Document:

POOLING AND SERVICING AGREEMENT

EXECUTION COPY

J.P. MORGAN ACCEPTANCE CORPORATION I

Depositor

WELLS FARGO BANK, NATIONAL ASSOCIATION

Master Servicer and Securities Administrator

and

WACHOVIA BANK, NATIONAL ASSOCIATION

Trustee

___________________________

POOLING AND SERVICING AGREEMENT

Dated as of November 1, 2005

___________________________

J.P. MORGAN ALTERNATIVE LOAN TRUST 2005-S1

MORTGAGE PASS-THROUGH CERTIFICATES

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS

9

SECTION 1.01

Definitions.

9

SECTION 1.02

Calculations Respecting Mortgage Loans.

47

ARTICLE II DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES

48

SECTION 2.01

Creation and Declaration of Trust Fund; Conveyance of Mortgage 

Loans.

48

SECTION 2.02

Acceptance of Trust Fund by Trustee; Review of Documentation for 

Trust Fund.

51

SECTION 2.03

Representations and Warranties of the Depositor.

52

SECTION 2.04

Representations and Warranties as to the Mortgage Loans.

54

SECTION 2.05

Discovery of Breach; Repurchase or Substitution of Mortgage Loans; 

Representations and Warranties of Seller as to the Mortgage Loans.

54

SECTION 2.06

Grant Clause.

58

ARTICLE III THE CERTIFICATES

59

SECTION 3.01

The Certificates.

59

SECTION 3.02

Registration.

60

SECTION 3.03

Transfer and Exchange of Certificates.

60

SECTION 3.04

Cancellation of Certificates.

64

SECTION 3.05

Replacement of Certificates.

64

SECTION 3.06

Persons Deemed Owners.

65

SECTION 3.07

Temporary Certificates.

65

SECTION 3.08

Appointment of Paying Agent.

65

SECTION 3.09

Book-Entry Certificates.

66

ARTICLE IV ADMINISTRATION OF THE TRUST FUND

67

SECTION 4.01

Custodial Accounts; Distribution Account.

67

SECTION 4.02

[Reserved].

68

SECTION 4.03

[Reserved].

68

SECTION 4.04

Reports to Trustee and Certificateholders.

68

ARTICLE V DISTRIBUTIONS TO HOLDERS OF CERTIFICATES

70

SECTION 5.01

Distributions Generally.

70

SECTION 5.02

Distributions from the Distribution Account.

71

SECTION 5.03

Allocation of Losses.

79

SECTION 5.04

Advances by Master Servicer.

81

SECTION 5.05

Compensating Interest Payments.

81

ARTICLE VI CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR; 

EVENTS OF DEFAULT

82

SECTION 6.01

Duties of Trustee and the Securities Administrator.

82

SECTION 6.02

Certain Matters Affecting the Trustee and the Securities 

Administrator.

85

SECTION 6.03

Trustee and Securities Administrator Not Liable for Certificates.

86

SECTION 6.04

Trustee and the Securities Administrator May Own Certificates.

87

SECTION 6.05

Eligibility Requirements for Trustee.

87

SECTION 6.06

Resignation and Removal of Trustee and the Securities Administrator.

87

SECTION 6.07

Successor Trustee and Successor Securities Administrator.

88

SECTION 6.08

Merger or Consolidation of Trustee or the Securities Administrator.

89

SECTION 6.09

Appointment of Co-Trustee, Separate Trustee or Custodian.

90

SECTION 6.10

Authenticating Agents.

91

SECTION 6.11

Indemnification of the Trustee, the Master Servicer and the Securities 

Administrator.

92

SECTION 6.12

Fees and Expenses of Securities Administrator and the Trustee.

93

SECTION 6.13

Collection of Monies.

93

SECTION 6.14

Events of Default; Trustee To Act; Appointment of Successor.

93

SECTION 6.15

Additional Remedies of Trustee Upon Event of Default.

97

SECTION 6.16

Waiver of Defaults.

97

SECTION 6.17

Notification to Holders.

97

SECTION 6.18

Directions by Certificateholders and Duties of Trustee During Event of 

Default.

98

SECTION 6.19

Action Upon Certain Failures of the Master Servicer and Upon Event 

of Default.

98

SECTION 6.20

Preparation of Tax Returns and Other Reports.

98

SECTION 6.21

Determination of LIBOR.

100

ARTICLE VII PURCHASE OF MORTGAGE LOANS AND TERMINATION OF THE TRUST FUND

100

SECTION 7.01

Purchase of Mortgage Loans; Termination of Trust Fund Upon 

Purchase or Liquidation of All Mortgage Loans.

100

SECTION 7.02

Procedure Upon Redemption or Termination of Trust Fund.

101

SECTION 7.03

Additional Trust Fund Termination Requirements.

102

ARTICLE VIII RIGHTS OF CERTIFICATEHOLDERS

103

SECTION 8.01

Limitation on Rights of Holders.

103

SECTION 8.02

Access to List of Holders.

104

SECTION 8.03

Acts of Holders of Certificates.

104

ARTICLE IX ADMINISTRATION AND SERVICING OF MORTGAGE LOANS BY 

THE MASTER SERVICER

105

SECTION 9.01

Duties of the Master Servicer; Enforcement of Servicers; and Master 

Servicer’s Obligations.

105

SECTION 9.02

Assumption of Master Servicing by Trustee.

107

SECTION 9.03

Representations and Warranties of the Master Servicer.

107

SECTION 9.04

Compensation to the Master Servicer.

109

SECTION 9.05

Merger or Consolidation.

109

SECTION 9.06

Resignation of Master Servicer.

109

SECTION 9.07

Assignment or Delegation of Duties by the Master Servicer.

110

SECTION 9.08

Limitation on Liability of the Master Servicer and Others.

110

SECTION 9.09

Indemnification; Third-Party Claims.

111

ARTICLE X REMIC ADMINISTRATION

111

SECTION 10.01

REMIC Administration.

111

SECTION 10.02

Prohibited Transactions and Activities.

113

SECTION 10.03

Indemnification with Respect to Prohibited Transactions or Loss of 

REMIC Status.

114

SECTION 10.04

REO Property.

114

SECTION 10.05

Fidelity.

115

ARTICLE XI MISCELLANEOUS PROVISIONS

115

SECTION 11.01

Binding Nature of Agreement; Assignment.

115

SECTION 11.02

Entire Agreement.

115

SECTION 11.03

Amendment.

116

SECTION 11.04

Voting Rights.

117

SECTION 11.05

Provision of Information.

117

SECTION 11.06

Governing Law.

117

SECTION 11.07

Notices.

118

SECTION 11.08

Severability of Provisions.

118

SECTION 11.09

Indulgences; No Waivers.

118

SECTION 11.10

Headings Not To Affect Interpretation.

118

SECTION 11.11

Benefits of Agreement.

119

SECTION 11.12

Special Notices to the Rating Agencies.

119

SECTION 11.13

Conflicts.

120

SECTION 11.14

Counterparts.

120

SECTION 11.15

No Petitions.

120

ATTACHMENTS

Exhibit A

Forms of Certificates

Exhibit B

Form of Residual Certificate Transfer Affidavit (Transferee)

Exhibit C

Form of Residual Certificate Transfer Affidavit (Transferor)

Exhibit D

[Reserved]

Exhibit E

List of Purchase and Servicing Agreements

Exhibit F

List of Custodial Agreements

Exhibit G

List of Limited Purpose Surety Bonds

Exhibit H

Form of Rule 144A Transfer Certificate

Exhibit I

Form of Purchaser’s Letter for Institutional Accredited Investors

Exhibit J

Form of ERISA Transfer Affidavit

Exhibit K

Form of Letter of Representations with the Depository Trust Company

Exhibit L

Form of Custodian Certification

Exhibit M

Form of Independent Accountant’s Report

Exhibit N

TAC Schedule

Schedule A

Mortgage Loan Schedule

This POOLING AND SERVICING AGREEMENT, dated as of November 1, 2005 (the “Agreement”), by and among J.P. MORGAN ACCEPTANCE CORPORATION I, a Delaware corporation, as depositor (the “Depositor”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as master servicer (in such capacity, the “Master Servicer”) and as securities administrator (in such capacity, the “Securities Administrator”), and acknowledged by J.P. MORGAN MORTGAGE ACQUISITION CORP., a Delaware corporation, as seller (the “Seller”), for purposes of Section 2.05.

PRELIMINARY STATEMENT

The Depositor has acquired the Mortgage Loans from the Seller and at the Closing Date is the owner of the Mortgage Loans and the other property being conveyed by the Depositor to the Trustee hereunder 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 Trust Fund of the Mortgage Loans and the other property constituting the Trust Fund.  The Depositor has duly authorized the execution and delivery of this Agreement to provide for the conveyance to the Trustee of the Mortgage Loans and the other property constituting the Trust Fund.  All covenants and agreements made by the Depositor, the Master Servicer, the Securities Administrator and the Trustee herein, with respect to the Mortgage Loans and the other property constituting the Trust Fund, are for the benefit of the Holders from time to time of the Certificates.  The Depositor, the Trustee, the Master Servicer and the Securities Administrator are entering into this Agreement, and the Trustee 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 comprising three real estate mortgage investment conduits (each, a “REMIC” or, in the alternative, the “Lower-Tier REMIC”, the “Middle-Tier REMIC” and the “Upper-Tier REMIC”). Each Certificate, other than the Class A-R Certificate, shall represent ownership of one or more regular interests in the Upper-Tier REMIC for purposes of the REMIC Provisions.  The Class A-R Certificate represents ownership of the sole class of residual interest in the Middle-Tier and Upper-Tier REMICs created hereunder.  The Upper-Tier REMIC shall hold as assets the several classes of uncertificated Middle Tier REMIC Interests (other than the Class MT-R Interest).

The Middle-Tier REMIC shall hold as assets the several classes of uncertificated Lower-Tier Interests in the Lower-Tier REMIC (other than the Class LT-R Interests).  The Lower-Tier REMIC shall hold as assets all property of the Trust Fund other than the interests in another REMIC formed hereby.  Each Middle-Tier Interest (other than the Class MT-R Interest) is hereby designated as a regular interest in the Middle-Tier REMIC.  Each Lower-Tier Interest (other than the Class LT-R Interest) is hereby designated as a regular interest in the Lower-Tier REMIC.  The latest possible maturity date of all REMIC regular interests created in this Agreement shall be the date three years following the Latest Possible Maturity Date.

The Lower-Tier REMIC

The Lower Tier Interests shall have the class designations, initial principal amounts, interest rates and corresponding Pool, Subgroup or Class of Certificates as set forth in the following table:

	

Class Designation

	

Initial Principal Amount

	

Certificate Interest Rate

	Corresponding Subgroup, Pool or

Class of Certificates

	LT1-SG1-A  (0.9% of SP Subgroup 1-1)

	(1)

	(4)

	1-1

	LT1-SG1-B  (0.1% of SP Subgroup 1-1)

	(1)

	(4)

	1-1

	LT1-SG1-C  (Excess of Subgroup 1-1)

	(1)

	(4)

	1-1

	LT1-SG2-A  (0.9% of SP Subgroup 1-2)

	(1)

	6.00%

	1-2

	LT1-SG2-B  (0.1% of SP Subgroup 1-2)

	(1)

	6.00%

	1-2

	LT1-SG2-C  (Excess of Subgroup 1-2)

	(1)

	6.00%

	1-2

	LT1-SG3-A  (0.9% of SP Subgroup 1-3)

	(1)

	6.50%

	1-3

	LT1-SG3-B  (0.1% of SP Subgroup 1-3)

	(1)

	6.50%

	1-3

	LT1-SG3-C  (Excess of Subgroup 1-3)

	(1)

	6.50%

	1-3

	LT1-SG4-A  (0.9% of SP Subgroup 1-4)

	(1)

	(4)

	1-4

	LT1-SG4-B  (0.1% of SP Subgroup 1-4)

	(1)

	(4)

	1-4

	LT1-SG4-C  (Excess of Subgroup 1-4)

	(1)

	(4)

	1-4

	LT1-SG5-A (0.9% of SP Subgroup 2-1)

	(1)

	(4)

	2-1

	LT1-SG5-B (0.1% of SP Subgroup 2-1)

	(1)

	(4)

	2-1

	LT1-SG5-C (Excess of Subgroup 2-1)

	(1)

	(4)

	2-1

	LT1-SG6-A (0.9% of SP Subgroup 2-2)

	(1)

	5.50%

	2-2

	LT1-SG6-B (0.1% of SP Subgroup 2-2)

	(1)

	5.50%

	2-2

	LT1-SG6-C (Excess of Subgroup 2-2)

	(1)

	5.50%

	2-2

	LT1-SG7-A (0.9% of SP Subgroup 2-3)

	(1)

	6.00%

	2-3

	LT1-SG7-B (0.1% of SP Subgroup 2-3)

	(1)

	6.00%

	2-3

	LT1-SG7-C (Excess of Subgroup 2-3)

	(1)

	6.00%

	2-3

	LT1-SG8-A (0.9% of SP Subgroup 2-4)

	(1)

	(4)

	2-4

	LT1-SG8-B (0.1% of SP Subgroup 2-4)

	(1)

	(4)

	2-4

	LT1-SG8-C (Excess of Subgroup 2-4)

	(1)

	(4)

	2-4

	LT1-A-P

	(3)

	(4)

	A-P

	LT1-A-3  (0.9% of SP Group 3)

	(1)

	(4)

	3

	LT1-B-3  (0.1% of SP Group 3)

	(1)

	(4)

	3

	LT1-C-3  (Excess of Group 3)

	(1)

	(4)

	3

	LT-A-X

	(2)

	(4)

	A-X

	LT-R

	(5)

	(5)

	N/A

_______________ 

(1)

Each Class A Interest will have a principal balance initially equal to 0.9% of the Pool Subordinate Amount or Subgroup Subordinate Amount, as applicable in each case, the (“SP”), of its corresponding Pool or Subgroup, as applicable.  Each Class B Interest will have a principal balance initially equal to 0.1% of the Pool Subordinate Amount or Subgroup Subordinate Amount, as applicable, of its corresponding Pool or Subgroup, as applicable. The initial principal balance of each Class C Interest will equal the excess of the initial aggregate principal balance of its corresponding Pool or Subgroup, as applicable (less the initial principal balance of any principal-only interest in the Lower-Tier REMIC payable from such Pool or Subgroup) over the initial aggregate principal balances of the Class A and Class B Interests corresponding to such Pool or Subgroup, as applicable.

(2)

This interest shall be an interest-only regular interest and shall bear interest on its notional principal amount, which shall be equal at all times to the Class Notional Amount of the Class A-X Certificates.

(3)

This Lower Tier Interest shall have an initial principal balance equal to the initial principal balance of its Corresponding Class of Certificates.

(4)

This Lower Tier Interest shall bear interest at the same rate as the Required Coupon of its Corresponding Subgroup or Pool, or the Pass-Through Rate of its Corresponding Class of Certificates.

(5)

The Class LT-R Interest is the sole class of residual interest in the Lower-Tier REMIC. It has no principal balance and pays no principal or interest.  

On each Distribution Date, the Available Funds shall be distributed with respect to the Lower Tier Interests in the following manner:

(1)

Interest. Interest shall be distributed with respect to each Lower-Tier Interest at the rate, or according to the formulas, described above; 

(2)

Principal if no Cross-Over Situation Exists. If no Cross-Over Situation exists with respect to any Class of Interests, then Principal Amounts arising with respect to each Pool or Subgroup, as applicable, will be allocated: first to cause the Pool's or Subgroup’s, as applicable, corresponding Class A and Class B to equal, respectively, 0.9% of the related SP and 0.1% of the SP; and second to the Pool's or Subgroup’s, as applicable, corresponding Class C Interest; 

(3)

Principal if a Cross-Over Situation Exists. If a Cross-Over Situation exists with respect to the Class A and Class B Interests then:

(a)

if the Calculation Rate in respect of the outstanding Class A and Class B Interests relating to a Group of Subordinate Certificates would be less than the Certificate Interest Rate of such Group of Subordinate Certificates, Principal Relocation Payments will be made proportionately to the outstanding Class A Interests prior to any other Principal Distributions from each such Pool or Subgroup, as applicable; and 

(b)

if the Calculation Rate in respect of the outstanding Class A and Class B Interests would be greater than the Certificate Interest Rate of such Group of Subordinate Certificates, Principal Relocation Payments will be made proportionately to the outstanding Class B Interests prior to any other Principal Distributions from each such Pool or Subgroup, as applicable. 

In each case, Principal Relocation Payments will be made so as to cause the Calculation Rate in respect of the outstanding Class A and Class B Interests relating to a Group of Subordinate Certificates to equal the Certificate Interest Rate of such Group or Subordinate Certificates. With respect to each Pool or Subgroup, as applicable, if (and to the extent that) the sum of (a) the principal payments comprising the Principal Remittance Amount received during the Due Period and (b) the Realized Losses, are insufficient to make the necessary reductions of principal on the Class A and Class B Interests, then interest will be added to the Pool's or Subgroup’s, as applicable, other Interests that are not receiving Principal Relocation Payments, in proportion to their principal balances. 

(c)

The outstanding aggregate Class A and Class B Interests for all Pools and Subgroups will not be reduced below 1 percent of the excess of (i) the aggregate outstanding Class Principal Amounts of all Pools and Subgroups as of the end of any Due Period over (ii) the Senior Certificates for all Pools and Subgroups as of the related Distribution Date (after taking into account distributions of principal on such Distribution Date).

(d)

If (and to the extent that) the limitation in paragraph (c) prevents the distribution of principal to the Class A and Class B Interests of a Pool or Subgroup, as applicable, and if the Pool's or Subgroup’s, as applicable, Class C Interest has already been reduced to zero, then the excess principal from that Pool or Subgroup, as applicable, will be paid to the Class C Interests of the other Pool or Subgroup, as applicable, the aggregate Class A and Class B Interests of which are less than one percent of the Pool Subordinated Amount or Subgroup Subordinate Amount, as applicable. If the Pool or Subgroup, as applicable, of the Class C Interest that receives such payment has a weighted average Net Mortgage Rate below the weighted average Net Mortgage Rate of the Pool making the payment, then the payment will be treated by the Lower-Tier REMIC as a Realized Loss. Conversely, if the Pool or Subgroup, as applicable, of the Class C Interest that receives such payment has a weighted average Net Mortgage Rate above the weighted average Net Mortgage Rate of the Pool or Subgroup, as applicable, making the payment, then the payment will be treated by the Lower-Tier REMIC as a reimbursement for prior Realized Losses.

The Middle-Tier REMIC

The Middle-Tier Interests will have the initial principal amounts, pass-through rates and Corresponding Certificate Class as set forth in the following table:

	Class

	Initial Principal Amount

	Pass-Through Rate

	Corresponding Certificates

	MT-1-A-1

	(1)

	(3)

	1-A-1

	MT-1-A-2

	(1)

	(3)

	1-A-2

	MT-1-A-3

	(1)

	(3)

	1-A-3

	MT-1-A-4

	(1)

	(3)

	1-A-4

	MT-1-A-5

	(1)

	(3)

	1-A-5

	MT-1-A-6

	(1)

	(3)

	1-A-6

	MT-1-A-7

	(1)

	7.50%

	1-A-7, 1-A-8

	MT-1-A-9

	(1)

	(3)

	1-A-9

	MT-1-A-10

	(1)

	(3)

	1-A-10

	MT-A-P

	(1)

	(3)

	A-P

	MT-2-A-1

	(1)

	(3)

	2-A-1

	MT-2-A-2

	(1)

	(3)

	2-A-2

	MT-2-A-3

	(1)

	(3)

	2-A-3

	MT-2-A-4

	(1)

	(3)

	2-A-4

	MT-2-A-5

	(1)

	(3)

	2-A-5

	MT-2-A-6

	(1)

	(3)

	2-A-6

	MT-2-A-7

	(1)

	(3)

	2-A-7

	MT-2-A-8

	(1)

	(3)

	2-A-8

	MT-2-A-9

	(1)

	(3)

	2-A-9

	MT-2-A-10

	(1)

	(3)

	2-A-10

	MT-2-A-11

	(1)

	(3)

	2-A-11

	MT-2-A-12

	(1)

	(3)

	2-A-12

	MT-2-A-13

	(1)

	(3)

	2-A-13

	MT-2-A-14

	(1)

	7.00%

	2-A-14, 2-A-15

	MT-2-A-16

	(1)

	7.00%

	2-A-16, 2-A-17

	MT-2-A-18

	(1)

	(3)

	2-A-18

	MT-A-X

	(2)

	(3)

	A-X

	MT-3-A-1

	(1)

	(3)

	3-A-1

	MT-B-1

	(1)

	(4)

	B-1

	MT-B-2

	(1)

	(4)

	B-2

	MT-B-3

	(1)

	(4)

	B-3

	MT-B-4

	(1)

	(4)

	B-4

	MT-B-5

	(1)

	(4)

	B-5

	MT-B-6

	(1)

	(4)

	B-6

	MT-R

	(5)

	(5)

	N/A

(1)

This Middle-Tier Interest shall have an initial principal balance equal to the initial principal balance of its Corresponding Class of Certificates.

(2)

This Middle-Tier Interest shall be an interest-only regular interest and shall bear interest on its notional principal amount, which shall equal the notional principal balance of its Corresponding Class of Certificates.

(3)

This Middle-Tier Interest shall bear interest at the same rate as its Corresponding Class of Certificates.  

(4)

This Middle-Tier Interest shall bear interest at the same rate as its Corresponding Class of Certificates.  For federal income tax purposes, the pass through rate will be the Calculation Rate.

(5)

The Class MT-R Interest is the sole class of residual interest in the Middle-Tier REMIC. It has no principal balance and pays no principal or interest.

On each Distribution Date, interest shall be distributed on the Middle-Tier Interests based on the above-described interest rates.   

On each Distribution Date principal shall be distributed, and Realized Losses shall be allocated, among the Middle-Tier Interests, pro rata, until the principal balance of each such Middle-Tier Interest equals the Class Principal Amount of the Corresponding Class of Certificates immediately after such Distribution Date.

The Certificates and the Upper-Tier REMIC

The following table sets forth (or describes) the Class designation, Certificate Interest Rate, initial Class Principal Amount (or initial Class Notional Amount) and minimum denomination for each Class of Certificates comprising interests in the Trust Fund created hereunder.

	Class Designation

	Certificate Interest Rate

	Initial Class Principal Amount 

	Minimum Denominations or Percentage Interest

	1-A-1

	5.500%

	$9,000,000

	$ 100,000.00

	1-A-2

	5.500%

	    $66,621,400

	$ 100,000.00

	1-A-3

	5.500%

	    $12,727,500

	$ 100,000.00

	1-A-4

	6.000%

	  $211,780,746

	$ 100,000.00

	1-A-5

	6.000%

	    $11,734,554

	$ 100,000.00

	1-A-6

	6.500%

	   $163,604,540

	$ 100,000.00

	1-A-7

	(1)

	$38,251,100

	$ 100,000.00

	1-A-8

	(2)

	(3)

	$ 100,000.00

	1-A-9

	5.500%

	$500,000

	$ 100,000.00

	1-A-10

	6.500%

	        $9,065,160

	$ 100,000.00

	2-A-1

	5.000%

	    $10,520,200

	$ 100,000.00

	2-A-2

	5.500%

	    $12,000,000

	$ 100,000.00

	2-A-3

	5.500%

	    $26,253,000

	$ 100,000.00

	2-A-4

	5.500%

	    $23,224,200

	$ 100,000.00

	2-A-5

	5.500%

	    $13,127,500

	$ 100,000.00

	2-A-6

	5.500%

	$34,360,900

	$ 100,000.00

	2-A-7

	5.500%

	      $3,817,900

	$ 100,000.00

	2-A-8

	5.500%

	       $191,800

	$ 100,000.00

	2-A-9

	6.000%

	  $150,000,000

	$ 100,000.00

	2-A-10

	6.000%

	    $20,000,000

	$ 100,000.00

	2-A-11

	6.000%

	  $158,829,200

	$ 100,000.00

	2-A-12

	6.000%

	      $8,359,425

	$ 100,000.00

	2-A-13

	6.000%

	    $18,683,275

	$ 100,000.00

	2-A-14

	(4)

	  $120,000,000

	$ 100,000.00

	2-A-15

	(5)

	(6)

	$ 100,000.00

	2-A-16

	6.000%

	$40,482,300

	$ 100,000.00

	2-A-17

	6.000%

	(7)

	$ 100,000.00

	2-A-18

	7.000%

	$8,892,200

	$ 100,000.00

	3-A-1

	5.500%

	$39,268,800

	$ 100,000.00

	A-P

	(8)

	$1,712,945

	$ 100,000.00

	A-X

	6.000%

	(9)

	$ 100,000.00

	A-R

	6.000%

	$100

	100%

	B-1

	(10)

	    $28,804,900

	$ 100,000.00

	B-2

	(10)

	    $12,802,200

	$ 100,000.00

	B-3

	(10)

	      $8,961,500

	$ 100,000.00

	B-4

	(10)

	      $6,401,100

	$ 100,000.00

	B-5

	(10)

	      $5,761,000

	$ 100,000.00

	B-6

	(10)

	      $4,481,365

	$ 100,000.00

_______________

(1)

The initial per annum Certificate Interest Rate on the Class 1-A-7 Certificates is 4.490% per annum.  After the first Distribution Date, the per annum Certificate Interest Rate on these Certificates will be equal to LIBOR plus 0.350%, but no more than 7.500% per annum.

(2)

The initial per annum Certificate Interest Rate on the Class 1-A-8 Certificates is 3.010% per annum.  After the first Distribution Date, the per annum Certificate Interest Rate on these Certificates will be equal to 7.150% minus LIBOR and no less than 0.000% per annum.

(3)

The Class 1-A-8 Certificates will not receive any distributions of principal.  Interest will accrue on the Class 1-A-8 Notional Amount.

(4)

The initial per annum Certificate Interest Rate on the Class 2-A-14 Certificates is 4.540% per annum.  After the first Distribution Date, the per annum Certificate Interest Rate on these Certificates will be equal to LIBOR plus 0.400%, but no more than 7.000% per annum.

(5)

The initial per annum Certificate Interest Rate on the Class 2-A-15 Certificates is 2.460% per annum.  After the first Distribution Date, the per annum Certificate Interest Rate on these Certificates will be equal to 6.600% minus LIBOR and no less than 0.00% per annum.

(6)

The Class 2-A-15 Certificates will not receive any distributions of principal.  Interest will accrue on the Class 2-A-15 Notional Amount.

(7)

The Class 2-A-17 Certificates will not receive any distributions of principal.  Interest will accrue on the Class 2-A-17 Notional Amount.

(8)

These Certificates will not receive any distributions of interest.

(9)

The Class A-X Certificates will not receive any distributions of principal.  Interest will accrue on the Class A-X Notional Amount.

(10)

The Certificate Interest Rate applicable to each of the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 will equal a per annum rate calculated as the quotient expressed as a percentage of (a) the sum of (i) the product of (x) 5.500% and (y) the Subgroup Subordinate Amount relating to Subgroup 1-1 for that Distribution Date, (ii) the product of (x) 6.000% and (y) the Subgroup Subordinate Amount relating to Subgroup 1-2 for that Distribution Date, (iii) the product of (x) 6.500% and (y) the Subgroup Subordinate Amount relating to Subgroup 1-3 for that Distribution Date, (iv)   the product of (x) 7.500% and (y) the Subgroup Subordinate Amount relating to Subgroup 1-4 for that Distribution Date, (v) the product of (x) 5.000% and (y) the Subgroup Subordinate Amount relating to Subgroup 2-1 for that Distribution Date, (vi) the product of (x) 5.500% and (y) the Subgroup Subordinate Amount relating to Subgroup 2-2 for that Distribution Date, (vii)  the product of (x) 6.000% and (y) the Subgroup Subordinate Amount relating to Subgroup 2-3 for that Distribution Date, (viii)  the product of (x) 7.000% and (y) the Subgroup Subordinate Amount relating to Subgroup 2-4 for that Distribution Date and (ix) the product of (x) 5.500% and (y) the Pool 3 Subordinate Amount for that Distribution Date, divided by (b) the aggregate of the Subgroup Subordinate Amounts relating to Subgroup 1-1, Subgroup 1-2, Subgroup 1-3, Subgroup 1-4, Subgroup 2-1, Subgroup 2-2, Subgroup 2-3  and Subgroup 2-4 for that Distribution Date and the Pool 3 Subordinate Amount for that Distribution Date.

As of the Cut-off Date, the Mortgage Loans had an Aggregate Stated Principal Balance of $1,280,220,811.52.

The foregoing REMIC structure is intended to cause all of the cash from the Mortgage Loans to flow through to the Upper-Tier REMIC as cash flow on a REMIC regular interest, without creating any shortfall—actual or potential (other than for credit losses) to any REMIC regular interest.  To the extent that the structure is believed to diverge from such intention the Trustee will resolve ambiguities to accomplish such result and will to the extent necessary rectify any drafting errors or seek clarification to the structure without Certificateholder approval (but with guidance of Counsel) to accomplish such intention.

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

ARTICLE I

DEFINITIONS

SECTION 1.01

Definitions.  

The following words and phrases, unless the context otherwise requires, shall have the following meanings:

Accountant: A Person engaged in the practice of accounting who (except when this Agreement provides that an Accountant must be Independent) may be employed by or affiliated with the Depositor or an Affiliate of the Depositor.

Accrual Period: With respect to any Distribution Date and any Class of Certificates, other than the LIBOR Certificates, the calendar month preceding the month in which the Distribution Date occurs and with respect to the LIBOR Certificates, the period from and including the 25th day of the month immediately preceding the related Distribution Date to and including the 24th day of the month of such Distribution Date.  Interest shall accrue on all Classes of Certificates and on all Lower-Tier Interests and Middle-Tier Interests on the basis of a 360-day year consisting of twelve 30-day months.

Acknowledgements: The Assignment, Assumption and Recognition Agreements, each dated as of November 1, 2005, assigning rights under the Purchase and Servicing Agreements from the Seller to the Depositor and from the Depositor to the Trustee, for the benefit of the Certificateholders.

Act: The Securities Act of 1933, as amended.

Advance: With respect to any Distribution Date and any Mortgage Loan, the payments required to be made by the Servicer of such Mortgage Loan or, if the applicable Servicer fails to make such payments, the Master Servicer, pursuant to this Agreement or the applicable Purchase and Servicing Agreement, as applicable, the amount of any such payment being equal to the aggregate of the payments of principal and interest (net of the applicable Servicing Fee and net of any net income in the case of any REO Property) on the Mortgage Loans that were due on the related Due Date and not received as of the close of business on the related Determination Date, less the aggregate amount of any such delinquent payments that the Master Servicer or the applicable Servicer has determined would constitute Nonrecoverable Advances if advanced.

Adverse REMIC Event: Either (i) loss of status as a REMIC, within the meaning of Section 860D of the Code, for any group of assets identified as a REMIC in the Preliminary Statement to this Agreement, or (ii) imposition of any tax, including the tax imposed under Section 860F(a)(1) on prohibited transactions, and the tax imposed under Section 860G(d) on certain contributions to a REMIC, on any REMIC created hereunder to the extent such tax would be payable from assets held as part of the Trust Fund.

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

Aggregate Expense Rate: With respect to any Mortgage Loan, the Servicing Fee Rate.

Aggregate Pool: Pool 1, Pool 2 and Pool 3 in the aggregate.

Aggregate Stated Principal Balance: As to any Distribution Date, the aggregate of the Stated Principal Balances for all Mortgage Loans (and when such term is used with respect to a particular Mortgage Group, the aggregate of the Stated Principal Balances of the Mortgage Loans or Mortgage Components, as applicable, in such Mortgage Group) which were outstanding on the Due Date in the month preceding the month of such Distribution Date.

Aggregate Voting Interests: The aggregate of the Voting Interests of all the Certificates under this Agreement.

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

Applicable Credit Support Percentage: As to each Class of Subordinate Certificates and any Distribution Date, the sum of the related Subordinate Class Percentage of that Class and the aggregate Subordinate Class Percentage of all other Classes of Subordinate Certificates, that rank lower in priority than such Class.

Apportioned Principal Balance: As to any Distribution Date and each Class of Subordinate Certificates, the Class Principal Amount thereof immediately prior to that Distribution Date multiplied by a fraction the numerator of which is the applicable Pool Subordinate Amount (or, for purposes of allocating Excess Losses to a Subgroup, the applicable Subgroup Subordinate Amount) for that date and the denominator of which is the sum of the Pool Subordinate Amounts (in the aggregate) in the Aggregate Pool. 

Appraised Value: With respect to any Mortgage Loan, the Appraised Value of the related Mortgaged Property shall be: (i) with respect to a Mortgage Loan other than a Refinancing Mortgage Loan, the lesser of (a) the value of the Mortgaged Property based upon the appraisal made at the time of the origination of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the time of the origination of such Mortgage Loan; and (ii) with respect to a Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the appraisal made at the time of the origination of such Refinancing Mortgage Loan.

Assignment: The Assignments, each dated as of November 1, 2005 between the Seller and the Custodian, pursuant to which the Seller assigns to the Trustee all of its rights, title and interest under the Custodial Agreements to the extent relating to certain specified mortgage loans.

Assignment of Mortgage: 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 the sale of the Mortgage to the Trustee, which assignment, notice of transfer or equivalent instrument may be in the form of one or more blanket assignments covering the Mortgage Loans secured by Mortgaged Properties located in the same jurisdiction, if permitted by law; provided, however, that neither the Trustee nor the Custodian shall be responsible for determining whether any such assignment is in recordable form.

Assignment of Proprietary Lease: With respect to a Cooperative Loan, an assignment of the Proprietary Lease sufficient under the laws of the jurisdiction wherein the related Cooperative Unit is located to reflect the assignment of such Proprietary Lease.

Assignment of Recognition Agreement: With respect to a Cooperative Loan, an assignment of the Recognition Agreement sufficient under the laws of the jurisdiction wherein the related Cooperative Unit is located to reflect the assignment of such Recognition Agreement.

Authenticating Agent: Any authenticating agent appointed by the Trustee pursuant to Section 6.10 until any successor authenticating agent for the Certificates is named, and thereafter  “Authenticating Agent” shall mean any such successor.  The Authenticating Agent shall be Wells Fargo Bank, N.A. for so long as it is acting as Securities Administrator under this Agreement.

Authorized Officer: Any Person who may execute an Officer’s Certificate on behalf of the Depositor.

Available Distribution Amount: With respect to any Distribution Date and (a) each Pool, the total amount of all cash received from each Servicer on the Mortgage Loans in such Pool for deposit into the Distribution Account in respect of such Distribution Date, including (1) all scheduled installments of interest (net of the related Servicing Fees) and principal collected on the related Mortgage Loans and due during the Due Period related to such Distribution Date, together with any Advances in respect thereof, (2) all Insurance Proceeds, Liquidation Proceeds and Subsequent Recoveries, in each case for such Distribution Date, (3) all Principal Prepayments, together with any accrued interest thereon, identified as having been received from the related Mortgage Loans during the related Prepayment Period, (4) any amounts paid by the Master Servicer and/or received from the Servicers in respect of Prepayment Interest Shortfalls with respect to the related Mortgage Loans and (5) the aggregate Purchase Price of all Defective Mortgage Loans in such Pool purchased from the Trust Fund during the related Prepayment Period, minus:

(A)

with respect to the Mortgage Loans in that Pool (or, if not related to the Pool, that Pool’s pro rata share of) all related fees, charges and other amounts payable or reimbursable to the Master Servicer, the Securities Administrator, the Custodian or the Trustee under this Agreement or to the related Servicer under the applicable Purchase and Servicing Agreement;

(B)

in the case of (2), (3), (4) and (5) above, any related unreimbursed expenses incurred by the related Servicer in connection with a liquidation or foreclosure and any unreimbursed Advances or Servicing Advances due to the Master Servicer or the related Servicer;

(C)

any related unreimbursed Nonrecoverable Advances due to the Master Servicer or the Servicers; and

(D)

in the case of (1) through (4) above, any related amounts collected which are determined to be attributable to a subsequent Due Period or Prepayment Period; 

and (b) each Subgroup, an amount equal to the portion of the Available Distribution Account for Pool 1 or Pool 2 that is allocable to that Subgroup.

Bankruptcy: As to any Person, the making of an assignment for the benefit of creditors, the filing of a voluntary petition in bankruptcy, adjudication as a bankrupt or insolvent, the entry of an order for relief in a bankruptcy or insolvency proceeding, the seeking of reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief, or seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator, dissolution, or termination, as the case may be, of such Person pursuant to the provisions of either the Bankruptcy Code or any other similar state laws.

Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.

Bankruptcy Coverage Termination Date: The point in time at which the Bankruptcy Loss Coverage Amount is reduced to zero.

Bankruptcy Loss: With respect to any Mortgage Loan or Mortgage Component, as applicable, a Deficient Valuation or Debt Service Reduction; provided, however, that a Bankruptcy Loss shall not be deemed a Bankruptcy Loss hereunder so long as the related Servicer has notified the Master Servicer in writing that the related Servicer is diligently pursuing any remedies that may exist in connection with the related Mortgage Loan and either (A) the Mortgage Loan is not in default with regard to payments due thereunder or (B) delinquent payments of principal and interest under the Mortgage Loan and any related escrow payments in respect of such Mortgage Loan are being advanced on a current basis by the related Servicer or by the Master Servicer if such Servicer fails to do so, in either case without giving effect to any Debt Service Reduction or Deficient Valuation, as reported by the related Servicer or the Master Servicer to the Securities Administrator.

Bankruptcy Loss Coverage Amount: As of any date of determination and the Subordinate Certificates, the related Bankruptcy Loss Coverage Amount shall equal the applicable Initial Bankruptcy Coverage Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated to the Subordinate Certificates, as applicable, since the Cut-off Date and (ii) any permissible reductions in such Bankruptcy Loss Coverage Amount as evidenced by a letter of each Rating Agency to the Trustee to the effect that any such reduction will not result in a downgrading of the then current ratings assigned to the Classes of Certificates rated by it.

Book-Entry Certificates: Beneficial interests in Certificates designated as “Book-Entry Certificates” in this Agreement, ownership and transfers of which shall be evidenced or made through book entries by a Clearing Agency as described in Section 3.09; provided, that after the occurrence of a Book-Entry Termination whereupon book-entry registration and transfer are no longer permitted and Definitive Certificates are to be issued to Certificate Owners, such Book-Entry Certificates shall no longer be “Book-Entry Certificates.”  As of the Closing Date, all Classes of Certificates constitute Book-Entry Certificates, other than the Class B-4, Class B-5, Class B-6 and Class A-R Certificates.

Book-Entry Termination: The occurrence of any of the following events: (i) the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Book Entry Certificates, and the Depositor is unable to locate a qualified successor; or (ii) the Depositor at its option advises the Trustee and the Certificate Registrar in writing that it elects to terminate the book-entry system through the Clearing Agency.

Bring-Down Date:  With respect to any Chase Originator Mortgage Loan, the date as of which the Chase Originators makes the representations and warranties with respect to such Chase Originator Mortgage Loan and as specified in the related Purchase and Servicing Agreement.  With respect to any PHH Mortgage Loan, the date as of which PHH makes the representations and warranties with respect to such PHH Mortgage Loan and as specified in the related Purchase and Servicing Agreement.  With respect to any GreenPoint Mortgage Loan, the date as of which GreenPoint makes the representations and warranties with respect to such GreenPoint Mortgage Loan and as specified in the related Purchase and Servicing Agreement.  With respect to any Suntrust Mortgage Loan, the date as of which Suntrust makes the representations and warranties with respect to such Suntrust City Mortgage Loan and as specified in the related Purchase and Servicing Agreement.

Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in New York, New York or, if other than New York, the city in which the Corporate Trust Office of the Trustee is located, are authorized or obligated by law or executive order to be closed.

Calculation Rate: For each Distribution Date and the Subordinate Certificates, in the case of the Class A and Class B Interests in the Lower-Tier REMIC, the product of (i) 10 and (ii) the weighted average rate of the outstanding related Class A and Class B Interests, treating each such Class A Interest as capped at zero or reduced by a fixed percentage of 100% of the interest accruing on such Class.

Certificate: Any one of the certificates signed by the Trustee, or the Securities Administrator on the Trustee’s behalf, and authenticated by the Securities Administrator as Authenticating Agent in substantially the forms attached hereto as Exhibit A.

Certificate Group: Each of the Subgroup 1-1 Certificates, Subgroup 1-2 Certificates, Subgroup 1-3 Certificates, Subgroup 1-4 Certificates, Subgroup 2-1 Certificates, Subgroup 2-2 Certificates, Subgroup 2-3 Certificates, Subgroup 2-4 Certificates and Group 3A Certificates. 

Certificate Interest Rate: With respect to each Class of Certificates and any Distribution Date, the applicable per annum rate described in the Preliminary Statement hereto.

Certificate Owner: With respect to a Book-Entry Certificate, the Person who is the owner of such Book-Entry Certificate, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency).

Certificate Principal Amount: With respect to any Certificate (other than an Interest-Only Certificate) the Certificate Principal Amount as of the Closing Date as reduced by all amounts previously distributed on that Certificate in respect of principal and the principal portion of any Realized Losses (including Excess Losses) previously allocated to that Certificate plus, in the case of the Class 2-A-7 and Class 2-A-8 Certificates, all prior Class 2-A-7 Accrual Amounts and Class 2-A-8 Accrual Amounts allocated to such Certificate, respectively; provided, however, that the Certificate Principal Amount of each class of Certificates (other than the Interest-Only Certificates) to which Realized Losses have been allocated shall be increased, sequentially in the order of payment priority, by the amount of Subsequent Recoveries on the Mortgage Components or Mortgage Loans in a Subgroup or Pool, as applicable, distributed as principal to any related class of Certificates, but not by more than the amount of Realized Losses previously allocated to reduce the Certificate Principal Amount of such class of Certificates.  The Certificate Principal Amount of a class of Subordinate Certificates may be additionally reduced by allocation of any related Subordinate Certificate Writedown Amount.

Certificate Register and Certificate Registrar: The register maintained and the registrar appointed pursuant to Section 3.02.  Wells Fargo Bank, N.A. will act as Certificate Registrar for so long as it is the Securities Administrator under this Agreement.

Certificateholder: The meaning provided in the definition of “Holder.”

Chase Originator: CHF and/or JPMCB, as the context requires.

Chase Originator Mortgage Loan:  Each Mortgage Loan originated by a Chase Originator and listed on the Mortgage Loan Schedule.

Chase Originator Purchase and Servicing Agreement:  The (i) Flow Mortgage Loan Purchase, Warranties and Servicing Agreement, dated as of January 1, 2004, as amended by Amendment No. 1 thereto dated as of June 1, 2004, and further amended by Amendment No. 2 thereto dated as of January 1, 2005 between the Seller and Chase Manhattan Mortgage Corporation and listed in Exhibit E hereto, as modified by the related acknowledgement and/or (ii) Flow Mortgage Loan Purchase, Warranties and Servicing Agreement, dated as of January 1, 2005 between the Seller, JPMCB and CHF and listed in Exhibit E hereto as modified by the related Acknowledgement, as the context requires.

CHF: Chase Home Finance, LLC or its successor in interest.

Civil Relief Act: The Servicemembers Civil Relief Act and any similar state laws.

Class: Collectively, Certificates bearing the same class designation.  In the case of the Lower-Tier REMIC, the term “Class” refers to all Lower-Tier Interests having the same alphanumeric designation.  In the case of the Middle-Tier REMIC, the term “Class” refers to all Middle-Tier Interests having the same alphanumerical designation.

Class A-R Certificate: The Class A-R Certificate executed by the Trustee, and authenticated and delivered by the Authenticating Agent, substantially in the form annexed hereto as Exhibit A, and evidencing the ownership of the residual interest in the Upper-Tier and Middle-Tier REMIC formed hereby.

Class 1-A-8 Notional Amount: With respect to any Distribution Date and the Class 1-A-8 Certificates, the Class Principal Amount of the Class 1-A-7 Certificates immediately prior to that Distribution Date.

Class 1-A-1 and Class 1-A-9 Priority Amount: With respect to the Class 1-A-1 and Class 1-A-9 Certificates and any Distribution Date, the product of (a) the Class 1-A-1 and Class 1-A-9 Priority Percentage, (b) the Stepdown Percentage and (c) the related Senior Principal Distribution Amount for such Distribution Date.

Class 1-A-1 and Class 1-A-9 Priority Percentage: With respect to any Distribution Date, the aggregate Class Principal Amount of the Class 1-A-1 and Class 1-A-9 Certificates divided by the aggregate Class Principal Amount of the Class 1-A-1, Class 1-A-2, Class 1-A-3 and Class 1-A-9 Certificates, in each case immediately prior to any distributions on that Distribution Date.

Class 1-A-P Component: The portion of the Class A-P Certificates related to the Class P Mortgage Components in Subgroup 1-1.

Class 2-A-2 Priority Amount: With respect to the Class 2-A-2 Certificates and any Distribution Date, the product of (a) the Class 2-A-2 Priority Percentage, (b) the Stepdown Percentage and (c) the related Senior Principal Distribution Amount for such Distribution Date.

Class 2-A-2 Priority Percentage:  With respect to any Distribution Date, the Class Principal Amount of the Class 2-A-2 Certificates divided by the aggregate Class Principal Amount of the Class 2-A-2, Class 2-A-3, Class 2-A-4, Class 2-A-5, Class 2-A-6, Class 2-A-7 and Class 2-A-8 Certificates, in each case immediately prior to any distributions on that Distribution Date.

Class 2-A-7 Accretion Termination Date: The earlier to occur of (x) the Distribution Date on which the Class Principal Amount of the Class 2-A-6 Certificates has been reduced to zero; and (y) the Distribution Date on which the aggregate Class Principal Amount of the Subordinate Certificates has been reduced to zero.

Class 2-A-7 Accrual Amount: With respect to any Distribution Date on or before the Class 2-A-7 Accretion Termination Date, an amount equal to the Current Interest on the Class 2-A-7 Certificates for that Distribution Date.

Class 2-A-8 Accretion Termination Date: The earlier to occur of (x) the Distribution Date on which the aggregate Class Principal Amount of the Class 2-A-6 and Class 2-A-7 Certificates has been reduced to zero; and (y) the Distribution Date on which the aggregate Class Principal Amount of the Subordinate Certificates has been reduced to zero.

Class 2-A-8 Accrual Amount: With respect to any Distribution Date on or before the Class 2-A-8 Accretion Termination Date, an amount equal to the Current Interest on the Class 2-A-8 Certificates for that Distribution Date.

Class 2-A-10 Priority Amount: With respect to the Class 2-A-10 Certificates and any Distribution Date, the product of (a) the Class 2-A-10 Priority Percentage, (b) the Stepdown Percentage and (c) the related Senior Principal Distribution Amount for such Distribution Date.

Class 2-A-10 Priority Percentage: With respect to any Distribution Date, the Class Principal Amount of the Class 2-A-10 Certificates divided by the aggregate Class Principal Amount of the Class 2-A-9, Class 2-A-10, Class 2-A-11, Class 2-A-12, Class 2-A-13 and Class A-R Certificates, in each case immediately prior to any distributions on that Distribution Date.

Class 2-A-15 Notional Amount: With respect to any Distribution Date and the Class 2-A-15 Certificates, the Class Principal Amount of the Class 2-A-14 Certificates immediately prior to that Distribution Date.

Class 2-A-17 Notional Amount: With respect to any Distribution Date and the Class 2-A-17 Certificates, the product of: (x) the Class Principal Amount of the Class 2-A-16 Certificates immediately prior to that Distribution Date and (y) a fraction, the numerator of which is 1.0% and the denominator of which is 6.0%.

Class 2-A-P Component: The portion of the Class A-P Certificates related to the Class P Mortgage Components in Subgroup 2-1.

Class 3-A-P Component: The portion of the Class A-P Certificates related to the Class P Mortgage Components in Pool 3.

Class A-X Notional Amount: With respect to any Distribution Date and the Class A-X Certificates, the product of: (x) the aggregate Stated Principal Balance, as of the second preceding Due Date after giving effect to Scheduled Payments for that Due Date, whether or not received, or for the initial Distribution Date, as of the Cut-off Date, of the Premium Rate Mortgage Loans in Subgroup 1-4, Subgroup 2-4 and Pool 3; and (y) a fraction, the numerator of which is the weighted average of the related Stripped Interest Rates for the Premium Rate Mortgage Loans in Subgroup 1-4, Subgroup 2-4 and Pool 3 and the denominator of which is 6.000%.

Class A Interest: Each regular interest in the Lower Tier REMIC with the letter "A" in its class designation. 

Class A-P Principal Distribution Amount: With respect to each Distribution Date and Subgroup 1-1, Subgroup 2-1 and Pool 3, the sum of the applicable Class P Fraction of the sum of (a) each Scheduled Payment of principal collected or advanced on the related Class P Mortgage Components or Class P Mortgage Loans in the related Mortgage Group (before taking into account any Deficient Valuations or Debt Service Reductions) and due during the related Due Period, (b) that portion of the Purchase Price representing principal of any Class P Mortgage Components or Class P Mortgage Loans in such Mortgage Group purchased in accordance with this Agreement or a Purchase and Servicing Agreement hereof and received during the related Prepayment Period, (c) the principal portion of any related Substitution Amount received during the related Prepayment Period on any Class P Mortgage Components or Class P Mortgage Loans in such Mortgage Group, (d) the principal portion of all Net Liquidation Proceeds including Insurance Proceeds received during the related Prepayment Period with respect to Class P Mortgage Components or Class P Mortgage Loans in such Mortgage Group that are not yet Liquidated Mortgage Loans, (e) the principal portion of all Net Liquidation Proceeds, including Insurance Proceeds, received during the related Prepayment Period with respect to Liquidated Mortgage Loans that are Class P Mortgage Components or Class P Mortgage Loans in such Mortgage Group, (f) the principal portion of all Principal Prepayments of Class P Mortgage Components or Class P Mortgage Loans in such Mortgage Group applied by the Servicers during the related Prepayment Period, and (g) on the Distribution Date on which the Trust Fund is to be terminated pursuant to Article VII hereof, that portion of the Par Value in respect of principal on the Class P Mortgage Components or Class P Mortgage Loans for such Mortgage Group.

Class B Interest: Each regular interest in the Lower Tier REMIC with the letter "B" in its class designation.

Class C Interest: Each regular interest in the Lower Tier REMIC with the letter "C" in its class designation.

Class Notional Amount: The Class 1-A-8 Notional Amount, Class 2-A-15 Notional Amount, Class 2-A-17 Notional Amount or Class A-X Notional Amount, as the context requires.

Class P Fraction: With respect to each Class P Mortgage Component or Class P Mortgage Loan in Subgroup 1-1, Subgroup 2-1 or Pool 3, a fraction, the numerator of which is the Required Coupon for the related Subgroup or Pool minus the Net Mortgage Rate on that Class P Mortgage Component or Class P Mortgage Loans and the denominator of which is the Required Coupon for the related Mortgage Group.

Class P Mortgage Component: With respect to Subgroup 1-1 and Subgroup 2-1, the Mortgage Components in that Subgroup that have Net Mortgage Rates less than the Required Coupon for that Subgroup.

Class P Mortgage Loan: With respect to Pool 3, the Mortgage Loans in that Pool that have Net Mortgage Rates less than the Required Coupon for Pool 3.

Class P Shortfall Amount: With respect to any Distribution Date and Subgroup 1-1, Subgroup 2-1 or Pool 3, the sum of (i) principal in an amount equal to the applicable Class P Fraction of any Realized Loss on a Class P Mortgage Component or Class P Mortgage Loan in the related Mortgage Group incurred in the previous calendar month (other than an Excess Loss) and (ii) the sum of the amounts, if any, by which the amount described in subclause (i) on each prior Distribution Date exceeded the amount actually distributed with respect to the related Class P Shortfall Amount on those prior Distribution Dates and not subsequently distributed.

Class Principal Amount: With respect to each Class of Certificates (other than an Interest-Only Certificate), the aggregate of the Certificate Principal Amounts of all Certificates of such Class at the date of determination.  With respect to any Lower-Tier or Middle-Tier Interest, the initial Class Principal Amount as shown or described in the table set forth in the Preliminary Statement for such REMIC, as reduced by principal distributed with respect to such Lower-Tier Interest and Realized Losses allocated to such Lower-Tier or Middle-Tier Interest at the date of determination.

Clearing Agency: An organization registered as a “clearing agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.  As of the Closing Date, the Clearing Agency shall be The Depository Trust Company.

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

Closing Date: November 29, 2005.

Code: The Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

Compensating Interest Payment: As to any Distribution Date, the lesser of (1) the Servicing Fee for such date or the amount payable to the Master Servicer pursuant to Section 9.04 on such Distribution Date, as applicable, and (2) any Prepayment Interest Shortfall for such date, to the extent required by Section 5.05, with respect to the Master Servicer or the applicable Purchase and Servicing Agreement, with respect to a Servicer.

Consent: A document executed by the Cooperative Corporation (i) consenting to the sale of the Cooperative Unit to the Mortgagor and (ii) certifying that all maintenance charges relating to the Cooperative Unit have been paid.

Cooperative Corporation: The entity that holds title (fee or an acceptable leasehold estate) to the real property and improvements constituting the Cooperative Property and which governs the Cooperative Property, which Cooperative Corporation must qualify as a Cooperative Housing Corporation under Section 216 of the Code.

Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a Proprietary Lease.

Cooperative Property: The real property and improvements owned by the Cooperative Corporation, that includes the allocation of individual dwelling units to the holders of the shares of the Cooperative Corporation.

Cooperative Shares: Shares issued by a Cooperative Corporation.

Cooperative Unit: With respect to any Cooperative Mortgage Loan, a specific unit in a Cooperative Property.

Corporate Trust Office: With respect to the Trustee, the principal corporate trust office of the Trustee located at 401 South Tryon Street, 12th Floor (NC 1179), Charlotte, North Carolina, 28288-1179 Attention: Structured Finance Trust Services, J.P. Morgan Alternative Loan Trust 2005-S1, or at such other address as the Trustee may designate from time to time by notice to the Certificateholders, the Depositor, the Master Servicer and the Securities Administrator or the principal corporate trust office of any successor Trustee.  With respect to the Certificate Registrar and presentment of Certificates for registration of transfer, exchange or final payment, Wells Fargo Bank, N.A., Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust, J.P. Morgan Alternative Loan Trust 2005-S1.

Corresponding Certificates: With respect to each Lower-Tier Interest and Middle-Tier Interest, the Certificates so designated in the Preliminary Statement.

Credit Support Depletion Date: The date on which the aggregate Class Principal Amount of the Subordinate Certificates has been reduced to zero.

Cross-Over Situation: For any Distribution Date and for any Pool or Subgroup (after taking into account principal distributions on such Distribution Date) a Cross-Over Situation exists with respect to the Class A and Class B Interests of the Pool or Subgroup if such Interests in the aggregate are less than 1% of the related SP, as defined in the Preliminary Statement.

Current Interest: With respect to each Class of Certificates (other than the Principal-Only Certificates) and any Distribution Date, the aggregate amount of interest accrued at the applicable Certificate Interest Rate during the related Accrual Period on the Class Principal Amount (or Class Notional Amount) of such Class immediately prior to such Distribution Date.

Custodial Accounts: Each custodial account (other than an Escrow Account) established and maintained by a Servicer pursuant to a Purchasing and Servicing Agreement.

Custodial Agreements: The Custodial Agreements, listed in Exhibit F hereof, as each such agreement may be amended or supplemented from time to time as permitted hereunder. 

Custodian: A Person who is at anytime appointed by the Trustee and the Depositor as a custodian of the Mortgage Documents and the Trustee Mortgage Files.  The initial Custodian is  JPMorgan Chase Bank, N.A.

Cut-off Date: November 1, 2005.

Cut-off Date Balance: With respect to the Mortgage Loans in the Trust Fund on the Closing Date, the Aggregate Stated Principal Balance as of the Cut-off Date.

DBRS: Dominion Bond Ratings Service, Inc.

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

Defective Mortgage Loan: The meaning specified in Section 2.05.

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 indebtedness under the Mortgage Loan, or any reduction in the amount of principal to be paid in connection with any Scheduled Payment that results in a permanent forgiveness of principal, which valuation or reduction results from an order of such court which is final and non-appealable in a proceeding under the Bankruptcy Code.

Deficient Valuation Reduction: The difference between the principal balance of the Mortgage Loan outstanding immediately prior to such Deficient Valuation and the principal balance of the Mortgage Loan as reduced by the Deficient Valuation.

Definitive Certificate: A Certificate of any Class issued in definitive, fully registered, certificated form.

Deleted Mortgage Loan: A Mortgage Loan which is repurchased, or replaced or to be replaced with a Replacement Mortgage Loan.

Delinquent: Any Mortgage Loan with respect to which the Scheduled Payment due on a Due Date is not received.

Depositor: J.P. Morgan Acceptance Corporation I, a Delaware corporation having its principal place of business in New York, or its successors in interest.

Determination Date: With respect to each Distribution Date and Servicer, the date specified as such in the related Purchase and Servicing Agreement.

Disqualified Organization: A “disqualified organization” as defined in Section 860E(e)(5) of the Code.

Distribution Account: The separate Eligible Account created and maintained by the Securities Administrator, on behalf of the Trustee, pursuant to Section 4.01.  Funds in the Distribution Account (exclusive of any earnings on investments made with funds deposited in the Distribution Account) shall be held in trust for the Trustee and the Certificateholders for the uses and purposes set forth in this Agreement.

Distribution Account Deposit Date:  The 18th day of each calendar month after the initial issuance of the Certificates or, if such 18th day is not a Business Day, the immediately preceding Business Day, commencing in December 2005.

Distribution Date: The 25th day of each month or, if such 25th day is not a Business Day, the next succeeding Business Day, commencing in December 2005.

Due Date: With respect to any Mortgage Loan, the date on which a Scheduled Payment is due under the related Mortgage Note as indicated in the applicable Purchase and Servicing Agreement.

Due Period: As to any Distribution Date, the period beginning on the second day of the month preceding the month of such Distribution Date, and ending on the first day of the month of such Distribution Date.

Eligible Account: Any of (i) an account or accounts maintained with a federal or state chartered depository institution or trust company the short-term unsecured debt obligations of which (or, in the case of a depository institution or trust company that is the principal subsidiary of a holding company, the debt obligations of such holding company) have the highest short-term ratings of each Rating Agency at the time any amounts are held on deposit therein, or (ii) an account or accounts in a depository institution or trust company in which such accounts are insured by the FDIC or the SAIF (to the limits established by the FDIC or the SAIF) and the uninsured deposits in which accounts are otherwise secured such that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating Agency, the Certificateholders have a claim with respect to the funds in such account or a perfected first priority security interest against any collateral (which shall be limited to Permitted Investments) securing such funds that is superior to claims of any other depositors or creditors of the depository institution or trust company in which such account is maintained, or (iii) a trust account or accounts maintained with the trust department of a federal or state chartered depository institution or trust company, acting in its fiduciary capacity or (iv) any other account acceptable to each Rating Agency, as evidenced by a signed writing delivered by each Rating Agency. Eligible Accounts may bear interest, and may include, if otherwise qualified under this definition, accounts maintained with the Trustee, the Paying Agent, the Securities Administrator or the Master Servicer.

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

ERISA-Qualifying Underwriting: A best efforts or firm commitment underwriting or private placement that meets the requirements of an Underwriter’s Exemption.

ERISA-Restricted Certificate: The Class A-R Certificates, and any Certificate that does not satisfy the applicable rating requirement under the Underwriter’s Exemption and the Uncertificated Interest.

Escrow Account: As defined in Article I of each Purchase and Servicing Agreement.

Estoppel Letter: A document executed by the Cooperative Corporation certifying, with respect to a Cooperative Unit, (i) the appurtenant Proprietary Lease will be in full force and effect as of the date of issuance thereof, (ii) the related stock certificate was registered in the Mortgagor’s name and the Cooperative Corporation has not been notified of any lien upon, pledge of, levy of execution on or disposition of such stock certificate, and (iii) the Mortgagor is not in default under the appurtenant Proprietary Lease and all charges due the Cooperative Corporation have been paid.

Event of Default: Any one of the conditions or circumstances enumerated in Section 6.14.

Excess Loss: The amount of any (i) Fraud Loss realized after the applicable Fraud Loss Coverage Termination Date, (ii) Special Hazard Loss realized after the applicable Special Hazard Coverage Termination Date or (iii) Bankruptcy Loss realized after the applicable Bankruptcy Coverage Termination Date.

Fair Market Value: An amount equal to the fair market value of all of the property of the Trust Fund, as agreed upon between the Master Servicer and a majority of the holders of the Uncertificated Interest; provided, however, that if the Master Servicer and a majority of the holders of the Uncertificated Interest do not agree upon the fair market value of all of such property of the Trust Fund, the Master Servicer, or an agent appointed by the Master Servicer, shall solicit bids for all of such property of the Trust Fund, until it has received three bids, and the Fair Market Value shall be equal to the highest of such three bids.

Fannie Mae: The entity formerly known as the Federal National Mortgage Association, a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act, or any successor thereto.

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

FHLMC: The Federal Home Loan Mortgage Corporation, a corporate instrumentality of the United States created and existing under Title III of the Emergency Home Finance Act of 1970, as amended, or any successor thereto.

Fitch Ratings: Fitch, Inc., or any successor in interest.

Fraud Loan: A Liquidated Mortgage Loan as to which a Fraud Loss has occurred, as reported by the related Servicer or the Master Servicer to the Securities Administrator.

Fraud Losses: Losses sustained on a Liquidated Mortgage Loan by reason of a default arising from fraud, dishonesty or misrepresentation.

Fraud Loss Coverage Amount: As of the Closing Date, $24,260,175, as reduced on the fifth anniversary of the Cut-off Date to zero and on the first, second, third and fourth anniversaries of the Cut-off Date, to an amount equal to the lesser of (x)1% of the then current Pool Balance of the Aggregate Pool, and (y) the excess of the Fraud Loss Coverage Amount as of the preceding anniversary of the Cut-off Date (or the Cut-off Date, in the case of the first anniversary), over the cumulative amount of Fraud Losses allocated to the related Certificates since the preceding anniversary.

Fraud Loss Coverage Termination Date: The point in time at which the Fraud Loss Coverage Amount is reduced to zero.

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

GreenPoint: GreenPoint Mortgage Funding, Inc. or any successor in interest.

GreenPoint Mortgage Loan: Each Mortgage Loan originated by GreenPoint and listed on the Mortgage Loan Schedule.

GreenPoint Purchase and Servicing Agreement: The Flow Mortgage Loan Sale and Servicing Agreement listed in Exhibit E hereto among the Seller and GreenPoint, as modified by the related Acknowledgement.

Group: Either a Mortgage Group or a Certificate Group, as the context requires.

Group 1 Subgroup: Either of Subgroup 1-1, Subgroup 1-2, Subgroup 1-3 or Sub-group 1-4, as applicable.

Group 1A Certificates: The Class 1-A-1, Class 1-A-2, Class 1-A-3, Class 1-A-4, Class 1-A-5, Class 1-A-6, Class 1-A-7, Class 1-A-8, Class 1-A-9, Class 1-A-10 and Class A-X Certificates and Class 1-A-P Component.

Group 2 Subgroup: Either of Subgroup 2-1, Subgroup 2-2, Subgroup 2-3 or Subgroup 2-4, as applicable.

Group 2A Certificates: The Class 2-A-1, Class 2-A-2, Class 2-A-3, Class 2-A-4, Class 2-A-5, Class 2-A-6, Class 2-A-7, Class 2-A-8, Class 2-A-9, Class 2-A-10, Class 2-A-11, Class 2-A-12, Class 2-A-13, Class 2-A-14, Class 2-A-15, Class 2-A-16, Class 2-A-17, Class 2-A-18, Class A-R and Class A-X Certificates and Class 2-A-P Component.

Group 3A Certificates: The Class 3-A-1, Class A-X Certificates and the Class 3-A-P Component.

Holder or Certificateholder: The registered owner of any Certificate or Uncertificated Interest as recorded on the books of the Certificate Registrar except that, solely for the purposes of taking any action or giving any consent pursuant to this Agreement, any Certificate registered in the name of the Depositor, the Trustee, the Master Servicer, the Securities Administrator and any Servicer, or any Affiliate thereof shall be deemed not to be outstanding in determining whether the requisite percentage necessary to effect any such consent has been obtained, except that, in determining whether the Trustee shall be protected in relying upon any such consent, only Certificates which a Responsible Officer of the Trustee knows to be so owned shall be disregarded.  The Trustee may request and conclusively rely on certifications by the Depositor, the Master Servicer, the Securities Administrator or any Servicer in determining whether any Certificates are registered to an Affiliate of the Depositor, the Master Servicer, the Securities Administrator or any Servicer.

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

Independent: When used with respect to any Accountants, a Person who is “independent” within the meaning of Rule 2-01(b) of the Securities and Exchange Commission’s Regulation SX.  When used with respect to any other Person, a Person who (a) is in fact independent of another specified Person and any Affiliate of such other Person, (b) does not have any material direct financial interest in such other Person or any Affiliate of such other Person, and (c) is not connected with such other Person or any Affiliate of such other Person as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions.

Initial Bankruptcy Coverage Amount: $459,656.32.

Initial Optional Purchase Date:  The first Distribution Date following the date on which the Aggregate Stated Principal Balance of the Aggregate Pool is equal to or less than 5.00% of the Aggregate Stated Principal Balance of the Aggregate Pool as of the Cut-off Date.

Insurance Policy: With respect to any Mortgage Loan, any insurance policy, including all names and endorsements thereto in effect, including any replacement policy or policies for any Insurance Policies.

Insurance Proceeds: Proceeds paid by any Insurance Policy (excluding proceeds required to be applied to the restoration and repair of the related Mortgaged Property or released to the Mortgagor), in each case other than any amount included in such Insurance Proceeds in respect of Insured Expenses and the proceeds from any Limited Purpose Surety Bond.

Insured Expenses: Expenses covered by an Insurance Policy or any other insurance policy with respect to the Mortgage Loans.

Interest Distribution Amount: For each Class of Certificates (other than the Principal-Only Certificates) on any Distribution Date, the Current Interest for such Class, as reduced by (i) such Class’s share of Net Prepayment Interest Shortfalls; and (ii) the related Class’s allocable share of (A) after the Special Hazard Coverage Termination Date, with respect to each Mortgage Loan or Mortgage Component, as applicable, in the related Mortgage Group that became a Special Hazard Mortgage Loan during the calendar month preceding the month of such Distribution Date, the excess of one month’s interest at the related Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan or Mortgage Component, as applicable, as of the Due Date in such month over the amount of Liquidation Proceeds applied as interest on such Mortgage Loan or Mortgage Component, as applicable, with respect to such month, (B) after the Bankruptcy Coverage Termination Date, with respect to each Mortgage Loan or Mortgage Component, as applicable, in the related Mortgage Group that became subject to a Bankruptcy Loss during the calendar month preceding the month of such Distribution Date, the interest portion of the related Debt Service Reduction or Deficient Valuation, (C) each Relief Act Shortfall for the Mortgage Loans or Mortgage Components, as applicable, in the related Mortgage Group incurred during the calendar month preceding the month of such Distribution Date and (D) after the Fraud Loss Coverage Termination Date, with respect to each Mortgage Loan or Mortgage Component, as applicable, in the related Mortgage Group that became a Fraud Loan during the calendar month preceding the month of such Distribution Date, the excess of one month’s interest at the related Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan or Mortgage Component, as applicable, as of the Due Date in such month over the amount of Liquidation Proceeds applied as interest on such Mortgage Loan or Mortgage Component, as applicable, with respect to such month.  Any such shortfalls and reductions on any Distribution Date will be allocated among all classes of Senior Certificates of the related Certificate Group (other than the Class P Certificates) and the Subordinate Certificates proportionately on the basis of (i) in the case of the Senior Certificates, Current Interest otherwise distributable thereon on such Distribution Date, and (ii) in the case of the Subordinate Certificates, interest accrued on their Apportioned Principal Balances, in each case before taking into account any of the foregoing reductions. 

Interest-Only Certificates: The Class 1-A-8, Class 2-A-15, Class 2-A-17 and Class A-X Certificates.

Interest Shortfall: As to any Class of Certificates and any Distribution Date, the amount by which the Interest Distribution Amount for such Class on such Distribution Date and all prior Distribution Dates exceeds amounts distributed in respect thereof to such Class on prior Distribution Dates.

Interest Transfer Amount: For any Distribution Date and any Undercollateralized Group, one month’s interest on the applicable Principal Transfer Amount at 5.50%, 6.00%, 6.50% or 7.50% per annum with respect to Subgroup 1-1, Subgroup 1-2, Subgroup 1-3 or Subgroup 1-4, respectively, 5.00%, 5.50%, 6.00% or 7.00% per annum with respect to Subgroup 2-1, Subgroup 2-2, Subgroup 2-3 or Subgroup 2-4, respectively, or  5.50% with respect to Pool 3, plus any shortfall of interest on the Senior Certificates of the applicable Undercollateralized Group from prior Distribution Dates.

Intervening Assignments: The original intervening assignments of the Mortgage, notices of transfer or equivalent instrument.

JPMCB: JPMorgan Chase Bank, National Association, or its successors in interest.

Latest Possible Maturity Date: For the Certificates other than the Class 3-A-1 Certificates, the Distribution Date in December 2035.  For the Class 3-A-1 Certificates, the Distribution Date in October 2020. In each case, the Latest Possible Maturity Date is the Distribution Date for the related Certificates occurring in the month following the latest scheduled maturity date for any Mortgage Loan in the related Pool.

LIBOR: The London Interbank Offered Rate for one-month United States dollar deposits quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the related LIBOR Determination Date relating.  If such rate does not appear on such page (or such other page as may replace that page on that service, or if such service is no longer offered, such other service for displaying LIBOR or comparable rates as may be reasonably selected by the Securities Administrator), the rate will be the Reference Bank Rate.  If no such quotations can be obtained and no Reference Bank Rate is available, LIBOR will be LIBOR applicable to the preceding Distribution Date.  On the LIBOR Determination Date immediately preceding each Distribution Date, the Securities Administrator shall determine LIBOR for the Accrual Period commencing on such Distribution Date and inform the Trustee, the Master Servicer and each Servicer of such rate.

LIBOR Business Day: Any day on which banks in London, England and the City of New York are open and conducting transactions in foreign currency and exchange.

LIBOR Certificates: The Class 1-A-7, Class 1-A-8, Class 2-A-14 and Class 2-A-15 Certificates.

LIBOR Determination Date: The second LIBOR Business Day prior to the first day of the related Accrual Period.

Liquidated Mortgage Loan: With respect to any Distribution Date, a defaulted Mortgage Loan or Mortgage Component, as applicable (including any REO Property) which was liquidated in the calendar month preceding the month of such Distribution Date and as to which the related Servicer has certified (in accordance with its Purchase and Servicing Agreement) that it has received all amounts it expects to receive in connection with the liquidation of such Mortgage Loan or Mortgage Component, as applicable, including the final disposition of an REO Property.

Liquidation Proceeds: Amounts, including Insurance Proceeds, received in connection with the partial or complete liquidation of defaulted Mortgage Loans or Mortgage Components, as applicable, whether through trustee’s sale, foreclosure sale or otherwise or amounts received in connection with any condemnation or partial release of a Mortgaged Property and any other proceeds received in connection with an REO Property.

Loan-To-Value Ratio: With respect to any Mortgage Loan and as to any date of determination, the fraction (expressed as a percentage) the numerator of which is the principal balance of the related Mortgage Loan at the date of determination and the denominator of which is (a) in the case of a Mortgage Loan financing the acquisition of the Mortgaged Property, the lesser of the selling price of the Mortgaged Property and its appraised value determined in an appraisal obtained by the related Originator at origination of such Mortgage Loan; provided however, certain Mortgage Loans financing the acquisition of a Mortgaged Property in New York will be based solely on the appraised value, or (b) in the case of a refinancing, the appraised value of the Mortgaged Property at the time of such refinance.

Lower-Tier Interest: Any one of the interests in the Lower-Tier REMIC as described in the Preliminary Statement.

Lower-Tier REMIC: As described in the Preliminary Statement.

Master Servicer: Wells Fargo Bank, N.A. a national banking association organized under the laws of the United States and any Person succeeding as master servicer hereunder or any successor in interest, or if any successor master servicer shall be appointed as herein provided, then such successor master servicer.

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

MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS® System.

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

Middle-Tier Interest:  Any one of the interests in the Middle-Tier REMIC as described in the Preliminary Statement.

Middle-Tier REMIC:  As described in the Preliminary Statement.

MIN: The mortgage identification number for any MERS Mortgage Loan.

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

Mortgage: A mortgage, deed of trust or other instrument encumbering a fee simple interest in real property securing a Mortgage Note, together with improvements thereto.

Mortgage Component: The portions of Pool 1 or Pool 2 Mortgage Loans that relate to a Subgroup.

Mortgage Documents: With respect to each Mortgage Loan, the mortgage documents required to be delivered to the Custodian pursuant to each Custodial Agreement.

Mortgage Group: The Mortgage Loans or Mortgage Components, as applicable, in Subgroup 1-1, Subgroup 1-2, Subgroup 1-3, Subgroup 1-4, Subgroup 2-1, Subgroup 2-2, Subgroup 2-3, Subgroup 2-4 or Pool 3, as the context requires.

Mortgage Loan: A Mortgage and the related Mortgage Note conveyed, transferred, sold, assigned to or deposited with the Trustee pursuant to Section 2.01 (including any Replacement Loan and REO Property), including without limitation, each Mortgage Loan listed on the Mortgage Loan Schedule, as amended from time to time.

Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which shall identify each Mortgage Loan, as such schedule may be amended by the Depositor or a Servicer from time to time (with copies of such amended schedule to be delivered promptly by the Depositor or such Servicer to the Securities Administrator, the Master Servicer, the Trustee and the Custodian) to reflect the addition of Replacement Mortgage Loans to, or the deletion of Deleted Mortgage Loans from, the Trust Fund.  Such schedule shall, among other things (i) designate the Servicer servicing such Mortgage Loan and the applicable Servicing Fee Rate; and (ii) identify the designated Mortgage Group in which such Mortgage Loan is included.

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

Mortgaged Property: The underlying property securing a Mortgage Loan which, with respect to a Cooperative Loan, is the related Cooperative Shares and Proprietary Lease.

Mortgage Rate: As to any Mortgage Loan, the annual rate of interest borne by the related Mortgage Note.  Any Mortgage Component related to a Mortgage Loan will have the same Mortgage Rate as that Mortgage Loan.

Mortgagor: The obligor on a Mortgage Note.

Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan or any other disposition of related Mortgaged Property, the related Liquidation Proceeds net of Advances, Servicer Advances, Servicing Fees and any other accrued and unpaid servicing fees received and retained in connection with the liquidation of such Mortgage Loan or Mortgaged Property.

Net Mortgage Rate: With respect to any Mortgage Loan and any Distribution Date, the related Mortgage Rate reduced by the Aggregate Expense Rate for such Mortgage Loan.  Any Mortgage Component related to a Mortgage Loan will have the same Net Mortgage Rate as that Mortgage Loan.

Net Prepayment Interest Shortfall: With respect to any Pool and any Distribution Date, the amount by which any Prepayment Interest Shortfall for such date exceeds the amount payable by the related Servicer, or the Master Servicer (if the related Servicer fails to pay such amount) and/or in respect of such shortfall.

Non-Book-Entry Certificate: Any Certificate other than a Book-Entry Certificate.

Non-permitted Foreign Holder: As defined in Section 3.03(f).

Non-U.S. Person: Any person other than a “United States person” within the meaning of Section 7701(a)(30) of the Code.

Nonrecoverable Advance: Any portion of an Advance or Servicer Advance previously made or proposed to be made by the related Servicer, or the Master Servicer (if the related Servicer fails to pay such amount) (as certified in an Officer’s Certificate of such Servicer or the Master Servicer), which in the good faith judgment of such party, shall not be ultimately recoverable by such party from the related Mortgagor, related Liquidation Proceeds or otherwise.

Notional Amount: With respect to any Interest-Only Certificate and any Distribution Date, such Certificate’s Percentage Interest of the Class Notional Amount of such Class of Certificates for such Distribution Date.

Offering Document: The Prospectus.

Officer’s Certificate: A certificate signed by two Authorized Officers of the Depositor or the Chairman of the Board, any Vice Chairman, the President, any Vice President or any Assistant Vice President or Trust Officer of the Master Servicer or the Securities Administrator, and in each case delivered to the Trustee.

Officer’s Certificate of a Servicer: A certificate (i) signed by the Chairman of the Board, the Vice Chairman of the Board, the President, a Managing Director, a Vice President (however denominated), an Assistant Vice President, the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant Secretaries of a Servicer, or (ii) if provided for herein, signed by a Servicing Officer, as the case may be, and delivered to the Trustee or the Securities Administrator, as required hereby.

Opinion of Counsel: A written opinion of counsel, reasonably acceptable in form and substance to the Trustee, the Securities Administrator or the Master Servicer, as required hereby, and who may be in-house or outside counsel to the Depositor, the Master Servicer, the Securities Administrator or the Trustee but which must be Independent outside counsel with respect to any such opinion of counsel concerning the transfer of any Residual Certificate or concerning certain matters with respect to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or the taxation, or the federal income tax status, of each REMIC.

Original Applicable Credit Support Percentage: With respect to each Class of Subordinate Certificates, the corresponding percentage set forth opposite its Class designation:

	Class B-1

	5.25%

	Class B-2

	3.00%

	Class B-3

	2.00%

	Class B-4

	1.30%

	Class B-5

	0.80%

	Class B-6

	0.35%

Originator: Each of the Chase Originators, PHH, Greenpoint and SunTrust, as applicable.

Overcollateralized Group: On any Distribution Date, any Certificate Group which is not an Undercollateralized Group.

Par Value:  An amount equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage Loan (other than in respect of REO Property) plus accrued and unpaid interest thereon from the date to which such interest was paid or advanced at the sum of the applicable Mortgage Rate, to but not including the Due Date in the month of the final Distribution Date and (ii) with respect to any REO Property, the appraised value of any REO Property as determined by the higher of two appraisals completed by two independent appraisers selected by the Depositor at the expense of the Depositor and (iii) any remaining unreimbursed Advances and Servicing Advances and unpaid Servicing Fees, and any other amounts payable to the Trustee and Securities Administrator, in each case relating to the Mortgage Loans.

Paying Agent: Any paying agent appointed pursuant to Section 3.08.  The Paying Agent shall be Wells Fargo Bank, N.A., for so long as it is acting as Securities Administrator under this Agreement.

Percentage Interest: With respect to any Certificate, its percentage interest in the undivided beneficial ownership interest in the Trust Fund evidenced by all Certificates of the same Class as such Certificate.  With respect to any Certificate other than a Interest-Only Certificate or the Class A-R Certificate, the Percentage Interest evidenced thereby shall equal the initial Certificate Principal Amount thereof divided by the initial Class Principal Amount of all Certificates of the same Class.  With respect to each of the Class A-R Certificates, the Percentage Interest evidenced thereby shall be as specified on the face thereof, or otherwise, be equal to 100%.  With respect to any Interest-Only Certificate, the Percentage Interest evidenced thereby shall equal its initial Notional Amount as set forth on the face thereof divided by the initial Class Notional Amount of such Class. 

Permitted Investments: At any time, any one or more of the following obligations and securities:

(i)

obligations of the United States or any agency thereof, provided that such obligations are backed by the full faith and credit of the United States;

(ii)

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

(iii)

commercial or finance company paper which is then receiving the highest commercial or finance company paper rating of each Rating Agency rating such paper, or such lower rating as shall not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by the Rating Agencies, as evidenced by a signed writing delivered by each Rating Agency;

(iv)

certificates of deposit, demand or time deposits, or bankers’ acceptances issued by any depository institution or trust company incorporated under the laws of the United States or of any state thereof and subject to supervision and examination by federal and/or state banking authorities, provided that the commercial paper and/or long-term unsecured debt obligations of such depository institution or trust company (or in the case of the principal depository institution in a holding company system, the commercial paper or long-term unsecured debt obligations of such holding company, but only if Moody’s is not the applicable Rating Agency) are then rated one of the two highest long-term and the highest short-term ratings of each Rating Agency for such securities, or such lower ratings as shall not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by the Rating Agencies, as evidenced by a signed writing delivered by each Rating Agency;

(v)

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

(vi)

guaranteed reinvestment agreements issued by any bank, insurance company or other corporation acceptable to the Rating Agencies at the time of the issuance of such agreements, as evidenced by a signed writing delivered by each Rating Agency;

(vii)

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

(viii)

securities (other than stripped bonds, stripped coupons or instruments sold at a purchase price in excess of 115% of the face amount thereof) bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States or any state thereof which, at the time of such investment, have one of the two highest ratings of each Rating Agency (except if the Rating Agency is Moody’s, such rating shall be the highest commercial paper rating of Moody’s for any such series), or such lower rating as shall not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by the Rating Agencies, as evidenced by a signed writing delivered by each Rating Agency;

(ix)

interests in any money market fund which at the date of acquisition of the interests in such fund and throughout the time such interests are held in such fund has the highest applicable rating by each Rating Agency rating such fund or such lower rating as shall not result in a change in the rating then assigned to the Certificates by each Rating Agency, as evidenced by a signed writing delivered by each Rating Agency, including funds for which the Trustee, the Master Servicer, the Securities Administrator or any of its Affiliates is investment manager or adviser;

(x)

short-term investment funds sponsored by any trust company or national banking association incorporated under the laws of the United States or any state thereof which on the date of acquisition has been rated by each applicable Rating Agency in their respective highest applicable rating category or such lower rating as shall not result in a change in the rating then specified stated maturity and bearing interest or sold at a discount acceptable to each Rating Agency as shall not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by the Rating Agencies, as evidenced by a signed writing delivered by each Rating Agency; and

(xi)

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

provided, that no such instrument shall be a Permitted Investment if (i) such instrument evidences the right to receive interest only payments with respect to the obligations underlying such instrument or (ii) such instrument would require the Depositor to register as an investment company under the Investment Company Act of 1940, as amended.

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

PHH: PHH Mortgage Corporation or its successors in interest.

PHH Mortgage Loan: Each Mortgage Loan originated by PHH and listed on the Mortgage Loan Schedule.

PHH Purchase and Servicing Agreement: The Flow Mortgage Loan Purchase, Warranties and Servicing Agreement between the Seller and PHH, listed in Exhibit E hereto, as modified by the related Acknowledgement.

Pool: Each of Pool 1, Pool 2 or Pool 3.

Pool 1: The aggregate of Mortgage Loans identified on the Mortgage Loan Schedule as being included in Pool 1.

Pool 1 Mortgage Loans: Any Mortgage Loan in Pool 1.

Pool 1 Subordinate Amount: As to any Distribution Date, is equal to the excess of the Stated Principal Balance of the Pool 1 Mortgage Loans (less the applicable Class P Fraction of any Class P Mortgage Component in Subgroup 1-1) as of the first day of the month preceding the month in which such Distribution Date occurs over the Class Principal Amount of the Group 1A Certificates (other than the Class 1-A-P Component) immediately before such Distribution Date.

Pool 2: The aggregate of Mortgage Loans identified on the Mortgage Loan Schedule as being included in Pool 2.

Pool 2 Mortgage Loans: Any Mortgage Loan in Pool 2.

Pool 2 Subordinate Amount: As to any Distribution Date, is equal to the excess of the Stated Principal Balance of the Pool 2 Mortgage Loans (less the applicable Class P Fraction of any Class P Mortgage Component in Subgroup 2-1) as of the first day of the month preceding the month in which such Distribution Date occurs over the Class Principal Amount of the Group 1A Certificates (other than the Class 1-A-P Component) immediately before such Distribution Date.

Pool 3: The aggregate of Mortgage Loans identified on the Mortgage Loan Schedule as being included in Pool 3.

Pool 3 Mortgage Loans: Any Mortgage Loan in Pool 3.

Pool 3 Subordinate Amount: As to any Distribution Date, is equal to the excess of the Stated Principal Balance of the Pool 3 Mortgage Loans (less the applicable Class P Fraction of any Class P Mortgage Loan in Pool 3) as of the first day of the month preceding the month in which such Distribution Date occurs over the Class Principal Amount of the Class 3-A-1 Certificates.

Pool Balance: As to any Distribution Date  and the Aggregate Pool or any Pool, as applicable, is equal the aggregate of the Stated Principal Balances of all the Mortgage Loans in the Aggregate Pool or such Pool, as applicable, outstanding on the Due Date of the month preceding the month of that Distribution Date.

Pool Subordinate Amount: the Pool 1 Subordinate Amount, Pool 2 Subordinate Amount or Pool 3 Subordinate Amount, as the context requires.

Premium Rate Mortgage Loan: A Subgroup 1-4, Subgroup 2-4 or Pool 3 Mortgage Component in such Mortgage Group having Net Mortgage Rates in excess of the Required Coupon for such Mortgage Group.

Prepayment Interest Shortfall: With respect to any full or partial Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full month’s interest at the applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan immediately prior to such Principal Prepayment over (ii) the amount of interest actually received with respect to such Mortgage Loan in connection with such Principal Prepayment.

Prepayment Period: With respect to each Distribution Date, the calendar month immediately preceding the month in which the Distribution Date occurs.

Primary Mortgage Insurance Policy: Each policy of primary mortgage guaranty insurance or any replacement policy therefor with respect to any Mortgage Loan.

Principal-Only Certificates: The Class A-P Certificates.

Principal Prepayment: Any Mortgagor payment of principal or other recovery of principal on a Mortgage Loan or Mortgage Component, as applicable, that is recognized as having been received or recovered in advance of its scheduled Due Date and applied to reduce the principal balance of the Mortgage Loan or Mortgage Component, as applicable, in accordance with the terms of the Mortgage Note or the related Purchase and Servicing Agreement.

Principal Prepayment In Full: Any Principal Prepayment of the entire principal balance of the Mortgage Loans or Mortgage Components, as applicable.

Principal Relocation Payment: A payment from any Pool or Subgroup to Lower-Tier Interests other than those of their Corresponding Pool or Subgroup as provided in the Preliminary Statement.  Principal Relocation Payments shall be made of principal allocations comprising the distributions of principal from a Pool or Subgroup.

Principal Transfer Amount: For any Distribution Date and for any Undercollateralized Group, the excess, if any, of the aggregate Class Principal Amount of the Senior Certificates (other than the Principal-Only Certificates) of such Undercollateralized Group immediately prior to such Distribution Date, over the Aggregate Stated Principal Balance of the Mortgage Loans or Mortgage Components, as applicable, in that Mortgage Group immediately prior to such Distribution Date (less the applicable Class P Fraction of each Class P Mortgage Loan or Mortgage Component, as applicable, in that Mortgage Group).

Proceeding: Any suit in equity, action at law or other judicial or administrative proceeding.

Proprietary Lease: With respect to any Cooperative Property, a lease or occupancy agreement between a Cooperative Corporation and a holder of related Cooperative Shares.

Prospectus: The prospectus supplement dated November 23, 2005, together with the accompanying prospectus dated August 25, 2005, relating to the Certificates.

Purchase and Servicing Agreements: The mortgage loan purchase and servicing agreements, listed in Exhibit E hereto, as each such agreement may be amended or supplemented from time to time as permitted hereunder.

Purchase Price: With respect to any Mortgage Loan required or permitted to be purchased by the Seller or Depositor pursuant to this Agreement, or by the related Originator or Servicer pursuant to the related Purchase and Servicing Agreement, an amount equal to the sum of (i) 100% of the unpaid principal balance of the Mortgage Loan on the date of such purchase, (ii) accrued interest thereon at the applicable Net Mortgage Rate from the date through which interest was last paid by the Mortgagor to the Due Date in the month in which the Purchase Price is to be distributed to Certificateholders and (iii) any costs and damages (including, without limitation, late fees) actually incurred and paid by or on behalf of the Trust Fund in connection with the fact that such Mortgage Loan at the time it was made failed to comply in all material respects with applicable federal, state or local predatory and abusive lending laws, to the extent such costs and damages result from a breach by the related Originator or the Seller, or such other amount as may be specified in the related Purchase and Servicing Agreement.

Rapid Prepayment Conditions: With respect to any Distribution Date and the Subordinate Certificates, (1) the Subordinate Percentage for the Aggregate Pool on such date is less than 200% of such Subordinate Percentage on the Closing Date; and (2) the outstanding Stated Principal Balance of the Mortgage Components or Mortgage Loans in any of Subgroup 1-1, Subgroup 1-2, Subgroup 1-3, Subgroup 1-4, Subgroup 2-1, Subgroup 2-2, Subgroup 2-3, Subgroup 2-4 or Pool 3 Delinquent 60 days or more (including Mortgage Components and Mortgage Loans in REO and foreclosure) (averaged over the preceding six-month period), as a percentage of the applicable Subgroup or Pool Subordinate Amount, is greater than or equal to 50%. 

Rating Agency: Each of S&P, Fitch Ratings and DBRS.

Realized Loss: With respect to each Liquidated Mortgage Loan, an amount (not less than zero or more than the Stated Principal Balance of the Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated Principal Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus (ii) interest at the Mortgage Rate from the Due Date as to which interest was last paid or advanced (and not reimbursed) to Certificateholders up to the Due Date in the month in which Liquidation Proceeds are required to be distributed on the Stated Principal Balance of such Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation Proceeds, if any, received during the month in which such liquidation occurred, to the extent applied as recoveries of interest at the Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect to each Mortgage Loan which has become the subject of a Deficient Valuation, if the principal amount due under the related Mortgage Note has been reduced, the Deficient Valuation Reduction.  With respect to each Mortgage Loan which has become the subject of a Debt-Service Reduction, the present value of all monthly Debt Service Reductions on the Mortgage Loan, assuming that the mortgagor pays each Scheduled Payment on the applicable Due Date and that no Principal Prepayments are received on the Mortgage Loan, discounted at the applicable Mortgage Rate.

Recognition Agreement: An agreement among a Cooperative Corporation, a lender and a Mortgagor with respect to a Cooperative Mortgage Loan whereby such parties (i) acknowledge that such lender may make, or intends to make, such Cooperative Loan, and (ii) make certain agreements with respect to such Cooperative Mortgage Loan.

Record Date: As to any Distribution Date and the Certificates other than the LIBOR Certificates, the last Business Day of the month preceding the month of each Distribution Date.  As to any Distribution Date and the LIBOR Certificates, the Business Day immediately preceding such Distribution Date.

Redemption Date: Any Distribution Date on which Certificates may be redeemed.

Redemption Price: An amount equal to the greater of (1) the sum of (i) 100% of the Stated Principal Balance of each Mortgage Loan (other than in respect of REO Property) plus accrued and unpaid interest thereon from the date to which such interest was paid or advanced at the sum of the applicable Mortgage Rate, to but not including the Due Date in the month of the final Distribution Date and (ii) with respect to any REO Property, the appraised value of any REO Property as determined by the higher of two appraisals completed by two independent appraisers selected by the Depositor at the expense of the Depositor and (iii) any remaining unreimbursed Advances and Servicing Advances and unpaid Servicing Fees, and any other amounts payable to the Trustee, the Master Servicer and Securities Administrator, in each case relating to the Mortgage Loans and (2) the Fair Market Value of all of the property in the Trust Fund.

Reference Bank Rate:  As to any Accrual Period relating to the LIBOR Certificates as follows: the arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of a percent) of the offered rates for United States dollar deposits for one month which are offered by the Reference Banks as of 11:00 A.M., London time, on the LIBOR Determination Date prior to the first day of such Accrual Period to prime banks in the London interbank market for a period of one month in amounts approximately equal to the aggregate Class Principal Amount or Class Notional Amount, as applicable, of the LIBOR Certificates; provided that at least two such Reference Banks provide such rate.  If fewer than two offered rates appear, the Reference Bank Rate will be the arithmetic mean of the rates quoted by one or more major banks in New York City, selected by the Securities Administrator, as of 11:00 A.M., New York City time, on such date for loans in U.S. Dollars to leading European banks for a period of one month in amounts approximately equal to the aggregate Class Principal Amount or Class Notional Amount, as applicable, of the LIBOR Certificates.  If no such quotations can be obtained, the Reference Bank Rate shall be the Reference Bank Rate applicable to the preceding Accrual Period.

Reference Banks:  Three major banks that are engaged in the London interbank market, selected by the Securities Administrator.

Refinancing Mortgage Loan: Any Mortgage Loan originated in connection with the refinancing of an existing mortgage loan.

Regular Certificates: Each Class of Certificates other than the Class A-R Certificates.

Relief Act Shortfalls: With respect to any Distribution Date and any Mortgage Loan as to which there has been a reduction in the amount of interest collectible thereon for the most recently ended calendar month as a result of the application of the Civil Relief Act, the amount, if any, by which (i) interest collectible on such Mortgage Loan for the most recently ended calendar month is less than (ii) interest accrued thereon for such month pursuant to the Mortgage Note.

REMIC: Each pool of assets in the Trust Fund designated as a REMIC as described in the Preliminary Statement.

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 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.

REO Property: A Mortgaged Property acquired by the Trust Fund through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC Provisions.

Replacement Mortgage Loan: A mortgage loan substituted by an Originator or the Seller for a Deleted Mortgage Loan which must, on the date of such substitution, as confirmed in a request for release, substantially in the form attached to the related Custodial Agreement, (i) have a Stated Principal Balance, after deduction of the principal portion of the Scheduled Payment due in the month of substitution, not in excess of, and not more than 10% less than the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have a Mortgage Rate not less than and not more than one percentage point greater than the Deleted Mortgage Loan; (iii) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (iv) have a remaining term to maturity no greater than (and not more than one year less than that of) the Deleted Mortgage Loan; (v) comply with each representation and warranty set forth in the related Purchase and Servicing Agreement; and (xii) shall be accompanied by an Opinion of Counsel that such Replacement Mortgage Loan would not adversely affect the REMIC status of any REMIC created hereunder or would not otherwise be prohibited by this Pooling and Servicing Agreement.

Required Coupon: With respect to Subgroup 1-1, Subgroup 1-4, Subgroup 2-1, Subgroup 2-4 and Pool 3, 5.50%, 7.50%, 5.00%, 7.00% and 5.50%, respectively.

Residual Certificate: The Class A-R Certificates and the Uncertificated Interest.

Responsible Officer: With respect to the Trustee, any officer in the corporate trust department or similar group of the Trustee with direct responsibility for the administration of this Agreement and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject.

Restricted Certificate: The Class B-4, Class B-5 and Class B-6 Certificates.

Restricted Global Security: As defined in Section 3.01(c).

S&P: Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc.

SAIF: The Saving’s Association Insurance Fund, or any successor thereto.

Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on any Due Date allocable to principal and/or interest on such Mortgage Loan which, unless otherwise specified in the related Purchase and Servicing Agreement, shall give effect to any related Debt Service Reduction and any Deficient Valuation that affects the amount of the monthly payment due on such Mortgage Loan.

Securities Administrator: Wells Fargo Bank, N.A., not in its individual capacity but solely as Securities Administrator, or any successor in interest, or if any successor securities administrator shall be appointed as herein provided, then such successor securities administrator.

Seller: J.P. Morgan Mortgage Acquisition Corp., a Delaware corporation.

Senior Certificates: Collectively, the Group 1A Certificates, the Group 2A Certificates, the Group 3A, the Class A-P and Class A-R Certificates.

Senior Percentage: With respect to each Distribution Date and each Mortgage Group, the percentage equivalent of a fraction, the numerator of which is the aggregate Class Principal Amount of the Class or Classes of related Senior Certificates of the related Certificate Group immediately prior to such Distribution Date (other than the Principal-Only Certificates related to such Mortgage Group), and the denominator of which is the Aggregate Stated Principal Balance of the related Mortgage Group for such Distribution Date (less the Class P Fraction of each Class P Mortgage Loan or Class P Mortgage Component in that Mortgage Group).

Senior Prepayment Percentage: With respect to any Distribution Date and any Mortgage Group, during the period beginning on the first Distribution Date and ending on the Distribution Date in December 2010, 100%.  Except as provided herein, the Senior Prepayment Percentage for each Mortgage Group and any Distribution Date occurring on or after December 2010 shall be as follows: (i) from December 2010 through November 2011, the related Senior Percentage plus 70% of the related Subordinate Percentage for that Distribution Date; (ii) from December 2011 through November 2012, the related Senior Percentage plus 60% of the related Subordinate Percentage for that Distribution Date; (iii) from December 2012 through November 2013, the related Senior Percentage plus 40% of the related Subordinate Percentage for that Distribution Date; (iv) from December 2013 through November 2014, the related Senior Percentage plus 20% of the related Subordinate Percentage for that Distribution Date; and (v) from and after December 2014, the related Senior Percentage for that Distribution Date; provided, however, that (a) there shall be no reduction in the Senior Prepayment Percentage unless the Step-Down Test is satisfied with respect such Mortgage Group and if the Senior Prepayment Percentage for any Mortgage Group is not permitted to decrease because the Step-Down Test is not satisfied for such Mortgage Group, then the Senior Prepayment Percentages for such other Mortgage Groups will not decrease on that date, (b) if, on any Distribution Date the Senior Percentage for any Mortgage Group exceeds the related Senior Percentage on the Closing Date, the Senior Prepayment Percentage for each Mortgage Group for that Distribution Date will equal 100% and (c) if on any Distribution Date the allocation to the related Senior Certificates then entitled to distributions of principal of related full and partial principal prepayments and other amounts in the percentage required above would reduce the sum of the Class Principal Amounts of those Certificates below zero, the distribution to the class or classes of Certificates of the related Senior Prepayment Percentage of those amounts for such Distribution Date will be limited to the percentage necessary to reduce the related Class Principal Amounts to zero.

Senior Principal Distribution Amount: With respect to a Certificate Group and any Distribution Date is equal to the sum of the following amounts (exclusive of the portion attributable to the applicable Class A-P Principal Distribution Amount, if any):

(a)

the product of (i) the related Senior Percentage and (ii) the principal portion of each Scheduled Payment on each Mortgage Loan or Mortgage Component, as applicable, in the related Mortgage Group due during the related Due Period;

(b)

the product of (i) the related Senior Prepayment Percentage and (ii) each of the following amounts: (A) the principal portion of each Principal Prepayment and Principal Prepayment In Full in the related Mortgage Group during the related Prepayment Period; (B) each other unscheduled collection (other than as set forth in (c) and (d) below), including Insurance Proceeds and Net Liquidation Proceeds (other than with respect to any Mortgage Loan or Mortgage Component, as applicable, in the related Mortgage Group that was finally liquidated during the related Prepayment Period) representing or allocable to recoveries of principal of the related Mortgage Loans or a Mortgage Component, as applicable, received during the related Prepayment Period, including any Subsequent Recoveries on the related Mortgage Loan or Mortgage Component, as applicable; (C) the principal portion of any Purchase Price or of the Substitution Amount received with respect to the related Prepayment Period and (D) the portion of the Redemption Price up to the Par Value. 

(c)

with respect to Net Liquidation Proceeds allocable to principal with respect to any Mortgage Loan or Mortgage Component, as applicable, in the related Mortgage Group that became a Liquidated Mortgage Loan during the related Prepayment Period, the lesser of (1) the related Senior Prepayment Percentage of the Net Liquidation Proceeds allocable to principal and (2) the product of (A) the related Senior Percentage for that date and (B) the related remaining Stated Principal Balance of the related Mortgage Loan or Mortgage Component, as applicable, at the time of liquidation; and 

(d)

any amounts described in clauses (a) through (c) above that remain unpaid with respect to such Certificate Group from prior Distribution Dates.

Servicer: Each of JPMCB, PHH and SunTrust.

Servicer Advance: A “Servicing Advance” as defined in the applicable Purchase and Servicing Agreement.

Servicing Fee: As to any Distribution Date and each Mortgage Loan, an amount equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b) the Stated Principal Balance of such Mortgage Loan as of the first day of the related Due Period.

Servicing Fee Rate: With respect to each Mortgage Loan and any Distribution Date, the rate specified in the related Purchase and Servicing Agreement and the Mortgage Loan Schedule.

Servicing Officer: Any officer of the related Servicer involved in, or responsible for, the administration and servicing of the related Mortgage Loans whose name and facsimile signature appear on a list of servicing officers furnished to the Securities Administrator by the related Servicer on the Closing Date pursuant to the related Purchase and Servicing Agreement, as such list may from time to time be amended. 

Special Hazard Coverage Termination Date: The point in time at which the Special Hazard Loss Coverage Amount is reduced to zero.

Special Hazard Loss: Any Realized Loss suffered by a Mortgaged Property on account of direct physical loss, as reported by a Servicer to the Master Servicer, but not including (i) any loss of a type covered by a hazard insurance policy or a flood insurance policy required to be maintained with respect to such Mortgaged Property to the extent of the amount of such loss covered thereby, or (ii) any loss caused by or resulting from:

(a)

normal wear and tear;

(b)

fraud, conversion or other dishonest act on the part of the Trustee, the Master Servicer or any of their agents or employees (without regard to any portion of the loss not covered by any errors and omissions policy); 

(c)

errors in design, faulty workmanship or faulty materials, unless the collapse of the property or a part thereof ensues and then only for the ensuing loss; 

(d)

nuclear or chemical reaction or nuclear radiation or radioactive or chemical contamination, all whether controlled or uncontrolled, and whether such loss be direct or indirect, proximate or remote or be in whole or in part caused by, contributed to or aggravated by a peril covered by the definition of the term “Special Hazard Loss;” 

(e)

hostile or warlike action in time of peace and war, including action in hindering, combating or defending against an actual, impending or expected attack: 

1.

by any government or sovereign power, de jure or de facto, or by any authority maintaining or using military, naval or air forces; or

2.

by military, naval or air forces; or

3.

by an agent of any such government, power, authority or forces; 

(f)

any weapon of war employing nuclear fission, fusion or other radioactive force, whether in time of peace or war; or

(g)

insurrection, rebellion, revolution, civil war, usurped power or action taken by governmental authority in hindering, combating or defending against such an occurrence, seizure or destruction under quarantine or customs regulations, confiscation by order of any government or public authority or risks of contraband or illegal transportation or trade. 

Special Hazard Loss Coverage Amount: With respect to the first Distribution Date, $12,858,941.39.  With respect to any Distribution Date, the lesser of (a) the greatest of (i) 1% of the aggregate of the principal balances of the Mortgage Loans in the Aggregate Pool (ii) twice the principal balance of the largest Mortgage Loan in the Aggregate Pool and (iii) the aggregate of the principal balances of all Mortgage Loans in the Aggregate Pool, secured by Mortgaged Properties located in the single California postal zip code area having the highest aggregate principal balance of any such zip code area and (b) the applicable Special Hazard Loss Coverage Amount as of the Closing Date less the amount, if any, of Special Hazard Losses in the Aggregate Pool, incurred since the Closing Date.  All principal balances for the purpose of this definition will be calculated as of the first day of the calendar month preceding the month of such Distribution Date after giving effect to Scheduled Payments on the Mortgage Loans then due, whether or not paid. 

Special Hazard Mortgage Loan: A Liquidated Mortgage Loan as to which a Special Hazard Loss has occurred. 

Startup Day: The day designated as such pursuant to Section 10.01(b) hereof.

Stated Principal Balance: As to any (a) Mortgage Loan and Due Date, the unpaid principal balance of such Mortgage Loan as of such Due Date 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 Principal Prepayments and Liquidation Proceeds allocable to principal (other than with respect to any Liquidated Mortgage Loan) and to the payment of principal due on such Due Date and irrespective of any delinquency in payment by the related Mortgagor and (b) Mortgage Component and Due Date, is the portion of the Stated Principal Balance of the related Mortgage Loan allocable to that Mortgage Component for that Due Date.  Principal payments and Realized Losses on Mortgage Loans divided in Mortgage Components will be allocated among the Mortgage Components, pro rata based on Stated Principal Balance.

Step-Down Test: As to any Distribution Date, the Step-Down Test will be satisfied if both of the following conditions are met: (i) the outstanding Stated Principal Balance of all Mortgage Loans or Mortgage Components, as applicable, in a Mortgage Group 60 days or more Delinquent (including Mortgage Loans or Mortgage Components, as applicable, in REO and foreclosure) (averaged over the preceding six month period), as a percentage of the related Subgroup Subordinate Amount or Pool Subordinate Amount, as applicable, related to that Mortgage Group on such Distribution Date does not equal or exceed 50% and (ii) cumulative Realized Losses with respect to the Mortgage Loans or Mortgage Components, as applicable, in each Mortgage Group do not exceed (a) with respect to each Distribution Date from December 2010 through November 2011, 30% of the original related Subgroup Subordinate Amount or Pool Subordinate Amount, as applicable, (b) with respect to each Distribution Date from December 2011 through November 2012, 35% of the original related Subgroup Subordinate Amount or Pool Subordinate Amount, as applicable, (c) with respect to each Distribution Date from December 2012 through November 2013, 40% of the original related Subgroup Subordinate Amount or Pool Subordinate Amount, as applicable, (d) with respect to each Distribution Date from December 2013 through November 2014, 45% of the original related Subgroup Subordinate Amount or Pool Subordinate Amount, as applicable, and (e) with respect to each Distribution Date from and after December 2014, 50% of the original related Subgroup Subordinate Amount or Pool Subordinate Amount, as applicable.

Stepdown Percentage:  With respect to any Distribution Date, the percentage indicated below:

	DISTRIBUTION DATE OCCURRING IN

	STEPDOWN PERCENTAGE

	 	

	December 2005 through November 2010

	0%

	December 2010 through November 2011

	30%

	December 2011 through November 2012

	40%

	December 2012 through November 2013

	60%

	December 2013 through November 2014

	80%

	December 2014 and thereafter

	100%

Stripped Interest Rate: With respect to any Premium Rate Mortgage Loan, is the excess of the Net Mortgage Rate for that Mortgage Loan over the applicable Required Coupon.

Subgroup: Either Subgroup 1-1, Subgroup 1-2, Subgroup 1-3, Subgroup 1-4, Subgroup 2-1, Subgroup 2-2, Subgroup 2-3 or Subgroup 2-4, as the context requires.

Subgroup 1-1: As of the Cut-off Date, consists of (a) 100% of the Stated Principal Balance of each Pool 1 Mortgage Loan with a Net Mortgage Rate equal to or less than 5.50% per annum and (b) the  portion of the Stated Principal Balance of each Pool 1 Mortgage Loan with a Net Mortgage Rate greater than 5.50% per annum and equal to or less than 6.00% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	1-

	(

	Net Mortgage Rate – 5.50%

	)

	0.50%

Subgroup 1-1 Certificates: The Class 1-A-1, Class 1-A-2, Class 1-A-3 and Class 1-A-9 Certificates and the Class 1-A-P Component.

Subgroup 1-1 Mortgage Component: Any Mortgage Component in Subgroup 1-1.

Subgroup 1-2: As of the Cut-off Date, consists of (a) the  portion of the Stated Principal Balance of each Pool 1 Mortgage Loan with a Net Mortgage Rate greater than 5.50% per annum and equal to or less than 6.00% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	(

	Net Mortgage Rate – 5.50%

	)

	0.50%

and

(b) the  portion of the Stated Principal Balance of each Pool 1 Mortgage Loan with a Net Mortgage Rate greater than 6.00% per annum and equal to or less than 6.50% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	1-

	(

	Net Mortgage Rate – 6.00%

	)

	0.50%

Subgroup 1-2 Certificates: The Class 1-A-4 and Class 1-A-5 Certificates.

Subgroup 1-2 Mortgage Component: Any Mortgage Component in Subgroup 1-2.

Subgroup 1-3: As of the Cut-off Date, consists of the  portion of the Stated Principal Balance of each Pool 1 Mortgage Loan with a Net Mortgage Rate greater than 6.00% per annum and equal to or less than 6.50% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	(

	Net Mortgage Rate – 6.00%

	)

	0.50%

and

(b) the  portion of the Stated Principal Balance of each Pool 1 Mortgage Loan with a Net Mortgage Rate greater than 6.50% per annum and equal to or less than 7.50% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	1-

	(

	Net Mortgage Rate – 6.50%

	)

	1.00%

Subgroup 1-3 Certificates: The Class 1-A-6 and Class 1-A-10 Certificates.

Subgroup 1-3 Mortgage Component: Any Mortgage Component in Subgroup 1-3.

Subgroup 1-4: As of the Cut-off Date, consists of the  portion of the Stated Principal Balance of each Pool 1 Mortgage Loan with a Net Mortgage Rate greater than 6.50% per annum and equal to or less than 7.50% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	(

	Net Mortgage Rate – 6.50%

	)

	1.00%

and

(b) 100% of the Stated Principal Balance of each Pool 1 Mortgage Loan with a Net Mortgage Rate greater than 7.50% per annum. 

Subgroup 1-4 Certificates: The Class 1-A-7 and Class 1-A-8 Certificates.

Subgroup 1-4 Mortgage Component: Any Mortgage Component in Subgroup 1-4.

Subgroup 2-1: As of the Cut-off Date, consists of (a) 100% of the Stated Principal Balance of each Pool 2 Mortgage Loan with a Net Mortgage Rate equal to or less than 5.00% per annum, and

(b) the  portion of the Stated Principal Balance of each Pool 2 Mortgage Loan with a Net Mortgage Rate greater than 5.00% per annum and equal to or less than 5.50% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	1-

	(

	Net Mortgage Rate – 5.00%

	)

	0.50%

Subgroup 2-1 Certificates: The Class 2-A-1 Certificates and the Class 2-A-P Component.

Subgroup 2-1 Mortgage Component: Any Mortgage Component in Subgroup 2-1.

Subgroup 2-2: As of the Cut-off Date, consists of (a) the  portion of the Stated Principal Balance of each Pool 2 Mortgage Loan with a Net Mortgage Rate greater than 5.00% per annum and equal to or less than 5.50% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	(

	Net Mortgage Rate – 5.00%

	)

	0.50%

and

(b) The  portion of the Stated Principal Balance of each Pool 2 Mortgage Loan with a Net Mortgage Rate greater than 5.50% per annum and equal to or less than 6.00% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	1-

	(

	Net Mortgage Rate – 5.50%

	)

	0.50%

Subgroup 2-2 Certificates: The Class 2-A-2, Class 2-A-3, Class 2-A-4, Class 2-A-5, Class 2-A-6, Class 2-A-7 and Class 2-A-8 Certificates.

Subgroup 2-2 Mortgage Component: Any Mortgage Component in Subgroup 2-2.

Subgroup 2-3: As of the Cut-off Date, consists of (a) the  portion of the Stated Principal Balance of each Pool 2 Mortgage Loan with a Net Mortgage Rate greater than 5.50% per annum and equal to or less than 6.00% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	(

	Net Mortgage Rate – 5.50%

	)

	0.50%

and

(b) the  portion of the Stated Principal Balance of each Pool 2 Mortgage Loan with a Net Mortgage Rate greater than 6.00% per annum and equal to or less than 7.00% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	1-

	(

	Net Mortgage Rate – 6.00%

	)

	1.00%

Subgroup 2-3 Certificates: The Class 2-A-9, Class 2-A-10, Class 2-A-11, Class 2-A-12, Class 2-A-13 and Class A-R Certificates.

Subgroup 2-3 Mortgage Component: Any Mortgage Component in Subgroup 2-3.

Subgroup 2-4: As of the Cut-off Date, consists of (a) the  portion of the Stated Principal Balance of each Pool 2 Mortgage Loan with a Net Mortgage Rate greater than 6.00% per annum and equal to or less than 7.00% per annum, equal to:

	The Stated Principal Balance of such Mortgage Loan

	x 

	(

	Net Mortgage Rate – 6.00%

	)

	1.00%

and

(b) 100% of the Stated Principal Balance of each Pool 2 Mortgage Loan with a Net Mortgage Rate greater than 7.00% per annum.

Subgroup 2-4 Certificates: The Class 2-A-14, Class 2-A-15, Class 2-A-16, Class 2-A-17, Class 2-A-18 and Class A-X Certificates.

Subgroup 2-4 Mortgage Component: Any Mortgage Component in Subgroup 2-4.

Subgroup Subordinate Amount: As to any Subgroup and Distribution Date will equal the excess of the Stated Principal Balance of the Mortgage Components of that Subgroup (less the applicable Class P Fraction of any Class P Mortgage Component with respect to Subgroup 1-1 and Subgroup 2-1) as of the first day of the month preceding the month in which such Distribution Date occurs over the sum of the aggregate Class Principal Amounts of the Senior Certificates (other than the Class A-P Certificates) related to that Subgroup.

Subordinate Certificates: The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates.

Subordinate Certificate Writedown Amount: The amount described in Section 5.03(f).

Subordinate Class Percentage: As to any Distribution Date and any Class of Subordinate Certificates, a fraction, expressed as a percentage, the numerator of which is the Class Principal Amount of that Class of Subordinate Certificates immediately prior to that date, and the denominator which is the aggregate Class Principal Amount for all Classes of Subordinate Certificates immediately prior to such date.

Subordinate Percentage: With respect to the Aggregate Pool on any Distribution Date, the percentage equivalent of a fraction, the numerator of which is the aggregate Class Principal Amount of the Subordinate Certificates immediately prior to that date, and the denominator of which is the Pool Balance for the Aggregate Pool  (other than the Class P Fraction of the Class P Mortgage Components and Class P Mortgage Loans) and such Distribution Date.  With respect to each Mortgage Group and any Distribution Date, the difference between 100% and the related Senior Percentage for such Mortgage Group for such Distribution Date.  

Subordinate Prepayment Percentage: With respect to any Distribution Date and for each Mortgage Group, the difference between 100% and the related Senior Prepayment Percentage for such Mortgage Group for that Distribution Date.

Subordinate Principal Distribution Amount: For the Subordinate Certificates and for each Distribution Date, the sum of the following amounts with respect to each Mortgage Group (in each case exclusive of the portion attributable to the applicable Class A-P Principal Distribution Amount):

(1)

the product of (a) the related Subordinate Percentage and (b) the principal portion of each related Scheduled Payment on each Mortgage Loan or Mortgage Component in the related Pool or Subgroup due during the related Due Period;

(2)

the product of (i) the related Subordinate Prepayment Percentage and (ii) each of the following amounts: (A) the principal portion of each Principal Prepayment and Principal Prepayment In Full in the related Mortgage Group during the related Prepayment Period; (B) each other unscheduled collection (other than as set forth in (3) and (4) below), including Insurance Proceeds and Net Liquidation Proceeds (other than with respect to any Mortgage Loan or Mortgage Component, as applicable, in the related Mortgage Group that was finally liquidated during the related Prepayment Period) representing or allocable to recoveries of principal of the related Mortgage Loans or a Mortgage Component, as applicable, received during the related Prepayment Period, including any Subsequent Recoveries on the related Mortgage Loan or Mortgage Component, as applicable; (C) the principal portion of any Purchase Price or of the Substitution Amount received with respect to the related Prepayment Period and (D) the portion of the Redemption Price up to the Par Value;

(3)

with respect to unscheduled recoveries allocable to principal of any Mortgage Loan or Mortgage Component in the related Pool or Subgroup that was finally liquidated during the related Prepayment Period, the related net Liquidation Proceeds allocable to principal, to the extent not distributed pursuant to clause (c) of the definition of Senior Principal Distribution Amount; and

(4)

any amounts described in clauses (1) through (3) for any previous Distribution Date that remain unpaid

Minus the sum of:

(A)

if the aggregate Class Principal Amount of the Senior Certificates relating to a Mortgage Group has been reduced to zero, principal paid from the related Available Distribution Amount from that Subgroup or Pool to the remaining Senior Certificates relating to such other Subgroups or Pool pursuant to Section 5.02(g) on that Distribution Date; and

(B)

the amounts paid from the Available Distribution Amount for any Mortgage Group that is an Overcollateralized Group to the Senior Certificates relating to any Mortgage Group that is an Undercollateralized Group, pursuant to Section 5.02(h) on that Distribution Date.

Subsequent Recoveries: With respect to any Distribution Date, with respect to a Liquidated Mortgage Loan that resulted in a Realized Loss in a prior calendar month, amounts received by the Securities Administrator from the Master Servicer or Servicer, specifically related to such Liquidated Mortgage Loan.

Substitution Amount: As defined in the second paragraph of Section 2.05(b).

Suntrust: Suntrust Mortgage, Inc. or its successors in interest.

Suntrust Mortgage Loan: Each Mortgage Loan originated by Suntrust and listed on the Mortgage Loan Schedule.

Suntrust Purchase and Servicing Agreement: Each Flow Mortgage Loan Purchase, Warranties and Servicing Agreements between the Seller and Suntrust, listed in Exhibit E hereto, as modified by the related Acknowledgement.

TAC Balance: For any Distribution Date and the Class 2-A-6 Certificates, the amount set forth in the schedule in Exhibit N for such Distribution Date.

Tax Matters Person: The “tax matters person” as specified in the REMIC Provisions, which shall initially be the Holder of the Class A-R Certificate.

Trust Fund: The corpus of the trust created pursuant to this Agreement, consisting of the Mortgage Loans and all interest and principal received thereon on or after the Cut-off Date (other than Scheduled Payments due on or prior to the Cut-off Date), the Depositor’s rights assigned to the Trustee under the Purchase and Servicing Agreements, as modified by the Acknowledgements, the Insurance Policies relating to the Mortgage Loans, all cash, instruments or property held or required to be held in the Custodial Accounts, the Distribution Account, property that secured a Mortgage Loan, the pledge, control and guaranty agreements.

Trustee: Wachovia Bank, National Association, a national banking association, organized under the laws of the United States and any Person succeeding the Trustee hereunder, or if any successor trustee or any co-trustee shall be appointed as herein provided, then such successor trustee and such co-trustee, as the case may be.

Trustee Mortgage Files: as defined in Section 2.01(a).

UCC: The Uniform Commercial Code as enacted in the relevant jurisdiction.

Uncertificated Interest: The LT- R Interest.

Undercollateralized Group: Any Certificate Group in which the aggregate Class Principal Amount of the related class or classes Senior Certificates (other than the related Principal-Only Certificates) is greater than the aggregate Stated Principal Balance of the related Mortgage Components or Mortgage Loans (less the applicable Class P Fraction of any Class P Mortgage Component).   

Underwriter: J.P. Morgan Securities Inc.

Underwriter’s Exemption: The prohibited transaction exemption granted to the Underwriter, or its affiliate, and most recently amended and restated by PTE 2002 19, or any substantially similar administrative exemption granted by the U.S. Department of Labor to the Underwriter.

Underwriting Agreement: The Underwriting Agreement, dated November 23, 2005, among the Seller, the Depositor and the Underwriter.

Uniform Commercial Code: The Uniform Commercial Code as in effect in any applicable jurisdiction from time to time.

Upper-Tier REMIC: As described in the Preliminary Statement.

Voting Interests: The portion of the voting rights of all the Certificates that is allocated to any Certificate for purposes of the voting provisions of this Agreement.  At all times during the term of this Agreement, 1.00% of all Voting Interests shall be allocated to each of the Class A-R, Class 1-A-8, Class 2-A-15, Class 2-A-17 and Class A-X Certificates and all other Classes of Certificates will be allocated 95.00% of all Voting Interests.  Voting Interests shall be allocated among such other Classes of Certificates based on the product of (i) 95.00% and (ii) the fraction, expressed as a percentage, the numerator of which is the aggregate Class Principal Amounts for each Class then outstanding and the denominator of which is the Class Principal Amounts of all Certificates outstanding.  Voting Interests shall be allocated among the Certificates within each such Class in proportion to their Certificate Principal Amounts or Class National Amounts, as applicable, or Percentage Interests.

Wells Fargo: Wells Fargo Bank, N.A. or its successors in interest.

SECTION 1.02

Calculations Respecting Mortgage Loans.  

Calculations required to be made pursuant to this Agreement with respect to any Mortgage Loan in the Trust Fund shall be made based upon current information as to the terms of the Mortgage Loans and reports of payments received from the Mortgagor on such Mortgage Loans and payments to be made to the Securities Administrator as supplied to the Securities Administrator by the Master Servicer or the related Servicer.  The Securities Administrator shall not be required to recompute, verify or recalculate the information supplied to it by the Master Servicer or a Servicer.

ARTICLE II

DECLARATION OF TRUST;

ISSUANCE OF CERTIFICATES

SECTION 2.01

Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans.  

(a)

Concurrently with the execution and delivery of this Agreement, the Depositor does hereby transfer, assign, set over, deposit with and otherwise convey to the Trustee, without recourse, subject to Sections 2.02 and 2.05, in trust, all the right, title and interest of the Depositor in and to the Trust Fund.  Such conveyance includes, without limitation: (i) the Mortgage Loans, including the right to all payments of principal and interest received on or with respect to the Mortgage Loans on and after the Cut-off Date (other than Scheduled Payments due on or before such date), and all such payments due after such date but received prior to such date and intended by the related Mortgagors to be applied after such date; (ii) all of the Depositor’s right, title and interest in and to all amounts from time to time credited to and the proceeds of the Distribution Account, any Custodial Accounts or any Escrow Account established with respect to the Mortgage Loans; (iii) all of the rights of the Depositor as assignee of the Seller with respect to the Seller’s rights under the Purchase and Servicing Agreements pursuant to the Acknowledgements; (iv) all of the Depositor’s right, title or interest in REO Property and the proceeds thereof; (v) all of the Depositor’s rights under any Insurance Policies related to the Mortgage Loans; and (vi) if applicable, the Depositor’s security interest in any collateral pledged to secure the Mortgage Loans, including the Mortgaged Properties, including, but not limited to, the pledge, control and guaranty agreements and the Limited Purpose Surety Bond to have and to hold, in trust; and the Trustee declares that, subject to the review provided for in Section 2.02, it has received and shall hold the Trust Fund, as trustee, in trust, for the benefit and use of the Holders of the Certificates and for the purposes and subject to the terms and conditions set forth in this Agreement, and, concurrently with such receipt, has caused to be executed, authenticated and delivered to or upon the order of the Depositor, in exchange for the Trust Fund, Certificates in the authorized denominations evidencing the entire ownership of the Trust Fund.

The foregoing sale, transfer, assignment, set-over, deposit and conveyance does not and is not intended to result in the creation or assumption by the Trustee of any obligation of the Depositor, the Seller or any other Person in connection with the Mortgage Loans or any other agreement or instrument relating thereto except as specifically set forth therein.

In connection with such transfer and assignment of the Mortgage Loans, the Custodian acting on the Trustee’s behalf, will continue to hold the documents or instruments listed below with respect to each Mortgage Loan (each, a “Trustee Mortgage File”) so transferred and assigned.

The Trustee 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 in the real estate records or that they are other than what they purport to be on their face.

On the Closing Date, the Custodian shall deliver to the Trustee and the Depositor certification (“Custodian Certification”) substantially in the form attached hereto as Exhibit L certifying that, pursuant to each related Custodial Agreement, the applicable Originator delivered and released to the Custodian with respect to the Chase Originator Mortgage Loans, the PHH Mortgage Loans, the GreenPoint Mortgage Loans and the Suntrust Mortgage Loans and delivered and released to the Custodian, subject to and in accordance with the relevant section of each related Purchase and Servicing Agreement, the following documents in the manner required by the related Purchase and Servicing Agreement pertaining to each of the Mortgage Loans identified in the Mortgage Loan Schedule (provided, however, that the Custodian shall not be required nor does it intend to re-examine the contents of the Trustee Mortgage File for any of the Mortgage Loans in connection with entering into this Agreement or providing the Custodian Certification required pursuant to this Section 2.01):

(i)

with respect to each Mortgage Loan, the original Mortgage Note endorsed without recourse in proper form to the order of the Trustee, or in blank (in each case, with all necessary intervening endorsements, as applicable);

(ii)

with respect to each Mortgage Loan (other than a Cooperative Loan) that is not a MERS Mortgage Loan, the original Mortgage with evidence of recording thereon and in the case of the each MERS Mortgage Loan, the original Mortgage, noting the presence of the MIN of the Mortgage Loans and either language indicating that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM Loan or if the Mortgage Loan was not a MOM Loan at origination, the original Mortgage and the assignment thereof to MERS, with evidence of recording indicated thereon;

(iii)

with respect to each Mortgage Loan (other than a Cooperative Loan) that is not a MERS Mortgage Loan, the Assignment of Mortgage in form and substance acceptable for recording in the relevant jurisdiction, such assignment being either (A) in blank, without recourse, or (B) endorsed to “Wachovia Bank, National Association, as Trustee of J.P. Morgan Alternative Loan Trust 2005-S1, Mortgage Pass-Through Certificates, without recourse”;

(iv)

with respect to each Mortgage Loan (other than a Cooperative Loan) that is not a MERS Mortgage Loan, the originals of all intervening assignments of the Mortgage, if any, with evidence of recording thereon, or if the original intervening assignment has not yet been returned from the recording office, a copy of such assignment certified by the applicable Originator to be a true copy of the original of the assignment which has been sent for recording in the appropriate jurisdiction in which the Mortgaged Property is located;

(v)

with respect to each Mortgage Loan (other than a Cooperative Loan), the originals of all assumption, modification, consolidation or extension agreements, if any, with evidence of recording thereon;

(vi)

if applicable, with respect to each Mortgage Loan (other than a Cooperative Loan), the original policy of title insurance (or a true copy thereof) with respect to any such Mortgage Loan, or, if such policy has not yet been delivered by the insurer, the title commitment or title binder to issue same;

(vii)

if applicable, with respect to each Mortgage Loan (other than a Cooperative Loan), a copy of the power of attorney and guaranty agreement with respect to such Mortgage Loan;

(viii)

if applicable, the original or certified copy of the certificates evidencing ownership of the Cooperative Shares issued by the Cooperative Corporation and related assignment of such certificates or an assignment of such Cooperative Shares, in blank, executed by the Mortgagor with such signature guaranteed;

(ix)

with respect to each Mortgage Loan which constitutes a Cooperative Loan:

(1)

the original of any security agreement or similar document executed in connection with the Cooperative Loan;

(2)

the original Recognition Agreement;

(3)

UCC-1 financing statements with recording information thereon from the appropriate governmental recording offices if necessary to perfect the security interest of the Cooperative Loan under the Uniform Commercial Code in the jurisdiction in which the Cooperative Property is located, accompanied by UCC-3 financing statements executed in blank for recordation of the change in the secured party thereunder;

(4)

the original Proprietary Lease and the Assignment of Proprietary Lease executed by the Mortgagor in blank or if the Proprietary Lease has been assigned by the Mortgagor to the Seller, then the Seller must execute an assignment of the Assignment of Proprietary Lease in blank; and

(5)

any other document or instruments required to be delivered under the related Custodial Agreement.

In addition, in connection with the assignment of any MERS Mortgage Loan, it is understood that the related Originator will cause the MERS® System to indicate that such Mortgage Loans have been assigned by the related Originator to the Trustee in accordance with this Agreement for the benefit of the Certificateholders by including (or deleting, in the case of Mortgage Loans which are repurchased in accordance with this Agreement) in such computer files the information required by the MERS® System to identify the series of Certificates issued in connection with such Mortgage Loans.  It is further understood that the related Originator will not, and the Servicer hereby agrees that it will not, alter the information referenced in this paragraph with respect to any Mortgage Loan during the term of this Agreement unless and until such Mortgage Loan is repurchased in accordance with the terms of this Agreement.

(b)

[Reserved].

(c)

In instances where a title insurance policy is required to be delivered to the Trustee or the Custodian on behalf of the Trustee and is not so delivered, the Depositor will provide a copy of such title insurance policy to the Trustee, or to the Custodian on behalf of the Trustee, as promptly as practicable after the execution and delivery hereof, but in any case within 180 days of the Closing Date.

(d)

For Mortgage Loans (if any) that 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, herewith delivers to the Trustee, or to the Custodian on behalf of the Trustee, an Officer’s Certificate which shall include a statement to the effect that all amounts received in connection with such prepayment that are required to be deposited in the Distribution Account pursuant to Section 4.01 have been so deposited.  All original documents that are not delivered to the Trustee or the Custodian on behalf of the Trustee shall be held by the related Servicer in trust for the benefit of the Trustee and the Certificateholders.

(e)

The Depositor and the Trustee hereto agree and understand that it is not intended that any Mortgage Loan be included in the Trust Fund that is (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, (iv) a  “high risk home loan” under the Illinois High Risk Home Loan Act, effective as of January 1, 2004, or (v) a “high-cost home loan” under the Indiana High Cost Home Loan Law, effective January 1, 2005.   The Trustee shall be entitled to indemnification from the Depositor and the Trust Fund for any loss, liability or expense arising out of, or in connection with, the provisions of this Section 2.01(e), including, without limitation, all costs, liabilities and expenses (including reasonable legal fees and expenses) of investigating and defending itself against any claim, action or proceeding, pending or threatened, relating to such provisions.

SECTION 2.02

Acceptance of Trust Fund by Trustee; Review of Documentation for Trust Fund.  

(a)

The Trustee, by execution and delivery hereof, acknowledges receipt by it or by the Custodian on its behalf of the Trustee Mortgage Files pertaining to the Mortgage Loans listed on the Mortgage Loan Schedule.  

(b)

With respect to the Mortgage Loans, in the event there exist exceptions noted on the related Custodian Certification (substantially in the form of Exhibit L), not later than 90 days after the Closing Date the Custodian shall deliver to the Trustee and the Depositor a further certification with any applicable exceptions noted thereon.

(c)

Nothing in this Agreement shall be construed to constitute an assumption by the Trust Fund, the Securities Administrator, the Trustee, any Custodian or the Certificateholders of any unsatisfied duty, claim or other liability on any Mortgage Loan or to any Mortgagor.

(d)

Each of the parties hereto acknowledges that (i) the Custodian has performed the applicable review of the Mortgage Loans and has delivered the Custodian Certification as provided herein and in the Custodial Agreements on the Closing Date and (ii) thereafter, if applicable, the Custodian shall perform the applicable review of the Mortgage Loans and deliver the further certifications as provided herein and in the applicable Custodial Agreements.

(e)

Upon execution of this Agreement, the Depositor hereby delivers to the Trustee and the Trustee acknowledges receipt of the Acknowledgements, together with the related Purchase and Servicing Agreements.

SECTION 2.03

Representations and Warranties of the Depositor.  

(a)

The Depositor hereby represents and warrants to the Trustee, for the benefit of the Certificateholders, and to the Servicer, the Master Servicer and the Securities Administrator as of the Closing Date or such other date as is specified, that:

(i)

the Depositor is a corporation duly organized, validly existing and in good standing under the laws governing its creation and existence and has full corporate power and authority to own its property, to carry on its business as presently conducted, to enter into and perform its obligations under this Agreement, and to create the trust pursuant hereto;

(ii)

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; 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 certificate of incorporation or bylaws of the Depositor;

(iii)

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 such as has been obtained, given, effected or taken prior to the date hereof;

(iv)

this Agreement has been duly executed and delivered by the Depositor and, assuming due authorization, execution and delivery by the Trustee, the Master Servicer and the Securities Administrator, constitutes a valid and binding obligation of the Depositor enforceable against it in accordance with its terms except as such enforceability may be subject to (A) applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally and (B) general principles of equity regardless of whether such enforcement is considered in a proceeding in equity or at law;

(v)

there are no actions, suits or proceedings pending or, to the knowledge of the Depositor, threatened or likely to be asserted against or affecting the Depositor, before or by any court, administrative agency, arbitrator or governmental body (A) with respect to any of the transactions contemplated by this Agreement or (B) 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 it or its business, assets, operations or condition, financial or otherwise, or adversely affect its ability to perform its obligations under this Agreement;

(vi)

immediately prior to the transfer and assignment of the Mortgage Loans to the Trustee, the Depositor was the sole owner of record and holder of each Mortgage Loan, and the Depositor had good and marketable title thereto, and had full right to transfer and sell each Mortgage Loan to the Trustee free and clear, subject only to (1) liens of current real property taxes and assessments not yet due and payable and, if the related Mortgaged Property is a condominium unit, any lien for common charges permitted by statute, (2) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording of such Mortgage acceptable to mortgage lending institutions in the area in which the related Mortgaged Property is located and specifically referred to in the lender’s title insurance policy or attorney’s opinion of title and abstract of title delivered to the originator of such Mortgage Loan, and (3) such other matters to which like properties are commonly subject which do not, individually or in the aggregate, materially interfere with the benefits of the security intended to be provided by the Mortgage, of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and had full right and authority, subject to no interest or participation of, or agreement with, any other party, to sell and assign each Mortgage Loan pursuant to this Agreement;

(vii)

This Agreement creates a valid and continuing security interest (as defined in the applicable Uniform Commercial Code (the “UCC”), in the Mortgage Loans in favor of the Trustee, which security interest is prior to all other liens, and is enforceable as such against creditors of and purchasers from the Depositor;

(viii)

The Mortgage Loans constitute “instruments” within the meaning of the applicable UCC;

(ix)

Other than the security interest granted to the Trustee pursuant to this Agreement, the Depositor has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Mortgage Loans.  The Depositor has not authorized the filing of and is not aware of any financing statement against the Depositor that includes a description of the collateral covering the Mortgage Loans other than a financing statement relating to the security interest granted to the Trustee hereunder or that has been terminated.  The Depositor is not aware of any judgment or tax lien filings against the Depositor;

(x)

None of the Mortgage Loans have any marks or notations indicating that such Mortgage Loans have been pledged, assigned or otherwise conveyed to any Person other than the Trustee; and

(xi)

The Depositor has received all consents and approvals required by the terms of the Mortgage Loans to convey the Mortgage Loans hereunder to the Trustee.

The foregoing representations made in this Section 2.03 shall survive the termination of this Agreement and shall not be waived by any party hereto

SECTION 2.04

Representations and Warranties as to the Mortgage Loans.

(a)

Representations and Warranties of the Depositor as to the Mortgage Loans.

The Depositor hereby represents and warrants to the Trustee with respect to the Mortgage Loans or each Mortgage Loan, as the case may be, as of the date hereof or such other date set forth herein that as of the Closing Date:

(i)

Immediately prior to the transfer and assignment contemplated herein, the Depositor was the sole owner and holder of the Mortgage Loans.  The Mortgage Loans were not assigned or pledged by the Depositor and the Depositor had good and marketable title thereto, and the Depositor had full right to transfer and sell the Mortgage Loans to the Trustee free and clear of any encumbrance, participation interest, lien, equity, pledge, claim or security interest and had full right and authority subject to no interest or participation in, or agreement with any other party to sell or otherwise transfer the Mortgage Loans.

(ii)

As of the Closing Date, the Depositor has transferred all right, title and interest in the Mortgage Loans to the Trustee on behalf of the Trust.

(iii)

As of the Closing Date, the Depositor has not transferred the Mortgage Loans to the Trustee on behalf of the Trust with any intent to hinder, delay or defraud an of its creditors.

It is understood and agreed that the representations and warranties set forth in this Section 2.04 shall survive delivery of the respective Mortgage Files to the Trustee or the Custodian and shall inure to the benefit of the Trustee, notwithstanding any restrictive or qualified endorsement or assignment.

SECTION 2.05

Discovery of Breach; Repurchase or Substitution of Mortgage Loans; Representations and Warranties of Seller as to the Mortgage Loans.  

(a)

Upon discovery by the Depositor, the Seller or the related Originator or receipt of written notice of any materially defective document in, or, following the date of delivery to the Trustee of the Custodian’s certifications as required under the related Custodial Agreements, that a document is missing from, a Trustee Mortgage File, or discovery by the Trustee, the Securities Administrator, the Depositor, the Seller or the related Originator of the breach by such Originator or Seller of any representation or warranty under the related Purchase and Servicing Agreement, as modified by the Acknowledgement, in the case of the Originator, or under this Agreement, in the case of the Seller, in respect of any Mortgage Loan which materially adversely affects the value of that Mortgage Loan or the interest therein of the Certificateholders (a “Defective Mortgage Loan”) (each of the Depositor, the Seller and the related Originator hereby agreeing to give written notice thereof to the Trustee, the Securities Administrator and the other of such parties), the Trustee, or its designee, shall promptly notify the Depositor and the Seller or the related Originator, as applicable, in writing of such defective or missing document or breach and request that the Seller or related Originator deliver such missing document or cure or cause the cure of such defect or breach within a period of time specified in the related Purchase and Servicing Agreement, and if the Seller or related Originator, as applicable, does not deliver such missing document or cure such defect or breach in all material respects during such period, the Trustee shall enforce the obligations of the related Originator under the related Purchase and Servicing Agreement, as modified by the Acknowledgement, or, to the extent that the related Originator fails to cure such defect or breach, the Seller under this Agreement, and shall cause the related Originator or the Seller, as the case may be, to repurchase that Mortgage Loan from the Trust Fund at the Purchase Price on or prior to the Determination Date following the expiration of such specified period (subject to Section 2.05(b) below); provided, however, that, in connection with any such breach that could not reasonably have been cured within such specified period (unless permitted a greater period of time to cure under the related Purchase and Servicing Agreement), subject to Section 2.05(c) below, if the related Originator or the Seller, as applicable, shall have commenced to cure such breach within such specified period, the related Originator or the Seller shall be permitted to proceed thereafter diligently and expeditiously to cure the same within such additional time as is reasonably determined by the Trustee to cure such breach.  To the extent that any costs and damages are incurred by the Trust Fund as a result of any violation of any applicable federal, state, or local predatory or abusive lending law arising from or in connection with the origination of any Mortgage Loan repurchased by the related Originator or the Seller, such costs and damages shall be included in the Purchase Price of such repurchased Mortgage Loan and shall be borne by the Seller.  The Purchase Price for the repurchased Mortgage Loan shall be deposited in the related Distribution Account, and the Trustee, or its designee, upon receipt of written certification from the Securities Administrator of such deposit, shall release or cause the Custodian to release to the related Originator or the Seller, as applicable, the related Trustee Mortgage File and shall execute and deliver such instruments of transfer or assignment, in each case without recourse, representation or warranties, as either party shall furnish to it and as shall be necessary to vest in such party any Mortgage Loan released pursuant hereto and the Trustee, or its designee, shall have no further responsibility with regard to such Trustee Mortgage File (it being understood that the Trustee shall have no responsibility for determining the sufficiency of such assignment for its intended purpose).  If pursuant to the foregoing provisions the related Originator or the Seller repurchases a Mortgage Loan that is a MERS Mortgage Loan, the related Servicer shall cause MERS to designate on the MERS® System the related Originator or the Seller, as applicable, as the beneficial holder of such Mortgage Loan.

In lieu of repurchasing any such Mortgage Loan as provided above, either party may cause such Mortgage Loan to be removed from the Trust Fund (in which case it shall become a Deleted Mortgage Loan) and substitute one or more Replacement Mortgage Loans in the manner and subject to the limitations set forth in Section 2.05(b) below.  It is understood and agreed that the obligations of the Originators and the Seller to cure or to repurchase (or to substitute for) any related Mortgage Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall constitute the sole remedy against the such party respecting such omission, defect or breach available to the Trustee on behalf of the Certificateholders.

(b)

Any substitution of Replacement Mortgage Loans for Deleted Mortgage Loans made pursuant to Section 2.05(a) above must be effected prior to the last Business Day that is within two years after the Closing Date.  As to any Deleted Mortgage Loan for which the related Originator or the Seller substitutes a Replacement Mortgage Loan or Loans, such substitution shall be effected by delivering to the Custodian, on behalf of the Trustee, for such Replacement Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other documents and agreements, with all necessary endorsements thereon, together with an Officers’ Certificate stating that each such Replacement Mortgage Loan satisfies the definition thereof and specifying the Substitution Amount (as described below), if any, in connection with such substitution.  Monthly Payments due with respect to Replacement Mortgage Loans in the month of substitution shall not be included as part of the Trust Fund and shall be retained by the related Originator or the Seller, as applicable.  For the month of substitution, distributions to the Certificateholders shall reflect the collections and recoveries in respect of such Deleted Mortgage in the Due Period preceding the month of substitution and the related Originator or the Seller, as applicable, shall thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Mortgage Loan.  Upon such substitution, such Replacement Mortgage Loan shall constitute part of the Trust Fund and shall be subject in all respects to the terms of this Agreement and the related Purchase and Servicing Agreement, as modified by the related Acknowledgement, including all representations and warranties thereof included in such Purchase and Servicing Agreement, as modified by the Acknowledgement, in each case as of the date of substitution.

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

In addition, the related Originator or the Seller, as applicable, shall obtain at its own expense and deliver to the Trustee and the Securities Administrator an Opinion of Counsel to the effect that such substitution (either specifically or as a class of transactions) shall not cause an Adverse REMIC Event.  If such Opinion of Counsel can not be delivered, then such substitution may only be effected at such time as the required Opinion of Counsel can be given.

(c)

Upon discovery by the related Originator, the Seller, the Depositor or the Trustee that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall within two (2) Business Days give written notice thereof to the other parties.  In connection therewith, the applicable party shall repurchase or, subject to the limitations set forth in Section 2.05(b), substitute one or more Replacement Mortgage Loans for the affected Mortgage Loan within 90 days of the earlier of discovery or receipt of such notice with respect to such affected Mortgage Loan.  Any such repurchase or substitution shall be made in the same manner as set forth in Section 2.05(a) above.  The Trustee shall re-convey to the related Originator or the Seller, as applicable, the Mortgage Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Mortgage Loan repurchased for breach of a representation or warranty.

(d)

Representations and Warranties of the Seller as to the Mortgage Loans.

The Seller hereby represents and warrants to the Trustee:

(i)

The representations and warranties of the JPMCB with respect to the Chase Originators Mortgage Loans in the JPMCB Purchase and Servicing Agreement, which has been assigned to the Trustee, were made as of the applicable Bring-Down Date, as specified in the related Purchase and Servicing Agreement.  With respect to the Chase Originators Mortgage Loans and the period from such Bring-Down Date to and including the Closing Date, the Seller hereby makes the representations and warranties contained in Section 3.02 of the JPMCB Purchase and Servicing Agreement with respect to each of the Chase Originators Mortgage Loans to and for the benefit of the Depositor, the Trustee and the Trust Fund.

(ii)

The representations and warranties of PHH with respect to the PHH Mortgage Loans in the PHH Purchase and Servicing Agreement, which has been assigned to the Trustee, were made as of the applicable Bring-Down Date, as specified in the Cendant Purchase and Servicing Agreement.  With respect to the PHH Mortgage Loans and the period from such Bring-Down Date to and including the Closing Date, the Seller hereby makes the representations and warranties contained in clauses (4), (20), (21), (25), (31) and (57) of Section 3.03 of the PHH Purchase and Servicing Agreement with respect to each of the PHH Mortgage Loans to and for the benefit of the Depositor, the Trustee and the Trust Fund.

(iii)

The representations and warranties of GreenPoint with respect to the GreenPoint Mortgage Loans in the GreenPoint Purchase and Servicing Agreement, which has been assigned to the Trustee, were made as of the applicable Bring-Down Date, as specified in the GreenPoint Purchase and Servicing Agreement.  With respect to the GreenPoint Mortgage Loans and the period from such Bring-Down Date to and including the Closing Date, the Seller hereby makes the representations and warranties contained in Section 7.01 of the GreenPoint Purchase and Servicing Agreement with respect to each of the GreenPoint Mortgage Loans to and for the benefit of the Depositor, the Trustee and the Trust Fund.

(iv)

The representations and warranties of Suntrust with respect to the Suntrust Mortgage Loans in the Suntrust Purchase and Servicing Agreement, which has been assigned to the Trustee, were made as of the applicable Bring-Down Date, as specified in the Suntrust Purchase and Servicing Agreement.  With respect to the Suntrust Mortgage Loans and the period from such Bring-Down Date to and including the Closing Date, the Seller hereby makes the representations and warranties contained in Section 7.01 of the Suntrust Purchase and Servicing Agreement with respect to each of the Suntrust Mortgage Loans to and for the benefit of the Depositor, the Trustee and the Trust Fund.

(v)

The Seller hereby represents and warrants that, as of the Closing Date, (i) no Mortgage Loan is subject to the Home Ownership and Equity Protection Act of 1994 or any applicable, similar federal, state or local statutes or regulations related to “high cost” mortgage loans or “predatory,” “high cost,” “threshold” or “covered” lending (as such terms are defined in the applicable statute or regulation); (ii) no Mortgage Loan is (w) a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27, 2003, (x) a “High-Cost Home Loan” as defined in the New Mexico Home Loan Protection Act effective January 1, 2004, (y) a “High Cost Loan” or “Covered Loan” (as such terms are defined in the current S&P’s LEVELS® Glossary), or (z) governed by the Georgia Fair Lending Act, if such Mortgage Loan was originated on or after October 1, 2002 through March 6, 2003, (iii) each Mortgage Loan at origination complied in all material respects with applicable local, state and federal laws, including, but not limited to, applicable anti-predatory and abusive lending laws, and (iv) each Mortgage Loan is a “qualified mortgage” within the meaning of 860G(a)(3) of the Code.

(vi)

The Seller agrees to comply with the provisions of Section 2.05 in respect of a breach of any of such representations and warranties.

SECTION 2.06

Grant Clause.  

(a)

It is intended that the conveyance of the Depositor’s right, title and interest in and to property constituting the Trust Fund pursuant to this Agreement shall constitute, and shall be construed as, a sale of such property and not a grant of a security interest to secure a loan.  However, if such conveyance is deemed to be in respect of a loan, it is intended that: (1) the rights and obligations of the parties shall be established pursuant to the terms of this Agreement; (2) the Depositor hereby grants to the Trustee for the benefit of the Holders of the Certificates a first priority security interest in all of the Depositor’s right, title and interest in, to and under, whether now owned or hereafter acquired, the Trust Fund and all proceeds of any and all property constituting the Trust Fund to secure payment of the Certificates; and (3) this Agreement shall constitute a security agreement under applicable law.  If such conveyance is deemed to be in respect of a loan and the trust created by this Agreement terminates prior to the satisfaction of the claims of any Person holding any Certificate, the security interest created hereby shall continue in full force and effect and the Trustee shall be deemed to be the collateral agent for the benefit of such Person, and all proceeds shall be distributed as herein provided.

(b)

The Depositor shall, to the extent consistent with this Agreement, take such reasonable actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Loans and the other property described above, such security interest would be deemed to be a perfected security interest of first priority under applicable law and will be maintained as such throughout the term of this Agreement.  The Depositor will, at its own expense, make all initial filings on or about the Closing Date and shall forward a copy of such filing or filings to the Trustee.  Without limiting the generality of the foregoing, the Depositor shall prepare and forward for filing, or shall cause to be forwarded for filing, at the expense of the Depositor, all filings necessary to maintain the effectiveness of any original filings necessary under the relevant UCC to perfect the Trustee’s security interest in or lien on the Mortgage Loans, including without limitation (x) continuation statements, and (y) such other statements as may be occasioned by (1) any change of name of an Originator, the Depositor or the Trustee, (2) any change of location of the place of business or the chief executive office of the Seller or the Depositor, (3) any transfer of any interest of an Originator or the Depositor in any Mortgage Loan or (4) any change under the relevant UCC or other applicable laws.  Neither the Originators nor the Depositor shall organize under the law of any jurisdiction other than the State under which each is organized as of the Closing Date (whether changing its jurisdiction of organization or organizing under an additional jurisdiction) without giving 30 days prior written notice of such action to its immediate and intermediate transferee, including the Trustee.  Before effecting such change, any Originator or the Depositor proposing to change its jurisdiction of organization shall prepare and file in the appropriate filing office any financing statements or other statements necessary to continue the perfection of the interests of its immediate and mediate transferees, including the Trustee, in the Mortgage Loans.  In connection with the transactions contemplated by this Agreement, each of the Originators and the Depositor authorizes its immediate or mediate transferee to file in any filing office any initial financing statements, any amendments to financing statements, any continuation statements, or any other statements or filings described in this paragraph (b), it being understood that such immediate or mediate transferees are under no obligation to make such filings.

ARTICLE III

THE CERTIFICATES

SECTION 3.01

The Certificates.  

(a)

The Certificates shall be issuable in registered form only and shall be securities governed by Article 8 of the New York Uniform Commercial Code.  The Uncertificated Interests shall be issuable as uncertificated securities in registered form only and shall be securities governed by Article 8 of the New York Uniform Commercial Code.  The Book-Entry Certificates will be evidenced by one or more certificates, beneficial ownership of which will be held in the dollar denominations in Certificate Principal Amount, or Notional Amount, as applicable, or in the Percentage Interests, specified herein.  Each Class of Book-Entry Certificates will be issued in the minimum denominations in Certificate Principal Amount (or Notional Amount) specified in the Preliminary Statement hereto and in integral multiples of $1 in excess thereof.  Each Class of Non-Book-Entry Certificates other than the Residual Certificates shall be issued in definitive, fully registered form in the minimum denominations in Certificate Principal Amount specified in the Preliminary Statement hereto and in integral multiples of $1 in excess thereof.  The Class A-R Certificates shall be issued as single Certificates and maintained in definitive, fully registered form in a denomination equal to 100% of the Percentage Interest of each such Class.  The Uncertificated Interest shall be issued as a single security and maintained in fully registered form in a denomination equal to 100% of the percentage interest of such interest.

(b)

The Certificates shall be executed by manual or facsimile signature on behalf of the Trustee by an authorized officer of the Trustee or of the Securities Administrator on its behalf.  Each Certificate shall, on original issue, be authenticated by the Authenticating Agent upon the written order of the Depositor upon receipt by the Trustee of the Trustee Mortgage Files described in Section 2.01.  No Certificate shall be entitled to any benefit under this Agreement, or be valid for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein, executed by an authorized officer of the Authenticating Agent, by manual signature, and such certification 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.  At any time and from time to time after the execution and delivery of this Agreement, the Depositor may deliver Certificates executed by the Trustee to the Authenticating Agent for authentication and the Authenticating Agent shall authenticate and deliver such Certificates as in this Agreement provided and not otherwise.

(c)

The Class B-4, Class B-5 and Class B-6 Certificates offered and sold in reliance on the exemption from registration under Rule 144A under the Act shall be issued initially in definitive, fully registered form without interest coupons with the applicable legends set forth in Exhibit A added to the forms of such Certificates (each, a “Restricted Global Security”).

SECTION 3.02

Registration.  

The Securities Administrator is hereby appointed, and the Securities Administrator hereby accepts its appointment as, initial Certificate Registrar in respect of the Certificates and shall maintain books for the registration and for the transfer of Certificates and the Uncertificated Interest (the “Certificate Register”).  The Trustee may appoint a bank or trust company to act as successor Certificate Registrar.  A registration book shall be maintained for the Certificates and the Uncertificated Interest collectively.  The Certificate Registrar may resign or be discharged or removed and a new successor may be appointed in accordance with the procedures and requirements set forth in Sections 6.06 and 6.07 hereof with respect to the resignation, discharge or removal of the Securities Administrator and the appointment of a successor Securities Administrator.  The Certificate Registrar may appoint, by a written instrument delivered to the Holders and the Master Servicer, any bank or trust company to act as co-registrar under such conditions as the Certificate Registrar may prescribe; provided, however, that the Certificate Registrar shall not be relieved of any of its duties or responsibilities hereunder by reason of such appointment.  The Certificate Register in respect of the Uncertificated Interest shall contain a statement that transfers of the Uncertificated Interest to a Disqualified Organization are prohibited as provided in this Agreement.

SECTION 3.03

Transfer and Exchange of Certificates.  

(a)

A Certificate (other than Book-Entry Certificates which shall be subject to Section 3.09 hereof) may be transferred by the Holder thereof only upon presentation and surrender of such Certificate at the office of the Certificate Registrar duly endorsed or accompanied by an assignment duly executed by such Holder or his duly authorized attorney in such form as shall be satisfactory to the Certificate Registrar.  Upon the transfer of any Certificate in accordance with the preceding sentence, the Trustee or the Securities Administrator on behalf of the Trustee shall execute, and the Authenticating Agent shall authenticate and deliver to the transferee, one or more new Certificates of the same Class and evidencing, in the aggregate, the same aggregate Certificate Principal Amount (or Notional Amount) as the Certificate being transferred.  An Uncertificated Interest may be transferred by the Holder thereof upon written notice to the Certificate Registrar and satisfaction of the other conditions set forth in this Section 3.03.  No service charge shall be made to a Certificateholder for any registration of transfer of Certificates, but the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any registration of transfer of Certificates.

(b)

A Certificate may be exchanged by the Holder thereof for any number of new Certificates of the same Class, in authorized denominations, representing in the aggregate the same Certificate Principal Amount (or Notional Amount) as the Certificate surrendered, upon surrender of the Certificate to be exchanged at the office of the Certificate Registrar duly endorsed or accompanied by a written instrument of transfer duly executed by such Holder or his duly authorized attorney in such form as is satisfactory to the Certificate Registrar.  Certificates delivered upon any such exchange will evidence the same obligations, and will be entitled to the same rights and privileges, as the Certificates surrendered.  No service charge shall be made to a Certificateholder for any exchange of Certificates, but the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any exchange of Certificates.  Whenever any Certificates are so surrendered for exchange, the Trustee, or the Securities Administrator on behalf of the Trustee, shall execute, and the Authenticating Agent shall authenticate, date and deliver the Certificates which the Certificateholder making the exchange is entitled to receive.

(c)

By acceptance of a Restricted Certificate, whether upon original issuance or subsequent transfer, each Holder of such a Certificate acknowledges the restrictions on the transfer of such Certificate set forth thereon and agrees that it will transfer such a Certificate only as provided herein.

The following restrictions shall apply with respect to the transfer and registration of transfer of a Restricted Certificate:

(i)

The Certificate Registrar shall register the transfer of a Restricted Certificate if the requested transfer is (x) to the Depositor or an affiliate (as defined in Rule 405 under the Act) of the Depositor or (y) being made to a “qualified institutional buyer” (a “QIB”) as defined in Rule 144A under the Act by a transferor that has provided the Certificate Registrar with a certificate in the form of Exhibit H hereto; and

(ii)

The Certificate Registrar shall register the transfer of a Restricted Certificate if the requested transfer is being made to an “accredited investor” under Rule 501(a)(1), (2), (3) or (7) under the Act, or to any Person all of the equity owners in which are such accredited investors, by a transferor who furnishes to the Certificate Registrar a letter of the transferee substantially in the form of Exhibit I hereto.

(d)

No transfer of an ERISA-Restricted Certificate in the form of a Definitive Certificate or that is an Uncertificated Interest shall be made to any Person or shall be effective unless the Certificate Registrar, on behalf of the Trustee, has received (A) a certificate substantially in the form of Exhibit J hereto (or Exhibit B, in the case of a Residual Certificate) from such transferee or (B) an Opinion of Counsel satisfactory to the Trustee and the Certificate Registrar to the effect that the purchase and holding of such a Certificate will not constitute or result in any nonexempt prohibited transactions under Title I of ERISA or Section 4975 of the Code and will not subject the Certificate Registrar, the Trustee, the Master Servicer, any Servicer, the Depositor or the Securities Administrator to any obligation in addition to those undertaken in the Agreement; provided, however, that the Certificate Registrar will not require such certificate or opinion in the event that, as a result of a change of law or otherwise, counsel satisfactory to the Certificate Registrar has rendered an opinion to the effect that the purchase and holding of an ERISA-Restricted Certificate by an employee benefit plan or other retirement arrangement subject to Section 406 of ERISA, or Section 4975 of the Code, (collectively, a “Plan”) or a Person that is purchasing or holding such a Certificate with the assets of a Plan will not constitute or result in a prohibited transaction under Title I of ERISA or Section 4975 of the Code and will not subject the Certificate Registrar, the Trustee, the Master Servicer, the Depositor, the Securities Administrator or any Servicer to any obligation in addition to those undertaken in this Agreement.  Each Transferee of an ERISA-Restricted Certificate that is a Book-Entry Certificate shall be deemed to have made the representations set forth in Exhibit J.  The preparation and delivery of the certificate and opinions referred to above shall not be an expense of the Trust Fund, the Certificate Registrar, the Trustee, the Master Servicer, any Servicer the Depositor or the Securities Administrator.

Notwithstanding the foregoing, no opinion or certificate shall be required for the initial transfer of the ERISA-Restricted Certificates.  The Certificate Registrar shall have no obligation to monitor transfers of Book-Entry Certificates that are ERISA-Restricted Certificates and shall have no liability for transfers of such Certificates in violation of the transfer restrictions.  The Certificate Registrar shall be under no liability to any Person for any registration of transfer of any ERISA-Restricted Certificate that is in fact not permitted by this Section 3.03(d) and none of the Securities Administrator, the Trustee or the Paying Agent shall have 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 Certificate Registrar in accordance with the foregoing requirements.  The Securities Administrator, on behalf of the Trustee, shall be entitled, but not obligated, to recover from any Holder of any ERISA-Restricted Certificate that was in fact a Plan or a Person acting on behalf of a Plan any payments made on such ERISA-Restricted Certificate at and after either such time.  Any such payments so recovered by the Securities Administrator, on behalf of the Trustee, shall be paid and delivered by the Securities Administrator, on behalf of the Trustee, to the last preceding Holder of such Certificate that is not such a Plan or Person acting on behalf of a Plan.

(e)

As a condition of the registration of transfer or exchange of any Certificate, the Certificate Registrar may require the certified taxpayer identification number of the owner of the Certificate and the payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith; provided, however, that the Certificate Registrar shall have no obligation to require such payment or to determine whether or not any such tax or charge may be applicable.  No service charge shall be made to the Certificateholder for any registration, transfer or exchange of a Certificate.

(f)

Notwithstanding anything to the contrary contained herein, no Residual Certificate may be owned, pledged or transferred, directly or indirectly, by or to (i) a Disqualified Organization or (ii) an individual, corporation or partnership or other person unless such person is (A) not a Non-U.S. Person or (B) is a Non-U.S. Person that holds a Residual Certificate in connection with the conduct of a trade or business within the United States and has furnished the transferor and the Certificate Registrar with an effective Internal Revenue Service Form W 8ECI or successor form at the time and in the manner required by the Code (any such person who is not covered by clause (A) or (B) above is referred to herein as a “Non-permitted Foreign Holder”).

Prior to and as a condition of the registration of any transfer, sale or other disposition of a Residual Certificate, the proposed transferee shall deliver to the Trustee and the Certificate Registrar an affidavit in substantially the form attached hereto as Exhibit B representing and warranting, among other things, that such transferee is neither a Disqualified Organization, an agent or nominee acting on behalf of a Disqualified Organization, nor a Non-permitted Foreign Holder (any such transferee, a “Permitted Transferee”), and the proposed transferor shall deliver to the Trustee and the Certificate Registrar an affidavit in substantially the form attached hereto as Exhibit C.  In addition, the Trustee or the Certificate Registrar may (but shall have no obligation to) require, prior to and as a condition of any such transfer, the delivery by the proposed transferee of an Opinion of Counsel, addressed to the Trustee and the Certificate Registrar, that such proposed transferee or, if the proposed transferee is an agent or nominee, the proposed beneficial owner, is not a Disqualified Organization, agent or nominee thereof, or a Non-permitted Foreign Holder.  Notwithstanding the registration in the Certificate Register of any transfer, sale, or other disposition of a Residual Certificate to a Disqualified Organization, an agent or nominee thereof, or Non-permitted Foreign Holder, such registration shall be deemed to be of no legal force or effect whatsoever and such Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign Holder shall not be deemed to be a Certificateholder for any purpose hereunder, including, but not limited to, the receipt of distributions on such Residual Certificate.  The Depositor, the Certificate Registrar and the Trustee shall be under no liability to any Person for any registration or transfer of a Residual Certificate to a Disqualified Organization, agent or nominee thereof or Non-permitted Foreign Holder or for the Paying Agent making any payments due on such Residual Certificate to the Holder thereof or for taking any other action with respect to such Holder under the provisions of the Agreement, so long as the transfer was effected in accordance with this Section 3.03(f), unless the Certificate Registrar shall have actual knowledge at the time of such transfer or the time of such payment or other action that the transferee is a Disqualified Organization, or an agent or nominee thereof, or Non-permitted Foreign Holder.  The Certificate Registrar shall be entitled to recover from any Holder of a Residual Certificate that was a Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign Holder at the time it became a Holder or any subsequent time it became a Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign Holder, all payments made on such Residual Certificate at and after either such times (and all costs and expenses, including but not limited to attorneys’ fees, incurred in connection therewith).  Any payment (not including any such costs and expenses) so recovered by the Certificate Registrar shall be paid and delivered to the last preceding Holder of such Residual Certificate.

If any purported transferee shall become a registered Holder of a Residual Certificate in violation of the provisions of this Section 3.03(f), then upon receipt of written notice to the Certificate Registrar that the registration of transfer of such Residual Certificate was not in fact permitted by this Section 3.03(f), the last preceding Permitted Transferee shall be restored to all rights as Holder thereof retroactive to the date of such registration of transfer of such Residual Certificate.  The Depositor, the Certificate Registrar and the Trustee shall be under no liability to any Person for any registration of transfer of a Residual Certificate that is in fact not permitted by this Section 3.03(f), or for the Paying Agent making any payment due on such Certificate to the registered Holder thereof or for taking any other action with respect to such Holder under the provisions of this Agreement so long as the transfer was registered upon receipt of the affidavit described in the preceding paragraph of this Section 3.03(f).

(g)

Each Holder or Certificate Owner of a Restricted Certificate, ERISA-Restricted Certificate or Residual Certificate, or an interest therein, by such Holder’s or Owner’s acceptance thereof, shall be deemed for all purposes to have consented to the provisions of this section.

SECTION 3.04

Cancellation of Certificates.  

Any Certificate surrendered for registration of transfer or exchange shall be cancelled and retained in accordance with normal retention policies with respect to cancelled certificates maintained by the Certificate Registrar.

SECTION 3.05

Replacement of Certificates.  

If (i) any Certificate is mutilated and is surrendered to the Certificate Registrar or (ii) the Trustee or the Certificate Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and there is delivered to the Trustee and the Certificate Registrar such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Depositor, the Trustee or the Certificate Registrar that such destroyed, lost or stolen Certificate has been acquired by a protected purchaser the Trustee, or the Securities Administrator on behalf of the Trustee, shall execute and the Authenticating Agent shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like tenor and Certificate Principal Amount.  Upon the issuance of any new Certificate under this Section 3.05, the Trustee, the Depositor or the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee, the Depositor or the Certificate Registrar) connected therewith.  Any replacement Certificate issued pursuant to this Section 3.05 shall constitute complete and indefeasible evidence of ownership in the applicable Trust Fund, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time.

If after the delivery of such new Certificate, a protected purchaser of the original Certificate in lieu of which such new Certificate was issued presents for payment such original Certificate, the Depositor, the Certificate Registrar and the Trustee or any agent shall be entitled to recover such new Certificate from the Person to whom it was delivered or any Person taking therefrom, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expenses incurred by the Depositor, the Certificate Registrar, the Trustee or any agent in connection therewith.

SECTION 3.06

Persons Deemed Owners.  

Subject to the provisions of Section 3.09 with respect to Book-Entry Certificates, the Depositor, the Master Servicer, the Trustee, the Certificate Registrar, the Paying Agent and any agent of any of them shall treat the Person in whose name any Certificate is registered upon the books of the Certificate Registrar as the owner of such Certificate for the purpose of receiving distributions pursuant to Sections 5.01 and 5.02 and for all other purposes whatsoever, and neither the Depositor, the Master Servicer, the Trustee, the Certificate Registrar, the Paying Agent nor any agent of any of them shall be affected by notice to the contrary.

SECTION 3.07

Temporary Certificates.  

(a)

Pending the preparation of definitive Certificates, upon the written order of the Depositor, the Trustee, or the Securities Administrator on behalf of the Trustee, shall execute and the Authenticating Agent shall authenticate and deliver temporary Certificates that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Certificates in lieu of which they are issued and with such variations as the authorized officers executing such Certificates may determine, as evidenced by their execution of such Certificates.

(b)

If temporary Certificates are issued, the Depositor will cause definitive Certificates to be prepared without unreasonable delay.  After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Certificate Registrar without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Certificates, the Securities Administrator, on behalf of the Trustee, shall execute and the Authenticating Agent shall authenticate and deliver in exchange therefor a like aggregate Certificate Principal Amount of definitive Certificates of the same Class in the authorized denominations.  Until so exchanged, the temporary Certificates shall in all respects be entitled to the same benefits under this Agreement as definitive Certificates of the same Class.

SECTION 3.08

Appointment of Paying Agent.  

The Trustee may appoint a Paying Agent (which may be the Trustee) for the purpose of making distributions to the Certificateholders hereunder.  The Trustee hereby appoints the Securities Administrator as the initial Paying Agent.  The Trustee shall cause any Paying Agent, other than the Securities Administrator, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee that such Paying Agent will hold all sums held by it for the payment to the Certificateholders in an Eligible Account (which shall be the Distribution Account) in trust for the benefit of the Certificateholders entitled thereto until such sums shall be paid to the Certificateholders.  All funds remitted by the Securities Administrator to any such Paying Agent for the purpose of making distributions shall be paid to the Certificateholders on each Distribution Date and any amounts not so paid shall be returned on such Distribution Date to the Securities Administrator.  If the Paying Agent is not the Trustee or the Securities Administrator, the Trustee shall cause to be remitted to the Paying Agent on or before the Business Day prior to each Distribution Date, by wire transfer in immediately available funds, the funds to be distributed on such Distribution Date.  Any Paying Agent shall be either a bank or trust company or otherwise authorized under law to exercise corporate trust powers.

SECTION 3.09

Book-Entry Certificates.  

(a)

Each Class of Book-Entry Certificates, upon original issuance, shall be issued in the form of one or more typewritten Certificates representing the Book-Entry Certificates.  The Book-Entry Certificates shall initially be registered on the Certificate Register in the name of the nominee of the Clearing Agency, and no Certificate Owner will receive a definitive certificate representing such Certificate Owner’s interest in the Book-Entry Certificates, except as provided in Section 3.09(c).  Unless Definitive Certificates have been issued to Certificate Owners of Book-Entry Certificates pursuant to Section 3.09(c):

(i)

the provisions of this Section 3.09 shall be in full force and effect;

(ii)

the Certificate Registrar, the Paying Agent and the Trustee shall deal with the Clearing Agency for all purposes (including the making of distributions on the Book-Entry Certificates) as the authorized representatives of the Certificate Owners and the Clearing Agency and shall be responsible for crediting the amount of such distributions to the accounts of such Persons entitled thereto, in accordance with the Clearing Agency’s normal procedures;

(iii)

to the extent that the provisions of this Section 3.09 conflict with any other provisions of this Agreement, the provisions of this Section 3.09 shall control; and

(iv)

the rights of Certificate Owners shall be exercised only through the Clearing Agency and the Clearing Agency Participants and shall be limited to those established by law and agreements between such Certificate Owners and the Clearing Agency and/or the Clearing Agency Participants.  Unless and until Definitive Certificates are issued pursuant to Section 3.09(c), the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal of and interest on the Book-Entry Certificates to such Clearing Agency Participants.

(b)

Whenever notice or other communication to the Certificateholders is required under this Agreement, unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 3.09(c), the Securities Administrator shall give all such notices and communications specified herein to be given to Holders of the Book-Entry Certificates to the Clearing Agency.

(c)

If (i) (A) the Clearing Agency or the Depositor advises the Paying Agent in writing that the Clearing Agency is no longer willing or able to discharge properly its responsibilities with respect to the Book-Entry Certificates, and (B) the Depositor is unable to locate a qualified successor satisfactory to the Depositor and the Paying Agent, (ii) the Depositor, at its option, advises the Paying Agent in writing that it elects to terminate the book-entry system through the Clearing Agency or (iii) after the occurrence of an Event of Default, Certificate Owners representing beneficial interests aggregating not less than 50% of the Class Principal Amount of a Class of Book-Entry Certificates advise the Paying Agent and the Clearing Agency through the Clearing Agency Participants in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Certificate Owners of a Class of Book-Entry Certificates, the Certificate Registrar shall notify the Clearing Agency to effect notification to all Certificate Owners, through the Clearing Agency, of the occurrence of any such event and of the availability of Definitive Certificates to Certificate Owners requesting the same.  Upon surrender to the Certificate Registrar of the Book-Entry Certificates by the Clearing Agency, accompanied by registration instructions from the Clearing Agency for registration, the Certificate Registrar shall issue the Definitive Certificates.  Neither the Depositor, the Certificate Registrar nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions.  Upon the issuance of Definitive Certificates all references herein to obligations imposed upon or to be performed by the Clearing Agency shall be deemed to be imposed upon and performed by the Certificate Registrar, to the extent applicable, with respect to such Definitive Certificates and the Certificate Registrar shall recognize the holders of the Definitive Certificates as Certificateholders hereunder.  Notwithstanding the foregoing, the Certificate Registrar, upon the written instruction of the Depositor, shall have the right to issue Definitive Certificates on the Closing Date in connection with credit enhancement programs.

ARTICLE IV

ADMINISTRATION OF THE TRUST FUND

SECTION 4.01

Custodial Accounts; Distribution Account.  

(a)

On or prior to the Closing Date, the Master Servicer shall have caused each Servicer to establish and maintain one or more Custodial Accounts into which all Scheduled Payments and unscheduled payments with respect to the Mortgage Loans, net of any deductions or reimbursements permitted under the related Purchase and Servicing Agreement, shall be deposited.  On each Distribution Account Deposit Date, each Servicer shall remit to the Securities Administrator for deposit into the Distribution Account, all amounts so required to be deposited into such account in accordance with the terms of the related Purchase and Servicing Agreement.

(b)

The Securities Administrator, as Paying Agent for the Trustee, shall establish and maintain an Eligible Account entitled “Distribution Account of Wachovia Bank, National Association, as Trustee for the benefit of J.P. Morgan Alternative Loan Trust 2005-S1, Holders of Mortgage Pass-Through Certificates.”  The Securities Administrator shall, promptly upon receipt from each Servicer, on each Distribution Account Deposit Date, deposit into the Distribution Account and retain on deposit until the related Distribution Date the following amounts:

(i)

the aggregate of collections with respect to the Mortgage Loans remitted by each  Servicer from the related Custodial Accounts in accordance with this Agreement and the related Purchase and Servicing Agreements;

(ii)

any amounts required to be deposited by the Master Servicer with respect to the Mortgage Loans for the related Due Period pursuant to this Agreement, including the amount of any Advances or Compensating Interest Payments with respect to the Mortgage Loans not paid by the applicable Servicer; and

(iii)

any other amounts so required to be deposited in the Distribution Account in the related Due Period pursuant to this Agreement.

(c)

In the event the Master Servicer or any Servicer, has remitted in error to the Distribution Account any amount not required to be remitted in accordance with the definition of Available Distribution Amount, it may at any time direct the Securities Administrator to withdraw such amount from the Distribution Account for repayment to the Master Servicer or such Servicer, as applicable, by delivery of an Officer’s Certificate to the Securities Administrator and the Trustee which describes the amount deposited in error.

(d)

On each Distribution Date and Redemption Date, the Securities Administrator, as Paying Agent, shall withdraw from funds available in the Distribution Account and distribute the Available Distribution Amount to the Certificateholders and any other parties entitled thereto in the amounts and priorities set forth in Section 5.02.  The Securities Administrator may from time to time withdraw from the Distribution Account and pay the Master Servicer, the Trustee, the Securities Administrator or any Servicer any amounts permitted to be paid or reimbursed to such Person from funds in the Distribution Account pursuant to the clauses (A) through (D) of the definition of Available Distribution Amount.

(e)

Funds in the Distribution Account may be invested in Permitted Investments selected by and at the written direction of the Master Servicer, which shall mature not later than one (1) Business Day prior to the Distribution Date (except that if such Permitted Investment is an obligation of the Master Servicer, then such Permitted Investment shall mature not later than such applicable Distribution Date) and any such Permitted Investment shall not be sold or disposed of prior to its maturity.  All such Permitted Investments shall be made in the name of the Trustee (in its capacity as such) or its nominee.  All income and gain realized from any Permitted Investment shall be for the benefit of the Master Servicer, as additional compensation for its duties hereunder, and shall be subject to its withdrawal or order from time to time, and shall not be part of the Trust Fund.  The amount of any losses incurred in respect of any such investments shall be deposited in such Distribution Account by the Master Servicer out of its own funds, without any right of reimbursement therefor, immediately as realized.

SECTION 4.02

[Reserved].  

SECTION 4.03

[Reserved].  

SECTION 4.04

Reports to Trustee and Certificateholders.  

On each Distribution Date, the Securities Administrator shall have prepared and shall make available to the Trustee, the Depositor and each Certificateholder a written report setting forth the following information (on the basis of Mortgage Loan level information obtained from each Servicer or the Master Servicer):

(a)

the amount of the distributions, separately identified, with respect to each Class of Certificates;

(b)

the amount of the distributions set forth in the clause (a) allocable to principal, separately identifying the aggregate amount of any Principal Prepayments or other unscheduled recoveries of principal included in that amount;

(c)

the amount of the distributions set forth in the clause (a) allocable to interest and how it was calculated;

(d)

the amount of any unpaid Interest Shortfall and the related accrued interest thereon, with respect to each Class of Certificates;

(e)

the Class Principal Amount of each Class of Certificates after giving effect to the distribution of principal on that Distribution Date;

(f)

the Aggregate Stated Principal Balance of the Mortgage Loans in each Mortgage Group at the end of the related Prepayment Period;

(g)

the Senior Percentage and the Subordinate Percentage for each Mortgage Group for the following Distribution Date;

(h)

the Senior Prepayment Percentage and Subordinate Prepayment Percentage for each Mortgage Group for the following Distribution Date;

(i)

in the aggregate and with respect to each Pool, the amount of the Servicing Fee paid to or retained by Servicer;

(j)

in the aggregate and with respect to each Mortgage Group, the amount of Advances for the related Due Period;

(k)

in the aggregate and with respect to each Pool, the number and Stated Principal Balance of the Mortgage Loans or Mortgage Components, as applicable, that were (A) Delinquent (exclusive of Mortgage Loans or Mortgage Components, as applicable, in foreclosure) (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days, (B) in foreclosure and Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days and (C) in bankruptcy as of the close of business on the last day of the calendar month preceding that Distribution Date;

(l)

in the aggregate and with respect to each Pool, for any Mortgage Loan as to which the related Mortgaged Property was an REO Property during the preceding calendar month, the principal balance of that Mortgage Loan as of the close of business on the last day of the related Due Period;

(m)

in the aggregate and with respect to each Mortgage Group, the amount of Realized Losses incurred during the preceding calendar month;

(n)

in the aggregate and with respect to each Mortgage Group, the cumulative amount of Realized Losses incurred since the Closing Date;

(o)

the Realized Losses, if any, allocated to each Class of Certificates on that Distribution Date;

(p)

each Special Hazard Loss Coverage Amount, each Fraud Loss Coverage Amount and each Bankruptcy Loss Coverage Amount, in each case as of the related Determination Date;

(q)

the Certificate Interest Rate for each Class of Certificates (other than the Principal-Only Certificates) for that Distribution Date; and

(r)

the amount of any Principal Transfer Amounts or Interest Transfer Amounts paid to an Undercollateralized Group or Principal Transfer Amounts between Groups in the event of Rapid Prepayment Conditions.

The Securities Administrator shall make such reports available each month via the Securities Administrator’s website at http://www.ctslink.com.  Assistance in using the website may be obtained by calling the Securities Administrator’s customer service desk at (301) 815-6600.  Certificateholders and other parties that are unable to use the website are entitled to have a paper copy mailed to them via first class mail by contacting the Securities Administrator and indicating such.  In preparing or furnishing the foregoing information to the Trustee, the Securities Administrator shall be entitled to rely conclusively on the accuracy of the information or data regarding the Mortgage Loans and the related REO Properties that has been provided to the Securities Administrator by the Master Servicer and the Servicers, and the Securities Administrator shall not be obligated to verify, recompute, reconcile or recalculate any such information or data. 

Upon the reasonable advance written request of any Certificateholder that is a savings and loan, bank or insurance company, which request, if received by the Trustee or any agent thereof, shall be promptly forwarded to the Securities Administrator, the Securities Administrator shall provide, or cause to be provided, (or, to the extent that such information or documentation is not required to be provided by a Servicer under the applicable Purchase and Servicing Agreement, shall use reasonable efforts to obtain such information and documentation from such Servicer, and provide) to such Certificateholders such reports and access to information and documentation regarding the Mortgage Loans as such Certificateholders may reasonably deem necessary to comply with applicable regulations of the Office of Thrift Supervision or its successor or other regulatory authorities with respect to an investment in the Certificates; provided, however, that the Securities Administrator shall be entitled to be reimbursed by such Certificateholders for the Securities Administrator’s actual expenses incurred in providing such reports and access.

ARTICLE V

DISTRIBUTIONS TO HOLDERS OF CERTIFICATES

SECTION 5.01

Distributions Generally.  

(a)

Subject to Section 7.01 respecting the final distribution on the Certificates, on each Distribution Date the Paying Agent shall make distributions in accordance with this Article V.  Such distributions shall be made by check mailed to each Certificateholder’s address as it appears on the Certificate Register of the Certificate Registrar or, upon written request made to the Securities Administrator at least five Business Days prior to the related Record Date by any Certificateholder owning an aggregate initial Certificate Principal Amount of at least $1,000,000, or in the case of a Class of Interest-Only Certificates or Residual Certificate, a Percentage Interest of not less than 100%, by wire transfer in immediately available funds to an account specified in the request and at the expense of such Certificateholder; provided, however, that the final distribution in respect of any Certificate shall be made only upon presentation and surrender of such Certificate at the Certificate Registrar’s Corporate Trust Office; provided, further, that the foregoing provisions shall not apply to any Class of Certificates as long as such Certificate remains a Book-Entry Certificate in which case all payments made shall be made through the Clearing Agency and its Clearing Agency Participants.  Wire transfers will be made at the expense of the Holder requesting such wire transfer by deducting a wire transfer fee from the related distribution.  Notwithstanding such final payment of principal of any of the Certificates, each Residual Certificate will remain outstanding until the termination of each REMIC and the payment in full of all other amounts due with respect to the Residual Certificates and at such time such final payment in retirement of any Residual Certificate will be made only upon presentation and surrender of such Certificate at the Certificate Registrar’s Corporate Trust Office.  If any payment required to be made on the Certificates is to be made on a day that is not a Business Day, then such payment will be made on the next succeeding Business Day.

(b)

All distributions or allocations made with respect to the Certificateholders within each Class on each Distribution Date shall be allocated among the outstanding Certificates in such Class equally in proportion to their respective initial Class Principal Amounts or initial Class Notional Amounts (or Percentage Interests).

SECTION 5.02

Distributions from the Distribution Account.  

(a)

Subject to Sections 5.02(e) and (f), on each Distribution Date, the Available Distribution Amount for Pool 1, Pool 2 and Pool 3 shall be withdrawn by the Securities Administrator from funds on deposit in the Distribution Account and allocated among the Certificates in the following order of priority with corresponding allocations to the related Lower-Tier Interests and Middle-Tier Interests:

(1)

With respect to the Group 1A Certificates, to the extent of the Available Distribution Amount for Pool 1 for that Distribution Date:

(A)

concurrently, to the payment of the Interest Distribution Amount and any accrued but unpaid Interest Shortfalls on each class of Group 1A Certificates; provided, however, that for purposes of distributions to the Class A-X Certificates pursuant to this subclause, only the portion of the Class A-X Notional Amount derived from the Premium Rate Mortgage Loans in Subgroup 1-4 will be used to calculate these distributions;

(B)

concurrently,

(i)

to the Class A-P Certificates in respect of the Class 1-A-P Component, the Class A-P Principal Distribution Amount for Subgroup 1-1;

(ii)

from payments in respect of principal on the Subgroup 1-1 Mortgage Components (other than the portion of principal received on the related Class P Fraction of the Class P Mortgage Components), to the Class 1-A-1, Class 1-A-2, Class 1-A-3 and Class 1-A-9 Certificates, up to the related Senior Principal Distribution Amount, sequentially, as follows:

(I)

to the Class 1-A-1 and Class 1-A-9 Certificates, pro rata based on their respective Class Principal Amounts, up to the Class 1-A-1 and Class 1-A-9 Priority Amount, until the Class Principal Amount of each such Class has been reduced to zero; and

(II)

to the Class 1-A-2 Certificates, until its Class Principal Amount has been reduced to zero;

(III)

to the Class 1-A-3 Certificates, until its Class Principal Amount has been reduced to zero;

(IV)

to the Class 1-A-1 and Class 1-A-9 Certificate, pro rata based on their respective Class Principal Amounts, until the Class Principal Amount of each such Class has been reduced to zero;

provided, however, on and after the Credit Support Depletion Date, the Class 1-A-1, Class 1-A-2, Class 1-A-3 and Class 1-A-9 Certificates will receive principal distributions of the related Senior Principal Distribution Amount pro rata based on their respective Class Principal Amounts;

(iii)

from payments in respect of principal on the Subgroup 1-2 Mortgage Components, to the Class 1-A-4 and Class 1-A-5 Certificates, pro rata based on their respective Class Principal Amounts, up to the related Senior Principal Distribution Amount, until the Class Principal Amount of each such Class has been reduced to zero;

(iv)

from payments in respect of principal on the Subgroup 1-3 Mortgage Components, to the Class 1-A-6 and Class 1-A-10 Certificates, pro rata based on their respective Class Principal Amounts, up to the related Senior Principal Distribution Amount, until the Class Principal Amount of each such Class has been reduced to zero;

(v)

from payments in respect of principal on the Subgroup 1-4 Mortgage Components, to the Class 1-A-7 Certificates, up to the related Senior Principal Distribution Amount, until its Class Principal Amount has been reduced to zero;

(2)

With respect to the Group 2A Certificates, to the extent of the Available Distribution Amount for Pool 2 for that Distribution Date;

(A)

concurrently, to the payment of the Interest Distribution Amount and any accrued but unpaid Interest Shortfalls on each class of Group 2A Certificates; provided, however, that on or before the Class 2-A-7 Accretion Termination Date, the amount of interest that would otherwise be distributable to the Class 2-A-7 Certificates pursuant to this paragraph (2)(A) will instead be distributed as principal in the manner described in (2)(B) below and provided, further, however, that on or before the Class 2-A-8 Accretion Termination Date, the amount of interest that would otherwise be distributable to the Class 2-A-8 Certificates pursuant to this paragraph (2)(A) will instead be distributed as principal in the manner described in (2)(C) below; and provided further, however, that for purposes of distributions to the Class A-X Certificates pursuant to this subclause, only the portion of the Class A-X Notional Amount derived from the Premium Rate Mortgage Loans in Subgroup 2-4 will be used to calculate these distributions;

(B)

On each Distribution Date on or before the Class 2-A-7 Accretion Termination Date, the Class 2-A-7 Accrual Amount shall be distributed, as principal, sequentially as follows:

(i)

to the Class 2-A-6 Certificates, in an amount necessary to reduce its Class Principal Amount to its TAC Balance for such Distribution Date; and

(ii)

to the Class 2-A-7 Certificates, until its Class Principal Amount has been reduced to zero;

(C)

On each Distribution Date on or before the Class 2-A-8 Accretion Termination Date, the Class 2-A-8 Accrual Amount shall be distributed, as principal, sequentially as follows:

(i)

to the Class 2-A-6 Certificates, in an amount necessary to reduce its Class Principal Amount to its TAC Balance for such Distribution Date;

(ii)

to the Class 2-A-7 Certificates, until its Class Principal Amount has been reduced to zero; and

(iii)

to the Class 2-A-6 Certificates, until its Class Principal Amount has been reduced to zero;

(iv)

to the Class 2-A-8 Certificates, until its Class Principal Amount has been reduced to zero; and

(D)

concurrently,

(i)

to the Class A-P Certificates in respect of the Class 2-A-P Component, the Class A-P Principal Distribution Amount for Subgroup 2-1;

(ii)

from payments in respect of principal on the Subgroup 2-1 Mortgage Components (other than the portion of principal received on the related Class P Fraction of the Class P Mortgage Components) to the Class 2-A-1 Certificates, up to the related Senior Principal Distribution Amount, until its Class Principal Amount has been reduced to zero;

(iii)

from payments in respect of principal on the Subgroup 2-2 Mortgage Components, to the Class 2-A-2, Class 2-A-3, Class 2-A-4, Class 2-A-5, Class 2-A-6, Class 2-A-7 and Class 2-A-8 Certificates, up to the related Senior Principal Distribution amount sequentially as follows:

(I)

to the Class 2-A-2 Certificates, up to the Class 2-A-2 Priority Amount, until its Class Principal Amount has been reduced to zero;

(II)

on each Distribution Date on or after the Distribution Date in August 2007, to the Class 2-A-3 Certificates, until its Class Principal Amount has been reduced to zero;

(III)

on each Distribution Date on or after the Distribution Date in December 2008, to the Class 2-A-4 Certificates, until its Class Principal Amount has been reduced to zero; and

(IV)

on each Distribution Date on or after the Distribution Date in May 2009, to the Class 2-A-5 Certificates, until its Class Principal Amount has been reduced to zero;

(V)

to the Class 2-A-6 Certificates, in an amount necessary to reduce its Class Principal Amount to its TAC Balance for such Distribution Date;

(VI)

to the Class 2-A-7 Certificates, until its Class Principal Amount has been reduced to zero;

(VII)

to the Class 2-A-6 Certificates, until its Class Principal Amount has been reduced to zero;

(VIII)

to the Class 2-A-8 Certificates, until its Class Principal Amount has been reduced to zero;

(IX)

to the Class 2-A-3 Certificates, until its Class Principal Amount has been reduced to zero;

(X)

to the Class 2-A-4 Certificates, until its Class Principal Amount has been reduced to zero;

(XI)

to the Class 2-A-5 Certificates, until its Class Principal Amount has been reduced to zero;

(XII)

to the Class 2-A-2 Certificates, until its Class Principal Amount has been reduced to zero;

provided, however, on and after the Credit Support Depletion Date, the Class 2-A-2, Class 2-A-3, Class 2-A-4, Class 2-A-5, Class 2-A-6, Class 2-A-7 and Class 2-A-8 Certificates will receive principal distributions of the related Senior Principal Distribution Amount pro rata based on their respective Class Principal Amounts;

(iv)

from payments in respect of principal on the Subgroup 2-3 Mortgage Components, to the Class 2-A-9, Class 2-A-10, Class 2-A-11, Class 2-A-12, Class 2-A-13 and Class A-R Certificates, up to the related Senior Principal Distribution Amount, as follows:

(I)

to the Class A-R Certificates, until its Class Principal Distribution Amount has been reduced to zero;

(II)

concurrently, as follows:

(1) 47.3999984264%, SEQUENTIALLY, TO THE CLASS 2-A-9 AND CLASS 2-A-13 CERTIFICATES, PRO RATA BASED ON THEIR RESPECTIVE CLASS PRINCIPAL AMOUNTS, UNTIL THE CLASS PRINCIPAL AMOUNT OF EACH SUCH CLASS HAS BEEN REDUCED TO ZERO;

(2) 52.6000015736%, SEQUENTIALLY, AS FOLLOWS:

(a)

to the Class 2-A-10 Certificates, up to the Class 2-A-10 Priority Amount, until its Class Principal Amount has been reduced to zero;

(b)

to the Class 2-A-11 Certificates, until its Class Principal Amount has been reduced to zero;

(c)

to the Class 2-A-12 Certificates, until its Class Principal Amount has been reduced to zero;

(d)

to the Class 2-A-10 Certificates, until its Class Principal Amount has been reduced to zero;

provided, however, on and after the Credit Support Deletion Date, the Class 2-A-9, Class 2-A-10, Class 2-A-11, Class 2-A-12, Class 2-A-13 and Class A-R Certificates will receive principal distributions of the related Senior Principal Distribution Amount pro rata based on their respective Class Principal Amounts;

(v)

from payments in respect of principal on the Subgroup 2-4 Mortgage Components, to the Class 2-A-14, Class 2-A-16 and Class 2-A-18 Certificates, up to the related Senior Principal Distribution Amount, sequentially as follows;

(I)

94.7499771217% sequentially as follows:

(a)

to the Class 2-A-14 Certificates, up to the amount of $1,000, on each Distribution Date;

(b)

to the Class 2-A-16 Certificates, up to the amount of $855,000, on each Distribution Date;

(c)

to the Class 2-A-14 Certificates, until its Class Principal Amount has been reduced to zero;

(d)

to the Class 2-A-16 Certificates, until its Class Principal Amount has been reduced to zero;

(II)

5.2500228783%, to the Class 2-A-18 Certificates, until its Class Principal Amount has been reduced to zero;

provided, however, on or after the Credit Support Deletion Date, the Class 2-A-14, Class 2-A-16 and Class 2-A-18 Certificates will receive principal distributions of the related Senior Principal Distribution Amount pro rata based on their respective Class Principal Amounts;

(3)

With respect to the Group 3A Certificates, to the extent of the Available Distribution Amount for Pool 3 for that Distribution Date;

(A)

to the payment of the Interest Distribution Amount and any accrued but unpaid Interest Shortfalls on each Class of Group 3A Certificates; provided, however, that for the purposes of distributions to the Class A-X Certificates pursuant to this subclause, only the portion of the Class A-X Notional Amount derived from the Premium Rate Mortgage Loans in Pool 3 will be used to calculate these distributions; and

(B)

concurrently,

(i)

to the Class A-P Certificates in respect of the Class 3-A-P Component, the Class A-P Principal Distribution Amount for Pool 3; and

(ii)

to the Class 3-A-1 Certificates, from payments in respect of the principal on the Pool 3 Mortgage Loans (other than the portion of principal received on the related Class P Fraction of the Class P Mortgage Components), to the Class 3-A-1 Certificates, up to the related Senior Principal Distribution Amount, until its Class Principal Amount has been reduced to zero;

(4)

If such Distribution Date is prior to the Credit Support Depletion Date, to the Class A-P Certificates, to the extent of amounts otherwise available to pay the Subordinate Principal Distribution Amount, the related Class P Shortfall Amount; provided, however, that any amounts distributed pursuant to this subclause (4) will not cause a further reduction on the Class Principal Amount of the Class A-P Certificates;

(5)

To the Subordinate Certificates, in the following order of priority;

(A)

to the Class B-1 Certificates, the payment of its applicable Interest Distribution Amount and any outstanding Interest Shortfalls;

(B)

to the Class B-1 Certificates, such class’ Subordinate Class Percentage of the Subordinate Principal Distribution Amount, until its Class Principal Amount has been reduced to zero;

(C)

to the Class B-2 Certificates, the payment of its applicable Interest Distribution Amount and any outstanding Interest Shortfalls;

(D)

to the Class B-2 Certificates, such class’ Subordinate Class Percentage of the Subordinate Principal Distribution Amount, until its Class Principal Amount has been reduced to zero;

(E)

to the Class B-3 Certificates, the payment of its applicable Interest Distribution Amount and any outstanding Interest Shortfalls;

(F)

to the Class B-3 Certificates, such class’ Subordinate Class Percentage of the Subordinate Principal Distribution Amount, until its Class Principal Amount has been reduced to zero;

(G)

to the Class B-4 Certificates, the payment of its applicable Interest Distribution Amount and any outstanding Interest Shortfalls;

(H)

to the Class B-4 Certificates, such class’ Subordinate Class Percentage of the Subordinate Principal Distribution Amount, until its Class Principal Amount has been reduced to zero;

(I)

to the Class B-5 Certificates, the payment of its applicable Interest Distribution Amount and any outstanding Interest Shortfalls;

(J)

to the Class B-5 Certificates, such class’ Subordinate Class Percentage of the Subordinate Principal Distribution Amount, until its Class Principal Amount has been reduced to zero;

(K)

to the Class B-6 Certificates, the payment of its applicable Interest Distribution Amount and any outstanding Interest Shortfalls; and

(L)

to the Class B-6 Certificates, such class’ Subordinate Class Percentage of the Subordinate Principal Distribution Amount, until its Class Principal Amount has been reduced to zero.

(6)

to the Class A-R Certificates, any remaining amount of the Available Distribution Amount for Pool 1, Pool 2 and Pool 3.

Notwithstanding the priority and allocation set forth in Section 5.02(a)(5) above, if with respect to any Classes of Subordinate Certificates on any Distribution Date the sum of the related Subordinate Class Percentages of such Class and of all other Classes of Subordinate Certificates which have a higher numerical Class designation than such Class is less than the Original Applicable Credit Support Percentage for such Class, no distribution of Principal Prepayments shall be made to any such Classes and the amount of such Principal Prepayment otherwise distributable to such Classes shall be distributed to any Classes of Subordinate Certificates having lower numerical Class designations than such Class, pro rata, based on the Class Principal Amounts of the respective Classes immediately prior to such Distribution Date and shall be distributed in the sequential order provided in Section 5.02(a)(5) above.

(b)

Amounts distributed to the Residual Certificates pursuant to Sections 5.02(a)(6) on any Distribution Date shall be allocated among the REMIC residual interests represented thereby such that each such interest is allocated the excess of funds available to the related REMIC over required distributions to the regular interests in such REMIC on such Distribution Date.

(c)

The Securities Administrator shall distribute the Redemption Price of any Optional Termination in excess of the Par Value and all amounts described in clause (1)(iii) of the definition of “Redemption Price” to the holders of the Uncertificated Interest.

(d)

For purposes of distributions of interest pursuant to Section 5.02(a) such distributions to a Class of Certificates on any Distribution Date shall be made first, in respect of Current Interest; and second, in respect of Interest Shortfalls.

(e)

Notwithstanding the priority of distributions set forth in Section 5.02(a) above, if on any Distribution Date prior to the Credit Support Depletion Date (1) either one of the Rapid Prepayment Conditions is satisfied on such date and (2) the Class Principal Amount of the Senior Certificates related to a Mortgage Group (other than the Class A-P Certificates) has been reduced to zero, then that portion of the Available Distribution Amount for that Mortgage Group that represents principal collections on the Mortgage Components or Mortgage Loans shall be applied as an additional distribution to the remaining Classes of related Senior Certificates (other than the Class A-P Certificates) of such other Mortgage Groups in reduction of, and in proportion to, the Class Principal Amounts thereof.

(f)

If on any Distribution Date the a Certificate Group would constitute an Undercollateralized Group and any such other Certificate Group constitutes an Overcollateralized Group, then notwithstanding Section 5.02(a), the Available Distribution Amount for such Overcollateralized Group, to the extent remaining following distributions of interest and principal to that Certificate Group, shall be distributed up to the sum of the Interest Transfer Amount and the Principal Transfer Amount for the Undercollateralized Group to the Certificate Group that is an Undercollateralized Group in payment of accrued but unpaid interest, if any, and then to such Certificate Group (other than the Class A-P Certificates) as principal, in the same order and priority as such Certificates would receive other distributions of principal.

If more than one Undercollateralized Group exists on any Distribution Date, the sum of the Interest Transfer Amounts and the Principal Transfer Amounts shall be allocated among such Undercollateralized Groups, pro rata, on the basis of the amount by which the aggregate Class Principal Amount of the related Senior Certificates (other than the related Principal-Only Certificates) immediately prior to such Distribution Date exceeds the aggregate Stated Principal Balance of the Mortgage Components or Mortgage Loans in that Undercollateralized Group. If more than one Overcollateralized Group exists on any Distribution Date, reductions in the Available Distribution Amount for such Overcollateralized Groups to make the payments required to be made pursuant to this Section 5.02(f) on such Distribution Date shall be made pro rata, on the basis of the Class Principal Amount of the related Senior Certificates (other than the Class A-P Certificates).

SECTION 5.03

Allocation of Losses.  

(a)

On each Distribution Date, the applicable Class P Fraction of any Realized Loss, including any Excess Loss, on a Class P Mortgage Component or Class P Mortgage Loan in Subgroup 1-1. Subgroup 2-1 or Pool 3 will be allocated to the Class A-P Certificates until its Class Principal Amount is reduced to zero. To the extent funds are available on that Distribution Date or any future Distribution Date pursuant to Section 5.02(a)(4), the related Class P Shortfall Amount will be paid to the Class A-P Certificates, prior to distributions on Subordinate Certificates.

(b)

On or prior to each Distribution Date, the Securities Administrator shall aggregate the information provided by each Servicer with respect to the total amount of Realized Losses, including Excess Losses, experienced on the Mortgage Loans or Mortgage Components, as applicable, for the related Distribution Date.

(c)

Realized Losses on the Pool 1, Pool 2 and Pool 3 Mortgage Loans or, in the case of subparagraph (b)(1)(i) second, below, Mortgage Components in a Group 1 or Group 2 Subgroup with respect to any Distribution Date shall be allocated by the Securities Administrator to the Certificates as follows:

(1)

On each Distribution Date, the Realized Losses (other than Excess Losses) (other than the Class P Fraction of Realized Losses on Class P Mortgage Components or Class P Mortgage Loans) shall be allocated as follows:

first, to the Subordinate Certificates in reverse order of their respective numerical Class designations (beginning with the Class of Subordinate Certificates with the highest numerical Class designation) until the Class Principal Amount of each such Class is reduced to zero; 

second, to the Senior Certificates (other than the Interest-Only and Principal-Only Certificates) of the Certificate Group  related to the Mortgage Group sustaining such loss, pro rata, based on Class Principal Amounts, until the Class Principal Amount of each such Class of Senior Certificates is reduced to zero; provided, however; (i) Realized Losses that would otherwise be allocated to the Class 1-A-1 Certificates will instead be allocated to the Class 1-A-9 Certificates until the Class Principal Balance of the Class 1-A-9 Certificates is reduced to zero, (ii) Realized Losses that would otherwise be allocated to the Class 1-A-4 Certificates will instead be allocated to the Class 1-A-5 Certificates until the Class Principal Balance of the Class 1-A-5 Certificates is reduced to zero, (iii) Realized Losses that would otherwise be allocated to the Class 1-A-6 Certificates will instead be allocated to the Class 1-A-10 Certificates until the Class Principal Balance of the Class 1-A-10 Certificates is reduced to zero, (iv) Realized Losses that would otherwise be allocated to the Class 2-A-9, Class 2-A-10, Class 2-A-11 and Class 2-A-12 Certificates will instead be allocated to the Class 2-A-13 Certificates until the Class Principal Balance of the Class 2-A-13 Certificates is reduced to zero and (v) Realized Losses that would otherwise be allocated to the Class 2-A-14 and Class 2-A-16 Certificates will instead be allocated to the Class 2-A-18 Certificates until the Class Principal Balance of the Class 2-A-18 Certificates is reduced to zero.

(2)

On each Distribution Date, Excess Losses on a Mortgage Component or Mortgage Loan, other than the Class P Fraction of the Excess Loss on a Class P Mortgage Component or Class P Mortgage Loan, will be allocated pro rata among the Senior Certificates (other than the Interest-Only and Principal-Only Certificates) of the related Certificate Group and the Subordinate Certificates as follows: (i) in the case of such Senior Certificates, based on their Class Principal Amounts and (ii) in the case of the Subordinate Certificates, pro rata based on each Classes’ share of the Apportioned Principal Balance for the related Mortgage Group; provided, however, on any Distribution Date on or after the Credit Support Deletion Date, any such Excess Losses will be allocated pro rata among the classes of Senior Certificates (other than the Interest-Only and Principal-Only Certificates) based on their respective Class Principal Amounts immediately prior to such Distribution Date.  

(d)

[reserved]

(e)

[reserved]

(f)

On each Distribution Date, the Class Principal Amount of the Class of Subordinate Certificates then outstanding with the highest numerical Class designation shall be reduced by the amount, if any, by which the aggregate of the Class Principal Amounts of all outstanding Classes of Certificates (after giving effect to the distribution of principal and allocation of Realized Losses on such Distribution Date) exceeds the Aggregate Stated Principal Balance of Pool 1, Pool 2 and Pool 3 in the aggregate for the following Distribution Date (such amount for any Distribution Date, the “Subordinate Certificate Write-down Amount”).

(g)

Any allocation of a loss pursuant to this Section 5.03 to a Class of Certificates shall be achieved by reducing the Class Principal Amount thereof by the amount of such loss.

(h)

If Subsequent Recoveries have been received with respect to a Liquidated Mortgage Loan, the amount of such Subsequent Recoveries will be applied sequentially, in the order of payment priority, to increase the Class Principal Amount of each Class of Certificates to which Realized Losses have been allocated in respect of the related Liquidated Mortgage Loan, but in each case by not more than the amount of Realized Losses previously allocated to that Class of Certificates pursuant to this Section 5.03.   Holders of such Certificates will not be entitled to any payment in respect of the Interest Distribution Amount on the amount of such increases for any Accrual Period preceding the Distribution Date on which such increase occurs.  Any such increases shall be applied pro rata to the Principal Amount of each Certificate of such Class.

SECTION 5.04

Advances by Master Servicer.  

If any Servicer fails to remit any Advance required to be made under the related Purchase and Servicing Agreement, the Master Servicer shall itself make, or shall cause the successor Servicer to make, such Advance.  If the Master Servicer determines that such an Advance is required, it shall on the Business Day immediately preceding the related Distribution Date remit to the Securities Administrator from its own funds (or funds advanced by such Servicer) for deposit in the Distribution Account immediately available funds in an amount equal to such Advance.  The Master Servicer and each Servicer shall be entitled to be reimbursed for all Advances made by it. Notwithstanding anything to the contrary herein, in the event the Master Servicer determines in its reasonable judgment that an Advance is non-recoverable, the Master Servicer shall be under no obligation to make such Advance.  If the Master Servicer determines that an Advance  is non-recoverable, it shall, on or prior to the related Distribution Date, deliver an Officer’s Certificate to the Trustee to such effect.

SECTION 5.05

Compensating Interest Payments.  

The amount of the aggregate Master Servicing Fees payable to the Master Servicer in respect of any Distribution Date shall be reduced (but not below zero) by the amount of any Compensating Interest Payment for such Distribution Date, but only to the extent that Prepayment Interest Shortfalls relating to such Distribution Date are required to be paid by the applicable Servicer pursuant to the related Purchase and Servicing Agreement, as amended by the Acknowledgements, but not actually paid by such Servicer. Such amount shall not be treated as an Advance and shall not be reimbursable to the Master Servicer, unless a Servicer pays such Prepayment Interest Shortfall amount for a Distribution Date subsequent to that Distribution Date on which the Master Servicer paid such Compensating Interest Payment.

ARTICLE VI

CONCERNING THE TRUSTEE AND

THE SECURITIES ADMINISTRATOR; EVENTS OF DEFAULT

SECTION 6.01

Duties of Trustee and the Securities Administrator.  

(a)

The Trustee, except during the continuance of an Event of Default, and the Securities Administrator undertakes to perform such duties and only such duties as are specifically set forth in this Agreement.  Any permissive right of the Trustee or the Securities Administrator provided for in this Agreement shall not be construed as a duty of the Trustee or the Securities Administrator.  If an Event of Default has occurred and has not otherwise been cured or waived, the Trustee shall exercise such of the rights and powers vested in it by this Agreement and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs, unless the Trustee is acting as master servicer of the Mortgage Loans, in which case it shall use the same degree of care and skill as a master servicer of the Mortgage Loans hereunder.

(b)

Each of the Trustee and the Securities Administrator, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee or the Securities Administrator which are specifically required to be furnished pursuant to any provision of this Agreement, shall examine them, subject to the limitations set forth in Section 6.11, to determine whether they are in the form required by this Agreement to the extent specified herein; provided, however, that neither the Trustee nor the Securities Administrator shall be responsible for the accuracy or content of any such resolution, certificate, statement, opinion, report, document, order or other instrument furnished by the Master Servicer or any Servicer or any other Person to the Trustee or the Securities Administrator pursuant to this Agreement, and shall not be required to recalculate or verify any numerical information furnished to the Trustee or the Securities Administrator pursuant to this Agreement.  Subject to the immediately preceding sentence, if any such resolution, certificate, statement, opinion, report, document, order or other instrument is found not to conform to the form required by this Agreement in a material manner the Securities Administrator shall notify the Person providing such instrument of such nonconformance and request that such instrument be corrected, and if the instrument is not corrected to the Securities Administrator ’s satisfaction, the Securities Administrator will provide notice thereof to the Certificateholders and will, at the expense of the Trust Fund, which expense shall be reasonable given the scope and nature of the required action, take such further action as directed by the Certificateholders.

(c)

Neither the Trustee nor the Securities Administrator shall have any liability arising out of or in connection with this Agreement, except for its negligence or willful misconduct.  Notwithstanding anything in this Agreement to the contrary, neither the Trustee nor the Securities Administrator shall be liable for special, indirect or consequential losses or damages of any kind whatsoever (including, but not limited to, lost profits).  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)

The Trustee shall not be personally liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of Holders of Certificates as provided in Section 6.18 hereof;

(ii)

For all purposes under this Agreement, the Trustee shall not be deemed to have notice of any Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Holders of the Certificates and this Agreement;

(iii)

For all purposes under this Agreement, the Securities Administrator shall not be deemed to have notice of any Event of Default (other than resulting from a failure by the Master Servicer (i) to remit funds (or to make Advances) or (ii) to furnish information to the Securities Administrator when required to do so) unless a Responsible Officer of the Securities Administrator has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Securities Administrator at the address provided in Section 11.07, and such notice references the Holders of the Certificates and this Agreement;

(iv)

No provision of this Agreement shall require the Trustee or the Securities Administrator to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that 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 under this Agreement or the Servicers under the Purchase and Servicing Agreements;

(v)

Neither the Trustee nor the Securities Administrator shall be responsible for any act or omission of the Master Servicer, the Depositor, the Seller, any Servicer or any Custodian.

(d)

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

(e)

Neither the Trustee nor the Securities Administrator shall be personally liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders of any Class holding Certificates which evidence, as to such Class, Percentage Interests aggregating not less than 25% as to the time, method and place of conducting any proceeding for any remedy available to the Trustee or the Securities Administrator or exercising any trust or power conferred upon the Trustee or the Securities Administrator, as applicable, under this Agreement.

(f)

Neither the Trustee nor the Securities Administrator shall be required to perform services under this Agreement, or to expend or risk its own funds or otherwise incur financial liability for the performance of any of its duties hereunder or the exercise of any of its rights or powers if there is reasonable ground for believing that the timely payment of its fees and expenses or 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, as applicable, to perform, or be responsible for the manner of performance of, any of the obligations of the Master Servicer or any Servicer under this Agreement or any Purchase and Servicing Agreement 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.

(g)

The Trustee shall not be held liable by reason of any insufficiency in the Distribution Account resulting from any investment loss on any Permitted Investment included therein (except to the extent that the Trustee is the obligor and has defaulted thereon).

(h)

Neither the Trustee nor the Securities Administrator shall have any duty (A) to see to any recording, filing, or depositing of this Agreement or any agreement referred to herein or any financing statement or continuation statement evidencing a security interest, or to see to the maintenance of any such recording or filing or depositing or to any rerecording, refiling or redepositing of any thereof, (B) to see to any insurance, (C) to see to the payment or discharge of any tax, assessment, or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust Fund other than from funds available in the Distribution Account, or (D) to confirm or verify the contents of any reports or certificates of the Master Servicer or any Servicer delivered to the Trustee or the Securities Administrator pursuant to this Agreement believed by the Trustee or the Securities Administrator, as applicable, to be genuine and to have been signed or presented by the proper party or parties.

(i)

Neither the Securities Administrator nor the Trustee shall be liable in its individual capacity for an error of judgment made in good faith by a Responsible Officer or other officers of the Trustee or the Securities Administrator, as applicable, unless it shall be proved that the Trustee or the Securities Administrator, as applicable, was negligent in ascertaining the pertinent facts.

(j)

Notwithstanding anything in this Agreement to the contrary, neither the Securities Administrator nor the Trustee shall be liable for special, indirect or consequential losses or damages of any kind whatsoever (including, but not limited to, lost profits), even if the Trustee or the Securities Administrator, as applicable, has been advised of the likelihood of such loss or damage and regardless of the form of action.

(k)

Neither the Securities Administrator nor 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 agents of one another, or of the Master Servicer or of any Servicer.

(l)

The Trustee shall have no duty to recompute, recalculate or verify the accuracy of any resolution, certificate, statement, opinion, report, document, order or other instrument so furnished to the Trustee.

(m)

The Trustee shall have no responsibility for any act or omission of the Securities Administrator or any Custodian, it being understood and agreed that the Trustee, the Securities Administrator and each Custodian are independent contractors and not agents, partners or joint venturers.

SECTION 6.02

Certain Matters Affecting the Trustee and the Securities Administrator.  

Except as otherwise provided in Section 6.01:

(i)

Each of the Trustee and the Securities Administrator may request, and may rely and shall be protected in acting or refraining from acting upon any resolution, Officer’s Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, 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)

Each of the Trustee and the Securities Administrator may consult with counsel and any advice of its counsel or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

(iii)

Neither the Trustee nor the Securities Administrator shall be personally liable for any action taken, suffered or omitted by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement;

(iv)

Unless an Event of Default shall have occurred and be continuing, 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 (provided the same appears regular on its face), unless requested in writing to do so by the Holders of at least a majority in Class Principal Amount (or Percentage Interest) of each Class of Certificates; provided, however, that, if 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, not reasonably assured to the Trustee or the Securities Administrator by the security afforded to it by the terms of this Agreement, the Trustee or the Securities Administrator, as applicable, may require reasonable indemnity against such expense or liability or payment of such estimated expenses from the Certificateholders as a condition to proceeding.  The reasonable expense thereof shall be paid by the party requesting such investigation and if not reimbursed by the requesting party shall be reimbursed to the Trustee and the Securities Administrator by the Trust Fund;

(v)

Each of the Trustee and the Securities Administrator may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians or attorneys, which agents, custodians or attorneys shall have any and all of the rights, powers, duties and obligations of the Trustee and the Securities Administrator conferred on them by such appointment, provided that each of the Trustee and the Securities Administrator shall continue to be responsible for its duties and obligations hereunder to the extent provided herein, and provided further that neither the Trustee nor the Securities Administrator shall be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by the Trustee or the Securities Administrator, as applicable;

(vi)

Neither the Trustee nor the Securities Administrator shall be under any obligation to exercise any of the trusts or powers vested in it by this Agreement or to institute, conduct or defend any litigation hereunder or in relation hereto, in each case at the request, order or direction of any of the Certificateholders pursuant to the provisions of this Agreement, unless such Certificateholders shall have offered to the Trustee or the Securities Administrator, as applicable, reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby;

(vii)

The right of the Trustee and 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 answerable for other than its negligence or willful misconduct in the performance of such act; and

(viii)

Neither the Trustee nor the Securities Administrator shall be required to give any bond or surety in respect of the execution of the Trust Fund created hereby or the powers granted hereunder.

SECTION 6.03

Trustee and Securities Administrator Not Liable for Certificates.  

The Trustee and the Securities Administrator make no representations as to the validity or sufficiency of this Agreement or of the Certificates (other than, in the case of the Securities Administrator, the certificate of authentication on the Certificates) or of any Mortgage Loan or Mortgage Component, or related document save that the Trustee and the Securities Administrator represent that, assuming due execution and delivery by the other parties hereto, this Agreement has been duly authorized, executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms except that such enforceability may be subject to (A) applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally, and (B) general principles of equity regardless of whether such enforcement is considered in a proceeding in equity or at law.  The Trustee and the Securities Administrator shall not be accountable for the use or application by the Depositor of funds paid to the Depositor in consideration of the assignment of the Mortgage Loans to the Trust Fund by the Depositor or for the use or application of any funds deposited into the Distribution Account or any other fund or account maintained with respect to the Certificates.  The Trustee and the Securities Administrator shall not be responsible for the legality or validity of this Agreement or the validity, priority, perfection or sufficiency of the security for the Certificates issued or intended to be issued hereunder.  The Trustee and the Securities Administrator shall have no 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 6.04

Trustee and the Securities Administrator May Own Certificates.  

The Trustee and the Securities Administrator and any Affiliate or agent of either of them in its individual or any other capacity may become the owner or pledgee of Certificates and may transact banking and trust business with the other parties hereto and their Affiliates with the same rights it would have if it were not Trustee, Securities Administrator or such agent.

SECTION 6.05

Eligibility Requirements for Trustee.  

The Trustee hereunder shall at all times be (i) an institution insured by the FDIC, (ii) a corporation or national banking association, organized and doing business under the laws of any State or the United States of America, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority and (iii) not an Affiliate of the Master Servicer or any Servicer.  If such corporation or national banking association 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, the combined capital and surplus of such corporation or national banking association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  In case at any time the Trustee shall cease to be eligible in accordance with provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.06.

SECTION 6.06

Resignation and Removal of Trustee and the Securities Administrator.  

(a)

Each of 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 Trustee or the Securities Administrator, as applicable, the Depositor and the Master Servicer.  Upon receiving such notice of resignation, the Depositor will promptly appoint a successor trustee or a successor securities administrator, as applicable, by written instrument, one copy of which instrument shall be delivered to the resigning Trustee or resigning Securities Administrator, as applicable, one copy to the successor trustee or successor securities administrator, as applicable, and one copy to the Master Servicer.  If no successor trustee or successor securities administrator shall have been so appointed and shall have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Trustee or resigning Securities Administrator, as applicable, may petition any court of competent jurisdiction for the appointment of a successor trustee or successor securities administrator, as applicable.

(b)

If at any time (i) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.05 and shall fail to resign after written request therefor by the Depositor, (ii) 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 of its property shall be appointed, or any public officer shall take charge or control of the Trustee or the Securities Administrator or of either of their property or affairs for the purpose of rehabilitation, conservation or liquidation, (iii) a tax is imposed or threatened with respect to the Trust Fund by any state in which the Trustee or the Trust Fund held by the Trustee is located, or (iv) the continued use of the Trustee or Securities Administrator would result in a downgrading of the rating by any Rating Agency of any Class of Certificates with a rating, then the Depositor shall remove the Trustee or the Securities Administrator, as applicable, and the Depositor shall appoint a successor trustee or successor securities administrator, as applicable, acceptable to the Master Servicer by written instrument, one copy of which instrument shall be delivered to the Trustee or Securities Administrator so removed, one copy each to the successor trustee or successor securities Administrator, as applicable, and one copy to the Master Servicer.  The Depositor or the Trustee may remove the Securities Administrator, and the Depositor, with the Trustee’s approval, may appoint another Securities Administrator.  A Securities Administrator (i) may not be an Originator, the Depositor or an affiliate of Depositor unless the Securities Administrator is an institutional trust department of JPMorgan Chase Bank, (ii) must be authorized to exercise corporate trust powers under the laws of its jurisdiction of organization, and must be rated at least “A/F1” by Fitch, if Fitch is a Rating Agency, or the equivalent rating by S&P, Moody’s or DBRS.  If no successor securities administrator shall have been appointed and shall have accepted appointment within 60 days after JPMorgan Chase Bank, as Securities Administrator, ceases to be the securities administrator pursuant to this Section 6.06(b), then the Trustee shall perform the duties of the Securities Administrator pursuant to this Agreement and shall henceforth be entitled to all compensation due the Securities Administrator hereunder.  The Trustee shall notify the Rating Agencies of any change of Securities Administrator.

(c)

The Holders of more than 50% of the Class Principal Amount (or Percentage Interest) of each Class of Certificates may at any time upon 30 days’ written notice to the Trustee or the Securities Administrator, as applicable, and to the Depositor remove the Trustee or the Securities Administrator, as applicable, by such written instrument, signed by such Holders or their attorney-in-fact duly authorized, one copy of which instrument shall be delivered to the Depositor, one copy to the Trustee or Securities Administrator, as applicable and one copy to the Master Servicer; the Depositor shall thereupon appoint a successor trustee or successor securities administrator, as applicable, in accordance with this Section.

(d)

Any resignation or removal of the Trustee or the Securities Administrator, as applicable, and appointment of a successor trustee or successor securities administrator pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor trustee or the successor securities administrator, as applicable, as provided in Section 6.07.

SECTION 6.07

Successor Trustee and Successor Securities Administrator.  

(a)

Any successor trustee or successor securities administrator appointed as provided in Section 6.06 shall execute, acknowledge and deliver to the Depositor and to its predecessor trustee or predecessor securities administrator, as applicable, an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee or predecessor securities administrator, as applicable, shall become effective and such successor trustee or successor securities administrator, as applicable, 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, as applicable, herein.  The predecessor trustee or predecessor securities administrator, as applicable, shall deliver to the successor trustee (or assign to the Trustee its interest under the Custodial Agreements, to the extent permitted thereunder) or successor securities administrator, as applicable, all Trustee Mortgage Files and documents and statements related to each Trustee Mortgage File held by it hereunder, and shall duly assign, transfer, deliver and pay over to the successor trustee the entire Trust Fund, together with all necessary instruments of transfer and assignment or other documents delivered to it for execution, properly executed and necessary to effect such transfer and such of the records or copies thereof maintained by the predecessor trustee in the administration hereof as may be requested by the successor trustee and shall thereupon be discharged from all duties and responsibilities under this Agreement.  In addition, the Depositor and the predecessor trustee or predecessor securities administrator, as applicable, shall execute and deliver such other instruments delivered to it for execution, and do such other things as may reasonably be required to more fully and certainly vest and confirm in the successor trustee or successor securities administrator, as applicable, all such rights, powers, duties and obligations.

(b)

No successor trustee shall accept appointment as provided in this Section unless at the time of such appointment such successor trustee shall be eligible under the provisions of Section 6.05.

(c)

Upon acceptance of appointment by a successor trustee or successor securities administrator, as applicable, as provided in this Section, the predecessor trustee or predecessor securities administrator, as applicable, shall mail notice of the succession of such trustee or securities administrator, as applicable, hereunder to all Holders of Certificates at their addresses as shown in the Certificate Register and to any Rating Agency.  

SECTION 6.08

Merger or Consolidation of Trustee or the Securities Administrator.  

Any Person into which the Trustee or Securities Administrator may be merged or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee or Securities Administrator shall be a party, or any Persons succeeding to the business of the Trustee or Securities Administrator, shall be the successor to the Trustee or Securities Administrator hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding, provided that, in the case of the Trustee, such Person shall be eligible under the provisions of Section 6.05.

SECTION 6.09

Appointment of Co-Trustee, Separate Trustee or Custodian.  

(a)

Notwithstanding any other provisions hereof, at any time, the Trustee, the Depositor or the Certificateholders evidencing more than 50% of the Class Principal Amount (or Percentage Interest) of every Class of Certificates shall have the power from time to time to appoint one or more Persons, approved by the Trustee, to act either as co-trustees jointly with the Trustee, or as separate trustees, or as custodians, for the purpose of holding title to, foreclosing or otherwise taking action with respect to any Mortgage Loan outside the state where the Trustee has its principal place of business where such separate trustee or co-trustee is necessary or advisable (or the Trustee has been advised by the Master Servicer in writing that such separate trustee or co-trustee is necessary or advisable) under the laws of any state in which a property securing a Mortgage Loan is located or for the purpose of otherwise conforming to any legal requirement, restriction or condition in any state in which a property securing a Mortgage Loan is located or in any state in which any portion of the Trust Fund is located.  The separate Trustees, co-trustees, or custodians so appointed shall be trustees or custodians for the benefit of all the Certificateholders and shall have such powers, rights and remedies as shall be specified in the instrument of appointment; provided, however, that no such appointment shall, or shall be deemed to, constitute the appointee an agent of the Trustee.  The obligation of the Master Servicer to make Advances pursuant to Section 5.04 hereof shall not be affected or assigned by the appointment of a co-trustee.

(b)

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

(i)

all powers, duties, obligations and rights conferred upon the Trustee in respect of the receipt, custody and payment of moneys shall be exercised solely by the Trustee;

(ii)

all other rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee, co-trustee, or custodian jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations, including the holding of title to the Trust Fund or any portion thereof in any such jurisdiction, shall be exercised and performed by such separate trustee, co-trustee, or custodian;

(iii)

no trustee or custodian hereunder shall be personally liable by reason of any act or omission of any other trustee or custodian hereunder; and

(iv)

the Trustee may at any time, by an instrument in writing executed by it, with the concurrence of the Depositor, accept the resignation of or remove any separate trustee, co-trustee or custodian, so appointed by it or them, if such resignation or removal does not violate the other terms of this Agreement.

(c)

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, co-trustee or custodian shall refer to this Agreement and the conditions of this Article VI.  Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Trustee.  Every such instrument shall be filed with the Trustee and a copy given to the Master Servicer.

(d)

Any separate trustee, co-trustee or custodian may, at any time, constitute the Trustee its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name.  If any separate trustee, co-trustee or custodian 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.

(e)

No separate trustee, co-trustee or custodian hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.05 hereunder and no notice to the Certificateholders of the appointment shall be required under Section 6.07 hereof.

(f)

The Trustee agrees to instruct the co-trustees, if any, to the extent necessary to fulfill the Trustee’s obligations hereunder.

(g)

The Trust shall pay the reasonable compensation of the co-trustees (which compensation shall not reduce any compensation payable to the Trustee under such Section).

SECTION 6.10

Authenticating Agents.  

(a)

The Trustee may appoint one or more Authenticating Agents which shall be authorized to act on behalf of the Trustee in authenticating Certificates.  The Trustee hereby appoints the Securities Administrator as initial Authenticating Agent, and the Securities Administrator accepts such appointment.  Wherever reference is made in this Agreement to the authentication of Certificates by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent must be a corporation organized and doing business under the laws of the United States of America or of any state, having a combined capital and surplus of at least $15,000,000, authorized under such laws to do a trust business and subject to supervision or examination by federal or state authorities.

(b)

Any Person into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any Person succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

(c)

Any Authenticating Agent may at any time resign by giving at least 30 days’ advance written notice of resignation to the Trustee and the Depositor.  The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Depositor.  Upon receiving a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.10, the Trustee may appoint a successor authenticating agent, shall give written notice of such appointment to the Depositor and shall mail notice of such appointment to all Holders of Certificates.  Any successor authenticating agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent.  No successor authenticating agent shall be appointed unless eligible under the provisions of this Section 6.10.  No Authenticating Agent shall have responsibility or liability for any action taken by it as such at the direction of the Trustee.

SECTION 6.11

Indemnification of the Trustee, the Master Servicer and the Securities Administrator.  

The Trustee, the Master Servicer and the Securities Administrator and their respective directors, officers, employees and agents shall be entitled to indemnification from the Depositor and the Trust Fund (provided that the Trust Fund’s indemnification under this Section 6.11 is limited by Section 4.01(d) for any loss, liability or expense (including, without limitation, reasonable attorneys’ fees and disbursements) and, in the case of the Trustee, in connection with the Custodial Agreements, including the reasonable compensation and the expenses and disbursements of its agents or counsel), incurred without negligence or willful misconduct on their part, arising out of, or in connection with, the acceptance or administration of the trusts created hereunder or in connection with the performance of their duties hereunder including the costs and expenses of defending themselves against any claim in connection with the exercise or performance of any of their powers or duties hereunder, provided that:

(i)

with respect to any such claim, the Trustee, the Master Servicer or the Securities Administrator, as applicable, shall have given the Depositor written notice thereof promptly after the Trustee, the Master Servicer the Securities Administrator, as applicable, shall have knowledge thereof; provided, however, that failure to give the Depositor such notice shall not affect the Trustee’s, the Master Servicer or the Securities Administrator’s rights to indemnification hereunder;

(ii)

while maintaining control over its own defense, the Trustee, the Master Servicer or the Securities Administrator, as applicable, shall cooperate and consult fully with the Depositor in preparing such defense;

(iii)

notwithstanding anything to the contrary in this Section 6.11, the Trust Fund shall not be liable for settlement of any such claim by the Trustee, the Master Servicer or the Securities Administrator, as applicable, entered into without the prior consent of the Depositor, which consent shall not be unreasonably withheld or delayed; and

(iv)

such expense constitutes an “unanticipated expense” within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii).

The provisions of this Section 6.11 shall survive any termination of this Agreement and the resignation or removal of the Trustee, the Master Servicer or the Securities Administrator, as applicable, and shall be construed to include, but not be limited to any loss, liability or expense under any environmental law.

SECTION 6.12

Fees and Expenses of Securities Administrator and the Trustee.  

(a)

As compensation for its services hereunder, the Securities Administrator shall be paid by the Master Servicer pursuant to a separate agreement between the Master Servicer and the Securities Administrator.  The Securities Administrator shall be entitled to prompt reimbursement or payment for all disbursements and advancements incurred or made by the Securities Administrator in accordance with this Agreement (including fees and expenses of its counsel and all persons not regularly in its employment), except any such expenses arising from its negligence, bad faith or willful misconduct and such expenses that do not  constitute “unanticipated expenses” within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii).  Such reimbursement or payment shall be made from amounts on deposit in the Distribution Account.

(b)

As compensation for its services hereunder, the Trustee shall be entitled to receive a trustee fee (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) which shall be paid by the Master Servicer pursuant to a separate agreement between the Trustee and Master Servicer.  Any expenses incurred by the Trustee shall be reimbursed from amounts on deposit in the Distribution Account except such expenses that do not constitute “unanticipated expenses” within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii).

SECTION 6.13

Collection of Monies.  

Except as otherwise expressly provided in this Agreement, the Securities Administrator, on behalf of the Trustee, may demand payment or delivery of, and shall receive and collect, all money payable to or receivable by the Securities Administrator, on behalf of the Trustee, pursuant to this Agreement.  The Securities Administrator, on behalf of the Trustee, shall hold all such money and property received by it as part of the Trust Fund and shall distribute it as provided in this Agreement.

SECTION 6.14

Events of Default; Trustee To Act; Appointment of Successor.  

(a)

The occurrence of any one or more of the following events shall constitute an “Event of Default”:

(i)

Any failure by the Master Servicer to furnish the Securities Administrator the Mortgage Loan data sufficient to prepare the reports described in Section 4.04 which continues unremedied for a period of one Business Day after the date upon which written notice of such failure shall have been given to such Master Servicer by the Trustee or the Securities Administrator or to such Master Servicer, the Securities Administrator and the Trustee by the Holders of not less than 25% of the Class Principal Amount of each Class of Certificates affected thereby; or

(ii)

Any failure on the part of the Master Servicer duly to observe or perform in any material respect any other of the covenants or agreements (other than those referred to in (viii) and (ix) below) on the part of the Master Servicer contained in this Agreement which continues unremedied for a period of 30 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Master Servicer by the Trustee or the Securities Administrator, or to the Master Servicer, the Securities Administrator and the Trustee by the Holders of more than 50% of the Aggregate Voting Interests of the Certificates; or

(iii)

A decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Master Servicer, and such decree or order shall have remained in force undischarged or unstayed for a period of 60 days or any Rating Agency reduces or withdraws or threatens to reduce or withdraw the rating of the Certificates because of the financial condition or loan servicing capability of such Master Servicer; or

(iv)

The Master Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities, voluntary liquidation or similar proceedings of or relating to the Master Servicer or of or relating to all or substantially all of its property; or

(v)

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

(vi)

The Master Servicer shall be dissolved, or shall dispose of all or substantially all of its assets, or consolidate with or merge into another entity or shall permit another entity to consolidate or merge into it, such that the resulting entity does not meet the criteria for a successor servicer as specified in Section 9.05 hereof; or

(vii)

A representation or warranty set forth in Section 9.03 hereof shall prove to be incorrect as of the time made in any respect that materially and adversely affects the interests of the Certificateholders, and the circumstance or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or cured within 30 days after the date on which written notice of such incorrect representation or warranty shall have been given to the Master Servicer by the Trustee or the Securities Administrator, or to the Master Servicer, the Securities Administrator and the Trustee by the Holders of more than 50% of the Aggregate Voting Interests of the Certificates; or

(viii)

A sale or pledge of any of the rights of the Master Servicer hereunder or an assignment of this Agreement by the Master Servicer or a delegation of the rights or duties of the Master Servicer hereunder shall have occurred in any manner not otherwise permitted hereunder and without the prior written consent of the Trustee and Certificateholders holding more than 50% of the Aggregate Voting Interests of the Certificates; or

(ix)

After receipt of notice from the Trustee, any failure of the Master Servicer to make any Advances required to be made hereunder.

If an Event of Default described in clauses (i) through (ix) of this Section shall occur, then, in each and every case, subject to applicable law, so long as any such Event of Default shall not have been remedied within any period of time prescribed by this Section, the Trustee, by notice in writing to the Master Servicer may, and shall, if so directed by Certificateholders evidencing more than 50% of the Class Principal Amount of each Class of Certificates, terminate all of the rights and obligations of the Master Servicer hereunder and in and to the Mortgage Loans and the proceeds thereof.  On or after the receipt by the Master Servicer of such written notice, all authority and power of the Master Servicer, and only in its capacity as Master Servicer under this Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee; and the Trustee is hereby authorized and empowered to execute and deliver, on behalf of the defaulting 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 defaulting Master Servicer agrees to cooperate with the Trustee and the Securities Administrator in effecting the termination of the defaulting Master Servicer’s responsibilities and rights hereunder as Master Servicer including, without limitation, notifying the Servicers of the assignment of the master servicing function and providing the Trustee or its designee all documents and records in electronic or other form reasonably requested by it to enable the Trustee or its designee to assume the defaulting Master Servicer’s functions hereunder and the transfer to the Trustee for administration by it of all amounts which shall at the time be or should have been deposited by the defaulting Master Servicer in the Distribution Account and any other account or fund maintained with respect to the Certificates or thereafter received with respect to the Mortgage Loans.  The Master Servicer being terminated shall bear all reasonable out-of-pocket costs of a master servicing transfer, including but not limited to those of the Trustee or Securities Administrator reasonably allocable to legal fees and expenses, accounting and financial consulting fees and expenses, and costs of amending the Agreement, if necessary.

Notwithstanding the termination of its activities as Master Servicer, each terminated Master Servicer shall continue to be entitled to reimbursement under this Agreement to the extent such reimbursement relates to the period prior to such Master Servicer’s termination.

If any Event of Default shall occur, the Trustee, upon becoming aware of the occurrence thereof, shall promptly notify the Securities Administrator and each Rating Agency of the nature and extent of such Event of Default.  The Trustee or the Securities Administrator shall immediately give written notice to the Master Servicer upon the Master Servicer’s failure to make Advances as required under this Agreement.

(b)

On and after the time the Master Servicer receives a notice of termination from the Trustee pursuant to Section 6.14(a) or the Trustee receives the resignation of the Master Servicer evidenced by an Opinion of Counsel pursuant to Section 9.06, the Trustee, unless another master servicer shall have been appointed, shall be the successor in all respects to the Master Servicer in its capacity as such under this Agreement and the transactions set forth or provided for herein and shall have all the rights and powers and be subject to all the responsibilities, duties and liabilities relating thereto and arising thereafter placed on the Master Servicer hereunder, including the obligation to make Advances with respect to the Mortgage Loans; provided, however, that any failure to perform such duties or responsibilities caused by the Master Servicer’s failure to provide information required by this Agreement shall not be considered a default by the Trustee hereunder.  In addition, the Trustee shall have no responsibility for any act or omission of the Master Servicer prior to the receipt by the Master Servicer of any notice of termination.  The Trustee shall have no liability relating to the representations and warranties of the Master Servicer set forth in Section 9.03.  In the Trustee's capacity as such successor, the Trustee shall have the same limitations on liability herein granted to the Master Servicer.  As compensation therefor, the Trustee shall be entitled to receive all compensation payable to the Master Servicer pursuant to Section 9.04 of this Agreement.

(c)

Notwithstanding the above, the Trustee may, if it shall be unwilling to continue to so act, or shall, if it is unable to so act, petition a court of competent jurisdiction to appoint, or appoint on its own behalf any established housing and home finance institution servicer, master servicer, servicing or mortgage servicing institution having a net worth of not less than $15,000,000 and meeting such other standards for a successor master servicer as are set forth in this Agreement, as the successor to such Master Servicer in the assumption of all of the responsibilities, duties or liabilities of a master servicer, like the Master Servicer.  Any entity designated by the Trustee as a successor master servicer may be an Affiliate of the Trustee; provided, however, that, unless such Affiliate meets the net worth requirements and other standards set forth herein for a successor master servicer, the Trustee, in its individual capacity shall agree, at the time of such designation, to be and remain liable to the Trust Fund for such Affiliate’s actions and omissions in performing its duties hereunder.  In connection with such appointment and assumption, the Trustee may make such arrangements for the compensation of such successor out of payments on Mortgage Loans, as it and such successor shall agree; provided, however, that no such compensation shall be in excess of that permitted to the Master Servicer hereunder.  The Trustee and such successor shall take such actions, consistent with this Agreement, as shall be necessary to effectuate any such succession and may make other arrangements with respect to the servicing to be conducted hereunder which are not inconsistent herewith.  The Master Servicer shall cooperate with the Trustee and any successor master servicer in effecting the termination of the Master Servicer’s responsibilities and rights hereunder including, without limitation, notifying Mortgagors of the assignment of the master servicing functions and providing the Trustee and successor master servicer, as applicable, all documents and records in electronic or other form reasonably requested by it to enable it to assume the Master Servicer’s functions hereunder and the transfer to the Trustee or such successor master servicer, as applicable, all amounts which shall at the time be or should have been deposited by the Master Servicer in the Distribution Account and any other account or fund maintained with respect to the Certificates or thereafter be received with respect to the Mortgage Loans.  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 caused by (i) the failure of the Master Servicer to deliver, or any delay in delivering, cash, documents or records to it, (ii) the failure of the Master Servicer to cooperate as required by this Agreement, (iii) the failure of the Master Servicer to deliver the Mortgage Loan data to the Trustee as required by this Agreement or (iv) restrictions imposed by any regulatory authority having jurisdiction over the Master Servicer.  No 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 caused by (i) the failure of the Trustee to deliver, or any delay in delivering cash, documents or records to it related to such distribution, or (ii) the failure of Trustee to cooperate as required by this Agreement.

SECTION 6.15

Additional Remedies of Trustee Upon Event of Default.  

During the continuance of any Event of Default, so long as such Event of Default shall not have been remedied, the Trustee, in addition to the rights specified in Section 6.14, shall have the right, in its own name and as trustee of the Trust Fund, to take all actions now or hereafter existing at law, in equity or by statute to enforce its rights and remedies and to protect the interests, and enforce the rights and remedies, of the Certificateholders (including the institution and prosecution of all judicial, administrative and other proceedings and the filings of proofs of claim and debt in connection therewith).  Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Event of Default.

SECTION 6.16

Waiver of Defaults.  

More than 50% of the Aggregate Voting Interests of the Certificateholders may waive any default or Event of Default by the Master Servicer in the performance of its obligations hereunder, except that a default in the making of any required deposit to the Distribution Account that would result in a failure of the Trustee or Securities Administrator to make any required payment of principal of or interest on the Certificates may only be waived with the consent of 100% of the affected Certificateholders.  Upon any such waiver of a past default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement.  No such waiver shall extend to any subsequent or other default or impair any right consequent thereon except to the extent expressly so waived.

SECTION 6.17

Notification to Holders.  

Upon termination of the Master Servicer or appointment of a successor to the Master Servicer, in each case as provided herein, the Trustee shall promptly mail notice thereof by first class mail to the Securities Administrator and the Certificateholders at their respective addresses appearing on the Certificate Register.  The Trustee shall also, within 45 days after the occurrence of any Event of Default known to a Responsible Officer of the Trustee, give written notice thereof to the Securities Administrator and the Certificateholders, unless such Event of Default shall have been cured or waived prior to the issuance of such notice and within such 45-day period.

SECTION 6.18

Directions by Certificateholders and Duties of Trustee During Event of Default.  

Subject to the provisions of Section 8.01 hereof, during the continuance of any Event of Default, Holders of Certificates evidencing not less than 25% of the Class Principal Amount (or Percentage Interest) of each Class of Certificates affected thereby may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement; provided, however, that the Trustee shall be under no obligation to pursue any such remedy, or to exercise any of the trusts or powers vested in it by this Agreement (including, without limitation, (i) the conducting or defending of any administrative action or litigation hereunder or in relation hereto and (ii) the terminating of the Master Servicer or any successor master servicer from its rights and duties as master servicer hereunder) at the written request, order or direction of any of the Certificateholders, unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which may be incurred therein or thereby; and, provided further, that, subject to the provisions of Section 8.01, the Trustee shall have the right to decline to follow any such direction if the Trustee, in accordance with an Opinion of Counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith determines that the action or proceeding so directed would involve it in personal liability for which it is not indemnified to its satisfaction or be unjustly prejudicial to the non-assenting Certificateholders.

SECTION 6.19

Action Upon Certain Failures of the Master Servicer and Upon Event of Default.  

In the event that the Trustee or the Securities Administrator shall have actual knowledge of any action or inaction of the Master Servicer that would become an Event of Default upon the Master Servicer’s failure to remedy the same after notice, the Trustee or the Securities Administrator shall give notice thereof to the Master Servicer, provided that the Trustee shall be under no duty or obligation to independently ascertain whether any action or inaction of the Master Servicer has occurred.

SECTION 6.20

Preparation of Tax Returns and Other Reports.  

(a)

The Securities Administrator shall prepare or cause to be prepared and file on behalf of the Trust Fund, based upon information calculated in accordance with this Agreement pursuant to written instructions given by the Depositor, federal tax returns, all in accordance with Article X hereof.  If the Depositor notifies the Securities Administrator in writing that a state tax return or other return is required, then, at the sole expense of the Trust Fund, the Securities Administrator shall prepare or cause to be prepared and file 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, 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 forward 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 forward 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.  The Master Servicer will indemnify the Securities Administrator and the Trustee for any liability of or assessment against the Securities Administrator or the Trustee, as applicable, resulting from any error in any of such tax or information returns directly resulting from errors in the information provided by the Master Servicer.

(b)

The Securities Administrator shall prepare and file with the Internal Revenue Service (“IRS”), on behalf of the Trust Fund and 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 Trustee and the Depositor.  The Securities Administrator shall furnish any other information that is required by the Code and regulations thereunder to be made available to the Certificateholders.  The Master Servicer shall cause each Servicer to provide the Securities Administrator with such information as is necessary for the Securities Administrator to prepare such documents.

(c)

Within 15 days after each Distribution Date, the Securities Administrator shall, on behalf of the Trust and in accordance with industry standards, file with the Securities and Exchange Commission (the "Commission") via the Electronic Data Gathering and Retrieval System (EDGAR), a Form 8–K (or other comparable form containing the same or comparable information or other information mutually agreed upon) with a copy of the report to the Certificateholders for such Distribution Date as an exhibit thereto.  Prior to March 31, 2006 (and, if applicable, prior to March 31 of each year), the Securities Administrator shall, on behalf of the Trust and in accordance with industry standards, file with the Commission via EDGAR a Form 10–K with respect to the Trust Fund.  In addition, the Master Servicer will cause its senior officer in charge of securitization to execute the certification (the "Form 10–K Certification") required pursuant to Rule 13a–14 under the Securities Exchange Act of 1934, as amended, and to file the same with the Commission prior to March 31, 2006 (and, if applicable, prior to March 31 of each year).  To the extent any information or exhibits required to be included in the Form 10–K are not timely received by the Securities Administrator prior to March 31, the Securities Administrator shall, on behalf of the Trust, file one or more amended Form 10–Ks to include such missing information or exhibits promptly after receipt thereof by the Securities Administrator.  Promptly following the first date legally permissible under applicable regulations and interpretations of the Commission, the Securities Administrator shall, on behalf of the Trust and in accordance with industry standards, file with the Commission via EDGAR a Form 15 Suspension Notification with respect to the Trust Fund, if applicable.  Each of the Master Servicer and the Trustee agree to furnish to the Securities Administrator promptly, from time to time upon request, such further information, reports and financial statements within its control related to this Agreement and the Mortgage Loans as the Securities Administrator reasonably deems appropriate to prepare and file all necessary reports with the Commission.  The Securities Administrator shall have no responsibility to file any items with the Commission other than those specified in this section.  The Depositor hereby grants to the Securities Administrator a limited power of attorney to execute and file each such document on behalf of the Depositor.  Such power of attorney shall continue until the earlier of (i) receipt by the Securities Administrator from the Depositor of written termination of such power of attorney and (ii) the termination of the Trust.  The Securities Administrator agrees to indemnify and hold harmless the Depositor and each Person, if any, who “controls” the Depositor within the meaning of the 1933 Act and their respective officers and directors against any and all losses, penalties, fines, forfeitures, legal fees and related costs, judgments and any other costs, fees and expenses that such Person may sustain arising out of third party claims based on any material misstatement or omission contained in any Form 8-K or Form 10-K filed pursuant to this Section 6.20; provided, however, that the Securities Administrator shall have no liability to any such Person with respect to any misstatement or omission in any information in, or in any exhibit to, such Form 8-K or Form 10-K that was provided by, or based on information provided by, any other Person to the Securities Administrator.  If an event occurs that would otherwise result in an indemnification obligation hereunder, but the indemnification provided for in this Section 6.20(c) by the Securities Administrator is unavailable or insufficient to hold harmless such Persons, then the Securities Administrator shall contribute to the amount paid or payable by such Persons as a result of the losses, claims, damages or liabilities of such Persons in such proportion as is appropriate to reflect the relative fault of the Depositor on the one hand and the Securities Administrator on the other.   

SECTION 6.21

Determination of LIBOR.

On each LIBOR Determination Date, the Securities Administrator shall determine LIBOR for the Accrual Period and make it available to the Master Servicer and each Servicer of such rate, and such rate shall be final and binding, absent a manifest error of the Securities Administrator.

ARTICLE VII

PURCHASE OF MORTGAGE LOANS AND

TERMINATION OF THE TRUST FUND

SECTION 7.01

Purchase of Mortgage Loans; Termination of Trust Fund Upon Purchase or Liquidation of All Mortgage Loans.  

(a)

The respective obligations and responsibilities of the Trustee, the Securities Administrator and the Master Servicer created hereby (other than the obligation of the Securities Administrator to make payments to the Certificateholders as set forth in Section 7.02), shall terminate on the earliest of (i) the final payment or other liquidation of the last Mortgage Loan remaining in the Trust Fund and the disposition of all REO Property, (ii) the sale of the property relating to the Aggregate Pool held by the Trust Fund in accordance with Section 7.01(c) and (iii) the Latest Possible Maturity Date; provided, however, that in no event shall the Trust Fund created hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the United States to the Court of St. James’s, living on the date hereof.  Any termination of the Trust Fund shall be carried out in such a manner so that the termination of each REMIC included therein shall qualify as a “qualified liquidation” under the REMIC Provisions.

(b)

[Reserved].

(c)

On any Distribution Date occurring on or after the Initial Optional Purchase Date, the Master Servicer has the option to purchase all of the Mortgage Loans and to cause the Trust Fund to adopt a plan of complete liquidation pursuant to Sections 7.02 and 7.03 hereof to sell all of its property.  If the Master Servicer elects to exercise such option, it shall no later than 30 days prior to the Distribution Date selected for purchase of the related assets of the Trust Fund (the “Purchase Date”) deliver written notice to the Trustee and the Securities Administrator and either (a) deposit in the Distribution Account the Redemption Price or (b) state in such notice that the Redemption Price shall be deposited in the Distribution Account not later than 10:00 a.m., New York City time, on the applicable Purchase Date.  Upon exercise of such option, the property of the Trust Fund shall be sold to the Master Servicer at a price equal to the Redemption Price.

(d)

The Depositor, the Master Servicer, each Servicer, the Securities Administrator, the Trustee and the Custodian shall be reimbursed from the Redemption Price for any Advances, Servicer Advances, accrued and unpaid Servicing Fees and Master Servicing Fees or other amounts with respect to the Mortgage Loans that are reimbursable to such parties under this Agreement, the related Purchase and Servicing Agreement or the related Custodial Agreement.

SECTION 7.02

Procedure Upon Redemption or Termination of Trust Fund.  

(a)

Notice of any redemption or termination pursuant to the provisions of Section 7.01, specifying the Distribution Date upon which the final distribution shall be made or the Redemption Date of the Certificates, shall be given promptly by the Securities Administrator by first class mail to the Certificateholders mailed in the case of a redemption of any Certificates, no later than (i) the first day of the month in which the Distribution Date selected for redemption of such Certificates shall occur or (ii) upon (x) the sale of all of the related property of the Trust Fund by Securities Administrator on behalf of the Trustee or in the case of a sale of assets of the Trust Fund, or (y) upon the final payment or other liquidation of the last Mortgage Loan or REO Property in the Trust Fund.  Such notice shall specify (A) the Redemption Date, Distribution Date upon which final distribution on the Certificates of all amounts required to be distributed to the Certificateholders pursuant to Section 5.02 will be made upon presentation and surrender of the Certificates at the Certificate Registrar’s Corporate Trust Office, and (B) that the Record Date otherwise applicable to such Distribution Date is not applicable, distribution being made only upon presentation and surrender of such Certificates at the office or agency of the Trustee therein specified.  The Securities Administrator shall give such notice to the Trustee, the Master Servicer and the Certificate Registrar at the time such notice is given to Holders of such Certificates.  Upon the final payment or other liquidation of the last Mortgage Loan or REO Property in the Trust Fund, the duties of the Certificate Registrar with respect to the Certificates shall terminate and the Securities Administrator shall terminate, the Distribution Account and any other account or fund maintained with respect to the Certificates, subject to the Securities Administrator’s obligation hereunder to hold all amounts payable to Certificateholders in trust without interest pending such payment.

(b)

In the event that any of the affected Holders do not surrender their Certificates for cancellation within three months after the time 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 one year after the second notice any applicable Certificates shall not have been surrendered for cancellation, the Securities Administrator may take appropriate steps to contact the remaining Certificateholders concerning surrender of such Certificates, and the cost thereof shall be paid out of the amounts distributable to such Holders.  If within two years after the second notice any Certificates shall not have been surrendered for cancellation, the Securities Administrator shall deliver any remaining funds being held by it to the Depositor and the Depositor shall, subject to applicable state law relating to escheatment, hold all amounts distributable to such Holders for the benefit of such Holders.  No interest shall accrue on any amount held by the Securities Administrator and not distributed to a Certificateholder due to such Certificateholder’s failure to surrender its Certificate(s) for payment of the final distribution thereon in accordance with this Section.

(c)

Any reasonable expenses incurred by the Trustee in connection with any redemption or termination or liquidation of the Trust Fund or a portion thereof shall be reimbursed from proceeds received from such liquidation of the Trust Fund.

SECTION 7.03

Additional Trust Fund Termination Requirements.  

(a)

On the termination of the Trust Fund under Section 7.01 (a), or on the exercise of a right to purchase all of the Mortgage Loans of the Aggregate Pool under Section 7.01(c), the Trustee shall comply with requirements of this Section 7.03 with respect to the Lower Tier REMIC, unless the party having the right to purchase the assets of the Lower-Tier REMIC (the “Purchaser”) delivers to the Trustee, an Opinion of Counsel (at the expense of the Purchaser), addressed to the Trustee to the effect that the failure of the Trustee to comply with the requirements of this Section 7.03 will not result in an Adverse REMIC Event:

(i)

Within 89 days prior to the time of making the final payment on the Certificates, (and upon notification by the Purchaser in the case of a purchase under Section 7.01(c)) the Trustee shall adopt on behalf of the each REMIC, a plan of complete liquidation, meeting the requirements of a qualified  liquidation under the REMIC Provisions;

(ii)

Any sale of the assets of the REMIC shall be for cash and shall occur at or after the time the plan of complete liquidation is adopted and prior to the time the final payments on the Certificates are made;

(iii)

On the date specified for final payment of the Certificates, the Securities Administrator shall make final distributions of principal and interest on the Certificates in accordance with Section 5.02 and, after payment of, or provision for any outstanding expenses, distribute or credit, or cause to be distributed or credited, to the Holders of the Residual Certificates all cash on hand with respect to each related REMIC after such final payment (other than cash retained to meet claims), and the Trust Fund (and each REMIC) shall terminate at that time; and

(iv)

In no event may the final payment on the Certificates or the final distribution or credit to the Holders of the Residual Certificates be made after the 89th day from the date on which the plan of complete liquidation is adopted.

(b)

By its acceptance of a Residual Certificate, each Holder thereof hereby agrees to accept the plan (or plans) of complete liquidation adopted by the Trustee under this Section and to take such other action in connection therewith as may be reasonably requested by the Trustee, the Securities Administrator or any Servicer.

ARTICLE VIII

RIGHTS OF CERTIFICATEHOLDERS

SECTION 8.01

Limitation on Rights of Holders.  

(a)

The death or incapacity of any Certificateholder shall not operate to terminate this Agreement or this Trust Fund, nor entitle such Certificateholder’s legal representatives or heirs to claim an accounting or take any action or proceeding in any court for a partition or winding up of this Trust Fund, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them.  Except as otherwise expressly provided herein, no Certificateholder, solely by virtue of its status as a Certificateholder, shall have any right to vote or in any manner otherwise control the Master Servicer or the operation and management of the Trust Fund, or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association, nor shall any Certificateholder be under any liability to any third person by reason of any action taken by the parties to this Agreement pursuant to any provision hereof.

(b)

No Certificateholder, solely by virtue of its status as Certificateholder, shall have any right by virtue or by availing of any provision of this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Agreement, unless such Holder previously shall have given to the Trustee and the Securities Administrator a written notice of an Event of Default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of Certificates evidencing not less than 25% of the Class Principal  Amount or Class Notional Amount (or Percentage Interest) of Certificates of each Class affected thereby shall have made written request upon the Trustee and the Securities Administrator to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee and the Securities Administrator such reasonable indemnity as they may require against the cost, expenses and liabilities to be incurred therein or thereby, and the Trustee, for sixty 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 and no direction inconsistent with such written request has been given to the Trustee and the Securities Administrator during such sixty-day period by such Certificateholders; it being understood and intended, and being expressly covenanted by each Certificateholder with every other Certificateholder, the Securities Administrator and the Trustee, that no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing of any provision of this Agreement to affect, disturb or prejudice the rights of the Holders of any other of such Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Agreement, except in the manner herein provided and for the benefit of all Certificateholders.  For the protection and enforcement of the provisions of this Section, each and every Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

SECTION 8.02

Access to List of Holders.  

(a)

If the Trustee is not acting as Certificate Registrar, the Certificate Registrar will furnish or cause to be furnished to the Trustee, within fifteen days after receipt by the Certificate Registrar of a request by the Trustee in writing, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Certificateholders of each Class as of the most recent Record Date.

(b)

If three or more Holders or Certificate Owners (hereinafter referred to as “Applicants”) apply in writing to the Certificate Registrar, and such application states that the Applicants desire to communicate with other Holders with respect to their rights under this Agreement or under the Certificates and is accompanied by a copy of the communication which such Applicants propose to transmit, then the Certificate Registrar shall, within five Business Days after the receipt of such application, afford such Applicants reasonable access during the normal business hours of the Certificate Registrar to the most recent list of Certificateholders held by the Certificate Registrar or shall, as an alternative, send, at the Applicants’ expense, the written communication proffered by the Applicants to all Certificateholders at their addresses as they appear in the Certificate Register.

(c)

Every Holder or Certificate Owner, if the Holder is a Clearing Agency, by receiving and holding a Certificate, agrees with the Depositor, the Master Servicer, the Securities Administrator, the Certificate Registrar and the Trustee that neither the Depositor, the Master Servicer, the Securities Administrator, the Certificate Registrar nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Certificateholders hereunder, regardless of the source from which such information was derived.

SECTION 8.03

Acts of Holders of Certificates.  

(a)

Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Holders or Certificate Owners, if the Holder is a Clearing Agency, may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and the Securities Administrator and, where expressly required herein, to the Master Servicer.  Such instrument or instruments (as the action embodies therein and evidenced thereby) are herein sometimes referred to as an “Act” of the Holders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agents shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Securities Administrator and the Master Servicer, if made in the manner provided in this Section.  Each of the Trustee, the Securities Administrator and the Master Servicer shall promptly notify the others of receipt of any such instrument by it, and shall promptly forward a copy of such instrument to the others.

(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 the certificate of any notary public or other officer authorized by law to take acknowledgments or deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof.  Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his 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 or the Securities Administrator deems sufficient.

(c)

The ownership of Certificates (whether or not such Certificates shall be overdue and notwithstanding any notation of ownership or other writing thereon made by anyone other than the Trustee) shall be proved by the Certificate Register, and neither the Trustee, the Securities Administrator, the Master Servicer, nor the Depositor shall be affected by any notice to the contrary.

(d)

Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Certificate shall bind every future Holder of the same Certificate and the Holder of every Certificate issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Trustee or the Master Servicer in reliance thereon, whether or not notation of such action is made upon such Certificate.

ARTICLE IX

ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

BY THE MASTER SERVICER

SECTION 9.01

Duties of the Master Servicer; Enforcement of Servicers; and Master Servicer’s Obligations.

(a)

The Master Servicer, on behalf of the Trustee, the Depositor and the Certificateholders shall monitor the performance of the Servicers under the related Purchase and Servicing Agreements, and shall use its reasonable good faith efforts to cause each Servicer duly and punctually to perform all of their respective duties and obligations thereunder. Upon the occurrence of a default of which an Authorized Officer of the Master Servicer has actual knowledge under any Purchase and Servicing Agreement, the Master Servicer shall promptly notify the Trustee in writing thereof, and shall specify in such notice the action, if any, the Master Servicer is taking in respect of such default.  So long as any such default shall be continuing, the Master Servicer may, and shall if it determines such action to be in the best interests of Certificateholders, (i) terminate all of the rights and powers of the Servicer under such Purchase and Servicing Agreement pursuant to the applicable provisions of such Purchase and Servicing Agreement; (ii) exercise any rights it may have to enforce such Purchase and Servicing Agreement against the related Servicer; and/or (iii) waive any such default under such Purchase and Servicing Agreement or take any other action with respect to such default as is permitted thereunder.  

(b)

Upon any termination by the Master Servicer of any Servicer’s rights and powers pursuant to the related Purchase and Servicing Agreement, the rights and powers of such Servicer with respect to the Mortgage Loans serviced by it shall vest in the Master Servicer and the Master Servicer shall be the successor in all respects to such Servicer in its capacity as servicer with respect to the Mortgage Loans serviced by such Servicer under the related Purchase and Servicing Agreement, unless or until the Master Servicer shall have appointed, with the consent of the Trustee and the Rating Agencies, such consent not to be unreasonably withheld, and in accordance with the applicable provisions of the related Purchase and Servicing Agreement, a new Fannie Mae- or FHLMC-approved Person to serve as successor to such Servicer; provided, however, that it is understood and agreed 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 a successor servicer (including the Master Servicer).  With such consent, the Master Servicer may elect to continue to serve as successor servicer under the related Purchase and Servicing Agreement.  Upon appointment of a successor servicer, as authorized under this Section 9.01(b), unless the successor servicer shall have assumed the obligations of the terminated Servicer under the related Purchase and Servicing Agreement, the Trustee and such successor servicer shall enter into a servicing agreement in a form substantially similar to the such Purchase and Servicing Agreement. In connection with any such appointment, the Master Servicer may make such arrangements for the compensation of such successor servicer as it and such successor servicer shall agree, but in no event shall such compensation of any successor servicer (including the Master Servicer) be in excess of that payable to the terminated Servicer under the related Purchase and Servicing Agreement.

The Master Servicer shall pay the costs of such enforcement (including the termination of such Servicer, the appointment of a successor servicer or the transfer and assumption of the servicing by the Master Servicer) at its own expense and shall be reimbursed therefor initially (i) by the terminated Servicer, (ii) from a general recovery resulting from such enforcement only to the extent, if any, that such recovery exceeds all amounts due in respect of the Mortgage Loans serviced by such terminated Servicer, (iii) from a specific recovery of costs, expenses or attorney’s fees against the party against whom such enforcement is directed, or (iv) to the extent that such amounts described in (i)-(iii) above are insufficient to reimburse the Master Servicer for such costs of enforcement, from the Trust Fund, as provided in Section 9.04.

If the Master Servicer assumes the servicing with respect to any of the Mortgage Loans serviced by a terminated Servicer, it will not assume liability for the representations and warranties of such Servicer or for the errors or omissions of such Servicer.

(c)

Upon any termination of any Servicer’s rights and powers pursuant to the related Purchase and Servicing Agreement, the Master Servicer shall promptly notify the Trustee and the Rating Agencies, specifying in such notice that the Master Servicer or any successor servicer, as the case may be, has succeeded such Servicer under the related Purchase and Servicing Agreement, which notice shall also specify the name and address of any such successor servicer.

(d)

Neither the Depositor nor the Trustee shall consent to the assignment by any Servicer of its rights and obligations under the related Purchase and Servicing Agreement without the prior written consent of the Master Servicer, which consent shall not be unreasonably withheld or delayed.

SECTION 9.02

Assumption of Master Servicing by Trustee.  

(a)

In the event the Master Servicer shall for any reason no longer be the Master Servicer (including by reason of any Event of Default under this Agreement), the Trustee shall thereupon assume all of the rights and obligations of such Master Servicer hereunder and under the Purchase and Servicing Agreements entered into with respect to the Mortgage Loans or shall appoint a Fannie-Mae or FHLMC-approved servicer as successor servicer acceptable to the Depositor and the Rating Agencies.  The Trustee, its designee or any successor master servicer appointed by the Trustee shall be deemed to have assumed all of the Master Servicer’s interest herein and therein to the same extent as if the Purchase and Servicing Agreements had been assigned to the assuming party, except that the Master Servicer shall not thereby be relieved of any liability or obligations of the Master Servicer under the Purchase and Servicing Agreements accruing prior to its replacement as Master Servicer, and shall be liable to the Trustee, and hereby agrees to indemnify and hold harmless the Trustee from and against all costs, damages, expenses and liabilities (including reasonable attorneys’ fees) incurred by the Trustee as a result of such liability or obligations of the Master Servicer and in connection with the Trustee’s assumption (but not its performance, except to the extent that costs or liability of the Trustee are created or increased as a result of negligent or wrongful acts or omissions of the Master Servicer prior to its replacement as Master Servicer) of the Master Servicer’s obligations, duties or responsibilities thereunder.

(b)

The Master Servicer that has been terminated shall, upon request of the Trustee but at the expense of such Master Servicer, deliver to the assuming party all documents and records relating to the Purchase and Servicing Agreements, this Agreement and the Mortgage Loans and an accounting of amounts collected and held by it and otherwise use its best efforts to effect the orderly and efficient transfer of the Purchase and Servicing Agreements and this Agreement to the assuming party.

SECTION 9.03

Representations and Warranties of the Master Servicer.  

(a)

The Master Servicer hereby represents and warrants to the Depositor, the Securities Administrator and the Trustee, for the benefit of the Certificateholders, as of the Closing Date that:

(i)

it is validly existing and in good standing under the laws of the New Jersey as a corporation, and as Master Servicer has full power and authority to transact any and all business contemplated by this Agreement and to execute, deliver and comply with its obligations under the terms of this Agreement, the execution, delivery and performance of which have been duly authorized by all necessary corporate action on the part of the Master Servicer;

(ii)

the execution and delivery of this Agreement by the Master Servicer and its performance and compliance with the terms of this Agreement will not (A) violate the Master Servicer’s charter or bylaws, (B) violate any law or regulation or any administrative decree or order to which it is subject or (C) constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material contract, agreement or other instrument to which the Master Servicer is a party or by which it is bound or to which any of its assets are subject, which violation, default or breach would materially and adversely affect the Master Servicer’s ability to perform its obligations under this Agreement;

(iii)

this Agreement constitutes, assuming due authorization, execution and delivery hereof by the other respective parties hereto, a legal, valid and binding obligation of the Master Servicer, enforceable against it in accordance with the terms hereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law);

(iv)

the Master Servicer is not in default with respect to any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency to the extent that any such default would materially and adversely affect its performance hereunder;

(v)

the Master Servicer is not a party to or bound by any agreement or instrument or subject to any charter provision, bylaw or any other corporate restriction or any judgment, order, writ, injunction, decree, law or regulation that may materially and adversely affect its ability as Master Servicer to perform its obligations under this Agreement or that requires the consent of any third person to the execution of this Agreement or the performance by the Master Servicer of its obligations under this Agreement;

(vi)

no litigation is pending or, to the best of the Master Servicer’s knowledge, threatened against the Master Servicer which would prohibit its entering into this Agreement or performing its obligations under this Agreement;

(vii)

the Master Servicer, or an affiliate thereof the primary business of which is the servicing of conventional residential mortgage loans, is a Fannie Mae- or FHLMC-approved seller/servicer;

(viii)

no consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Master Servicer of or compliance by the Master Servicer with this Agreement or the consummation of the transactions contemplated by this Agreement, except for such consents, approvals, authorizations and orders (if any) as have been obtained; and

(ix)

the consummation of the transactions contemplated by this Agreement are in the ordinary course of business of the Master Servicer.

(b)

It is understood and agreed that the representations and warranties set forth in this Section shall survive the execution and delivery of this Agreement.  The Master Servicer shall indemnify the Depositor, the Securities Administrator and the Trustee and hold them harmless against any loss, damages, penalties, fines, forfeitures, legal fees and related costs, judgments, and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from, a material breach of the Master Servicer’s representations and warranties contained in Section 9.03(a).  It is understood and agreed that the enforcement of the obligation of the Master Servicer set forth in this Section to indemnify the Depositor, the Securities Administrator and the Trustee as provided in this Section constitutes the sole remedy (other than as set forth in Section 6.14) of the Depositor, the Securities Administrator and the Trustee, respecting a breach of the foregoing representations and warranties.  Such indemnification shall survive any termination of the Master Servicer as Master Servicer hereunder, and any termination of this Agreement.

Any cause of action against the Master Servicer relating to or arising out of the breach of any representations and warranties made in this Section shall accrue upon discovery of such breach by either the Depositor, the Master Servicer or the Trustee or notice thereof by any one of such parties to the other parties.

SECTION 9.04

Compensation to the Master Servicer.  

As compensation for its services hereunder, the Master Servicer shall be entitled to be retain or withdraw from the Distribution Account, (i) all investment income payable to the Master Servicer pursuant to Section 4.01(e) hereof and (ii) amounts necessary to reimburse itself for any previously unreimbursed Advances, Servicer Advances and Nonrecoverable Advances in accordance with the definition of “Available Distribution Amount.”  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.

In addition, the Master Servicer shall be entitled to reimbursement from the Distribution Account for all reasonable expenses, disbursements and advances incurred or made by the Master Servicer in connection with the performance of its duties hereunder and under the Purchase and Servicing Agreements, as modified by the Acknowledgements (including the reasonable compensation and the expenses and disbursements of its agents and counsel), to the extent not otherwise reimbursed pursuant to this Agreement, except any such expense, disbursement or advance as may be attributable to its willful misfeasance, bad faith or negligence.

SECTION 9.05

Merger or Consolidation.  

Any Person into which the Master Servicer may be merged or consolidated, or any Person resulting from any merger, conversion, other change in form 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 to the Master Servicer hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that the successor or resulting Person to the Master Servicer shall be a Person that shall be qualified and approved to service mortgage loans for Fannie Mae or FHLMC and shall have a net worth of not less than $15,000,000.

SECTION 9.06

Resignation of Master Servicer.  

Except as otherwise provided in Sections 9.05 and 9.07 hereof, the Master Servicer shall not resign from the obligations and duties hereby imposed on it unless the Master Servicer’s duties hereunder are no longer permissible under applicable law or are in material conflict by reason of applicable law with any other activities carried on by it and cannot be cured.  Any such determination permitting the resignation of the Master Servicer shall be evidenced by an Opinion of Counsel that shall be Independent to such effect delivered to the Trustee.  No such resignation shall become effective until the Trustee shall have assumed, or a successor master servicer shall have been appointed by the Trustee and until such successor shall have assumed, the Master Servicer’s responsibilities and obligations under this Agreement.  Written notice of such resignation shall be given promptly by the Master Servicer and the Depositor to the Trustee.

If, at any time, the Master Servicer resigns under this Section 9.06, or transfers or assigns its rights and obligations under Section 9.07, or is removed as Master Servicer pursuant to Section 6.14, then at such time Wells Fargo Bank, N.A. also shall be entitled to resign as Securities Administrator, Paying Agent, Authenticating Agent and Certificate Registrar under this Agreement.  In such event, the obligations of each such party shall be assumed by the Trustee or such successor master servicer appointed by the Trustee (subject to the provisions of Section 9.02(a)).

SECTION 9.07

Assignment or Delegation of Duties by the Master Servicer.  

Except as expressly provided herein, the Master Servicer shall not assign or transfer any of its rights, benefits or privileges hereunder to any other Person, or delegate to or subcontract with, or authorize or appoint any other Person to perform any of the duties, covenants or obligations to be performed by the Master Servicer hereunder; provided, however, that the Master Servicer shall have the right with the prior written consent of the Trustee and the Depositor (which consent shall not be unreasonably withheld), and upon delivery to the Trustee and the Depositor of a letter from each Rating Agency to the effect that such action shall not result in a downgrading of the Certificates, to delegate or assign to or subcontract with or authorize or appoint any qualified Person to perform and carry out any duties, covenants or obligations to be performed and carried out by the Master Servicer hereunder.  Notice of such permitted assignment shall be given promptly by the Master Servicer to the Depositor and the Trustee.  If, pursuant to any provision hereof, the duties of the Master Servicer are transferred to a successor master servicer, the entire amount of the compensation payable to the Master Servicer pursuant hereto shall thereafter be payable to such successor master servicer.  Such successor Master Servicer shall also pay the fees of the Trustee and the Securities Administrator, as provided herein.

SECTION 9.08

Limitation on Liability of the Master Servicer and Others.  

Neither the Master Servicer nor any of the directors, officers, employees or agents of the Master Servicer shall be under any liability to the Trustee 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 Master Servicer or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in its performance of its duties or by reason of reckless disregard for its obligations and duties under this Agreement.  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.  The Master Servicer shall be under no obligation to appear in, prosecute or defend any legal action that is not incidental to its duties to master service the Mortgage Loans in accordance with this Agreement and that in its opinion may involve it in any expenses or liability; provided, however, that the Master Servicer may in its sole discretion undertake any such action that it may deem necessary or desirable in respect to this Agreement and the rights and duties of the parties hereto and the interests of the Certificateholders hereunder.  In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Trust Fund and the Master Servicer shall be entitled to be reimbursed therefor out of the Distribution Account.

The Master Servicer shall not be liable for any acts or omissions of the Servicers except to the extent that damages or expenses are incurred as a result of such act or omissions and such damages and expenses would not have been incurred but for the negligence, willful misfeasance, bad faith or recklessness of the Master Servicer in supervising, monitoring and overseeing the obligations of any servicer in this Agreement and the Purchase and Servicing Agreements.

SECTION 9.09

Indemnification; Third-Party Claims.  

The Master Servicer agrees to indemnify the Depositor, the Securities Administrator and the Trustee, and hold them harmless against any and all claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments, and any other costs, liability, fees and expenses that the Depositor, the Securities Administrator or the Trustee may sustain as a result of the Master Servicer’s willful misfeasance, bad faith or negligence in the performance of its duties hereunder or by reason of its reckless disregard for its obligations and duties under this Agreement and the Purchase and Servicing Agreements.  The Depositor, the Securities Administrator and the Trustee shall immediately notify the Master Servicer if a claim is made by a third party with respect to this Agreement or the Mortgage Loans entitling the Depositor, the Securities Administrator or the Trustee to indemnification under this Section 9.09, whereupon the Master Servicer shall assume 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 them in respect of such claim; provided, however, that the failure to so notify the Master Servicer shall not affect the Depositor’s, the Securities Administrator’s or the Trustee’s right to indemnification hereunder except to the extent that the Master Servicer’s defense of any such claim has been materially prejudiced thereby.

ARTICLE X

REMIC ADMINISTRATION

SECTION 10.01

REMIC Administration.  

(a)

REMIC elections as set forth in the Preliminary Statement 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.

(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 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 Section 6.20 and this Section.

(d)

The Securities Administrator shall prepare, and the Trustee shall sign and file, as instructed by the Securities Administrator, all of each REMIC’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.  In preparing such returns, the Securities Administrator shall, with respect to each REMIC other than the Upper-Tier REMIC: (i) treat the accrual period for interests in such REMIC as the calendar month; (ii) account for distributions made from such REMIC as made on the first day of each succeeding calendar month; (iii) account for income under the all-OID method at the Net WAC; (iv) use the aggregation method provided in Treasury Regulation section 1.1275-2(c); and (v) account for income and expenses related to such REMIC in the manner resulting in the lowest amount of excess inclusion income possible accruing to the Holder of the residual interest in such REMIC.

(e)

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, (i) 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 and (ii) to the Certificateholders and the Trustee such information or reports as are required by the Code or REMIC Provisions.

(f)

To the extent within their control, the Trustee, the Securities Administrator, the Master Servicer and the Holders of Certificates shall take any action or cause any REMIC to take any action necessary to 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.  Neither the Trustee, the Securities Administrator, the Master Servicer nor the Holder of any Residual Certificate or Uncertificated Interest 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 result in an Adverse REMIC Event unless the Trustee, the Securities Administrator and the Master Servicer have received an Opinion of Counsel (at the expense of the party seeking to take such action) to the effect that the contemplated action will not endanger such status or result in the imposition of such a tax.  In addition, prior to taking any action with respect to any REMIC or the assets therein, or causing any REMIC to take any action, which is not expressly permitted under the terms of this Agreement, any Holder of a Residual Certificate or Uncertificated Interest will consult with the Trustee, the Securities Administrator, the Master Servicer or their respective designees, in writing, with respect to whether such action could cause an Adverse REMIC Event to occur with respect to any REMIC, and no such Person shall take any such action or cause any REMIC to take any such action as to which the Trustee, the Securities Administrator or the Master Servicer 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.

(g)

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 Trustee or the Paying Agent 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.

(h)

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.

(i)

No additional contributions of assets shall be made to any REMIC, except as expressly provided in this Agreement.

(j)

Neither the Securities Administrator nor the Master Servicer shall enter into any arrangement by which any REMIC will receive a fee or other compensation for services.

(k)

[Reserved].

(l)

The Holder of a majority interest in the residual interest in any REMIC formed hereby shall act as “tax matters person” with respect to such REMIC and the Securities Administrator shall act as agent for such holder in such role, unless and until another party is so designated by such holder.  

SECTION 10.02

Prohibited Transactions and Activities.  

Neither the Depositor, the Master Servicer nor the Trustee shall sell, dispose of, or substitute for any of the Mortgage Loans, except in a disposition pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund, (iii) the termination of each REMIC pursuant to Article VII 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, substitution or acceptance) that such disposition, acquisition, substitution, or acceptance will not result in an Adverse REMIC Event, (b) affect the distribution of interest or principal on the Certificates or (c) result in the encumbrance of the assets transferred or assigned to the Trust Fund (except pursuant to the provisions of this Agreement).

SECTION 10.03

Indemnification with Respect to Prohibited Transactions or Loss of REMIC Status.  

Upon the occurrence of an Adverse REMIC Event due to the negligent performance by the Securities Administrator of its duties and obligations set forth herein, the Securities Administrator shall indemnify the Certificateholders of the related Residual Certificate 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, the Trustee or the Holder(s) of the Residual Certificates, 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 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 under any Purchase and Servicing Agreements or under any Acknowledgement, (2) for any Losses other than arising out of malfeasance, willful misconduct or negligent performance by the Securities Administrator of 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).

SECTION 10.04

REO Property.  

(a)

Notwithstanding any other provision of this Agreement, the Master Servicer, acting on behalf of the Trustee hereunder, shall not, except to the extent provided in the applicable Purchase and Servicing Agreement, knowingly permit any Servicer to, rent, lease, or otherwise earn income on behalf of any REMIC with respect to any REO Property which might cause an Adverse REMIC Event unless the applicable Servicer has provided to the Trustee 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 an Adverse REMIC Event.

(b)

The Depositor shall cause the applicable Servicer (to the extent provided in its Purchase and Servicing 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 applicable Servicer (to the extent provided in its Purchase and Servicing Agreement) to, dispose of any REO Property within three years of its acquisition by the Trust Fund unless the Depositor or the applicable Servicer (on behalf of the Trust Fund) 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 causing an Adverse REMIC Event.  If such an extension has been received, then the Depositor, acting on behalf of the Trustee hereunder, shall, or shall cause the applicable 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 applicable Servicer, acting on behalf of the Trust Fund hereunder, is unable to sell the REO Property within 33 months after its acquisition by the Trust Fund or if such an extension, has been received and the Depositor or the applicable 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 applicable 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 applicable 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.

SECTION 10.05

Fidelity.

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 and trustees.  

ARTICLE XI

MISCELLANEOUS PROVISIONS

SECTION 11.01

Binding Nature of Agreement; Assignment.  

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

SECTION 11.02

Entire Agreement.  

This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.  The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

SECTION 11.03

Amendment.  

(a)

This Agreement may be amended from time to time by the Depositor, the Master Servicer, the Securities Administrator, and the Trustee, without notice to or the consent of any of the Holders, (i) to cure any ambiguity or mistake, (ii) to cause the provisions herein to conform to or be consistent with or in furtherance of the statements made with respect to the Certificates, the Trust Fund or this Agreement in any Offering Document, or to correct or supplement any provision herein which may be inconsistent with any other provisions herein or with the provisions of any Purchase and Servicing Agreement, (iii) to make any other provisions with respect to matters or questions arising under this Agreement or (iv) to add, delete, or amend any provisions to the extent necessary or desirable to comply with any requirements imposed by the Code and the REMIC Provisions.  No such amendment effected pursuant to the preceding sentence shall, as evidenced by an Opinion of Counsel, result in an Adverse REMIC Event, nor shall such amendment effected pursuant to clause (iii) of such sentence adversely affect in any material respect the interests of any Holder.  Prior to entering into any amendment without the consent of Holders pursuant to this paragraph, the Trustee shall be provided with an Opinion of Counsel (at the expense of the party requesting such amendment) to the effect that such amendment is permitted under this Section.  Any such amendment shall be deemed not to adversely affect in any material respect any Holder, if the Trustee receives written confirmation from each Rating Agency that such amendment will not cause such Rating Agency to reduce the then current rating assigned to the Certificates.

(b)

This Agreement may also be amended from time to time by the Depositor, the Master Servicer, the Securities Administrator and the Trustee, with the consent of the Holders of not less than 66-2/3% of the Class Principal Amount (or Percentage Interest) of each Class of Certificates affected thereby for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Holders; provided, however, that no such amendment shall be made unless the Trustee receives an Opinion of Counsel, at the expense of the party requesting the change, that such amendment is permitted hereinafter and that such change will not cause an Adverse REMIC Event; and provided further, that no such amendment may (i) reduce in any manner the amount of, or delay the timing of, payments received on Mortgage Loans which are required to be distributed on any Certificate, without the consent of the Holder of such Certificate or (ii) reduce the aforesaid percentages of Class Principal Amount or Class Notional Amount (or Percentage Interest) of Certificates of each Class, the Holders of which are required to consent to any such amendment without the consent of the Holders of 100% of the Class Principal Amount or Class Notional Amount (or Percentage Interest) of each Class of Certificates affected thereby.  For purposes of this paragraph, references to “Holder” or “Holders” shall be deemed to include, in the case of any Class of Book-Entry Certificates, the related Certificate Owners.

(c)

Promptly after the execution of any such amendment, the Trustee shall furnish written notification of the substance of such amendment to each Holder, the Depositor and the Rating Agencies.

(d)

It shall not be necessary for the consent of Holders under this Section 11.03 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Holders shall be subject to such reasonable regulations as the Trustee may prescribe.

(e)

Notwithstanding anything to the contrary in any Purchase and Servicing Agreement, the Trustee shall not consent to any amendment of any Purchase and Servicing Agreement except pursuant to the standards provided in this Section with respect to amendment of this Agreement.  With respect to any amendment that relates to the servicing of the Mortgage Loans or a Servicer, the Trustee shall not consent to any such amendment without the prior written consent of the Master Servicer.

SECTION 11.04

Voting Rights.  

Except to the extent that the consent of all affected Certificateholders is required pursuant to this Agreement, with respect to any provision of this Agreement requiring the consent of Certificateholders representing specified percentages of aggregate outstanding Certificate Principal Amount or Class Notional Amount (or Percentage Interest), Certificates owned by the Depositor, the Master Servicer, the Securities Administrator, the Trustee, any Servicer or any Affiliates thereof are not to be counted so long as such Certificates are owned by the Depositor, the Master Servicer, the Securities Administrator, the Trustee, any Servicer or any Affiliate thereof.

SECTION 11.05

Provision of Information.  

(a)

For so long as any of the Certificates of any Class are “restricted securities” within the meaning of Rule 144(a)(3) under the Act, each of the Depositor, the Securities Administrator, the Master Servicer and the Trustee agree to cooperate with each other to provide to any Certificateholders and to any prospective purchaser of Certificates designated by such holder, upon the request of such holder or prospective purchaser, any information required to be provided to such holder or prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4) under the Act.  Any reasonable, out-of-pocket expenses incurred by the Trustee, the Master Servicer or the Securities Administrator in providing such information shall be reimbursed by the Depositor.

(b)

The Securities Administrator shall provide to any person to whom a Prospectus was delivered, upon the request of such person specifying the document or documents requested, a copy (excluding exhibits) of any report on Form 8-K or Form 10-K filed with the Securities and Exchange Commission pursuant to Section 6.20(c).  Any reasonable out-of-pocket expenses incurred by the Securities Administrator in providing copies of such documents shall be reimbursed by the Depositor.

(c)

On each Distribution Date, the Securities Administrator shall deliver or cause to be delivered by first class mail or make available on its website to the Depositor, Attention: Contract Finance, a copy of the report delivered to Certificateholders pursuant to Section 4.04.

SECTION 11.06

Governing Law.  

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.

SECTION 11.07

Notices.  

All requests, demands, notices, authorizations, directions, consents, waivers and communications hereunder shall be in writing and shall be deemed to have been duly given when received by (a) in the case of the Depositor, J.P Morgan Acceptance Corporation I, 270 Park Avenue, New York, New York 10017, telecopy number: (212) 834-3850, Attention: J.P. Morgan Alternative Loan Trust 2005-S1, (b) in the case of the Seller, J.P. Morgan Mortgage Acquisition Corp., 270 Park Avenue, New York, New York 10017, telecopy number: (212) 834-3850, Attention: J.P. Morgan Alternative Loan Trust 2005-S1, (c) in the case of the Master Servicer or the Securities Administrator, Wells Fargo Bank, N.A., P.O. Box 98, Columbia, Maryland 21046 (or, for overnight deliveries, 9062 Old Annapolis Road, Columbia, Maryland  21045), telecopy number (410) 715-2380, Attention: J.P. Morgan Alternative Loan Trust 2005-S1 and (d) In the case of the Trustee, its Corporate Trust Office, or as to each party such other address as may hereafter be furnished by such party to the other parties in writing.  All demands, notices and communications to a party hereunder shall be in writing and shall be deemed to have been duly given when delivered to such party at the relevant address, facsimile number or electronic mail address set forth above or at such other address, facsimile number or electronic mail address as such party may designate from time to time by written notice in accordance with this Section 11.07.

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 severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates or the rights of the Holders thereof.

SECTION 11.09

Indulgences; No Waivers.  

Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

SECTION 11.10

Headings Not To Affect Interpretation.  

The headings contained in this Agreement are for convenience of reference only, and they shall not be used in the interpretation hereof.

SECTION 11.11

Benefits of Agreement.  

Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties to this Agreement and their successors hereunder and the Holders of the Certificates, any benefit or any legal or equitable right, power, remedy or claim under this Agreement, except to the extent specified in Section 11.15.

SECTION 11.12

Special Notices to the Rating Agencies.  

(a)

The Depositor shall give prompt notice to the Rating Agencies of the occurrence of any of the following events of which it has notice:

(i)

any amendment to this Agreement pursuant to Section 11.03;

(ii)

any Assignment by the Master Servicer of its rights hereunder or delegation of its duties hereunder;

(iii)

the occurrence of any Event of Default described in Section 6.14;

(iv)

any notice of termination given to the Master Servicer pursuant to Section 6.14 and any resignation of the Master Servicer hereunder;

(v)

the appointment of any successor to any Master Servicer pursuant to Section 6.14;

(vi)

the making of a final payment pursuant to Section 7.02; and

(vii)

any termination of the rights and obligations of any Servicer under the applicable Purchase and Servicing Agreement.

(b)

All notices to the Rating Agencies provided for this Section shall be in writing and sent by first class mail, telecopy or overnight courier, as follows:

If to S&P’s, to:

Standard & Poor’s Ratings Services,

a division of The McGraw-Hill Companies, Inc.

55 Water Street

New York, New York 10041

Attention:  Residential Mortgages

If to Fitch Ratings, to:

Fitch, Inc.

One State Street Plaza

New York, New York 10004

Attention: Residential Mortgages

If to DBRS, to:

Dominion Bond Rating Service, Inc.

One Exchange Plaza

55 Broadway, 15th Floor

New York, New York 10006

(c)

The Securities Administrator shall make available to the Rating Agencies reports prepared pursuant to Section 4.04.  In addition, the Securities Administrator shall, at the expense of the Trust Fund, make available to each Rating Agency such information as such Rating Agency may reasonably request regarding the Certificates or the Trust Fund, to the extent that such information is reasonably available to the Securities Administrator.

SECTION 11.13

Conflicts.  

To the extent that the terms of this Agreement conflict with the terms of any Purchase and Servicing Agreement, the related Purchase and Servicing Agreement shall govern.

SECTION 11.14

Counterparts.  

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same instrument.

SECTION 11.15

No Petitions.  

The Trustee, the Securities Administrator and the Master Servicer (not in its individual corporate capacity, but solely as Master Servicer hereunder), by entering into this Agreement, hereby covenant and agree that they shall not at any time institute against the Depositor, or join in any institution against the Depositor of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to this Agreement or any of the documents entered into by the Depositor in connection with the transactions contemplated by this Agreement.

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

J.P MORGAN ACCEPTANCE CORPORATION I,

as Depositor

By:

/s/ Rosa Hyun

Name:  Rosa Hyun

Title:  Vice President

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Trustee

By:

/s/ Lisa L. Moorehead

Name:  Lisa L. Moorehead

Title:  Assistant Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Master Servicer

By:

/s/ Darron C. Woodus

Name:  Darron C. Woodus

Title:  Assistant Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Securities Administrator

By:

/s/ Darron C. Woodus

Name:  Darron C. Woodus

Title:  Assistant Vice President

Solely for purposes of Section 2.05

accepted and agreed to by:

J.P. MORGAN MORTGAGE ACQUISITION CORP.

By:/s/ Rosa Hyun

      Name:  Rosa Hyun

Title:  Vice President

State of New York

)

) ss.:

County of New York

)

On the 29th day of November 2005, before me, a notary public in and for the State of New York, personally appeared Rosa Hyun known to me who, being by me duly sworn, did depose and say that she is the Vice President of J.P. Morgan Acceptance Corporation I one of the parties that executed the foregoing instrument; and that she signed her name thereto by order of the Board of Directors.

/s/ Sarah E. Hay

Notary Public

[Notarial Seal]

State of North Carolina

)

) ss.:

County of Mecklenburg

)

On the 23 day of November 2005, before me, a notary public in and for the State of North Carolina, personally appeared Lisa L. Moorehead known to me who, being by me duly sworn, did depose and say that she is the Assistant Vice President of Wachovia Bank, National Association one of the parties that executed the foregoing instrument; and that she signed her name thereto by order of the Board of Directors.

/s/ Sandi L. Lee

Notary Public

[Notarial Seal]

State of Maryland

)

) ss.:

City of Baltimore

)

On the 29th day of November 2005, before me, a notary public in and for the State of North Carolina, personally appeared Darron C. Woodus known to me who, being by me duly sworn, did depose and say that s/he is the Assistant Vice President of Wells Fargo Bank, N.A. one of the parties that executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors.

/s/ Graham M. Oglesby

Notary Public

[Notarial Seal]

State of New York

)

) ss.:

County of New York

)

On the 29th day of November 2005, before me, a notary public in and for the State of New York, personally appeared Rosa Hyun known to me who, being by me duly sworn, did depose and say that she is the Vice President of J.P. Morgan Acquisition Corp. one of the parties that executed the foregoing instrument; and that she signed her name thereto by order of the Board of Directors.

/s/ Sarah E. Hay

Notary Public

[Notarial Seal]

EXHIBIT A

FORMS OF CERTIFICATES

EXHIBIT B

FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)

STATE OF

)

)

ss.:

COUNTY OF

)

[NAME OF OFFICER], _________________ being first duly sworn, deposes and says:

1.

That he [she] is [title of officer] ________________________ of [name of Purchaser] _________________________________________ (the “Purchaser”), a _______________________ [description of type of entity] duly organized and existing under the laws of the [State of __________] [United States], on behalf of which he [she] makes this affidavit.

2.

That the Purchaser’s Taxpayer Identification Number is [           ].

3.

That the Purchaser is not a “disqualified organization” within the meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended (the “Code”) and will not be a “disqualified organization” as of [date of transfer], and that the Purchaser is not acquiring a Residual Certificate (as defined in the Agreement) for the account of, or as agent (including a broker, nominee, or other middleman) for, any person or entity from which it has not received an affidavit substantially in the form of this affidavit.  For these purposes, a “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 (other than an instrumentality if all of its activities are subject to tax and a majority of its board of directors is not selected by such governmental entity), any cooperative organization furnishing electric energy or providing telephone service to persons in rural areas as described in Code Section 1381(a)(2)(C), any “electing large partnership” within the meaning of Section 775 of the Code, or any organization (other than a farmers’ cooperative described in Code Section 521) that is exempt from federal income tax unless such organization is subject to the tax on unrelated business income imposed by Code Section 511.

4.

That the Purchaser either (x) is not, and on __________________ [date of transfer] will not be, an employee benefit plan or other retirement arrangement subject to Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or Section 4975 of the Code (“Code”), (collectively, a “Plan”) or a person acting on behalf of any such Plan or investing the assets of any such Plan to acquire a Residual Certificate; (y) is an insurance company that is purchasing the Certificate with funds contained in an “insurance company general account” as defined in Section V(e) of Prohibited Transaction Class Exemption (“PTCE”) 95 60 and the purchase and holding of the Certificate satisfy the requirements for exemptive relief under Sections I and III of PTCE 95 60; or (z) herewith delivers to the Certificate Registrar an opinion of counsel satisfactory to the Certificate Registrar, and upon which the Certificate Registrar, the Trustee, the Master Servicer, each Servicer, the Depositor and Securities Administrator shall be entitled to rely, to the effect that the purchase or holding of such Residual Certificate by the Investor will not result in any non-exempt prohibited transactions under Title I of ERISA or Section 4975 of the Code and will not subject the Certificate Registrar, the Trustee, the Depositor, the Master Servicer, any Servicer or the Securities Administrator 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 Trust Fund or any of the above parties.

5.

That the Purchaser hereby acknowledges that under the terms of the Pooling and Servicing Agreement, dated as of November 1, 2005 (the “Agreement”), by and among J.P. Morgan Acceptance Corporation I, as Depositor, Wells Fargo Bank, N.A, as Master Servicer and as Securities Administrator, and Wachovia Bank, National Association, as Trustee with respect to J.P. Morgan Alternative Loan Trust 2005-S1, Mortgage Pass-Through Certificates, no transfer of the Residual Certificates shall be permitted to be made to any person unless the Certificate Registrar and Trustee have received a certificate from such transferee containing the representations in paragraphs 3 and 4 hereof.

6.

That the Purchaser does not hold REMIC residual securities as nominee to facilitate the clearance and settlement of such securities through electronic book-entry changes in accounts of participating organizations (such entity, a “Book-Entry Nominee”).

7.

That the Purchaser does not have the intention to impede the assessment or collection of any federal, state or local taxes legally required to be paid with respect to such Residual Certificate.

8.

That the Purchaser will not transfer a Residual Certificate to any person or entity (i) as to which the Purchaser has actual knowledge that the requirements set forth in paragraph 3, paragraph 6 or paragraph 10 hereof are not satisfied or that the Purchaser has reason to believe does not satisfy the requirements set forth in paragraph 7 hereof, and (ii) without obtaining from the prospective Purchaser an affidavit substantially in this form and providing to the Trustee and the Certificate Registrar a written statement substantially in the form of Exhibit C to the Agreement.

9.

That the Purchaser understands that, as the holder of a Residual Certificate, the Purchaser may incur tax liabilities in excess of any cash flows generated by the interest and that it intends to pay taxes associated with holding such Residual Certificate as they become due.

10.

That the Purchaser (i) is not a Non-U.S. Person or (ii) is a Non-U.S. Person that holds a Residual Certificate in connection with the conduct of a trade or business within the United States and has furnished the transferor, the Trustee and the Certificate Registrar with an effective Internal Revenue Service Form W 8ECI (Certificate of Foreign Person’s Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United States) or successor form at the time and in the manner required by the Code or (iii) is a Non-U.S. Person that has delivered to the transferor, the Trustee and the Certificate Registrar an opinion of a nationally recognized tax counsel to the effect that the transfer of such Residual Certificate to it is in accordance with the requirements of the Code and the regulations promulgated thereunder and that such transfer of a Residual Certificate will not be disregarded for federal income tax purposes.  “Non-U.S. Person” means an individual, corporation, partnership or other person other than (i) a citizen or resident of the United States; (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any state thereof, including for this purpose, the District of Columbia; (iii) an estate that is subject to U.S. federal income tax regardless of the source of its income; (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States trustees have authority to control all substantial decisions of the trust; and, (v) to the extent provided in Treasury regulations, certain trusts in existence on August 20, 1996 that are treated as United States persons prior to such date and elect to continue to be treated as United States persons.

11.

The Purchaser will not cause income from the Residual Certificate to be attributable to a foreign permanent establishment or fixed base of the Purchaser or another U.S. taxpayer.

12.

That the Purchaser agrees to such amendments of the Pooling and Servicing Agreement as may be required to further effectuate the restrictions on transfer of any Residual Certificate to such a “disqualified organization,” an agent thereof, a Book-Entry Nominee, or a person that does not satisfy the requirements of paragraph 7 and paragraph 10 hereof.

13.

That the Purchaser consents to the designation of the Securities Administrator to act as agent for the “tax matters person” of each REMIC created by the Trust Fund pursuant to the Pooling and Servicing Agreement.

IN WITNESS WHEREOF, the Purchaser has caused this instrument to be executed on its behalf, pursuant to authority of its Board of Directors, by its [title of officer] this _____ day of __________ 20__.

                                                                 

[name of Purchaser]

By:

                                                          

Name:

Title:

Personally appeared before me the above-named [name of officer] ________________, known or proved to me to be the same person who executed the foregoing instrument and to be the [title of officer] _________________ of the Purchaser, and acknowledged to me that he [she] executed the same as his [her] free act and deed and the free act and deed of the Purchaser.

Subscribed and sworn before me this _____ day of __________ 20__.

NOTARY PUBLIC

                                                      

COUNTY OF                               

STATE OF                                   

My commission expires the _____ day of __________ 20__.

EXHIBIT C

FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)

____________________________

Date

Re:

J.P. Morgan  Alternative Loan Trust 2005-S1

Mortgage Pass-Through Certificates

_______________________ (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 information contained in paragraph 7 thereof 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 a Residual Certificate.  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,

                                                            

Name:

Title:

EXHIBIT D

[RESERVED]

EXHIBIT E

LIST OF PURCHASE AND SERVICING AGREEMENTS

1.

Flow Mortgage Loan Purchase, Warranties and Servicing Agreement, dated as of January 1, 2004, as amended by Amendment No. 1 thereto, dated as of June 1, 2004 and Amendment No. 2 thereto, dated as of June 1, 2005, between J.P. Morgan Mortgage Acquisition Corp., as purchaser, and Chase Manhattan Mortgage Corporation, as seller and servicer, as modified by the related Acknowledgement.

2.

The Flow Mortgage Loan Purchase, Warranties and Servicing Agreement, dated as of January 1, 2005, between J.P. Morgan Mortgage Acquisition Corp., as purchaser, Chase Home Finance, LLC as a seller and a servicer, and JPMorgan Chase Bank, National Association, as a seller and a servicer, as modified by the related Acknowledgement.

3.

Mortgage Loan Purchase And Warranties Agreement, dated as of December 1, 2001, between Suntrust Mortgage, Inc. and Chase Manhattan Mortgage Corporation, together with Servicing Agreement, dated as of December 1, 2001, by and between Chase Manhattan Mortgage Corporation and Suntrust Mortgage, Inc. and the Assignment, Assumption And Recognition Agreement, dated April 16, 2004 among Suntrust Mortgage, Inc., Chase Manhattan Mortgage Corporation and J.P. Morgan Mortgage Acquisition Corp.

4.

Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of April 29, 2003, between J.P. Morgan Mortgage Acquisition Corp., as the Purchaser, PHH Mortgage Corporation (formerly known as Cendant Mortgage Corporation) and Bishop’s Gate Residential Mortgage Trust (formerly known as Cendant Residential Mortgage Trust) as the Sellers as amended by Amendment No. 1 thereto, dated as of September 1, 2003 and further amended by Amendment No. 2 thereto, dated as of May 26, 2005.

5.

Mortgage Loan Sale Agreement dated and effective as of August 1, 2005 between J.P. Morgan Mortgage Acquisition Corp. and GreenPoint Mortgage Funding, Inc., as seller and servicer.

EXHIBIT F

LIST OF CUSTODIAL AGREEMENTS

6.

FLOW CUSTODIAL AGREEMENT, DATED AS OF APRIL 23, 2004 BETWEEN J.P. MORGAN MORTGAGE ACQUISITION CORP. AND JPMORGAN CHASE BANK.

7.

CUSTODIAL AGREEMENT, dated as of July 24, 2003 among J.P. MORGAN MORTGAGE ACQUISITION CORP., CHASE MANHATTAN MORTGAGE CORPORATION and JPMORGAN CHASE BANK.

8.

CUSTODIAL AGREEMENT, dated as of April 1, 2003 made by and between J.P. MORGAN MORTGAGE ACQUISITION CORP., CENDANT MORTGAGE CORPORATION and BISHOP’S GATE RESIDENTIAL MORTGAGE TRUST (formerly known as CENDANT RESIDENTIAL MORTGAGE TRUST) and JPMORGAN CHASE BANK.

9.

CUSTODIAL AGREEMENT, dated as of May 1, 2005 among J.P. MORGAN MORTGAGE ACQUISITION CORP., SUNTRUST MORTGAGE, INC. and JPMORGAN CHASE BANK.

EXHIBIT G

[RESERVED]

EXHIBIT H

FORM OF RULE 144A TRANSFER CERTIFICATE

Re:

J.P. Morgan Alternative Loan Trust 2005-S1,

Mortgage Pass-Through Certificates

Reference is hereby made to the Pooling and Servicing Agreement, dated as of November 1, 2005 (the “Pooling and Servicing Agreement”), by and among J.P. Morgan Acceptance Corporation I, as Depositor, Wells Fargo Bank, N.A., as Master Servicer and as Securities Administrator, and Wachovia Bank, National Association, as Trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Pooling and Servicing Agreement.

This letter relates to $__________ initial Certificate Balance of Class _____ Certificates which are held in the form of Definitive Certificates registered in the name of  ______________ (the “Transferor”). The Transferor has requested a transfer of such Definitive Certificates for Definitive Certificates of such Class registered in the name of [insert name of transferee].

In connection with such request, and in respect of such Certificates, the Transferor hereby certifies that such Certificates are being transferred in accordance with (i) the transfer restrictions set forth in the Pooling and Servicing Agreement and the Certificates and (ii) Rule 144A under the Securities Act to a purchaser that the Transferor reasonably believes is a “qualified institutional buyer” within the meaning of Rule 144A purchasing for its own account or for the account of a “qualified institutional buyer,” which purchaser is aware that the sale to it is being made in reliance upon Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction.

This certificate and the statements contained herein are made for your benefit and the benefit of the Underwriter, the Certificate Registrar and the Depositor.

_________________________

[Name of Transferor]

By:

_____________________

Name:

Title:

Dated: ___________, ____

EXHIBIT I

FORM OF PURCHASER’S LETTER FOR

INSTITUTIONAL ACCREDITED INVESTOR

Date

Dear Sirs:

In connection with our proposed purchase of $______________ principal amount of J.P. Morgan Alternative Loan Trust 2005-S1, Mortgage Pass-Through Certificates (the “Privately Offered Certificates”) of J.P. Morgan Acceptance Corporation I (the “Depositor”), we confirm that:

(1)

We understand that the Privately Offered Certificates have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Privately Offered Certificates within two years of the later of the date of original issuance of the Privately Offered Certificates or the last day on which such Privately Offered Certificates are owned by the Depositor or any affiliate of the Depositor we will do so only (A) to the Depositor, (B) to “qualified institutional buyers” (within the meaning of Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act (“QIBs”), (C) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (D) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act that is not a QIB (an “Institutional Accredited Investor”) which, prior to such transfer, delivers to the Certificate Registrar under the Pooling and Servicing Agreement, dated as of  November 1, 2005, by and among J.P. Morgan Acceptance Corporation I, as Depositor, Wells Fargo Bank, National Association, as Master Servicer and JPMorgan Chase Bank as Securities Administrator, and Wachovia Bank, National Association, as Trustee, a signed letter in the form of this letter; and we further agree, in the capacities stated above, to provide to any person purchasing any of the Privately Offered Certificates from us a notice advising such purchaser that resales of the Privately Offered Certificates are restricted as stated herein.

(2)

We understand that, in connection with any proposed resale of any Privately Offered Certificates to an Institutional Accredited Investor, we will be required to furnish to the Certificate Registrar a certification from such transferee in the form hereof to confirm that the proposed sale is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. We further understand that the Privately Offered Certificates purchased by us will bear a legend to the foregoing effect.

(3)

We are acquiring the Privately Offered Certificates for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Privately Offered Certificates, and we and any account for which we are acting are each able to bear the economic risk of such investment.

(4)

We are an Institutional Accredited Investor and we are acquiring the Privately Offered Certificates purchased by us for our own account or for one or more accounts (each of which is an Institutional Accredited Investor) as to each of which we exercise sole investment discretion.

(5)

We have received such information as we deem necessary in order to make our investment decision.

(6)

If we are acquiring ERISA-Restricted Certificates, we understand that in accordance with ERISA, the Code and the Exemption, no Plan and no person acting on behalf of such a Plan may acquire such Certificate except in accordance with Section 3.03(d) of the Pooling and Servicing Agreement.

Terms used in this letter which are not otherwise defined herein have the respective meanings assigned thereto in the Pooling and Servicing Agreement.

You and the Certificate Registrar are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

Very truly yours,

___________________________

[Purchaser]

By:

_____________________

Name:

Title:

EXHIBIT J

FORM OF ERISA TRANSFER AFFIDAVIT

STATE OF NEW YORK

)

)

ss.:

COUNTY OF NEW YORK

)

The undersigned, being first duly sworn, deposes and says as follows:

1.

The undersigned is the ______________________ of ______________ (the “Investor”), a [corporation duly organized] and existing under the laws of __________, on behalf of which he makes this affidavit.

2.

The Investor either (x) is not, and on ___________ [date of transfer] will not be, an employee benefit plan or other retirement arrangement subject to Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), (collectively, a “Plan”) or a person acting on behalf of any such Plan or investing the assets of any such Plan; (y) if the Certificate has been the subject of an ERISA-Qualifying Underwriting, is an insurance company that is purchasing the Certificate with funds contained in an “insurance company general account” as defined in Section V(e) of Prohibited Transaction Class Exemption (“PTCE”) 95 60 and the purchase and holding of the Certificate satisfy the requirements for exemptive relief under Sections I and III of PTCE 95 60; or (z) herewith delivers to the Certificate Registrar an opinion of counsel satisfactory to the Certificate Registrar, and upon which the Certificate Registrar, the Trustee, the Master Servicer, any Servicer, the Depositor and the Securities Administrator shall be entitled to rely, to the effect that the purchase or holding of such Certificate by the Investor will not constitute or result in any non-exempt prohibited transactions under Title I of ERISA or Section 4975 of the Code and will not subject the Certificate Registrar, the Trustee, the Master Servicer, the Depositor, the Securities Administrator or any Servicer 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 Trust Fund or the above parties.

3.

The Investor hereby acknowledges that under the terms of the Pooling and Servicing Agreement, dated as of November 1, 2005 (the “Agreement”), by and among J.P. Morgan Acceptance Corporation I, as Depositor, Wells Fargo Bank, National Association, as Master Servicer and as Securities Administrator, and Wachovia Bank, National Association, as Trustee, no transfer of the ERISA-Restricted Certificates shall be permitted to be made to any person unless the Certificate Registrar has received a certificate from such transferee in the form hereof.

IN WITNESS WHEREOF, the Investor has caused this instrument to be executed on its behalf, pursuant to proper authority, by its duly authorized officer, duly attested, this ____ day of _______________ 20___.

_________________________

[Investor]

By:

____________________

Name:

Title:

ATTEST:

___________________________

STATE OF

)

)

ss.:

COUNTY OF

)

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 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

My commission expires the

_____ day of __________ 20___.

EXHIBIT K

FORM OF LETTER OF REPRESENTATIONS

WITH THE DEPOSITORY TRUST COMPANY

[On File with Securities Administrator] 

EXHIBIT L

FORM OF CUSTODIAN CERTIFICATION

J.P. Morgan Acceptance Corporation I

270 Park Avenue

New York, New York 10017

Wachovia Bank, National Association, as Trustee

401 South Tryon Street, 12th Floor (NC 1179)

Charlotte, North Carolina, 28288-1179

Attn:  Corporate Trust Structured Finance

J.P. Morgan Alternative Loan Trust 2005-S1

RE:

J.P. Morgan Alternative Loan Trust 2005-S1, Mortgage Pass-Through Certificates

Ladies and Gentlemen:

Reference is hereby made to the Pooling and Servicing Agreement, dated as of November 1, 2005 (the “Pooling and Servicing Agreement”), among J.P. Morgan Acceptance Corporation I, as depositor, Wells Fargo Bank, N.A., as master servicer and as securities administrator, and Wachovia Bank, National Association, as trustee.  Capitalized terms used but not defined herein shall have the meanings provided in the Pooling and Servicing Agreement.

In accordance with the provisions of Section 2.01 of the Pooling and Servicing Agreement, the undersigned, as the Custodian, hereby certifies that, as to each Mortgage Loan listed on the Mortgage Loan Schedule, it has reviewed the Trustee Mortgage File and has determined that except as set forth in the attached exception report (a) all documents required to be delivered to it pursuant to Section 2.01 (a) (i) through (ix) of the Pooling and Servicing Agreement are in its possession; provided, that the Custodian has no obligation to verify the receipt of any documents the existence of which was not made known to the Custodian by the Trustee Mortgage File, and provided, further, that the Custodian has no obligation to determine whether recordation of any such modification is necessary (except as set forth in Section 2.01 of the Pooling and Servicing Agreement); (b) such documents have been reviewed by it and appear regular on their face and to relate to such Mortgage Loans; provided, however, that the Custodian makes no representation and has no responsibilities as to the authenticity of such documents, their compliance with applicable law, or the collectability of any of the Mortgage Loans relating thereto; (c) based upon its examination, and only as to the foregoing documents, the information set forth on the Mortgage Loan Schedule accurately reflects, within permitted tolerances, the information reviewed by the Custodian with respect to each Mortgage Loan; and (d) each Mortgage Note has been endorsed and each assignment has been assigned as required under Section 2.01 of the Pooling & Servicing Agreement. 

JPMORGAN CHASE BANK, N.A., as Custodian 

By:  _________________________________

Name: 

Title:  

EXHIBIT M

FORM OF INDEPENDENT ACCOUNTANTS’ REPORT

We have examined management’s assertion, included in the accompanying Management's Assertion Concerning Compliance with Wells Fargo Bank, N.A., (“WFBNA”) Minimum Master Servicing Standards, that WFBNA has complied with the minimum master servicing standards in their role as Master Servicer as of and for the year ended December 31, 20[___].  Such assertions were examined relating to those series of certificates included in the attached Exhibit 1.  Management is responsible for WFBNA’s compliance with those minimum master servicing standards.  Our responsibility is to express an opinion on management’s assertion about WFBNA’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about WFBNA’s compliance with their minimum master servicing standards and performing such other procedures as we considered necessary in the circumstances.  Series of certificates subject to such procedures were selected using sampling methods, and, accordingly, we make no representations that our examination procedures were performed on a specific series of certificates as listed in the attached Exhibit 1.  We believe that our examination provides a reasonable basis for our opinion.  Our examination does not provide a legal determination on WFBNA’s compliance with their minimum master servicing standards.

In our opinion, management’s assertion that WFBNA complied with the aforementioned minimum master servicing standards as of and for the year ended December 31, 20[___], is fairly stated, in all material respects.

Report Date, 20[_____]

Wells Fargo Bank, N.A.

Exhibit 1

Pool Number

Series Name

1000

[______]

1001

[______]

Management's Assertion Concerning Compliance with

Wells Fargo Bank, N.A. Minimum Master Servicing Standards

Report Date, 20[____]

[______]

For the year ended December 31, 20[____], Wells Fargo Bank, N.A. (“WFBNA”) has complied in all material respects with our minimum master servicing standards set forth below for those loans serviced for others under servicing arrangements.  Direct servicing functions are performed by various servicers.

Our minimum standards are:

I.

RECONCILIATIONS

A.

Reconciliations shall be prepared on a monthly basis for all Certificate Accounts. These reconciliations shall:

1)

Be mathematically accurate.

2)

Be prepared within forty-five (45) calendar days after each Certificate Account’s statement cutoff date

3)

Be reviewed and approved by someone other than the person who prepared the reconciliation, and document explanations for reconciling items.

B.

Reconciling items shall be resolved within one-hundred eighty (180) calendar days of their original identification.

C.

Each certificate account shall be maintained as prescribed by applicable pooling and servicing agreements.

II.

SERVICER REMITTANCES

A.

Remittances for mortgage payments and payoffs received from servicers shall be deposited into the applicable certificate account within one business day of receipt.

B.

Remittances from servicers shall be reconciled to applicable loan records maintained by WFBNA during the appropriate accounting cycle.

C.

Reconciliations shall be performed monthly for each servicer remittance.  These reconciliations shall:

1)

Be mathematically accurate.

2)

Be prepared within thirty (30) calendar days after the cutoff date.

III.

DISBURSEMENTS

A.

Disbursements to trustees, paying agents, and investors shall be made in accordance with the applicable pooling and servicing agreements and/or the prospectus indicating how cash flows are to be allocated.

B.

Disbursements from the certificate accounts for amounts remitted to trustees, paying agents and investors, per our monthly reports to those entities, shall agree with the bank statements for the clearing accounts.

C.

Only permitted withdrawals, per the applicable pooling and servicing agreements, shall be   made from the certificate accounts.

D.

Disbursements to trustees, paying agents and investors from certificate accounts, made via wire transfer, shall be made only by authorized personnel.

IV.

INVESTOR ACCOUNTING AND REPORTING

A.

Statements to the trustees, paying agents and investors shall be provided with each monthly distribution, in accordance with applicable pooling and servicing agreements, detailing the applicable distribution activity and effect on the unpaid principal balance of the mortgage loans.

V.

MORTGAGOR LOAN ACCOUNTING

A.

Loan records maintained by WFBNA shall agree with, or reconcile to, the mortgage loan records maintained by the servicer with respect to unpaid principal balance on a monthly basis.

VI.

DELIQUENCIES

A.

Reports from servicers identifying delinquent loans shall be received and reviewed monthly.  The number and aggregate principal balances of delinquent mortgage loans contained in these reports shall be included in our monthly statements to the trustees, paying agents and investors

VII.

INSURANCE POLICIES

As of and for this same period, a fidelity bond in the amount of $[__________________] and a mortgage impairment/mortgagees errors and omissions and professional liability insurance policy in the amount of $[__________________], was in effect.

[Signature of WFBNA officer]

Name: [Name of WFBNA officer]

Title: [Title of WFBNA officer]

EXHIBIT N

TAC SCHEDULE FOR THE CLASS 2-A-6 CERTIFICATES

	Distribution Date

	TAC Balance($)

	Distribution Date

	TAC Balance($)

	Distribution Date

	TAC Balance($)

	Distribution Date

	TAC Balance($)

	 	 	 	 
	11/25/2005       34,360,900.00 

	12/25/2010       13,070,456.01 

	01/25/2016       11,365,343.51 

	02/25/2021       1,937,216.06 

	12/25/2005       33,536,822.79 

	01/25/2011       13,046,165.45 

	02/25/2016       11,333,237.86 

	03/25/2021       1,756,049.99 

	01/25/2006       32,669,642.40 

	02/25/2011       13,021,763.57 

	03/25/2016       11,300,985.05 

	04/25/2021       1,576,061.12 

	02/25/2006       31,760,135.28 

	03/25/2011       12,997,249.84 

	04/25/2016       11,268,584.42 

	05/25/2021       1,397,235.95 

	03/25/2006       30,809,127.61 

	04/25/2011       12,972,623.76 

	05/25/2016       11,236,035.29 

	06/25/2021       1,219,561.08 

	04/25/2006       29,817,494.03 

	05/25/2011       12,947,884.81 

	06/25/2016       11,203,336.98 

	07/25/2021       1,043,023.24 

	05/25/2006       28,786,156.41 

	06/25/2011       12,923,032.47 

	07/25/2016       11,170,488.80 

	08/25/2021          867,609.23 

	06/25/2006       27,716,082.40 

	07/25/2011       12,898,066.22 

	08/25/2016       11,137,490.06 

	09/25/2021          693,306.00 

	07/25/2006       26,608,283.97 

	08/25/2011       12,872,985.55 

	09/25/2016       11,104,340.08 

	10/25/2021          520,100.56 

	08/25/2006       25,503,187.38 

	09/25/2011       12,847,789.92 

	10/25/2016       11,071,038.16 

	11/25/2021          347,980.06 

	09/25/2006       24,407,245.62 

	10/25/2011       12,822,478.82 

	11/25/2016       11,037,583.61 

	12/25/2021          176,931.72 

	10/25/2006       23,321,178.03 

	11/25/2011       12,797,051.70 

	12/25/2016       11,003,975.72 

	01/25/2022              6,942.90 

	11/25/2006       22,244,895.77 

	12/25/2011       12,771,508.05 

	01/25/2017       10,970,213.80 

	02/25/2022                     

	12/25/2006       21,178,310.80 

	01/25/2012       12,745,847.31 

	02/25/2017       10,936,297.14 

	and thereafter

   0.00  

	01/25/2007       20,121,335.83 

	02/25/2012       12,720,068.97 

	03/25/2017       10,902,225.02 

	 
	02/25/2007       19,073,884.36 

	03/25/2012       12,694,172.48 

	04/25/2017       10,867,996.74 

	 
	03/25/2007       18,035,870.65 

	04/25/2012       12,668,157.29 

	05/25/2017       10,833,611.58 

	 
	04/25/2007       17,007,209.68 

	05/25/2012       12,642,022.87 

	06/25/2017       10,799,068.83 

	 
	05/25/2007       15,987,817.23 

	06/25/2012       12,615,768.66 

	07/25/2017       10,764,367.75 

	 
	06/25/2007       14,977,609.76 

	07/25/2012       12,589,394.12 

	08/25/2017       10,729,507.62 

	 
	07/25/2007       13,976,504.52 

	08/25/2012       12,562,898.70 

	09/25/2017       10,561,275.11 

	 
	08/25/2007       13,956,366.69 

	09/25/2012       12,536,281.85 

	10/25/2017       10,318,730.60 

	 
	09/25/2007       13,936,136.56 

	10/25/2012       12,509,542.99 

	11/25/2017       10,078,024.09 

	 
	10/25/2007       13,915,813.70 

	11/25/2012       12,482,681.59 

	12/25/2017       9,839,136.64 

	 
	11/25/2007       13,895,397.71 

	12/25/2012       12,455,697.07 

	01/25/2018       9,602,049.46 

	 
	12/25/2007       13,874,888.14 

	01/25/2013       12,428,588.87 

	02/25/2018       9,366,743.93 

	 
	01/25/2008       13,854,284.56 

	02/25/2013       12,401,356.43 

	03/25/2018       9,133,201.58 

	 
	02/25/2008       13,833,586.56 

	03/25/2013       12,373,999.17 

	04/25/2018       8,901,404.08 

	 
	03/25/2008       13,812,793.69 

	04/25/2013       12,346,516.52 

	05/25/2018       8,671,333.28 

	 
	04/25/2008       13,791,905.51 

	05/25/2013       12,318,907.91 

	06/25/2018       8,442,971.17 

	 
	05/25/2008       13,770,921.60 

	06/25/2013       12,291,172.76 

	07/25/2018       8,216,299.88 

	 
	06/25/2008       13,749,841.52 

	07/25/2013       12,263,310.49 

	08/25/2018       7,991,301.69 

	 
	07/25/2008       13,728,664.81 

	08/25/2013       12,235,320.52 

	09/25/2018       7,767,959.04 

	 
	08/25/2008       13,707,391.05 

	09/25/2013       12,207,202.26 

	10/25/2018       7,546,254.52 

	 
	09/25/2008       13,686,019.78 

	10/25/2013       12,178,955.13 

	11/25/2018       7,326,170.85 

	 
	10/25/2008       13,664,550.56 

	11/25/2013       12,150,578.53 

	12/25/2018       7,107,690.88 

	 
	11/25/2008       13,642,982.94 

	12/25/2013       12,122,071.87 

	01/25/2019       6,890,797.65 

	 
	12/25/2008       13,621,316.47 

	01/25/2014       12,093,434.56 

	02/25/2019       6,675,474.28 

	 
	01/25/2009       13,599,550.69 

	02/25/2014       12,064,665.99 

	03/25/2019       6,461,704.09 

	 
	02/25/2009       13,577,685.16 

	03/25/2014       12,035,765.56 

	04/25/2019       6,249,470.48 

	 
	03/25/2009       13,555,719.40 

	04/25/2014       12,006,732.68 

	05/25/2019       6,038,757.04 

	 
	04/25/2009       13,533,652.97 

	05/25/2014       11,977,566.73 

	06/25/2019       5,829,547.46 

	 
	05/25/2009       13,511,485.41 

	06/25/2014       11,948,267.10 

	07/25/2019       5,621,825.57 

	 
	06/25/2009       13,489,216.24 

	07/25/2014       11,918,833.18 

	08/25/2019       5,415,575.35 

	 
	07/25/2009       13,466,845.00 

	08/25/2014       11,889,264.35 

	09/25/2019       5,210,780.89 

	 
	08/25/2009       13,444,371.23 

	09/25/2014       11,859,560.01 

	10/25/2019       5,007,426.43 

	 
	09/25/2009       13,421,794.46 

	10/25/2014       11,829,719.51 

	11/25/2019       4,805,496.33 

	 
	10/25/2009       13,399,114.20 

	11/25/2014       11,799,742.25 

	12/25/2019       4,604,975.07 

	 
	11/25/2009       13,376,330.00 

	12/25/2014       11,769,627.59 

	01/25/2020       4,405,847.28 

	 
	12/25/2009       13,353,441.37 

	01/25/2015       11,739,374.91 

	02/25/2020       4,208,097.70 

	 
	01/25/2010       13,330,447.83 

	02/25/2015       11,708,983.57 

	03/25/2020       4,011,711.19 

	 
	02/25/2010       13,307,348.91 

	03/25/2015       11,678,452.93 

	04/25/2020       3,816,672.74 

	 
	03/25/2010       13,284,144.11 

	04/25/2015       11,647,782.36 

	05/25/2020       3,622,967.47 

	 
	04/25/2010       13,260,832.96 

	05/25/2015       11,616,971.22 

	06/25/2020       3,430,580.62 

	 
	05/25/2010       13,237,414.97 

	06/25/2015       11,586,018.86 

	07/25/2020       3,239,497.53 

	 
	06/25/2010       13,213,889.65 

	07/25/2015       11,554,924.64 

	08/25/2020       3,049,703.69 

	 
	07/25/2010       13,190,256.50 

	08/25/2015       11,523,687.90 

	09/25/2020       2,861,184.69 

	 
	08/25/2010       13,166,515.03 

	09/25/2015       11,492,307.99 

	10/25/2020       2,673,926.23 

	 
	09/25/2010       13,142,664.75 

	10/25/2015       11,460,784.26 

	11/25/2020       2,487,914.14 

	 
	10/25/2010       13,118,705.15 

	11/25/2015       11,429,116.04 

	12/25/2020       2,303,134.36 

	 
	11/25/2010       13,094,635.74 

	12/25/2015       11,397,302.68 

	01/25/2021       2,119,572.94 

	 

SCHEDULE A

MORTGAGE LOAN SCHEDULE

[On File]F-1/A

Exhibit 4.2  

TOWER SEMICONDUCTOR
LTD., 

AS ISSUER 

THE BANK OF NEW YORK, 

AS TRUSTEE 

AND 

HERMETIC TRUST (1975)
LTD., 

AS CO-TRUSTEE 

Indenture 

Dated as of December 15 ,
2005 

$50,000,000 

5% Subordinated
Convertible Debentures due 201 2 

TABLE OF CONTENTS 

			
			
			
			
			
	ARTICLE 1 	DEFINITIONS 	  
	 
	Section 1.01.	Definitions	1 
	 
	 
	ARTICLE 2 	ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES 
	 
	 
	Section 2.01.	Designation Amount and Issue of Note	4 
	 
	Section 2.02.	Form of Note	5 
	 
	Section 2.03.	Date and Denomination of Notes; Payments of Interest	5 
	 
	Section 2.04.	Execution of Notes	5 
	 
	Section 2.05.	Exchange and Registration of Transfer of Notes; Restrictions on Transfer	5 
	 
	Section 2.06.	Mutilated, Destroyed, Lost or Stolen Notes	7 
	 
	Section 2.07.	Temporary Notes	8 
	 
	Section 2.08.	Cancellation of Notes	8 
	 
	Section 2.09.	CUSIP Numbers	9 
	 
	 
	ARTICLE 3 	REDEMPTION OF NOTES 
	 
	 
	Section 3.01.	Redemption of Notes	9 
	 
	Section 3.02.	Redemption at Option of Issuer	9 
	 
	Section 3.03.	Notes Owned by Issuer or Its Subsidiaries	9 
	 
	 
	ARTICLE 4 	PARTICULAR COVENANTS OF THE COMPANY  
	 
	 
	Section 4.01.	Payment of Principal and Interest	10 
	 
	Section 4.02.	Maintenance of Office or Agency	10 
	 
	Section 4.03.	Appointments to Fill Vacancies in Office of the Trustee or Co-Trustee	10 
	 
	Section 4.04.	Provisions as to Paying Agent	10 
	 
	Section 4.05.	Existence	11 
	 
	Section 4.06.	Stay, Extension and Usury Laws	11 
	 
	Section 4.07.	Compliance Certificate	11 
	 
	 
	ARTICLE 5  	NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE  
	 
	 
	Section 5.01.	Noteholders' Lists	12 
	 
	Section 5.02.	Preservation and Disclosure of Lists	12 
	 
	Section 5.03.	Reports by Trustee and Co-Trustee	12 
	 
	Section 5.04.	Reports by Issuer	1 3  

			
			
			
			
			
	 
	ARTICLE 6  	REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT  
	 
	 
	Section 6.01.	Events of Default	13 
	 
	Section 6.02.	Payments of Notes on Default; Suit Therefor	14 
	 
	Section 6.03.	Application of Monies Collected by Trustees	15 
	 
	Section 6.04.	Proceedings by Noteholder	16 
	 
	Section 6.05.	Proceedings by Trustees	16 
	 
	Section 6.06.	Remedies Cumulative and Continuing	16 
	 
	Section 6.07.	Direction of Proceedings and Waiver of Defaults by Noteholders	17 
	 
	Section 6.08.	Notice of Defaults	17 
	 
	Section 6.09.	Undertaking to Pay Costs	17 
	 
	Section 6.10.	Indenture and Notes Solely Corporate Obligations	18 
	 
	 
	ARTICLE 7  	THE TRUSTEES  
	 
	 
	Section 7.01.	Duties and Responsibilities of Trustees	18 
	 
	Section 7.02.	Rights of Trustees; Reliance on Documents, Opinions, Etc	19 
	 
	Section 7.03.	No Responsibility for Recitals, Etc	21 
	 
	Section 7.04.	Monies to Be Held in Trust	21 
	 
	Section 7.05.	Compensation and Expenses of Trustees	21 
	 
	Section 7.06.	Officers' Certificate as Evidence	22 
	 
	Section 7.07.	Conflicting Interests of Trustee and the Co-Trustee	23 
	 
	Section 7.08.	Eligibility of Trustee and Co-Trustee	23 
	 
	Section 7.09.	Resignation or Removal of Trustee	23 
	 
	Section 7.10.	Acceptance by Successor Trustee	24 
	 
	Section 7.11.	Succession by Merger	25 
	 
	Section 7.12.	Preferential Collection of Claims	25 
	 
	Section 7.13.	Coordination between the Trustee and the Co-Trustee	25 
	 
	 
	ARTICLE 8  	SUBORDINATION  
	 
	 
	Section 8.01.	Agreement to Subordinate	26 
	 
	Section 8.02.	Postponement of Payments	26 
	 
	Section 8.03.	Defaults Under The Credit Facility	26 
	 
	Section 8.04.	Reserved	29 
	 
	Section 8.05.	Provisions Solely to Define Relative Rights	29 
	 
	Section 8.06.	Trustee to Effectuate Subordination	29 
	 
	Section 8.07.	No Waiver of Subordination Provisions	29 
	 
	Section 8.08.	Notice to Trustees	30 
	 
	Section 8.09.	Trustees Not Fiduciary for the Lenders under the Credit Facility	30 
	 
	Section 8.10.	Trustees' Compensation Not Prejudiced	30 
	 

- ii -

			
			
			
			
			
	 
	ARTICLE 9  	THE NOTEHOLDERS  
	 
	 
	Section 9.01.	Action by Noteholders	30 
	 
	Section 9.02.	Proof of Execution by Noteholders	30 
	 
	Section 9.03.	Who Are Deemed Absolute Owners	31 
	 
	Section 9.04.	Notes Held by Subsidiaries or Affiliates of the Issuer Disregarded	31 
	 
	Section 9.05.	Revocation of Consents, Future Holders Bound	31 
	 
	 
	ARTICLE 10  	MEETINGS OF NOTEHOLDERS  
	 
	 
	Section 10.01.	Purpose of Meetings	31 
	 
	Section 10.02.	Call of Meetings by Trustees	32 
	 
	Section 10.03.	Call of Meetings by Issuer or Noteholders	32 
	 
	Section 10.04.	Qualifications for Voting	32 
	 
	Section 10.05.	Regulations	32 
	 
	Section 10.06.	Voting	33 
	 
	Section 10.07.	No Delay of Rights by Meeting	33 
	 
	Section 10.08.	Separate Meetings of Groups of Noteholders	33 
	 
	Section 10.09.	Quorum	33 
	 
	Section 10.10.	Majority Controls	34 
	 
	 
	ARTICLE 11  	SUPPLEMENTAL INDENTURES  
	 
	 
	Section 11.01.	Supplemental Indentures Without Consent of Noteholders	34 
	 
	Section 11.02.	Supplemental Indenture with Consent of Noteholders	35 
	 
	Section 11.03.	Effect of Supplemental Indenture	35 
	 
	Section 11.04.	Notation on Notes	35 
	 
	Section 11.05.	Evidence of Compliance of Supplemental Indenture to Be Furnished to Trustees	36 
	 
	 
	ARTICLE 12  	CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE  
	 
	 
	Section 12.01.	Issuer May Consolidate on Certain Terms	36 
	 
	Section 12.02.	Successor to Be Substituted	36 
	 
	Section 12.03.	Opinion of Counsel to Be Given to Trustees	36 
	 
	 
	ARTICLE 13  	SATISFACTION AND DISCHARGE OF INDENTURE  
	 
	 
	Section 13.01.	Discharge of Indenture	37 
	 
	Section 13.02.	Deposited Monies to Be Held in Trust by Trustees	37 
	 
	Section 13.03.	Paying Agent to Repay Monies Held	37 
	 
	Section 13.04.	Return of Unclaimed Monies	37 
	 
	Section 13.05.	Reinstatement	37 
	 

- iii -

			
			
			
			
			
	 
	ARTICLE 14  	CONVERSION OF NOTES  
	 
	 
	Section 14.01.	Right to Convert	38 
	 
	Section 14.02.	Exercise of Conversion Privilege; Issuance of Ordinary Shares on Conversion; No
	 	Adjustment for Interest or Dividends	38 
	 
	Section 14.03.	Conversion Price	38 
	 
	Section 14.04.	Adjustment of Conversion Price	39 
	 
	Section 14.05.	Effect of Reclassification, Consolidation, Merger or Sale	41 
	 
	Section 14.06.	Reserved	42 
	 
	Section 14.07.	Reservation of Shares, Shares to Be Fully Paid; Compliance with Governmental
	 	Requirements, Listing of Ordinary Shares	42 
	 
	Section 14.08.	Responsibility of Trustees	42 
	 
	Section 14.09.	Notice to Holders Prior to Certain Actions	43 
	 
	Section 14.10.	Rights Issued in Respect of Ordinary Shares Issued Upon Conversions	43 
	 
	 
	ARTICLE 15  	MISCELLANEOUS PROVISIONS  
	 
	 
	Section 15.01.	Provisions Binding on Issuer's Successors	43 
	 
	Section 15.02.	Official Acts by Successor Corporation	43 
	 
	Section 15.03.	Addresses for Notices, Etc	44 
	 
	Section 15.04.	Governing Law	44 
	 
	Section 15.05.	Evidence of Compliance with Conditions Precedent, Certificates to Trustees	44 
	 
	Section 15.06.	Legal Holidays	45 
	 
	Section 15.07.	Trust Indenture Act	45 
	 
	Section 15.08.	No Security Interest Created	45 
	 
	Section 15.09.	No limitation on the Issuer's Future Financings	45 
	 
	Section 15.10.	Benefits of Indenture	45 
	 
	Section 15.11.	Table of Contents, Headings, Etc	45 
	 
	Section 15.12.	Authenticating Agent	45 
	 
	Section 15.13.	Execution in Counterparts	46 
	 
	Section 15.14.	Severability	46 

- iv -

INDENTURE 

INDENTURE dated as of December 15 ,
2005 by and among Tower Semiconductor Ltd., a company with limited liability incorporated
under the laws of Israel (the “Issuer”), The Bank of New York, a New York
banking corporation, as trustee (the “Trustee”) and Hermetic Trust (1975)
Ltd., an Israeli company, as co-trustee (the “Co-Trustee”, and, together
with the Trustee, the “Trustees”). 

WITNESSETH: 

        WHEREAS,
for its lawful corporate purposes, the Issuer has duly authorized the issue of its 5%
Subordinated Convertible Debentures due 201 2 (the “Notes”), in an
aggregate principal amount not to exceed $50,000,000 and to provide the terms and
conditions upon which the Notes are to be authenticated, issued and delivered, the Issuer
has duly authorized the execution and delivery of this Indenture; and 

        WHEREAS,
the Notes, the certificate of authentication to be borne by the Notes, a form of
assignment and a form of conversion notice to be borne by the Notes are to be
substantially in the forms hereinafter provided for; and 

        WHEREAS,
all acts and things necessary to make the Notes, when executed by the Issuer and
authenticated and delivered by the Trustee or a duly authorized authenticating agent, as
in this Indenture provided, the valid, binding and legal obligations of the Issuer, and to
constitute this Indenture a valid agreement according to its terms, have been done and
performed, and the execution of this Indenture and the issue hereunder of the Notes have
in all respects been duly authorized, 

        NOW,
THEREFORE, THIS INDENTURE WITNESSETH: 

That in order to declare the terms
and conditions upon which the Notes are, and are to be, authenticated, issued and
delivered, and in consideration of the premises and of the purchase and acceptance of the
Notes by the holders thereof, the Issuer covenants and agrees with the Trustees for the
equal and proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows: 

ARTICLE 1 

DEFINITIONS 

             Section 1.01.
          Definitions. The terms defined in this Section 1.01 (except as
          herein otherwise expressly provided or unless the context otherwise requires)
          for all purposes of this Indenture and of any indenture supplemental hereto
          shall have the respective meanings specified in this Section 1.01. All
          other terms used in this Indenture that are defined in the Trust Indenture Act
          or which are by reference therein defined in the Securities Act (except as
          herein otherwise expressly provided or unless the context otherwise requires)
          shall have the meanings assigned to such terms in the Trust Indenture Act and in
          the Securities Act as in force at the date of the execution of this Indenture.
          The words “herein”, “hereof”,
          “hereunder” and words of similar import refer to this Indenture
          as a whole and not to any particular Article, Section or other Subdivision. The
          terms defined in this Article include the plural as well as the singular. 

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

        “Articles
of Association” means the Issuer’s Amended Articles of Association adopted
by the shareholders’ meeting of the Issuer on November 14, 2000 as it may have been
and may be amended from time to time. 

        “Bank
Payment Date” means a payment date of interest and/or principal to the Lenders
under the Credit Facility. 

        “Board
of Directors” means the Board of Directors of the Issuer or a committee of such
Board duly authorized to act for it hereunder. 

        “Business
Day” means any day on which banking institutions in London, New York and the
State of Israel are generally open for business. 

        “Co-Trustee”
means Hermetic Trust (1975) Ltd. and its successors and any corporation resulting from or
surviving any consolidation or merger to which it or its successors may be a party and any
successor co-trustee at any time serving as successor or co-trustee hereunder. 

        “Commission”
means the Securities and Exchange Commission, as from time to time constituted, created
under the Exchange Act, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time. 

        “Conversion
Price” has the meaning specified in Section 14.03. 

        “Corporate
Trust Office”, or other similar term, means the designated office of the Trustee
at which at any particular time its corporate trust business as it relates to this
Indenture shall be administered, which office is, at the date as of which this Indenture
is dated, located at One Canada Square, London E14 5AL, United Kingdom. 

        “Credit
Facility” means the credit facility agreement dated January 18, 2001 made between
the Issuer, as borrower, and Bank Hapoalim B.M and Bank Leumi Le-Israel Ltd., as lenders,
as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time. 

        “Credit
Facility Event of Default” has the meaning specified in Section 8.03. 

        “default”
means any event that is, or after notice or passage of time, or both, would be, an Event
of Default. 

        “Event
of Default” means any event specified in Section 6.01 as an Event of
Default. 

        “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as in effect from time to time. 

        “Immediate
Report” means a report which is referred to in Section 30 of the Securities
Regulations (Periodic and Immediate Reports) – 1970, regulations promulgated under
the Securities Law. 

        “Indenture”
means this instrument as originally executed or, if amended or supplemented as herein
provided, as so amended or supplemented. 

        “interest”
means, when used with reference to the Notes, any interest payable under the terms of the
Notes. 

        “Issuer”
means the corporation named as the “Issuer” in the first paragraph of
this Indenture, and, subject to the provisions of Article 12 and Section 14.05,
shall include its successors and assigns. 

        “Lender”
means a lender under the Credit Facility from time to time. 

        “ISA”
means the Israel Securities Authority. 

- 2 -

        “NIS” means
New Israeli Shekels, the lawful currency of the State of Israel. 

        “non-electing
share” has the meaning specified in Section 14.05. 

        “Note”
or “Notes” means any Note or Notes, as the case may be, authenticated and
delivered under this Indenture. 

        “Note
register” has the meaning specified in Section 2.05. 

        “Note registrar”
has the meaning specified in Section 2.05. 

        “Noteholder”
or “holder” as applied to any Note, or other similar terms (but excluding
the term “beneficial holder”), means any Person in whose name at the time
a particular Note is registered on the Note registrar’s books. 

        “Officers’
Certificate”, when used with respect to the Issuer, means a certificate signed by
the Chairman of the Board, the Chief Executive Officer, the President or any Vice
President (whether or not designated by a number or numbers or word or words added before
or after the title “Vice President”), the Treasurer or any Assistant
Treasurer, or the Secretary of the Issuer. 

        “Opinion
of Counsel” means an opinion in writing signed by legal counsel, who may be an
employee of or counsel to the Issuer, or other counsel reasonably acceptable to the
Trustee. 

        “Ordinary
Shares” means any stock of any class of the Issuer which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Issuer and which is not subject to
redemption by the Issuer. Subject to the provisions of Section 14.05, however, shares
issuable on conversion of Notes shall include only shares of the class designated as
ordinary shares of the Issuer at the date of this Indenture (namely, the Ordinary Shares,
par value NIS 1.00) or shares of any class or classes resulting from any reclassification
or reclassifications thereof and which have no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Issuer and which are not subject to redemption (other than as provided
in the Articles of Association) by the Issuer; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then so
issuable on conversion shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications. 

        “outstanding”,
when used with reference to Notes and subject to the provisions of Section 9.04,
means, as of any particular time, all Notes authenticated and delivered by the Trustee
under this Indenture, except: 

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

                    

               	 	(b) 	
                    Notes, or portions thereof, for the redemption of which monies in the necessary
                    amount shall have been deposited in trust with the Trustee or with any paying
                    agent (other than the Issuer); 

                    

               	 	(c) 	
                    Notes in lieu of which, or in substitution for which, other Notes shall have
                    been authenticated and delivered pursuant to the terms of Section 2.06; and 

                    

               	 	(d) 	
                    Notes converted into Ordinary Shares pursuant to Article 14 and Notes
                    deemed not outstanding pursuant to Article 3. 

                    

        “Person”
means a corporation, an association, a partnership, a limited liability company, an
individual, a joint venture, a joint stock company, a trust, an unincorporated
organization or a government or an agency or a political subdivision thereof. 

- 3 -

        “Responsible
Officer” means, when used with respect to the Trustee or the Co-Trustee, any
officer within the corporate trust department of the Trustee or the Co-Trustee, including
any vice president, assistant vice president, assistant treasurer, trust officer or any
other officer of the Trustee or the Co-Trustee who customarily performs functions similar
to those performed by the persons who at the time shall be such officers, respectively, or
to whom any corporate trust matter is referred because of such person’s knowledge of,
and familiarity with, the particular subject and who shall have direct responsibility for
the administration of this Indenture. 

        “Restricted
Securities” has the meaning specified in Section 2.05(b). 

        “Securities”
means any capital stock of the Issuer. 

        “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, as in effect from time to time. 

        “Securities
Law” means the Israel Securities Law, 5728 – 1968 and the regulations
pursuant thereto, as in effect from time to time. 

        “Significant
Subsidiary” means, as of any date of determination, a Subsidiary of the Issuer
that would constitute a “significant subsidiary” as such term is defined
under Rule 1-02(w) of Regulation S-X of the Commission as in effect on the date
of this Indenture. 

        “Six
Month Period” has the meaning specified in Section 8.03. 

        “Subsidiary”
means, with respect to any Person, (i) any corporation, association or other business
entity of which more than 50% of the total voting power of shares of capital stock or
other equity interest entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
subsidiaries of that Person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or managing general partner of which is such Person or a
subsidiary of such Person or (b) the only general partners of which are such Person
or one or more subsidiaries of such Person (or any combination thereof). 

        “TASE”
means the Tel Aviv Stock Exchange Ltd., or any successor thereto. 

        “TASE
Trading Day” means a day on which the TASE is open for trading in Ordinary
Shares. 

        “Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended, as it was in
force at the date of this Indenture, except as provided in Sections 11.03 and 15.07;
provided that if the Trust Indenture Act of 1939 is amended after the date hereof,
the term “Trust Indenture Act” shall mean, to the extent required by such
amendment, the Trust Indenture Act of 1939 as so amended. 

        “Trustee”
means The Bank of New York, and its successors and any corporation resulting from or
surviving any consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder. 

        “Trustee
Disagreement” has the meaning specified in Section 7.13(b). 

        “US
dollars” or “$” means the lawful currency of the United States
of America. 

ARTICLE 2 

ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

             Section 2.01.
          Designation Amount and Issue of Note. The Notes shall be designated as
          “5% Subordinated Convertible Debentures due 201 2 ". Notes not to
          exceed the aggregate principal amount of $50,000,000 upon the execution of this
          Indenture, or from time to time thereafter, may be executed by the Issuer in
          accordance with Section 2.04 and delivered to the Trustee for authentication,
          and the Trustee shall thereupon authenticate and deliver said Notes to or upon
          the written order of the Issuer, signed by its Chairman of the Board, Chief
          Executive Officer, Chief Financial Officer, President or any Vice President
          (whether or not designated by a number or numbers or word or words added before
          or after the title “Vice President”), and attested by the manual or
          facsimile signature of the Treasurer or any Assistant Treasurer or the
          Secretary, without any further action by the Issuer hereunder. 

- 4 -

             Section 2.02.
          Form of Note.  The Notes and the Trustee’s certificate of
          authentication to be borne by such Notes shall be substantially in the form set
          forth in Exhibit A. The terms and provisions contained in the form of Note
          attached as Exhibit A hereto shall constitute, and are hereby expressly
          made, a part of this Indenture and, to the extent applicable, the Issuer and the
          Trustee, by their execution and delivery of this Indenture, expressly agree to
          such terms and provisions and to be bound thereby. 

Any of the Notes may have such
letters, numbers or other marks of identification and such notations, legends,
endorsements or changes as the officers executing the same may approve (execution thereof
to be conclusive evidence of such approval) and as are not inconsistent with the
provisions of this Indenture or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be listed, or
conform to usage, or to indicate any special limitations or restrictions to which any
particular Notes are subject. 

             Section 2.03.
          Date and Denomination of Notes; Payments of Interest.  The Notes
          shall be issuable in registered form without coupons in denominations of $1.00
          principal amount and integral multiples thereof. Each Note shall be dated the
          date of its authentication and shall bear interest from the date specified on
          the face of the form of Note attached as Exhibit A hereto. Interest on the
          Notes will be paid only upon the maturity of the Notes or upon the early redemption of the Notes in
accordance with Section 3.02. No interest shall be payable  upon any portion of any Note which is converted into
Ordinary Shares as provided in Article 14. Interest on the Notes shall be computed on the basis of a 365 day year. 

             Section 2.04.
          Execution of Notes.  The Notes shall be signed in the name and on behalf
          of the Issuer by the manual or facsimile signature of its Chairman of the Board,
          Chief Executive Officer, Chief Financial Officer, President or any Vice
          President (whether or not designated by a number or numbers or word or words
          added before or after the title “Vice President”) and attested by the
          manual or facsimile signature of its Secretary or any of its Assistant
          Secretaries or its Treasurer or any of its Assistant Treasurers (which may be
          printed, engraved or otherwise reproduced thereon, by facsimile or otherwise).
          Only such Notes as shall bear thereon a certificate of authentication
          substantially in the form set forth on the form of Note attached as
          Exhibit A hereto, manually executed by the Trustee (or an authenticating
          agent appointed by the Trustee as provided by Section 15.11), shall be
          entitled to the benefits of this Indenture or be valid or obligatory for any
          purpose. Such certificate by the Trustee (or such an authenticating agent) upon
          any Note executed by the Issuer shall be conclusive evidence that the Note so
          authenticated has been duly authenticated and delivered hereunder and that the
          holder is entitled to the benefits of this Indenture. 

In case any officer of the Issuer who
shall have signed any of the Notes shall cease to be such officer before the Notes so
signed shall have been authenticated and delivered by the Trustee, or disposed of by the
Issuer, such Notes nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Notes had not ceased to be such officer of the Issuer,
and any Note may be signed on behalf of the Issuer by such persons as, at the actual date
of the execution of such Note, shall be the proper officers of the Issuer, although at the
date of the execution of this Indenture any such person was not such an officer. 

        Section 2.05.
               Exchange and Registration of Transfer of Notes; Restrictions on Transfer.
                (a) The Issuer shall cause to be kept at the Corporate Trust Office a
               register (the register maintained in such office and in any
other office or agency of the Issuer designated pursuant to Section 4.02 being herein
sometimes collectively referred to as the “Note register”) in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and of transfers of Notes. The Note register shall be in written
form or in any form capable of being converted into written form within a reasonably
prompt period of time. The Trustee is hereby appointed “Note registrar,”
and does hereby accept such appointment, for the purpose of registering Notes and
transfers of Notes as herein provided. The Issuer may appoint one or more co-registrars in
accordance with Section 4.02. 

- 5 -

Upon surrender for registration of
transfer of any Note to the Note registrar or any co-registrar, and satisfaction of the
requirements for such transfer set forth in this Section 2.05, the Issuer shall
execute, and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount and bearing such restrictive legends as may be required by
this Indenture. 

Notes may be exchanged for other
Notes of any authorized denominations and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at any such office or agency maintained by the
Issuer pursuant to Section 4.02. Whenever any Notes are so surrendered for exchange,
the Issuer shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Noteholder making the exchange is entitled to receive bearing registration numbers not
contemporaneously outstanding. 

All Notes issued upon any
registration of transfer or exchange of Notes shall be the valid obligations of the
Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture,
as the Notes surrendered upon such registration of transfer or exchange. 

All Notes presented or surrendered
for registration of transfer or for exchange, redemption or conversion shall (if so
required by the Issuer or the Note registrar) be duly endorsed, or be accompanied by a
written instrument or instruments of transfer in form satisfactory to the Issuer, and the
Notes shall be duly executed by the Noteholder thereof or his attorney duly authorized in
writing. 

No service charge shall be made to
any holder for any registration of, transfer or exchange of Notes, but the Issuer may
require payment by the holder of a sum sufficient to cover any tax, assessment or other
governmental charge that may be imposed in connection with any registration of transfer or
exchange of Notes. 

Neither the Issuer nor the Trustee
nor any Note registrar shall be required to exchange or register a transfer of
(a) any Notes for a period of fifteen (15) days next preceding any selection of
Notes to be redeemed, (b) any Notes surrendered for conversion pursuant to
Article 14 or (c) any Notes tendered for redemption (and not withdrawn) pursuant
to Section 3.02. 

             (b)
          Every Note that bears or is required under this Section 2.05(b) to bear the
          legend set forth in this Section 2.05(b) (together with any Ordinary Shares
          issued upon conversion of the Notes and required to bear the legend set forth in
          Section 2.05(c), collectively, the “Restricted
          Securities”) shall be subject to the restrictions on transfer set forth
          in  Sections 2.05(b) and 2.05 (c), as applicable (including those set
          forth in the legends below), unless such restrictions on transfer shall be waived
          by written consent of the Issuer, and the holder of each such Restricted
          Security, by such Note holder’s acceptance thereof, agrees to be bound by
          all such restrictions on transfer. As used in Sections 2.05(b) and 2.05(c), the
          term “transfer” encompasses any sale, pledge, loan, transfer or
          other disposition whatsoever of any Restricted Security or any interest therein. 

Until the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), any certificate evidencing such Note (and all securities issued in
exchange therefor or substitution thereof, other than Ordinary Shares, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.05(c), if
applicable) shall bear a legend in substantially the following form, unless such Note has
been sold pursuant to a registration statement that has been declared effective under the
Securities Act (and which continues to be effective at the time of such transfer), or
unless otherwise agreed by the Issuer in writing, with written notice thereof to the
Trustee: 

- 6 -

THE NOTE EVIDENCED HEREBY AND THE
ORDINARY SHARES ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF A
REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES SO OFFERED OR SOLD IN EFFECT UNDER
THE SECURITIES ACT OR AN OPINION OF COUNSEL (SATISFACTORY IN FORM AND SUBSTANCE TO THE
ISSUER) THAT SUCH REGISTRATION IS NOT REQUIRED. 

Any Note (or security issued in
exchange or substitution therefor) as to which such restrictions on transfer shall have
expired in accordance with their terms or as to conditions for removal of the foregoing
legend set forth therein have been satisfied may, upon surrender of such Note for exchange
to the Note registrar in accordance with the provisions of this Section 2.05, be
exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which
shall not bear the restrictive legend required by this Section 2.05(b). 

             (c)       
          (i) Until the expiration of the holding period applicable to sales thereof under
          Rule 144(k) under the Securities Act (or any successor provision), any
          stock certificate representing Ordinary Shares issued upon conversion of any
          Restricted Note shall bear a legend in substantially the following form, unless
          such Ordinary Shares have been registered under a registration statement that
          has been declared effective under the Securities Act (and which continues to be
          effective at the time of such exchange), or unless otherwise agreed by the
          Issuer in writing with written notice thereof to the transfer agent: 

THE ORDINARY SHARES EVIDENCED HEREBY
HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD IN THE ABSENCE OF A REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES
SO OFFERED OR SOLD IN EFFECT UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
(SATISFACTORY IN FORM AND SUBSTANCE TO THE ISSUER) THAT SUCH REGISTRATION IS NOT REQUIRED. 

Any such Ordinary Shares as to which
such restrictions on transfer shall have expired in accordance with their terms or as to
which the conditions for removal of the foregoing legend set forth therein have been
satisfied may, upon surrender of the certificates representing such shares of Ordinary
Shares for exchange in accordance with the procedures of the transfer agent for the
Ordinary Shares, be exchanged for a new certificate or certificates for a like number of
shares of Ordinary Shares, which shall not bear the restrictive legend required by this
Section 2.05(c). 

             (d)
          Any Note or Ordinary Shares issued upon the conversion of a Note that is
          purchased or owned by the Issuer or any Affiliate thereof may not be resold by
          the Issuer or such Affiliate unless registered under the Securities Act or
          resold pursuant to an exemption from the registration requirements of the
          Securities Act. 

             (e)
          The Trustee shall have no obligation or duty to monitor, determine or inquire as
          to compliance with any restrictions or transfer imposed under this Indenture or
          under applicable law with respect to any transfer of any interest in any Note
          other than to require delivery of such certificates and other documentation or
          evidence as are expressly required by, and to do so if and when expressly
          required by the terms of, this Indenture, and to examine the same to determine
          substantial compliance as to form with the express requirements hereof. 

             Section 2.06.
          Mutilated, Destroyed, Lost or Stolen Notes. In case any Note shall become
          mutilated or be destroyed, lost or stolen, the Issuer in its discretion may
          execute, and upon its written request the Trustee or an authenticating agent
          appointed by the Trustee shall authenticate and make available for delivery, a
          new Note, bearing a number not contemporaneously outstanding, in exchange and
          substitution for the mutilated Note, or in lieu of and in substitution for the
          Note so destroyed, lost or stolen. In every case, the applicant for a
          substituted Note shall furnish to the Issuer, to the Trustee and, if applicable,
          to such authenticating agent such security or indemnity as may be required by
          them to save each of them harmless for any loss, liability, cost or expense
          caused by or connected with such substitution, and, in every case of
          destruction, loss or theft, the applicant shall also furnish to the Issuer, to
          the Trustee and, if applicable, to such authenticating agent evidence to their
          satisfaction of the destruction, loss or theft of such Note and of the ownership
          thereof. 

- 7 -

Following receipt by the Trustee or
such authenticating agent, as the case may be, of satisfactory security or indemnity and
evidence, as described in the preceding paragraph, the Trustee or such authenticating
agent may authenticate any such substituted Note and make available for delivery such
Note. Upon the issuance of any substituted Note, the Issuer may require the payment by the
holder of a sum sufficient to cover any tax, assessment or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith. In case any
Note which has matured or is about to mature or is to be converted into Ordinary Shares
shall become mutilated or be destroyed, lost or stolen, the Issuer may, instead of issuing
a substitute Note, pay or authorize the payment of or convert or authorize the conversion
of the same (without surrender thereof except in the case of a mutilated Note), as the
case may be, if the applicant for such payment or conversion shall furnish to the Issuer,
to the Trustee and, if applicable, to such authenticating agent such security or indemnity
as may be required by them to save each of them harmless for any loss, liability, cost or
expense caused by or in connection with such substitution, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Issuer, the Trustee
and, if applicable, any paying agent or conversion agent evidence to their satisfaction of
the destruction, loss or theft of such Note and of the ownership thereof. 

Every substitute Note issued pursuant
to the provisions of this Section 2.06 by virtue of the fact that any Note is
destroyed, lost or stolen shall constitute an additional contractual obligation of the
Issuer, whether or not the destroyed, lost or stolen Note shall be found at any time, and
shall be entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other Notes duly
issued hereunder. To the extent permitted by law, all Notes shall be held and owned upon
the express condition that the foregoing provisions are exclusive with respect to the
replacement or payment or conversion or redemption of mutilated, destroyed, lost or stolen
Notes and shall preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the replacement or
payment or conversion or redemption of negotiable instruments or other securities without
their surrender. 

             Section 2.07.
          Temporary Notes.  Pending the preparation of Notes in certificated
          form, the Issuer may execute and the Trustee or an authenticating agent
          appointed by the Trustee shall, upon the written request of the Issuer,
          authenticate and deliver temporary Notes (printed or lithographed). Temporary
          Notes shall be issuable in any authorized denomination, and substantially in the
          form of the Notes in certificated form, but with such omissions, insertions and
          variations as may be appropriate for temporary Notes, all as may be determined
          by the Issuer. Every such temporary Note shall be executed by the Issuer and
          authenticated by the Trustee or such authenticating agent upon the same
          conditions and in substantially the same manner, and with the same effect, as
          the Notes in certificated form. Without unreasonable delay, the Issuer will
          execute and deliver to the Trustee or such authenticating agent Notes in
          certificated form and thereupon any or all temporary Notes may be surrendered in
          exchange therefor, at each office or agency maintained by the Issuer pursuant to
          Section 4.02 and the Trustee or such authenticating agent shall
          authenticate and make available for delivery in exchange for such temporary
          Notes an equal aggregate principal amount of Notes in certificated form. Such
          exchange shall be made by the Issuer at its own expense and without any charge
          therefor. Until so exchanged, the temporary Notes shall in all respects be
          entitled to the same benefits and subject to the same limitations under this
          Indenture as Notes in certificated form authenticated and delivered hereunder. 

             Section 2.08.
          Cancellation of Notes.  All Notes surrendered for the purpose of
          payment, redemption, conversion, exchange or registration of transfer shall, if
          surrendered to the Issuer or any paying agent or any Note registrar or any
          conversion agent, be surrendered to the Trustee and promptly canceled by it, or,
          if surrendered to the Trustee, shall be promptly canceled by it, and no Notes
          shall be issued in lieu thereof except as expressly permitted by any of the
          provisions of this Indenture. The Trustee shall dispose of such canceled Notes
          in accordance with its customary procedures. If the Issuer shall acquire any of
          the Notes, such acquisition shall not operate as a redemption or satisfaction of
          the indebtedness represented by such Notes unless and until the same are
          delivered to the Trustee for cancellation. 

- 8 -

             Section 2.09.
          CUSIP Numbers.  The Issuer in issuing the Notes may use CUSIP
          numbers (if then generally in use), and, if so, the Trustee shall use CUSIP
          numbers, as appropriate, in notices of redemption as a convenience to Holders;
          provided, that any such notice may state that no representation is made
          as to the correctness of such numbers either as printed on the Notes or as
          contained in any notice of a redemption and that reliance may be placed only on
          the other identification numbers printed on the Notes, and any such redemption
          shall not be affected by any defect in or omission of such numbers. The Issuer
          shall promptly notify the Trustee of any change in the CUSIP numbers. 

ARTICLE 3 

REDEMPTION OF NOTES 

             Section 3.01.
          Redemption of Notes.  Except as otherwise provided in
          Section 3.02 the Issuer may not redeem any Notes prior to
          maturity. 

             Section 3.02.
          Redemption at Option of Issuer.  The Issuer may, at its option,
announce the early redemption of the Notes or part thereof, provided that the outstanding
aggregate balance of principal on account of the Notes is equal to or less than $500,000.
In the event that the Issuer chooses to redeem the Notes pursuant to this Section 3.02,
the Issuer will redeem 100% of the Notes; no partial redemptions shall be permitted. The
Issuer will provide notice to Noteholders as set forth in this Section 3.02 below and to
the Trustees at least 30 days prior to any such redemption. Upon such early redemption,
the Issuer will pay to the Noteholders the amount of outstanding principal of the Notes
and interest accrued as of the redemption date. The Issuer will also furnish notice of any
resolution by the Board of Directors to the Commission on Form 6-K, and in an Immediate
Report in Israel as well as a notice to be published in two Israeli newspapers with wide circulation in Israel. The date
of the early redemption will be between 30 to 45 days after the date of the Issuer’s
notification. 

             Section 3. 03 .
          Notes Owned by Issuer or Its Subsidiaries.  (a) The Issuer and any
          Subsidiary thereof may purchase Notes at any time, and must provide prompt
          notice thereof to the Trustees. 

         (b)       
          Any Notes purchased by the Issuer shall be cancelled upon such purchase. 

         (c)       
          Any Notes purchased by a Subsidiary of the Issuer shall be disregarded in
          connection with any direction, consent, waiver, vote or other action of the
          Noteholders under this Indenture in accordance with Section 9.04. 

- 9 -

ARTICLE 4 

PARTICULAR COVENANTS
OF THE COMPANY 

             Section 4.01.
          Payment of Principal and Interest. 
The Issuer covenants and agrees that it will duly and punctually pay or cause to be paid the
principal and interest on each of the Notes at the places, at the respective times and in the manner
provided herein and in the Notes. 

             Section 4.02.
          Maintenance of Office or Agency. The Issuer will maintain an office or
          agency in London, England where the Notes may be surrendered for registration of
          transfer or exchange or for presentation for payment or for conversion or
          redemption and where notices and demands to or upon the Issuer in respect of the
          Notes and this Indenture may be served. The Issuer will give prompt written
          notice to the Trustees of the location, and any change in the location, of such
          office or agency not designated or appointed by the Trustee. If at any time the
          Issuer shall fail to maintain any such required office or agency or shall fail
          to furnish the Trustee with the address thereof, such presentations, surrenders,
          notices and demands may be made or served at the Corporate Trust Office or the
          principal corporate trust office of the Trustee in London which office is
          located as of the date hereof at One Canada Square, London E14 5AL. 

The Issuer may also from time to time
designate co-registrars and one or more offices or agencies where the Notes may be
presented or surrendered for any or all such purposes and may from time to time rescind
such designations. The Issuer will give prompt written notice of any such designation or
rescission and of any change in the location of any such other office or agency. 

The Issuer hereby initially appoints
The Bank of New York as principal paying agent, Note registrar and conversion agent and
each of the Corporate Trust Office and the office of agency of the Trustee shall be
considered as one such office or agency of the Issuer for each of the aforesaid purposes.
The Bank of New York hereby accepts such appointments. In addition, the Issuer hereby
initially appoints Hermetic Trust (1975) Ltd. as Co-Trustee. Hermetic Trust (1975) Ltd.
hereby accepts such appointment. 

All payments of the principal and interest on this Note shall be made only upon
the surrender of this Note at the option of the Holder at the Corporate Trust Office or at the
office or agency maintained by the Issuer for such purpose in London, England.

So long as the Trustee is the Note
registrar, the Trustee agrees to mail, or cause to be mailed, the notices set forth in
Section 7.09 and the third paragraph of Section 7.10. If co-registrars have been
appointed in accordance with this Section, the Trustee shall mail such notices only to the
Issuer and the holders of Notes it can identify from its records. 

             Section 4.03.
          Appointments to Fill Vacancies in Trustees’ Office. The Issuer,
          whenever necessary to avoid or fill a vacancy in the office of Trustee or
          Co-Trustee, will appoint, in the manner provided in Section 7.09, a Trustee
          or Co-Trustee, so that there shall at all times be a Trustee and a Co-Trustee
          hereunder. The appointment of any such entity located and operating in the State
          of Israel shall be in accordance with the applicable provisions of the
          Securities Law. 

             Section 4.04.
          Provisions as to Paying Agent. (a) If the Issuer shall appoint a paying
          agent other than the Trustee, or if the Trustee shall appoint such a paying
          agent, the Issuer will cause such paying agent to execute and deliver to the
          Trustee an instrument in which such agent shall agree with the Trustee, subject
          to the provisions of this Section 4.04: 

          	 	(1) 	
               that it will hold all sums held by it as such agent for the payment of the
               principal of or interest on the Notes in trust for the benefit of the holders of
               the Notes; 

               

          	 	(2) 	
               that it will give the Trustee notice of any failure by the Issuer to make any
               payment of the principal of or interest on the Notes when the same shall be due
               and payable; and 

               

          	 	(3) 	
               that at any time during the continuance of an Event of Default, upon request of
               the Trustee, it will forthwith pay to the Trustee all sums so held in trust. 

               

- 10 -

The Issuer shall, on or before each
due date of the principal of or interest on the Notes, deposit with the paying agent a sum
(in funds which are immediately available on the due date for such payment) sufficient to
pay such principal or interest, and (unless such paying agents is the Trustee) the Issuer
will promptly notify the Trustees of any failure to take such action; provided that
if such deposit is made on the due date, such deposit shall be received by the paying
agent by 10:00 a.m. London time, on such date. 

             (b)
          If the Issuer shall act as its own paying agent, it will, on or before each due
          date of the principal of or interest on the Notes, set aside, segregate and hold
          in trust for the benefit of the holders of the Notes a sum sufficient to pay
          such principal or interest so becoming due and will promptly notify the Trustees
          of any failure to take such action and of any failure by the Issuer to make any
          payment of the principal of or interest on the Notes when the same shall become
          due and payable. 

             (c)
          Anything in this Section 4.04 to the contrary notwithstanding, the Issuer
          may, at any time, for the purpose of obtaining a satisfaction and discharge of
          this Indenture, or for any other reason, pay or cause to be paid to the Trustee
          all sums held in trust by the Issuer or any paying agent hereunder as required
          by this Section 4.04, such sums to be held by the Trustee upon the trusts
          herein contained and upon such payment by the Issuer or any paying agent to the
          Trustee, the Issuer or such paying agent shall be released from all further
          liability with respect to such sums. 

             (d)
          Anything in this Section 4.04 to the contrary notwithstanding, the
          agreement to hold sums in trust as provided in this Section 4.04 is subject
          to Sections 13.03 and 13.04. 

No Trustee shall be responsible for
the actions of any other paying agents (including the Issuer if acting as its own paying
agent) and shall have no control of any funds held by such other paying agents. 

             Section 4.05.
          Existence. Subject to Article 12, the Issuer will do or cause to be
          done all things necessary to preserve and keep in full force and effect its
          existence and rights (charter and statutory); provided that the Issuer
          shall not be required to preserve any such right if the Issuer shall determine
          that the preservation thereof is no longer desirable in the conduct of the
          business of the Issuer and that the loss thereof is not disadvantageous in any
          material respect to the Noteholders. 

        Section
4.06. Stay, Extension and Usury Laws. The Issuer covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or
other law which would prohibit or forgive the Issuer from paying all or any portion of the
principal of or interest on the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the performance of this
Indenture and the Issuer (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though no such
law had been enacted. 

        Section
4.07. Compliance Certificate. The Issuer shall deliver to the Trustees, within one
hundred twenty (120) days after the end of each fiscal year of the Issuer, a
certificate signed by either the principal executive officer, principal financial officer
or principal accounting officer of the Issuer, stating whether or not to the best
knowledge of the signer thereof the Issuer is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the Issuer shall be
in default, specifying all such defaults and the nature and the status thereof of which
the signer may have knowledge. 

- 11 -

The Issuer will deliver to the
Trustees, forthwith upon becoming aware of (i) any default in the performance or
observance of any covenant, agreement or condition contained in this Indenture, or
(ii) any Event of Default, an Officers’ Certificate specifying with
particularity such default or Event of Default and further stating what action the Issuer
has taken, is taking or proposes to take with respect thereto. 

Any notice required to be given under
this Section 4.07 shall be delivered to a Responsible Officer of the Trustee at its
Corporate Trust Office and to the Co-Trustee at its address as specified in Section 15.03. 

ARTICLE 5 

NOTEHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE 

             Section 5.01.
          Noteholders’ Lists. The Issuer covenants and agrees that it will
          furnish or cause to be furnished to the Trustee, semiannually, not more than
          fifteen (15) days after each May 1 and November 1 in each year beginning
          with May 1, 2006, and at such other times as the Trustee may request in writing,
          within thirty (30) days after receipt by the Issuer of any such request (or
          such lesser time as the Trustee may reasonably request in order to enable it to
          timely provide any notice to be provided by it hereunder), a list in such form
          as the Trustee may reasonably require of the names and addresses of the holders
          of Notes (to the extent available to the Issuer) as of a date not more than
          fifteen (15) days (or such other date as the Trustee may reasonably request
          in order to so provide any such notices) prior to the time such information is
          furnished, except that no such list need be furnished by the Issuer to the
          Trustee so long as the Trustee is acting as the sole Note registrar. 

             Section 5.02.
          Preservation and Disclosure of Lists. (a) The Trustee shall preserve,
          in as current a form as is reasonably practicable, all information as to the
          names and addresses of the holders of Notes contained in the most recent list
          furnished to it as provided in Section 5.01 or maintained by the Trustee in
          its capacity as Note registrar or co-registrar in respect of the Notes, if so
          acting. The Trustee may destroy any list furnished to it as provided in
          Section 5.01 upon receipt of a new list so furnished. 

             (b)
          The rights of Noteholders to communicate with other holders of Notes with
          respect to their rights under this Indenture or under the Notes, and the
          corresponding rights and duties of the Trustee, shall be as provided by the
          Trust Indenture Act. 

             (c)
          Every Noteholder, by receiving and holding the same, agrees with the Issuer and
          the Trustee that neither the Issuer nor the Trustee nor any agent of either of
          them shall be held accountable by reason of any disclosure of information as to
          names and addresses of holders of Notes made pursuant to the Trust Indenture
          Act. 

             Section 5.03.
          Reports by Trustee. (a) Within sixty (60) days after May 15 of
          each year commencing with the year 2006, the Trustee shall transmit to holders
          of Notes and the Co-Trustee such reports dated as of May 15 of the year in which
          such reports are made concerning the Trustee and its actions under this
          Indenture as may be required pursuant to the Trust Indenture Act at the times
          and in the manner provided pursuant thereto. The Noteholders may review such
          report at the offices of the Trustee and the offices of the Co-Trustee during
          normal working hours. 

             (b)
          A copy of such report shall, at the time of such transmission to holders of
          Notes, be filed by the Trustee with each stock exchange and automated quotation
          system upon which the Notes are listed and with the Issuer. The Issuer will
          promptly notify the Trustee in writing when the Notes are listed on any stock
          exchange or automated quotation system or delisted therefrom. 

        (c) The Co-Trustee shall prepare an annual report concerning the Co-Trustee and its actions
as required under the Securities Law and any regulation promulgated thereunder from time
to time. The Noteholders may review such report at the offices of the Co-Trustee during
normal working hours. The Co-Trustee shall furnish a copy of such report to the Trustee
and to any Noteholder who so requests in writing. 

- 12 -

             Section 5.04.
          Reports by Issuer. The Issuer shall file with the Trustees, the Commission
          and the ISA and transmit to holders of Notes, such information, documents and
          other reports and such summaries thereof, as may be required pursuant to the
          Trust Indenture Act and/or the Securities Law at the times and in the manner
          provided pursuant to such Act or Law, whether or not the Notes are governed by
          such Act or Law, and the Issuer shall deliver to the Trustees any additional
          information which may be reasonably requested by either of the Trustees from
          time to time; provided that any such information, documents or reports
          required to be filed with the Commission pursuant to Section 13 or 15(d) of
          the Exchange Act and/or the ISA pursuant to the Securities Law shall be filed
          with the Trustees within fifteen (15) days after the same is so required to
          be filed with the Commission and/or the ISA. Delivery of such reports,
          information and documents to the Trustees is for informational purposes only and
          the Trustees’ receipt of such shall not constitute actual or constructive
          notice of any information contained therein or determinable from information
          contained therein, including the Issuer’s compliance with any of its
          covenants hereunder (as to which the Trustees are entitled to rely exclusively
          on an Officers’ Certificate). 

ARTICLE 6 

REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT 

             Section 6.01.
          Events of Default. In case one or more of the following Events of Default
          (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) shall have occurred and be continuing: 

     	 	(a) 	
          default in the payment of any amount of interest upon any of the Notes, as and
          when the same shall become due and payable, and continuance of such default for
          a period of fourteen (14) Business Days following the date on which such
          payment is due under the terms hereof (and subject to Article 8); or 

          

     	 	(b) 	
          default in the payment of the principal of any of the Notes as and when the same
          shall become due and payable either at maturity (subject to Article 8) or in
          connection with any redemption or otherwise, pursuant to Article 3, by
          acceleration or otherwise and continuance of such default for a period of
          fourteen (14) Business Days; or 

          

     	 	(c) 	
          The Issuer takes any corporate action or other steps are taken or proceedings
          are started or are consented to or any order is made for its winding-up,
          liquidation, bankruptcy, dissolution, administration or re-organization (or for
          the suspension of payments generally or any process giving protection against
          creditors) or for the appointment of a liquidator, receiver, administrator,
          administrative receiver or similar officer of it or of all or any part of its
          revenues or assets or such a person is appointed, which action, steps,
          proceedings or order are not cancelled or withdrawn within 60 (sixty) days of
          the occurrence or institution thereof; or 

          

     	 	(d) 	
          an involuntary case or other proceeding shall be commenced against the Issuer
          seeking liquidation, reorganization or other relief with respect to the Issuer
          or its debts under any bankruptcy, insolvency or other similar law now or
          hereafter in effect or seeking the appointment of a trustee, receiver,
          liquidator, custodian or other similar official of the Issuer or any substantial
          part of the property of the Issuer, and such involuntary case or other
          proceeding shall remain undismissed and unstayed for a period of sixty
          (60) consecutive days, 

          

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then,
and in each and every such case, unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or Co-Trustee, or both acting jointly,
by notice in writing to the Issuer shall declare the principal of all the Notes and the
interest accrued thereon to be due and payable immediately, and upon any such declaration
the same shall become and shall be immediately due and payable, anything in this Indenture
or in the Notes contained to the contrary notwithstanding, but subject to Article 8. This
provision, however, is subject to the conditions that if, at any time after the principal
of the Notes shall have been so declared due and payable, and before any judgment or
decree for the payment of the monies due shall have been obtained or entered as
hereinafter provided, the Issuer shall pay or shall deposit with the Trustees a sum
sufficient to pay all matured installments of interest upon all Notes and the principal of
any and all Notes which shall have become due otherwise than by acceleration (with
interest on overdue installments of interest (to the extent that payment of such interest
is enforceable under applicable law) and on such principal at the rate borne by the Notes,
to the date of such payment or deposit) and amounts due to the Trustees pursuant to
Section 7.05, and if any and all defaults under this Indenture, other than the
nonpayment of principal of and accrued interest on Notes which shall have become due by
acceleration, shall have been cured or waived pursuant to Section 6.07, then and in
every such case the holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Issuer and to the Trustees, may waive all defaults
or Events of Default and rescind and annul such declaration and its consequences; but no
such waiver or rescission and annulment shall extend to or shall affect any subsequent
default or Event of Default, or shall impair any right consequent thereon. The Issuer
shall notify in writing a Responsible Officer of the Trustee and of the Co-Trustee,
promptly upon becoming aware thereof, of any Event of Default. 

Provided, that the Trustees
may not declare any amount due and payable prior to its maturity and shall not take any
action against the Issuer unless the Event of Default remains unremedied within
thirty-nine (39) days of the later of (i) the receipt by the Issuer of demand to cure such
default and (ii) the receipt by the Lenders from either the Co-Trustee or the Trustee of a
copy of such demand to cure, such notice to the Lenders to have been made in accordance
with addresses and contact details of the representative of the Lenders provided by the
Issuer to the Co-Trustee or to the Trustee from time to time. 

In case the Trustees shall have
proceeded to enforce any right under this Indenture and such proceedings shall have been
discontinued or abandoned because of such waiver or rescission and annulment or for any
other reason or shall have been determined adversely to the Trustee, the Co-Trustee or
both, then and in every such case the Issuer, the holders of Notes, and the Trustees shall
be restored respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Issuer, the holders of Notes, and the Trustees shall continue
as though no such proceeding had been taken. 

             Section 6.02.
          Payments of Notes on Default; Suit Therefor. The Issuer covenants that
          (a) in case default shall be made in the payment of any installment of
          interest upon any of the Notes as and when the same shall become due and
          payable, and such default shall have continued for a period of fourteen
          (14) Business Days, or (b) in case a default shall be made in the
          payment of the principal of any of the Notes as and when the same shall have
          become due and payable, whether at maturity of the Notes or in connection with
          any redemption of the Notes, by acceleration or otherwise, and such default
          shall have continued for a period of fourteen (14) Business Days, then, upon
          demand of the Trustees, but subject to Article 8 below, the Issuer will pay to
          the Trustee, for the benefit of the holders of the Notes, the whole amount that
          then shall have become due and payable on all such Notes for principal or
          interest, as the case may be, with interest upon the overdue principal and, in
          addition thereto, such further amount as shall be sufficient to cover the costs
          and expenses of collection, including reasonable compensation to the Trustees,
          their agents, attorneys and counsel, and all other amounts due the Trustees
          under Section 7.05. Until such demand by the Trustees, the Issuer may pay
          the principal of and interest on the Notes to the registered holders, whether or
          not the Notes are overdue. 

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In case the Issuer shall fail
forthwith to pay such amounts upon such demand, the Trustees, in their own name and as
trustees of an express trust, shall be entitled and empowered (but not required) to
institute any actions or proceedings at law or in equity for the collection of the sums so
due and unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Issuer and collect
in the manner provided by law out of the property of the Issuer wherever situated the
monies adjudged or decreed to be payable. 

In case there shall be pending
proceedings for the bankruptcy or for the reorganization of the Issuer under Title 11 of
the United States Code, liquidation, insolvency or reorganization proceedings under the
Israeli Companies Ordinance – 1983, Section 350 of the Israeli Companies Law –
2000, or under any other applicable law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer the property of the Issuer, or in the case
of any other judicial proceedings relative to the Issuer upon the Notes, or to the
creditors or property of the Issuer, the Trustees, irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustees shall have made any demand pursuant to
the provisions of this Section 6.02, shall be entitled and empowered, by intervention
in such proceedings or otherwise, to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustees and of the Noteholders
allowed in such judicial proceedings relative to the Issuer, its creditors, or its
property, and to collect and receive any monies or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of any amounts due the
Trustees under Section 7.05, and any receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, custodian or similar official is hereby authorized by each of
the Noteholders to make such payments to the Trustees, and, in the event that the Trustees
shall consent to the making of such payments directly to the Noteholders, to pay to the
Trustees any amount due it for reasonable compensation, expenses, advances and
disbursements, including counsel fees and expenses incurred by them up to the date of such
distribution. To the extent that such payment of reasonable compensation, expenses,
advances and disbursements out of the estate in any such proceedings shall be denied for
any reason, payment of the same shall be secured by a lien on, and shall be paid out of,
any and all distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise. 

All rights of action and of asserting
claims under this Indenture, or under any of the Notes, may be enforced by the Trustees
without the possession of any of the Notes, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by the
Trustees shall be brought in their own name as trustees of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustees, their agents and
counsel, be for the ratable benefit of the holders of the Notes. 

In any proceedings brought by the
Trustee or the Co-Trustee, or both (and in any proceedings involving the interpretation of
any provision of this Indenture to which the Trustee or the Co-Trustee, or both shall be a
party) the Trustee or the Co-Trustee, or both shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes parties to
any such proceedings. 

             Section 6.03.
          Application of Monies Collected by Trustees. Any monies collected by the
          Trustee or the Co-Trustee, or both pursuant to this Article 6 shall be
          applied in the order following, at the date or dates fixed by the Trustees for
          the distribution of such monies, upon presentation of the several Notes, and
          stamping thereon the payment, if only partially paid, and upon surrender
          thereof, if fully paid: 

	 	
FIRST:
To the payment of all amounts due (a) the Trustee and then (b) the Co-Trustee under
 Section 7.05; 

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SECOND:
In case the principal of the outstanding Notes shall not have become due and be unpaid,
to the payment of interest on the Notes in default in the order of the maturity of the
installments of such interest, with interest (to the extent that such interest has been
collected by the Trustees) upon the overdue installments of interest at the rate borne by
the Notes, such payments to be made ratably to the Persons entitled thereto;  

	 	
THIRD:
In case the principal of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid to the payment of the whole amount then owing and unpaid upon
the Notes for principal and interest with interest on the overdue principal and (to the
extent that such interest has been collected by the Trustees) upon overdue installments
of interest at the rate borne by the Notes, and in case such monies shall be insufficient
to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of
such principal and interest without preference or priority of principal over interest or
of interest over principal or of any installment of interest over any other installment
of interest, or of any Note over any other Note, ratably to the aggregate of such
principal and accrued and unpaid interest; and 

	 	
FOURTH:
To the payment of the remainder, if any, to the Issuer or any other Person lawfully
entitled thereto. 

        Section 6.04. Proceedings
by Noteholder. Subject to the further provisions of this           Section 6.04, no
holder of any Note shall have any right by virtue of or by           reference to any
provision of this Indenture to institute any suit, action or           proceeding in
equity or at law upon or under or with respect to this Indenture,           or for the
appointment of a receiver, trustee, liquidator, custodian or other           similar
official, or for any other remedy hereunder.  

Notwithstanding any other provision
of this Indenture, the right of any holder of any Note to receive payment of the principal
of and accrued interest on such Note, on or after the respective due dates expressed in
such Note, or to institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such holder. 

Notwithstanding any other provision
of this Indenture, the right of any holder of any Note to institute suit for the
enforcement of the right to convert the Note as provided herein, shall not be impaired or
affected without the consent of the holder. 

No one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or
to seek to obtain priority or preference over any other Holders or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and ratable
benefit of all the Holders. 

        Section 6.05. Proceedings
by Trustees. In case of an Event of Default, the Trustee and           the Co-Trustee
may, jointly or separately in their discretion, proceed to           protect and enforce
the rights vested in it or them by this Indenture by such           appropriate judicial
proceedings as are necessary to protect and enforce any of           such rights, either
by suit in equity or by action at law or by proceeding in           bankruptcy or
otherwise, whether for the specific enforcement of any covenant or           agreement
contained in this Indenture or in aid of the exercise of any power           granted in
this Indenture, or to enforce any other legal or equitable right           vested in the
Trustees by this Indenture or by law.  

        Section 6.06. Remedies
Cumulative and Continuing. Except as provided in           Section 2.06, all
powers and remedies given by this Article 6 to the           Trustees or to the
Noteholders shall, to the extent permitted by law, be deemed           cumulative and not
exclusive of any thereof or of any other powers and remedies           available to the
Trustees or the holders of the Notes, by judicial proceedings           or otherwise, to
enforce the performance or observance of the covenants and           agreements contained
in this Indenture, and no delay or omission of the Trustees           or of any holder of
any of the Notes to exercise any right or power accruing           upon any default or
Event of Default occurring and continuing as aforesaid shall           impair any such
right or power, or shall be construed to be a waiver of any such           default or any
acquiescence therein, and, subject to the provisions of           Section 6.04,
every power and remedy given by this Article 6 or by law           to the Trustees
or to the Noteholders may be exercised from time to time, and as           often as shall
be deemed expedient, by the Trustee, the Co-Trustee or by the           Noteholders.  

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        Section 6.07. Direction
of Proceedings and Waiver of Defaults by Noteholders. 

	(a) 	Direction
of Proceedings by Noteholders. The holders of a majority in
                    aggregate principal amount of the Notes at the time outstanding
determined in                     accordance with Section 9.04 shall have the right
to direct in accordance                     with Section 9.01, the time, method and place
of conducting any proceeding for                     any remedy available to the Trustees
or exercising any trust or power conferred                     on the Trustees; provided that
(a) such direction shall not be in                     conflict with any rule of law
or with this Indenture, (b) the Trustees may                     take any other
action which is not inconsistent with such direction and                     (c) the
Trustees may decline to take any action that would benefit some
                    Noteholder to the detriment of other Noteholders. 

	(b) 	Waiver
of Defaults by Noteholders. The holders of a majority in aggregate
                    principal amount of the Notes at the time outstanding determined in
accordance                     with Section 9.04, shall have the right (subject to
the next paragraph                     below) to direct, in accordance with Section 9.01,
a waiver, on behalf of the                     holders of all of the Notes, of any past
default or Event of Default hereunder                     and its consequences, provided
that such direction to waive is given at a                     meeting of the
Noteholders, in accordance with Article 10, and that such waiver                     be
approved by the vote of holders of at least 75% of the principal amount of
                    the Notes present or represented in that Noteholders meeting. 

	 	
Notwithstanding
the former paragraph above, the following defaults may not be waived without the consent
of the holders of each or all Notes then outstanding or affected thereby: (i) a
default in the payment of interest on, or the principal of, the Notes, (ii) a
failure by the Issuer to convert any Notes into Ordinary Shares, or (iii)  a default in
respect of a covenant or provisions hereof which under the provisions of the Trust
Indenture Act cannot be modified or amended without the consent of the holders of each or
all Notes then outstanding or affected thereby.  

	 	
Upon
any such waiver, the Issuer, the Trustees and the holders of the Notes shall be restored
to their former positions and rights hereunder; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent thereon.
Whenever any default or Event of Default hereunder shall have been waived as permitted by
this Section 6.07, said default or Event of Default shall for all purposes of the
Notes and this Indenture be deemed to have been cured and to be not continuing; but no
such waiver shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.  

        Section 6.08. Notice
of Defaults. The Trustees shall, within ninety (90) days           after a
Responsible Officer of the Trustee and of the Co-Trustee have actual           knowledge
of the occurrence of a default, mail to all Noteholders, as the names           and
addresses of such holders appear upon the Note register, notice of all           defaults
known them, unless such defaults shall have been cured or waived before           the
giving of such notice.  

        Section 6.09. Undertaking
to Pay Costs.  All parties to this Indenture agree, and each           holder of any
Note by his acceptance thereof shall be deemed to have agreed,           that any court
may, in its discretion, require, in any suit for the enforcement           of any right
or remedy under this Indenture, or in any suit against the Trustees           for any
action taken or omitted by them as Trustees, the filing by any party           litigant
in such suit of an undertaking to pay the costs of such suit and that           such
court may in its discretion assess reasonable costs, including reasonable
          attorneys’ fees and expenses, against any party litigant in such suit,
          having due regard to the merits and good faith of the claims or defenses made
by           such party litigant; provided that the provisions of this
          Section 6.09 (to the extent permitted by law) shall not apply to any suit
          instituted by the Trustee or the Co-Trustee, or both, to any suit instituted by
          any Noteholder, or group of Noteholders, holding in the aggregate more than ten
          percent (10%) in principal amount of the Notes at the time outstanding
          determined in accordance with Section 9.04, or to any suit instituted by
          any Noteholder for the enforcement of the payment of the principal of or
          interest on any Note on or after the due date expressed in such Note or to any
          suit for the enforcement of the right to convert any Note in accordance with
the           provisions of Article 14.  

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        Section 6.10. Indenture and Notes Solely Corporate Obligations. No recourse for the payment
of the principal of or interest on any Note, or for any claim based thereon or otherwise
in respect thereof, and no recourse under or upon any obligation, covenant or agreement of
the Issuer in this Indenture or in any supplemental indenture or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, director or subsidiary, as such,
past, present or future, of the Issuer or of any successor corporation, either directly or
through the Issuer or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this Indenture
and the issue of the Notes. 

ARTICLE 7 

THE TRUSTEES 

        Section 7.01. Duties
and Responsibilities of Trustees. The Trustees prior to the           occurrence of
an Event of Default and after the curing of all Events of Default           which may
have occurred, undertake to perform such duties and only such duties           as are
specifically set forth in this Indenture. In case an Event of Default has
          occurred (which has not been cured or waived), the Trustees shall exercise such
          of the rights and powers vested in them by this Indenture, and use the same
          degree of care and skill in their exercise, as a prudent person would exercise
          or use under the circumstances in the conduct of his own affairs.  

No provision of this Indenture shall
be construed to relieve the Trustees from liability for their own negligent action, their
own negligent failure to act or their own willful misconduct, except that: 

	 	(a) 	prior
to the occurrence of an Event of Default and after the curing or waiving
               of all Events of Default which may have occurred: 

	 	(i) 	the
duties and obligations of the Trustee shall be determined solely by the
               express provisions of this Indenture and the Trust Indenture Act (and, in
the                case of the Co-Trustee, by the express provisions of this Indenture
and the                Securities Law), and the Trustees shall not be liable except for
the performance                of such duties and obligations as are specifically set
forth in this Indenture                and no implied covenants or obligations shall be
read into this Indenture, the                Trust Indenture Act and/or the Securities
Law (as applicable) against the                Trustees; and  

	 	(ii) 	in
the absence of bad faith and willful misconduct on the part of the Trustees,
               the Trustees 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 Trustees and conforming to the requirements
of this Indenture;                but, in the case of any such certificates or opinions
which by any provisions                hereof are specifically required to be furnished
to the Trustees, the Trustees                shall be under a duty to examine the same to
determine whether or not they                conform to the requirements of this
Indenture (but need not confirm or                investigate the accuracy of
mathematical calculations or other facts stated                therein);  

	 	(b) 	the
Trustees shall not be liable for any error of judgment made in good faith by
               a Responsible Officer or Officers of the Trustee or Responsible Officers
or                Officers of the Co-Trustee, unless the Trustees were negligent in
ascertaining                the pertinent facts; 

	 	(c) 	the
Trustees shall not be liable with respect to any action taken or omitted to
               be taken by them in good faith in accordance with the written direction of
the                holders of not less than a majority in principal amount of the Notes
at the time                outstanding determined as provided in Section 9.04
relating to the time,                method and place of conducting any proceeding for
any remedy available to the                Trustees, or exercising any trust or power
conferred upon the Trustees under                this Indenture; 

- 18 -

	 	(d) 	whether
or not therein provided, every provision of this Indenture relating to                the
conduct or affecting the liability of, or affording protection to, the
               Trustees shall be subject to the provisions of this Section; 

	 	(e) 	the
Trustees shall not be liable in respect of any payment (as to the
               correctness of amount, entitlement to receive or any other matters
relating to                payment) or notice effected by the Issuer or any paying agent
or any records                maintained by any co-registrar with respect to the Notes; 

	 	(f) 	if
any party fails to deliver a notice relating to an event the fact of which,
               pursuant to this Indenture, requires notice to be sent to the Trustees,
the                Trustees may conclusively rely on their failure to receive such notice
as reason                to act as if no such event occurred; and 

	 	(g) 	the
Trustee or Co-Trustee, as the case may be, shall not be deemed to have
               notice of any default or Event of Default hereunder unless a Responsible
Officer                thereof shall have actual knowledge thereof or unless written
notice of any                event which is in fact such a default or Event of Default is
received by a                Responsible Officer of the Trustee or the Co-Trustee, as the
case may be, and                such notice references the Notes and this Indenture. 

None of the provisions contained in
this Indenture shall require the Trustees to expend or risk their own funds or otherwise
incur personal financial liability in the performance of any of their duties or in the
exercise of any of their 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 them. 

        Section 7.02. Rights
of Trustees; Reliance on Documents, Opinions, Etc. Except as           otherwise
provided in Section 7.01:  

	 	(a) 	the
Trustees may conclusively rely and shall be protected in acting upon any
               resolution, certificate, statement, instrument, opinion, report, notice,
               request, consent, order, bond, debenture, note, coupon or other paper or
               document (whether in its original or facsimile form) believed by them in
good                faith to be genuine and to have been signed or presented by the
proper party or                parties; 

	 	(b) 	any
request, direction, order or demand of the Issuer mentioned herein shall be
               sufficiently evidenced by an Officers’ Certificate (unless other
evidence                in respect thereof be herein specifically prescribed); and any
resolution of the                Board of Directors may be evidenced to the Trustees by a
copy thereof certified                by the Secretary or an Assistant Secretary of the
Issuer; 

	 	(c) 	the
Trustees may each consult with counsel or other professional advisors of its
               own selection and any such advice so received or Opinion of Counsel shall
be                full and complete authorization and protection in respect of any action
taken or                omitted by it hereunder in good faith and in reliance on such
advice or Opinion                of Counsel; 

	 	(d) 	the
Trustees shall be under no obligation to exercise any of the rights or
               powers vested in it by this Indenture at the request, order or direction
of any                of the Noteholders pursuant to the provisions of this Indenture,
unless such                Noteholders shall have offered to the Trustees security or
indemnity                satisfactory to them against the costs, expenses and liabilities
which may be                incurred therein or thereby; 

	 	(e) 	the
Trustees shall not be bound to make any investigation into the facts or
               matters stated in any resolution, certificate, statement, instrument,
opinion,                report, notice, request, direction, consent, order, bond,
debenture or other                paper or document, but the Trustees may make such
further inquiry or                investigation into such facts or matters as they may
see fit, and, if the                Trustees shall determine to make such further inquiry
or investigation, they                shall be entitled to examine the books, records and
premises of the Issuer,                personally or by agent or attorney at the sole
cost of the Issuer and shall                incur no liability or additional liability of
any kind by reason of such inquiry                or investigation; 

- 19 -

	 	(f) 	the
Trustees may execute any of the trusts or powers hereunder or perform any
               duties hereunder either directly or by or through agents or attorneys and
the                Trustees shall not be responsible for any misconduct or negligence on
the part                of any agent or attorney appointed by them with due care
hereunder; 

	 	(g) 	the
Trustees shall not be liable for any action taken, suffered or omitted to be
               taken by them in good faith and reasonably believed by them to be
authorized or                within the discretion or rights or powers conferred upon it
by this                Indenture;delivery of reports, information and documents to
the Trustees                under any Section 5.04 is for informational purposes only and
the Trustees’               receipt of the foregoing shall not constitute actual or
constructive notice of                any information contained therein or determinable
from information contained                therein, including the Issuer’s compliance
with any of their covenants                hereunder (as to which the Trustees are
entitled to rely exclusively on                Officers’ Certificates) except as
otherwise required in this Indenture or                the terms of the Notes; 

	 	(h) 	the
Trustees shall not have any obligation or duty to monitor, determine or
               inquire as to compliance, and shall not be responsible or liable for
compliance                with restrictions on transfer, exchange, redemption, purchase
or repurchase, as                applicable, of minimum denominations imposed under this
Indenture or under                applicable law or regulation with respect to any
transfer, exchange, redemption,                purchase or repurchase, as applicable, of
any interest in any Notes; 

	 	(i) 	in
no event shall the Trustees be responsible or liable for any failure or delay
               in the performance of their obligations hereunder arising out of, or
caused by,                directly or indirectly, forces beyond their control, including,
without                limitation, strikes, work stoppages, accidents, acts of war or
terrorism, civil                or military disturbances, nuclear or natural catastrophes
or acts of God; it                being understood that the Trustees shall use reasonable
efforts which are                consistent with accepted practices in the banking
industry to resume performance                as soon as practicable under the
circumstances; 

	 	(j) 	the
rights, privileges, protections, immunities and benefits given to the
               Trustees including, without limitation, its right to be indemnified, are
               extended to, and shall be enforceable by, the Trustees in each of their
               capacities hereunder, and each agent, custodian and other Person employed
to act                hereunder; 

	 	(k) 	the
Trustees may request that the Issuer deliver an Officers’ Certificate
               setting forth the names of individuals and/or titles of officers
authorized at                such time to take specified actions pursuant to this
Indenture, which                Officers’ Certificate may be signed by any person
authorized to sign an                Officers’ Certificate, including any person
specified as so authorized in                any such certificate previously delivered
and not superseded; 

	 	(l) 	the
Trustees are not required to give any bond or surety with respect to the
               performance or their duties or the exercise of their powers under this
Indenture                or the Notes; 

	 	(m) 	the
Trustees will not be liable to any person if prevented or delayed in
               performing any of their obligations or discretionary functions under this
               Indenture by reason of any present or future law applicable to them, by
any                governmental or regulatory authority; 

- 20 -

	 	(n) 	in
the event the Trustees receive inconsistent or conflicting requests and
               indemnity from two or more groups of Holders, each representing less than
a                majority in aggregate principal amount of the Notes then outstanding,
pursuant                to the provisions of this Indenture, the Trustees, in their sole
discretion, may                determine what action, if any, will be taken and shall not
incur any liability                for their failure to act until such inconsistency or
conflict is, in their                reasonable opinion, resolved; 

	 	(o) 	the
Trustees shall not be liable for any error of judgment made in good faith
               unless it is proved that the Trustees were grossly negligent in
ascertaining the                pertinent facts; 

	 	(p) 	the
Trustees shall not be liable for any consequential loss (being loss of
               business, goodwill, opportunity or profit of any kind) of the Issuer; and 

	 	(q) 	the
permissive right of the Trustees to take the actions permitted by this
               Indenture shall not be construed as an obligation or duty to do so. 

        Section 7.03. No
Responsibility for Recitals, Etc. The recitals contained herein and in           the
Notes (except in the Trustee’s certificate of authentication) shall be
          taken as the statements of the Issuer, and the Trustees assume no
responsibility           for the correctness of the same. The Trustees make no
representations as to the           validity or sufficiency of this Indenture or of the
Notes. The Trustees shall           not be accountable for the use or application by the
Issuer of any Notes or the           proceeds of any Notes authenticated and delivered by
the Trustee in conformity           with the provisions of this Indenture.  

        Section 7.04. Monies
to Be Held in Trust. Subject to the provisions of           Section 13.04, all
monies received by the Trustees shall, until used or           applied as herein
provided, be held in trust for the purposes for which they           were received. The
Trustee shall be under no liability for interest on any money           received by it
hereunder except as may be agreed in writing from time to time by           the Issuer
and the Trustee.  

        Section 7.05. Compensation
and Expenses of Trustees. (a) The Issuer covenants and           agrees to pay to the
Trustee from time to time, and the Trustee shall be           entitled to, such
compensation for all services rendered by it hereunder in any           capacity (which
shall not be limited by any provision of law in regard to the           compensation of a
trustee of an express trust) as mutually agreed to from time           to time in writing
between the Issuer and the Trustee, and the Issuer will pay           or reimburse the
Trustee upon its request for all reasonable expenses,           disbursements and
advances reasonably incurred or made by the Trustee in           accordance with any of
the provisions of this Indenture (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, willful misconduct or bad faith.  

        (b) The
Issuer will pay to the Co-Trustee the following fees for its services under
          this Indenture:  

	 	(i) 	For
each of the years from the second year of the trust hereunder (that is from
               the expiry of 12 months from the date of this Indenture) in which there
are                still Notes outstanding, a sum of $10,000 (referred to in this
section                7.05(b) as: the “Annual Fee”). The Annual Fee will be
paid to the                Co-Trustee at the beginning of each year of the trust. The
Annual Fee will be                paid to the Co- Trustee for the period until the end of
the period of the trust                pursuant to the terms of this Indenture even if a
receiver and/or an                administrative receiver is appointed for the Issuer
and/or even if the trust                pursuant to this Indenture is managed under the
supervision of a court. If the                term of the Co-Trustee’s office has
come to an end, the Co-Trustee will not                be entitled to the payment of its
fee from the date on which its term of office                has ended. Should the term
of the Co-Trustee’s office come to an end during                the course of a year
of the trust, the Co-Trustee will refund to the Issuer the                portion of the
Annual Fee paid for the months on which the it has not acted as a
               Co-Trustee. The Annual Fee is not payable for the first year of the trust;
and  

- 21 -

	 	(ii) 	The
Co-Trustee is entitled to payment for the time actually spent by the
               Co-Trustee in connection with this Indenture and the trust hereunder prior
the                execution of this Indenture in the total amount of approximately $5,000; and  

	 	(iii) 	The
Co-Trustee will be entitled to the reimbursement of the reasonable expenses
               that it has incurred in the fulfillment of its roles and duties hereunder.
               Regarding expenses for an expert opinion, the Co-Trustee will give prior
notice                to the Issuer of its intention to request an expert opinion; and  

	 	(iv) 	The
Co-Trustee will also be entitled to additional payment to the extent that
               the Co-Trustee is required to take any action as a result of a default on
this                Indenture by the Issuer or an Event of Default. This payment will be
calculated                according to the time actually spent by the Co-Trustee in
connection with these                actions, based on an agreed hourly rate of up to
$200; and  

	 	(v) 	In
the event that, due to changes in the applicable law in Israel, the
               Co-Trustee shall be required to perform additional reviews or prepare
additional                reports, the Co-Trustee shall be entitled to additional fees as
shall be agreed                upon by the Co-Trustee and the Issuer.  

	 	
Israeli
Value added tax, if applicable, will be added to the payments due to the Co-Trustee
hereunder and will be paid by the Issuer. The Issuer covenants and agrees to reimburse
the Co-Trustee for the costs incurred by the Co-Trustee for an insurance policy providing
for coverage in respect of expenses of the Co-Trustee resulting from any litigation
action taken against the Co-Trustee under the competent jurisdiction of a United States
court, in connection with the actions and duties of the Co-Trustee under this Indenture.  

        (c)
           The
Issuer also covenants to indemnify each of the Trustee and the Co-Trustee           and
any predecessor Trustees (or any officer, director or employee of the
          Trustees), in any capacity under this Indenture and its agents and any
          authenticating agent for, and to hold them harmless against, any and all loss,
          liability, damage, claim or expense including taxes (other than taxes based on
          the income of the Trustees) incurred without negligence, willful misconduct or
          bad faith on the part of the Trustee or the Co-Trustee or such officers,
          directors, employees and agent or authenticating agent, as the case may be, and
          arising out of or in connection with the acceptance or administration of this
          trust or in any other capacity hereunder, including the costs and expenses of
          defending themselves against any claim (whether asserted by the Issuer, any
          holder or any other Person) of liability in the premises. For the avoidance of
          doubt, neither of the Trustee nor the Co-Trustee shall be denied any
          indemnification to which it is entitled pursuant to this Section 7.05(c) as the
          result of the other’s negligence, willful misconduct or bad faith. The
          obligation of the Issuer under this Section 7.05 shall survive the satisfaction
          and discharge of this Indenture.  

        
(d) When
the Trustees and its agents and any authenticating agent incur expenses or
          render services after an Event of Default specified in Section 6.01(c) or
          (d) with respect to the Issuer occurs, the expenses and the compensation
          for the services are intended to constitute expenses of administration under
any           bankruptcy, insolvency or similar laws.  

        Section 7.06. Officers’ Certificate
as Evidence. Except as otherwise provided in           Section 7.01, whenever in
the administration of the provisions of this           Indenture the Trustees shall deem
it necessary or desirable that a matter be           proved or established prior to
taking or omitting any action hereunder, such           matter (unless other evidence in
respect thereof be herein specifically           prescribed) may, in the absence of bad
faith or willful misconduct on the part           of the Trustees, be deemed to be
conclusively proved and established by an           Officers’ Certificate delivered
to the Trustees.  

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        Section 7.07. Conflicting
Interests of Trustee and the Co-Trustee. (a) If the Trustee           has or shall
acquire a conflicting interest within the meaning of the Trust           Indenture Act,
the Trustee shall either eliminate such interest or resign, to           the extent and
in the manner provided by, and subject to the provisions of, the           Trust
Indenture Act and this Indenture.  

        (b)
 If,
with respect to the Co-Trustee, there at any time exist circumstances which           may
constitute a conflict of interests as provided in Section 35(E)(2) of the
          Securities Law, the Co-Trustee shall either eliminate such circumstances or
          resign, to the extent and in the manner provided by, and subject to the
          provisions of, the Securities Law.  

        Section 7.08. Eligibility
of Trustee and Co-Trustee. (a) There shall at all times be a           Trustee
hereunder which shall be a Person that is eligible pursuant to the Trust
          Indenture Act to act as such and has a combined capital and surplus of at least
          $50,000,000 (or if such Person is a member of a bank holding company system,
its           bank holding company shall have a combined capital and surplus of at least
          $50,000,000). If such Person publishes reports of condition at least annually,
          pursuant to law or to the requirements of any supervising or examining
          authority, then for the purposes of this Section the combined capital and
          surplus of such Person shall be deemed to be its combined capital and surplus
as           set forth in its most recent report of condition so published. If at any
time           the Trustee shall cease to be eligible in accordance with the provisions
of this           Section 7.08, it shall resign immediately in the manner and with
the effect           hereinafter specified in this Article.  

        (b)
           There
shall at all times be a Co-Trustee hereunder which shall be a Person that           is
eligible pursuant to the Securities Law to act as a trustee for debentures
          issued to the Israeli public. If at any time the Co-Trustee shall cease to be
          eligible in accordance with the provisions of the Securities Law, it shall
          resign immediately in the manner and with the effect specified in Section 7.09.  

        
Section 7.09. Resignation
or Removal of the Trustee and of the           Co-Trustee.    (a) (i)
The Trustee may at any time           resign by giving written notice of such resignation
to the Issuer, the           Co-Trustee and to the holders of Notes. Upon receiving such
notice of           resignation, the Issuer shall promptly appoint a successor trustee by
written           instrument, in triplicate, executed by order of the Board of Directors,
one copy           of which instrument shall be delivered to the resigning Trustee, one
copy to the           successor trustee and one copy to the Co-Trustee. If no successor
trustee shall           have been so appointed and have accepted appointment sixty (60) days
after           the mailing of such notice of resignation to the Noteholders, the
resigning           Trustee may, upon ten (10) Business Days’ notice to the
Issuer, the           Co-Trustee and the Noteholders, appoint a successor identified in
such notice or           may petition, at the expense of the Issuer, any court of
competent jurisdiction           for the appointment of a successor trustee, or, if any
Noteholder who has been a           bona fide holder of a Note or Notes for at least six
(6) months may,           subject to the provisions of Section 6.09, on behalf
of himself and all           others similarly situated, petition any such court for the
appointment of a           successor trustee. Such court may thereupon, after such
notice, if any, as it           may deem proper and prescribe, appoint a successor
trustee.  

		    (ii)        The
provisions of the Securities Law will apply to the expiry of the appointment of the
Co-Trustee as a trustee under this Indenture upon the occurrence of certain events
specified therein and to the appointment of a successor trustee in such an event.  

		    (iii)        Subject
to the applicable provisions of the Securities Law, the Co-Trustee and any successor
co-trustee that replaces the Co-Trustee may resign from their office as trustee after
giving notice in writing to the Issuer, the Trustee and the Noteholders three (3) months
in advance, in which the reasons for the resignation will be specified. Such resignation
will come into effect only after it has been approved by a court of competent
jurisdiction in the State of Israel and on the date specified in such court approval. The
Issuer shall promptly notify the Trustees and the Noteholders of such approval.  

        (b)
 In
case at any time any of the following shall occur:  

	 	(i) 	the
Trustee or the Co-Trustee shall fail to comply with Section 7.07 after
               written request therefor by the Issuer or by any Noteholder who has been a
bona                fide holder of a Note or Notes for at least six (6) months; or  

- 23 -

	 	(ii) 	the
Trustee or the Co-Trustee shall cease to be eligible in accordance with the
               relevant provisions of Section 7.08 and shall fail to resign after
written                request therefor by the Issuer or by any such Noteholder; or  

	 	(iii) 	the
Trustee or the Co-Trustee shall become incapable of acting, or shall be
               adjudged a bankrupt or insolvent, or a receiver of the Trustee or the
Co-Trustee                or of its property shall be appointed, or any public officer
shall take charge                or control of the Trustee or of its property or affairs
for the purpose of                rehabilitation, conservation or liquidation;  

	 	
then,
in any such case, the Issuer may remove the Trustee or the Co-Trustee and appoint a
successor trustee by written instrument, in triplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the Trustee or the
Co-Trustee so removed, one copy to the successor trustee and one copy to the Co-Trustee,
or, subject to the provisions of Section 6.09, any Noteholder who has been a bona
fide holder of a Note or Notes for at least six (6) months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee or the Co-Trustee and the appointment of a successor trustee; provided that
if no successor trustee shall have been appointed and have accepted appointment sixty (60) days
after either the Issuer or the Noteholders has removed the Trustee or the Co-Trustee , or
the Trustee or the Co-Trustee resigns, the trustee so removed may petition, at the
expense of the Issuer, any court of competent jurisdiction for an appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee or the Co-Trustee and appoint a successor
trustee. 

        (c)
          The
holders of a majority in aggregate principal amount of the Notes at the time
          outstanding may at any time by action pursuant to Section 9.01 remove the
          Trustee or the Co-Trustee and nominate a successor trustee which shall be
deemed           appointed as successor trustee unless, within ten (10) days after
notice to           the Issuer of such nomination, the Issuer objects thereto, in which
case the           trustee so removed or any Noteholder, or if such trustee so removed or
any           Noteholder fails to act, the Issuer, upon the terms and conditions and
otherwise           as in this Section 7.09(a) provided, may petition any court of
competent           jurisdiction for an appointment of a successor trustee.  

        (d)
         (i)   Any resignation or removal of the Trustee or the Co-Trustee and appointment
          of a successor trustee pursuant to any of the provisions of this
          Section 7.09 shall become effective upon acceptance of appointment by the
          successor trustee as provided in Section 7.10.  

                       (ii)
        A court of competent jurisdiction in the State of Israel may dismiss the
          Co-Trustee if it has not fulfilled its duties hereunder properly or if a court
          of competent jurisdiction in the State of Israel should find any other reason
          for its dismissal. Additionally, the holders of ten percent (10%) in aggregate
          principal amount of the Notes may convene a general meeting of the holders of
          the Notes in accordance with Article 10. At such a meeting, the Co-Trustee may
          be removed by an affirmative vote of the holders of a majority of the aggregate
          principal amount of the Notes.  

The ISA may petition a court of
competent jurisdiction in the State of Israel to bring the Co-Trustee’s term of
office to an end, pursuant to Section 35 of the Securities Law. 

        Section 7.10. Acceptance
by Successor Trustee. Any successor trustee appointed as           provided in Section 7.09
shall execute, acknowledge and deliver to the           Issuer and to its predecessor
trustee an instrument accepting such appointment           hereunder, and thereupon the
resignation or removal of the predecessor trustee           shall become effective and
such successor trustee, without any further act, deed           or conveyance, shall
become vested with all the rights, powers, duties and           obligations of its
predecessor hereunder, with like effect as if originally           named as trustee
herein; but, nevertheless, on the written request of the Issuer           or of the
successor trustee, the trustee ceasing to act shall, upon payment of           any amount
then due it pursuant to the provisions of Section 7.05, execute           and
deliver an instrument transferring to such successor trustee all the rights           and
powers of the trustee so ceasing to act. Upon request of any such successor
          trustee, the Issuer shall execute any and all instruments in writing for more
          fully and certainly vesting in and confirming to such successor trustee all
such           rights and powers. Any trustee ceasing to act shall, nevertheless, retain
a lien           upon all property and funds held or collected by such trustee as such,
except           for funds held in trust for the benefit of holders of particular Notes,
to           secure any amounts then due it pursuant to the provisions of Section 7.05.  

- 24 -

No successor trustee shall accept
appointment as provided in this Section 7.10 unless, at the time of such acceptance,
such successor trustee shall be qualified under the provisions of Section 7.09 and be
eligible under the provisions of Section 7.08. 

Upon acceptance of appointment by a
successor trustee as provided in this Section 7.10, the Issuer (or the former
trustee, at the written direction of the Issuer) shall mail or cause to be mailed notice
of the succession of such trustee hereunder to the holders of Notes at their addresses as
they shall appear on the Note register. If the Issuer fails to mail such notice within ten
(10) days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of the Issuer. The Issuer
shall promptly file an Immediate Report regarding such an event, as provided in the
Securities Law, as well as furnish such notice to the Commission on Form 6-K. 

        Section 7.11. Succession
by Merger. Any corporation into which either of the Trustees           may be merged
or converted or with which either of them may be consolidated, or           any
corporation resulting from any merger, conversion or consolidation to which           the
Trustee or Co-Trustee shall be a party, or any corporation succeeding to all           or
substantially all of the corporate trust business of the Trustee or           Co-Trustee
(including any trust created by this Indenture), shall be the           successor to the
Trustee or Co-Trustee hereunder without the execution or filing           of any paper or
any further act on the part of any of the parties hereto,           provided that in the
case of any corporation succeeding to all or substantially           all of the corporate
trust business of the Trustee or Co-Trustee, such           corporation shall be
qualified under the provisions of Section 7.07 and           shall, in the case of
the successor to the Trustee, be eligible under the           provisions of Section 7.08.  

In case at the time such successor to
the Trustee or the Co-Trustee shall succeed to the trusts created by this Indenture, any
of the Notes shall have been authenticated but not delivered, any such successor to the
Trustee or the Co-Trustee may adopt the certificate of authentication of any predecessor
trustee or authenticating agent appointed by such predecessor trustee, and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee or the Co-Trustee or any authenticating agent
appointed by such successor trustee may authenticate such Notes in the name of the
successor trustee; and in all such cases such certificates shall have the full force that
is provided in the Notes or in this Indenture; provided that the right to adopt the
certificate of authentication of any predecessor Trustee or authenticate Notes in the name
of any predecessor Trustee or the Co-Trustee shall apply only to its successor or
successors by merger, conversion or consolidation. 

        Section 7.12. Preferential
Collection of Claims. If and when the Trustee shall be or           become a creditor
of the Issuer, the Trustee shall be subject to the provisions           of the Trust
Indenture Act regarding the collection of the claims against the           Issuer.  

        Section 7.13.  Coordination between the Trustee and the Co-Trustee. (a) Except as duties,
rights and obligations are specifically attributed to one of either the Trustee or the
Co-Trustee herein, the Trustee and the Co-Trustee are to take or refrain from taking all
actions in the exercise of the terms of this Indenture by mutual agreement. 

        (b)
 To
the extent that the Trustee and the Co-Trustee are unable to agree to take or
          refrain from taking an action in accordance with Section 7.13(a) in good faith
          (a “Trustee Disagreement”), the Trustee or the Co-Trustee, or
          both of them, shall be entitled, in its sole discretion, to convene a meeting
of           Noteholders in accordance with Article 10. At such meeting, the Noteholders,
by           a vote in accordance with Section 10.10, shall be entitled to adopt a
resolution           resolving the Trustee Disagreement, provided, that any
actions to be           taken by the Trustee or the Co-Trustee, or both of them, pursuant
to this           Section 7.13(b), shall be in accordance with Section 6.07(a).  

- 25 -

        (c)
 Upon
receipt of any notice, information or other communication provided pursuant           to
this Indenture that is required to be made to both the Trustee and the
          Co-Trustee, the Trustee and Co-Trustee, if not previously contacted by the
other           pursuant to this Section 7.13(c), shall as promptly as practicable
consult with           the other, as applicable,  

	 	(i)	         to
confirm receipt of the notice, information or other communication;  

	 	(ii) 	transmit
such notice, information or other communication to the other if not yet
               received by the other; and  

	 	(iii) 	to
the extent necessary, the Trustee and Co-Trustee will consult in accordance
               with Section 7.13(a).  

        (d)  Notwithstanding
any other provision of this Indenture, neither of the Trustee or           the Co-Trustee
shall be liable for actions taken by the other if such actions           were (i) the
result of negligence or willful misconduct on the part of the           other; (ii) any
action taken by either of the Trustee or the Co-Trustee without           the knowledge
of the other or (iii) any action taken or refrained from being           taken by the
Trustee or the Co-Trustee to which the other has stated an           objection in
writing.  

ARTICLE 8 

SUBORDINATION 

        Section 8.01. Agreement to Subordinate.  

	 	(a) 	The
Issuer agrees, and each Holder by accepting a Note agrees, that all payments
               pursuant to the Notes made by or on behalf of the Issuer are subordinated
to the                extent and in the manner provided in this Article 8 to all existing
and future                obligations of the Issuer under the Credit Facility and that
such subordination                is for the benefit of and enforceable by the Lenders. 

	 	(b) 	Each
Noteholder agrees and acknowledges that the Trustee and or the Co-Trustee
               shall refrain from initiating any proceeding or acting in any other way
against                the Issuer due to the provisions of this Article 8. Each
Noteholder waives any                right or claim against the Trustee and/or the
Co-Trustee based, inter-alia, on the grounds that the Trustee or the Co-Trustee
should have                initiated any proceeding or act in any other way in spite of
the provisions of                this Article 8 while claiming that Article 8 does not
comply with any applicable                law. 

	 	(c) 	In
the event of any insolvency or bankruptcy case or proceeding, or any
               receivership, liquidation, reorganization or other similar case or
proceeding in                connection therewith, relating to the Issuer or its assets,
or any liquidation,                dissolution or other winding-up of the Issuer, whether
voluntary or involuntary,                or any assignment for the benefit of creditors
or other marshalling of assets or                liabilities of the Issue, all existing
and future obligations of the Issuer                under the Credit Facility must be
paid in full in cash before any payment is                made on account of the
principal of or interest on the Notes. 

        Section 8.02. Postponement of Payments. Notwithstanding any provision herein to the
contrary, the date for payment of any interest or principal on the Notes may be postponed
in accordance with the provisions of Section 8.03 below, with interest continuing to
accrue at its regular rate.  

        Section 8.03. Postponement of Payments to the Noteholders if Defaults Occur Under the Credit
Facility. (a) In the event of the existence of a default, as such term is defined in
the Credit Facility (a “Credit Facility Event of Default”), on a Bank
Payment Date, then, subject to the provisions below, no payment of principal or interest
on the Notes shall be made and the holders and any person or entity acting on their behalf
(including the Trustees) shall not be entitled to take any action against the Issuer in
connection with such non-payment, unless such non-payment shall continue for a period of
more than six (6) months commencing on the applicable Bank Payment Date falling
immediately prior to the date of the scheduled payment in respect of the Notes due
immediately after the Bank Payment Date (a “Six Month Period”). The
Issuer shall notify the holders and the Trustees of any Credit Facility Event of Default. 

- 26 -

        (b)         During
the Six Month Period, the following shall apply:  

	 	(i) 	If
during such period, the Issuer shall make any payment to the Lenders on
               account of interest or principal under the Credit Facility, then, on the
date of                such payment to the Lenders, or promptly thereafter, the Issuer
shall make a                payment on account of interest or principal then due and
payable in respect of                the Notes, such payment to be made at the same
percentage of the interest or                principal then due and payable on the Notes
proportionate to the portion of the                payment actually made to the Lenders
to the amount (interest and principal as                the case may be) due and payable
under the Credit Facility as of the payment                date;  

	 	(ii) 	In
the event that during such Six Month Period the Lenders and the Issuer shall
               reach an agreement regarding a rescheduling of payments by the Issuer to
the                Lenders under the Credit Facility, such rescheduling shall apply pro
rata also                to payments of principal and/or interest, as the case may be, in
respect of the                Notesand the holders of the Notes shall be bound by
such rescheduling                agreement, provided that any such rescheduling agreement
shall apply only to                payments (of principal and/or interest) scheduled to
be made under the Notes and                under the Credit Facility during the period of
12 (twelve) months from the                relevant Bank Payment Date, and shall postpone
the scheduled payment under the                Notes to a date falling not more than 12
(twelve) months after the scheduled                date for such payment pursuant to the
terms of the Notes. (All payments, whether                of interest or principal, in
respect of the Notes rescheduled under any such                rescheduling agreement,
shall be hereinafter referred to as the                “Rescheduled Note Payments”;
the date of payment of Rescheduled Note                Payments shall be hereinafter
referred to as the “Rescheduled Note Payment                Date”; and all
payments, whether of interest or principal under the Credit                Facility,
rescheduled under such a Rescheduling Agreement, shall be hereinafter
               referred to as the “Rescheduled Facility Payments”.) Pursuant to
any                such rescheduling agreement, the Issuer shall pay to the holders of
the Notes,                such amounts on account of principal and/or interest, which,
together with the                aggregate of all payments (of principal and/or interest)
actually made prior to                such Rescheduled Note Payment Date in respect of
the Rescheduled Note Payments                under the rescheduling agreement comprises
the same percentage of the scheduled                repayments of principal or interest,
of the aggregate Rescheduled Note Payments                rescheduled under such
Rescheduling Agreement as the aggregate Rescheduled                Facility Payments
under such rescheduling agreement actually made prior to such                Rescheduled
Note Payment Date comprise of the aggregate Rescheduled Facility                Payments
rescheduled under such Rescheduling Agreement. Alternatively, such
               rescheduling agreement may provide that payments of principal and interest
on                account of the Notes shall, with effect from the termination of such
Six Month                Period, be made to the holders of the Notes in accordance with
the original                schedule under the terms of the Notes, provided that
amounts not paid                during such Six Month Period, or prior thereto shall be
postponed to be paid pro                rata to those payments not made to the Lenders
during such Six Month Period or                prior thereto and the holders of the Notes
shall be bound by such an agreement.                If during the rescheduling period
another Credit Facility Event of Default shall                occur, the aforementioned
provisions shall again apply. For the removal of                doubt, in the event of
the existence of a Credit Facility Event of Default                during or after any
rescheduling period under this Article 8.03(b)(ii),                (including non-payment
on the due date of any amount of principal or interest,                whether pursuant
to any rescheduling agreement or otherwise), the provisions of                this
Article 8.03(b)(ii) shall again apply, mutatis mutandis (all without
               derogating from Article 8.03(c) below).  

- 27 -

        (c)
 Notwithstanding
this Section 8.03, if, on a date scheduled for the payment of           principal or
interest on the Notes, any of the events described in Section 8.03           (c) shall
occur, then no amount of whatsoever nature shall be payable by the           Issuer in
respect of the Notes (whether in respect of principal, interest or any           other
amount) until all amounts owed by the Issuer under the Credit Facility           shall
have been paid in full. The events are as follows:  

	 	
(A)
           The existence of any of the following events: (i) the Issuer’s inability
          or admission of its inability to pay its debts as they fall due or the
          commencement by the Issuer of negotiations with any one or more of its
creditors           with a view to the general readjustment or rescheduling of its
indebtedness or           making a general assignment for the benefit of or a composition
with its           creditors (save for an event referred to in this sub-paragraph (A)
comprising           only the commencement of negotiations by the Issuer with individual
suppliers of           the Issuer to make an adjustment or rescheduling of its
indebtedness to such           suppliers), (ii) if the Issuer takes any corporate action
or other steps are           taken or proceedings are started or are consented to or any
order is made for           the Issuer’s winding-up, liquidation, bankruptcy,
dissolution,           administration or re-organisation (or for the suspension of
payments generally           or any process giving protection against creditors) or for
the appointment of a           liquidator, receiver, administrator, administrative
receiver or any similar           officer, against or in respect of the Issuer, its
revenues or any of its assets)           or any such person is appointed, provided that
such actions, steps, proceedings,           or orders are not cancelled or withdrawn
within 60 days of the occurrence or           institution thereof, (iii) any execution,
attachment or sequestration or other           process arises out of any third party
claim against the Issuer where the amount           being the subject of the relevant
proceeding is in excess of $2.5 million, save           where: (1) the Issuer is in
good faith on reasonable grounds, contesting           the execution, attachment,
sequestration or other process by appropriate           proceedings diligently pursued;
(2) the Lenders are satisfied that the           Issuer’s ability to comply
with its respective obligations under the Credit           Facility will not be adversely
affected whilst such distress, execution,           attachment, diligence or other
process is being so contested; and (3) such           process as aforesaid is
cancelled or withdrawn not later than 45 (forty-five)           days after the
institution thereof;  

	 	
(B)
           If the Lenders under the Credit Facility shall declare that all loans and/or
          other credits received under the Credit Facility are immediately due and
payable           (including where any such declaration is made following a Credit
Facility Event           of Default constituted by proceedings as referred to in
sub-section (C) below;  

	 	
(C)
           In the event that the holders of the Notes (or any person or entity acting on
          their behalf, including the Trustees), shall institute any legal proceedings
          against the Issuer other than in connection with excluded proceedings, and in
          accordance with the terms of the Notes. Excluded proceedings mean (i)
          proceedings where the sole claim relates to the Issuer’s failure to make
          payments of principal or interest on the Notes more than 14 Business Days from
          the date on which the Issuer is required to make them hereunder, as these dates
          may be postponed in accordance with the above provisions in this Section 8,
          provided that the Lenders are given 39 days prior notice as required under
          Section 6.01 before the institution of such proceedings; or (ii) proceedings
          instituted with relate only to a misleading statement in the prospectus
pursuant           to which the Notes were offered.  

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        (d)
 After
the conclusion of a Six Month Period, the Issuer may not make payments of
          principal and interest on the Notes unless the Issuer has either (i) paid the
          Lenders all amounts then owing to them under the Credit Facility in full; or
          (ii) the holders of the Notes shall have obtained a final judgment requiring
the           Issuer to make payment to them.  

             (e)
          In the event that, contrary to the provisions of this Section 8.03, the holders
          of the Notes (or, as applicable, any person or entity acting on their behalf,
          including, subject at all times to Section 8.08, the Trustees) shall receive any
          payment, distribution or benefit, the recipient thereof shall be deemed to hold
          same on trust for the Lenders and shall forthwith pay or transfer to the Lenders
          any payment, distribution or benefit so received. 

        Section 8.04. Reserved.  

        Section 8.05. Provisions Solely to Define Relative Rights. The provisions of this
Article 8 are and are intended solely for the purpose of defining the relative rights
of the Holders of the Notes on the one hand and the Lenders on the other hand. Nothing
contained in this Article 8 or elsewhere in this Indenture or in the Notes is
intended to or shall 

	 	(i) 	impair,
as among the Issuer, its creditors other than Lenders and the Holders of
               the Notes, the obligation of the Issuer, which is absolute and
unconditional, to                pay to the Holders of the Notes the principal and
interest on the Notes as                and when the same shall become due and payable in
accordance with their terms;  

	 	(ii) 	affect
the relative rights against the Issuer of the Holders of the Notes and
               creditors of the Issuer other than the Lenders; or  

	 	(iii) 	prevent
the Trustees or the Holder of any Notes from exercising all remedies
               otherwise permitted by applicable law upon default under this Indenture
subject                to this Article 8.  

        Section 8.06. Trustee to Effectuate Subordination. Each Holder of a Note by its acceptance
thereof authorizes and directs the Trustees on its behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this Article 8
and appoints the Trustees, and each of them, its attorney-in-fact for any and all such
purposes. 

        Section 8.07. No Waiver of Subordination Provisions. No right of any present or future
Lender to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Issuer or by any
act or failure to act, in good faith, by any such Lender, or by any non-compliance by the
Issuer with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such Lender may have or be otherwise charged with. Without in any
way limiting the generality of the foregoing paragraph, the Lenders may, at any time and
from time to time, without the consent of or notice to the Trustees or the Holders of the
Notes, without incurring responsibility to the Holders of the Notes and without impairing
or releasing the subordination provided in this Article 8 or the obligations
hereunder of the Holders of the Notes to the Lenders, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment of, or
renew or alter, existing and future obligations of the Issuer under the Credit Facility,
or otherwise amend or supplement in any manner existing and future obligations of the
Issuer under the Credit Facility or any instrument evidencing the same or any agreement
under which other indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing senior
indebtedness; (iii) release any Person liable in any manner for the collection of
senior indebtedness; and (iv) exercise or refrain from exercising any rights against
the Issuer and any other Person. For the removal of doubt, any variation of the terms of
the Credit Facility Agreement, shall not require the consent of the Noteholders or anyone
acting on their behalf (including the Trustees), nor shall it constitute a default
hereunder. 

- 29 -

        Section 8.08. Notice to Trustee. The Issuer shall give prompt written notice to the
Trustees of any fact known to the Issuer which would prohibit the making of any payment to
or by the Trustee or the Co-Trustee, or both, in respect of the Notes. Notwithstanding the
provisions of this Article 8 or any other provision of this Indenture, the Trustees
shall not be charged with knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Trustees in respect of the Notes, unless and until the
Trustees shall have received written notice thereof from the Issuer or a Lender or from
any trustee thereof; and, prior to the receipt of any such written notice, the Trustees,
subject to the provisions of Section 6.01, shall be entitled in all respects to
assume that no such facts exist; provided, that if the Trustee shall not have
received at its Corporate Trust Office or the Co-Trustee at the address specified in
Section 15.03, the notice provided for in this Section at least three (3) Business Days
prior to the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment in cash of the principal of or
interest on any Note), then, anything herein contained to the contrary notwithstanding,
the Trustees shall have full power and authority to receive such money and to apply the
same to the purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three (3) Business Days prior to
such date. 

        Section 8.09. Trustees Not Fiduciary for the Lenders under the Credit Facility. The
Trustees shall not be deemed to owe any fiduciary duty to the Lenders and shall not be
liable to any Lender if they shall in good faith mistakenly pay over or distribute to
holders or the Issuer or any other Person, cash, property or securities to which any
Lender shall be entitled by virtue of this Article 8 or otherwise. With respect to the
Lenders and the Issuer, the Trustees undertake to perform or to observe only such of its
or their covenants or obligations as are specifically set forth in this Indenture and no
implied covenants or obligations with respect to the Lenders or the Issuer shall be read
into this Indenture against the Trustees. 

        Section 8.10. Trustees’ Compensation Not Prejudiced. Nothing in this Article 8 shall
apply to amounts due to the Trustees pursuant to other Sections of this Indenture. 

ARTICLE 9 

THE NOTEHOLDERS 

             Section 9.01.
          Action by Noteholders. Whenever in this Indenture it is provided that the
          holders of a specified percentage in aggregate principal amount of the Notes may
          take any action (including the making of any demand or request, the giving of
          any notice, consent or waiver or the taking of any other action), the fact that
          at the time of taking any such action, the holders of such specified percentage
          have joined therein may be evidenced (a) by any instrument or any number of
          instruments of similar tenor executed by Noteholders in person or by agent or
          proxy appointed in writing, or (b) by the record of the holders of Notes
          voting in favor thereof at any meeting of Noteholders duly called and held in
          accordance with the provisions of Article 10, or (c) by a combination of
          such instrument or instruments and any such record of such a meeting of
          Noteholders. Whenever the Issuer or the Trustees (acting jointly or separately)
          solicits the taking of any action by the holders of the Notes, the Issuer or the
          Trustees may fix in advance of such solicitation, a date as the record date for
          determining holders entitled to take such action. The record date shall be not
          more than fifteen (15) days prior to the date of commencement of
          solicitation of such action. 

        Section 9.02. Proof
of Execution by Noteholders. Subject to the provisions of Sections           7.01,
7.02 and 10.05, proof of the execution of any instrument by a Noteholder           or its
agent or proxy shall be sufficient if made in accordance with such           reasonable
rules and regulations as may be prescribed by the Trustees or in such           manner as
shall be satisfactory to the Trustees, each acting in its sole           discretion. The
holding of Notes shall be proved by the registry of such Notes           or by a
certificate of the Note registrar. With respect to any Notes held           through the
Clearing House of the TASE and the Hevra Le-Rishumim of Bank Leumi           Le-Israel
Ltd, (Nominee Company), the holding of such Notes may be proven by a           TASE
Member through which such Notes are held.  

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The record of any Noteholders’
meeting shall be proved in the manner provided in Section 10.06. 

        Section 9.03. Who
Are Deemed Absolute Owners. The Issuer, the Trustees, any paying           agent, any
conversion agent and any Note registrar may deem the Person in whose           name such
Note shall be registered upon the Note register to be, and may treat           it as, the
absolute owner of such Note (whether or not such Note shall be           overdue and
notwithstanding any notation of ownership or other writing thereon           made by any
Person other than the Issuer or any Note registrar) for the purpose           of
receiving payment of or on account of the principal of and interest on such
          Note, for conversion of such Note and for all other purposes; and neither the
          Issuer nor the Trustees nor any paying agent nor any conversion agent nor any
          Note registrar shall be affected by any notice to the contrary. All such
          payments so made to any holder for the time being, or upon his order, shall be
          valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
          discharge the liability for monies payable upon any such Note.  

        Section 9.04. Notes
Held by Subsidiaries or Affiliates of the Issuer may be Disregarded. (a) In
determining whether the holders of the requisite aggregate principal           amount of
Notes have concurred in any direction, consent, waiver, vote or other           action
under this Indenture, Notes which are owned by a Subsidiary of the Issuer           shall
be disregarded and deemed not to be outstanding for the purpose of any           such
determination;  

     (b)
          In addition to paragraph (a) above, with respect to Section 6.07 above – in
          determining whether the holders of the requisite aggregate principal amount of
          Notes have concurred in any direction, consent, waiver, vote or other action
          specified in Section 6.07, Notes which are owned by an Affiliate of the Issuer
          shall be disregarded and deemed not to be outstanding for the purpose of any
          such determination; 

provided that for the purposes
of determining whether the Trustees shall be protected in relying on any such direction,
consent, waiver, vote or other action, only Notes which a Responsible Officer of the
Trustee or of the Co-Trustee knows are owned by a Subsidiary or an Affiliate of the Issuer
(as applicable) shall be so disregarded. In the case of a dispute as to such right, any
decision by the Trustees taken upon the advice of counsel shall be full protection to the
Trustees. Upon request of the Trustees, the Issuer shall furnish to the Trustees promptly
an Officers’ Certificate listing and identifying all Notes, if any, known by the
Issuer to be owned or held by or for the account of any of the above described Persons,
and, subject to Section 7.01, the Trustees shall be entitled to accept such
Officers’ Certificate as conclusive evidence of the facts therein set forth and of
the fact that all Notes not listed therein are outstanding for the purpose of any such
determination. 

        Section 9.05. Revocation
of Consents, Future Holders Bound. At any time prior to (but           not after) the
evidencing to the Trustees, as provided in Section 9.01, of           the taking of
any action by the holders of the percentage in aggregate principal           amount of
the Notes specified in this Indenture in connection with such action,           any
holder of a Note which is shown by the evidence to be included in the Notes           the
holders of which have consented to such action may, by filing written notice
          with the Trustee at its Corporate Trust Office and the Co-Trustee at its office
          as specified in Section 15.03 and upon proof of holding as provided in
          Section 9.02, revoke such action so far as concerns such Note. Except as
          aforesaid, any such action taken by the holder of any Note shall be conclusive
          and binding upon such holder and upon all future holders and owners of such
Note           and of any Notes issued in exchange or substitution therefor, irrespective
of           whether any notation in regard thereto is made upon such Note or any Note
issued           in exchange or substitution therefor.  

ARTICLE 10 

MEETINGS OF NOTEHOLDERS 

        Section 10.01. Purpose
of Meetings. A meeting of Noteholders may be called at any time           and from
time to time pursuant to the provisions of this Article 10 for any           of the
following purposes:  

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	 	(1) 	to
give any notice to the Issuer or to the Trustee and/or the Co-Trustee or to
               give any directions to the Trustee and/or the Co-Trustee permitted under
this                Indenture, or to consent to the waiving of any default or Event of
Default                hereunder and its consequences, or to take any other action
authorized to be                taken by Noteholders pursuant to any of the provisions of
Article 6;  

	 	(2) 	to
remove the Trustees (or either of them) and nominate a successor trustee
               pursuant to the provisions of Article 7;  

	 	(3) 	to
consent to the execution of an indenture or indentures supplemental hereto
               pursuant to the provisions of Section 11.02; or  

	 	(4) 	to
take any other action authorized to be taken by or on behalf of the holders
               of any specified aggregate principal amount of the Notes under any other
               provision of this Indenture or under applicable law.  

        Section 10.02. Call
of Meetings by Trustees. The Trustees, either jointly or separately           may at
any time call a meeting of Noteholders to take any action specified in           Section 10.01,
to be held at such time and at such place as the Trustee,           Co-Trustee or both of
them shall determine. Notice of every meeting of the           Noteholders, setting forth
the time and the place of such meeting and in general           terms the action proposed
to be taken at such meeting and the establishment of           any record date pursuant
to Section 9.01, shall be mailed to holders of           Notes at their addresses as
they shall appear on the Note register. Such notice           shall also be mailed to the
Issuer and the Issuer shall publish an Immediate           Report (under the Securities
Law) and furnish a report to the Commission on Form           6-K thereof. Such notices
shall be mailed not less than twenty (20) nor           more than ninety (90) days
prior to the date fixed for the meeting.  

Any meeting of Noteholders shall be
valid without notice if the holders of all Notes then outstanding are present in person or
by proxy or if notice is waived before or after the meeting by the holders of all Notes
outstanding, and if the Issuer, the Trustee and the Co-Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice. 

        Section 10.03. Call
of Meetings by Issuer or Noteholders. In case at any time the           Issuer,
pursuant to a resolution of its Board of Directors, or the holders of at           least
ten percent (10%) in aggregate principal amount of the Notes then           outstanding,
shall have requested the Trustees to call a meeting of Noteholders,           by written
request setting forth in reasonable detail the action proposed to be           taken at
the meeting, and the Trustees shall not have mailed the notice of such           meeting
within twenty (20) days after receipt of such request, then the           Issuer or
such Noteholders may determine the time and the place for such meeting           and may
call such meeting to take any action authorized in Section 10.01,           by
mailing notice thereof as provided in Section 10.02. The Issuer shall
          publish such notice in an Immediate Report and
          furnish a report to the Commission on Form 6-K which shall include such notice
          or the substance thereof.  

        Section 10.04. Qualifications
for Voting. To be entitled to vote at any meeting of           Noteholders a person
shall (a) be a holder of one or more Notes on the           record date pertaining
to such meeting or (b) be a person appointed by an           instrument in writing
as proxy by a holder of one or more Notes on the record           date pertaining to such
meeting. The only persons who shall be entitled to be           present or to speak at
any meeting of Noteholders shall be the persons entitled           to vote at such
meeting and their counsel and any representatives of the           Trustees and their
counsel and any representatives of the Issuer and its           counsel, unless the
Trustees, in their sole discretion, consent to the           participation of other
Persons.  

        Section 10.05. Regulations.
Notwithstanding any other provisions of this Indenture, the           Trustees may
make such reasonable regulations as they may deem advisable for any           meeting of
Noteholders, in regard to proof of the holding of Notes and of the           appointment
of proxies, and in regard to the appointment and duties of           inspectors of votes,
the submission and examination of proxies, certificates and           other evidence of
the right to vote, and such other matters concerning the           conduct of the meeting
as it shall think fit.  

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The Trustees shall, by an instrument
in writing, appoint a temporary chairman of the meeting, unless the meeting shall have
been called by the Issuer or by Noteholders as provided in Section 9.03, in which
case the Issuer or the Noteholders calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the holders of a majority in principal amount of the
Notes represented at the meeting and entitled to vote at the meeting. 

Subject to the provisions of
Section 9.04, at any meeting each Noteholder or proxyholder shall be entitled to one
vote for each $1.00 principal amount of Notes held or represented by him; provided
that no vote shall be cast or counted at any meeting in respect of any Note challenged as
not outstanding and ruled by the chairman of the meeting to be not outstanding. The
chairman of the meeting shall have no right to vote other than by virtue of Notes held by
him or instruments in writing as aforesaid duly designating him as the proxy to vote on
behalf of other Noteholders. Any meeting of Noteholders duly called pursuant to the
provisions of Section 10.02 or 10.03 may be adjourned from time to time by the
holders of a majority of the aggregate principal amount of Notes represented at the
meeting. 

A Responsible Officer of the
Co-Trustee shall participate, without voting privileges, in all meetings of the
shareholders of the Issuer. 

        Section 10.06. Voting.
The vote upon any resolution submitted to any meeting of           Noteholders shall
be by written ballot on which shall be subscribed the           signatures of the holders
of Notes or of their representatives by proxy and the           aggregate principal
amount of the Notes held or represented by them. The           permanent chairman of the
meeting shall appoint two inspectors of votes who           shall count all votes cast at
the meeting for or against any resolution and who           shall make and file with the
secretary of the meeting their verified written           reports in duplicate of all
votes cast at the meeting. A record in duplicate of           the proceedings of each
meeting of Noteholders shall be prepared by the           secretary of the meeting and
there shall be attached to said record the original           reports of the inspectors
of votes on any vote by ballot taken thereat and           affidavits by one or more
persons having knowledge of the facts setting forth a           copy of the notice of the
meeting and showing that said notice was mailed as           provided in Section 10.02.
The record shall show the principal amount of           the Notes voting in favor of or
against any resolution. The record shall be           signed and verified by the
affidavits of the permanent chairman and secretary of           the meeting and one of
the duplicates shall be delivered to the Issuer and the           other to the Trustees
to be preserved by the Trustees, the latter to have           attached thereto the
ballots voted at the meeting.  

Any record so signed and verified
shall be conclusive evidence of the matters therein stated. 

        Section 10.07. No
Delay of Rights by Meeting. Nothing contained in this Article 10 shall           be
deemed or construed to authorize or permit, by reason of any call of a           meeting
of Noteholders or any rights expressly or impliedly conferred hereunder           to make
such call, any hindrance or delay in the exercise of any right or rights
          conferred upon or reserved to the Trustees or to the Noteholders under any of
          the provisions of this Indenture or of the Notes.  

        Section 10.08.  Separate Meetings of Groups of Noteholders. When a meeting of Noteholders is
convened, the Co-Trustee may determine according to the circumstances at that time that
the different interests of certain groups of Noteholders dictate the convening of separate
meetings of certain group of Noteholders, pursuant to the provisions of the Israeli law,
including Israeli case law and the instructions of the ISA (as applicable). In such an
event, such separate meetings shall be convened, and the procedural provisions in this
Article 10, shall apply in those meetings, mutatis mutandis. 

        Section 10.09. Quorum.(a)
Two Noteholders present in person or by proxy who           together hold or represent at
least 50% in aggregate principal amount of the           Notes then outstanding will
constitute a quorum for any meeting of the           Noteholders.  

- 33 -

        (b)
 If
within thirty (30) minutes of the time specified for the meeting to start           there
is no quorum present, the meeting will be postponed to the same day in the
          following week (and in the event that such day is not a Business Day, to the
          Business Day immediately following such day) and to the same venue without it
          being necessary to give notice to that effect to the Noteholders or to another
          day, venue and time as the Issuer selects and of which notice will be given to
          the Noteholders and the Trustees at least three Business Days in advance. If no
          quorum is present at the aforesaid postponed meeting, at that meeting two
          Noteholders who are present in person or by proxy regardless of the principal
          amount they hold, will constitute a quorum.  

        Section 10.10.  Majority
Controls. Resolutions in meetings of the Noteholders shall be           adopted by a
simple majority (50.01%), subject to any other specific provision           herein
requiring any other majority with respect to certain resolutions.  

ARTICLE 11 

SUPPLEMENTAL INDENTURES 

        Section 11.01. Supplemental
Indentures Without Consent of Noteholders. The Issuer, when           authorized by
the resolutions of the Board of Directors, and the Trustees may,           from time to
time, and at any time enter into an indenture or indentures           supplemental hereto
for one or more of the following purposes:  

	 	(a) 	to
evidence the succession of another Person to the Issuer, or successive
               successions, and the assumption by the successor Person of the covenants,
               agreements and obligations of the Issuer pursuant to Article 12; 

	 	(b) 	to
add to the covenants of the Issuer such further covenants, restrictions or
               conditions as the Board of Directors and the Trustees shall consider to be
for                the benefit of the holders of Notes, and to make the occurrence, or
the                occurrence and continuance, of a default in any such additional
covenants,                restrictions or conditions a default or an Event of Default
permitting the                enforcement of all or any of the several remedies provided
in this Indenture as                herein set forth; provided that in respect of
any such additional                covenant, restriction or condition, such supplemental
indenture may provide for                a particular period of grace after default
(which period may be shorter or                longer than that allowed in the case of
other defaults) or may provide for an                immediate enforcement upon such
default or may limit the remedies available to                the Trustees upon such
default; 

	 	(c) 	to
provide for the issuance under this Indenture of Notes in coupon form
               (including Notes registrable as to principal only) and to provide for
               exchangeability of such Notes with the Notes issued hereunder in fully
               registered form and to make all appropriate changes for such purpose; 

	 	(d) 	to
cure any ambiguity or to correct or supplement any provision contained herein
               or in any supplemental indenture that may be defective or inconsistent
with any                other provision contained herein or in any supplemental
indenture, or to make                such other provisions in regard to matters or
questions arising under this                Indenture that shall not materially adversely
affect the interests of the                holders of the Notes; 

	 	(e) 	to
evidence and provide for the acceptance of appointment hereunder by a
               successor trustee with respect to the Notes; 

	 	(f) 	to
modify, eliminate or add to the provisions of this Indenture to such extent
               as shall be necessary to effect the qualifications of this Indenture under
the                Trust Indenture Act, or under any similar federal statute hereafter
enacted or                the Securities Law; or 

	 	(g) 	to
make any other change that does not adversely affect any right of the holders
               of Notes under this Indenture. 

- 34 -

Upon the written request of the
Issuer, accompanied by a copy of the resolutions of the Board of Directors certified by
its Secretary or Assistant Secretary authorizing the execution of any supplemental
indenture, the Trustees are hereby authorized to join with the Issuer in the execution of
any such supplemental indenture, to make any further appropriate agreements and
stipulations that may be therein contained and to accept the conveyance, transfer and
assignment of any property thereunder, but the Trustees shall not be obligated to, but may
in its discretion, enter into any supplemental indenture that affects the Trustees’
own rights, duties or immunities under this Indenture or otherwise. 

Any supplemental indenture authorized
by the provisions of this Section 11.01 may be executed by the Issuer and the
Trustees without the consent of the holders of any of the Notes at the time outstanding,
notwithstanding any of the provisions of Section 11.02 provided, the Trustee
and the Co-Trustee shall have received an opinion of counsel stating that such
supplemental indenture does not adversely affect any rights of the Noteholders. 

        Section 11.02. Supplemental
Indenture with Consent of Noteholders. With the approval of           the
Noteholders, the Trustees may, from time to time and at any time, enter into           an
indenture or indentures supplemental hereto for the purpose of adding any
          provisions to or changing in any manner or eliminating any of the provisions of
          this Indenture or any supplemental indenture or of modifying in any manner the
          rights of the holders of the Notes; provided that the entering into such
          supplemental indenture is approved by a resolution of the Noteholders meeting
in           accordance with Article 10, by the vote of Noteholders who (i) hold not less
          than a majority of the aggregate principal amount of the Notes at the time
          outstanding, determined in accordance with Section 9.04; and also (ii)
hold           at least 75% of the principal amount of the Notes present or represented
in that           Noteholders meeting; and provided further  that no such
supplemental           indenture shall modify any term, covenant or provisions hereof
which under the           provisions of the Trust Indenture Act cannot be modified or
amended without the           consent of the holders of each or all Notes then
outstanding or affected           thereby, without the consent of the holder of each Note
so affected.  

Upon the written request of the
Issuer, accompanied by a copy of the resolutions of the Board of Directors certified by
its Secretary or Assistant Secretary authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustees of evidence of the consent of Noteholders
as aforesaid, the Trustees shall join with the Issuer in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustees’ own
rights, duties or immunities under this Indenture or otherwise, in which case the Trustees
may in their discretion, but shall not be obligated to, enter into such supplemental
indenture. 

It shall not be necessary for the
consent of the Noteholders under this Section 10.02 to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof. 

        Section 11.03. Effect
of Supplemental Indenture. Any supplemental indenture executed           pursuant to
the provisions of this Article 11 shall comply with the Trust           Indenture
Act provided that this Section 11.03 shall not require such           supplemental
indenture or the Trustee to be qualified under the Trust Indenture           Act. Upon
the execution of any supplemental indenture pursuant to the provisions           of this
Article 11, this Indenture shall be and be deemed to be modified           and
amended in accordance therewith and the respective rights, limitation of
          rights, obligations, duties and immunities under this Indenture of the Trustee,
          the Issuer and the holders of Notes shall thereafter be determined, exercised
          and enforced hereunder, subject in all respects to such modifications and
          amendments and all the terms and conditions of any such supplemental indenture
          shall be and be deemed to be part of the terms and conditions of this Indenture
          for any and all purposes.  

        Section 11.04. Notation
on Notes. Notes authenticated and delivered after the execution           of any
supplemental indenture pursuant to the provisions of this Article 11           may
bear a notation in form approved by the Trustees as to any matter provided           for
in such supplemental indenture. If the Issuer or the Trustees shall so
          determine, new Notes so modified as to conform, in the opinion of the Trustees
          and the Board of Directors, to any modification of this Indenture contained in
          any such supplemental indenture may, at the Issuer’s expense, be prepared
          and executed by the Issuer, authenticated by the Trustee (or an authenticating
          agent duly appointed by the Trustee pursuant to Section 15.10) and
          delivered in exchange for the Notes then outstanding, upon surrender of such
          Notes then outstanding.  

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        Section 11.05. Evidence
of Compliance of Supplemental Indenture to Be Furnished to Trustees. Prior to
entering into any supplemental indenture, the Trustees shall be           provided with
an Officers’ Certificate and an Opinion of Counsel as           conclusive evidence
that any supplemental indenture executed pursuant hereto           complies with the
requirements of this Article 11.  

ARTICLE 12 

MERGER AND
CONSOLIDATION 

        Section 12.01. Issuer
May Merge on Certain Terms. The Issuer shall not consolidate or           merge with
or into any other Person or Persons (whether or not affiliated with           the
Issuer), nor shall the Issuer or its successor or successors be a party or
          parties to successive consolidations or mergers unless: upon any such
          consolidation or merger, such successor Person assumes (either expressly as a
          matter of law or assume) the obligation to pay the principal of and interest on
          all of the Notes when due and payable hereunder and the obligation to observe
          all of the covenants and conditions that under this Indenture are to be
          performed by the Issuer.  

        Section 12.02. Successor
to Be Substituted. In case of any such consolidation or merger,           such
successor Person shall succeed to and be substituted for the Issuer, with           the
same effect as if it had been named herein as the party of this first part.
          Such successor Person thereupon may cause to be signed, and may issue either in
          its own name or in the name of Tower Semiconductor Ltd. any or all of the
Notes,           issuable hereunder that theretofore shall not have been signed by the
Issuer and           delivered to the Trustees; and, upon the order of such successor
Person instead           of the Issuer and subject to all the terms, conditions and
limitations in this           Indenture prescribed, the Trustee shall authenticate and
shall deliver, or cause           to be authenticated and delivered, any Notes that
previously shall have been           signed and delivered by the officers of the Issuer
to the Trustee for           authentication, and any Notes that such successor Person
thereafter shall cause           to be signed and delivered to the Trustee for that
purpose. All the Notes so           issued shall in all respects have the same legal rank
and benefit under this           Indenture as the Notes theretofore or thereafter issued
in accordance with the           terms of this Indenture as though all of such Notes had
been issued at the date           of the execution hereof. In the event of any such
consolidation, merger, sale,           conveyance, transfer or lease, the Person named as
the “Issuer”          in the first paragraph of this Indenture or any
successor that shall thereafter           have become such in the manner prescribed in
this Article 11 may be           dissolved, wound up and liquidated at any time
thereafter and such Person shall           be released from its liabilities as obligor
and maker of the Notes and from its           obligations under this Indenture.  

In case of any such consolidation or
merger, such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate. 

        Section 12.03. Opinion
of Counsel to Be Given to Trustees. The Trustees shall receive an           Officers’ Certificate
and an Opinion of Counsel as conclusive evidence that           any such consolidation or
merger and any such assumption by the successor Person           complies with the
provisions of this Article 12.  

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ARTICLE 13 

SATISFACTION AND
DISCHARGE OF INDENTURE 

        Section 13.01. Discharge
of Indenture. When (a) the Issuer shall deliver to the           Trustee for
cancellation all Notes theretofore authenticated (other than any           Notes that
have been destroyed, lost or stolen and in lieu of or in substitution           for which
other Notes shall have been authenticated and delivered) and not           theretofore
canceled, or (b) all the Notes not theretofore canceled or           delivered to
the Trustee for cancellation shall have become due and payable, or           are by their
terms to become due and payable within one year or are to be called           for
redemption within one year under arrangements satisfactory to the Trustees           for
the giving of notice of redemption, and the Issuer shall deposit with the
          Trustees, in trust, funds sufficient to pay at maturity or upon redemption of
          all of the Notes (other than any Notes that shall have been mutilated,
          destroyed, lost or stolen and in lieu of or in substitution for which other
          Notes shall have been authenticated and delivered) not theretofore canceled or
          delivered to the Trustee for cancellation, including principal and interest due
          or to become due to such date of maturity or redemption date, as the case may
          be, accompanied by a verification report, as to the sufficiency of the
deposited           amount, from an independent certified accountant or other financial
professional           satisfactory to the Trustees, and if the Issuer shall also pay or
cause to be           paid all other sums payable hereunder by the Issuer, then this
Indenture shall           cease to be of further effect (except as to (i) remaining
rights of           registration of transfer, substitution and exchange and conversion of
Notes,           (ii) rights hereunder of Noteholders to receive payments of
principal of           and interest on, the Notes and the other rights, duties and
obligations of           Noteholders, as beneficiaries hereof with respect to the
amounts, if any, so           deposited with the Trustees and (iii) the rights,
obligations and           immunities of the Trustees hereunder), and the Trustees, on
written demand of           the Issuer accompanied by an Officers’ Certificate and
an Opinion of           Counsel as required by Section 15.05 and at the cost and
expense of the           Issuer, shall execute proper instruments acknowledging
satisfaction of and           discharging this Indenture; the Issuer, however, hereby
agrees to reimburse the           Trustees for any costs or expenses thereafter
reasonably and properly incurred           by the Trustees and to compensate the Trustees
for any services thereafter           reasonably and properly rendered by the Trustees in
connection with this           Indenture or the Notes.  

        Section 13.02. Deposited
Monies to Be Held in Trust by Trustees. Subject to           Section 13.04, all
monies deposited with the Trustees pursuant to           Section 13.01 shall be held
in trust for the sole benefit of the           Noteholders, and such monies shall be
applied by the Trustee to the payment,           either directly or through any paying
agent (including the Issuer if acting as           its own paying agent), to the holders
of the particular Notes for the payment or           redemption of which such monies have
been deposited with the Trustees, of all           sums due and to become due thereon for
principal and interest.  

        Section 13.03. Paying
Agent to Repay Monies Held. Upon the satisfaction and discharge of           this
Indenture, all monies then held by any paying agent of the Notes (other           than
the Trustees) shall, upon written request of the Issuer, be repaid to it or
          paid to the Trustees, and thereupon such paying agent shall be released from
all           further liability with respect to such monies.  

        Section 13.04. Return
of Unclaimed Monies. Subject to the requirements of applicable           law, any
monies deposited with or paid to the Trustees for payment of the           principal of
or interest on Notes and not applied but remaining unclaimed by the           holders of
Notes for two years after the date upon which the principal of or           interest on
such Notes, as the case may be, shall have become due and payable,           shall be
repaid to the Issuer by the Trustee on demand and all liability of the           Trustees
shall thereupon cease with respect to such monies; and the holder of           any of the
Notes shall thereafter look only to the Issuer for any payment that           such holder
may be entitled to collect unless an applicable abandoned property           law
designates another Person.  

        Section 13.05. Reinstatement.
If the Trustees or the paying agent are unable to apply           any money in
accordance with Section 13.02 by reason of any order or           judgment of any
court or governmental authority enjoining, restraining or           otherwise prohibiting
such application, the Issuer’s obligations under this           Indenture and the
Notes shall be revived and reinstated as though no deposit had           occurred
pursuant to Section 13.01 until such time as the Trustees or the           paying
agent are permitted to apply all such money in accordance with           Section 13.02;
provided that if the Issuer makes any payment of           interest on or
principal of any Note following the reinstatement of its           obligations, the
Issuer shall be subrogated to the rights of the holders of such           Notes to
receive such payment from the money held by the Trustees or paying           agent.  

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ARTICLE 14 

CONVERSION OF NOTES 

        Section 14.01. Right
to Convert. (a) Subject to and upon compliance with
the provisions of this Indenture, but subject to Section 14.04 below, at any time
commencing on the first trading date on the TASE after the date on which the Notes are
listed for trading on the TASE and until 5:00 p.m. (New York City time) on December , 27 , 2011,
inclusive (but if such last date is not a trading day on the TASE, then the last date to
convert the Notes will be the first trading day on the TASE after such date), the holder
of any Note shall have the right, at such holder’s option, to convert the principal
amount of the Note, in integral multiples of $1.00, into fully paid and non-assessable
Ordinary Shares at the Conversion Price in effect at such time, by surrender of the Note so
to be converted, together with any required funds, under the circumstances described in
this Section 14.01 and in the manner provided in Section 14.02.  

        (b)
 A
holder of Notes is not entitled to any rights of a holder of Ordinary Shares
          until such holder has converted his Notes to Ordinary Shares, and only to the
          extent such Notes are deemed to have been converted to Ordinary Shares under
          this Article 14.  

             (c)
          No accrued interest will be payable by the Issuer upon the conversion of the
          Notes into Ordinary Shares. A holder’s right to accrued interest, if any,
          will be lost up conversion of the Notes into Ordinary Shares. 

             (d)
          Fractional shares will not be issued upon conversion of the Notes. The number of
          shares issuable upon conversion of the Notes will be rounded down to the nearest
          whole number. No payment of cash or in kind will be made in lieu of fractional
          shares. 

        Section 14.02. Exercise
of Conversion Privilege; Issuance of Ordinary Shares on Conversion;           No
Adjustment for Interest. In order to exercise the conversion privilege           with
respect to any Note in certificated form, the Issuer must receive at the           office
or agency of the Issuer maintained for that purpose or, at the option of           such
holder, the Corporate Trust Office, such Note with the original or           facsimile of
the form entitled “Conversion Notice” on the           reverse thereof,
duly completed and manually signed, together with such Notes           duly endorsed for
transfer. Such notice shall also state the name or names (with           address or
addresses) in which the certificate or certificates for Ordinary           Shares which
shall be issuable on such conversion shall be issued, and shall be           accompanied
by transfer or similar taxes, if required pursuant to this           Indenture.  

As promptly as practicable after
satisfaction of the requirements for conversion set forth above, subject to compliance
with any restrictions on transfer if shares issuable on conversion are to be issued in a
name other than that of the Noteholder (as if such transfer were a transfer of the Note or
Notes so converted), the Issuer shall issue and shall deliver to such Noteholder at the
office or agency maintained by the Issuer for such purpose pursuant to Section 4.02,
a certificate or certificates for the number of full Ordinary Shares issuable upon the
conversion of such Note as determined by the Issuer in accordance with the provisions of
this Article 14, calculated by the Issuer as provided in Section 14.03. 

Each conversion shall be deemed to
have been effected as to any such Note on the date on which the requirements set forth
above in this Section 14.02 have been satisfied as to such Note, and the Person in
whose name any certificate or certificates for Ordinary Shares shall be issuable upon such
conversion shall be deemed to have become on said date the holder of record of the shares
represented thereby; provided that any such surrender on any date when the stock
transfer books of the Issuer shall be closed shall constitute the Person in whose name the
certificates are to be issued as the record holder thereof for all purposes on the next
succeeding day on which such stock transfer books are open, but such conversion shall be
at the Conversion Price in effect on the date upon which such Note shall be surrendered. 

Upon
conversion of a Note, and thereafter, no amount of principal and/or interest on account of
the Note shall be payable by the Issuer. 

        Section 14.03. Conversion
Price. Each $1.10 principal amount of the Notes shall be           convertible
into one Ordinary Share specified in the form of Note (herein called           the “Conversion
Price”) attached as Exhibit A hereto, subject to           adjustment as
provided in this Article 14. The adjusted Conversion Price to           the
debentures shall under no circumstances be lower than $0.01. Fractional           shares
will not be issued upon conversion of the Notes. The number of shares           issuable
upon conversion of the Notes will be rounded down to the nearest whole           number.
No payment of cash or in kind will be made in lieu of fractional shares.  

- 38 -

        Section 14.04.
 Adjustment
of Conversion Price. Except as set forth in this Section 14.04 below, the Conversion Price will be adjusted if:  

	 	(a) 	In the event that
by December 20 , 2006, the Issuer consummates one or more financings (excluding the
offering under which the Notes were issued) in which the Issuer receives gross proceeds from each
such financing that equal or exceed $5 million, the Conversion Price of the Notes will be adjusted
to 90% of the lowest price per share (as calculated below) at which the Issuer sold securities in
any one of these financings, provided that the lowest price per share at which the Issuer sold
securities in any one of these financings is lower than the original Conversion Price. The Issuer
shall issue a press release, with a copy to the Trustee and Co-Trustee, to announce the adjusted
Conversion Price on the fifth TASE Trading Day after December 20 , 2006 and the adjustment will take
effect on the first TASE Trading Day following the twenty-first day after the date of the press
release. 

	 	(b) 	In the event that by
December 20 , 2006, the Issuer does not receive in any one financing (excluding the
offering under which the Notes were issued) gross proceeds that equal or exceed $5 million, but
executes prior to December 20 , 2006, one or more agreements relating to transactions which have not
closed, letters of intent, memorandums of understanding or similar agreements or understandings, for
a proposed financing or financings, which have not been abandoned prior to December 20 , 2006, and the
Issuer receives in any one of these financings gross proceeds that equal or exceed $5 million by
June 20 , 2007, then, the Conversion Price will be adjusted to 90% of the lowest price per
share (as calculated below) at which the Issuer sold securities in any of these financings, provided
that the lowest price per share at which the Issuer sold securities in any one of these financings
is lower than the original Conversion Price.  The Issuer shall issue a press release, with a copy to
the Trustee and Co-Trustee, to announce the adjusted Conversion Price on the fifth TASE Trading Day
after June 20 , 2007 and the adjustment will take effect on the first TASE Trading Day following the
twenty-first day after the date of the press release. 

	 	
A
“financing” for purposes of adjustments to the Conversion Price means:  

	 	(a) 	the
sale of the Issuer’s Ordinary Shares, warrants or additional
               convertible debentures, other than employee options, existing outstanding
               warrants, employee options, convertible debentures or other rights; and 

	 	(b) 	the
conversion of existing debt of the Issuer into equity, other than the
               conversion of existing wafer credits into the Issuer’s Ordinary
Shares and                existing convertible debentures. 

	 	
The
Issuer shall calculate the price per share for the purposes of the adjustment to the
Conversion Price as follows:  

	 	(a) 	If,
in the financing or financings the Issuer issues only Ordinary Shares, the
               price per share for the purposes of calculating the adjustment will be the
price                per Ordinary Share in the financing or financings. 

	 	(b) 	If,
in the financing or financings the Issuer issues only convertible
               debentures, the price per share for the purposes of calculating the
adjustment                will be the result of dividing the purchase price of the
debentures issued in                the financing or financings less the present value of
the cumulative amount of                interest payable prior to the last conversion
date of the debentures issued in                the financing or financings, by the
number of Ordinary Shares issuable upon                conversion of the debentures
issued in the financing or financings. 

- 39 -

	 	(c) 	If,
in the financing or financings the Issuer issues only warrants, the price
               per share for the purposes of calculating the adjustment will be the
purchase                price of the warrants less the difference between the economic
value of the                warrants and the purchase price of the warrants, plus the
present value of the                exercise price of the warrants. 

	 	(d) 	If,
in the financing or financings the Issuer issues units consisting of
               Ordinary Shares and warrants, the price per share for the purposes of
               calculating the adjustment will be the result of dividing the purchase
price per                unit in the financing or financings, less the economic value of
the warrants, by                the number of Ordinary Shares in each unit (not including
the number of Ordinary                Shares issuable upon exercise of the warrants). 

	 	(e) 	If,
in the financing or financings the Issuer issues units consisting of
               convertible debentures and warrants, the price per share for the purposes
of                calculating the adjustment will be the result of dividing the price per
unit in                the financing or financings, less the present value of the
cumulative amount of                interest payable prior to the last conversion date of
the debentures issued in                the financing or financings and less the economic
value of the warrants included                in the units, by the number of Ordinary
Shares in each unit issuable upon                conversion of the debentures issued in
the financing or financings, but not                including the number of Ordinary
Shares issuable upon exercise of the warrants. 

	 	(f) 	If,
in the financing or financings the Issuer issues units consisting of
               Ordinary Shares and convertible debentures, the price per share for the
purposes                of calculating the adjustment will be the result of dividing the
purchase price                per unit in the financing or financings, less the present
value of the                cumulative amount of interest payable prior to the last
conversion date of the                debentures issued in the financing or financings,
by the number of Ordinary                Shares in each unit including the number of
Ordinary Shares issuable upon                conversion of the debentures issued in the
financing or financings. 

	 	(g) 	If,
in the financing or financings the Issuer issues units consisting of
               Ordinary Shares, convertible debentures and warrants, the price per share
for                the purposes of calculating the adjustment will be the result of
dividing the                price per unit in the financing or financings, less the
present value of the                cumulative amount of interest payable prior to the
last conversion date of the                debentures issued in the financing or
financings and less the economic value of                the warrants included in the
units, by the number of Ordinary Shares in each                unit including the number
of Ordinary Shares issuable upon conversion of the                debentures issued in
the financing or financings, but not including the number                of Ordinary
Shares issuable upon exercise of the warrants. 

        For
the purposes of the adjustments set forth above, the “economic value” of the
warrants will be calculated according to the Black and Scholes model as set forth in the
TASE Rules for registered companies based on the average closing price of the
Issuer’s Ordinary Shares on NASDAQ (or such other stock exchange or quotation system
on which the Issuer’s Ordinary Shares are listed in that the event that they cease to
be traded on NASDAQ) during the 15 consecutive trading days immediately prior to the date
on which the financing agreement is signed. The interest rate for this calculation will be
the interest rate as published by the TASE on the date of the relevant financing. 

        For
the purposes of the adjustments set forth above, the “present value” will be
calculated using the interest rate then applicable to the long term loans (more than 12
months maturity) under the Credit Facility. In the event that the financing or financings
is denominated in a currency other than United States dollars, the amounts in the
financing or financings will be converted to United States dollars according to the last
known exchange rate on the date of the consummation of the relevant financing. 

- 40 -

        Section 14.05. Effect
of Reclassification, Consolidation, Merger, Bonus Shares, Rights           Offerings. 

	 	(a) 	If
the Issuer shall effect a subdivision or consolidation of its Ordinary Shares
               into a greater or lesser number of Ordinary Shares (by reclassification,
stock                split, reverse stock split or otherwise than by payment of a
dividend in                Ordinary Shares) then, upon conversion of Notes following the
record date for                the determination of holders of Ordinary Shares to be
affected by such                subdivision or consolidation, the number of Ordinary
Shares issuable upon the                conversion of each Note will be increased or
decreased, as the case may be, by                such number of Ordinary Shares that
would have been received if such Note had                been converted on the record
date fixed for such subdivision or consolidation. 

	 	(b) 	If
the Issuer shall effect a distribution of bonus Ordinary Shares then, upon
               conversion of Notes following the record date for the determination of
holders                of Ordinary Shares entitled to the bonus share distribution, the
number of                Ordinary Shares issuable upon the conversion of each Note will
be increased by                such number of Ordinary Shares that would have been
received if such Note had                been converted on the record date fixed for the
bonus share distribution. 

	 	(c) 	In
the event of the Issuer shall consummate a rights offering to its
               shareholders of any type of its securities prior to the conversion of the
Notes,                the number of Ordinary Shares issuable upon the conversion of the
Notes shall be                adjusted to take into account the element of economic
benefit in the future                rights offering as is represented by the ratio
between the price per share of                the Issuer’s Ordinary Shares on the
effective date of the future rights                offering and the opening price per
share of the Issuer’s Ordinary Shares                that is established by the TASE
on the following TASE Trading Day. If the TASE                does not establish an
opening price per share of the Issuer’s Ordinary                Shares, no
adjustment in the number of shares issuable upon conversion of the                Notes
will be made with respect to such future rights offering. 

- 41 -

	 	(d) 	In
the event of a consolidation or merger of the Issuer with another Person as a
               result of which the Issuer is not the surviving Person, the Issuer shall
provide                notice to the Trustees prior to the date of consummation of such
consolidation                or merger. Notes which are not converted prior to the date
of consummation of                such consolidation or merger shall no longer be
convertible. The surviving                Person shall execute with the Trustee a
supplemental indenture (which shall                comply with the Trust Indenture Act as
in force at the date of execution of such                supplemental indenture)
providing that each Note shall continue to hold such                rights and/or
privileges with respect to payment of interest and/or principal                from the
surviving Person as further set forth in section 12.01. 

The Issuer shall cause notice of the
execution of such supplemental indenture to be mailed to each holder of Notes, at its
address appearing on the Note register provided for in Section 2.05 of this
Indenture, within twenty (20) days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of such supplemental indenture. 

The above provisions of this Section
shall similarly apply to successive reclassifications, consolidations, mergers and
combinations. 

If Section 14.05(d) applies,
thereafter, the adjustments under Section 14.04 shall no longer apply. 

        Section 14.06 Reserved. 

        Section 14.07. Taxes
on Shares Issued. The issue of stock certificates on conversions of           Notes
shall be made without charge to the converting Noteholder for any           documentary,
stamp or similar issue or transfer tax in respect of the issue           thereof. The
Issuer shall not, however, be required to pay any such tax which           may be payable
in respect of any transfer involved in the issue and delivery of           stock in any
name other than that of the holder of any Note converted, and the           Issuer shall
not be required to issue or deliver any such stock certificate           unless and until
the Person or Persons requesting the issue thereof shall have           paid to the
Issuer the amount of such tax or shall have established to the           satisfaction of
the Issuer that such tax has been paid.  

        Section 14.08. Reservation
of Shares, Shares to Be Fully Paid; Compliance with Governmental           Requirements;
Listing of Ordinary Shares. The Issuer shall provide, free           from preemptive
rights, out of its authorized but unissued shares or shares held           in treasury,
sufficient Ordinary Shares to provide for the conversion of the           Notes from time
to time as such Notes are presented for conversion.  

Upon taking any action which would
cause an adjustment to the Conversion Price to an amount that would cause the Conversion
Price to be reduced below the then par value, if any, of the Ordinary Shares issuable upon
conversion of the Notes, the Issuer will take all corporate action which may, in the
opinion of its counsel, be necessary in order that the Issuer may validly and legally
issue Ordinary Shares at such adjusted Conversion Price. 

The Issuer covenants that all
Ordinary Shares which may be issued upon conversion of Notes will upon issue be fully paid
and non-assessable by the Issuer and free from all taxes, liens and charges with respect
to the issue thereof. 

The Issuer covenants that, if any
Ordinary Shares to be provided for the purpose of conversion of Notes hereunder require
registration with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Issuer will in good faith
and as expeditiously as possible, to the extent then permitted by the rules and
interpretations of the Commission (or any successor thereto), endeavor to secure such
registration or approval, as the case may be. 

- 42 -

The Issuer further covenants that, if
at any time the Ordinary Shares shall be listed on the NASDAQ National Market and the TASE
or any other national securities exchange or automated quotation system, the Issuer will,
if permitted by the rules of such exchange or automated quotation system, list and keep
listed, so long as the Ordinary Shares shall be so listed on such exchange or automated
quotation system, all Ordinary Shares issuable upon conversion of the Notes;
provided that if the rules of such exchange or automated quotation system permit the
Issuer to defer the listing of such Ordinary Shares until the first conversion of the
Notes into Ordinary Shares in accordance with the provisions of this Indenture, the Issuer
covenants to list such Ordinary Shares issuable upon conversion of the Notes in accordance
with the requirements of such exchange or automated quotation system at such time. 

        Section 14.09. Responsibility
of Trustees. The Trustees and any other conversion agent           shall not at any
time be under any duty or responsibility to any holder of Notes           to determine
the Conversion Price or whether any facts exist which may require           any adjustment
of the Conversion Price, or with respect to the nature or extent           or calculation
of any such adjustment when made, or with respect to the method           employed, or
herein or in any supplemental indenture provided to be employed, in           making the
same. The Trustees and any other conversion agent shall not be           accountable with
respect to the validity or value (or the kind or amount) of any           Ordinary
Shares, or of any securities or property, which may at any time be           issued or
delivered upon the conversion of any Note; and the Trustees and any           other
conversion agent make no representations with respect thereto. Neither the
          Trustees nor any conversion agent shall be responsible for any failure of the
          Issuer to issue, transfer or deliver any Ordinary Shares or stock certificates
          or other securities or property or cash upon the surrender of any Note for the
          purpose of conversion or to comply with any of the duties, responsibilities or
          covenants of the Issuer contained in this Article 14. Without limiting the
          generality of the foregoing, neither the Trustees nor any conversion agent
shall           be under any responsibility to determine the correctness of any
provisions           contained in any supplemental indenture entered into pursuant to
          Section 14.05 relating to any adjustment to be made with respect thereto,
          but, subject to the provisions of Section 7.01, may accept as conclusive
          evidence of the correctness of any such provisions, and shall be protected in
          relying upon, the Officers’ Certificate (which the Issuer shall be
          obligated to file with the Trustees prior to the execution of any such
          supplemental indenture) with respect thereto.  

        Section 14.10. Notice
to Holders Prior to Certain Actions. In case of the taking of any           of the
actions listed in Section 14.05 above or of the voluntary or involuntary
          dissolution, liquidation or winding up of the Issuer, the Issuer shall cause to
          be filed with the Trustees and to be mailed to each holder of Notes at his
          address appearing on the Note register provided for in Section 2.05 of
this           Indenture, as promptly as possible but in any event at least ten (10) days
          prior to the applicable date hereinafter specified, a notice stating
          (x) the date on which a record is to be taken for the purpose of such
          distribution of bonus shares, or rights offering, or, if a record is not to be
          taken, the date as of which the holders of Ordinary Shares of record to be
          entitled to such bonus shares, or to participate in such rights offering are to
          be determined, or (y) the date on which such, consolidation, merger
          dissolution, liquidation or winding up is expected to become effective or
occur.           Failure to give such notice, or any defect therein, shall not affect the
          legality or validity of such dividend, distribution, reclassification,
          consolidation, merger, dissolution, liquidation or winding up.  

ARTICLE 15 

MISCELLANEOUS
PROVISIONS 

        Section 15.01. Provisions
Binding on Issuer’s Successors. All the covenants,           stipulations,
promises and agreements by the Issuer contained in this Indenture           shall bind
its successors and assigns whether so expressed or not.  

        Section 15.02. Official
Acts by Successor Corporation. Any act or proceeding by any           provision of
this Indenture authorized or required to be done or performed by           any board,
committee or officer of the Issuer shall and may be done and           performed with
like force and effect by the like board, committee or officer of           any Person
that shall at the time be the lawful sole successor of the Issuer.  

- 43 -

        Section 15.03. Notices; Addresses
for Notices, Etc. Any notice or demand which by any provision of this Indenture is to be given by publication and/or
the filing of a report with the Commission and/or the ISA, shall, if and to the extent so required
by the provision of any applicable law or stock exchange rule, be mailed to each holder of Notes at
his address appearing on the Note register provided for in Section 2.05 of this Indenture.

Any notice or demand which by any provision           of this
Indenture is required or permitted to be given or served by the Trustees           or by
the holders of Notes on the Issuer shall be deemed to have been           sufficiently
given or made, for all purposes, if given or served by being           deposited postage
prepaid by registered or certified mail in a post office           letter box or sent by
telecopier transmission addressed as follows:  

to the Issuer:

Tower Semiconductor Ltd.

Ramat Gavriel Industrial Park

P.O. Box 619 Migdal Haemek 23150

Israel

Attention: Chief Financial Officer

Facsimile: +972 (0) 4-654-6510.

Any notice, direction, request or
demand hereunder to or upon the Trustees shall be deemed to have been sufficiently given
or made, for all purposes, if given or served by being deposited, postage prepaid, by
registered or certified mail in a post office letter box or sent by telecopier
transmission addressed as follows: 

The Bank of New York

One Canada Square

London E14 5AL

United Kingdom

Facsimile: +44 (0) 207-964 6399

Attention: Corporate Trust Administration

and

Hermetic Trust (1975) Ltd

of Hayarkon Street 113

Tel Aviv

Israel

Facsimile: +972 (0) 3-527 1736

Attention: Dan Avnon, Esq.

The Trustees, by notice to the
Issuer, may designate additional or different addresses for subsequent notices or
communications. 

Any notice or communication mailed to
a Noteholder shall be mailed to him by first class mail, postage prepaid, at his address
as it appears on the Note register and shall be sufficiently given to him if so mailed
within the time prescribed. 

Failure to mail a notice or
communication to a Noteholder or any defect in it shall not affect its sufficiency with
respect to other Noteholders. If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it. 

        Section 15.04. Governing
Law. THIS INDENTURE AND EACH NOTE SHALL BE DEEMED TO BE A           CONTRACT MADE
UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES           SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  

        Section 15.05. Evidence
of Compliance with Conditions Precedent, Certificates to Trustees. Upon any
application or demand by the Issuer to the Trustees to take any           action under
any of the provisions of this Indenture, the Issuer shall furnish           to the
Trustees an Officers’ Certificate stating that all conditions           precedent,
if any, provided for in this Indenture relating to the proposed           action have
been complied with, and an Opinion of Counsel stating that, in the           opinion of
such counsel, all such conditions precedent have been complied with.  

- 44 -

Each certificate or opinion provided
for in this Indenture and delivered to the Trustees with respect to compliance with a
condition or covenant provided for in this Indenture shall include: (1) a statement
that the person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is based;
(3) a statement that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and (4) a statement as to
whether or not, in the opinion of such person, such condition or covenant has been
complied with. 

        Section 15.06. Legal
Holidays. In any case in which the date of maturity of interest on           or
principal of the Notes or the redemption date of any Note will not be a
          Business Day, then payment of such interest on or principal of the Notes need
          not be made on such date, but may be made on the next succeeding Business Day
          with the same force and effect as if made on the date of maturity or the
          redemption date, and no interest shall accrue for the period from and after
such           date.  

        Section 15.07. Trust
Indenture Act. This Indenture is hereby made subject to, and shall           be
governed by, the provisions of the Trust Indenture Act required to be part of
          and to govern indentures qualified under the Trust Indenture Act;If any
          provision hereof limits, qualifies or conflicts with another provision hereof
          which is required to be included in an indenture qualified under the Trust
          Indenture Act, such required provision shall control.  

        Section 15.08. No
Security Interest Created. The Notes are not secured. Nothing in this
          Indenture or in the Notes, expressed or implied, shall be construed to
          constitute a security interest under the Uniform Commercial Code or similar
          legislation, as now or hereafter enacted and in effect, in any jurisdiction in
          which property of the Issuer or its subsidiaries is located.  

        Section 15.09. No limitation on the Issuer’s Future Financings. For the removal of
doubt, it is clarified that the Issuer shall be entitled to create pledges and security
interests over any of its assets, without the consent of the Trustees and/or the
Noteholders, and that the Issuer shall be entitled at any time to take any credit with no
limitation, to issue additional series of debentures, with any terms whatsoever as the
Issuer decide, whether subordinated or senior or equal to the rights of the Noteholders
hereunder.  

        Section 15.10. Benefits
of Indenture. Nothing in this Indenture or in the Notes, express           or
implied, shall give to any Person, other than the parties hereto, any paying
          agent, any authenticating agent, any Note registrar and their successors
          hereunder and the holders of Notes any benefit or any legal or equitable right,
          remedy or claim under this Indenture.  

        Section 15.11. Table of Contents, Headings, Etc. The table of contents and the
titles           and headings of the Articles and Sections of this Indenture have been
inserted           for convenience of reference only, are not to be considered a part
hereof, and           shall in no way modify or restrict any of the terms or provisions
hereof.  

        Section 15.12. Authenticating
Agent. The Trustee may appoint an authenticating agent           that shall be
authorized to act on its behalf, and subject to its direction, in           the
authentication and delivery of Notes in connection with the original           issuance
thereof and transfers and exchanges of Notes hereunder, including under
          Sections 2.04, 2.05, 2.06, 2.07 and 3.02, as fully to all intents and purposes
          as though the authenticating agent had been expressly authorized by this
          Indenture and those Sections to authenticate and deliver Notes. For all
purposes           of this Indenture, the authentication and delivery of Notes by the
          authenticating agent shall be deemed to be authentication and delivery of such
          Notes “by the Trustee” and a certificate of authentication executed
on           behalf of the Trustee by an authenticating agent shall be deemed to satisfy
any           requirement hereunder or in the Notes for the Trustee’s certificate of
          authentication. Such authenticating agent shall at all times be a Person
          eligible to serve as trustee hereunder pursuant to Section 7.09.  

- 45 -

Any corporation into which any
authenticating agent may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, consolidation or conversion to which any
authenticating agent shall be a party, or any corporation succeeding to the corporate
trust business of any authenticating agent, shall be the successor of the authenticating
agent hereunder, if such successor corporation is otherwise eligible under this
Section 15.12, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor corporation. 

Any authenticating agent may at any
time resign by giving written notice of resignation to the Trustee and to the Issuer. The
Trustee may at any time terminate the agency of any authenticating agent by giving written
notice of termination to such authenticating agent and to the Issuer. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee shall
either promptly appoint a successor authenticating agent or itself assume the duties and
obligations of the former authenticating agent under this Indenture and, upon such
appointment of a successor authenticating agent, if made, shall give written notice of
such appointment of a successor authenticating agent to the Issuer and shall mail notice
of such appointment of a successor authenticating agent to all holders of Notes as the
names and addresses of such holders appear on the Note register. 

The Issuer agrees to pay to the
authenticating agent from time to time such reasonable compensation for its services as
shall be agreed upon in writing between the Issuer and the authenticating agent. 

The provisions of Sections 7.02,
7.03, 7.04 and 8.03 and this Section 15.12 shall be applicable to any authenticating
agent. 

        Section 15.13. Execution
in Counterparts. This Indenture may be executed in any number           of
counterparts, each of which shall be an original, but such counterparts shall
          together constitute but one and the same instrument.  

        Section 15.14. Severability.
In case any provision in this Indenture or in the Notes           shall be invalid,
illegal or unenforceable, then (to the extent permitted by           law) the validity,
legality and enforceability of the remaining provisions shall           not in any way be
affected or impaired thereby.  

The Bank of New York and Hermetic
Trust (1975) Ltd. each hereby accepts the trusts in this Indenture declared and provided,
upon the terms and conditions herein above set forth. 

- 46 -

        IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed. 

			TOWER SEMICONDUCTOR LTD.,

By: 
——————————————

   Name:
   Title: 

			THE BANK OF NEW YORK, as Trustee

By: 
——————————————

   Name:
   Title: 

			HERMETIC TRUST (1975) LTD., as Co-Trustee

By: 
——————————————

   Name:
   Title: 

Exhibit A 

FORM OF NOTE 

[FORM OF FACE OF NOTE] 

 [THE FOLLOWING LEGEND
SHALL APPEAR ON THE FACE OF EACH RESTRICTED NOTE]  

THE NOTE EVIDENCED HEREBY AND
THE ORDINARY SHARES ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF A
REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES SO OFFERED OR SOLD IN EFFECT UNDER
THE SECURITIES ACT OR AN OPINION OF COUNSEL (SATISFACTORY IN FORM AND SUBSTANCE TO THE
ISSUER) THAT SUCH REGISTRATION IS NOT REQUIRED. 

TOWER SEMICONDUCTOR
LTD. 

5% SUBORDINATED
CONVERTIBLE DEBENTURES DUE 201 2 

CUSIP: M87915 AB 6

No.  

$___________

        Tower
Semiconductor Ltd., a company with limited liability incorporated under the laws of
the State of Israel (herein called the “Issuer), for value received hereby promises to pay to
[ ] or its registered assigns, the principal sum of           Dollars at
maturity on January 12 , 201 2 , and to pay interest on said principal sum, at the rate per annum of
5%, from January 13 , 200 6 until the principal hereof is duly paid or provided for. Interest on the
Notes shall be computed on the basis of a 365-day year.  

        All
payments of the principal of and interest due and payable on this Note at the
maturity thereof or on any redemption date, shall be made only upon the surrender of this Note, at
the option of the holder, at the Corporate Trust Office or at the office or agency maintained by the
Issuer for that purpose in London, England, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private debts. 

        No
accrued interest will be payable upon  portion of this Note converted into the Issuer’s Ordinary Shares, as provided on
the reverse hereof and in the Indenture. 

        Reference
is made to the further provisions of this Note set forth on the reverse hereof. Such
further provisions shall for all purposes have the same effect as though fully set forth
at this place. 

        This
Note shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been manually signed by the Trustee or a duly authorized
authenticating agent under the Indenture. 

        IN
WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.  

	

Attest:	

By:
——————————————

Name:
Title:	TOWER SEMICONDUCTOR LTD.,

By:
——————————————

Name:
Title: 

Dated: 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION  
    

This is one of the Notes described in
the within-named Indenture.   

THE BANK OF NEW YORK, as Trustee 

	

By: ______________________________

       Authorized Signatory

                            , or

	

By: ______________________________

       As Authenticating Agent
       (if different from Trustee)

	

By: ______________________________

       Authorized Signatory

- A-2 -

FORM OF REVERSE OF NOTE 

TOWER SEMICONDUCTOR
LTD. 

5% SUBORDINATED
CONVERTIBLE DEBENTURES DUE 201 2 

        Notes;
Indenture; Trustees. This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its 5% Subordinated Convertible Debentures due 201 2 (the
“Notes”), limited in aggregate principal amount to $50,000,000 and to be
issued under and pursuant to an Indenture dated as of December 15 , 2005 (the
“Indenture”), by and between the Issuer, and The Bank of New York, as
trustee (the “Trustee”) and Hermetic Trust (1975) Ltd., as co-trustee
(the “Co-Trustee”, and, together with the Trustee, the
“Trustees”), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustees, the Issuer and the holders
of the Notes. 

        No
reference herein to the Indenture and no provision of this Note or of the Indenture shall
(i) alter or impair the obligation of the Issuer, which is absolute and unconditional, to
pay the principal and interest on this Note at the place, at the
respective times, at the rate and in the coin or currency herein prescribed; (ii) affect
the relative rights against the Issuer of the Holders of the Notes and creditors of the
Issuer other than the Lenders; or (iii) prevent the Trustees or the holder of any Notes
from exercising all remedies otherwise permitted by applicable law upon default under the
Indenture (subject to any conditions and limitations set forth therein). 

        Capitalized
but otherwise undefined terms used in this Note that are defined in the Indenture are used
herein as therein defined. 

        Form;
Denomination; Exchange; Transfer. The Notes are issuable in fully registered form,
without coupons, in denominations of $1.00 principal amount and any integral multiple of
$1.00, at the office or agency of the Issuer referred to on the face hereof, and in the
manner and subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax, assessment or other
governmental charge that may be imposed in connection with any registration or exchange of
Notes, Notes may be exchanged for a like aggregate principal amount of Notes of any other
authorized denominations. Upon surrender for registration of transfer of this Note to the
Note registrar or any co-registrar, and satisfaction of the requirements for such transfer
set forth in Section 2.05 of the Indenture, the Issuer shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or transferees,
one or more new Notes of authorized denominations and of like aggregate principal amount
and bearing such restrictive legends as may be required by this Indenture, subject to the
limitations provided in the Indenture and without charge except for any tax, assessment or
other governmental charge imposed in connection therewith. 

             Redemption.
          The Issuer may, at its option, announce the early redemption of the Notes,
          provided that the outstanding aggregate balance of principal on account of the
          Notes is equal to or less than $500,000. In such case, the Issuer shall redeem
          100% of the Notes; no partial redemptions shall be permitted. The Issuer will
          provide notice to the holders of the Notes and the Trustees at least 30 days
          (but not more than 45 days) prior to any such redemption. 

        The
Notes are not subject to redemption through the operation of any sinking fund. 

- A-3 -

             Subordination.
          All payments pursuant to the Notes made by or on behalf of the Issuer are subordinated to the extent
and in the manner provided in the Indenture to all existing and future obligations of the Issuer
under the Credit Facility. Any Holder by accepting this Note agrees to and shall be bound by the
subordination provisions set forth in the Indenture. Upon any dissolution, winding up, liquidation
or reorganization of the Issuer, the Lenders will be entitled to receive payment in full of all
amounts due to them under the Credit Facility before the holders of Notes are entitled to receive
any payment. In addition, the dates for payment of the principal and interest
on the Notes may be postponed (with interest continuing to accrue at regular rates), under certain
circumstances as described in the Indenture. The Lenders may, at any time and from time to time,
without the consent of or notice to the Trustees or the holders of the Notes, take any action under
the Credit Facility or vary any terms of the Credit Facility agreement, as set forth in Article 8 of
the Indenture. 

             Conversion.
          Subject to and in compliance with the provisions of the Indenture, commencing on
          the first trading date on the TASE after the date on which the Notes are listed for trading on the TASE and until 5:00 p.m. (New York City time) on
          December 27 , 2011, inclusive (but if such last date is not a trading day
          on the TASE, then the last date to convert the Notes will be the first trading
          day on the TASE after such date), the holder hereof has the right, at its
          option, to convert the principal amount of the Notes, in integral multiples of
          $1.00, into the Issuer’s Ordinary Shares at the Conversion Price in
          effect at such time, subject to adjustment from time to time as provided in
          Section 14.04 of the Indenture, upon surrender of this Note with the form
          entitled “Conversion Notice” on the reverse hereof duly
          completed, to the Issuer at the office or agency of the Issuer maintained for
          that purpose in accordance with the terms of the Indenture, or at the option of
          such holder, the Corporate Trust Office, and, unless the shares issuable on
          conversion are to be issued in the same name as this Note, duly endorsed for
          transfer. 

        The
Conversion Price is subject to adjustment if the Issuer consummates one or more financings as
described in Section 14.04 of the Indenture on or before December 20, 2006, or in certain circumstances on
or before June 20, 2007, subject to and as provided in Section 14.04 of the Indenture.  

        The
Conversion Price is also subject to adjustment as a result of certain corporate events such
as consolidation, reclassification, stock split, payment of bonus shares (stock
dividends), mergers or rights offering, as provided in Section 14.05 of the
Indenture. 

        Fractional
shares will not be issued upon any conversion of this Note. The number of Ordinary Shares
issuable upon conversion of this Note will be rounded down to the nearest whole number. No
payment of cash or in kind will be made in lieu of fractional shares. 

        No
accrued interest will be payable by the Issuer upon the conversion of this Note into the
Issuer’s Ordinary Shares. The holder’s right to accrued interest, if any, will
be lost upon conversion of this Note into Ordinary Shares. 

        Persons
Deemed Owners. The Issuer, the Trustees, any authenticating agent, any
paying agent, any conversion agent and any Note registrar may deem and treat the
registered holder hereof as the absolute owner of this Note (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Issuer or any Note registrar) for the purpose of receiving
payment hereof, or on account hereof, for the conversion hereof and for all other
purposes, and neither the Issuer nor the Trustees nor any other authenticating agent nor
any paying agent nor other conversion agent nor any Note registrar shall be affected by
any notice to the contrary. All payments made to or upon the order of such registered
holder shall, to the extent of the sum or sums paid, satisfy and discharge liability for
monies payable on this Note. 

        No
Recourse Against Incorporator, Stockholder, Etc. No recourse for the
payment of the principal of or interest on this Note, or for any claim based hereon or
otherwise in respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Issuer in the Indenture or any supplemental indenture or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer or director or subsidiary, as such,
past, present or future, of the Issuer or of any successor corporation, either directly or
through the Issuer or any successor corporation, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or otherwise,
all such liability being expressly waived and released as a condition of, and as a
consideration for, the execution of the Indenture and the issue of this Note. 

- A-4 -

        Events
of Default. An Event of Default on this Note is (i) any corporate action taken by the Issuer or other steps
taken or proceedings started or consented to or any order made for the Issuer’s winding up,
liquidation, bankruptcy, dissolution, administration or re-organization (or for the suspension of
payments generally or any process giving protection against creditors), or for the appointment of a
liquidator, receiver, administrator, administrative receiver or similar officer for all or any part
of the Issuer’s revenues or assets or such a person is appointed, which action, steps, proceedings
or order are not cancelled or withdrawn within 60 days of the occurrence or the institution thereof,
or (ii) failure by the Issuer to pay an amount of principal or interest due hereon within 14
Business Days of the date the Issuer is required to make the payment hereon as such date may be
postponed in accordance with the terms hereof. 

        In case
an Event of Default shall have occurred and be continuing, the principal and accrued interest on all Notes may be declared by the Trustee, the Co-Trustee or both acting
jointly, and upon said declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture. 

        Waivers
of Events of Default. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.04 of the
Indenture, shall have the right (subject to the next sentence below) to direct, in
accordance with Section 9.01 of the Indenture, a waiver, on behalf of the holders of all
of the Notes, of any past default or Event of Default and its consequences, provided that
such direction to waive is given at a meeting of the Noteholders, in accordance with
Article 10 of the Indenture, and that such waiver be approved by the vote of holders of
at least a majority of the aggregate principal amount of the Notes at the time
outstanding, determined in accordance with Section 9.04, who also hold at least 75% of
the principal amount of the Notes present or represented in that Noteholders meeting.
Notwithstanding the preceding sentence, the following defaults may not be waived without
the consent of the holders of each or all Notes then outstanding or affected thereby: (i)
a default in the payment of interest on, or the principal of, the Notes, (ii) a failure
by the Issuer to convert any Notes into Ordinary Shares, or (iii) a default in
respect of a covenant or provisions of the Indenture which under the provisions of the
Trust Indenture Act cannot be modified or amended without the consent of the holders of
each or all Notes then outstanding or affected thereby. Upon any such waiver, the Issuer,
the Trustees and the holders of the Notes shall be restored to their former positions and
rights under the Indenture; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Whenever any default
or Event of Default under the Indenture shall have been waived as permitted by Section
6.07 of the Indenture, said default or Event of Default shall for all purposes of the
Notes and the Indenture be deemed to have been cured and to be not continuing; but no
such waiver shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.  

        Supplemental
Indentures. The Issuer, when authorized by the resolutions of the Board of Directors, and
the Trustees may, from time to time, and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes: (i) evidence
the succession of another Person to the Issuer, or successive successions, and the
assumption by the successor Person of the covenants, agreements and obligations of the
Issuer pursuant to Article 12 of the Indenture; (ii) add covenants, restrictions or
conditions to the Issuer so long as they are deemed by the Board of Directors and the
Trustees as for the benefit of the Noteholders (provided the Trustees shall first have
received an opinion of counsel to this effect), (iii) provide for the issuance of Notes
in coupon form; (iv) to cure any ambiguity or to correct or supplement any provision in
the Indenture or in any supplemental indenture; (v) evidence and provide for the
acceptance of appointment hereunder by a successor trustee with respect to the Notes;
(vi) modify, eliminate or add to the provisions of this Indenture to such extent as shall
be necessary to effect the qualifications of this Indenture under the Trust Indenture
Act, or under any similar federal statute hereafter enacted or the Securities Law; or
(vii) make any other change that does not adversely affect any right of the Noteholders
under the Indenture. The Indenture contains provisions permitting the Issuer and the
Trustee, with the consent of the Noteholders, to execute supplemental indentures adding
any provisions to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights of the
Noteholders; provided that the entering into such supplemental indenture is approved by a
resolution of the Noteholders meeting in accordance with Article 10 of the Indenture, by
the vote of Noteholders who (i) hold not less than a majority of the aggregate principal
amount of the Notes at the time outstanding, determined in accordance with Section 9.04
of the Indenture; and also (ii) hold at least 75% of the principal amount of the Notes
present or represented in that Noteholders meeting; and provided further that no such
supplemental indenture shall modify any term, covenant or provisions hereof which under
the provisions of the Trust Indenture Act cannot be modified or amended without the
consent of the holders of each or all Notes then outstanding or affected thereby, without
the consent of the holder of each Note so affected.  

        Governing
Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW
YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK. 

- A-5 -

ABBREVIATIONS 

        The
following abbreviations, when used in the inscription of the face of this Note, shall be
construed as though they were written out in full according to applicable laws or
regulations. 

	TEN COM -
TEN ENT -
JT TEN - 	as tenants in common 
as tenant by the entireties       
as joint tenants with right of    
survivorship and not as tenants in
common                            	UNIF GIFT MIN ACT-	__________	Custodian	__________	 
	 	(Cust) 	  	(Minor) 
	under Uniform Gifts to Minors Act 	 	 
	  	 	 	 	 	 	 
	__________________________ 	 	 	 	 
	 	 	(State) 	 

Additional
abbreviations may also be used though not in the above list. 

- A-6 -

CONVERSION NOTICE: 

TO: TOWER SEMICONDUCTOR LTD. 

        The
undersigned registered owner of this Note hereby irrevocably exercises the option to
convert this Note, or the portion thereof (which is $1.00 or an integral multiple thereof)
below designated, into Ordinary Shares of Tower Semiconductor Ltd. in accordance with the
terms of the Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon such conversion, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. Capitalized terms used herein but not
defined shall have the meanings ascribed to such terms in the Indenture. If shares or any
portion of this Note not converted are to be issued in the name of a person other than the
undersigned, the undersigned will provide the appropriate information below and pay all
transfer taxes payable with respect thereto. 

	Dated: __________________________
	_________________________________

Signature(s)

Signature(s) must be guaranteed by an “eligible guarantor institution”
meeting the requirements of the Note registrar, which requirements
include membership or participation in the Security Transfer Agent
Medallion Program (“STAMP”) or such other “signature guarantee program”
as may be determined by the Note registrar in a
substitution for, STAMP, all in accordance with
Act of 1934, as amended.

_________________________________

Signature Guarantee

Fill in the registration of Ordinary
Shares if to be issued, and Notes if to be delivered, other than to and in the name of the
registered holder 

__________________________________

(Name)                                                              

__________________________________

(Street Address)                      

__________________________________

(City, State and Zip Code)            

__________________________________

Please print name and address         

                                          

Principal amount to be converted

(if less than all):

Social Security or Other Taxpayer

Identification Number:

- A-7 -

ASSIGNMENT 

        For
value received                    THE UNDERSIGNED hereby sells assigns and transfers unto
                             (Please insert name of
assignee and social security or other Taxpayer Identification Number of assignee) the within Note,
and hereby irrevocably constitutes and appoints                attorney to transfer said
Note on the books of the Issuer, with full power of substitution in the premises. 

	 	_________________________________

Signature(s)

Signature(s) must be guaranteed by an “eligible guarantor institution”
meeting the requirements of the Note registrar, which requirements
include membership or participation in the Security Transfer Agent
Medallion Program (“STAMP”) or such other “signature guarantee program”
as may be determined by the Note registrar in a
substitution for, STAMP, all in accordance with
Act of 1934, as amended.

_________________________________

Signature Guarantee 

NOTICE: The signature on the
Conversion Notice or the Assignment must correspond with the name as written upon the face
of the Note in every particular without alteration or enlargement or any change whatever. 

- A-8 -

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