exv10w1



 







Exhibit 10.1




AMENDMENT NUMBER ONE

to the

AMENDED AND RESTATED SALE AND SERVICING AGREEMENT,

dated as of November 12, 2004,

among

OPTION ONE OWNER TRUST 2003-5,

OPTION ONE LOAN WAREHOUSE CORPORATION,

OPTION ONE MORTGAGE CORPORATION

and

WELLS FARGO BANK, N.A.




          This AMENDMENT NUMBER ONE (this “Amendment”) is made and is effective as of this 11th day of
November, 2005, among Option One Owner Trust 2003-5 (the “Issuer”), Option One Loan Warehouse
Corporation (the “Depositor”), Option One Mortgage Corporation (the “Loan Originator” and the
“Servicer”) and Wells Fargo Bank, N.A., (formerly known as Wells Fargo Bank Minnesota, National
Association) as Indenture Trustee (the “Indenture Trustee”), to the Amended and Restated Sale and
Servicing Agreement, dated as of November 12, 2004 (the “Sale and Servicing Agreement”), among the
Issuer, the Depositor, the Loan Originator, the Servicer and the Indenture Trustee.




RECITALS




          WHEREAS, the parties hereto desire to amend the Sale and Servicing Agreement subject to the
terms and conditions of this Amendment.




          NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and of the mutual covenants herein contained, the parties hereto hereby agree
as follows:




          SECTION 1. Defined Terms. Any terms capitalized but not otherwise defined herein
shall have the respective meanings set forth in the Sale and Servicing Agreement.




          SECTION 2. Amendments. (A) Section 1.01 of the Sale and Servicing Agreement
is hereby amended by adding the following definition:





          Interest-Only Loan: A loan which, by its terms, requires the related Borrower
to make monthly payments of only accrued interest for the certain period of time
following origination. After such interest-only period, the loan terms provide that
the Borrower’s monthly payment will be recalculated to cover both interest and
principal so that such loan will amortize fully on or prior to its final payment
date. Each Interest-Only Loan shall be identified as such on the Loan Schedule, and
shall have an interest-only period of five years or as otherwise designated in the
Loan Schedule.



 









 





          (B) Section 1.01 of the Sale and Servicing Agreement is hereby amended by amending the
definition of the term “Revolving Period” in its entirety to read as follows:





          Revolving Period: With respect to the Notes, the period commencing on November
11, 2005 and ending on the earlier of (i) 364 days after such date, and (ii) the
date on which the Revolving Period is terminated pursuant to Section 2.07.



          (C) Section 2.03(b) of the Sale and Servicing Agreement is amended in its entirety to
read as follows:





     (b) It is the intention of the parties hereto that, other than for
federal, state and local income or franchise tax purposes (as to which no treatment
is herein contemplated), the transfers and assignments of the Trust Estate on the
initial Closing Date, on each Transfer Date and as otherwise contemplated by the
Basic Documents and the Assignments shall constitute a sale of the Trust Estate
including, without limitation, the Loans and all other property comprising the
Trust Estate specified in Section 2.01(a) hereof, from the Depositor to the Issuer
and such property shall not be property of the Depositor. The parties hereto shall
treat the Notes as indebtedness for federal, state and local income and franchise
tax purposes.



          (D) Section 3.01(e) of the Sale and Servicing Agreement is amended in its entirety to
read as follows:





     (e) There are no actions or proceedings against, or investigations of,
the Depositor currently pending with regard to which the Depositor has received
service of process and no action or proceeding against, or investigation of, the
Depositor is, to the knowledge of the Depositor, threatened or otherwise pending
before any court, administrative agency or other tribunal that (A) if determined
adversely to the Depositor, has a reasonable possibility of prohibiting or
preventing its entering into any of the Basic Documents to which it is a party or
render the Securities invalid, (B) seek to prevent the issuance of the Securities
or the consummation of any of the transactions contemplated by any of the Basic
Documents to which it is a party or (C) if determined adversely to the Depositor,
would prohibit or materially and adversely affect the performance by the Depositor
of its obligations under, or the validity or enforceability of, any of the Basic
Documents to which it is a party or the Securities, provided, however, that,
insofar as this representation relates to the Loan Originator’s satisfaction of its
financial covenants, there is also a reasonable possibility of an adverse
determination of such action, proceeding or investigation having such effect;



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          (E) Section 3.02(e) of the Sale and Servicing Agreement is amended in its entirety to
read as follows:





     (e) There are no actions or proceedings against, or investigations of,
the Loan Originator currently pending with regard to which the Loan Originator has
received service of process and no action or proceeding against, or investigation
of, the Loan Originator is, to the knowledge of the Loan Originator, threatened or
otherwise pending before any court, administrative agency or other tribunal that
(A) if determined adversely to the Loan Originator, would prohibit its entering
into any Basic Document to which it is a party or render the Securities invalid,
(B) seek to prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by any Basic Document to which it is a party or (C)
if determined adversely to the Loan Originator, would have a reasonable possibility
of prohibiting or preventing or materially and adversely affecting the sale of the
Loans to the Depositor, the performance by the Loan Originator of its obligations
under, or the validity or enforceability of, any Basic Document to which it is a
party or the Securities, provided, however, that, insofar as this representation
relates to
the Loan Originator’s satisfaction of its financial covenants, there is also a
reasonable possibility of an adverse determination of such action, proceeding or
investigation having such effect;



          (F) Section 3.03(e) of the Sale and Servicing Agreement is amended in its entirety to
read as follows:





     (e) There are no actions or proceedings against, or investigations of,
the Servicer currently pending with regard to which the Servicer has received
service of process and no action or proceeding against, or investigation of, the
Servicer is, to the knowledge of the Servicer, threatened or otherwise pending
before any court, administrative agency or other tribunal that (A) if determined
adversely to the Servicer, would prohibit its entering into any Basic Document to
which it is a party, (B) seek to prevent the consummation of any of the
transactions contemplated by any Basic Document to which it is a party, (C) if
determined adversely to the Servicer, would have a reasonable possibility of
prohibiting or materially and adversely affecting the performance by the Servicer
of its obligations under, or the validity or enforceability of, any Basic Document
to which it is a party or the Securities, provided, however, that, insofar as this
representation relates to the Loan Originator’s satisfaction of its financial
covenants, there is also a reasonable possibility of an adverse determination of
such action, proceeding or investigation having such effect, or (D) allege that the
Servicer has engaged in practices, with respect to any of the Loans, that are
predatory, abusive, deceptive or otherwise wrongful under any applicable statute,
regulation or ordinance or that are otherwise actionable and that have a reasonable
possibility of adverse determination;



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          (G) Section 7.02 of the Sale and Servicing Agreement is amended in its entirety to
read as follows:




     Section 7.02 Financial Covenants.




     (a) Each of the Loan Originator and the Servicer shall maintain a
minimum Tangible Net Worth of $425 million as of any day.




     (b) Each of the Loan Originator and the Servicer shall maintain a
ratio of 1.0 or greater at any time pursuant to the Capital Adequacy Test, attached
as Exhibit G hereto.




     (c) Neither the Loan Originator nor the Servicer may exceed a maximum
non-warehouse leverage ratio (the ratio of (i) the sum of (A) all funded debt
(excluding debt from H&R Block, Inc. or any of its Affiliates and all non-recourse
debt) less (B) 91% of its mortgage loan inventory held for sale less (C) 90% of
servicing advance receivables (determined and valued in accordance with GAAP) to
(ii) Tangible Net Worth) of 0.50x at any time.




     (d) Each of the Loan Originator and the Servicer shall maintain a
minimum liquidity facility (defined as a committed, unsecured, non-amortizing
liquidity facility from H&R Block, Inc. not to mature (scheduled or accelerated)
prior to the Maturity Date) in an amount no less than $150 million. Such facility
from H&R Block,
Inc. cannot contain covenants or termination events more restrictive than the
covenants or termination events contained in the Basic Documents.




     (e) Each of the Loan Originator and the Servicer shall maintain a
minimum “Net Income” (defined and determined in accordance with GAAP) of at least
$1 based on the total of the current quarter combined with the previous three
quarters.




     (f) Each of the Loan Originator and the Servicer, on a quarterly
basis, shall provide the Noteholder Agent with an Officer’s Certificate stating
that the Loan Originator or the Servicer, as the case may be, is in compliance with
the financial covenants set forth in this Section 7.02 and the details of such
compliance.



          (H) Clause (10) of Section 9.01(a) of the Sale and Servicing Agreement is amended in
its entirety to read as follows:





     (10) so long as the Servicer or the Loan Originator is an Affiliate of
the Issuer, the occurrence of an Event of Default under the Indenture as a result
of the action or inaction of the Issuer.



          (I) Exhibit E to the Sale and Servicing Agreement is hereby amended by amending (xx)
the following representations and warranties:




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          (xx) Except for Interest-Only Loans, Principal payments on the Loan
commenced no more than two months after the proceeds of the Loan were disbursed.
The Loan bears interest at the Loan Interest Rate. With respect to each Loan unless
otherwise stated on the Loan Schedule, the Promissory Note is payable on the first
day of each month in Monthly Payments which, except for Balloon Loans, are
sufficient to fully amortize the original principal balance over the original term
thereof and to pay interest at the related Loan Interest Rate, and, in the case of
each ARM, are changed on each Adjustment Date. The Promissory Note does not permit
negative amortization. No Loan is a Convertible Mortgage Loan;



     (J) A new Exhibit G is added to the Sale and Servicing Agreement, in the form appended
to this Amendment.




     SECTION 3. Representations. In order to induce the parties hereto to execute and
deliver this Amendment, each of the Issuer and the Depositor hereby jointly and severally
represents to the other parties hereto and the Noteholders that as of the date hereof, after giving
effect to this Amendment, (a) all of its respective representations and warranties in the Note
Purchase Agreement and the other Basic Documents are true and correct, and (b) it is otherwise in
full compliance with all of the terms and conditions of the Sale and Servicing Agreement.



     SECTION 4. Guaranty. Reference is hereby made to that certain Guaranty, dated as of
November 1, 2003 (the “Guaranty”), made by H&R Block, Inc. in favor of Wells Fargo Bank Minnesota,
National Association, as indenture trustee. H&R Block, Inc., as guarantor pursuant to the Guaranty,
hereby consents to this Amendment and acknowledges and agrees that the Guaranty shall remain in
full force and effect and shall apply to all of the Guaranteed Obligations (as defined in the
Guaranty), as such term is amended or affected by this Amendment.



     SECTION 5. Limited Effect. Except as expressly amended and modified by this Amendment,
the Sale and Servicing Agreement shall continue in full force and effect in accordance with its
terms. Reference to this Amendment need not be made in the Sale and Servicing Agreement or any
other instrument or document executed in connection therewith or herewith, or in any certificate,
letter or communication issued or made pursuant to, or with respect to, the Sale and Servicing
Agreement, any reference in any of such items to the Sale and Servicing Agreement being sufficient
to refer to the Sale and Servicing Agreement as amended hereby.



     SECTION 6. Fees and Expenses. The Issuer and the Depositor jointly and severally
covenant to pay as and when billed by the Initial Noteholder all of the reasonable out-of-pocket
costs and expenses incurred in connection with the transactions contemplated hereby and in the
other Basic Documents including, without limitation, (i) all reasonable fees, disbursements and
expenses of counsel to the Initial Noteholder, (ii) all reasonable fees and expenses of the
Indenture Trustee and Owner Trustee and their counsel and (iii) all reasonable fees and expenses of
the Custodian and its counsel.



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     SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE.




     SECTION 8. Counterparts. This Amendment may be executed by each of the parties hereto
on any number of separate counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same instrument.



     SECTION 9. Limitation on Liability. It is expressly understood and agreed by the
parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust Company, not
individually or personally, but solely as Owner Trustee of Option One Owner Trust 2003-5 in the
exercise of the powers and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust Company but is made and
intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on 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 (d) under no circumstances shall Wilmington Trust Company be personally liable
for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer
under this Amendment or any other related documents.



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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized officers as of the day and year first above written.




	 	 	 	 	 
	 	 	OPTION ONE OWNER TRUST 2003-5
	 
	 	 	 	 
	 	 	By: Wilmington Trust Company, not in its
	 	 	individual capacity but solely as owner trustee
	 
	 	 	 	 
	 

	 	By:
	 	      /s/ Joann A. Rozell
	 

	 	 	 	 
	 	 	Name: Joann A. Rozell
	 	 	Title: Financial Services Officer
	 
	 	 	 	 
	 	 	OPTION ONE LOAN WAREHOUSE CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	     /s/ Bob Fulton
	 

	 	 	 	 
	 	 	Name: Bob Fulton
	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	OPTION ONE MORTGAGE CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	      /s/ Bob Fulton
	 

	 	 	 	 
	 	 	Name: Bob Fulton
	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	WELLS FARGO BANK, N.A., as Indenture Trustee
	 
	 	 	 	 
	 

	 	By:
	 	      /s/ Amy Doyle
	 

	 	 	 	 
	 	 	Name: Amy Doyle
	 	 	Title: Vice President






Acknowledged and Agreed as

of the date first above written:




H&R BLOCK, INC.




	 	 	 	 	 
	By:

	 	      /s/ Becky S. Shulman	 	 
	Name: Becky S. Shulman	 	 
	Title: Vice President and Treasurer	 	 






 









 






EXHIBIT G




Capital Adequacy Test

*For each field multiply the HRB% by the Balance Sheet Amount for Required Capital




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	HRB TEST	 	Balance Sheet	 	Required Capital
	Unrestricted Cash and Equivalents
	 	 	0	%	 	 	 	 	 	 	 	 
	Restricted Cash
	 	 	0	%	 	 	 	 	 	 	 	 
	Loans Held for Sale
	 	 	9	%	 	 	 	 	 	 	 	 
	Servicing Advances
	 	 	10	%	 	 	 	 	 	 	 	 
	Beneficial Interests in trusts
	 	 	10	%	 	 	 	 	 	 	 	 
	Subprime Mortgage NIM Residual Interest
	 	 	60	%	 	 	 	 	 	 	 	 
	Real Estate Held for Sale
	 	 	10	%	 	 	 	 	 	 	 	 
	Furniture and Equipment
	 	 	0	%	 	 	 	 	 	 	 	 
	Mortgage Servicing Rights
	 	 	25	%	 	 	 	 	 	 	 	 
	Prepaid Expenses and Other Assets
	 	 	10	%	 	 	 	 	 	 	 	 
	Accrued interest receivable
	 	 	10	%	 	 	 	 	 	 	 	 
	Receivable from H&R Block
	 	 	0	%	 	 	 	 	 	 	 	 
	Intangibles and goodwill
	 	 	100	%	 	 	 	 	 	 	 	 
	Deferred Tax Assets
	 	 	10	%	 	 	 	 	 	 	 	 
	Derivative Assets
	 	 	10	%	 	 	 	 	 	 	 	 
	Total Required Capital
	 	 	 	 	 	 	 	 	 	 	 	 






Total Owners Equity on Balance Sheet Date



Less: Receivables from H&R Block / Adjusted Net Worth



Adjusted Net Worth divided by Required Capital = Ratio for Capital Adequacy Test