lynch Mortgage Investors, INC., as
            depositor (the "Depositor"), Wells Fargo Bank, N.A., as master
            servicer (in such capacity, the "Master Servicer") and as securities
            administrator (in such capacity, the "Securities Administrator"),
            Wilshire Credit Corporation, as servicer (in such capacity, a
            "Servicer"), Central Mortgage Company, as servicer (in such
            capacity, a "Servicer"), and HSBC Bank USA, National Association, as
            trustee

            I, ____________________________, the _______________________ of
[NAME OF COMPANY] (the "Company"), certify to [the Purchaser], [the Depositor],
and the [Master Servicer] [Securities Administrator] [Trustee], and their
officers, with the knowledge and intent that they will rely upon this
certification, that:

            (1) I have reviewed, or persons under my supervision have reviewed,
      the servicer compliance statement of the Company provided in accordance
      with Item 1123 of Regulation AB (the "Compliance Statement"), the report
      on assessment of the Company's compliance with the servicing criteria set
      forth in Item 1122(d) of Regulation AB (the "Servicing Criteria"),
      provided in accordance with Rules 13a-18 and 15d-18 under Securities
      Exchange Act of 1934, as amended (the "Exchange Act") and Item 1122 of
      Regulation AB (the "Servicing Assessment"), the registered public
      accounting firm's attestation report provided in accordance with Rules
      13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of Regulation
      AB (the "Attestation Report"), and all servicing reports, officer's
      certificates and other information relating to the servicing of the
      Mortgage Loans by the Company during 200[ ] that were delivered by the
      Company to the [Depositor] [Master Servicer] [Securities Administrator]
      [Trustee] pursuant to the Agreement (collectively, the "Company Servicing
      Information");

            (2) Based on my knowledge, the Company Servicing Information, taken
      as a whole, does not contain any untrue statement of a material fact or
      omit to state a material fact necessary to make the statements made, in
      the light of the circumstances under which such statements were made, not
      misleading with respect to the period of time covered by the Company
      Servicing Information;

            (3) Based on my knowledge, all of the Company Servicing Information
      required to be provided by the Company under the Agreement has been
      provided to the [Depositor] [Master Servicer] [Securities Administrator]
      [Trustee];

            (4) I am responsible for reviewing the activities performed by the
      Company as servicer under the Agreement, and based on my knowledge and the
      compliance review conducted in preparing the Compliance Statement and
      except as disclosed in the Compliance Statement, the Servicing Assessment
      or the Attestation Report, the Company has fulfilled its obligations under
      the Agreement in all material respects; and

                                      T-1
<PAGE>

            (5) The Compliance Statement required to be delivered by the Company
      pursuant to this Agreement, and the Servicing Assessment and Attestation
      Report required to be provided by the Company and by any Subservicer and
      Subcontractor pursuant to the Agreement, have been provided to the
      [Depositor] [Master Servicer]. Any material instances of noncompliance
      described in such reports have been disclosed to the [Depositor] [Master
      Servicer]. Any material instance of noncompliance with the Servicing
      Criteria has been disclosed in such reports.

                                     Date: _________________________

                                     By:
                                         ____________________________
                                     Name:
                                     Title:

                                      T-2
<PAGE>

                                  EXHIBIT U-1

                    STANDARD FILE LAYOUT - MASTER SERVICING

<TABLE>
<CAPTION>
                                                                                                                               MAX
COLUMN NAME             DESCRIPTION                                          DECIMAL  FORMAT COMMENT                           SIZE
----------------------  ---------------------------------------------------  -------  ---------------------------------------  -----
<S>                     <C>                                                  <C>      <C>                                      <C>
SER_INVESTOR_NBR        A value assigned by the Servicer to define a group            Text up to 10 digits                       20
                        of loans.

LOAN_NBR                A unique identifier assigned to each loan by the              Text up to 10 digits                       10
                        investor.

SERVICER_LOAN_NBR       A unique number assigned to a loan by the                     Text up to 10 digits                       10
                        Servicer.  This may be different than the LOAN_NBR.

BORROWER_NAME           The borrower name as received in the file.  It is             Maximum length of 30 (Last, First)         30
                        not separated by first and last name.

SCHED_PAY_AMT           Scheduled monthly principal and scheduled interest     2      No commas(,) or dollar signs ($)           11
                        payment that a borrower is expected to pay, P&I
                        constant.

NOTE_INT_RATE           The loan interest rate as reported by the Servicer.    4      Max length of 6                             6

NET_INT_RATE            The loan gross interest rate less the service fee      4      Max length of 6                             6
                        rate as reported by the Servicer.

SERV_FEE_RATE           The servicer's fee rate for a loan as reported by      4      Max length of 6                             6
                        the Servicer.

SERV_FEE_AMT            The servicer's fee amount for a loan as reported       2      No commas(,) or dollar signs ($)           11
                        by the Servicer.

NEW_PAY_AMT             The new loan payment amount as reported by the         2      No commas(,) or dollar signs ($)           11
                        Servicer.

NEW_LOAN_RATE           The new loan rate as reported by the Servicer.         4      Max length of 6                             6

ARM_INDEX_RATE          The index the Servicer is using to calculate a         4      Max length of 6                             6
                        forecasted rate.

ACTL_BEG_PRIN_BAL       The borrower's actual principal balance at the         2      No commas(,) or dollar signs ($)           11
                        beginning of the processing cycle.

ACTL_END_PRIN_BAL       The borrower's actual principal balance at the end     2      No commas(,) or dollar signs ($)           11
                        of the processing cycle.

BORR_NEXT_PAY_DUE_DATE  The date at the end of processing cycle that the              MM/DD/YYYY                                 10
                        borrower's next payment is due to the Servicer, as
                        reported by Servicer.
</TABLE>

                                      U-1-1
<PAGE>

<TABLE>
<S>                     <C>                                                  <C>      <C>                                      <C>
SERV_CURT_AMT_1         The first curtailment amount to be applied.            2      No commas(,) or dollar signs ($)           11

SERV_CURT_DATE_1        The curtailment date associated with the first                MM/DD/YYYY                                 10
                        curtailment amount.

CURT_ADJ_ AMT_1         The curtailment interest on the first curtailment      2      No commas(,) or dollar signs ($)           11
                        amount, if applicable.

SERV_CURT_AMT_2         The second curtailment amount to be applied.           2      No commas(,) or dollar signs ($)           11

SERV_CURT_DATE_2        The curtailment date associated with the second               MM/DD/YYYY                                 10
                        curtailment amount.

CURT_ADJ_ AMT_2         The curtailment interest on the second curtailment     2      No commas(,) or dollar signs ($)           11
                        amount, if applicable.

SERV_CURT_AMT_3         The third curtailment amount to be applied.            2      No commas(,) or dollar signs ($)           11

SERV_CURT_DATE_3        The curtailment date associated with the third                MM/DD/YYYY                                 10
                        curtailment amount.

CURT_ADJ_AMT_3          The curtailment interest on the third curtailment      2      No commas(,) or dollar signs ($)           11
                        amount, if applicable.

PIF_AMT                 The loan "paid in full" amount as reported by the      2      No commas(,) or dollar signs ($)           11
                        Servicer.

PIF_DATE                The paid in full date as reported by the Servicer.            MM/DD/YYYY                                 10

ACTION_CODE             The standard FNMA numeric code used to                        Action Code Key: 15=Bankruptcy,             2
                        indicate the default/delinquent status of                     30=Foreclosure,,60=PIF,63=Substitution,
                        a particular loan.                                            65=Repurchase,70=REO

INT_ADJ_AMT             The amount of the interest adjustment as reported      2      No commas(,) or dollar signs ($)           11
                        by the Servicer.

SOLDIER_SAILOR_ADJ_AMT  The Soldier and Sailor Adjustment amount, if           2      No commas(,) or dollar signs ($)           11
                        applicable.

NON_ADV_LOAN_AMT        The Non Recoverable Loan Amount, if applicable.        2      No commas(,) or dollar signs ($)           11

LOAN_LOSS_AMT           The amount the Servicer is passing as a loss, if       2      No commas(,) or dollar signs ($)           11
                        applicable.

SCHED_BEG_PRIN_BAL      The scheduled outstanding principal amount due at      2      No commas(,) or dollar signs ($)           11
                        the beginning of the cycle date to be passed
                        through to investors.

SCHED_END_PRIN_BAL      The scheduled principal balance due to investors       2      No commas(,) or dollar signs ($)           11
                        at the end of a processing cycle.

SCHED_PRIN_AMT          The scheduled principal amount as reported by the      2      No commas(,) or dollar signs ($)           11
                        Servicer for the current cycle -- only
                        applicable for Scheduled/Scheduled Loans.
</TABLE>

                                      U-1-2
<PAGE>

<TABLE>
<S>                     <C>                                                  <C>      <C>                                      <C>
SCHED_NET_INT           The scheduled gross interest amount less the           2      No commas(,) or dollar signs ($)           11
                        service fee amount for the current cycle
                        as reported by the Servicer -- only
                        applicable for Scheduled/Scheduled Loans.

ACTL_PRIN_AMT           The actual principal amount collected by the           2      No commas(,) or dollar signs ($)           11
                        Servicer for the current reporting cycle
                        -- only applicable for Actual/Actual
                        Loans.

ACTL_NET_INT            The actual gross interest amount less the service      2      No commas(,) or dollar signs ($)           11
                        fee amount for the current reporting cycle
                        as reported by the Servicer -- only
                        applicable for Actual/Actual Loans.

PREPAY_PENALTY_ AMT     The penalty amount received when a borrower            2      No commas(,) or dollar signs ($)           11
                        prepays on his loan as reported by the Servicer.

PREPAY_PENALTY_ WAIVED  The prepayment penalty amount for the loan waived      2      No commas(,) or dollar signs ($)           11
                        by the servicer.

MOD_DATE                The Effective Payment Date of the Modification for            MM/DD/YYYY                                 10
                        the loan.

MOD_TYPE                The Modification Type.                                        Varchar - value can be alpha or numeric    30

DELINQ_P&I_ADVANCE_AMT  The current outstanding principal and interest         2      No commas(,) or dollar signs ($)           11
                        advances made by Servicer.

                        Flag to indicate if the repurchase of a loan is               Y=Breach                                    1
BREACH_FLAG             due to a breach of Representations and Warranties             N=NO Breach
                                                                                      Let blank if N/A
</TABLE>

                                      U-1-3
<PAGE>

                                  EXHIBIT U-2

                  STANDARD FILE LAYOUT - DELINQUENCY REPORTING

*   The column/header names in bold are the minimum fields Wells Fargo must
    receive from every Servicer

<TABLE>
<CAPTION>
    COLUMN/HEADER NAME                                   DESCRIPTION                             DECIMAL    FORMAT COMMENT
--------------------------       ------------------------------------------------------------    -------    --------------
<S>                              <C>                                                             <C>        <C>
SERVICER_LOAN_NBR                A unique number assigned to a loan by the Servicer.  This
                                 may be different than the LOAN_NBR

LOAN_NBR                         A unique identifier assigned to each loan by the originator.

CLIENT_NBR                       Servicer Client Number

SERV_INVESTOR_NBR                Contains a unique number as assigned by an external servicer
                                 to identify a group of loans in their system.

BORROWER_FIRST_NAME              First Name of the Borrower.

BORROWER_LAST_NAME               Last name of the borrower.

PROP_ADDRESS                     Street Name and Number of Property

PROP_STATE                       The state where the  property located.

PROP_ZIP                         Zip code where the property is located.

BORR_NEXT_PAY_DUE_DATE           The date that the borrower's next payment is due to the                     MM/DD/YYYY
                                 MM/DD/YYYY servicer at the end of processing cycle, as
                                 reported by Servicer.

LOAN_TYPE                        Loan Type (i.e. FHA, VA, Conv)

BANKRUPTCY_FILED_DATE            The date a particular bankruptcy claim was filed.                           MM/DD/YYYY

BANKRUPTCY_CHAPTER_CODE          The chapter under which the bankruptcy was filed.

BANKRUPTCY_CASE_NBR              The case number assigned by the court to the bankruptcy
                                 filing.

POST_PETITION_DUE_DATE           The payment due date once the bankruptcy has been approved                  MM/DD/YYYY
                                 by the courts

BANKRUPTCY_DCHRG_DISM_DATE       The Date The Loan Is Removed From Bankruptcy. Either by                     MM/DD/YYYY
                                 Dismissal, Discharged and/or a Motion For Relief Was
                                 Granted.

LOSS_MIT_APPR_DATE               The Date The Loss Mitigation Was Approved By The Servicer                   MM/DD/YYYY

LOSS_MIT_TYPE                    The Type Of Loss Mitigation Approved For A Loan Such As;

LOSS_MIT_EST_COMP_DATE           The Date The Loss Mitigation /Plan Is Scheduled To End/Close                MM/DD/YYYY

LOSS_MIT_ACT_COMP_DATE           The Date The Loss Mitigation Is Actually Completed                          MM/DD/YYYY

FRCLSR_APPROVED_DATE             The date DA Admin sends a letter to the servicer with                       MM/DD/YYYY
                                 instructions to begin foreclosure proceedings.

ATTORNEY_REFERRAL_DATE           Date File Was Referred To Attorney to Pursue Foreclosure                    MM/DD/YYYY

FIRST_LEGAL_DATE                 Notice of 1st legal filed by an Attorney in a Foreclosure                   MM/DD/YYYY
                                 Action

FRCLSR_SALE_EXPECTED_DATE        The date by which a foreclosure sale is expected to occur.                  MM/DD/YYYY

FRCLSR_SALE_DATE                 The actual date of the foreclosure sale.                                    MM/DD/YYYY

FRCLSR_SALE_AMT                  The amount a property sold for at the foreclosure sale.             2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

EVICTION_START_DATE              The date the servicer initiates eviction of the borrower.                   MM/DD/YYYY

EVICTION_COMPLETED_DATE          The date the court revokes legal possession of the property                 MM/DD/YYYY
                                 from the borrower.

LIST_PRICE                       The price at which an REO property is marketed.                     2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

LIST_DATE                        The date an REO property is listed at a particular price.                   MM/DD/YYYY

OFFER_AMT                        The dollar value of an offer for an REO property.                   2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

OFFER_DATE_TIME                  The date an offer is received by DA Admin or by the Servicer.               MM/DD/YYYY
</TABLE>

                                      U-2-1
<PAGE>

<TABLE>
<S>                              <C>                                                             <C>        <C>
REO_CLOSING_DATE                 The date the REO sale of the property is scheduled to close.                MM/DD/YYYY

REO_ACTUAL_CLOSING_DATE          Actual Date Of REO Sale                                                     MM/DD/YYYY

OCCUPANT_CODE                    Classification of how the property is occupied.

PROP_CONDITION_CODE              A code that indicates the condition of the property.

PROP_INSPECTION_DATE             The date a  property inspection is performed.                               MM/DD/YYYY

APPRAISAL_DATE                   The date the appraisal was done.                                            MM/DD/YYYY

CURR_PROP_VAL                     The current "as is" value of the property based on brokers         2
                                 price opinion or appraisal.

REPAIRED_PROP_VAL                The amount the property would be worth if repairs are               2
                                 completed pursuant to a broker's price opinion or appraisal.
IF APPLICABLE:

DELINQ_STATUS_CODE               FNMA Code Describing Status of Loan

DELINQ_REASON_CODE               The circumstances which caused a borrower to stop paying on
                                 a loan. Code indicates the reason why the loan is in default
                                 for this cycle.

MI_CLAIM_FILED_DATE              Date Mortgage Insurance Claim Was Filed With Mortgage                       MM/DD/YYYY
                                 Insurance Company.

MI_CLAIM_AMT                     Amount of Mortgage Insurance Claim Filed                                    No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

MI_CLAIM_PAID_DATE               Date Mortgage Insurance Company Disbursed Claim Payment                     MM/DD/YYYY

MI_CLAIM_AMT_PAID                Amount Mortgage Insurance Company Paid On Claim                     2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

POOL_CLAIM_FILED_DATE            Date Claim Was Filed With Pool Insurance Company                            MM/DD/YYYY

POOL_CLAIM_AMT                   Amount of Claim Filed With Pool Insurance Company                   2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

POOL_CLAIM_PAID_DATE             Date Claim Was Settled and The Check Was Issued By The Pool                 MM/DD/YYYY
                                 Insurer

POOL_CLAIM_AMT_PAID              Amount Paid On Claim By Pool Insurance Company                      2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

FHA_PART_A_CLAIM_FILED_DATE       Date FHA Part A Claim Was Filed With HUD                                   MM/DD/YYYY

FHA_PART_A_CLAIM_AMT              Amount of FHA Part A Claim Filed                                   2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

FHA_PART_A_CLAIM_PAID_DATE        Date HUD Disbursed Part A Claim Payment                                    MM/DD/YYYY

FHA_PART_A_CLAIM_PAID_AMT         Amount HUD Paid on Part A Claim                                    2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

FHA_PART_B_CLAIM_FILED_DATE        Date FHA Part B Claim Was Filed With HUD                                  MM/DD/YYYY

FHA_PART_B_CLAIM_AMT               Amount of FHA Part B Claim Filed                                  2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

FHA_PART_B_CLAIM_PAID_DATE          Date HUD Disbursed Part B Claim Payment                                  MM/DD/YYYY

FHA_PART_B_CLAIM_PAID_AMT         Amount HUD Paid on Part B Claim                                    2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

VA_CLAIM_FILED_DATE               Date VA Claim Was Filed With the Veterans Admin                            MM/DD/YYYY

VA_CLAIM_PAID_DATE                Date Veterans Admin. Disbursed VA Claim Payment                            MM/DD/YYYY

VA_CLAIM_PAID_AMT                 Amount Veterans Admin. Paid on VA Claim                            2       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

MOTION_FOR_RELIEF_DATE           The date the Motion for Relief was filed                           10       MM/DD/YYYY

FRCLSR_BID_AMT                   The foreclosure sale bid amount                                             No commas(,)
                                                                                                             or dollar
                                                                                                    11       signs ($)

FRCLSR_SALE_TYPE                 The foreclosure sales results: REO, Third Party, Conveyance
                                 to HUD/VA
</TABLE>

                                      U-2-2
<PAGE>
<TABLE>
<S>                              <C>                                                             <C>        <C>
REO_PROCEEDS                     The net proceeds from the sale of the REO property.                         No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

BPO_DATE                         The date the BPO was done.

CURRENT_FICO                     The current FICO score

HAZARD_CLAIM_FILED_DATE          The date the Hazard Claim was filed with the Hazard                10       MM/DD/YYYY
                                 Insurance Company.

HAZARD_CLAIM_AMT                 The amount of the Hazard Insurance Claim filed.                    11       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

HAZARD_CLAIM_PAID_DATE           The date the Hazard Insurance Company disbursed the claim          10       MM/DD/YYYY
                                 payment.

HAZARD_CLAIM_PAID_AMT            The amount the Hazard Insurance Company paid on the claim.         11       No commas(,)
                                                                                                             or dollar
                                                                                                             signs ($)

ACTION_CODE                      Indicates loan status                                                       Number

NOD_DATE                                                                                                     MM/DD/YYYY

NOI_DATE                                                                                                     MM/DD/YYYY

ACTUAL_PAYMENT_PLAN_START_DATE                                                                               MM/DD/YYYY

ACTUAL_PAYMENT_ PLAN_END_DATE

ACTUAL_REO_START_DATE                                                                                        MM/DD/YYYY

REO_SALES_PRICE                                                                                              Number

REALIZED_LOSS/GAIN               As defined in the Pooling and Servicing Agreement                           Number
</TABLE>

STANDARD FILE CODES - DELINQUENCY REPORTING

The LOSS MIT TYPE field should show the approved Loss Mitigation Code as
follows:

      -     ASUM-       Approved Assumption

      -     BAP-        Borrower Assistance Program

      -     CO-         Charge Off

      -     DIL-        Deed-in-Lieu

      -     FFA-        Formal Forbearance Agreement

      -     MOD-        Loan Modification

      -     PRE-        Pre-Sale

      -     SS-         Short Sale

      -     MISC-       Anything else approved by the PMI or Pool Insurer

NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.

The CCUPANT CODE field should show the current status of the property code as
follows:

      -     Mortgagor

      -     Tenant

      -     Unknown

                                     U-2-3
<PAGE>

      -     Vacant

The PROPERTY CONDITION field should show the last reported condition of the
property as follows:

      -     Damaged

      -     Excellent

      -     Fair

      -     Gone

      -     Good

      -     Poor

      -     Special Hazard

      -     Unknown

The FNMA DELINQUENT REASON CODE field should show the Reason for Delinquency as
follows:

<TABLE>
<CAPTION>
DELINQUENCY CODE         DELINQUENCY DESCRIPTION
----------------         ------------------------------------------
<S>                      <C>
001                      FNMA-Death of principal mortgagor

002                      FNMA-Illness of principal mortgagor

003                      FNMA-Illness of mortgagor's family member

004                      FNMA-Death of mortgagor's family member

005                      FNMA-Marital difficulties

006                      FNMA-Curtailment of income

007                      FNMA-Excessive Obligation

008                      FNMA-Abandonment of property

009                      FNMA-Distant employee transfer

011                      FNMA-Property problem

012                      FNMA-Inability to sell property

013                      FNMA-Inability to rent property

014                      FNMA-Military Service

015                      FNMA-Other

016                      FNMA-Unemployment

017                      FNMA-Business failure

019                      FNMA-Casualty loss

022                      FNMA-Energy environment costs

023                      FNMA-Servicing problems

026                      FNMA-Payment adjustment

027                      FNMA-Payment dispute

029                      FNMA-Transfer of ownership pending

030                      FNMA-Fraud

031                      FNMA-Unable to contact borrower

INC                      FNMA-Incarceration
</TABLE>

                                      U-2-4
<PAGE>

                  STANDARD FILE CODES - DELINQUENCY REPORTING

The FNMA DELINQUENT STATUS CODE field should show the Status of Default as
follows:

<TABLE>
<CAPTION>
STATUS CODE     STATUS DESCRIPTION
-----------     ----------------------------------------------
<S>             <C>
     09         Forbearance

     17         Pre-foreclosure Sale Closing Plan Accepted

     24         Government Seizure

     26         Refinance

     27         Assumption

     28         Modification

     29         Charge-Off

     30         Third Party Sale

     31         Probate

     32         Military Indulgence

     43         Foreclosure Started

     44         Deed-in-Lieu Started

     49         Assignment Completed

     61         Second Lien Considerations

     62         Veteran's Affairs-No Bid

     63         Veteran's Affairs-Refund

     64         Veteran's Affairs-Buydown

     65         Chapter 7 Bankruptcy

     66         Chapter 11 Bankruptcy

     67         Chapter 13 Bankruptcy
</TABLE>

                            U-2-5
<PAGE>

                                   EXHIBIT U-3

CALCULATION OF REALIZED LOSS/GAIN FORM 332 -  INSTRUCTION SHEET

      NOTE: DO NOT NET OR COMBINE ITEMS. SHOW ALL EXPENSES INDIVIDUALLY AND ALL
      CREDITS AS SEPARATE LINE ITEMS. CLAIM PACKAGES ARE DUE ON THE REMITTANCE
      REPORT DATE. LATE SUBMISSIONS MAY RESULT IN CLAIMS NOT BEING PASSED UNTIL
      THE FOLLOWING MONTH. THE SERVICER IS RESPONSIBLE TO REMIT ALL FUNDS
      PENDING LOSS APPROVAL AND /OR RESOLUTION OF ANY DISPUTED ITEMS.

      The numbers on the 332 form correspond with the numbers listed below.

      LIQUIDATION AND ACQUISITION EXPENSES:

      1.    The Actual Unpaid Principal Balance of the Mortgage Loan. For
            documentation, an Amortization Schedule from date of default through
            liquidation breaking out the net interest and servicing fees
            advanced is required.

      2.    The Total Interest Due less the aggregate amount of servicing fee
            that would have been earned if all delinquent payments had been made
            as agreed. For documentation, an Amortization Schedule from date of
            default through liquidation breaking out the net interest and
            servicing fees advanced is required.

      3.    Accrued Servicing Fees based upon the Scheduled Principal Balance of
            the Mortgage Loan as calculated on a monthly basis. For
            documentation, an Amortization Schedule from date of default through
            liquidation breaking out the net interest and servicing fees
            advanced is required.

      4-12. Complete as applicable. Required documentation:

            * For taxes and insurance advances - see page 2 of 332 form -
            breakdown required showing period of coverage, base tax, interest,
            penalty. Advances prior to default require evidence of servicer
            efforts to recover advances.

            * For escrow advances - complete payment history

            (to calculate advances from last positive escrow balance forward)

            * Other expenses - copies of corporate advance history showing all
            payments

            * REO repairs > $1500 require explanation

            * REO repairs >$3000 require evidence of at least 2 bids.

            * Short Sale or Charge Off require P&L supporting the decision and
            WFB's approved Officer Certificate

                                      U-3-1
<PAGE>

            * Unusual or extraordinary items may require further documentation.

      13.   The total of lines 1 through 12.

      (b)   CREDITS:

      14-21. Complete as applicable. Required documentation:

            * Copy of the HUD 1 from the REO sale. If a 3rd Party Sale, bid
            instructions and Escrow Agent / Attorney

            Letter of Proceeds Breakdown.

            * Copy of EOB for any MI or gov't guarantee

            * All other credits need to be clearly defined on the 332 form

      22.   The total of lines 14 through 21.

      Please Note: For HUD/VA loans, use line (18a) for Part A/Initial proceeds
                   and line (18b) for Part B/Supplemental proceeds.

      TOTAL REALIZED LOSS (OR AMOUNT OF ANY GAIN)

      23.   The total derived from subtracting line 22 from 13. If the amount
            represents a realized gain, show the amount in parenthesis ( ).

                                     U-3-2
<PAGE>

CALCULATION OF REALIZED LOSS/GAIN FORM 332

        Prepared by:___________________            Date:____________

        Phone:_________________________   Email Address:____________

Servicer Loan No.           Servicer Name                 Servicer Address

         WELLS FARGO BANK, N.A. LOAN NO.__________________________

         Borrower's Name: ______________________________________________________

         Property Address:______________________________________________________

LIQUIDATION TYPE:     REO SALE     3RD PARTY SALE     SHORT SALE     CHARGE OFF

WAS THIS LOAN GRANTED A BANKRUPTCY DEFICIENCY OR CRAMDOWN       YES   NO

If "Yes", provide deficiency or cramdown amount _______________________________

Liquidation and Acquisition Expenses:

(1)   Actual Unpaid Principal Balance of Mortgage Loan   $_______________  (1)

(2)   Interest accrued at Net Rate                        _______________  (2)

(3)   Accrued Servicing Fees                              _______________  (3)

(4)   Attorney's Fees                                     _______________  (4)

(5)   Taxes (see page 2)                                  _______________  (5)

(6)   Property Maintenance                                _______________  (6)

(7)   MI/Hazard Insurance Premiums (see page 2)           _______________  (7)

(8)   Utility Expenses                                    _______________  (8)

(9)   Appraisal/BPO                                       _______________  (9)

(10)  Property Inspections                                _______________  (10)

(11)  FC Costs/Other Legal Expenses                       _______________  (11)

(12)  Other (itemize)                                     _______________  (12)

            Cash for Keys ____________________________    _______________  (12)

            HOA/Condo Fees____________________________    _______________  (12)

            __________________________________________    _______________  (12)

            TOTAL EXPENSES                               $_______________  (13)

CREDITS:
(14)  Escrow Balance                                     $_______________  (14)

(15)  HIP Refund                                          _______________  (15)

(16)  Rental Receipts                                     _______________  (16)

(17)  Hazard Loss Proceeds                                _______________  (17)

(18)  Primary Mortgage Insurance / Gov't Insurance        _______________  (18a)
 HUD Part A

                                      U-3-3
<PAGE>

                                                           _______________ (18b)

 HUD Part B
(19)  Pool Insurance Proceeds                              _______________ (19)

(20)  Proceeds from Sale of Acquired Property              _______________ (20)

(21)  Other (itemize)                                      _______________ (21)

                          ____________________________     _______________ (21)

                 TOTAL CREDITS                           $ _______________ (22)

TOTAL REALIZED LOSS (OR AMOUNT OF GAIN)                  $ _______________ (23)

                                      U-3-4
<PAGE>

                           ESCROW DISBURSEMENT DETAIL

<TABLE>
<CAPTION>
  TYPE                    PERIOD OF                    BASE
(TAX /INS.)   DATE PAID   COVERAGE    TOTAL PAID      AMOUNT     PENALTIES   INTEREST
-----------   ---------   ---------   ----------   -----------   ---------   --------
<S>           <C>         <C>         <C>          <C>           <C>         <C>

</TABLE>

                                      U-3-5
<PAGE>

                                    EXHIBIT V

SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

      The assessment of compliance to be delivered by [the Company] [Name of
Subservicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria":

<TABLE>
<CAPTION>
                                                                                                APPLICABLE
                                                                                                SERVICING
                                       SERVICING CRITERIA                                       CRITERIA
----------------------------------------------------------------------------------------------------------
  REFERENCE                               CRITERIA
----------------     ---------------------------------------------------------------------     -----------
<S>                  <C>                                                                       <C>
                                 GENERAL SERVICING CONSIDERATIONS

1122(d)(1)(i)        Policies and procedures are instituted to monitor any performance or
                     other triggers and events of default in accordance with the
                     transaction agreements.                                                       X

1122(d)(1)(ii)       If any material servicing activities are outsourced to third parties,         X
                     policies and procedures are instituted to monitor the third party's
                     performance and compliance with such servicing activities.

1122(d)(1)(iii)      Any requirements in the transaction agreements to maintain a back-up
                     servicer for the mortgage loans are maintained.

1122(d)(1)(iv)       A fidelity bond and errors and omissions policy is in effect on the           X
                     party participating in the servicing function throughout the
                     reporting period in the amount of coverage required by and otherwise
                     in accordance with the terms of the transaction agreements.

                                      CASH COLLECTION AND ADMINISTRATION

1122(d)(2)(i)        Payments on mortgage loans are deposited into the                             X
                     appropriate custodial bank accounts and related bank
                     clearing accounts no more than two business days following
                     receipt, or such other number of days specified in the
                     transaction agreements.

1122(d)(2)(ii)       Disbursements made via wire transfer on behalf of an obligor or to            X
                     an investor are made only by authorized personnel.

1122(d)(2)(iii)      Advances of funds or guarantees regarding collections, cash flows or          X
                     distributions, and any interest or other fees charged for such
                     advances, are made, reviewed and approved as specified in the
                     transaction agreements.

                     The related accounts for the transaction, such as cash reserve
                     accounts or accounts established as a form of overcollateralization,
                     are separately maintained (e.g., with respect to commingling of cash)
1122(d)(2)(iv)       as set forth in the transaction agreements.                                   X

1122(d)(2)(v)        Each custodial account is maintained at a federally insured                   X
                     depository institution as set forth in the transaction agreements.
                     For purposes of this criterion, "federally insured depository
                     institution" with respect to a foreign financial institution means a
                     foreign financial institution that meets the requirements of Rule
                     13k-1(b)(1) of the Securities Exchange Act.

1122(d)(2)(vi)       Unissued checks are safeguarded so as to prevent unauthorized access.         X

1122(d)(2)(vii)      Reconciliations are prepared on a monthly basis for all asset-backed          X
                     securities related bank accounts, including custodial accounts and
                     related bank clearing accounts. These reconciliations are (A)
                     mathematically accurate; (B) prepared
</TABLE>

                                           V-1
<PAGE>

<TABLE>
<CAPTION>
                                                                                                APPLICABLE
                                                                                                SERVICING
                                       SERVICING CRITERIA                                        CRITERIA
----------------------------------------------------------------------------------------------------------
  REFERENCE                               CRITERIA
----------------     ---------------------------------------------------------------------     -----------
<S>                  <C>                                                                       <C>
                     within 30 calendar days after the bank statement cutoff date, or
                     such other number of days specified in the transaction agreements;
                     (C) reviewed and approved by someone other than the person who
                     prepared the reconciliation; and (D) contain explanations for
                     reconciling items. These reconciling items are resolved within 90
                     calendar days of their original identification, or such other number
                     of days specified in the transaction agreements.

                                      INVESTOR REMITTANCES AND REPORTING

1122(d)(3)(i)        Reports to investors, including those to be filed with the
                     Commission, are maintained in accordance with the transaction
                     agreements and applicable Commission requirements. Specifically,
                     such reports (A) are prepared in accordance with timeframes and
                     other terms set forth in the transaction agreements; (B) provide
                     information calculated in accordance with the terms specified in the
                     transaction agreements; (C) are filed with the Commission as
                     required by its rules and regulations; and (D) agree with investors'
                     or the trustee's records as to the total unpaid principal balance
                     and number of mortgage loans serviced by the Servicer.                        X

1122(d)(3)(ii)       Amounts due to investors are allocated and remitted in accordance
                     with timeframes, distribution priority and other terms set forth in
                     the transaction agreements.                                                   X

1122(d)(3)(iii)      Disbursements made to an investor are posted within two business
                     days to the Servicer's investor records, or such other number of days
                     specified in the transaction agreements.                                      X

1122(d)(3)(iv)       Amounts remitted to investors per the investor reports agree with
                     cancelled checks, or other form of payment, or custodial bank
                     statements.                                                                   X

                                           POOL ASSET ADMINISTRATION

1122(d)(4)(i)        Collateral or security on mortgage loans is maintained as required
                     by the transaction agreements or related mortgage loan documents.             X

1122(d)(4)(ii)       Mortgage loan and related documents are safeguarded as required by
                     the transaction agreements.                                                   X

1122(d)(4)(iii)      Any additions, removals or substitutions to the asset pool are made,
                     reviewed and approved in accordance with any conditions or
                     requirements in the transaction agreements.                                   X

1122(d)(4)(iv)       Payments on mortgage loans, including any payoffs, made in
                     accordance with the related mortgage loan documents are posted to
                     the Servicer's obligor records maintained no more than two business
                     days after receipt, or such other number of days specified in the
                     transaction agreements, and allocated to principal, interest or
                     other items (e.g., escrow) in accordance with the related mortgage
                     loan documents.                                                               X

1122(d)(4)(v)        The Servicer's records regarding the mortgage loans agree with the
                     Servicer's records with respect to an obligor's unpaid principal
                     balance.                                                                      X

1122(d)(4)(vi)       Changes with respect to the terms or status of an obligor's mortgage
                     loans (e.g., loan modifications or re-agings) are made, reviewed and
                     approved by authorized personnel in accordance with the transaction
                     agreements and related pool asset documents.                                  X
</TABLE>

                                           V-2
<PAGE>

<TABLE>
<CAPTION>
                                                                                                APPLICABLE
                                                                                                SERVICING
                                       SERVICING CRITERIA                                        CRITERIA
----------------------------------------------------------------------------------------------------------
  REFERENCE                               CRITERIA
----------------     ---------------------------------------------------------------------     -----------
<S>                  <C>                                                                       <C>
1122(d)(4)(vii)      Loss mitigation or recovery actions (e.g., forbearance plans,
                     modifications and deeds in lieu of foreclosure, foreclosures and
                     repossessions, as applicable) are initiated, conducted and concluded
                     in accordance with the timeframes or other requirements established
                     by the transaction agreements.                                                X

1122(d)(4)(viii)     Records documenting collection efforts are maintained during the
                     period a mortgage loan is delinquent in accordance with the
                     transaction agreements. Such records are maintained on at least a
                     monthly basis, or such other period specified in the transaction
                     agreements, and describe the entity's activities in monitoring
                     delinquent mortgage loans including, for example, phone calls,
                     letters and payment rescheduling plans in cases where delinquency is
                     deemed temporary (e.g., illness or unemployment).                             X

1122(d)(4)(ix)       Adjustments to interest rates or rates of return for mortgage loans
                     with variable rates are computed based on the related mortgage loan
                     documents.                                                                    X

1122(d)(4)(x)        Regarding any funds held in trust for an obligor (such as escrow
                     accounts): (A) such funds are analyzed, in accordance with the
                     obligor's mortgage loan documents, on at least an annual basis, or
                     such other period specified in the transaction agreements; (B)
                     interest on such funds is paid, or credited, to obligors in
                     accordance with applicable mortgage loan documents and state laws;
                     and (C) such funds are returned to the obligor within 30 calendar
                     days of full repayment of the related mortgage loans, or such other
                     number of days specified in the transaction agreements.                       X

1122(d)(4)(xi)       Payments made on behalf of an obligor (such as tax or insurance
                     payments) are made on or before the related penalty or expiration
                     dates, as indicated on the appropriate bills or notices for such
                     payments, provided that such support has been received by the
                     servicer at least 30 calendar days prior to these dates, or such
                     other number of days specified in the transaction agreements.                 X

1122(d)(4)(xii)      Any late payment penalties in connection with any payment to be made
                     on behalf of an obligor are paid from the servicer's funds and not
                     charged to the obligor, unless the late payment was due to the
                     obligor's error or omission.                                                  X

                     Disbursements made on behalf of an obligor are posted within two
                     business days to the obligor's records maintained by the servicer,
1122(d)(4)(xiii)     or such other number of days specified in the transaction agreements.         X

1122(d)(4)(xiv)      Delinquencies, charge-offs and uncollectible accounts are recognized
                     and recorded in accordance with the transaction agreements.                   X

1122(d)(4)(xv)       Any external enhancement or other support, identified in Item
                     1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained
                     as set forth in the transaction agreements.
</TABLE>

                                           V-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]