exv10w7



 





Exhibit 10.7




EXECUTION COPY




SECOND AMENDED AND RESTATED

NOTE PURCHASE AGREEMENT




among




OPTION ONE OWNER TRUST 2002-3

as Issuer,




OPTION ONE LOAN WAREHOUSE CORPORATION

as Depositor




and




UBS REAL ESTATE SECURITIES INC.

as Purchaser




Dated as of January 19, 2007




OPTION ONE OWNER TRUST 2002-3

MORTGAGE-BACKED NOTES




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	ARTICLE I	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 1.01
	 	 	 	Certain Defined Terms
	 	 	1	 
	 

	 	SECTION 1.02
	 	 	 	Other Definitional Provisions
	 	 	2	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE II	 	COMMITMENT; CLOSING AND PURCHASES OF ADDITIONAL NOTE PRINCIPAL BALANCES	 	 	3	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 2.01
	 	 	 	Commitment
	 	 	3	 
	 

	 	SECTION 2.02
	 	 	 	Closing
	 	 	3	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE III	 	TRANSFER DATES	 	 	3	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 3.01
	 	 	 	Transfer Dates
	 	 	3	 
	 

	 	SECTION 3.02
	 	 	 	Limitation on Purchases; Illegality
	 	 	5	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IV	 	CONDITIONS PRECEDENT TO EFFECTIVENESS OF COMMITMENT	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 4.01
	 	 	 	Subject to Conditions Precedent
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE V	 	REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE DEPOSITOR	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 5.01
	 	 	 	Issuer
	 	 	8	 
	 

	 	SECTION 5.02
	 	 	 	Securities Act
	 	 	12	 
	 

	 	SECTION 5.03
	 	 	 	No Fee
	 	 	12	 
	 

	 	SECTION 5.04
	 	 	 	Information
	 	 	12	 
	 

	 	SECTION 5.05
	 	 	 	The Purchased Notes
	 	 	12	 
	 

	 	SECTION 5.06
	 	 	 	Use of Proceeds
	 	 	12	 
	 

	 	SECTION 5.07
	 	 	 	The Depositor
	 	 	12	 
	 

	 	SECTION 5.08
	 	 	 	Taxes, etc
	 	 	13	 
	 

	 	SECTION 5.09
	 	 	 	Financial Condition
	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VI	 	REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PURCHASER	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 6.01
	 	 	 	Organization
	 	 	13	 
	 

	 	SECTION 6.02
	 	 	 	Authority, etc
	 	 	13	 
	 

	 	SECTION 6.03
	 	 	 	Securities Act
	 	 	13	 
	 

	 	SECTION 6.04
	 	 	 	Conflicts With Law
	 	 	14	 
	 

	 	SECTION 6.05
	 	 	 	Conflicts With Agreements, etc
	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VII	 	COVENANTS OF THE ISSUER AND THE DEPOSITOR	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 7.01
	 	 	 	Information from the Issuer
	 	 	14	 
	 

	 	SECTION 7.02
	 	 	 	Access to Information
	 	 	15	 
	 

	 	SECTION 7.03
	 	 	 	Ownership and Security Interests; Further Assurances
	 	 	15	 
	 

	 	SECTION 7.04
	 	 	 	Covenants
	 	 	15	 
	 

	 	SECTION 7.05
	 	 	 	Amendments
	 	 	15	 
	 

	 	SECTION 7.06
	 	 	 	With Respect to the Exempt Status of the Purchased Notes
	 	 	16	 









i









 





TABLE OF
CONTENTS


	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 

	 	SECTION 7.07
	 	 	 	Affirmative Covenants
	 	 	16	 
	 

	 	SECTION 7.08
	 	 	 	Negative Covenants
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	ADDITIONAL COVENANTS	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 8.01
	 	 	 	Legal Conditions to Closing
	 	 	20	 
	 

	 	SECTION 8.02
	 	 	 	Expenses
	 	 	20	 
	 

	 	SECTION 8.03
	 	 	 	Mutual Obligations
	 	 	21	 
	 

	 	SECTION 8.04
	 	 	 	Restrictions on Transfer
	 	 	21	 
	 

	 	SECTION 8.05
	 	 	 	[Reserved]
	 	 	21	 
	 

	 	SECTION 8.06
	 	 	 	Information Provided by the Purchaser
	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IX	 	INDEMNIFICATION	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 9.01
	 	 	 	Indemnification of the Purchaser
	 	 	21	 
	 

	 	SECTION 9.02
	 	 	 	Procedure and Defense
	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE X	 	MISCELLANEOUS	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SECTION 10.01
	 	 	 	Amendments
	 	 	22	 
	 

	 	SECTION 10.02
	 	 	 	Notices
	 	 	22	 
	 

	 	SECTION 10.03
	 	 	 	No Waiver; Remedies
	 	 	22	 
	 

	 	SECTION 10.04
	 	 	 	Binding Effect; Assignability
	 	 	23	 
	 

	 	SECTION 10.05
	 	 	 	Provision of Documents and Information
	 	 	23	 
	 

	 	SECTION 10.06
	 	 	 	GOVERNING LAW; JURISDICTION
	 	 	23	 
	 

	 	SECTION 10.07
	 	 	 	No Proceedings
	 	 	24	 
	 

	 	SECTION 10.08
	 	 	 	Execution in Counterparts
	 	 	24	 
	 

	 	SECTION 10.09
	 	 	 	No Recourse—Purchaser and Depositor
	 	 	24	 
	 

	 	SECTION 10.10
	 	 	 	Survival
	 	 	24	 
	 

	 	SECTION 10.11
	 	 	 	Waiver of Set-Off
	 	 	25	 
	 

	 	SECTION 10.12
	 	 	 	Tax Characterization
	 	 	25	 
	 

	 	SECTION 10.13
	 	 	 	Conflicts
	 	 	25	 
	 

	 	SECTION 10.14
	 	 	 	Service of Process
	 	 	25	 
	 

	 	SECTION 10.15
	 	 	 	[Reserved]
	 	 	25	 
	 

	 	SECTION 10.16
	 	 	 	Limitation on Liability
	 	 	25	 
	 

	 	SECTION 10.17
	 	 	 	Binding Effect; Third-Party Beneficiaries
	 	 	25	 
	 

	 	SECTION 10.18
	 	 	 	Merger and Integration
	 	 	26	 
	 

	 	SECTION 10.19
	 	 	 	No Petition
	 	 	26	 
	 

	 	SECTION 10.20
	 	 	 	Cooperation
	 	 	26	 
	 

	 	SECTION 10.21
	 	 	 	Time
	 	 	26	 
	 

	 	SECTION 10.22
	 	 	 	Headings
	 	 	26	 
	 

	 	SECTION 10.23
	 	 	 	Exhibits
	 	 	26	 
	 

	 	SECTION 10.24
	 	 	 	Counterparts
	 	 	26	 
	Schedule I   —	 	Information for Notices	 	 	 	 












ii









 





SECOND AMENDED AND RESTATED NOTE PURCHASE AGREEMENT




     SECOND AMENDED AND RESTATED NOTE PURCHASE AGREEMENT, dated as of January 19, 2007 (the “Note
Purchase Agreement”), among OPTION ONE OWNER TRUST 2002-3 (the “Issuer”), OPTION ONE LOAN WAREHOUSE
CORPORATION (the “Depositor”), and UBS REAL ESTATE SECURITIES INC. (“UBS” and in its capacity as
the purchaser, the “Purchaser”).



     The parties hereto agree as follows:



ARTICLE I




DEFINITIONS




     SECTION 1.01 Certain Defined Terms. Capitalized terms used herein without definition
shall have the meanings set forth in the Indenture and the Sale and Servicing Agreement (as defined
below). Additionally, the following terms shall have the following meanings:



     “Closing” shall have the meaning set forth in Section 2.02.



     “Closing Date” shall have the meaning set forth in Section 2.02.



     “Commitment” means the commitment of the Purchaser to purchase Additional Note
Principal Balances pursuant to Section 2.01.



     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.



     “Governmental Actions” means any and all consents, approvals, permits, orders,
authorizations, waivers, exceptions, variances, exemptions or licenses of, or registrations,
declarations or filings with, any Governmental Authority required under any Governmental Rules.



     “Governmental Authority” means the United States of America, any state or other
political subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and having jurisdiction over
the applicable Person.



     “Governmental Rules” means any and all laws, statutes, codes, rules, regulations,
ordinances, orders, writs, decrees and injunctions, of any Governmental Authority and any and all
legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental
Authority.



     “Indemnified Party” means UBS Real Estate Securities Inc. and any of its officers,
directors, employees, agents, representatives, assignees and Affiliates and any Person who controls
UBS Real Estate Securities Inc. or their Affiliates within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.



     “Indenture” means the Indenture dated as of January 19, 2007, between the Issuer as
Issuer and Wells Fargo Bank, N.A. as Indenture Trustee.













 





     “Investment Company Act” shall have the meaning provided in Section 5.01(k).



     “Lien” means, with respect to any asset, (a) any mortgage, lien, pledge, charge,
security interest, hypothecation, option or encumbrance of any kind in respect of such asset or (b)
the interest of a vendor or lessor under any conditional sale agreement, financing lease or other
title retention agreement relating to such asset.



     “Loan Originator” means Option One Mortgage Corporation, a California corporation and
Option One Mortgage Capital Corporation, a Delaware corporation, or either of them.



     “Maximum Note Principal Balance” has the meaning set forth in the Pricing Letter.



     “Pricing Letter” means the pricing letter among the Issuer, the Depositor, UBS Real
Estate Securities Inc., Option One and the Indenture Trustee, dated the date hereof and any
amendments thereto.



     “Purchased Notes” means the Option One Owner Trust 2002-3 Mortgage-Backed Notes issued
by the Issuer pursuant to the Indenture.



     “Purchaser” means UBS and its permitted successors and assigns.



     “Sale and Servicing Agreement” means the Second Amended and Restated Sale and
Servicing Agreement dated as of January 19, 2007, among the Issuer, the Depositor, the Loan
Originators, the Servicer and Wells Fargo Bank, N.A. as the Indenture Trustee, as the same may be
amended, modified or supplemented from time to time.



     “Servicer” means Option One Mortgage Corporation or its permitted successors and
assigns.



     SECTION 1.02 Other Definitional Provisions.



     (a) All terms defined in this Note Purchase Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.



     (b) As used herein and in any certificate or other document made or delivered pursuant hereto
or thereto, accounting terms not defined in Section 1.01, and accounting terms partially defined in
Section 1.01 to the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of accounting terms
herein are inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained herein shall control.



     (c) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this
Note Purchase Agreement shall refer to this Note Purchase Agreement as a whole and not to any
particular provision of this Note Purchase Agreement; and Section, subsection, Schedule and Exhibit
references contained in this Note Purchase Agreement are references to Sections, subsections and
schedules in or to this Note Purchase Agreement unless otherwise specified.



2









 





ARTICLE II




COMMITMENT; CLOSING AND PURCHASES OF

ADDITIONAL NOTE PRINCIPAL BALANCES




     SECTION 2.01 Commitment.



     (a) At any time during the Revolving Period at least two Business Days prior to a proposed
Transfer Date in the case of a Loan that is not a Wet Funded Loan, or by 11:00 AM, New York City
time on a proposed Transfer Date, in the case of a Wet Funded Loan, to the extent that the
aggregate outstanding Note Principal Balance (after giving effect to the proposed purchase) is less
than the Maximum Note Principal Balance, and subject to the terms and conditions hereof and in
accordance with the other Basic Documents, the Issuer may request that the Purchaser purchase
Additional Note Principal Balances (each such request, a “Purchase Request”). Each
Purchase Request shall identify the proposed Transfer Date, an estimate of the number of Loans and
aggregate Principal Balance of the Loans that will be purchased by the Issuer on such Transfer
Date. On the identified Transfer Date, the Purchaser agrees to purchase the Additional Note
Principal Balance requested in the Purchase Request, subject to the terms and conditions and in
reliance upon the covenants, representations and warranties set forth herein and in the other Basic
Documents.



     SECTION 2.02 Closing. The closing (the “Closing”) of the execution of the
Basic Documents and issuance of the Notes shall take place at 10:00 a.m. at the offices of Manatt,
Phelps & Phillips LLP, Costa Mesa, California on January 19, 2007, or if the conditions to closing
set forth in Article IV of this Note Purchase Agreement shall not have been satisfied or waived by
such date, as soon as practicable after such conditions shall have been satisfied or waived, or at
such other time, date and place as the parties shall agree upon (the date of the Closing being
referred to herein as the “Closing Date”).



ARTICLE III




TRANSFER DATES




     SECTION 3.01 Transfer Dates.



     (a) Subject to the conditions and terms set forth herein and in Section 2.06 of the Sale and
Servicing Agreement with respect to each Transfer Date, the Issuer may request, and the Purchaser
agrees to, purchase Additional Note Principal Balances from the Issuer from time to time in
accordance with, and upon the satisfaction, as of the applicable Transfer Date, of each of the
following additional conditions:



          (i) With respect to each Transfer Date, each condition set forth in Section 2.06 of the Sale
and Servicing Agreement shall have been satisfied;




          (ii) Each of the representations and warranties of the Issuer, the Servicer, the Loan
Originator and the Depositor made in the Basic Documents shall be true and correct in all material
respects as of such date (except to the extent they expressly relate to an earlier or later time);




3









 








          (iii) The Issuer, the Servicer, the Loan Originator and the Depositor shall be in material
compliance with all of their respective covenants contained in the Basic Documents and the
Purchased Notes;




          (iv) No Event of Default and no Default shall have occurred or shall be occurring;




          (v) With respect to each Transfer Date, the Purchaser shall have received evidence reasonably
satisfactory to it of the completion of all recordings, registrations, and filings as may be
necessary or, in the reasonable opinion of the Purchaser, desirable to perfect or evidence the
assignments required to be effected on such Transfer Date in accordance with the Sale and Servicing
Agreement and the Loan Purchase Agreement including, without limitation, the assignment of the
Loans and the proceeds thereof;




          (vi) Each Loan (i) has been originated in accordance with the Underwriting Guidelines and (ii)
is not “abusive” or “predatory” as defined in or in violation of any applicable statutes,
regulations, ordinances or in any other way that would be otherwise actionable by the Borrower or
any Governmental Authority;




          (vii) With respect to the first Transfer Date, the Purchaser shall have completed its initial
due diligence review with respect to the Loans and the Loan Originator and determined, in the
Purchaser’s sole discretion, that both the Loans and the origination, servicing and business
practices of the Loan Originator are reasonably acceptable to the Purchaser;




          (viii) The Purchaser shall have received, in form and substance reasonably satisfactory to the
Purchaser, an Officer’s Certificate from the Loan Originator, dated the Closing Date, certifying to
the satisfaction of the conditions set forth in the preceding paragraphs (i), (ii), (iii), (iv) and
(vi);




          (ix) All information provided by the Issuer to the Purchaser concerning each of the Loans to
be Pledged on such Transfer Date or date of substitution shall be true and correct in all material
respects as of such Transfer Date or date of substitution;




          (x) All corporate and legal proceedings and all instruments in connection with such Transfer
Date or date of substitution, or otherwise in connection with this Agreement and the transactions
contemplated hereby, shall be reasonably satisfactory in form and substance to the Purchaser, and
the Purchaser shall have received from the Issuer copies of all documents (including records of
corporate proceedings) relevant to the transactions herein contemplated as the Purchaser may
reasonably have requested. Such documents shall include, in addition to the documents listed in
Section 4.01, a certificate of the Secretary or Assistant Secretary of the Issuer certifying the
names and signatures of the officers authorized on its behalf to execute this Agreement and any
other documents to be delivered by it hereunder on such Transfer Date or date of substitution; and




          (xi) The Purchaser shall have received the most recent available standard servicing or loan
reports in summary form, if any, with respect to all of the Pledged Loans.




     (b) The price paid by the Purchaser on each Transfer Date for the Additional Note Principal
Balance purchased on such Transfer Date shall be equal to the amount of such Additional



4









 







Note Principal Balance and shall be remitted not later than 3:30 p.m. (New York City time) on
the Transfer Date by wire transfer of immediately available funds to the Advance Account.



     (c) The Purchaser shall record on the schedule attached to the Purchased Notes, the date and
amount of any Additional Note Principal Balance purchased by it; provided, that failure to
make such recordation on such schedule or any error in such schedule shall not adversely affect the
Purchaser’s rights with respect to its Note Principal Balance and any right to receive interest
payments in respect of the Note Principal Balance actually held. Absent manifest error, the Note
Principal Balance of the Purchased Notes as set forth in the Purchaser’s records shall be binding
upon the parties hereto, notwithstanding any notation or record made or kept by any other party
hereto.



     (d) The Purchaser shall determine in its reasonable discretion whether each of the above
conditions have been met in accordance with the Sale and Servicing Agreement and its determination
shall be binding on the parties hereto.



     SECTION 3.02 Limitation on Purchases; Illegality. Anything to the contrary
notwithstanding, if, on or prior to the determination of any One-Month LIBOR:



     (a) The Purchaser determines, which determination shall be conclusive, that quotations of
interest rates for the relevant deposits referred to in the definition of “One-Month LIBOR” in
Section 1.01 of the Sale and Servicing Agreement are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of interest for the Purchased Notes
as provided herein; or



     (b) The Purchaser determines, which determination shall be conclusive (and based on such
information as Majority Noteholders shall have given to the Purchaser), that the relevant rate of
interest referred to in the definition of “One-Month LIBOR” in Section 1.01 of the Sale and
Servicing Agreement upon the basis of which the rate of interest for the Purchased Notes is to be
determined is not adequate to cover the cost to the Majority Noteholders of making or maintaining
Loans; or



     (c) It becomes unlawful for the Purchaser to honor its obligation to purchase Notes hereunder
or for any Noteholder to maintain its investment in Notes issued hereunder, in each case, using
One-Month LIBOR;



then the Purchaser shall give the Issuer prompt notice thereof and at the Issuer’s option, upon
notice to the Purchaser, the Issuer may either immediately prepay all the Purchased Notes
outstanding and terminate this Note Purchase Agreement or pay interest on the Purchased Notes at a
rate per annum equal to the Federal Funds Rate plus 2.00%.



5









 





ARTICLE IV




CONDITIONS PRECEDENT TO

EFFECTIVENESS OF COMMITMENT




     SECTION 4.01 Subject to Conditions Precedent. The effectiveness of the Commitment
hereunder is subject to the satisfaction at the time of the Closing of the following conditions
(any or all of which may be waived by the Purchaser in its sole discretion):



     (a) Performance by the Issuer, the Depositor, the Servicer and the Loan Originator.
All the terms, covenants, agreements and conditions of the Basic Documents to be complied with and
performed by the Issuer, the Depositor, the Servicer and the Loan Originator on or before the
Closing Date shall have been complied with and performed in all material respects.



     (b) Representations and Warranties. Each of the representations and warranties of the
Issuer, the Depositor, the Servicer and the Loan Originator made in the Basic Documents shall be
true and correct in all material respects as of the Closing Date (except to the extent they
expressly relate to an earlier or later time).



     (c) Officer’s Certificate. The Purchaser shall have received, in form and substance
reasonably satisfactory to the Purchaser, an Officer’s Certificate from the Loan Originator, the
Depositor and the Servicer and a certificate of an Authorized Officer of the Issuer, dated the
Closing Date, certifying to the satisfaction of the conditions set forth in the preceding
paragraphs (a) and (b).



     (d) Opinions of Counsel to the Issuer, the Loan Originator, the Servicer and the
Depositor. Counsel to the Issuer, the Loan Originator, the Servicer and the Depositor shall
have delivered to the Purchaser favorable opinions, dated as of the Closing Date and reasonably
satisfactory in form and substance to the Purchaser and its counsel. In addition to the foregoing,
the Loan Originator shall have caused its counsel to deliver to the Purchaser a favorable opinion
to the effect that the Issuer will not be treated as an association (or publicly traded
partnership) taxable as a corporation or as a taxable mortgage pool, for federal income tax
purposes.



     (e) Opinions of Counsel to the Indenture Trustee. Counsel to the Indenture Trustee
shall have delivered to the Purchaser a favorable opinion, dated as of the Closing Date and
reasonably satisfactory in form and substance to the Purchaser and its counsel.



     (f) Opinions of Counsel to the Owner Trustee. Delaware counsel to the Owner Trustee
of the Issuer and the Depositor shall have delivered to the Purchaser favorable opinions regarding
the formation, existence and standing of the Issuer and the Depositor and of the Issuer’s and the
Depositor’s execution, authorization and delivery of each of the Basic Documents to which it is a
party and such other matters as the Purchaser may reasonably request, dated as of the Closing Date
and reasonably satisfactory in form and substance to the Purchaser and its counsel.



     (g) Filings and Recordations. The Purchaser shall have received evidence reasonably
satisfactory to it of (i) the completion of all recordings, registrations, and filings as may be
necessary or, in the reasonable opinion of the Purchaser, desirable to perfect or evidence the
assignment by the Loan Originator to the Depositor of the Loan Originator’s ownership interest in



6









 







the Trust Estate including, without limitation, the Loans conveyed pursuant to the Loan
Purchase Agreement and the proceeds thereof, (ii) the completion of all recordings, registrations
and filings as may be necessary or, in the reasonable opinion of the Purchaser, desirable to
perfect or evidence the assignment by the Depositor to the Issuer of the Depositor’s ownership
interest in the Trust Estate including, without limitation, the Loans and the proceeds thereof and
(iii) the completion of all recordings, registrations, and filings as may be necessary or, in the
reasonable opinion of the Purchaser, desirable to perfect or evidence the grant of a first priority
perfected security interest in the Issuer’s ownership interest in the Trust Estate including,
without limitation, the Loans, in favor of the Indenture Trustee, subject to no Liens prior to the
Lien of the Indenture.



     (h) Documents. The Purchaser shall have received a duly executed counterpart of each
of the Basic Documents, in form reasonably acceptable to the Purchaser, the Purchased Notes and
each and every document or certification delivered by any party in connection with any of the Basic
Documents or the Purchased Notes, and each such document shall be in full force and effect.



     (i) Due Diligence. The Purchaser shall have completed its due diligence review with
respect to the Loans, as provided for in Section 11.15 of the Sale and Servicing Agreement.



     (j) Actions or Proceedings. No action, suit, proceeding or investigation by or before
any Governmental Authority shall have been instituted to restrain or prohibit the consummation of,
or to invalidate, any of the transactions contemplated by the Basic Documents, the Purchased Notes
and the documents related thereto in any material respect.



     (k) Approvals and Consents. All Governmental Actions of all Governmental Authorities
required with respect to the transactions contemplated by the Basic Documents, the Purchased Notes
and the documents related thereto shall have been obtained or made.



     (l) Accounts. The Purchaser shall have received evidence reasonably satisfactory to
it that each Trust Account has each been established in accordance with the terms of the Sale and
Servicing Agreement.



     (m) Fees and Expenses. The fees and expenses payable by the Issuer and the Depositor
pursuant to Section 8.02(b) hereof shall have been paid.



     (n) Other Documents. The Issuer, the Loan Originator, the Depositor and the Servicer
shall have furnished to the Purchaser such other opinions, information, certificates and documents
as the Purchaser may reasonably request.



     (o) Proceedings in Contemplation of Sale of Purchased Notes. All actions and
proceedings undertaken by the Issuer, the Loan Originator, the Depositor and the Servicer in
connection with the issuance and sale of the Purchased Notes as herein contemplated shall be
reasonably satisfactory in all respects to the Purchaser and its counsel.



     (p) Financial Covenants. The Loan Originator and the Servicer shall be in compliance
with the financial covenants set forth in Section 7.02 of the Sale and Servicing Agreement.



7









 





     (q) Trust Accounts Control Agreements. The Purchaser shall have received control
agreements relating to the Trust Accounts reasonably satisfactory to the Purchaser.



     (r) Underwriting Guidelines. The Purchaser shall have received a copy of the current
Underwriting Guidelines.



     (s) Fees. The Loan Originator shall have paid all fees, costs and expenses of the
Purchaser required, by the terms of the Basic Documents, to be paid by the Loan Originator on or
before the Closing Date.



     If any condition specified in this Section 4.01 shall not have been fulfilled when and as
required to be fulfilled through no fault of the Purchaser, this Note Purchase Agreement may be
terminated by the Purchaser by notice to the Loan Originator at any time at or prior to the Closing
Date, and the Purchaser shall incur no liability as a result of such termination.



ARTICLE V




REPRESENTATIONS AND WARRANTIES OF

THE ISSUER AND THE DEPOSITOR




     The Issuer and the Depositor hereby jointly and severally make the following representations
and warranties to the Purchaser, as of the Closing Date, and as of each Transfer Date and the
Purchaser shall be deemed to have relied on such representations and warranties in making (or
committing to make) purchases of Additional Note Principal Balances on each Transfer Date and on
each date on which any Collateral is released to it or substituted by it:



     SECTION 5.01 Issuer.



     (a) The Issuer has been duly organized and is validly existing and in good standing as a
statutory trust under the laws of the State of Delaware, with requisite trust power and authority
to own its properties and to transact the business in which it is now engaged, and is duly
qualified to do business and is in good standing (or is exempt from such requirements) in each
State of the United States where the nature of its business requires it to be so qualified and the
failure to be so qualified and in good standing would, individually or in the aggregate, have a
material adverse effect on (a) the interests of the Purchaser, (b) the legality, validity or
enforceability of this Note Purchase Agreement or any other Basic Document or the rights or
remedies of the Purchaser or the Indenture Trustee hereunder or thereunder, (c) the ability of the
Issuer to perform its obligations under this Note Purchase Agreement or any other Basic Document,
(d) the Indenture Trustee’s security interest in the Collateral generally or in any Loan or other
item of Collateral or (e) the enforceability or recoverability of any of the Loans (a “Material
Adverse Effect”).



     (b) The issuance, sale, assignment and conveyance of the Purchased Notes and the Additional
Note Principal Balances, the performance of the Issuer’s obligations under each Basic Document to
which it is a party and the consummation of the transactions therein contemplated will not conflict
with or result in a breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any Lien (other than any Lien created by the Basic
Documents), charge or encumbrance upon any of the property or assets of the Issuer or any of its
Affiliates pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement or
other



8









 







agreement or instrument to which it or any of its Affiliates is bound or to which any of its
property or assets is subject, nor will such action result in any violation of the provisions of
its organizational documents or any Governmental Rule applicable to the Issuer, in each case which
could be expected to have a Material Adverse Effect.



     (c) No Governmental Action which has not been obtained is required by or with respect to the
Issuer in connection with the execution and delivery of the Purchased Notes. No Governmental
Action which has not been obtained is required by or with respect to the Issuer in connection with
the execution and delivery of any of the Basic Documents to which the Issuer is a party or the
consummation by the Issuer of the transactions contemplated thereby except for any requirements
under state securities or “blue sky” laws in connection with any transfer of the Purchased Notes.



     (d) The Issuer possesses all material licenses, certificates, authorizations or permits issued
by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the
business now operated by it, and has not received any notice of proceedings relating to the
revocation or modification of any such license, certificate, authorization or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would materially
and adversely affect its condition, financial or otherwise, or its earnings, business affairs or
business prospects.



     (e) Each of the Basic Documents to which the Issuer is a party has been duly authorized,
executed and delivered by the Issuer and is a valid and legally binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms, subject to enforcement of bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general applicability relating to
or affecting creditors’ rights and to general principles of equity.



     (f) The execution, delivery and performance by the Issuer of each of its obligations under
each of the Basic Documents to which it is a party will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any agreement or instrument to which
the Issuer is a party or by which the Issuer is bound or to which any of its properties are subject
or of any statute, order or regulation applicable to the Issuer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the Issuer or any of its
properties, in each case which could be expected to have a Material Adverse Effect.



     (g) The Issuer is not in violation of its organizational documents or in default under any
agreement, indenture or instrument which would have a Material Adverse Effect. The Issuer is not a
party to, bound by or in breach or violation of any indenture or other agreement or instrument, or
subject to or in violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the Issuer that could,
individually or in the aggregate, be expected to have a Material Adverse Effect.



     (h) There are no actions or proceedings against, or investigations of, the Issuer pending, or,
to the knowledge of the Issuer threatened, before any Governmental Authority, court, arbitrator,
administrative agency or other tribunal (i) asserting the invalidity of any of the Basic Documents,
or (ii) seeking to prevent the issuance of the Purchased Notes or the consummation of any of the
transactions contemplated by the Basic Documents or the Purchased Notes, or (iii) that, if



9









 







adversely determined, could, individually or in the aggregate, be expected to have a Material
Adverse Effect.



     (i) Neither this Note Purchase Agreement, the other Basic Documents nor any transaction
contemplated herein or therein shall result in a violation of, or give rise to an obligation on the
part of the Purchaser to register, file or give notice under, Regulations T, U or X of the Federal
Reserve Board or any other regulation issued by the Federal Reserve Board pursuant to the Exchange
Act, in each case as in effect on the Closing Date.



     (j) The Issuer has all necessary power and authority to execute and deliver the Purchased
Notes. Each Purchased Note has been duly and validly authorized by the Issuer and, from and after
the date on which such Purchased Note is executed by the Issuer and authenticated by the Indenture
Trustee in accordance with the terms of the Indenture and delivered to and paid for by the
Purchaser in accordance with the terms of this Note Purchase Agreement, shall be validly issued and
outstanding and shall constitute a valid and legally binding obligation of the Issuer that is
entitled to the benefits of the Indenture and enforceable against the Issuer in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and by general principles of
equity, regardless of whether enforceability is considered in a proceeding in equity or at law.



     (k) The Issuer is not, and neither the issuance and sale of the Purchased Notes to the
Purchaser nor the activities of the Issuer pursuant to the Basic Documents, shall render the Issuer
an “investment company” or under the “control” of an “investment company” as such terms are defined
in the Investment Company Act of 1940, as amended (the “Investment Company Act”).



     (l) It is not necessary to qualify the Indenture under the Trust Indenture Act of 1939, as
amended.



     (m) The Issuer is solvent and has adequate capital for its business and undertakings.



     (n) The chief executive offices of the Issuer are located at Option One Owner Trust 2002-3,
c/o Wilmington Trust Company, as Owner Trustee, One Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, or, with the consent of the Purchaser, such other address as shall be
designated by the Issuer in a written notice to the other parties hereto.



     (o) There are no contracts, agreements or understandings between the Issuer and any Person
granting such Person the right to require the filing at any time of a registration statement under
the Act with respect to the Purchased Notes.



     (p) No Default or Event of Default exists.



     (q) The Issuer holds good and indefeasible title to, and is the sole owner of, all right,
title and interest in and to the Collateral (including any and all Loans and the related Other
Assets given as security for any of the Issuer’s obligations hereunder), free and clear of all
Liens, participations and rights of others (except for the Lien created by this Agreement), and on
each date this representation is made, the Purchaser has a first priority Lien with respect to the
Collateral and no further action in the nature of delivery of possession or filing, including any
filing of any



10









 







document (other than the filing of a UCC-1 financing statement with the Secretary of the State
of California naming the Issuer as “debtor” and the Purchaser as “secured party” and describing the
Collateral as the “collateral” therein, but only if such filing has not previously been made), is
required to establish and (insofar as a security interest may be perfected by filing or possession)
perfect the Lien with respect to the Collateral in favor of the Purchaser against all third parties
in any jurisdiction.



     (r) The Issuer’s Chief Executive Office is located at 3 Ada, Irvine, CA 92618. The Custodial
Loan Files concerning the Loans are held in the offices of the Custodian under the Custodial
Agreement in the State of California.



     (s) The Issuer’s’s federal taxpayer identification number is 3543125.



     (t) There are no delinquent federal, state, city, county, or other taxes relating to any of
the Issuer, the Depositor, any other transferor of loans to the Issuer, or the Loan Originator
except those taxes (i) that are being contested by such Person in good faith, (ii) that are not
material in amount, (iii) with respect to which payment has been stayed by a court of competent
jurisdiction, (iv) that relate to a Mortgage Property, or (v) that would not have a Material
Adverse Effect.



     (u) The transactions contemplated by this Agreement are in the ordinary course of business of
the Issuer. The Issuer will engage in each acquisition of Loans under the Sale and Servicing
Agreement or pursuant to the Disposition Agreement as a principal and not as an agent.



     (v) The Issuer is solvent, is able to pay its debts as they become due and has capital
sufficient to carry on its business and its obligations hereunder. The Issuer will not be rendered
insolvent by the execution and delivery of this Agreement or the performance of its obligations
hereunder. No petition of bankruptcy (or similar insolvency proceeding) has been filed by or
against the Issuer.



     (w) In incurring any obligation or making any “transfer” (as defined in Section 101 of the
Bankruptcy Code) of property or any interest therein pursuant to this Agreement (whether in
connection with a purchase of Notes hereunder or otherwise), the Issuer does not intend to hinder,
delay or defraud any Person to which the Issuer is or will become, on or after the date on which
such obligation is incurred or such transfer is made, indebted.



     (x) With respect to any obligation incurred by the Issuer or any “transfer” (as defined in
Section 101 of the Bankruptcy Code) of property or any interest therein made by the Issuer pursuant
to this Agreement (whether in connection with a purchase of Notes hereunder or otherwise), (i) the
Issuer has received “reasonably equivalent value” within the meaning of Section 548(a)(1)(B)(i) of
the Bankruptcy Code for such obligation or transfer, (ii) the Issuer is not and will not become
“insolvent” within the meaning of Section 101(32) of the Bankruptcy Code at the time of or as a
result of incurring such obligation or making such transfer, (iii) the Issuer is not engaged in,
and is not about to engage in, any business or transaction for which the any property remaining
with the Issuer constitutes “unreasonably small capital” within the meaning of Section
548(a)(1)(B)(ii)(II) of the Bankruptcy Code, and (iv) the Issuer does not intend to incur, and does
not believe that it will incur, “debts” within the meaning of Section 101(12) of the Bankruptcy
Code that would be beyond the Issuer’s ability to pay as such debts matured.



11









 





     (y) With respect to any “transfer” (as defined in Section 101 of the Bankruptcy Code) of
property or any interest therein made by the Issuer pursuant to this Agreement (including the
Issuer’s Grant to the Purchaser of a Lien with respect to Loans in exchange for a purchase of Notes
hereunder from the Issuer to finance its purchase of such Loans), such transfer is intended as a
“contemporaneous exchange for new value” given to the Issuer within the meaning of Section
547(c)(1) of the Bankruptcy Code.



     SECTION 5.02 Securities Act. Assuming the accuracy of the representations and
warranties of and compliance with the covenants of the Purchaser, contained herein, the sale of the
Purchased Notes and the sale of Additional Note Principal Balances pursuant to this Note Purchase
Agreement are each exempt from the registration and prospectus delivery requirements of the Act.
In the case of the offer or sale of the Purchased Notes, no form of general solicitation or general
advertising was used by the Issuer, any Affiliates of the Issuer or any person acting on its or
their behalf, including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or broadcast over television
or radio, or any seminar or meeting whose attendees have been invited by any general solicitation
or general advertising. Neither the Issuer, any Affiliates of the Issuer nor any Person acting on
its or their behalf has offered or sold, nor will the Issuer, any Affiliates of the Issuer or any
Person acting on its behalf offer or sell directly or indirectly, the Purchased Notes or any other
security in any manner that, assuming the accuracy of the representations and warranties and the
performance of the covenants given by the Purchaser and compliance with the applicable provisions
of the Indenture with respect to each transfer of the Purchased Notes, would render the issuance
and sale of the Purchased Notes as contemplated hereby a violation of Section 5 of the Securities
Act or the registration or qualification requirements of any state securities laws, nor has the
Issuer authorized, nor will it authorize, any Person to act in such manner.



     SECTION 5.03 No Fee. Neither the Issuer, nor the Depositor, nor any of their
Affiliates has paid or agreed to pay to any Person any compensation for soliciting another to
purchase the Purchased Notes.



     SECTION 5.04 Information. The information provided pursuant to Section 7.01 hereof
will, at the date thereof, be true and correct in all material respects.



     SECTION 5.05 The Purchased Notes. The Purchased Notes have been duly and validly
authorized, and, when executed and authenticated in accordance with the terms of the Indenture, and
delivered to and paid for in accordance with this Note Purchase Agreement, will be duly and validly
issued and outstanding and will be entitled to the benefits of the Indenture.



     SECTION 5.06 Use of Proceeds. No proceeds of a purchase hereunder will be used (i)
for a purpose that violates or would be inconsistent with Regulations T, U or X promulgated by the
Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security
in any transaction in violation of Section 13 or 14 of the Exchange Act.



     SECTION 5.07 The Depositor. The Depositor hereby makes to the Purchaser each of the
representations, warranties and covenants set forth in Section 3.01 of the Sale and Servicing



12









 







Agreement as of the Closing Date and as of each Transfer Date (except to the extent that any
such representation, warranty or covenant is expressly made as of another date).



     SECTION 5.08 Taxes, etc. Any taxes, fees and other charges of Governmental
Authorities applicable to the Issuer and the Depositor, except for franchise or income taxes, in
connection with the execution, delivery and performance by the Issuer and the Depositor of each
Basic Document to which they are parties, the issuance of the Purchased Notes or otherwise
applicable to the Issuer or the Depositor in connection with the Trust Estate have been paid or
will be paid by the Issuer or the Depositor, as applicable, at or prior to the Closing Date or
Transfer Date, to the extent then due.



     SECTION 5.09 Financial Condition. On the date hereof and on each Transfer Date,
neither the Issuer nor the Depositor is or will be insolvent or the subject of any voluntary or
involuntary bankruptcy proceeding.



ARTICLE VI




REPRESENTATIONS AND WARRANTIES

WITH RESPECT TO THE PURCHASER




     The Purchaser hereby makes the following representations and warranties, as to itself, to the
Issuer and the Depositor on which the same are relying in entering into this Note Purchase
Agreement.



     SECTION 6.01 Organization. The Purchaser has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its organization with power and
authority to own its properties and to transact the business in which it is now engaged.



     SECTION 6.02 Authority, etc. The Purchaser has all requisite power and authority to
enter into and perform its obligations under this Note Purchase Agreement and to consummate the
transactions herein contemplated. The execution and delivery by the Purchaser of this Note
Purchase Agreement and the consummation by the Purchaser of the transactions contemplated hereby
have been duly and validly authorized by all necessary organizational action on the part of the
Purchaser. This Note Purchase Agreement has been duly and validly executed and delivered by the
Purchaser and constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, subject to enforcement of bankruptcy,
reorganization, insolvency, moratorium and other similar laws of general applicability relating to
or affecting creditors’ rights and to general principles of equity. Neither the execution and
delivery by the Purchaser of this Note Purchase Agreement nor the consummation by the Purchaser of
any of the transactions contemplated hereby, nor the fulfillment by the Purchaser of the terms
hereof, will conflict with, or violate, result in a breach of or constitute a default under any
term or provision of the Purchaser’s organizational documents or any Governmental Rule applicable
to the Purchaser.



     SECTION 6.03 Securities Act. The Purchaser hereby represents and warrants to the
Issuer and the Depositor as of the date of this Note Purchase Agreement, as follows:



     (a) The Purchaser has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of the purchase of an interest in the Note.



13









 




The Purchaser (i) is (A) a “qualified institutional buyer” as defined under Rule 144A
promulgated under the Securities Act of 1933, as amended (the “1933 Act”), acting for its own
account or the accounts of other “qualified institutional buyers” as defined under Rule 144A, or
(B) an “accredited investor” within the meaning of Regulation D promulgated under the 1933 Act, and
(ii) is aware that the Issuer intends to rely on the exemption from registration requirements under
the 1933 Act provided by Rule 144A or Regulation D, as applicable.




     (b) The Purchaser understands that neither the Note nor interests in the Note have been
registered or qualified under the 1933 Act, nor under the securities laws of any state, and
therefore neither the Note nor interests in the Note can be resold unless they are registered or
qualified thereunder or unless an exemption from registration or qualification is available.



     (c) It is the intention of the Purchaser to acquire interests in the Note (a) for investment
for its own account, or (b) for resale to “qualified institutional buyers” in transactions under
Rule 144A, and not in any event with the view to, or for resale in connection with, any
distribution thereof. The Purchaser understands that the Note and interests therein have not been
registered under the 1933 Act by reason of a specific exemption from the registration provisions of
the 1933 Act which depends upon, among other things, the bona fide nature of the Purchaser’s
investment intent (or intent to resell only in Rule 144A transactions) as expressed herein.



     SECTION 6.04 Conflicts With Law. The execution, delivery and performance by the
Purchaser of its obligations under this Note Purchase Agreement will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under, any agreement or
instrument to which the Purchaser is a party or by which the Purchaser is bound or of any statute,
order or regulation applicable to the Purchaser of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Purchaser, in each case which could be
expected to have a material adverse effect on the transactions contemplated therein.



     SECTION 6.05 Conflicts With Agreements, etc. The Purchaser is not in violation of its
organizational documents or in default under any agreement, indenture or instrument the effect of
which violation or default would be materially adverse to the Purchaser in the performance of its
obligations or duties under any of the Basic Documents to which it is a party. The Purchaser is
not a party to, bound by or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having jurisdiction over the Purchaser
that materially and adversely affects, the ability of the Purchaser to perform its obligations
under this Note Purchase Agreement.



ARTICLE VII




COVENANTS OF THE ISSUER AND THE DEPOSITOR




     SECTION 7.01 Information from the Issuer. So long as the Purchased Notes remain
outstanding, the Issuer and the Depositor shall each furnish to the Purchaser:



     (a) the financial information required to be delivered by the Servicer under Section 4.02(a)
of the Sale and Servicing Agreement;



14









 





     (b) such information (including financial information), documents, records or reports with
respect to the Trust Estate, the Loans, the Issuer, the Loan Originator, the Servicer or the
Depositor as the Purchaser may from time to time reasonably request;



     (c) as soon as possible and in any event within one (1) Business Day after the occurrence
thereof, notice of each Event of Default under the Sale and Servicing Agreement or the Indenture,
and each Default; and



     (d) promptly and in any event not later than the effective time thereof, written notice of a
change in address of the chief executive office of the Issuer, the Loan Originator or the
Depositor.



     SECTION 7.02 Access to Information. So long as the Purchased Notes remain
outstanding, each of the Issuer and the Depositor shall, at any time and from time to time during
regular business hours, or at such other reasonable times upon reasonable notice to the Issuer or
the Depositor, as applicable, permit the Purchaser, or its agents or representatives to:



     (a) examine all books, records and documents (including computer tapes and disks) in the
possession or under the control of the Issuer or the Depositor relating to the Loans or the Basic
Documents as may be requested, and



     (b) visit the offices and property of the Issuer and the Depositor for the purpose of
examining such materials described in clause (a) above.



     Except as provided in Section 10.05, information obtained by the Purchaser pursuant to this
Section 7.02 and Section 7.01 herein shall be held in confidence in accordance with and to the
extent provided in Sections 11.15 and 11.17 of the Sale and Servicing Agreement as if it
constituted “Confidential Information” (as defined therein).



     SECTION 7.03 Ownership and Security Interests; Further Assurances. The Depositor will
take all action necessary to maintain the Issuer’s ownership interest in the Loans and the other
items sold pursuant to Article II of the Sale and Servicing Agreement. The Issuer will take all
action necessary to maintain the Indenture Trustee’s security interest in the Loans and the other
items pledged to the Indenture Trustee pursuant to the Indenture.



     The Issuer and the Depositor agree to take any and all acts and to execute any and all further
instruments reasonably necessary or requested by the Purchaser to more fully effect the purposes of
this Note Purchase Agreement.



     SECTION 7.04 Covenants. The Issuer and the Depositor shall each duly observe and
perform each of their respective covenants set forth in each of the Basic Documents to which they
are a party.



     SECTION 7.05 Amendments. Neither the Issuer nor the Depositor shall make, nor permit
any Person to make, any amendment, modification or change to, or provide any waiver under any Basic
Document to which the Issuer or the Depositor, as applicable, is a party without the prior written
consent of the Purchaser.



15









 





     SECTION 7.06 With Respect to the Exempt Status of the Purchased Notes.



     (a) Neither the Issuer nor the Depositor, nor any of their respective Affiliates, nor any
Person acting on their behalf will, directly or indirectly, make offers or sales of any security,
or solicit offers to buy any security, under circumstances that would require the registration of
the Purchased Notes under the Securities Act.



     (b) Neither the Issuer nor the Depositor, nor any of their Affiliates, nor any Person acting
on their behalf will engage in any form of general solicitation or general advertising (within the
meaning of Regulation D promulgated under the Securities Act) in connection with any offer or sale
of the Purchased Notes.



     (c) On or prior to any Transfer Date, the Issuer and the Depositor will furnish or cause to be
furnished to the Purchaser and any subsequent purchaser therefrom of Additional Note Principal
Balance, if the Purchaser or any such subsequent purchaser so request, a letter from each Person
furnishing a certificate or opinion on the Closing Date as described in Section 4.01 hereof or on
or before any such Transfer Date in which such Person shall state that such subsequent purchaser
may rely upon such original certificate or opinion as though delivered and addressed to such
subsequent purchaser and made on and as of the Closing Date or such Transfer Date, as the case may
be, except for such exceptions set forth in such letter as are attributable to events occurring
after the Closing Date or such Transfer Date.



     SECTION 7.07 Affirmative Covenants 




          Until (i) the Revolving Period has ended, (ii) all Obligations have been paid in full and
(iii) all other obligations of the Issuer under the Basic Documents have been performed in full,
the Issuer and the Depositor, each covenants and agrees that it will do all of the following:




     (a) Continue to engage in the business now conducted by it and preserve and maintain in full
force and effect its existence and all permits, licenses, approvals, consents, rights, privileges,
and franchises necessary or desirable in the conduct or transaction of its business or the
ownership of its properties.



     (b) Pay and discharge, or cause the Servicer to pay and discharge, all taxes, levies, liens,
and other charges on its assets and on the Collateral that, in each case, in any manner would
create any lien or charge upon the Collateral.



     (c) Comply in all material respects with all laws, ordinances, rules, and regulations of any
federal, state, municipal, or other public authority having jurisdiction over the Issuer or any of
its assets.



     (d) Advise the Purchaser in writing at least thirty (30) days prior to the opening of any new
chief executive office or the closing of any such office and of any change in the Issuer’s name or
the places where the books and records pertaining to the Collateral are kept.



     (e) Maintain records with respect to the Collateral and the conduct and operation of its
business in conformity with general standards in the subprime mortgage loan servicing industry and
with no less a degree of prudence than if the Collateral were held by the Issuer for its



16









 







own account, and furnish the Purchaser, upon reasonable request by the Purchaser, with
information with respect to the Collateral.



     (f) Provide, or cause the Servicer to provide, to the Purchaser a magnetic tape, floppy disk
or electronic transmission, as the Purchaser shall elect from time to time, containing the
Servicer’s standard monthly remittance report, which report shall be in substantially the form
required under the Sale and Servicing Agreement .



     (g) Pay, discharge, or otherwise satisfy before they become delinquent all material
obligations of whatever nature, except when (i) the failure to pay, discharge or satisfy such
obligations before they become delinquent is consistent with Accepted Servicing Practices or (ii)
the amount or validity thereof is currently being contested in good faith by appropriate
proceedings and the Issuer has established adequate reserves with respect thereto and no liens have
attached to any portion of the Collateral.



     (h) Promptly, and in any event within one Business Day of the occurrence thereof, notify the
Purchaser in writing of (i) the occurrence of any event of default by any Person under any
indenture, mortgage, deed of trust, agreement, or other instrument or contractual obligation to
which the Issuer or any Affiliate of the Issuer is a party or by which its properties may be bound
or affected, if such occurrence could reasonably be expected to have a Material Adverse Effect, or
(ii) the occurrence of any Default or Event of Default.



     (i) At all times be wholly-owned (i) directly, by the Depositor, and (ii) indirectly, by the
Loan Originator.



     (j) Cause the Loans to be serviced and administered by the Servicer (including any
Subservicers) in substantial compliance with Accepted Servicing Practices and, at all times,
enforce the obligations of the Servicer (including any Subservicers) under the Sale and Servicing
Agreement.



     (k) Cause each of its agents (including the Servicer) to agree to hold in trust and to
deposit, in accordance with its normal and customary practices and procedures, all Collections
received from time to time in respect of the Pledged Loans (net of Servicing Fees and ancillary
amounts that are payable to the Servicer under the Sale and Servicing Agreement) to the Collection
Account maintained pursuant to the Facility Administration Agreement or to such other account or
accounts as may be specified and maintained by the Purchaser or its designee from time to time.



     (l) Comply in all material respects with the terms of both the Custodial Agreement and the
Indenture.



     (m) Except as otherwise permitted in the Sale and Servicing Agreement, agree to any material
modification of any Loan only with the prior written consent of the Purchaser.



     (n) Deliver all Custodial Loan Files to the Custodian as provided in the Custodial Agreement.



     (o) Cause each service provider engaged by the Issuer that is an Affiliate of the Issuer to
agree and covenant that such service provider shall not, prior to a date which is one year



17









 







and one day after the payment in full of all Obligations (i) petition or otherwise invoke,
directly or indirectly, the process of any Governmental Authority for the purpose of (A) commencing
or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or
similar law or (B) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or any substantial part of its property or (C) ordering the
winding up or liquidation of the affairs of the Issuer, or (ii) acquiesce to any of the foregoing.



     (p) Use the funds derived from issuing and selling the Notes solely to purchase Loans and
other Collateral from the Depositor (or any other transferor).



     (q) Permit representatives of the Purchaser, at the Purchaser’s expense (except as otherwise
provided herein with respect to any due diligence activities undertaken by or for the Purchaser) at
any reasonable time prior to the occurrence of an Event of Default and at the Issuer’s expense at
any time thereafter, to (i) visit and inspect any of the Issuer’s properties and examine and make
copies of or abstracts from any of its books and records in any way relating to the Collateral or
to the Issuer’s compliance with the provisions of this Agreement or any other Basic Document at any
reasonable time and as often as may reasonably be desired by the Purchaser (but, prior to the
occurrence of any Default or Event of Default, only upon not less than five Business Days’ prior
notice), and (ii) discuss the business, operations, properties, assets and financial and other
condition of the Issuer with the Issuer’s officers and employees of the Issuer and with its
independent certified public accountants (it being agreed that the Issuer shall cause such
officers, employees and accountants to be available for such purposes and to cooperate fully with
such representatives); provided, however, that the results of any such visit, inspection,
examination, discussion or audit, to the extent such results are proprietary and non-public, shall
be kept confidential by the Purchaser and its Affiliates except (x) as may be required by law or
regulation or by any governmental agency or regulatory body having authority over the Purchaser or
its Affiliates, (y) to the extent that such information may be communicated to the legal counsel,
auditors and other advisers of the Purchaser or its Affiliates, and (z) in connection with any
legal or other proceedings for the enforcement of any right, remedy, power or privilege of the
Purchaser under any Basic Document or for the protection of the Purchaser’s interests thereunder.



     (r) Promptly give the Purchaser written notice upon becoming aware that the Issuer is not in
compliance in all material respects with ERISA or that any Lien exists on any of the Pledged Loans
under ERISA.



     (s) Keep proper books of record and account in which full, true and correct entries in
conformity with GAAP and all requirements of law shall be made of all dealings and transactions in
relation to its business and activities.



     (t) Supply the Purchaser with bring-down good standing certificates, legal opinions, officer’s
certificates and similar such items, promptly upon the Purchaser’s reasonable request. The
Purchaser will not, however, request such items more frequently than once in any period of 90
consecutive days unless either a Default or an Event of Default shall have occurred and be
continuing.



     (u) Within ten (10) days of the initial Transfer Date, file all material instruments and
documents (including UCC-1 financing statements and continuation statements) required to be



18









 







filed to create in favor of the Purchaser a perfected Lien with respect to the Collateral
shall have been duly prepared (and, if applicable executed or acknowledged) by the Issuer and
delivered to the Purchaser in the proper form for filing in each office in each relevant
jurisdiction.



     SECTION 7.08 Negative Covenants.



     Until (i) the Revolving Period has ended, (ii) all Obligations have been paid in full and
(iii) all other obligations of the Issuer under the Basic Documents have been performed in full,
the Issuer covenants and agrees that it will not:



     (a) Create, incur, assume, or suffer to exist, any Lien with respect to any of the Collateral
whether now owned or existing or hereafter acquired or arising, other than liens in favor of the
Indenture Trustee, or permit any financing statement (except any financing statements in favor of
the Indenture Trustee) or assignment (except for any assignments in favor of the Purchaser) to be
on file in any public office with respect thereto.



     (b) Sell, lease, license, transfer, assign, convey, dispose of, alienate, terminate or
relinquish any of the Issuer’s right, title or interest in or to the Collateral, except as
specifically provided herein.



     (c) Either (i) merge with or into or consolidate with any other Person, regardless of whether
the Issuer is the surviving entity in such merger or consolidation, or transfer all or
substantially all of its assets to any other Person to accomplish a similar purpose, or (ii) wind
up, liquidate, or dissolve, or (iii) agree to do any of the foregoing.



     (d) Without obtaining the prior written approval of the Purchaser in each case, either (i)
amend, supplement or otherwise modify (or agree to amend, supplement or otherwise modify) the
Issuer’s charter, bylaws or other organizational documents (unless such amendment, supplement or
other modification cannot reasonably be expected to have a Material Adverse Effect) or (ii) amend,
supplement or otherwise modify (or agree to amend, supplement or otherwise modify, or, to the
extent its consent is required therefor, consent to any amendment or supplement to or modification
of) the Sale and Servicing Agreement or any other Basic Document, or any other document, instrument
or agreement in any way relating to the transactions contemplated hereunder or thereunder.



     (e) Change its name, chief executive office, or location where its books and records are kept
with respect to the Collateral, on less than thirty (30) days’ prior written notice to the
Purchaser; or., except with the Purchaser’s prior written consent, change its structure or
ownership.



     (f) Prior to pledging the affected Loans hereunder, approve any proposed amendments,
supplements or other modifications to the Underwriting Standards that are material in nature
without first providing the Purchaser with a copy of such proposed modifications; provided
that if, within 15 Business Days after receipt of a copy thereof, the Purchaser informs the
Issuer that it disapproves of one or more of such proposed modifications, “Underwriting Standards”
shall mean, for purposes of this Agreement and the other Basic Documents, the Underwriting
Standards previously in effect, modified only to the extent of such modifications as have not been
disapproved by the Purchaser.



19









 





     (g) Use the proceeds of the purchase of Notes made pursuant to this Agreement, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for the purpose of
reducing or retiring any debt which was originally incurred to purchase or carry margin stock or
for any other purpose which might constitute the Advances under this Agreement as being “purpose
credit” within the meaning of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.



     (h) Incur or otherwise become liable for any debt obligation for money borrowed (other than
debt arising under this Agreement), or for any other (i.e., debt arising for reasons other than
money borrowed) material debt obligations other than amounts owed to the Depositor (or any other
transferor of loans to the Issuer) in consideration of assets purchased by the Issuer under the
Sale and Servicing Agreement or pursuant to the Disposition Agreement), without first obtaining the
specific written consent of the Purchaser (which consent may be given or withheld in the
Purchaser’s sole discretion).



     (i) Attempt to assign this Agreement or any rights hereunder without first obtaining the
specific written consent of the Purchaser (which consent may be given or withheld in the
Purchaser’s sole discretion).



ARTICLE VIII




ADDITIONAL COVENANTS




     SECTION 8.01 Legal Conditions to Closing. The parties hereto will take all reasonable
action necessary to obtain (and will cooperate with one another in obtaining) any consent,
authorization, permit, license, franchise, order or approval of, or any exemption by, any
Governmental Authority or any other Person, required to be obtained or made by it in connection
with any of the transactions contemplated by this Note Purchase Agreement.



     SECTION 8.02 Expenses.



     (a) The Issuer and the Depositor jointly and severally covenant that, whether or not the
Closing takes place, except as otherwise expressly provided herein, all reasonable costs and
expenses incurred in connection with this Note Purchase Agreement and the transactions contemplated
hereby shall be paid by the Issuer or the Depositor.



     (b) The Issuer and the Depositor jointly and severally covenant to pay as and when billed by
the Purchaser, subject to the applicable limit on Due Diligence Fees set forth in Section 11.15 of
the Sale and Servicing Agreement, all of the reasonable out-of-pocket costs and expenses incurred
in connection with the consummation and administration of the transactions contemplated hereby and
in the other Basic Documents including, without limitation, (i) all reasonable fees, disbursements
and expenses of counsel to the Purchaser, (ii) all reasonable fees and expenses of the Indenture
Trustee and the Owner Trustee and their counsel, including, but not limited to, legal fees for the
protection of the Purchaser’s interests, and (iii) all reasonable fees and expenses of the
Custodian and its counsel.



     (c) The Issuer’s and Depositor’s obligations under this Section 8.02 shall survive the
termination of this Agreement.



20









 





     SECTION 8.03 Mutual Obligations. On and after the Closing, each party hereto will do,
execute and perform all such other acts, deeds and documents as any other party hereto may from
time to time reasonably require in order to carry out the intent of this Note Purchase Agreement.



     SECTION 8.04 Restrictions on Transfer. The Purchaser agrees that it will comply with
the restrictions on transfer of the Purchased Notes set forth in the Indenture and will resell the
Purchased Notes only in compliance with such restrictions.



     SECTION 8.05 [Reserved].



     SECTION 8.06 Information Provided by the Purchaser. The Purchaser hereby covenants to
determine One-Month LIBOR in accordance with the definition thereof in the Basic Documents and
shall give notice to the Indenture Trustee, the Issuer and the Depositor of the Interest Payment
Amount on each Determination Date. The Purchaser shall cause the Market Value Agent to give notice
to the Indenture Trustee, the Issuer and the Depositor of any Hedge Funding Requirement (if any) on
or before the Determination Date related to any Payment Date. In addition, on each Determination
Date, the Purchaser hereby covenants to give notice to the Indenture Trustee, the Issuer and the
Depositor of (i) the Issuer/Depositor Indemnities (as defined in the Trust Agreement), (ii) Due
Diligence Fees and (iii) the Collateral Value for each Loan for the related Payment Date.



ARTICLE IX




INDEMNIFICATION




     SECTION 9.01 Indemnification of the Purchaser. Each of the Issuer and the Depositor
hereby agree to, jointly and severally, indemnify and hold harmless each Indemnified Party against
any and all losses, claims, damages, liabilities, reasonable expenses or judgments (including
reasonable accounting fees and reasonable legal fees and other reasonable expenses incurred in
connection with this Note Purchase Agreement or any other Basic Document and any action, suit or
proceeding or any claim asserted) (collectively, “Losses”), as incurred (payable promptly upon
written request), for or on account of or arising from or in connection with any information
prepared by and furnished or to be furnished by any of the Issuer, the Loan Originator or the
Depositor pursuant to or in connection with the transactions contemplated hereby including, without
limitation, such written information as may have been and may be furnished in connection with any
due diligence investigation with respect to the business, operations, financial condition of the
Issuer, the Loan Originator, the Depositor or with respect to the Loans, to the extent such
information contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained therein in the light of the circumstances under which
such statements were made not misleading, except with respect to any such information used by such
Indemnified Party in violation of the Basic Documents or as a result of an Indemnified Party’s
gross negligence or willful misconduct which results in such Losses. The indemnities contained in
this Section 9.01 will be in addition to any liability which the Issuer or the Depositor may
otherwise have pursuant to this Note Purchase Agreement and any other Basic Document.



     SECTION 9.02 Procedure and Defense. In case any action or proceeding (including any
governmental or regulatory investigation or proceeding) shall be instituted involving any



21









 







Indemnified Party in respect of which indemnity may be sought pursuant to Section 9.01, such
Indemnified Party shall promptly notify the Issuer and the Depositor in writing and, upon request
of the Indemnified Party, the Issuer and the Depositor shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party to represent such
Indemnified Party and any others the indemnifying party may designate and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding; provided that failure to give
such notice or deliver such documents shall not affect the rights to indemnity hereunder unless
such failure materially prejudices the rights of the Indemnified Party. The Indemnified Party will
have the right to employ its own counsel in any such action in addition to the counsel of the
Issuer and/or the Depositor, but the reasonable fees and expenses of such counsel will be at the
expense of such Indemnified Party, unless (i) the employment of counsel by the Indemnified Party at
its expense has been authorized in writing by the Depositor or the Issuer, (ii) the Depositor or
the Issuer has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include the Depositor or the
Issuer and one or more Indemnified Parties, and the Indemnified Parties shall have been advised by
counsel that there may be one or more legal defenses available to them which are different from or
additional to those available to the Depositor or the Issuer. Reasonable expenses of counsel to
any Indemnified Party for which the Issuer and the Depositor are responsible hereunder shall be
reimbursed by the Issuer and the Depositor as they are incurred. The Issuer and the Depositor
shall not be liable for any settlement of any proceeding affected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the Indemnified Party from and against any loss or liability by reason of
such settlement or judgment. Neither the Issuer nor the Depositor will, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the subject matter of such
proceeding.



ARTICLE X




MISCELLANEOUS




     SECTION 10.01 Amendments. No amendment or waiver of any provision of this Note
Purchase Agreement shall in any event be effective unless the same shall be in writing and signed
by all of the parties hereto, and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.



     SECTION 10.02 Notices. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including telecopies) and mailed, telecopied
(with a copy delivered by overnight courier) or delivered, as to each party hereto, at its address
as set forth in Schedule I hereto or at such other address as shall be designated by such party in
a written notice to the other parties hereto. All such notices and communications shall be deemed
effective upon receipt thereof, and in the case of telecopies, when receipt is confirmed by
telephone.



     SECTION 10.03 No Waiver; Remedies. No failure on the part of any party hereto to
exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall



22









 







any single or partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.



     SECTION 10.04 Binding Effect; Assignability.



     (a) This Note Purchase Agreement shall be binding upon and inure to the benefit of the Issuer,
the Depositor and the Purchaser and their respective permitted successors and assigns (including
any subsequent holders of the Purchased Notes); provided, however, neither the Issuer nor the
Depositor shall have any right to assign their respective rights hereunder or interest herein (by
operation of law or otherwise) without the prior written consent of the Purchaser.



     (b) The Purchaser may, in the ordinary course of its business and in accordance with the Basic
Documents and applicable law, including applicable securities laws, at any time sell to one or more
Persons (each, a “Participant”), participating interests in all or a portion of its rights and
obligations under this Note Purchase Agreement. Notwithstanding any such sale by the Purchaser of
participating interests to a Participant, the Purchaser’s rights and obligations under this Note
Purchase Agreement shall remain unchanged, the Purchaser shall remain solely responsible for the
performance thereof, and the Issuer and the Depositor shall continue to deal solely and directly
with the Purchaser and shall have no obligations to deal with any Participant in connection with
the Purchaser’s rights and obligations under this Note Purchase Agreement.



     (c) This Note Purchase Agreement shall create and constitute the continuing obligation of the
parties hereto in accordance with its terms, and shall remain in full force and effect until such
time as all amounts payable with respect to the Purchased Notes shall have been paid in full.



     SECTION 10.05 Provision of Documents and Information. Each of the Issuer and the
Depositor acknowledges and agrees that the Purchaser is permitted to provide to any subsequent
purchaser, permitted assignees and Participants, opinions, certificates, documents and other
information relating to the Issuer, the Depositor and the Loans delivered to the Purchaser pursuant
to this Note Purchase Agreement provided that with respect to Confidential Information, such
subsequent purchaser, permitted assignees and Participants agree to be bound by Section 7.02
hereof.



     SECTION 10.06 GOVERNING LAW; JURISDICTION. THIS NOTE PURCHASE AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW. EACH
OF THE PARTIES TO THIS NOTE PURCHASE AGREEMENT HEREBY AGREES TO THE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT HAVING
JURISDICTION TO REVIEW THE JUDGMENTS THEREOF. EACH OF THE PARTIES TO THIS NOTE PURCHASE AGREEMENT
HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO



23









 




THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.




     SECTION 10.07 No Proceedings. Until the date that is one year and one day after the
last day on which any amount is outstanding under this Note Purchase Agreement, the Depositor and
the Purchaser hereby covenant and agree that they will not institute against the Issuer or the
Depositor or the Purchaser, or join in any institution against the Issuer or the Depositor or the
Purchaser of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or similar law.



     SECTION 10.08 Execution in Counterparts. This Note Purchase Agreement may be executed
in any number of counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when taken together shall
constitute one and the same agreement.



     SECTION 10.09 No Recourse—Purchaser and Depositor.



     (a) The obligations of the Purchaser under this Note Purchase Agreement, or any other
agreement, instrument, document or certificate executed and delivered by or issued by the Purchaser
or any officer thereof are solely the partnership or corporate obligations of the Purchaser, as the
case may be. No recourse shall be had for payment of any fee or other obligation or claim arising
out of or relating to this Note Purchase Agreement or any other agreement, instrument, document or
certificate executed and delivered or issued by the Purchaser or any officer thereof in connection
therewith, against any stockholder, limited partner, employee, officer, director or incorporator of
the Purchaser.



     (b) The obligations of the Depositor under this Note Purchase Agreement, or any other
agreement, instrument, document or certificate executed and delivered by or issued by the Depositor
or any officer thereof are solely the partnership or corporate obligations of the Depositor, as the
case may be. No recourse shall be had for payment of any fee or other obligation or claim arising
out of or relating to this Note Purchase Agreement or any other agreement, instrument, document or
certificate executed and delivered or issued by the Depositor or any officer thereof in connection
therewith, against any stockholder, limited partner, employee, officer, director or incorporator of
the Depositor.



     (c) The Purchaser, by accepting the Purchased Notes, acknowledges that such Purchased Notes
represent an obligation of the Issuer and do not represent an interest in or an obligation of the
Loan Originator, the Servicer, the Depositor, the Administrator, the Owner Trustee, the Indenture
Trustee or any Affiliate thereof and no recourse may be had against such parties or their assets,
except as may be expressly set forth or contemplated in this Note Purchase Agreement, the Purchased
Notes or the Basic Documents.



     SECTION 10.10 Survival. All representations, warranties, covenants, guaranties and
indemnifications contained in this Note Purchase Agreement and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the sale, transfer or
repayment of the Purchased Notes and the termination of this Note Purchase Agreement.



24









 





     SECTION 10.11 Waiver of Set-Off. All payments due to Noteholders hereunder and under
any of the Basic Documents, including without limitation all payments on account of principal,
interest and fees, if any, shall be made to the Noteholders, without set-off, recoupment or
counterclaim, and each of the Depositor and the Issuer hereby waive any and all right of set-off,
recoupment or counterclaim hereunder or under any of the Basic Documents.



     SECTION 10.12 Tax Characterization. Each party to this Note Purchase Agreement (a)
acknowledges and agrees that it is the intent of the parties to this Note Purchase Agreement that
for all purposes, including federal, state and local income, single business and franchise tax
purposes, the Purchased Notes will be treated as evidence of indebtedness secured by the Loans and
proceeds thereof and the trust created under the Indenture will not be characterized as an
association (or publicly traded partnership) taxable as a corporation, (b) agrees to treat the
Purchased Notes for federal, state and local income and franchise tax purposes as indebtedness and
(c) agrees that the provisions of all Basic Documents shall be construed to further these
intentions of the parties.



     SECTION 10.13 Conflicts. Notwithstanding anything contained herein to the contrary,
in the event of the conflict between the terms of the Sale and Servicing Agreement and this Note
Purchase Agreement, the terms of the Sale and Servicing Agreement shall control.



     SECTION 10.14 Service of Process. Each of the Depositor and the Issuer agrees that
until such time as the Purchased Notes have been paid in full, each such party shall have appointed
an agent registered with the Secretary of State of the State of New York, with an office in the
County of New York in the State of New York, as its true and lawful attorney and duly authorized
agent for acceptance of service of legal process. Each of the Depositor and the Issuer agrees that
service of such process upon such person shall constitute personal service of such process upon it.



     SECTION 10.15 [Reserved].



     SECTION 10.16 Limitation on Liability. It is expressly understood and agreed by the
parties hereto that (a) this Note Purchase Agreement is executed and delivered by Wilmington Trust
Company, not individually or personally, but solely as Owner Trustee of Option One Owner Trust
2002-3, 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 Note Purchase Agreement or any other related documents.



     SECTION 10.17 Binding Effect; Third-Party Beneficiaries. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective successors and
permitted assigns. Each of the Noteholders other than the Purchaser shall be deemed to be an



25









 







express third-party beneficiary of this Agreement and shall be entitled to enforce the terms
hereof as if it were a party hereto.



     SECTION 10.18 Merger and Integration. This Agreement and the other Basic Documents
set forth the entire understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the other Basic
Documents.



     SECTION 10.19 No Petition. Neither the Issuer nor the Purchaser shall petition or
otherwise invoke the process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer or the Purchaser under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or the Purchaser or any substantial part of
their respective property, or ordering the winding up or liquidation of the affairs of the Issuer
or the Purchaser.



     SECTION 10.20 Cooperation. The Issuer agrees to cooperate and to cause its Affiliates
(including the Servicer) to cooperate with the Purchaser, consistent with the terms hereof, to the
extent necessary or appropriate to effectuate any sale or financing of any of the Purchased Notes
by the Purchaser, including by making available or providing access (as appropriate) to the
Purchaser or its designee the Custodial Loan Files and Servicing Records relating to the Mortgage
Loans (subject to the confidentiality requirements of any applicable consumer protection and other
laws or regulations).



     SECTION 10.21 Time. Unless the context clearly requires otherwise, all references to
time contained in this Agreement shall be deemed to be local time in New York City on the
applicable day.



     SECTION 10.22 Headings. The headings and captions contained herein are for
convenience only and shall not control or affect the meaning or interpretation of any provision
hereof.



     SECTION 10.23 Exhibits. The schedules and exhibits referred to herein shall
constitute a part of this Agreement and are incorporated into this Agreement for all purposes.



     SECTION 10.24 Counterparts. This Agreement may be executed in two or more
counterparts, including telecopy transmission thereof (and by different parties on separate
counterparts), each of which shall be an original, but all of which together shall constitute one
and the same instrument. Signatures may be exchanged by facsimile, and each party hereto agrees to
be bound by its own facsimile signature and to accept the facsimile signature of the other party.




[Remainder of page intentionally left blank.]




26









 







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



	 	 	 	 	 
	 	 	OPTION ONE OWNER TRUST 2002-3
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Wilmington Trust Company, not in
	 

	 	 	 	its individual capacity but solely as owner
	 

	 	 	 	trustee






	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






	 	 	 	 	 
	 	 	OPTION ONE LOAN WAREHOUSE
	 

	 	CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






	 	 	 	 	 
	 	 	UBS REAL ESTATE SECURITIES INC.,
	 	 	as Purchaser
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 







27









 








Schedule I

Information for Notices




	 	 	 
	1.

	 	if to the Issuer:
	 
	 	 
	 

	 	Option One Owner Trust 2002-3
	 

	 	c/o Wilmington Trust Company
	 

	 	as Owner Trustee
	 

	 	One Rodney Square North
	 

	 	1100 North Market Street
	 

	 	Wilmington, Delaware 19890
	 

	 	Attention: Corporate Trust Administration
	 

	 	Telecopy: (302) 636-4144
	 

	 	Telephone: (302) 636-1000
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Option One Mortgage Corporation
	 

	 	3 Ada Road
	 

	 	Irvine, California 92618
	 

	 	Attention: Matthew Engel
	 

	 	Telecopy number: (866)715-8329
	 

	 	Telephone number: (949) 790-8128
	 
	 	 
	2.

	 	if to the Depositor:
	 
	 	 
	 

	 	Option One Loan Warehouse Corporation
	 

	 	3 Ada Road
	 

	 	Irvine, California 92618
	 

	 	Attention: Matthew Engel
	 

	 	Telecopy number: (866)715-8329
	 

	 	Telephone number: (949) 790-8128
	 
	 	 
	3.

	 	if to the Purchaser:
	 
	 	 
	 

	 	UBS Real Estate Securities Inc.
	 

	 	1251 Avenue of the Americas
	 

	 	New York, New York 10020
	 

	 	Attention: Robert Carpenter
	 

	 	       George A. Mangiaracina
	 

	 	Telephone: (212) 882-3749
	 

	 	Facsimile: (212) 882-3597






Schedule I









 






	 	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	UBS Investment Bank
	 

	 	Newport Office Center 7 (NOC 7)
	 

	 	480 Washington Boulevard
	 

	 	Jersey City, NJ 07310
	 

	 	Attention: Steven D’Orazio
	 

	 	Telephone: (201) 793-6819
	 

	 	Facsimile: (201) 793-6833







Schedule I