EX-99.4 7 b415685_ex99-4.txt EXHIBIT 99.4 EXHIBIT 99.4 BEAR STEARNS BEAR STEARNS FINANCIAL PRODUCTS INC. 383 MADISON AVENUE NEW YORK, NEW YORK 10179 212-272-4009 DATE: October 30, 2006 TO: Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator ATTENTION: Client Manager - AEGIS 2006-1 5TELEPHONE: 410-884-2000 FACSIMILE: 410-715-2380 FROM: Derivatives Documentation TELEPHONE: 212-272-2711 FACSIMILE: 212-272-9857 SUBJECT: Fixed Income Derivatives Confirmation and Agreement REFERENCE NUMBER: FXNSC8788 The purpose of this letter agreement ("Agreement") is to confirm the terms and conditions of the Transaction entered into on the Trade Date specified below (the "Transaction") between Bear Stearns Financial Products Inc. ("BSFP") and Aegis Asset Backed Securities Trust 2006-1 ("Counterparty"). This Agreement, which evidences a complete and binding agreement between you and us to enter into the Transaction on the terms set forth below, constitutes a "Confirmation" as referred to in the "ISDA Form Master Agreement" (as defined below), as well as a "Schedule" as referred to in the ISDA Form Master Agreement. 1. This Agreement is subject to the 2000 ISDA Definitions, as supplemented by the Annex thereto (June 2000 Version) (the "Definitions"), as published by the International Swaps and Derivatives Association, Inc. ("ISDA"). You and we have agreed to enter into this Agreement in lieu of negotiating an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency--Cross Border) and, accordingly, an agreement in such form but without any Schedule attached thereto and with all elections, modifications and amendments to such form contained herein (the "ISDA Form Master Agreement") shall be deemed to have been executed by you and us on the date we entered into the Transaction. In the event of any inconsistency between the provisions of this Agreement and the Definitions or the ISDA Form Master Agreement, this Agreement shall prevail for purposes of the Transaction. Any capitalized terms used but not otherwise defined in this Agreement shall have the meanings assigned to them (or incorporated by reference) in the Transfer and Servicing Agreement dated as of October 1, 2006, among the Counterparty, as Issuer, Aegis Asset Backed Securities Corporation, as Depositor, Aegis REIT Corporation, as Seller, Wells Fargo Bank, N.A., as Master Servicer and Administrator, Ocwen Loan Servicing, LLC, as Servicer, and Deutsche Bank National Trust Company, as Indenture Trustee and Custodian (the "Transfer and Servicing Agreement"). 2. The terms of the particular Transaction to which this Confirmation relates are as follows: Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 2 of 18 Notional Amount: With respect to any Calculation Period, the amount set forth for such period in the Schedule I attached hereto. Trade Date: October 12, 2006 Effective Date: October 30, 2006 Termination Date: October 25, 2011, provided, however, for the purposes of determining the Floating Amount to be paid in respect of the final Calculation Period, such date shall be subject to adjustment in accordance with the Business Day Convention. FIXED AMOUNTS: Fixed Rate Payer: Counterparty Fixed Rate Payer Period End Dates: The 25th calendar day of each month during the Term of this Transaction, commencing November 25, 2006 and ending on the Termination Date, with No Adjustment. Fixed Rate Payer Payment Date: The 25th calendar day of each month during the Term of this Transaction, commencing November 25, 2006 and ending on the Termination Date, subject to adjustment in accordance with the Business Day Convention. Fixed Rate: 5.21150% Fixed Rate Day Count Fraction: 30/360 FLOATING AMOUNTS: Floating Rate Payer: BSFP Floating Rate Payer Payment Dates: The 25th calendar day of each month during the Term of this Transaction, commencing November 25, 2006 and ending on the Termination Date, subject to adjustment in accordance with the Business Day Convention. Floating Rate for initial Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 3 of 18 Calculation Period: To be determined Floating Rate Option: USD-LIBOR-BBA; provided, however, that all references in Sections 7.1(w)(xvii) and 7.1(w)(xx) of the Definitions to "on the day that is two London Banking Days preceding that Reset Date" shall be deleted and replaced with "on the day that is two New York Business Days preceding that Reset Date". Designated Maturity: One month Spread: None Floating Rate Day Count Fraction: Actual/360 Reset Dates: The first day of each Calculation Period. Compounding: Inapplicable Business Days: Any day other than (i) a Saturday or a Sunday, or (ii) either (1) a day on which banking institutions in New York, New York, or (2) the States of Delaware, Maryland, Minnesota, Florida, or Texas are closed. Business Day Convention: Following 3. Additional Provisions: (1) Each party hereto is hereby advised and acknowledges that the other party has engaged in (or refrained from engaging in) substantial financial transactions and has taken (or refrained from taking) other material actions in reliance upon the entry by the parties into the Transaction being entered into on the terms and conditions set forth herein and in the Confirmation relating to such Transaction, as applicable. This paragraph (1) shall be deemed repeated on the trade date of each Transaction. 4. Provisions Deemed Incorporated in a Schedule to the ISDA Form Master Agreement: 1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form Master Agreement will apply to any Transaction. 2) Termination Provisions. For purposes of the ISDA Form Master Agreement: Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 4 of 18 (a) "Specified Entity" is not applicable to BSFP or Counterparty for any purpose. (b) "Specified Transaction" is not applicable to BSFP or Counterparty for any purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or Counterparty. (c) Section 5(a)(i) of the ISDA Form Master Agreement is hereby amended by deleting the word "third" therein and replacing it with the word "second." (d) "Breach of Agreement" provision of Section 5(a)(ii) will not apply to BSFP and will not apply to Counterparty. (e) "Credit Support Default" provisions of Section 5(a)(iii) will not apply to BSFP and will not apply to Counterparty. (f) "Misrepresentation" provisions of Section 5(a)(iv) will not apply to BSFP and will not apply to Counterparty. (g) The "Merger Without Assumption" provision of Section 5(a)(viii) will apply to BSFP and will not apply to Counterparty. (h) The "Cross Default" provision of Section 5(a)(vi) will not apply to BSFP or Counterparty. (h) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply to BSFP or Counterparty. (i) The "Bankruptcy" provision of Section 5(a)(vii)(2) will apply to BSFP and will not apply to Counterparty. (j) The "Automatic Early Termination" provision of Section 6(a) will not apply to BSFP or to Counterparty. (k) Payments on Early Termination. For the purpose of Section 6(e): (i) Market Quotation will apply. (ii) The Second Method will apply. (l) "Termination Currency" means United States Dollars. 3) Tax Representations. (a) Payer Representations. For the purpose of Section 3(e) of the ISDA Form Master Agreement, each of BSFP and the Counterparty will make the following representations: Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 5 of 18 It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of the ISDA Form Master Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on: (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement; (ii) the satisfaction of the agreement contained in Sections 4(a)(i) or 4(a)(iii) of the ISDA Form Master Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Sections 4(a)(i) or 4(a)(iii) of the ISDA Form Master Agreement; and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the ISDA Form Master Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) of the ISDA Form Master Agreement by reason of material prejudice to its legal or commercial position. (b) Payee Representations. For the purpose of Section 3(f) of the ISDA Form Master Agreement, each of BSFP and the Counterparty make the following representations. The following representation will apply to BSFP: BSFP is a corporation organized under the laws of the State of Delaware and its U.S. taxpayer identification number is 13-3866307. The following representation will apply to the Counterparty: The Counterparty is a statutory trust organized under the laws of the State of Delaware and, for U.S. federal income tax purposes, it is a qualified REIT subsidiary, within the meaning of section 856(i) of the U.S. Internal Revenue Code of 1986 [26 U.S.C. section 856(i)], of Aegis REIT Corporation and, as such, is disregarded as an entity separate from Aegis REIT Corporation for U.S. federal income tax purpose. Aegis REIT Corporation is a corporation organized under the laws of the State of Maryland and its taxpayer identification number is 20-1973436. 4) [Reserved] 5) Documents to be Delivered. For the purpose of Section 4(a) of the ISDA Form Master Agreement: (1) Tax forms, documents, or certificates to be delivered are: Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 6 of 18 PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO DELIVER DOCUMENT CERTIFICATE BE DELIVERED ----------------- ---------------------------- ----------------------------- BSFP and Any document required or Promptly after the earlier of the Counterparty reasonably requested to (i) reasonable demand by allow the other party to either party or (ii) learning make payments under this that such form or document is Agreement without any required deduction or withholding for or on the account of any Tax or with such deduction or withholding at a reduced rate (2) Other documents to be delivered are:

Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 7 of 18

(3) BSFP will provide a legal opinion as to standard corporate matters (including enforceability of this agreement and of the Disclosure Agreements dated as of October 20, 2006 and October 24, 2006 among BSFP, the Counterparty, Aegis Asset Backed Securities Corporation and Aegis Mortgage Corporation (the "Disclosure Agreements") (excluding any provisions expressly stated therein which provide for indemnification or contribution)), reasonably acceptable to the Counterparty. 6) Miscellaneous. Miscellaneous (a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form Master Agreement: Address for notices or communications to BSFP: Address: 383 Madison Avenue, New York, New York 10179 Attention: DPC Manager Facsimile: (212) 272-5823 with a copy to: Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 8 of 18 Address: One Metrotech Center North, Brooklyn, New York 11201 Attention: Derivative Operations - 7th Floor Facsimile: (212) 272-1634 (For all purposes) Address for notices or communications to the Counterparty: Address: Wilmington Trust Company as Owner Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Attention: Client Manager - AEGIS 2006-1 Facsimile: 302-636-4140 Phone: 302-651-1000 with a copy to: Address: Wells Fargo Bank, N.A., as Securities Administrator 9062 Old Annapolis Road Columbia, MD 21045 Attention: Client Manager-AEGIS 2006-1 Facsimile: 410-715-2380 Phone: 410-884-2000 (For all purposes) (b) Process Agent. For the purpose of Section 13(c) of the ISDA Form Master Agreement: BSFP appoints as its Process Agent: Not Applicable The Counterparty appoints as its Process Agent: Not Applicable (c) Offices. The provisions of Section 10(a) of the ISDA Form Master Agreement will not apply to this Agreement; neither BSFP nor the Counterparty have any Offices other than as set forth in the Notices Section and BSFP agrees that, for purposes of Section 6(b) of the ISDA Form Master Agreement, it shall not in future have any Office other than one in the United States. (d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master Agreement: BSFP is not a Multibranch Party. Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 9 of 18 The Counterparty is not a Multibranch Party. (e) Calculation Agent. The Calculation Agent is BSFP. (f) Credit Support Document. Not applicable for either BSFP or the Counterparty. (g) Credit Support Provider. BSFP: Not Applicable The Counterparty: Not Applicable (h) Governing Law. The parties to this Agreement hereby agree that the law of the State of New York shall govern their rights and duties in whole. (i) Severability. If any term, provision, covenant, or condition of this Agreement, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable (in whole or in part) for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Agreement had been executed with the invalid or unenforceable portion eliminated, so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Agreement and the deletion of such portion of this Agreement will not substantially impair the respective benefits or expectations of the parties. The parties shall endeavor to engage in good faith negotiations to replace any invalid or unenforceable term, provision, covenant or condition with a valid or enforceable term, provision, covenant or condition, the economic effect of which comes as close as possible to that of the invalid or unenforceable term, provision, covenant or condition. (j) Consent to Recording. Each party hereto consents to the monitoring or recording, at any time and from time to time, by the other party of any and all communications between officers or employees of the parties, waives any further notice of such monitoring or recording, and agrees to notify its officers and employees of such monitoring or recording. (k) Waiver of Jury Trial. Each party waives any right it may have to a trial by jury in respect of any Proceedings relating to this Agreement or any Credit Support Document. 7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form Master Agreement, provided that neither BSFP nor Counterparty shall be deemed to have any Affiliates for purposes of this Agreement, including for purposes of Section 6(b)(ii) of the ISDA Form Master Agreement. 8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at the end thereof the following subsection (g): Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 10 of 18 "(g) Relationship Between Parties. Each party represents to the other party on each date when it enters into a Transaction that:-- (1) Nonreliance. It is not relying on any statement or representation of the other party regarding the Transaction (whether written or oral), other than the representations expressly made in this Agreement or the Confirmation in respect of that Transaction. (2) Evaluation and Understanding. (i) Each of BSFP and the Counterparty is acting for its own account. Each Party has made its own independent decisions to enter into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Transaction; it being understood that information and explanations related to the terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. It has not received from the other party any assurance or guarantee as to the expected results of this Transaction. (ii) It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Transaction. It is also capable of assuming, and assumes, the financial and other risks of this Transaction. (iii) The other party is not acting as an agent or fiduciary or an advisor for it in respect of this Transaction. (3) Purpose. It is entering into the Transaction for the purposes of managing its borrowings or investments, hedging its underlying assets or liabilities or in connection with a line of business. (4) Principal. It is entering into the Transaction as principal, and not as agent or in any other capacity, fiduciary or otherwise and the other party is not acting as a fiduciary for or an adviser to it in respect of the Transaction." 9) Limitation of Liability. It is expressly understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by Wilmington Trust Company, not individually or personally but solely as owner trustee of Aegis Asset Backed Securities Trust 2006-1 (the "Trust"), in the exercise of the powers and authority conferred and vested in it, (ii) each of the Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 11 of 18 representations, undertakings and agreements herein made on the part of the Trust is made and intended not as personal representations, undertakings and agreements by but is made and intended for the purpose of binding only the Trust, (iii) nothing herein contained shall be construed as creating any liability on the part of Wilmington Trust Company, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (iv) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Agreement or any other related documents. 10) Proceedings. BSFP shall not institute against or cause any other person to institute against, or join any other person in instituting against Counterparty any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any federal or state bankruptcy or similar law for a period of one year and one day following payment in full of the Notes. 11) Set-off. The provisions for Set-off set forth in Section 6(e) of the Agreement shall not apply for purposes of this Transaction. Notwithstanding any provision of this Agreement or any other existing or future agreement, each party irrevocably waives any and all rights it may have to set off, net, recoup or otherwise withhold or suspend or condition payment or performance of any obligation between it and the other party under any other agreements. 12) Additional Termination Events. The following Additional Termination Events will apply: (a) If a Ratings Downgrade has occurred and BSFP has not, within the time period specified therein, complied with paragraph 13 below, then an Additional Termination Event shall have occurred with respect to BSFP and BSFP shall be the sole Affected Party with respect to such Additional Termination Event. (b) If BSFP fails to comply with the terms of either Disclosure Agreement (as defined in paragraph 14 below) and BSFP has not, within the timeframe set forth in such Disclosure Agreements after such failure, complied with any of the provisions set forth in such Disclosure Agreements, then an Additional Termination Event shall have occurred with respect to BSFP and BSFP shall be the sole Affected Party with respect to such Additional Termination Event. (c) If, without the prior written consent of BSFP where such consent is required under the Transfer and Servicing Agreement (such consent not to be unreasonably withheld), an amendment or supplemental agreement is made to the Transfer and Servicing Agreement which amendment or supplemental agreement could reasonably be expected to have a material adverse effect on the interests of BSFP under this Agreement, an Additional Termination Event shall have occurred with respect to Counterparty and Counterparty shall be the sole Affected Party with respect to such Additional Termination Event and all Transactions hereunder shall be Affected Transactions. Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 12 of 18 (d) If the Issuer is unable to pay, or fails or admits in writing its inability to pay, on any Distribution Date, the Class A Notes or the ultimate payment of principal with respect to the Class A Notes, in either case to the extent required pursuant to the terms of the Transfer and Servicing Agreement to be paid to the Class A Notes on such Distribution Date, then an Additional Termination Event shall have occurred with respect to Counterparty and Counterparty shall be the sole Affected Party with respect to such Additional Termination Event; (e) Notice of the Ownership Certificate holder's or the Servicer's intention to exercise its option to purchase the Mortgage Loans pursuant to Section 9.1 of the Transfer and Servicing Agreement is given by the Indenture Trustee to Noteholders pursuant to Section 9.2 of the Transfer and Servicing Agreement. 13) Ratings Downgrade. (a) If BSFP fails to satisfy the Required Ratings (a "RATINGS EVENT"), then BSFP shall, at its own expense and subject to the Rating Agency Condition, either (i) assign this Transaction to an entity that satisfies (or whose credit support provider satisfies) the Required Ratings; (ii) deliver collateral, and an executed ISDA Credit Support Annex; (iii) obtain a guaranty of an entity that satisfies the Required Rating to guaranty BSFP's obligations under this Transaction; or (iv) take any other action that satisfies the Rating Agency Condition; provided that the failure by BSFP to take any action specified in (i)-(iv) above on or prior to the 30th calendar day after such Ratings Event shall constitute an Additional Termination Event under the ISDA Form Master Agreement with respect to which BSFP shall be the sole Affected Party and this Transaction shall be the sole Affected Transaction. (b) If BSFP fails to satisfy the Replacement Ratings (a "REPLACEMENT EVENT"), then BSFP shall, at its own expense and subject to the Rating Agency Condition, either: (i) assign this Transaction to an entity that satisfies (or whose credit support provider satisfies) the Required Ratings; (ii) obtain a guaranty of an entity that satisfies the Required Rating to guaranty BSFP's obligations under this Transaction; or (iii) take any other action that satisfies the Rating Agency Condition; Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 13 of 18 provided that the failure by BSFP to take any action specified in (i)-(iii) above on or prior to the 10th Local Business Days after such Replacement Event shall constitute an Additional Termination Event under the ISDA Form Master Agreement with respect to which BSFP shall be the sole Affected Party and this Transaction shall be the sole Affected Transaction. As used herein, "MOODY'S" means Moody's Investors Service, Inc. "RATING AGENCY" means, each of S&P and Moody's "RATING AGENCY CONDITION" means with respect to any proposed act or omission to act hereunder, a condition that is satisfied if each Rating Agency then providing a rating of the Certificates confirms in writing that the proposed action or inaction would not cause a downgrade or withdrawal of the then-current rating of the Certificates. "REPLACEMENT RATINGS" means, with respect to any entity, the rating of the long-term senior unsecured and unsubordinated obligations of such entity is at least "BBB-" by S&P or "A3" by Moody's. "REQUIRED RATINGS" means, with respect to any entity, the rating of the long-term senior unsecured and unsubordinated obligations of such entity is at least "AA-" by S&P and "Aa3" by Moody's. "S&P" means Standard and Poor's Ratings Services, Inc. 14) Compliance with Regulation AB. Aegis Asset Backed Securities Corporation (the "Depositor"), Aegis Mortgage Corporation (the "Sponsor"), Aegis Asset Backed Securities Trust 2006-1 (the "Issuer"), and BSFP have entered into (a) the Disclosure Agreement dated October 20, 2006 (the "Preliminary Prospectus Disclosure Agreement") and (b) the Disclosure Agreement dated October 24, 2006 (the "Final Prospectus Disclosure Agreement" and each a "Disclosure Agreement"). 15) Transfer, Amendment and Assignment. No transfer, amendment, waiver, supplement, assignment or other modification of this Transaction shall be permitted by either party unless S&P, Moody's and [Fitch] have all been provided notice of the same and confirm in writing (including by facsimile transmission) within a reasonable amount of time after such notice is given that it will not downgrade, qualify, withdraw or otherwise modify its then-current rating of the Notes. 16) Non-Recourse. The liability of the Counterparty in relation to this Agreement and any Confirmation hereunder is limited in recourse to assets in the Trust Estate (as defined in the Transfer and Servicing Agreement) and payments of interest proceeds and principal proceeds thereon applied in accordance with the terms of the Transfer and Servicing Agreement and the Indenture. Upon application of all of the assets in the Trust Estate (and proceeds thereon) in Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 14 of 18 accordance with the Transfer and Servicing Agreement and Indenture, BSFP shall not be entitled to take any further steps against the Counterparty to recover any sums due but still unpaid hereunder or thereunder, all claims in respect of which shall be extinguished. NEITHER THE BEAR STEARNS COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF THE BEAR STEARNS COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT SUPPORT PROVIDER ON THIS AGREEMENT. Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 15 of 18 5. Account Details and Settlement Information: PAYMENTS TO BSFP: Citibank, N.A., New York ABA Number: 021-0000-89, for the account of Bear, Stearns Securities Corp. Account Number: 0925-3186, for further credit to Bear Stearns Financial Products Inc. Sub-account Number: 102-04654-1-3 Attention: Derivatives Department PAYMENTS TO COUNTERPARTY: Wells Fargo Bank, N.A. ABA #: 121000248 Account Name: SAS Clearing Account #: 3970771416 FFC to: Aegis 2006-1, Account # 50960500 This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to BSFP a facsimile of the fully-executed Confirmation to 212-272-9857. For inquiries regarding U.S. Transactions, please contact DERIVATIVES DOCUMENTATION by telephone at 212-272-2711. For all other inquiries please contact DERIVATIVES DOCUMENTATION by telephone at 353-1-402-6233. Originals will be provided for your execution upon your request. Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 16 of 18 We are very pleased to have executed this Transaction with you and we look forward to completing other transactions with you in the near future. Very truly yours, BEAR STEARNS FINANCIAL PRODUCTS INC. By: /s/ Annie Manevitz --------------------------------- Name: Annie Manevitz Title: Authorized Signatory Counterparty, acting through its duly authorized signatory, hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade Date. AEGIS ASSET BACKED SECURITIES TRUST 2006-1 BY: WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE By: /s/ Robert J. Perkins --------------------------------- Name: Robert J. Perkins Title: Sr. Financial Services Officer lm Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 17 of 18 SCHEDULE I (For the purposes of (i) determining Floating Amounts, all such dates subject to adjustment in accordance with the Business Day Convention and (ii) determining Fixed Amounts, all such dates subject to No Adjustment) NOTIONAL AMOUNT FROM AND INCLUDING TO BUT EXCLUDING (USD) ------------------ ---------------- --------------- Effective Date 25-Nov-06 509,250,000 25-Nov-06 25-Dec-06 505,152,648 25-Dec-06 25-Jan-07 500,104,338 25-Jan-07 25-Feb-07 493,343,381 25-Feb-07 25-Mar-07 483,114,225 25-Mar-07 25-Apr-07 471,321,741 25-Apr-07 25-May-07 457,381,942 25-May-07 25-Jun-07 440,884,878 25-Jun-07 25-Jul-07 422,390,095 25-Jul-07 25-Aug-07 401,324,389 25-Aug-07 25-Sep-07 378,352,967 25-Sep-07 25-Oct-07 356,704,109 25-Oct-07 25-Nov-07 337,011,632 25-Nov-07 25-Dec-07 320,182,675 25-Dec-07 25-Jan-08 305,046,485 25-Jan-08 25-Feb-08 290,601,187 25-Feb-08 25-Mar-08 277,571,894 25-Mar-08 25-Apr-08 265,894,244 25-Apr-08 25-May-08 255,006,519 25-May-08 25-Jun-08 244,244,287 25-Jun-08 25-Jul-08 233,535,615 25-Jul-08 25-Aug-08 222,963,435 25-Aug-08 25-Sep-08 209,925,525 25-Sep-08 25-Oct-08 195,624,814 25-Oct-08 25-Nov-08 183,899,077 25-Nov-08 25-Dec-08 174,333,315 25-Dec-08 25-Jan-09 166,215,657 25-Jan-09 25-Feb-09 158,444,392 25-Feb-09 25-Mar-09 150,960,847 25-Mar-09 25-Apr-09 143,809,563 25-Apr-09 25-May-09 137,159,105 25-May-09 25-Jun-09 130,950,052 25-Jun-09 25-Jul-09 124,968,279 25-Jul-09 25-Aug-09 118,991,940 25-Aug-09 25-Sep-09 111,917,393 Reference Number: FXNSC8788 Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator October 30, 2006 Page 18 of 18 25-Sep-09 25-Oct-09 105,073,507 25-Oct-09 25-Nov-09 98,650,568 25-Nov-09 25-Dec-09 92,639,779 25-Dec-09 25-Jan-10 87,002,803 25-Jan-10 25-Feb-10 81,858,844 25-Feb-10 25-Mar-10 77,168,165 25-Mar-10 25-Apr-10 72,875,104 25-Apr-10 25-May-10 68,844,963 25-May-10 25-Jun-10 65,074,106 25-Jun-10 25-Jul-10 61,521,322 25-Jul-10 25-Aug-10 58,152,318 25-Aug-10 25-Sep-10 54,951,962 25-Sep-10 25-Oct-10 51,918,121 25-Oct-10 25-Nov-10 48,995,271 25-Nov-10 25-Dec-10 46,184,482 25-Dec-10 25-Jan-11 43,453,544 25-Jan-11 25-Feb-11 40,845,125 25-Feb-11 25-Mar-11 38,347,660 25-Mar-11 25-Apr-11 35,956,071 25-Apr-11 25-May-11 33,664,447 25-May-11 25-Jun-11 31,471,120 25-Jun-11 25-Jul-11 29,378,147 25-Jul-11 25-Aug-11 27,389,865 25-Aug-11 25-Sep-11 25,511,759 25-Sep-11 Termination Date 23,727,552 BEAR STEARNS BEAR STEARNS FINANCIAL PRODUCTS INC. 383 MADISON AVENUE SUITE 2700 NEW YORK, NEW YORK 10179 212-272-4009 DATE: October 30, 2006 TO: Aegis Asset Backed Securities Trust 2006-1 Wells Fargo Bank, N.A., as Administrator ATTENTION: Client Manager - AEGIS 2006-1 TELEPHONE: 410-884-2000 FACSIMILE: 410-715-2380 FROM: Derivatives Documentation TELEPHONE: 212-272-2711 FACSIMILE: 212-272-9857 SUBJECT: Mortgage Derivatives Confirmation and Agreement REFERENCE NUMBER: FXAEG061C1 The purpose of this letter agreement ("Agreement") is to confirm the terms and conditions of the current Transaction entered into on the Trade Date specified below (the "Current Transaction") between Bear Stearns Financial Products Inc. ("BSFP") and Aegis Asset Backed Securities Trust 2006-1 ("Counterparty"). This Agreement, which evidences a complete and binding agreement between you and us to enter into the Transaction on the terms set forth below, constitutes a "Confirmation" as referred to in the "ISDA Form Master Agreement" (as defined below), as well as a "Schedule" as referred to in the ISDA Form Master Agreement. 1. This Agreement is subject to the 2000 ISDA Definitions, as supplemented by the Annex thereto (June 2000 Version) (the "Definitions"), as published by the International Swaps and Derivatives Association, Inc. ("ISDA"). You and we have agreed to enter into this Agreement in lieu of negotiating an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency--Cross Border) and, accordingly, an agreement in such form but without any Schedule attached thereto and with all elections, modifications and amendments to such form contained herein (the "ISDA Form Master Agreement") shall be deemed to have been executed by you and us on the date we entered into the Transaction. In the event of any inconsistency between the provisions of this Agreement and the Definitions or the ISDA Form Master Agreement, this Agreement shall prevail for purposes of the Transaction. Terms capitalized but not defined herein shall have the meanings attributed to them in the Transfer and Servicing Agreement dated as of October 1, 2006, among the Counterparty, as Issuer, Aegis Asset Backed Securities Corporation, as Depositor, Aegis REIT Corporation, as Seller, Wells Fargo Bank, N.A., as Master Servicer and Administrator, Ocwen Loan Servicing LLC, as Servicer, and Deutsche Bank Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 2 of 21 National Trust Company, as Indenture Trustee and Custodian (the "Transfer and Servicing Agreement"). 2. The terms of the particular Transaction to which this Confirmation relates are as follows: Type of Transaction: Rate Cap Notional Amount: With respect to any Calculation Period, the lower of: (i) the Maximum Notional Balance amount set forth for such period on Annex A attached hereto, and (ii) the greater of (a) zero, and (b) the aggregate outstanding principal balance of the Class A1, A2, A3, M1, M2, M3, M4, M5, M6, M7, M8, M9 and M10 Certificates issued by Aegis Asset-Backed Securities Trust Mortgage Pass-Through Certificates, Series 2006-1 as of the first day of such Calculation Period minus the Swap Notional Balance amount set forth for such period on Annex B attached hereto. Trade Date: October 12, 2006 Effective Date: November 25, 2006 Termination Date: October 25, 2011, provided, however, for the purposes of determining the Floating Amount to be paid in respect of the final Calculation Period, such date shall be subject to adjustment in accordance with the Business Day Convention. FIXED AMOUNT (PREMIUM): Fixed Amount Payer: Counterparty Fixed Amount Payer Payment Date: October 30, 2006 Fixed Amount: USD 960,000.00 Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 3 of 21 FLOATING AMOUNTS: Floating Rate Payer: BSFP Cap Rate: 5.35% Floating Rate Payer Period End Dates: The 25th calendar day of each month during the Term of this Transaction, commencing November 25, 2006 and ending on the Termination Date, subject to adjustment in accordance with the Business Day Convention. Floating Rate Payer Payment Dates: Early Payment shall be applicable. The Floating Rate Payer Payment Dates shall be two Business Days preceding each Floating Rate Payer Period End Date. Floating Rate Option: USD-LIBOR-BBA; provided, however, that all references in Sections 7.1(w)(xvii) and 7.1(w)(xx) of the Definitions to "on the day that is two London Banking Days preceding that Reset Date" shall be deleted and replaced with "on the day that is two New York Business Days preceding that Reset Date" Designated Maturity: One month Floating Rate Day Count Fraction: Actual/360 Reset Dates: The first day of each Calculation Period Compounding: Inapplicable Business Days: Any day other than (i) a Saturday or a Sunday, or (ii) either (1) a day on which banking institutions in New York, New York, or (2) the States of Delaware, Maryland, Minnesota, Florida, or Texas as closed. Business Day Convention: Following Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 4 of 21 3. Additional Provisions: (1) Each party hereto is hereby advised and acknowledges that the other party has engaged in (or refrained from engaging in) substantial financial transactions and has taken (or refrained from taking) other material actions in reliance upon the entry by the parties into the Transaction being entered into on the terms and conditions set forth herein and in the Confirmation relating to such Transaction, as applicable. This paragraph (1) shall be deemed repeated on the trade date of each Transaction. (2) The Transfer and Servicing Agreement shall provide that Wells Fargo Bank, N.A, shall, on each Payment Date (as defined in the Transfer and Servicing Agreement), make available to BSFP via its internet website (which will initially be located at http://www.ctslink.com) a monthly statement prepared by it pursuant to the Transfer and Servicing Agreement that indicates the aggregate principal balance of the Class A1, A2, A3, M1, M2, M3, M4, M5, M6, M7, M8, M9 and M10 Notes (following application of any payment in respect of principal on the Class A1, A2, A3, M1, M2, M3, M4, M5, M6, M7, M8, M9 and M10 Notes pursuant to the Transfer and Servicing Agreement on the Payment Date (as defined in the Transfer and Servicing Agreement) relating to such calculation period 4. Provisions Deemed Incorporated in a Schedule to the ISDA Form Master Agreement: 1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form Master Agreement will apply to any Transaction. 2) Termination Provisions. For purposes of the ISDA Form Master Agreement: (a) "Specified Entity" is not applicable to BSFP or Counterparty for any purpose. (b) "Specified Transaction" is not applicable to BSFP or Counterparty for any purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or Counterparty. (c) Section 5(a)(i) of the ISDA Form Master Agreement is hereby amended by deleting the word "third" therein and replacing it with the word "second." Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 5 of 21 (d) "Breach of Agreement" provision of Section 5(a)(ii) will not apply to BSFP and will not apply to Counterparty. (e) "Credit Support Default" provisions of Section 5(a)(iii) will not apply to BSFP and will not apply to Counterparty. (f) "Misrepresentation" provisions of Section 5(a)(iv) will not apply to BSFP and will not apply to Counterparty. (g) The "Merger Without Assumption" provision of Section 5(a)(viii) will apply to BSFP and will not apply to Counterparty. (h) The "Cross Default" provision of Section 5(a)(vi) will not apply to BSFP or Counterparty. (h) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply to BSFP or Counterparty. (i) The "Bankruptcy" provision of Section 5(a)(vii)(2) will apply to BSFP and will not apply to Counterparty. (j) The "Automatic Early Termination" provision of Section 6(a) will not apply to BSFP or to Counterparty. (k) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA Form Master Agreement: (i) Market Quotation will apply. (ii) The Second Method will apply. (l) "Termination Currency" means United States Dollars. 3) Tax Representations. (a) Payer Representations. For the purpose of Section 3(e) of the ISDA Form Master Agreement, each of BSFP and the Counterparty will make the following representations: It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of the ISDA Form Master Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on: Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 6 of 21 (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement; (ii) the satisfaction of the agreement contained in Sections 4(a)(i) or 4(a)(iii) of the ISDA Form Master Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Sections 4(a)(i) or 4(a)(iii) of the ISDA Form Master Agreement; and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the ISDA Form Master Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) of the ISDA Form Master Agreement by reason of material prejudice to its legal or commercial position. (b) Payee Representations. For the purpose of Section 3(f) of the ISDA Form Master Agreement, each of BSFP and the Counterparty make the following representations. The following representation will apply to BSFP: BSFP is a corporation organized under the laws of the State of Delaware and its U.S. taxpayer identification number is 13-3866307. The following representation will apply to the Counterparty: The Counterparty is a statutory trust organized under the laws of the State of Delaware and, for U.S. federal income tax purposes, it is a qualified REIT subsidiary, within the meaning of section 856(i) of the U.S. Internal Revenue Code of 1986 [26 U.S.C. Section 856(i)], of Aegis REIT Corporation and, as such, is disregarded as an entity separate from Aegis REIT Corporation for U.S. federal income tax purpose. Aegis REIT Corporation is a corporation organized under the laws of the State of Maryland and its taxpayer identification number is 20-1973436. 4) Limitation on Events of Default. Notwithstanding the terms of Sections 5 and 6 of the ISDA Form Master Agreement, unless BSFP is required pursuant to appropriate proceedings to return to the Counterparty or otherwise returns to the Counterparty upon demand of the Counterparty any portion of the Fixed Amount, (a) the occurrence of an event described in Section 5(a) of the ISDA Form Master Agreement with respect to the Counterparty shall not constitute an Event of Default or Potential Event of Default with respect to the Counterparty as Defaulting Party and (b) BSFP shall be entitled to designate an Early Termination Date pursuant to Section 6 of the ISDA Form Master Agreement only as a result of the occurrence of a Termination Event set forth in either Section 5(b)(i) or 5(b)(ii) of the ISDA Form Master Agreement with respect to BSFP as the Affected Party, or Section 5(b)(iii) with respect to BSFP as the Burdened Party. Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 7 of 21 5) Documents to be Delivered. For the purpose of Section 4(a): (1) Tax forms, documents, or certificates to be delivered are:

(2) Other documents to be delivered are:

Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 8 of 21

(3) BSFP will provide a legal opinion as to corporate matters, including enforceability of this Agreement and of the Disclosure Agreements dated as of October 20, 2006 and October 24, 2006 among BSFP, the Counterparty, Aegis Asset Backed Securities Corporation and Aegis Mortgage Corporation (the "Disclosure Agreement") (excluding any provisions expressly stated therein which provide for indemnification or contribution), reasonably acceptable to the Counterparty. 6) Miscellaneous. Miscellaneous (a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form Master Agreement: Address for notices or communications to BSFP: Address: 383 Madison Avenue, New York, New York 10179 Attention: DPC Manager - Suite 2700 Facsimile: (212) 272-5823 Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 9 of 21 with a copy to: Address: One Metrotech Center North, Brooklyn, New York 11201 Attention: Derivative Operations - 7th Floor Facsimile: (212) 272-1634 (For all purposes) Address for notices or communications to the Counterparty: Address: Wilmington Trust Company as Owner Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Attention: Corporate Trust Administration Facsimile: 302-636-4140 Phone: 302-651-1000 with a copy to: Address: Wells Fargo Bank, N.A., as Administrator 9062 Old Annapolis Road Columbia, MD 21045 Attention: Client Manager-AEGIS 2006-1 Facsimile: 410-715-2380 Phone: 410-884-2000 (For all purposes) (b) Process Agent. For the purpose of Section 13(c): BSFP appoints as its Process Agent: Not Applicable The Counterparty appoints as its Process Agent: Not Applicable Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 10 of 21 (c) Offices. The provisions of Section 10(a) will not apply to this Agreement; neither BSFP nor the Counterparty have any Offices other than as set forth in the Notices Section and BSFP agrees that, for purposes of Section 6(b) of this Agreement, it shall not in future have any Office other than one in the United States. (d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master Agreement: BSFP is not a Multibranch Party. The Counterparty is not a Multibranch Party. (e) Calculation Agent. The Calculation Agent is BSFP. (f) Credit Support Document. Not applicable for either BSFP or the Counterparty. (g) Credit Support Provider. BSFP: Not Applicable The Counterparty: Not Applicable (h) Governing Law. The parties to this Agreement hereby agree that the law of the State of New York shall govern their rights and duties in whole. (i) Severability. If any term, provision, covenant, or condition of this Agreement, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable (in whole or in part) for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Agreement had been executed with the invalid or unenforceable portion eliminated, so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Agreement and the deletion of such portion of this Agreement will not substantially impair the respective benefits or expectations of the parties. The parties shall endeavor to engage in good faith negotiations to replace any invalid or unenforceable term, provision, covenant or condition with a valid or enforceable term, provision, covenant or condition, the economic effect of which comes as close as possible to that of the invalid or unenforceable term, provision, covenant or condition. (j) Consent to Recording. Each party hereto consents to the monitoring or recording, at any time and from time to time, by the other party of any and all communications between Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 11 of 21 officers or employees of the parties, waives any further notice of such monitoring or recording, and agrees to notify its officers and employees of such monitoring or recording. (k) Waiver of Jury Trial. Each party waives any right it may have to a trial by jury in respect of any Proceedings relating to this Agreement or any Credit Support Document. 7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form Master Agreement, provided that neither BSFP nor Counterparty shall be deemed to have any Affiliates for purposes of this Agreement, including for purposes of Section 6(b)(ii). 8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at the end thereof the following subsection (g): "(g) Relationship Between Parties. Each party represents to the other party on each date when it enters into a Transaction that:-- (1) Nonreliance. It is not relying on any statement or representation of the other party regarding the Transaction (whether written or oral), other than the representations expressly made in this Agreement or the Confirmation in respect of that Transaction. (2) Evaluation and Understanding. (i) Each of the Counterparty and BSFP is acting for its own account. Each Party has made its own independent decisions to enter into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Transaction; it being understood that information and explanations related to the terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. It has not received from the other party any assurance or guarantee as to the expected results of this Transaction. (ii) It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Transaction. It is also capable of assuming, and assumes, the financial and other risks of this Transaction. (3) Purpose. It is entering into the Transaction for the purposes of managing its borrowings or investments, hedging its underlying assets or liabilities or in connection with a line of business. Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 12 of 21 (4) Principal. It is entering into the Transaction as principal, and not as agent or in any other capacity, fiduciary or otherwise and the other party is not acting as a fiduciary for or an adviser to it in respect of the Transaction." 9) Limitation of Liability. It is expressly understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by Wilmington Trust Company, not individually or personally but solely as owner trustee of Aegis Asset Backed Securities Trust 2006-1 , in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements herein made on the part of Aegis Asset Backed Securities Trust 2006-1 is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose of binding only Aegis Asset Backed Securities Trust 2006-1, (iii) nothing herein contained shall be construed as creating any liability on the part of Wilmington Trust Company, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (iv) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by Aegis Asset Backed Securities Trust 2006-1 under this Agreement or any other related documents. 10) Proceedings. BSFP shall not institute against or cause any other person to institute against, or join any other person in instituting against Counterparty any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any federal or state bankruptcy or similar law for a period of one year and one day following payment in full of the Notes. 11) Set-off. The provisions for Set-off set forth in Section 6(e) of the ISDA Form Master Agreement shall not apply for purposes of this Transaction. Notwithstanding any provision of this Agreement or any other existing or future agreement, each party irrevocably waives any and all rights it may have to set off, net, recoup or otherwise withhold or suspend or condition payment or performance of any obligation between it and the other party under any other agreements. 12) Additional Termination Events. The following Additional Termination Events will apply, in each case with respect to the Counterparty as the sole Affected Party (unless otherwise provided below): (i) If a Ratings Downgrade has occurred and BSFP has not, within the time period specified therein, complied with paragraph 13 below, then an Additional Termination Event shall have occurred with respect to BSFP and Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 13 of 21 BSFP shall be the sole Affected Party with respect to such Additional Termination Event. (ii) Notice of the Ownership Certificateholder's or the Servicer's intention to exercise its option to purchase the Mortgage Loans pursuant to Section 9.1 of the Transfer and Servicing Agreement is given by the Indenture Trustee to Noteholders pursuant to Section 9.2 of the Transfer and Servicing Agreement. (iii) If BSFP fails to comply with the terms of either Disclosure Agreement (as defined in paragraph 14 below) and BSFP has not, within the timeframe set forth in such Disclosure Agreement after such failure, complied with any of the provisions set forth in such Disclosure Agreement, then an Additional Termination Event shall have occurred with respect to BSFP and BSFP shall be the sole Affected Party with respect to such Additional Termination Event. 13) Ratings Downgrade. (a) If BSFP fails to satisfy the Required Ratings (a "RATINGS EVENT"), then BSFP shall, at its own expense and subject to the Rating Agency Condition, either (i) assign this Transaction to an entity that satisfies (or whose credit support provider satisfies) the Required Ratings; (ii) deliver collateral, and an executed ISDA Credit Support Annex; (iii) obtain a guaranty of an entity that satisfies the Required Rating to guaranty BSFP's obligations under this Transaction; or (iv) take any other action that satisfies the Rating Agency Condition; provided that the failure by BSFP to take any action specified in (i)-(iv) above on or prior to the 30th calendar day after such Ratings Event shall constitute an Additional Termination Event under the ISDA Form Master Agreement with respect to which BSFP shall be the sole Affected Party and this Transaction shall be the sole Affected Transaction. (b) If BSFP fails to satisfy the Replacement Ratings (a "REPLACEMENT EVENT"), then BSFP shall, at its own expense and subject to the Rating Agency Condition, either: (i) assign this Transaction to an entity that satisfies (or whose credit support provider satisfies) the Required Ratings; (ii) obtain a guaranty of an entity that satisfies the Required Rating to guaranty BSFP's obligations under this Transaction; or (iii) take any other action that satisfies the Rating Agency Condition; Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 14 of 21 provided that the failure by BSFP to take any action specified in (i)-(iii) above on or prior to the 10th Local Business Days after such Replacement Event shall constitute an Additional Termination Event under the ISDA Form Master Agreement with respect to which BSFP shall be the sole Affected Party and this Transaction shall be the sole Affected Transaction. As used herein, "MOODY'S" means Moody's Investors Service, Inc. "RATING AGENCY" means, each of S&P and Moody's "RATING AGENCY CONDITION" means with respect to any proposed act or omission to act hereunder, a condition that is satisfied if each Rating Agency then providing a rating of the Certificates confirms in writing that the proposed action or inaction would not cause a downgrade or withdrawal of the then-current rating of the Certificates. "REPLACEMENT RATINGS" means, with respect to any entity, the rating of the long-term senior unsecured and unsubordinated obligations of such entity is at least "BBB-" by S&P or "A3" by Moody's. "REQUIRED RATINGS" means, with respect to any entity, the rating of the long-term senior unsecured and unsubordinated obligations of such entity is at least "AA-" by S&P and "Aa3" by Moody's. "S&P" means Standard and Poor's Ratings Services, Inc. 14) Compliance with Regulation AB. Aegis Asset Backed Securities Corporation (the "Depositor"), Aegis Mortgage Corporation (the "Sponsor"), Aegis Asset Backed Securities Trust 2006-1 (the "Issuer"), and BSFP have entered into (a) the Disclosure Agreement dated October 20, 2006 (the "Preliminary Prospectus Disclosure Agreement") and (b) the Disclosure Agreement dated October 24, 2006 (the "Final Prospectus Disclosure Agreement" and each a "Disclosure Agreement"). 15) Additional Provisions. Notwithstanding the terms of Sections 5 and 6 of the ISDA Form Master Agreement, if Counterparty has satisfied its payment obligations under Section 2(a)(i) of the ISDA Form Master Agreement, then unless BSFP is required pursuant to appropriate proceedings to return to Counterparty or otherwise returns to Counterparty upon demand of Counterparty any portion of such payment, (a) the occurrence of an event described in Section 5(a) of the ISDA Form Master Agreement with respect to Counterparty shall not constitute an Event of Default or Potential Event of Default with respect to Counterparty the Defaulting Party and (b) BSFP shall be entitled to designate an Early Termination Event pursuant to Section 6 of the ISDA Form Master Agreement only as a result of a Termination Event set forth in either Section 5(b)(i) or Section 5(b)(ii) of the ISDA Form Master Agreement with respect to BSFP as the Affected Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 15 of 21 Party or Section 5(b)(iii) of the ISDA Form Master Agreement with respect to BSFP as the Burdened Party. For purposes of the Transaction to which this Agreement relates, Counterparty's only obligation under Section 2(a)(i) of the ISDA Form Master Agreement is to pay the Fixed Amounts on the Fixed Rate Payer Payment Date. 16) Transfer, Amendment and Assignment. No transfer, amendment, waiver, supplement, assignment or other modification of this Transaction shall be permitted by either party unless S&P, Moody's and Fitch have all been provided notice of the same and confirm in writing (including by facsimile transmission) within five Business Days after such notice is given that it will not downgrade, qualify, withdraw or otherwise modify its then-current rating of the Notes. 17) Non-Recourse. The liability of the Counterparty in relation to this Agreement and any Confirmation hereunder is limited in recourse to assets in the Trust Estate (as defined in Transfer and Servicing Agreement) and payments of interest proceeds and principal proceeds thereon applied in accordance with the terms of the Transfer and Servicing Agreement and the Indenture. Upon application of all of the assets in the Trust Estate (and proceeds thereon) in accordance with the Transfer and Servicing Agreement and Indenture, BSFP shall not be entitled to take any further steps against the Counterparty to recover any sums due but still unpaid hereunder or thereunder, all claims in respect of which shall be extinguished. NEITHER THE BEAR STEARNS COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF THE BEAR STEARNS COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT SUPPORT PROVIDER ON THIS AGREEMENT. 5. Account Details and Settlement Information: PAYMENTS TO BSFP: Citibank, N.A., New York ABA Number: 021-0000-89, for the account of Bear, Stearns Securities Corp. Account Number: 0925-3186, for further credit to Bear Stearns Financial Products Inc. Sub-account Number: 102-04654-1-3 Attention: Derivatives Department PAYMENTS TO COUNTERPARTY: Wells Fargo Bank, N.A. ABA # 121000248 Account Name: SAS Clearing Account # 3970771416 FFC to: Aegis 2005-1, Account # 50960500 Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 16 of 21 This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to BSFP a facsimile of the fully-executed Confirmation to 212-272-9857. For inquiries regarding U.S. Transactions, please contact DERIVATIVES DOCUMENTATION by telephone at 212-272-2711. For all other inquiries please contact DERIVATIVES DOCUMENTATION by telephone at 353-1-402-6233. Originals will be provided for your execution upon your request. Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 17 of 21 We are very pleased to have executed this Transaction with you and we look forward to completing other transactions with you in the near future. Very truly yours, BEAR STEARNS FINANCIAL PRODUCTS INC. By: /s/ Annie Manevitz ------------------------------------- Name: Annie Manevitz Title: Authorized Signatory Counterparty, acting through its duly authorized signatory, hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade Date. AEGIS ASSET BACKED SECURITIES TRUST 2006-1 By: Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee By: /s/ Robert J. Perkins ------------------------------------- Name: Robert J. Perkins Title: Sr. Financial Services Officer Ln Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 18 of 21 ANNEX A (all such dates subject to adjustment in accordance with the Business Day Convention) FROM AND INCLUDING TO BUT EXCLUDING MAXIMUM NOTIONAL BALANCE (USD) Effective Date December 25, 2006 2,244,087 December 25, 2006 January 25, 2007 1,219,565 January 25, 2007 February 25, 2007 1,118,173 February 25, 2007 March 25, 2007 3,704,691 March 25, 2007 April 25, 2007 7,078,655 April 25, 2007 May 25, 2007 12,712,272 May 25, 2007 June 25, 2007 20,364,431 June 25, 2007 July 25, 2007 29,309,064 July 25, 2007 August 25, 2007 40,149,178 August 25, 2007 September 25, 2007 52,252,881 September 25, 2007 October 25, 2007 62,428,573 October 25, 2007 November 25, 2007 70,082,317 November 25, 2007 December 25, 2007 74,964,002 December 25, 2007 January 25, 2008 77,692,710 January 25, 2008 February 25, 2008 79,345,959 February 25, 2008 March 25, 2008 79,235,919 March 25, 2008 April 25, 2008 77,450,621 April 25, 2008 May 25, 2008 74,698,863 May 25, 2008 June 25, 2008 92,092,436 June 25, 2008 July 25, 2008 90,749,974 July 25, 2008 August 25, 2008 89,717,438 August 25, 2008 September 25, 2008 91,614,330 September 25, 2008 October 25, 2008 94,811,018 October 25, 2008 November 25, 2008 92,014,087 November 25, 2008 December 25, 2008 88,515,179 December 25, 2008 January 25, 2009 84,349,845 January 25, 2009 February 25, 2009 80,607,442 February 25, 2009 March 25, 2009 77,283,635 March 25, 2009 April 25, 2009 74,459,189 April 25, 2009 May 25, 2009 73,886,502 May 25, 2009 June 25, 2009 73,183,894 Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 19 of 21 June 25, 2009 July 25, 2009 72,585,767 July 25, 2009 August 25, 2009 72,269,025 August 25, 2009 September 25, 2009 73,354,999 September 25, 2009 October 25, 2009 74,450,633 October 25, 2009 November 25, 2009 72,630,420 November 25, 2009 December 25, 2009 70,625,274 December 25, 2009 January 25, 2010 68,664,699 January 25, 2010 February 25, 2010 66,605,266 February 25, 2010 March 25, 2010 64,464,011 March 25, 2010 April 25, 2010 62,296,268 April 25, 2010 May 25, 2010 37,503,492 May 25, 2010 June 25, 2010 36,787,846 June 25, 2010 July 25, 2010 36,043,129 July 25, 2010 August 25, 2010 35,295,683 August 25, 2010 September 25, 2010 34,553,024 September 25, 2010 October 25, 2010 33,810,022 October 25, 2010 November 25, 2010 33,116,031 November 25, 2010 December 25, 2010 32,462,120 December 25, 2010 January 25, 2011 31,874,338 January 25, 2011 February 25, 2011 31,303,874 February 25, 2011 March 25, 2011 30,756,411 March 25, 2011 April 25, 2011 30,231,414 April 25, 2011 May 25, 2011 29,729,929 May 25, 2011 June 25, 2011 29,245,268 June 25, 2011 July 25, 2011 28,741,710 July 25, 2011 August 25, 2011 28,179,827 August 25, 2011 September 25, 2011 27,547,104 September 25, 2011 Termination Date 26,843,239 Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 20 of 21 ANNEX B (all such dates subject to adjustment in accordance with the Business Day Convention) FROM AND INCLUDING TO BUT EXCLUDING SWAP NOTIONAL BALANCE (USD) October 30, 2006 November 25, 2006 509,250,000 November 25, 2006 December 25, 2006 505,152,648 December 25, 2006 January 25, 2007 500,104,338 January 25, 2007 February 25, 2007 493,343,381 February 25, 2007 March 25, 2007 483,114,225 March 25, 2007 April 25, 2007 471,321,741 April 25, 2007 May 25, 2007 457,381,942 May 25, 2007 June 25, 2007 440,884,878 June 25, 2007 July 25, 2007 422,390,095 July 25, 2007 August 25, 2007 401,324,389 August 25, 2007 September 25, 2007 378,352,967 September 25, 2007 October 25, 2007 356,704,109 October 25, 2007 November 25, 2007 337,011,632 November 25, 2007 December 25, 2007 320,182,675 December 25, 2007 January 25, 2008 305,046,485 January 25, 2008 February 25, 2008 290,601,187 February 25, 2008 March 25, 2008 277,571,894 March 25, 2008 April 25, 2008 265,894,244 April 25, 2008 May 25, 2008 255,006,519 May 25, 2008 June 25, 2008 244,244,287 June 25, 2008 July 25, 2008 233,535,615 July 25, 2008 August 25, 2008 222,963,435 August 25, 2008 September 25, 2008 209,925,525 September 25, 2008 October 25, 2008 195,624,814 October 25, 2008 November 25, 2008 183,899,077 November 25, 2008 December 25, 2008 174,333,315 December 25, 2008 January 25, 2009 166,215,657 January 25, 2009 February 25, 2009 158,444,392 February 25, 2009 March 25, 2009 150,960,847 March 25, 2009 April 25, 2009 143,809,563 April 25, 2009 May 25, 2009 137,159,105 May 25, 2009 June 25, 2009 130,950,052 Reference Number: FXAEG061C1 Aegis Asset Backed Securities Trust 2006-1 October 30, 2006 Page 21 of 21 June 25, 2009 July 25, 2009 124,968,279 July 25, 2009 August 25, 2009 118,991,940 August 25, 2009 September 25, 2009 111,917,393 September 25, 2009 October 25, 2009 105,073,507 October 25, 2009 November 25, 2009 98,650,568 November 25, 2009 December 25, 2009 92,639,779 December 25, 2009 January 25, 2010 87,002,803 January 25, 2010 February 25, 2010 81,858,844 February 25, 2010 March 25, 2010 77,168,165 March 25, 2010 April 25, 2010 72,875,104 April 25, 2010 May 25, 2010 68,844,963 May 25, 2010 June 25, 2010 65,074,106 June 25, 2010 July 25, 2010 61,521,322 July 25, 2010 August 25, 2010 58,152,318 August 25, 2010 September 25, 2010 54,951,962 September 25, 2010 October 25, 2010 51,918,121 October 25, 2010 November 25, 2010 48,995,271 November 25, 2010 December 25, 2010 46,184,482 December 25, 2010 January 25, 2011 43,453,544 January 25, 2011 February 25, 2011 40,845,125 February 25, 2011 March 25, 2011 38,347,660 March 25, 2011 April 25, 2011 35,956,071 April 25, 2011 May 25, 2011 33,664,447 May 25, 2011 June 25, 2011 31,471,120 June 25, 2011 July 25, 2011 29,378,147 July 25, 2011 August 25, 2011 27,389,865 August 25, 2011 September 25, 2011 25,511,759 September 25, 2011 Termination Date 23,727,552

AEGIS 2006-1 8-K