Document:

exv10w4

 

Exhibit 10.4

AMENDED AND RESTATED SALE AND SERVICING AGREEMENT

among

OPTION ONE OWNER TRUST 2003-5

as Issuer

and

OPTION ONE LOAN WAREHOUSE CORPORATION

as Depositor

and

OPTION ONE MORTGAGE CORPORATION

as Loan Originator and Servicer

and

WELLS FARGO BANK, N.A.

as Indenture Trustee

Dated as of November 12, 2004

OPTION ONE OWNER TRUST 2003-5

MORTGAGE-BACKED NOTES

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	5	 
	Section 1.02 Other Definitional Provisions
	 	 	30	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE PRINCIPAL BALANCES
	 	 	 	 
	 
	 	 	 	 
	Section 2.01 Conveyance of the Trust Estate; Additional Note Principal Balances
	 	 	31	 
	Section 2.02 Ownership and Possession of Loan Files
	 	 	33	 
	Section 2.03 Books and Records; Intention of the Parties
	 	 	33	 
	Section 2.04 Delivery of Loan Documents
	 	 	34	 
	Section 2.05 Acceptance by the Indenture Trustee of the Loans; Certain
	 	 	35	 
	Section 2.06 Conditions Precedent to Transfer Dates and Collateral Value Increase Dates
	 	 	36	 
	Section 2.07 Termination of Revolving Period
	 	 	38	 
	Section 2.08 Correction of Errors
	 	 	39	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
	 	 	 	 
	 
	 	 	 	 
	Section 3.01 Representations and Warranties of the Depositor
	 	 	39	 
	Section 3.02 Representations and Warranties of the Loan Originator
	 	 	41	 
	Section 3.03 Representations, Warranties and Covenants of the Servicer
	 	 	44	 
	Section 3.04 Reserved
	 	 	46	 
	Section 3.05 Representations and Warranties Regarding Loans
	 	 	46	 
	Section 3.06 Purchase and Substitition
	 	 	46	 
	Section 3.07 Dispositions
	 	 	49	 
	Section 3.08 Servicer Put; Servicer Call
	 	 	52	 
	Section 3.09 Modification of Underwriting Guidelines
	 	 	52	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	ADMINISTRATION AND SERVICING OF THE LOANS
	 	 	 	 
	 
	 	 	 	 
	Section 4.01 Servicer’s Servicing Obligations
	 	 	52	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	ESTABLISHMENT OF TRUST ACCOUNTS; TRANSFER OBLIGATION
	 	 	 	 
	 
	 	 	 	 
	Section 5.01 Collection Account and Distribution Account
	 	 	53	 
	Section 5.02 Payments to Securityholders
	 	 	58	 
	Section 5.03 Trust Accounts; Trust Account Property
	 	 	59	 
	Section 5.04 Advance Account
	 	 	61	 

- 2 -

 

	 	 	 	 	 
	 	 	Page	 
	Section 5.05 Transfer Obligation Account
	 	 	61	 
	Section 5.06 Transfer Obligation
	 	 	62	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
	 	 	 	 
	 
	 	 	 	 
	Section 6.01 Statements
	 	 	63	 
	Section 6.02 Specification of Certain Tax Matters
	 	 	66	 
	Section 6.03 Valuation of Loans, Hedge Value and Retained Securities Value;
	 	 	66	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	HEDGING; FINANCIAL COVENANTS
	 	 	 	 
	 
	 	 	 	 
	Section 7.01 Hedging Instruments
	 	 	67	 
	Section 7.02 Financial Covenants
	 	 	68	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	THE SERVICER
	 	 	 	 
	 
	 	 	 	 
	Section 8.01 Indemnification; Third Party Claims
	 	 	69	 
	Section 8.02 Merger or Consolidation of the Servicer
	 	 	71	 
	Section 8.03 Limitation on Liability of the Servicer and Others
	 	 	71	 
	Section 8.04 Servicer Not to Resign;Assignment
	 	 	71	 
	Section 8.05 Relationship of Servicer to Issuer and the Indenture Trustee
	 	 	72	 
	Section 8.06 Servicer May Own Securities
	 	 	72	 
	Section 8.07 Indemnification of the Indenture Trustee and Initial Noteholder
	 	 	72	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	SERVICER EVENTS OF DEFAULT
	 	 	 	 
	 
	 	 	 	 
	Section 9.01 Servicer Events of Default
	 	 	73	 
	Section 9.02 Appointment of Successor
	 	 	75	 
	Section 9.03 Waiver of Defaults
	 	 	76	 
	Section 9.04 Accounting Upon Termination of Servicer
	 	 	76	 
	 
	 	 	 	 
	ARTICLE X
	 	 	 	 
	TERMINATION; PUT OPTION
	 	 	 	 
	 
	 	 	 	 
	Section 10.01 Termination
	 	 	77	 
	Section 10.02 Optional Termination
	 	 	77	 
	Section 10.03 Notice of Termination
	 	 	77	 
	Section 10.04 Put Option
	 	 	78	 

- 3 -

 

	 	 	 	 	 
	 	 	Page	 
	ARTICLE XI
	 	 	 	 
	MISCELLANEOUS PROVISIONS
	 	 	 	 
	 
	 	 	 	 
	Section 11.01 Acts of Securityholders
	 	 	78	 
	Section 11.02 Amendment
	 	 	78	 
	Section 11.03 Recordation of Agreement
	 	 	79	 
	Section 11.04 Duration of Agreement
	 	 	79	 
	Section 11.05 Governing Law
	 	 	79	 
	Section 11.06 Notices
	 	 	80	 
	Section 11.07 Severability of Provisions
	 	 	80	 
	Section 11.08 No Partnership
	 	 	80	 
	Section 11.09 Counterparts
	 	 	80	 
	Section 11.10 Successors and Assigns
	 	 	81	 
	Section 11.11 Headings
	 	 	81	 
	Section 11.12 Actions of Securityholders
	 	 	81	 
	Section 11.13 Non-Petition Agreement
	 	 	81	 
	Section 11.14 Holders of the Securities
	 	 	82	 
	Section 11.15 Due Diligence Fees, Due Diligence
	 	 	82	 
	Section 11.16 No Reliance
	 	 	83	 
	Section 11.17 Confidential Information
	 	 	83	 
	Section 11.18 Conflicts
	 	 	84	 
	Section 11.19 Limitation on Liability
	 	 	84	 
	Section 11.20 No Agency
	 	 	85	 

- 4 -

 

	 	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT A Form of Notice of Additional Note Principal Balance
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT B Form of Servicer’s Remittance Report to Indenture Trustee
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT C Form of S&SA Assignment
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT D Loan Schedule
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT E Representations and Warranties Regarding the Loans
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT F Servicing Addendum
	 	 	 	 

- 5 -

 

AMENDED AND RESTATED SALE AND SERVICING AGREEMENT

     This Amended and Restated Sale and Servicing Agreement is entered into effective as of
November 12, 2004, among OPTION ONE OWNER TRUST 2003-5, a Delaware statutory trust (the “Issuer” or
the “Trust”), OPTION ONE LOAN WAREHOUSE CORPORATION, a Delaware corporation, as Depositor (in such
capacity, the “Depositor”), OPTION ONE MORTGAGE CORPORATION, a California corporation (“Option
One”), as Loan Originator (in such capacity, the “Loan Originator”) and as Servicer (in such
capacity, the “Servicer”), and WELLS FARGO BANK, N.A. (formerly known as Wells Fargo Bank
Minnesota, National Association), a national banking association, as Indenture Trustee on behalf of
the Noteholders (in such capacity, the “Indenture Trustee”).

W I T N E S S E T H:

     In consideration of the mutual agreements herein contained, the Issuer, the Depositor, the
Loan Originator, the Servicer and the Indenture Trustee hereby agree as follows for the benefit of
each of them and for the benefit of the holders of the Securities:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions.

     Whenever used in this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article. Unless otherwise specified, all
calculations of interest described herein shall be made on the basis of a 360-day year and the
actual number of days elapsed in each Accrual Period.

     Accepted Servicing Practices: The Servicer’s normal servicing practices in servicing and
administering similar mortgage loans for its own account, which in general will conform to the
mortgage servicing practices of prudent mortgage lending institutions which service for their own
account mortgage loans of the same type as the Loans in the jurisdictions in which the related
Mortgaged Properties are located and will give due consideration to the Noteholders’ reliance on
the Servicer.

     Accrual Period: With respect to the Notes, the period commencing on and including the
preceding Payment Date (or, in the case of the first Payment Date, the period commencing on and
including the first Transfer Date (which first Transfer Date is the first date on which the Note
Principal Balance is greater than zero)) and ending on the day preceding the related Payment Date.

     Act or Securities Act: The Securities Act of 1933, as amended.

     Additional Note Principal Balance: With respect to each Transfer Date, the aggregate Sales
Prices of all Loans conveyed on such date.

 

 

     Adjustment Date: With respect to each ARM, the date set forth in the related Promissory Note
on which the Loan Interest Rate on such ARM is adjusted in accordance with the terms of the related
Promissory Note.

     Administration Agreement: The Administration Agreement, dated as of November 1, 2003, between
the Issuer and the Administrator.

     Administrator: Option One Mortgage Corporation, in its capacity as Administrator under the
Administration Agreement.

     Advance Account: The account established and maintained pursuant to Section 5.04.

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

     Agreement: This Agreement, as the same may be amended and supplemented from time to time.

     ALTA: The American Land Title Association and its successors in interest.

     Appraised Value: With respect to any Loan, and the related Mortgaged Property, the lesser of:

     (i) the lesser of (a) the value thereof as determined by an appraisal made for the originator
of the Loan at the time of origination of the Loan by an appraiser who met the minimum requirements
of Fannie Mae or Freddie Mac, and (b) the value thereof as determined by a review appraisal
conducted by the Loan Originator in the event any such review appraisal determines an appraised
value more than 10% lower than the value thereof, in the case of a Loan with a Loan-to-Value Ratio
less than or equal to 80%, or more than 5% lower than the value thereof, in the case of a Loan with
a Loan-to-Value Ratio greater than 80%, as determined by the appraisal referred to in clause (i)(a)
above; and

     (ii) the purchase price paid for the related Mortgaged Property by the Borrower with the
proceeds of the Loan; provided, however, that in the case of a refinanced Loan (which is a Loan the
proceeds of which were not used to purchase the related Mortgaged Property) or a Loan originated in
connection with a “lease option purchase” if the “lease option purchase price” was set 12 months or
more prior to origination, such value of the Mortgaged Property is based solely upon clause (i)
above.

     ARM: Any Loan, the Loan Interest Rate with respect to which is subject to adjustment during
the life of such Loan.

     Assignment: An LPA Assignment or S&SA Assignment.

 

 

     Assignment of Mortgage: With respect to any Loan, an assignment of the related Mortgage in
blank or to Wells Fargo Bank, N.A. (formerly known as Wells Fargo Bank Minnesota, National
Association), as custodian or trustee under the applicable custodial agreement or trust agreement,
and notice of transfer or equivalent instrument in recordable form, sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment and
pledge of such Mortgage.

     Basic Documents: This Agreement, the Administration Agreement, the Custodial Agreement, the
Indenture, the Loan Purchase and Contribution Agreement, the Master Disposition Confirmation
Agreement, the Note Purchase Agreement, the Trust Agreement, each Hedging Instrument and, as and
when required to be executed and delivered, the Assignments.

     Borrower: The obligor or obligors on a Promissory Note.

     Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on which banking
institutions in New York City, California, Maryland, Minnesota, Pennsylvania, Delaware or in the
city in which the corporate trust office of the Indenture Trustee is located or the city in which
the Servicer’s servicing operations are located are authorized or obligated by law or executive
order to be closed.

     Certificateholder: A holder of a Trust Certificate.

     Change of Control: As defined in the Indenture.

     Clean-up Call Date: The first Payment Date occurring after the end of the Revolving Period
and the date on which the Note Principal Balance declines to 10% or less of the aggregate Note
Principal Balance as of the end of the Revolving Period.

     Closing Date: November 14, 2003.

     Code: The Internal Revenue Code of 1986, as amended from time to time, and the regulations
promulgated by the United States Treasury thereunder.

     Collateral Percentage: As defined in the Pricing Letter.

     Collateral Value: As defined in the Pricing Letter.

     Collateral Value Increase Date: Shall have the meaning provided in Section 2.01 (c) hereof.

     Collection Account: The account designated as such, established and maintained by the
Servicer in accordance with Section 5.01(a)(1) hereof.

     Combined LTV or CLTV: With respect to any Second Lien Loan, the ratio of the outstanding
Principal Balance on the related date of origination of (a) (i) such Loan plus (ii) the loan
constituting the first lien, to (b) the lesser of (x) the Appraised Value of the Mortgaged Property
at origination or (y) if the Mortgaged Property was purchased within 12 months of the origination
of the Loan, the purchase price of the Mortgaged Property, expressed as a percentage.

 

 

     Commission: The Securities and Exchange Commission.

     Convertible Loan: A Loan that by its terms and subject to certain conditions contained in the
related Mortgage or Promissory Note allows the Borrower to convert the adjustable Loan Interest
Rate on such Loan to a fixed Loan Interest Rate.

     Credit Score: With respect to each Borrower, the credit score for such Borrower from a
nationally recognized credit repository; provided, however, in the event that a credit score for
such Borrower was obtained from two repositories, the “Credit Score” shall be the lower of the two
scores; provided, further, in the event that a credit score for such Borrower was obtained from
three repositories, the “Credit Score” shall be the middle score of the three scores.

     Custodial Agreement: The custodial agreement dated as of November 1, 2003, among the Issuer,
the Servicer, the Indenture Trustee and the Custodian, providing for the retention of the Custodial
Loan Files by the Custodian on behalf of the Indenture Trustee.

     Custodial Loan File: As defined in the Custodial Agreement.

     Custodian: The custodian named in the Custodial Agreement, which custodian shall not be
affiliated with the Servicer, the Loan Originator, the Depositor or any Subservicer. Wells Fargo
Bank Minnesota, National Association, a national banking association, shall be the initial
Custodian pursuant to the terms of the Custodial Agreement.

     Custodian Fee: For any Payment Date, the fee payable to the Custodian on such Payment Date as
set forth in the Custodian Fee Notice for such Payment Date, which fee shall be calculated in
accordance with the separate fee letter between the Custodian and the Servicer.

     Custodian Fee Notice: For any Payment Date, the written notice provided by the Custodian to
the Servicer and the Indenture Trustee pursuant to Section 6.01, which notice shall specify the
amount of the Custodian Fee payable on such Payment Date.

     Daily Interest Accrual Amount: With respect to each day and the related Accrual Period,
interest accrued at the Note Interest Rate with respect to such Accrual Period on the Note
Principal Balance as of the preceding Business Day after giving effect to all changes to the Note
Principal Balance on or prior to such preceding Business Day.

     Deemed Cured: With respect to the occurrence of a Rapid Amortization Trigger, when the
condition that originally gave rise to the occurrence of such trigger has not continued for 20
consecutive days, or if the occurrence of such Rapid Amortization Trigger has been waived in
writing by the Majority Noteholder.

     Default: Any occurrence that is, or with notice or the lapse of time or both would become, an
Event of Default.

     Defaulted Loan: With respect to any Determination Date, any Loan, including, without
limitation, any Liquidated Loan with respect to which any of the following has occurred as of the
end of the related Remittance Period: (a) foreclosure or similar proceedings have been commenced;
or (b) the Servicer or any Subservicer has determined in good faith and in

 

 

accordance with the servicing standard set forth in Section 4.01 of the Servicing Addendum
that such Loan is in default or imminent default.

     Default LIBOR Margin: As defined in the Pricing Letter.

     Deleted Loan: A Loan replaced or to be replaced by one or more Qualified Substitute Loans.

     Delinquent: A Loan is “Delinquent” if any Monthly Payment due thereon is not made by the close
of business on the day such Monthly Payment is required to be paid. A Loan is “30 days Delinquent”
if any Monthly Payment due thereon has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such Monthly Payment was
required to be paid or, if there is no such corresponding day (e.g., as when a 30-day month follows
a 31-day month in which a payment was required to be paid on the 31st day of such month), then on
the last day of such immediately succeeding month. The determination of whether a Loan is “60 days
Delinquent,” “90 days Delinquent”, etc., shall be made in like manner.

     Delivery: When used with respect to Trust Account Property means:

          (a) with respect to bankers’ acceptances, commercial paper, negotiable certificates of deposit
and other obligations that constitute “instruments” within the meaning of Section 9-102(a)(47) of
the UCC and are susceptible of physical delivery (except with respect to Trust Account Property
consisting of certificated securities (as defined in Section 8-102(a)(4) of the UCC)), physical
delivery to the Indenture Trustee or its custodian (or the related Securities Intermediary)
endorsed to the Indenture Trustee or its custodian (or the related Securities Intermediary) or
endorsed in blank (and if delivered and endorsed to the Securities Intermediary, by continuous
credit thereof by book-entry to the related Trust Account);

          (b) with respect to a certificated security (i) delivery of such certificated security
endorsed to, or registered in the name of, the Indenture Trustee or endorsed in blank to its
custodian or the related Securities Intermediary and the making by such Securities Intermediary of
appropriate entries in its records identifying such certificated securities as credited to the
related Trust Account, or (ii) by delivery thereof to a “clearing corporation” (as defined in
Section 8-102(a)(5) of the UCC) and the making by such clearing corporation of appropriate entries
in its records crediting the securities account of the related Securities Intermediary by the
amount of such certificated security and the making by such Securities Intermediary of appropriate
entries in its records identifying such certificated securities as credited to the related Trust
Account (all of the Trust Account Property described in Subsections (a) and (b), “Physical
Property”);

          and, in any event, any such Physical Property in registered form shall be in the name of the
Indenture Trustee or its nominee or custodian (or the related Securities Intermediary); and such
additional or alternative procedures as may hereafter become appropriate to effect the complete
transfer of ownership of any such Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or the interpretation thereof;

 

 

          (c) with respect to any security issued by the U.S. Treasury, Fannie Mae or Freddie Mac that
is a book-entry security held through the Federal Reserve System pursuant to federal book-entry
regulations, the following procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC: the making by a Federal Reserve Bank of an
appropriate entry crediting such Trust Account Property to an account of the related Securities
Intermediary or the securities intermediary that is (x) also a “participant” pursuant to applicable
federal regulations and (y) is acting as securities intermediary on behalf of the Securities
Intermediary with respect to such Trust Account Property; the making by such Securities
Intermediary or securities intermediary of appropriate entries in its records crediting such
book-entry security held through the Federal Reserve System pursuant to federal book-entry
regulations and Articles 8 and 9 of the UCC to the related Trust Account; and such additional or
alternative procedures as may hereafter become appropriate to effect complete transfer of ownership
of any such Trust Account Property to the Indenture Trustee or its nominee or custodian, consistent
with changes in applicable law or regulations or the interpretation thereof; and

          (d) with respect to any item of Trust Account Property that is an uncertificated security (as
defined in Section 8-102(a)(18) of the UCC) and that is not governed by clause (c) above,
registration in the records of the issuer thereof in the name of the related Securities
Intermediary, and the making by such Securities Intermediary of appropriate entries in its records
crediting such uncertificated security to the related Trust Account.

     Designated Depository Institution: With respect to an Eligible Account, an institution whose
deposits are insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the
FDIC, the long-term deposits of which shall be rated A or better by S&P or A2 or better by Moody’s
and the short-term deposits of which shall be rated P-1 or better by Moody’s and A-1 or better by
S&P, unless otherwise approved in writing by the Initial Noteholder and which is any of the
following: (A) a federal savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (B) an institution duly organized, validly existing and in
good standing under the applicable banking laws of any state, (C) a national banking association
duly organized, validly existing and in good standing under the federal banking laws, (D) a
principal subsidiary of a bank holding company or (E) approved in writing by the Initial Noteholder
and, in each case acting or designated by the Servicer as the depository institution for the
Eligible Account; provided, however, that any such institution or association shall have
combined capital, surplus and undivided profits of at least $50,000,000.

     Depositor: Option One Loan Warehouse Corporation, a Delaware corporation, and any successors
thereto.

     Determination Date: With respect to any Payment Date occurring on the 10th day of a month, the
last calendar day of the month immediately preceding the month of such Payment Date, and with
respect to any other Payment Date, as mutually agreed by the Servicer and the Noteholders.

     Disposition: A Securitization, Whole Loan Sale transaction, or other disposition of Loans.

 

 

     Disposition Agent: Citigroup Global Markets Inc. and its successors and assigns acting at the
direction, and as agent, of the Majority Noteholders.

     Disposition Participant: As applicable, with respect to a Disposition, any “depositor” with
respect to such Disposition, the Disposition Agent, the Majority Noteholders, the Issuer, the
Servicer, the related trustee and the related custodian, any nationally recognized credit rating
agency, the related underwriters, the related placement agent, the related credit enhancer, the
related whole-loan purchaser, the related purchaser of securities and/or any other party necessary
or, in the good faith belief of any of the foregoing, desirable to effect a Disposition.

     Disposition Proceeds: With respect to a Disposition, (x) the proceeds of the Disposition
remitted to the Trust in respect of the Loans transferred on the date of and with respect to such
Disposition, including without limitation, any cash and Retained Securities created in any related
Securitization less all costs, fees and expenses incurred in connection with such Disposition,
including, without limitation, all amounts deposited into any reserve accounts upon the closing
thereof plus or minus (y) the net positive or net negative value of all Hedging Instruments
terminated in connection with such Disposition minus (z) all other amounts agreed upon in writing
by the Initial Noteholder, the Trust and the Servicer.

     Distribution Account: The account established and maintained pursuant to Section 5.01(a)(2)
hereof.

     Due Date: The day of the month on which the Monthly Payment is due from the Borrower with
respect to a Loan.

     Due Diligence Fees: Shall have the meaning provided in Section 11.15 hereof.

     Eligible Account: At any time, a deposit account or a securities account which is: (i)
maintained with a Designated Depository Institution; (ii) fully insured by either the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC; (iii) a trust account (which
shall be a “segregated trust account”) maintained with the corporate trust department of a federal
or state chartered depository institution or trust company with trust powers and acting in its
fiduciary capacity for the benefit of the Indenture Trustee and the Issuer, which depository
institution or trust company shall have capital and surplus of not less than $50,000,000; or (iv)
with the prior written consent of the Majority Noteholders, any other deposit account or a
securities account.

     Eligible Servicer: (x) Option One or (y) any other Person that (a) (i) has been designated as
an approved seller-servicer by Fannie Mae or Freddie Mac for first and second mortgage loans and
(ii) has equity of not less than $15,000,000, as determined in accordance with GAAP or (b) any
other Person to which the Majority Noteholders may consent in writing.

     Escrow Payments: With respect to any Loan, the amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, fire, hazard, liability and other
insurance premiums, condominium charges, and any other payments required to be escrowed by the
related Borrower with the lender or servicer pursuant to the Mortgage or any other document.

 

 

     Event of Default: Either a Servicer Event of Default or an Event of Default under the
Indenture.

     Exceptions Report: The meaning set forth in the Custodial Agreement.

     Exchange Act: The Securities Exchange Act of 1934, as amended.

     Fannie Mae: The Federal National Mortgage Association and any successor thereto.

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

     Fidelity Bond: As described in Section 4.10 of the Servicing Addendum.

     Final Put Date: The Put Date following the end of the Revolving Period on which the Majority
Noteholders exercise the Put Option with respect to the entire outstanding Note Principal Balance.

     Final Recovery Determination: With respect to any defaulted Loan or any Foreclosure Property,
a determination made by the Servicer that all Mortgage Insurance Proceeds, Liquidation Proceeds and
other payments or recoveries which the Servicer, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered. The Servicer shall maintain
records, prepared by a servicing officer of the Servicer, of each Final Recovery Determination.

     First Lien Loan: A Loan secured by the lien on the related Mortgaged Property, subject to no
prior liens on such Mortgaged Property.

     Foreclosed Loan: As of any Determination Date, any Loan that as of the end of the preceding
Remittance Period has been discharged as a result of (i) the completion of foreclosure or
comparable proceedings by the Servicer on behalf of the Issuer; (ii) the acceptance of the deed or
other evidence of title to the related Mortgaged Property in lieu of foreclosure or other
comparable proceeding; or (iii) the acquisition of title to the related Mortgaged Property by
operation of law.

     Foreclosure Property: Any real property securing a Foreclosed Loan that has been acquired by
the Servicer on behalf of the Issuer through foreclosure, deed in lieu of foreclosure or similar
proceedings in respect of the related Loan.

     Freddie Mac: The Federal Home Loan Mortgage Corporation and any successor thereto.

     GAAP: Generally Accepted Accounting Principles as in effect in the United States.

     Gross Margin: With respect to each ARM, the fixed percentage amount set forth in the related
Promissory Note.

     Hedge Funding Requirement: With respect to any day, all amounts required to be paid or
delivered by the Issuer under any Hedging Instrument, whether in respect of payments thereunder or
in order to meet margin, collateral or other requirements thereof. Such amounts

 

 

shall be calculated by the Market Value Agent and the Indenture Trustee shall be notified of
such amount by the Market Value Agent.

     Hedge Value: With respect to any Business Day and a specific Hedging Instrument, the positive
amount, if any, that is equal to the amount that would be paid to the Issuer in consideration of an
agreement between the Issuer and an unaffiliated third party, that would have the effect of
preserving for the Issuer the net economic equivalent, as of such Business Day, of all payment and
delivery requirements payable to and by the Issuer under such Hedging Instrument until the
termination thereof, as determined by the Market Value Agent in accordance with Section 6.03
hereof.

     Hedging Counterparty: A Person (i) (A) the long-term and commercial paper or short-term
deposit ratings of which are acceptable to the Majority Noteholders and (B) which shall agree in
writing that, in the event that any of its long-term or commercial paper or short-term deposit
ratings cease to be at or above the levels deemed acceptable by the Majority Noteholders, it shall
secure its obligations in accordance with the request of the Majority Noteholders, (ii) that has
entered into a Hedging Instrument and (iii) that is acceptable to the Majority Noteholders.

     Hedging Instrument: Any interest rate cap agreement, interest rate floor agreement, interest
rate swap agreement or other interest rate hedging agreement entered into by the Issuer with a
Hedging Counterparty, and which requires the Hedging Counterparty to deposit all amounts payable
thereby directly to the Collection Account. Each Hedging Instrument shall meet the requirements set
forth in Article VII hereof with respect thereto.

     Indenture: The Indenture dated as of November 1, 2003, between the Issuer and the Indenture
Trustee and any amendments thereto.

     Indenture Trustee: Wells Fargo Bank, N.A. (formerly known as Wells Fargo Bank Minnesota,
National Association), a national banking association, as Indenture Trustee under the Indenture, or
any successor indenture trustee under the Indenture.

     Indenture Trustee Fee: An annual fee of $5,000 payable by the Servicer in accordance with a
separate fee agreement between the Indenture Trustee and the Servicer and Section 5.01 hereof.

     Independent: When used with respect to any specified Person, such Person (i) is in fact
independent of the Loan Originator, the Servicer, the Depositor or any of their respective
Affiliates, (ii) does not have any direct financial interest in, or any material indirect financial
interest in, the Loan Originator, the Servicer, the Depositor or any of their respective Affiliates
and (iii) is not connected with the Loan Originator, the Depositor, the Servicer or any of their
respective Affiliates, as an officer, employee, promoter, underwriter, trustee, partner, director
or Person performing similar functions; provided, however, that a Person shall not fail to be
Independent of the Loan Originator, the Depositor, the Servicer or any of their respective
Affiliates merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Loan Originator, the Depositor, the Servicer or any of their respective
Affiliates, as the case may be.

 

 

     Independent Accountants: A firm of nationally recognized certified public accountants which
is independent according to the provisions of SEC Regulation S-X, Article 2.

     Index: With respect to each ARM, the index set forth in the related Promissory Note for the
purpose of calculating the Loan Interest Rate thereon.

     Initial Noteholder: Citigroup Global Markets Realty Corp. or an Affiliate thereof identified
in writing by Citigroup Global Markets Realty Corp. to the Indenture Trustee and the other parties
hereto.

     Interest Carry-Forward Amount: With respect to any Payment Date, the excess, if any, of (A)
the Interest Payment Amount for such Payment Date plus the Interest Carry-Forward Amount for the
prior Payment Date over (B) the amount in respect of interest that is actually paid from the
Distribution Account on such Payment Date in respect of the interest for such Payment Date.

     Interest Payment Amount: With respect to any Payment Date, the sum of the Daily Interest
Accrual Amounts for all days in the related Accrual Period.

     LIBOR Business Day: Any day on which banks in the City of London are open and conducting
transactions in United States dollars.

     LIBOR Determination Date: With respect to each Accrual Period, the second LIBOR Business Day
preceding the commencement of such Accrual Period.

     LIBOR Margin: As defined in the Pricing Letter.

     Lien: 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.

     Lifetime Cap: The provision in the Promissory Note for each ARM which limits the maximum Loan
Interest Rate over the life of such ARM.

     Lifetime Floor: The provision in the Promissory Note for each ARM which limits the minimum
Loan Interest Rate over the life of such ARM.

     Liquidated Loan: As defined in Section 4.03(c) of the Servicing Addendum.

     Liquidated Loan Losses: With respect to any Determination Date, the difference between (i) the
aggregate Principal Balances as of such date of all Loans that became Liquidated Loans and (ii) all
Liquidation Proceeds allocable to principal received on or prior to such date.

     Liquidation Proceeds: With respect to a Liquidated Loan, any cash amounts received in
connection with the liquidation of such Liquidated Loan, whether through trustee’s sale,
foreclosure sale or other disposition, any cash amounts received in connection with the management
of the Mortgaged Property from Defaulted Loans, any proceeds from Primary Insurance Policies and
any other amounts required to be deposited in the Collection Account

 

 

pursuant to Section 5.01(b)(1) hereof, in each case other than Mortgage Insurance Proceeds and
Released Mortgaged Property Proceeds. Liquidation Proceeds shall also include any awards or
settlements in respect of the related Mortgage Property, whether permanent or temporary, partial or
entire, by exercise of the power of eminent domain or condemnation.

     Loan: Any loan sold to the Trust hereunder and pledged to the Indenture Trustee, which loan
includes, without limitation, (i) a Promissory Note or Lost Note Affidavit and related Mortgage and
(ii) all right, title and interest of the Loan Originator in and to the Mortgaged Property covered
by such Mortgage. The term Loan shall be deemed to include the related Promissory Note or Lost Note
Affidavit, related Mortgage and related Foreclosure Property, if any.

     Loan Documents: With respect to a Loan, the documents comprising the Custodial Loan File for
such Loan.

     Loan File: With respect to each Loan, the Custodial Loan File and the Servicer’s Loan File.

     Loan Interest Rate: With respect to each Loan, the annual rate of interest borne by the
related Promissory Note, as shown on the Loan Schedule, and, in the case of an ARM, as the same may
be periodically adjusted in accordance with the terms of such Loan.

     Loan Originator: Option One and its permitted successors and assigns.

     Loan Pool: As of any date of determination, the pool of all Loans conveyed to the Issuer
pursuant to this Agreement on all Transfer Dates up to and including such date of determination,
which Loans have not been released from the Lien of the Indenture pursuant to the terms of the
Basic Documents, together with the rights and obligations of a holder thereof, and the payments
thereon and proceeds therefrom received on and after the applicable Transfer Cut-off Date, as
identified from time to time on the Loan Schedule.

     Loan Purchase and Contribution Agreement: The Second Amended and Restated Loan Purchase and
Contribution Agreement, between Option One, as seller and the Depositor, as purchaser, dated as of
November 14, 2003, and all supplements and amendments thereto.

     Loan Schedule: The schedule of Loans conveyed to the Issuer on the Closing Date and on each
Transfer Date and delivered to the Initial Noteholder and the Custodian in the form of a
computer-readable transmission specifying the information set forth on Exhibit D hereto and, with
respect to Wet Funded Loans, Exhibit C to the Custodial Agreement.

     Loan-to-Value Ratio or LTV: With respect to any First Lien Loan, the ratio of the original
outstanding principal amount of such Loan to the Appraised Value of the Mortgaged Property at
origination.

     Lost Note Affidavit: With respect to any Loan as to which the original Promissory Note has
been permanently lost or destroyed and has not been replaced, an affidavit from the Loan Originator
certifying that the original Promissory Note has been lost, misplaced or destroyed (together with a
copy of the related Promissory Note and indemnifying the Issuer against any

 

 

loss, cost or liability resulting from the failure to deliver the original Promissory Note) in
the form of Exhibit L attached to the Custodial Agreement.

     LPA Assignment: The Assignment of Loans from Option One to the Depositor under the Loan
Purchase and Contribution Agreement.

     Majority Certificateholders: Has the meaning set forth in the Trust Agreement.

     Majority Noteholders: The holder or holders of in excess of 50% of the Note Principal
Balance. In the event of the release of the Lien of the Indenture in accordance with the terms
thereof, the Majority Noteholders shall mean the Majority Certificateholders.

     Market Value: The market value of a Loan as of any Business Day as determined by the Market
Value Agent in accordance with Section 6.03 hereof.

     Market Value Agent: Citigroup Global Markets Realty Corp. or an Affiliate thereof designated
by Citigroup Global Markets Realty Corp. in writing to the parties hereto and, in either case, its
successors in interest.

     Master Disposition Confirmation Agreement: The Third Amended and Restated Master Disposition
Confirmation Agreement, dated as of November 14, 2003, by and among Option One, the Depositor,
Option One Owner Trust 2001-1A, Option One Owner Trust 2001-1 B, Option One Owner Trust 2001-2,
Option One Owner Trust 2002-3, Option One Owner Trust 2003-4, Option One Owner Trust 2003-5, Wells
Fargo Bank Minnesota, National Association, Bank of America, N.A., Greenwich Capital Financial
Products, Inc. and Steamboat Funding Corporation, UBS Warburg Real Estate Securities Inc., Bank
One, NA (Main Office Chicago) and Citigroup Global Markets Realty Corp.

     Maturity Date: With respect to the Notes, as set forth in the Indenture or such later date as
may be agreed in writing by the Majority Noteholders.

     Maximum Note Principal Balance: As defined in Section 1.01 of the Note Purchase Agreement.

     Monthly Advance: The aggregate of the advances made by the Servicer on any Remittance Date
pursuant to Section 4.14 of the Servicing Addendum.

     Monthly Payment: The scheduled monthly payment of principal and/or interest required to be
made by a Borrower on the related Loan, as set forth in the related Promissory Note.

     Monthly Remittance Amount: With respect to each Remittance Date, the sum, without
duplication, of (i) the aggregate payments on the Loans collected by the Servicer pursuant to
Section 5.01(b)(1)(i) during the immediately preceding Remittance Period and (ii) the aggregate of
amounts deposited into the Collection Account pursuant to Section 5.01(b)(1)(ii) through
5.01(b)(1)(xi) during the immediately preceding Remittance Period.

     Moody’s: Moody’s Investors Service, Inc., or any successor thereto.

 

 

     Mortgage: With respect to any Loan, the mortgage, deed of trust or other instrument securing
the related Promissory Note, which creates a first or second lien on the fee in real property
and/or a first or second lien on the leasehold estate in real property securing the Promissory Note
and the assignment of rents and leases related thereto.

     Mortgage Insurance Policies: With respect to any Mortgaged Property or Loan, the insurance
policies required pursuant to Section 4.08 of the Servicing Addendum.

     Mortgage Insurance Proceeds: With respect to any Mortgaged Property, all amounts collected in
respect of Mortgage Insurance Policies and not required either pursuant to applicable law or the
related Loan Documents to be applied to the restoration of the related Mortgaged Property or paid
to the related Borrower.

     Mortgaged Property: With respect to a Loan, the related Borrower’s fee and/or leasehold
interest in the real property (and/or all improvements, buildings, fixtures, building equipment and
personal property thereon (to the extent applicable) and all additions, alterations and
replacements made at any time with respect to the foregoing) and all other collateral securing
repayment of the debt evidenced by the related Promissory Note.

     Net Liquidation Proceeds: With respect to any Payment Date, Liquidation Proceeds received
during the prior Remittance Period, net of any reimbursements to the Servicer made from such
amounts for any unreimbursed Servicing Compensation and Servicing Advances (including
Nonrecoverable Servicing Advances) made and any other fees and expenses paid in connection with the
foreclosure, inspection, conservation and liquidation of the related Liquidated Loans or
Foreclosure Properties pursuant to Section 4.03 of the Servicing Addendum.

     Net Loan Losses: With respect to any Defaulted Loan that is subject to a modification
pursuant to Section 4.01 of the Servicing Addendum, an amount equal to the portion of the Principal
Balance, if any, released in connection with such modification.

     Net Worth: With respect to any Person, the excess of total assets of such Person, over total
liabilities of such Person, determined in accordance with GAAP.

     Non-performing Loan: Any Loan which is greater than 90 days Delinquent.

     Nonrecoverable Monthly Advance: Any Monthly Advance previously made or proposed to be made
with respect to a Loan or Foreclosure Property that, in the good faith business judgment of the
Servicer, as evidenced by an Officer’s Certificate of a Servicing Officer delivered to the Initial
Noteholder, will not, or, in the case of a proposed Monthly Advance, would not be, ultimately
recoverable from the related late payments, Mortgage Insurance Proceeds, Liquidation Proceeds or
condemnation proceeds on such Loan or Foreclosure Property as provided herein.

     Nonrecoverable Servicing Advance: With respect to any Loan or any Foreclosure Property, (a)
any Servicing Advance previously made and not reimbursed from late collections, condemnation
proceeds, Liquidation Proceeds, Mortgage Insurance Proceeds or the Released Mortgaged Property
Proceeds on the related Loan or Foreclosure Property or (b) a Servicing Advance proposed to be made
in respect of a Loan or Foreclosure Property either of which, in

 

 

the good faith business judgment of the Servicer, as evidenced by an Officer’s Certificate of
a Servicing Officer delivered to the Initial Noteholder, would not be ultimately recoverable.

     Nonutilization Fee: With respect to any Payment Date occurring on a date specified in clause
(i) of the definition thereof, a fee payable by the Issuer to the Initial Noteholder in an amount
equal to (a) the product of (i) 0.125% and (ii) the average amount of the excess (if any) on each
day during the related Remittance Period of $1,000,000,000 over the Note Principal Balance for such
day and (iii) the number of days during the related Remittance Period divided by (b) 360; provided,
however, that (1) for purposes of clauses (a)(ii) and (a)(iii) above there shall be disregarded any
days occurring prior to the first Transfer Date and any days occurring on or after the expiration
or termination of the Revolving Period and (2) should the amount calculated pursuant to clause
(a)(ii) above not exceed $750,000,000, then the amount of the Nonutilization Fee with respect to
the Payment Date shall be zero.

     Note: The meaning assigned thereto in the Indenture.

     Noteholder: The meaning assigned thereto in the Indenture.

     Note Interest Rate: With respect to each Accrual Period, a per annum interest rate equal to
One-Month LIBOR for the related LIBOR Determination Date plus the LIBOR Margin and, if applicable,
the Default LIBOR Margin for such Accrual Period.

     Note Principal Balance: With respect to the Notes, as of any date of determination (a) the
sum of the Additional Note Principal Balances purchased on or prior to such date pursuant to the
Note Purchase Agreement less (b) all amounts previously distributed in respect of principal of the
Notes on or prior to such day.

     Note Purchase Agreement: The Note Purchase Agreement among the Initial Noteholder, the Issuer
and the Depositor, dated as of November 14, 2003 and any amendments thereto.

     Note Redemption Amount: As of any Determination Date, an amount without duplication equal to
the sum of (i) the then outstanding Note Principal Balance of the Notes, plus the Interest Payment
Amount for the related Payment Date, (ii) any Trust Fees and Expenses due and unpaid on the related
Payment Date, (iii) any Servicing Advance Reimbursement Amount as of such Determination Date and
(iv) all amounts due to Hedging Counterparties in respect of the termination of all related Hedging
Instruments.

     Officer’s Certificate: A certificate signed by a Responsible Officer of the Depositor, the
Loan Originator, the Servicer or the Issuer, in each case, as required by this Agreement.

     One-Month LIBOR: With respect to each Accrual Period, the rate determined by the Initial
Noteholder on the related LIBOR Determination Date on the basis of the offered rate for one-month
U.S. dollar deposits, as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on
such LIBOR Determination Date; provided that if such rate does not appear on Telerate Page 3750,
the rate for such date will be determined on the basis of the offered rates of the Reference Banks
for one-month U.S. dollar deposits, as of 11:00 a.m. (London time) on such LIBOR Determination
Date. In such event, the Initial Noteholder will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If on such

 

 

LIBOR Determination Date, two or more Reference Banks provide such offered quotations,
One-Month LIBOR for the related Accrual Period shall be the arithmetic mean of all such offered
quotations (rounded to the nearest whole multiple of 1/16%). If on such LIBOR Determination Date,
fewer than two Reference Banks provide such offered quotations, One-Month LIBOR for the Accrual
Period shall be the higher of (i) LIBOR as determined on the previous LIBOR Determination Date and
(ii) the Reserve Interest Rate. Notwithstanding the foregoing, if, under the priorities described
above, One-Month LIBOR for a LIBOR Determination Date would be based on One-Month LIBOR for the
previous LIBOR Determination Date for the third consecutive LIBOR Determination Date, the Initial
Noteholder shall select an alternative comparable index (over which the Initial Noteholder has no
control), used for determining one-month Eurodollar lending rates that is calculated and published
(or otherwise made available) by an independent party.

     Opinion of Counsel: A written opinion of counsel who may be employed by the Servicer, the
Depositor, the Loan Originator or any of their respective Affiliates.

     Option One: Option One Mortgage Corporation, a California corporation.

     Overcollateralization Shortfall: With respect to any Business Day, an amount equal to the
positive difference, if any, between (a) the Note Principal Balance on such Business Day and (b)
the aggregate Collateral Value of all Loans in the Loan Pool as of such Business Day; provided,
however, that on (A) the termination of the Revolving Period, (B) the occurrence of a Rapid
Amortization Trigger, (C) the Payment Date on which the Trust is to be terminated pursuant to
Section 10.02 hereof, or (D) the Final Put Date, the Overcollateralization Shortfall shall be equal
to the Note Principal Balance. Notwithstanding anything to the contrary herein, in no event shall
the Overcollateralization Shortfall, with respect to any Business Day, exceed the Note Principal
Balance as of such date. If as of such Business Day, no Rapid Amortization Trigger or Default under
this Agreement or the Indenture shall be in effect, the Overcollateralization Shortfall shall be
reduced (but in no event to an amount below zero) by all or any portion of the aggregate Hedge
Value as of such Payment Date as the Majority Noteholders may, in their sole discretion, designate
in writing.

     Owner Trustee: means Wilmington Trust Company, a Delaware banking corporation, not in its
individual capacity but solely as Owner Trustee under this Agreement, and any successor owner
trustee under the Trust Agreement.

     Owner Trustee Fee: The annual fee of $4,000 payable in equal monthly installments to the
Servicer pursuant to Section 5.01(c)(3)(i) which shall in turn pay such amount annually to the
Owner Trustee on the anniversary of the Closing Date occurring each year during the term of this
Agreement.

     Paying Agent: The meaning assigned thereto in the Indenture.

     Payment Date: Each of, (i) the 10th day of each calendar month commencing on the first such
10th day to occur after the first Transfer Date, or if any such day is not a Business Day, the
first Business Day immediately following such day, (ii) any day a Loan is sold pursuant to the
terms hereof, (iii) a Put Date as specified by the Majority Noteholder pursuant to Section 10.05 of
the Indenture and (iv) an additional Payment Date pursuant to Section 5.01(c)(4)(i) and

 

 

5.01(c)(4)(iii). From time to time, the Majority Noteholders and the Issuer may agree, upon
written notice to the Owner Trustee and the Indenture Trustee, to additional Payment Dates in
accordance with Section 5.01(c)(4)(ii).

     Payment Statement: As defined in Section 6.01(b) hereof.

     Percentage Interest: As defined in the Trust Agreement.

     Periodic Cap: With respect to each ARM Loan and any Rate Change Date therefor, the annual
percentage set forth in the related Promissory Note, which is the maximum annual percentage by
which the Loan Interest Rate for such Loan may increase or decrease (subject to the Lifetime Cap or
the Lifetime Floor) on such Rate Change Date from the Loan Interest Rate in effect immediately
prior to such Rate Change Date.

     Permitted Investments: Each of the following:

          (a) Direct general obligations of the United States or the obligations of any agency or
instrumentality of the United States fully and unconditionally guaranteed, the timely payment or
the guarantee of which constitutes a full faith and credit obligation of the United States.

          (b) Federal Housing Administration debentures rated Aa2 or higher by Moody’s and AA or better
by S&P.

          (c) Freddie Mac senior debt obligations rated Aa2 or higher by Moody’s and AA or better by
S&P.

          (d) Federal Home Loan Banks’ consolidated senior debt obligations rated Aa2 or higher by
Moody’s and AA or better by S&P.

          (e) Fannie Mae senior debt obligations rated Aa2 or higher by Moody’s.

          (f) Federal funds, certificates or deposit, time and demand deposits, and bankers’ acceptances
(having original maturities of not more than 365 days) of any domestic bank, the short-term debt
obligations of which have been rated A-1 or better by S&P and P-1 or better by Moody’s.

          (g) Investment agreements approved by the Initial Noteholder provided:

     (1) The agreement is with a bank or insurance company which has an unsecured, uninsured and
unguaranteed obligation (or claims-paying ability) rated Aa2 or better by Moody’s and AA or better
by S&P, and

     (2) Monies invested thereunder may be withdrawn without any penalty, premium or charge upon
not more than one day’s notice (provided such notice may be amended or canceled at any time prior
to the withdrawal date), and

     (3) The agreement is not subordinated to any other obligations of such insurance company or
bank, and

 

 

     (4) The same guaranteed interest rate will be paid on any future deposits made pursuant to
such agreement, and

     (5) The Indenture Trustee and the Initial Noteholder receive an opinion of counsel that such
agreement is an enforceable obligation of such insurance company or bank.

          (h) Commercial paper (having original maturities of not more than 365 days) rated A-1 or
better by S&P and P-1 or better by Moody’s.

          (i) Investments in money market funds rated AAAM or AAAM-G by S&P and Aaa or P-1 by Moody’s.

          (j) Investments approved in writing by the Initial Noteholder;

provided that no instrument described above is permitted to evidence either the right to receive
(a) only interest with respect to obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument and the interest and
principal payments with respect to such instrument provided a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying obligations; and provided, further, that no
instrument described above may be purchased at a price greater than par if such instrument may be
prepaid or called at a price less than its purchase price prior to stated maturity; and provided,
further, that, with respect to any instrument described above, such instrument qualifies as a
“permitted investment” within the meaning of Section 860G(a)(5) of the Code and the regulations
thereunder.

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

     Physical Property: As defined in clause (b) of the definition of “Delivery” above.

     Points and Fees Loan: Any Loan identified on the related Loan Schedule as having points and
fees of less than 4.85%.

     Pool Principal Balance: With respect to any Determination Date, the aggregate Principal
Balances of the Loans as of such Determination Date.

     Premium Advance Loan: As defined in the Pricing Letter.

     Prepaid Installment: With respect to any Loan, any installment of principal thereof and
interest thereon received prior to the scheduled Due Date for such installment, intended by the
Borrower as an early payment thereof and not as a Prepayment with respect to such Loan.

     Prepayment: Any payment of principal of a Loan which is received by the Servicer in advance of
the scheduled due date for the payment of such principal (other than the principal portion of any
Prepaid Installment), and the proceeds of any Mortgage Insurance Policy which are to be applied as
a payment of principal on the related Loan shall be deemed to be Prepayments for all purposes of
this Agreement.

 

 

     Preservation Expenses: Expenditures made by the Servicer in connection with a foreclosed Loan
prior to the liquidation thereof, including, without limitation, expenditures for real estate
property taxes, hazard insurance premiums, property restoration or preservation.

     Pricing Letter: The pricing letter among the Issuer, the Depositor, Option One and the
Indenture Trustee, dated the date hereof and any amendments thereto.

     Primary Insurance Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer pursuant to Section 4.06 of the Servicing Addendum.

     Principal Balance: With respect to any Loan or related Foreclosure Property, (i) at the
Transfer Cut-off Date, the Transfer Cut-off Date Principal Balance and (ii) with respect to any
other date of determination, the outstanding unpaid principal balance of the Loan as of the end of
the preceding Remittance Period (after giving effect to all payments received thereon and the
allocation of any Net Loan Losses with respect thereto for a Defaulted Loan prior to the end of
such Remittance Period); provided, however, that any Liquidated Loan shall be deemed to have a
Principal Balance of zero.

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

     Promissory Note: With respect to a Loan, the original executed promissory note or other
evidence of the indebtedness of the related Borrower or Borrowers.

     Put/Call Loan: Any (i) Loan that has become 30 or more days (but less than 60 days)
Delinquent, (ii) Loan that has become 60 or more days (but less than 90 days) Delinquent, (iii)
Loan that has become 90 or more days Delinquent, (iv) Loan that is a Defaulted Loan, (v) Loan that
has been in default for a period of 30 days or more (other than a Loan referred to in clause (i),
(ii), (iii) or (iv) hereof), (vi) Loan that does not meet criteria established by independent
rating agencies or surety agency conditions for Dispositions which criteria have been established
at the related Transfer Date and may be modified only to match changed criteria of independent
rating agencies or surety agents, or (vii) Loan that is inconsistent with the intended tax status
of a Securitization.

     Put Date: Any date on which all or a portion of the Notes are to be purchased by the Issuer
as a result of the exercise of the Put Option.

     Put Option: The right of the Majority Noteholders to require the Issuer to repurchase all or
a portion of the Notes in accordance with Section 10.04 of the Indenture.

     QSPE Affiliate: Option One Owner Trust 2001-1A, Option One Owner Trust 2001-1 B, Option One
Owner Trust 2001-2, Option One Owner Trust 2002-3, Option One Owner Trust 2003-4 or any other
Affiliate which is a “qualified special purpose entity” in accordance with Financial Accounting
Standards Board’s Statement No. 140 or 125.

     Qualified Insurer: An insurance company duly qualified as such under the laws of the states in
which the Mortgaged Property is located, duly authorized and licensed in such states to

 

 

transact the applicable insurance business and to write the insurance provided and that meets
the requirements of Fannie Mae and Freddie Mac.

     Qualified Substitute Loan: A Loan or Loans substituted for a Deleted Loan pursuant to Section
3.06 hereof, which (i) has or have been approved in writing by the Majority Noteholders and (ii)
complies or comply as of the date of substitution with each representation and warranty set forth
in Exhibit E and is or are not 30 or more days Delinquent as of the date of substitution for such
Deleted Loan or Loans.

     Rapid Amortization Trigger: Shall exist, as of any Determination Date, if the aggregate
Principal Balance of all Loans that are Delinquent greater than 59 days (including Defaulted Loans
and Foreclosed Loans) as of such Determination Date divided by the Pool Principal Balance as of
such Determination Date is greater than 3%; provided, however, that a Rapid Amortization Trigger
shall not occur if such percentage is reduced to less than 3% within 5 Business Days of such
Determination Date as a result of the exercise of a Servicer Call. A Rapid Amortization Trigger
shall continue to exist until it is Deemed Cured.

     Rate Change Date: The date on which the Loan Interest Rate of each ARM is subject to
adjustment in accordance with the related Promissory Note.

     Rating Agencies: S&P and Moody’s or such other nationally recognized credit rating agencies
as may from time to time be designated in writing by the Majority Noteholders in their sole
discretion.

     Record Date: With respect to each Payment Date, the close of business of the immediately
preceding Business Day.

     Reference Banks: Bankers Trust Company, Barclay’s Bank PLC, The Tokyo Mitsubishi Bank and
National Westminster Bank PLC and their successors in interest; provided, however, that if the
Initial Noteholder determines that any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Initial Noteholder with the approval of the
Issuer, which approval shall not be unreasonably withheld, which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an established place of
business in London and (ii) which have been designated as such by the Initial Noteholder with the
approval of the Issuer, which approval shall not be unreasonably withheld.

     Refinanced Loan: A Loan the proceeds of which were not used to purchase the related Mortgaged
Property.

     Released Mortgaged Property Proceeds: With respect to any Loan, proceeds received by the
Servicer in connection with (i) a taking of an entire Mortgaged Property by exercise of the power
of eminent domain or condemnation or (ii) any release of part of the Mortgaged Property from the
lien of the related Mortgage, whether by partial condemnation, sale or otherwise; which proceeds in
either case are not released to the Borrower in accordance with applicable law and/or Accepted
Servicing Practices.

     Remittance Date: The Business Day immediately preceding each Payment Date.

 

 

     Remittance Period: With respect to any Payment Date, the period commencing immediately
following the Determination Date for the preceding Payment Date (or, in the case of the initial
Payment Date, commencing immediately following the initial Transfer Cut-off Date) and ending on and
including the related Determination Date.

     Repurchase Price: With respect to a Loan the sum of (i), the Principal Balance thereof as of
the date of purchase or repurchase, plus (ii) all accrued and unpaid interest on such Loan to the
date of purchase or repurchase computed at the applicable Loan Interest Rate, plus (iii) the amount
of any unreimbursed Servicing Advances made by the Servicer with respect to such Loan (after
deducting therefrom any amounts received in respect of such purchased or repurchased Loan and being
held in the Collection Account for future distribution to the extent such amounts represent
recoveries of principal not yet applied to reduce the related Principal Balance or interest (net of
the Servicing Fee) for the period from and after the date of repurchase). The Repurchase Price
shall be (i) increased by the net negative value or (ii) decreased by the net positive value of all
Hedging Instruments terminated with respect to the purchase of such Loan. To the extent the
Servicer does not reimburse itself for amounts, if any, in respect of the Servicing Advance
Reimbursement Amount pursuant to Section 5.01(c)(1) hereof, with respect to such Loan, the
Repurchase Price shall be reduced by such amounts.

     Reserve Interest Rate: With respect to any LIBOR Determination Date, the rate per annum that
the Initial Noteholder determines to be either (i) the arithmetic mean (rounded to the nearest
whole multiple of 1/16%) of the one-month U.S. dollar lending rates which New York City banks
selected by the Initial Noteholder are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market or (ii) in the event that
the Initial Noteholder can determine no such arithmetic mean, the lowest one-month U.S. dollar
lending rate which New York City banks selected by the Initial Noteholder are quoting on such LIBOR
Determination Date to leading European banks.

     Responsible Officer: When used with respect to the Indenture Trustee or Custodian, any officer
within the corporate trust office of such Person, including any Vice President, Assistant Vice
President, Secretary, Assistant Secretary or any other officer of such Person customarily
performing functions similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is referred because of
such officer’s knowledge of and familiarity with the particular subject. When used with respect to
the Issuer, any officer of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the date hereof (as such list may be modified or
supplemented from time to time thereafter) and, so long as the Administration Agreement is in
effect, any Vice President or more senior officer of the Administrator who is authorized to act for
the Administrator in matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on the list of Responsible Officers
delivered by the Administrator to the Owner Trustee on the date hereof (as such list may be
modified or supplemented from time to time thereafter). When used with respect to the Depositor,
the Loan Originator or the Servicer, the President, any Vice President, or the Treasurer.

     Retained Securities: With respect to a Securitization, any subordinated securities issued or
expected to be issued, or excess collateral value retained or expected to be retained, in

 

 

connection therewith to the extent the Depositor, the Loan Originator or an Affiliate thereof
retains, instead of sell, such securities.

     Retained Securities Value: With respect to any Business Day and a Retained Security, the
market value thereof as determined by the Market Value Agent in accordance with Section 6.03(d)
hereof.

     Revolving Period: With respect to the Notes, the period commencing on November 12, 2004 and
ending on the earlier of (i) 364 days after such date, and (ii) the date on which the Revolving
Period is terminated pursuant to Section 2.07.

     Sales Price: For any Transfer Date, the sum of the Collateral Values with respect to each Loan
conveyed on such Transfer Date as of such Transfer Date.

     S&SA Assignment: An Assignment, in the form of Exhibit C hereto, of Loans and other property
from the Depositor to the Issuer pursuant to this Agreement.

     Second Lien Loan: A Loan secured by the lien on the Mortgaged Property, subject to one Senior
Lien on such Mortgaged Property.

     Securities: The Notes and the Trust Certificates.

     Securities Intermediary: A “securities intermediary” as defined in Section 8-102(a)(14) of
the UCC that is holding a Trust Account for the Indenture Trustee as the sole “entitlement holder”
as defined in Section 8-102(a)(7) of the UCC.

     Securitization: A sale or transfer of Loans by the Issuer at the direction of the Majority
Noteholders to any other Person in order to effect one or a series of structured-finance
securitization transactions, including but not limited to transactions involving the issuance of
securities which may be treated for federal income tax purposes as indebtedness of Option One or
one or more of its wholly-owned subsidiaries.

     Securityholder: Any Noteholder or Certificateholder.

     Senior Lien: With respect to any Second Lien Loan, the mortgage loan having a senior priority
lien on the related Mortgaged Property.

     Servicer: Option One, in its capacity as the servicer hereunder, or any successor appointed
as herein provided.

     Servicer Call: The optional repurchase by the Servicer of a Loan pursuant to Section 3.08(b)
hereof.

     Servicer Event of Default: As described in Section 9.01 hereof.

     Servicer Put: The mandatory repurchase by the Servicer, at the option of the Majority
Noteholders, of a Loan pursuant to Section 3.08(a) hereof.

     Servicer’s Fiscal Year: May 1st of each year through April 30th of the
following year.

 

 

     Servicer’s Loan File: With respect to each Loan, the file held by the Servicer, consisting of
all documents (or electronic images thereof) relating to such Loan, including, without limitation,
copies of all of the Loan Documents included in the related Custodial Loan File.

     Servicer’s Remittance Report: A report prepared and computed by the Servicer in substantially
the form of Exhibit B attached hereto.

     Servicing Addendum: The terms and provisions set forth in Exhibit F attached hereto relating
to the administration and servicing of the Loans.

     Servicing Advance Reimbursement Amount: With respect to any Determination Date, the amount of
any Servicing Advances that have not been reimbursed as of such date, including Nonrecoverable
Servicing Advances.

     Servicing Advances: As defined in Section 4.14(b) of the Servicing Addendum.

     Servicing Compensation: The Servicing Fee and other amounts to which the Servicer is entitled
pursuant to Section 4.15 of the Servicing Addendum.

     Servicing Fee: As to each Loan (including any Loan that has been foreclosed and for which the
related Mortgaged Property has become a Foreclosure Property, but excluding any Liquidated Loan),
the fee payable monthly to the Servicer, which shall be the product of 0.50% (50 basis points), or
such other lower amount as shall be mutually agreed to in writing by the Majority Noteholders and
the Servicer, and the Principal Balance of such Loan as of the beginning of the related Remittance
Period, divided by 12. The Servicing Fee shall only be payable to the extent interest is collected
on a Loan.

     Servicing Officer: Any officer of the Servicer or Subservicer involved in, or responsible for,
the administration and servicing of the Loans whose name and specimen signature appears on a list
of servicing officers annexed to an Officer’s Certificate furnished by the Servicer or the
Subservicer, respectively, on the date hereof to the Issuer and the Indenture Trustee, on behalf of
the Noteholders, as such list may from time to time be amended.

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

     State: Means any one of the states of the United States of America or the District of
Columbia.

     Sub-performing Loan: Any Loan which is 31 to 90 days Delinquent.

     Subservicer: Any Person with which the Servicer has entered into a Subservicing Agreement and
which is an Eligible Servicer and satisfies any requirements set forth in Section 4.22 of the
Servicing Addendum in respect of the qualifications of a Subservicer.

     Subservicing Account: An account established by a Subservicer pursuant to a Subservicing
Agreement, which account must be an Eligible Account.

 

 

     Subservicing Agreement: Any agreement between the Servicer and any Subservicer relating to
subservicing and/or administration of any or all Loans as provided in Section 4.22 in the Servicing
Addendum.

     Subsidiary: With respect to any Person, any corporation, partnership or other entity of which
at least a majority of the securities or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors or other persons performing
similar functions of such corporation, partnership or other entity (irrespective of whether or not
at the time securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.

     Substitution Adjustment: As to any date on which a substitution occurs pursuant to Section
2.05 or Section 3.06 hereof, the amount, if any, by which (a) the aggregate principal balance of
any Qualified Substitute Loans (after application of principal payments received on or before the
related Transfer Cut-off Date) is less than (b) the aggregate of the Principal Balances of the
related Deleted Loans as of the first day of the month in which such substitution occurs.

     Tangible Net Worth: With respect to any Person, as of any date of determination, the
consolidated Net Worth of such Person and its Subsidiaries, less the consolidated net book value of
all assets of such Person and its Subsidiaries (to the extent reflected as an asset in the balance
sheet of such Person or any Subsidiary at such date) which will be treated as intangibles under
GAAP, including, without limitation, such items as deferred financing expenses, net leasehold
improvements, good will, trademarks, trade names, service marks, copyrights, patents, licenses and
unamortized debt discount and expense; provided, that residual securities issued by such Person or
its Subsidiaries shall not be treated as intangibles for purposes of this definition.

     Termination Price: As of any Determination Date, an amount without duplication equal to the
greater of (A) the Note Redemption Amount and (B) the sum of (i) the Principal Balance of each Loan
included in the Trust as of the end of the preceding Remittance Period; (ii) all unpaid interest
accrued on the Principal Balance of each such Loan at the related Loan Interest Rate to the end of
the preceding Remittance Period; and (iii) the aggregate fair market value of each Foreclosure
Property included in the Trust as of the end of the preceding Remittance Period, as determined by
an Independent appraiser acceptable to the Majority Noteholders as of a date not more than 30 days
prior to such Payment Date.

     Transfer Cut-off Date: With respect to each Loan, (i) the first day of the month in which the
Transfer Date with respect to such Loan occurs or if originated in such month, the date of
origination or (ii) in the case of a purchase from a QSPE Affiliate, unless otherwise specified in
the confirmation delivered in accordance with the Master Disposition Confirmation Agreement in
connection with such purchase, the related Transfer Date.

     Transfer Cut-off Date Principal Balance: As to each Loan, its Principal Balance as of the
opening of business on the Transfer Cut-off Date (after giving effect to any payments received on
the Loan before the Transfer Cut-off Date).

 

 

     Transfer Date: With respect to each Loan, the day such Loan is either (i) sold and conveyed
to the Depositor by the Loan Originator pursuant to the Loan Purchase and Contribution Agreement
and to the Issuer by the Depositor pursuant to Section 2.01 hereof or (ii) sold to the Issuer
pursuant to the Master Disposition Confirmation Agreement, which results in an increase in the Note
Principal Balance by the related Additional Note Principal Balance. With respect to any Qualified
Substitute Loan, the Transfer Date shall be the day such Loan is conveyed to the Trust pursuant to
Section 2.05 or 3.06.

     Transfer Obligation: The obligation of the Loan Originator under Section 5.06 hereof to make
certain payments in connection with Dispositions and other related matters.

     Transfer Obligation Account: The account designated as such, established and maintained
pursuant to Section 5.05 hereof.

     Transfer Obligation Target Amount: With respect to any Payment Date, the cumulative total of
all withdrawals pursuant to Section 5.05(e), 5.05(f), 5.05(g), and 5.05(h) hereof from the Transfer
Obligation Account to but not including such Payment Date minus any amount withdrawn from the
Transfer Obligation Account to return to the Loan Originator pursuant to Section 5.05(i)(i).

     Trust: Option One Owner Trust 2003-5, the Delaware statutory trust created pursuant to the
Trust Agreement.

     Trust Agreement: The Trust Agreement dated as of November 1, 2003 between the Depositor and
the Owner Trustee.

     Trust Account Property: The Trust Accounts, all amounts and investments held from time to
time in the Trust Accounts and all proceeds of the foregoing.

     Trust Accounts: The Distribution Account, the Collection Account and the Transfer Obligation
Account.

     Trust Certificate: The meaning assigned thereto in the Trust Agreement.

     Trust Estate: Shall mean the assets subject to this Agreement, the Trust Agreement and the
Indenture and assigned to the Trust, which assets consist of: (i) such Loans as from time to time
are subject to this Agreement as listed in the Loan Schedule, as the same may be amended or
supplemented on each Transfer Date and by the removal of Deleted Loans and Unqualified Loans and by
the addition of Qualified Substitute Loans, together with the Servicer’s Loan Files and the
Custodial Loan Files relating thereto and all proceeds thereof, (ii) the Mortgages and security
interests in the Mortgaged Properties, (iii) all payments in respect of interest and principal with
respect to each Loan received on or after the related Transfer Cut-off Date, (iv) such assets as
from time to time are identified as Foreclosure Property, (v) such assets and funds as are from
time to time deposited in the Distribution Account, Collection Account and the Transfer Obligation
Account, including, without limitation, amounts on deposit in such accounts that are invested in
Permitted Investments, (vi) lenders’ rights under all Mortgage Insurance Policies and to any
Mortgage Insurance Proceeds, (vii) Net Liquidation Proceeds and Released Mortgaged Property
Proceeds, (viii) all right, title and interest of the Trust (but none of the

 

 

obligations) in and to the obligations of Hedging Counterparties under Hedging Instruments and
(ix) all right, title and interest of each of the Depositor, the Loan Originator and the Trust in
and under the Basic Documents including, without limitation, the obligations of the Loan Originator
under the Loan Purchase and Contribution Agreement and/or the Master Disposition Confirmation
Agreement, and all proceeds of any of the foregoing.

     Trust Fees and Expenses: As of each Payment Date, an amount equal to the Servicing
Compensation, the Owner Trustee Fee, the Indenture Trustee Fee and the Custodian Fee, if any, and
any expenses of the Servicer, the Owner Trustee, the Indenture Trustee or the Custodian.

     UCC: The Uniform Commercial Code as in effect from time to time in the State of New York.

     UCC Assignment: A form “UCC 2” or “UCC 3” statement meeting the requirements of the Uniform
Commercial Code of the relevant jurisdiction to reflect an assignment of a secured party’s interest
in collateral.

     UCC-1 Financing Statement: A financing statement meeting the requirements of the Uniform
Commercial Code of the relevant jurisdiction.

     Underwriting Guidelines: The underwriting guidelines (including the loan origination
guidelines) of the Loan Originator, as the same may be amended from time to time with notice to the
Initial Noteholder.

     Unfunded Transfer Obligation: With respect to any date of determination, an amount equal to
(x) the sum of (A) 10% of the aggregate Collateral Value (as of the related Transfer Date) of all
Loans sold hereunder, plus (B) any amounts withdrawn from the Transfer Obligation Account for
return to the Loan Originator pursuant to Section 5.05(i)(i) hereof prior to such Payment Date,
less (y) the sum of (i) the aggregate amount of payments actually made by the Loan Originator in
respect of the Transfer Obligation pursuant to Section 5.06, (ii) the amount obtained by
multiplying (a) the Unfunded Transfer Obligation Percentage immediately prior to a Disposition by
(b) the aggregate Collateral Value (as of the related date of such Disposition) of all Loans that
have been subject to such Disposition and (iii) without duplication, the aggregate amount of the
Repurchase Prices paid by the Servicer in respect of any Servicer Puts.

     Unfunded Transfer Obligation Percentage: As of any date of determination, an amount equal to
(x) the Unfunded Transfer Obligation as of such date, divided by (y) 100% of the aggregate
Collateral Values as of the related Transfer Date of all Loans in the Loan Pool.

     Unqualified Loan: As defined in Section 3.06(a) hereof.

     Wet Funded Custodial File Delivery Date: With respect to a Wet Funded Loan, the fifteenth day
after the related Transfer Date, provided that if a Default or Event of Default shall have
occurred, the Wet Funded Custodial File Delivery Date shall be the earlier of (x) such fifteenth
day and (y) the fifth day after the occurrence of such event.

     Wet Funded Loan: A Loan for which the related Custodial Loan File shall not have been
delivered to the Custodian as of the related Transfer Date.

 

 

     Whole Loan Sale: A Disposition of Loans pursuant to a whole-loan sale.

Section 1.02 Other Definitional Provisions.

          (a) Any agreement, instrument or statute defined or referred to herein or in any instrument or
certificate delivered in connection herewith means such agreement, instrument or statute as from
time to time amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments incorporated therein; references
to a Person are also to its permitted successors and assigns.

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

          (c) As used in this Agreement and in any certificate or other document made or delivered
pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such
certificate or other document, and accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the respective meanings given
to them under GAAP. To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of such terms under GAAP,
the definitions contained in this Agreement or in any such certificate or other document shall
control.

          (d) The words “hereof,” “herein,” “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement; Article, Section, Schedule and Exhibit references contained in this Agreement are
references to Articles, Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term “including” shall mean “including without limitation.”

          (e) The definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and neuter genders of
such terms.

ARTICLE II

CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE PRINCIPAL BALANCES

Section 2.01 Conveyance of the Trust Estate; Additional Note Principal Balances.

          (a) (i) On the terms and conditions of this Agreement, on each Transfer Date during the
Revolving Period, the Depositor agrees to offer for sale and to sell a portion of each of the Loans
and contribute to the capital stock of the Issuer the balance of each of the Loans and deliver the
related Loan Documents to or at the direction of the Issuer. To the extent the Issuer has or is
able to obtain sufficient funds under the Note Purchase Agreement and the Notes for the
purchase thereof, the Issuer agrees to purchase such Loans offered for sale by the Depositor.
On the terms and conditions of this Agreement and the Master Disposition Confirmation Agreement, on
each Transfer Date during the Revolving Period, the Issuer may acquire Loans from another

 

 

QSPE Affiliate of the Loan Originator to the extent the Issuer has or is able to obtain sufficient funds
for the purchase thereof.

               (ii) In consideration of the payment of the Additional Note Principal Balance
pursuant to Section 2.06 hereof and as a contribution to the assets of the Issuer,
the Depositor as of the related Transfer Date and concurrently with the execution
and delivery hereof, hereby sells, transfers, assigns, sets over and otherwise
conveys to the Issuer, without recourse, but subject to the other terms and
provisions of this Agreement, all of the right, title and interest of the Depositor
in and to the Trust Estate.

               (iii) During the Revolving Period, on each Transfer Date, subject to the
conditions precedent set forth in Section 2.06 and in accordance with the procedures
set forth in Section 2.01(c), the Depositor, pursuant to an S&SA Assignment, will
assign to the Issuer without recourse all of its respective right, title and
interest, in and to the Loans and all proceeds thereof listed on the Loan Schedule
attached to such S&SA Assignment, including all interest and principal received by
the Loan Originator, the Depositor or the Servicer on or with respect to the Loans
on or after the related Transfer Cut-off Date, together with all right, title and
interest in and to the proceeds of any related Mortgage Insurance Policies and all
of the Depositor’s rights, title and interest in and to (but none of its obligations
under) the Loan Purchase and Contribution Agreement and all proceeds of the
foregoing.

               (iv) The foregoing sales, transfers, assignments, set overs and conveyances do
not, and are not intended to, result in a creation or an assumption by the Issuer of
any of the obligations of the Depositor, the Loan Originator or any other Person in
connection with the Trust Estate or under any agreement or instrument relating
thereto except as specifically set forth herein.

          (b) As of the Closing Date and as of each Transfer Date, the Issuer acknowledges (or will
acknowledge pursuant to the S&SA Assignment) the conveyance to it of the Trust Estate, including
all rights, title and interest of the Depositor and any QSPE Affiliate in and to the Trust Estate,
receipt of which is hereby acknowledged by the Issuer. Concurrently with such delivery, as of the
Closing Date and as of each Transfer Date, pursuant to the Indenture the Issuer pledges the Trust
Estate to the Indenture Trustee. In addition, concurrently with such delivery and in exchange
therefor, the Owner Trustee, pursuant to the instructions of the Depositor, has executed (not in
its individual capacity, but solely as Owner Trustee on behalf of the Issuer) and caused the Trust
Certificates to be authenticated and delivered to or at the direction of the Depositor.

          (c) (i) Pursuant to and subject to the Note Purchase Agreement, the Trust may, at its sole
option, from time to time request that the Initial Noteholder advance on any Transfer Date
Additional Note Principal Balances and the Initial Noteholder shall remit on such Transfer Date, to
the Advance Account, an amount equal to the Additional Note Principal
Balance. In addition, if the Issuer increases the Collateral Percentage of any Mortgage Loan
to a percentage specified in the Pricing Letter pursuant to the definition of “Collateral
Percentage” on any date following the related Transfer Date (any such date, a “Collateral Value
Increase Date”),

 

 

the Issuer may request that the Initial Noteholder advance Additional Note
Principal Balances equal to such increase in the Collateral Percentage of such Loan and the Initial
Noteholder may, in its sole discretion, make such advance of Additional Note Principal Balances.

               (ii) Notwithstanding anything to the contrary herein, in no event shall the
Initial Noteholder be required to advance Additional Note Principal Balances on a
Transfer Date or Collateral Value Increase Date if the conditions precedent to a
transfer of the Loans under Section 2.06 and the conditions precedent to the
purchase of Additional Note Principal Balances set forth in Section 3.01 of the Note
Purchase Agreement have not been fulfilled.

               (iii) The Servicer shall appropriately note such Additional Note Principal
Balance (and the increased Note Principal Balance) in the next succeeding Payment
Statement; provided, however, that failure to make any such notation in such Payment
Statement or any error in such notation shall not adversely affect any Noteholder’s
rights with respect to its Note Principal Balance and its right to receive interest
and principal payments in respect of the Note Principal Balance held by such
Noteholder. The Initial Noteholder shall record on the schedule attached to such
Noteholder’s Note, the date and amount of any Additional Note Principal Balance
advanced by it; provided, that failure to make such recordation on such schedule or
any error in such schedule shall not adversely affect any Noteholder’s rights with
respect to its Note Principal Balance and its right to receive interest payments in
respect of the Note Principal Balance held by such Noteholder.

               (iv) Absent manifest error, the Note Principal Balance of each Note as set
forth in the Initial Noteholder’s records shall be binding upon the Noteholders and
the Trust, notwithstanding any notation made by the Servicer in its Payment
Statement pursuant to the preceding paragraph.

Section 2.02 Ownership and Possession of Loan Files.

          With respect to each Loan, as of the related Transfer Date the ownership of the related
Promissory Note, the related Mortgage and the contents of the related Servicer’s Loan File and
Custodial Loan File shall be vested in the Trust for the benefit of the Securityholders, although
possession of the Servicer’s Loan File on behalf of and for the benefit of the Securityholders
shall remain with the Servicer, and the Custodian shall take possession of the Custodial Loan Files
as contemplated in Section 2.05 hereof.

Section 2.03 Books and Records; Intention of the Parties.

          (a) As of each Transfer Date, the sale of each of the Loans conveyed by the Depositor on such
Transfer Date shall be reflected on the balance sheets and other financial
statements of the Depositor and the Loan Originator, as the case may be, as a sale of assets
and a contribution to capital by the Loan Originator and the Depositor, as applicable, under GAAP.
Each of the Servicer and the Custodian shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Loan which shall be clearly marked to reflect the

 

 

ownership of each Loan, as of the related Transfer Date, by the Issuer and for the benefit of the
Securityholders.

          (b) It is the intention of the parties hereto that, other than for federal, state and local
income or franchise tax purposes, the transfers and assignments of the Trust Estate on the initial
Closing Date, on each Transfer Date and as otherwise contemplated by the Basic Documents and the
Assignments shall constitute a sale of the Trust Estate including, without limitation, the Loans
and all other property comprising the Trust Estate specified in Section 2.01(a) hereof, from the
Depositor to the Issuer and such property shall not be property of the Depositor. The parties
hereto shall treat the Notes as indebtedness for federal, state and local income and franchise tax
purposes.

          (c) Each transfer and assignment contemplated by this Agreement shall constitute a sale in
part, and a contribution to capital in part, of the Loans from the Depositor to the Issuer. Upon
the consummation of those transactions the Loans shall be owned by and the property of the Issuer,
and not owned by or otherwise the property of, the Depositor for any purpose including without
limitation any bankruptcy, receivership, insolvency, liquidation, conservatorship or similar
proceeding relating to either the Depositor or the Issuer or any property of either. The parties
hereto hereby acknowledge that the Issuer and its creditors are relying, and its subsequent
transferees and their creditors will rely, on such sales and contributions being recognized as
such. If (A) any transfer and assignment contemplated hereby is subsequently determined for any
reason under any circumstances to constitute a transfer to secure a loan rather than a sale in
part, and a contribution in part, of the Loans or (B) any Loan is otherwise held to be property of
the Depositor, then this Agreement (i) is and shall be a security agreement within the meaning of
Articles 8 and 9 of the applicable Uniform Commercial Code and (ii) shall constitute a grant by the
Depositor to the Issuer of a security interest in all of the Depositor’s right, title and other
interest in and to the Loans and the proceeds and other distributions and payments and general
intangibles and other rights and benefits in respect thereof. For purposes of perfecting that
security interest under any applicable Uniform Commercial Code, the possession by, and notices and
other communications with respect thereto to and from, the Issuer or any agent thereof, of money,
notes and other documents evidencing ownership of and other rights with respect to the Loans shall
be “possession” by the secured party or purchaser and required notices and other communications to
and from applicable financial intermediaries, bailees and other agents.

          (d) The Depositor at its expense shall take such actions as may be necessary or reasonably
requested by the Issuer to ensure the perfection, and priority to all other security interests, of
the security interest described in the preceding paragraph including without limitation the
execution and delivery of such financing statements and amendments thereto, continuation statements
and other documents as the Issuer may reasonably request.

Section 2.04 Delivery of Loan Documents.

          (a) The Loan Originator shall, prior to the related Transfer Date (or, in the case of each Wet
Funded Loan, the related Wet Funded Custodial File Delivery Date), in accordance with the terms and
conditions set forth in the Custodial Agreement, deliver or cause to be delivered to the Custodian,
as the designated agent of the Indenture Trustee, a Loan

 

 

Schedule and each of the documents constituting the Custodial Loan File with respect to each Loan. The Loan Originator shall assure
that (i) in the event that any Wet Funded Loan is not closed and funded to the order of the
appropriate Borrower on the day funds are provided to the Loan Originator by the Initial Noteholder
on behalf of the Issuer, such funds shall be promptly returned to the Initial Noteholder on behalf
of the Issuer and (ii) in the event that any Wet Funded Loan is subject to a recission, all funds
received in connection with such recission shall be promptly returned to the Initial Noteholder on
behalf of the Issuer.

          (b) The Loan Originator shall, on the related Transfer Date (or in the case of a Wet Funded
Loan, on or before the related Wet Funded Custodial File Delivery Date), deliver or cause to be
delivered to the Servicer the related Servicer’s Loan File (i) for the benefit of, and as agent
for, the Noteholders and (ii) for the benefit of the Indenture Trustee, on behalf of the
Noteholders, for so long as the Notes are outstanding; after the Notes are not outstanding, the
Servicer’s Loan File shall be held in the custody of the Servicer for the benefit of, and as agent
for, the Certificateholders.

          (c) The Indenture Trustee shall cause the Custodian to take and maintain continuous physical
possession of the Custodial Loan Files in the State of California (or upon prior written notice
from the Custodian to the Loan Originator and the Initial Noteholder and delivery of an Opinion of
Counsel with respect to the continued perfection of the Indenture Trustee’s security interest, in
the State of Minnesota or Utah) and, in connection therewith, shall act solely as agent for the
Noteholders in accordance with the terms hereof and not as agent for the Loan Originator, the
Servicer or any other party.

	Section 2.05 Acceptance by the Indenture Trustee of the Loans; Certain Substitutions and
Repurchases; Certification by the Custodian.

          (a) The Indenture Trustee declares that it will cause the Custodian to hold the Custodial Loan
Files and any additions, amendments, replacements or supplements to the documents contained
therein, as well as any other assets included in the Trust Estate and delivered to the Custodian,
in trust, upon and subject to the conditions set forth herein. The Indenture Trustee further agrees
to cause the Custodian to execute and deliver such certifications as are required under the
Custodial Agreement and to otherwise direct the Custodian to perform all of its obligations with
respect to the Custodial Loan Files in strict accordance with the terms of the Custodial Agreement.

          (b) (i) With respect to any Loans which are set forth as exceptions in the Exceptions Report,
the Loan Originator shall cure such exceptions by delivering such missing documents to the
Custodian or otherwise curing the defect no later than, in the case of (x) a non-Wet Funded Loan, 5
Business Days, or (y) in the case of a Wet Funded Loan one Business Day after the Wet Funded Custodial File Delivery Date, in each case, following the receipt of
the first Exceptions Report listing such exception with respect to such Loan.

               (ii) In the event that, with respect to any Loan, the Loan Originator does not
comply with the document delivery requirements of this Section 2.05 and such failure
has a material adverse effect on the value or enforceability of any Loan or the
interests of the Securityholders in any Loan, the Loan Originator shall repurchase
such Loan within one Business Day of notice thereof from the

 

 

Indenture Trustee or the Initial Noteholder at the Repurchase Price thereof with respect to such Loan by
depositing such Repurchase Price in the Collection Account. In lieu of such a
repurchase, the Depositor and Loan Originator may comply with the substitution
provisions of Section 3.06 hereof. The Loan Originator shall provide the Servicer,
the Indenture Trustee, the Issuer and the Initial Noteholder with a certification of
a Responsible Officer on or prior to such repurchase or substitution indicating that
the Loan Originator intends to repurchase or substitute such Loan.

               (iii) It is understood and agreed that the obligation of the Loan Originator to
repurchase or substitute any such Loan pursuant to this Section 2.05(b) shall
constitute the sole remedy with respect to such failure to comply with the foregoing
delivery requirements.

          (c) In performing its reviews of the Custodial Loan Files pursuant to the Custodial Agreement,
the Custodian shall have no responsibility to determine the genuineness of any document contained
therein and any signature thereon. The Custodian shall not have any responsibility for determining
whether any document is valid and binding, whether the text of any assignment or endorsement is in
proper or recordable form, whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction.

          (d) The Servicer’s Loan File shall be held in the custody of the Servicer (i) for the benefit
of, and as agent for, the Noteholders and (ii) for the benefit of the Indenture Trustee, on behalf
of the Noteholders, for so long as the Notes are outstanding; after the Notes are not outstanding,
the Servicer’s Loan File shall be held in the custody of the Servicer for the benefit of, and as
agent for, the Certificateholders. It is intended that, by the Servicer’s agreement pursuant to
this Section 2.05(d), the Indenture Trustee shall be deemed to have possession of the Servicer’s
Loan Files for purposes of Section 9-313 of the Uniform Commercial Code of the state in which such
documents or instruments are located. The Servicer shall promptly report to the Indenture Trustee
any failure by it to hold the Servicer’s Loan File as herein provided and shall promptly take
appropriate action to remedy any such failure. In acting as custodian of such documents and
instruments, the Servicer agrees not to assert any legal or beneficial ownership interest in the
Loans or such documents or instruments. Subject to Section 8.01(d), the Servicer agrees to
indemnify the Securityholders and the Indenture Trustee, their officers, directors, employees,
agents and “control persons” as such term is used under the Act and under the Securities Exchange
Act of 1934, as amended for any and all liabilities, obligations, losses, damages, payments, costs
or expenses of any kind whatsoever which may be imposed on, incurred by or asserted against the
Securityholders or the Indenture Trustee as the result of the negligence or willful misfeasance by
the Servicer relating to the maintenance and custody of such documents or instruments which have been delivered to the Servicer; provided, however,
that the Servicer will not be liable for any portion of any such amount resulting from the
negligence or willful misconduct of any Securityholders or the Indenture Trustee; and provided,
further, that the Servicer will not be liable for any portion of any such amount resulting from the
Servicer’s compliance with any instructions or directions consistent with this Agreement issued to
the Servicer by the Indenture Trustee or the Majority Noteholders. The Indenture Trustee shall

 

 

have no duty to monitor or otherwise oversee the Servicer’s performance as custodian of the Servicer
Loan File hereunder.

Section 2.06 Conditions Precedent to Transfer Dates and Collateral Value Increase Dates.

          Two (2) Business Days prior to each Transfer Date, the Issuer shall give notice to the Initial
Noteholder of such upcoming Transfer Date and provide the Initial Noteholder (i) an estimate of the
number of Loans and aggregate Principal Balance of such Loans to be transferred on such Transfer
Date and (ii) a final Loan Schedule with respect to the Loans to be transferred on such Transfer
Date. By no later than 12:00 noon New York City time on the Business Day preceding each Transfer
Date, in the case of non-Wet Funded Loans, the Issuer shall have delivered the Custodial Loan File
to the Custodian in accordance with the Custodial Agreement and the Initial Noteholder shall have
received a copy of the Trust Receipt and Exceptions Report reflecting such delivery. On each
Transfer Date, the Depositor or the applicable QSPE Affiliate shall convey to the Issuer, the Loans
and the other property and rights related thereto described in the related S&SA Assignment, and the
Issuer, only upon the satisfaction of each of the conditions set forth below on or prior to such
Transfer Date or Collateral Value Increase Date, shall deposit or cause to be deposited cash in the
amount of the Additional Note Principal Balance received from the Initial Noteholder in the Advance
Account in respect thereof, and the Servicer shall, promptly after such deposit, withdraw the
amount deposited in respect of applicable Additional Note Principal Balance from the Advance
Account, and distribute such amount to or at the direction of the Depositor or the applicable QSPE
Affiliate.

     As of the Closing Date, each Transfer Date and, as applicable, each Collateral Value Increase
Date:

     (i) the Depositor, the QSPE Affiliate and the Servicer, as applicable, shall have delivered to
the Issuer and the Initial Noteholder duly executed Assignments, which shall have attached thereto
a Loan Schedule setting forth the appropriate information with respect to all Loans conveyed on
such Transfer Date and shall have delivered to the Initial Noteholder a computer readable
transmission of such Loan Schedule;

     (ii) the Depositor shall have deposited, or caused to be deposited, in the Collection Account
all collections received with respect to each of the Loans on and after the applicable Transfer
Cut-off Date;

     (iii) as of such Transfer Date or Collateral Value Increase Date, neither the Loan Originator,
the Depositor or the QSPE Affiliate, as applicable, shall (A) be insolvent, (B) be made insolvent
by its respective sale of Loans or (C) have reason to believe that its insolvency is imminent;

     (iv) the Revolving Period shall not have terminated;

     (v) as of such Transfer Date or Collateral Value Increase Date (after giving effect to the
sale of Loans on such Transfer Date), there shall be no Overcollateralization Shortfall;

     (vi) Reserved;

 

 

     (vii) each of the representations and warranties made by the Loan Originator contained in
Exhibit E with respect to the Loans shall be true and correct in all material respects as of the
related Transfer Date with the same effect as if then made and the proviso set forth in Section
3.05 with respect to Loans sold by a QSPE Affiliate shall not be applicable to any Loans, and the
Depositor or the QSPE Affiliate, as applicable, shall have performed all obligations to be
performed by it under the Basic Documents on or prior to such Transfer Date or Collateral Value
Increase Date;

     (viii) the Depositor or the QSPE Affiliate shall, at its own expense, within one Business Day
following the Transfer Date, indicate in its computer files that the Loans identified in each S&SA
Assignment have been sold to the Issuer pursuant to this Agreement and the S&SA Assignment;

     (ix) the Depositor or the QSPE Affiliate shall have taken any action requested by the
Indenture Trustee, the Issuer or the Noteholders required to maintain the ownership interest of the
Issuer in the Trust Estate;

     (x) no selection procedures believed by the Depositor or the QSPE Affiliate to be adverse to
the interests of the Noteholders shall have been utilized in selecting the Loans to be conveyed on
such Transfer Date;

     (xi) the Depositor shall have provided the Issuer, the Indenture Trustee and the Initial
Noteholder no later than two Business Days prior to such date a notice of Additional Note Principal
Balance in the form of Exhibit A hereto;

     (xii) after giving effect to the Additional Note Principal Balance associated therewith, the
Note Principal Balance will not exceed the Maximum Note Principal Balance;

     (xiii) all conditions precedent to the Depositor’s purchase of Loans pursuant to the Loan
Purchase and Contribution Agreement shall have been fulfilled as of such Transfer Date and, in the
case of purchases from a QSPE Affiliate, all conditions precedent to the Issuer’s purchase of Loans
pursuant to the Master Disposition Confirmation Agreement shall have been fulfilled as of such
Transfer Date;

     (xiv) all conditions precedent to the Noteholders’ purchase of Additional Note Principal
Balance pursuant to the Note Purchase Agreement shall have been fulfilled as of such Transfer Date
or Collateral Value Increase Date; and

     (xv) with respect to each Loan acquired from any QSPE Affiliate that has a limited right of
recourse to the Loan Originator under the terms of the applicable loan purchase agreement, the Loan
Originator has not been required to pay any amount to or on behalf of such QSPE Affiliate that
lowered the recourse to the Loan Originator available to such QSPE Affiliate below the maximum recourse to the Loan Originator available to such QSPE Affiliate under the
terms of the related loan purchase contract providing for recourse by that QSPE Affiliate to the
Loan Originator.

Section 2.07 Termination of Revolving Period.

 

 

          Upon the occurrence of (i) an Event of Default or Default or (ii) a Rapid Amortization Trigger
or (iii) the Unfunded Transfer Obligation Percentage equals 4% or less or (iv) Option One or any of
its Affiliates shall default under, or fail to perform as requested under, or shall otherwise
materially breach the terms of any repurchase agreement, loan and security agreement or similar
credit facility or agreement entered into by Option One or any of its Affiliates, including the
Sale and Servicing Agreement, dated as of April 1, 2001, among the Option One Owner Trust 2001-1A,
the Depositor, Option One and the Indenture Trustee, the Sale and Servicing Agreement, dated as of
April 1, 2001, among the Option One Owner Trust 2001-1B, the Depositor, Option One and the
Indenture Trustee, the Sale and Servicing Agreement, dated as of July 2, 2002, among the Option One
Owner Trust 2002-3, the Depositor, Option One and the Indenture Trustee and the Sale and Servicing
Agreement, dated as of August 8, 2003, among the Option One Owner Trust 2003-4, the Depositor,
Option One and the Indenture Trustee, and such default, failure or breach shall entitle any
counterparty to declare the Indebtedness thereunder to be due and payable prior to the maturity
thereof or (v) the delivery of written notice by the Initial Noteholder to the Servicer on or
before December 3, 2003 (or such other date to which the Servicer and the Initial Noteholder may
agree) to the effect that the condition specified in Section 3.01(a)(viii) of the Note Purchase
Agreement has not been met, the Initial Noteholder may, in any such case, in its sole discretion,
terminate the Revolving Period.

Section 2.08 Correction of Errors.

          The parties hereto who have relevant information shall cooperate to reconcile any errors in
calculating the Sales Price from and after the Closing Date. In the event that an error in the
Sales Price is discovered by either party, including without limitation, any error due to
miscalculations of Market Value where insufficient information has been provided with respect to a
Loan to make an accurate determination of Market Value as of any applicable Transfer Date, any
miscalculations of Principal Balance, accrued interest, Overcollateralization Shortfall or
aggregate unreimbursed Servicing Advances attributable to the applicable Loan, or any prepayments
not properly credited, such party shall give prompt notice to the other parties hereto, and the
party that shall have benefited from such error shall promptly remit to the other, by wire transfer
of immediately available funds, the amount of such error with no interest thereon.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.01 Representations and Warranties of the Depositor.

          The Depositor hereby represents, warrants and covenants to the other parties hereto and the
Securityholders that as of the Closing Date and as of each Transfer Date:

          (a) The Depositor is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has, and had at all relevant times, full power
to own its property, to carry on its business as currently conducted, to enter into and perform its
obligations under each Basic Document to which it is a party;

 

 

          (b) The execution and delivery by the Depositor of each Basic Document to which the Depositor
is a party and its performance of and compliance with all of the terms thereof will not violate the
Depositor’s organizational documents or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in the breach or acceleration
of, any material contract, agreement or other instrument to which the Depositor is a party or which
are applicable to the Depositor or any of its assets;

          (c) The Depositor has the full power and authority to enter into and consummate the
transactions contemplated by each Basic Document to which the Depositor is a party, has duly
authorized the execution, delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is a party; each Basic Document
to which it is a party, assuming due authorization, execution and delivery by the other party or
parties thereto, constitutes a valid, legal and binding obligation of the Depositor, enforceable
against it in accordance with the terms thereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to
or affecting the rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

          (d) The Depositor is not in violation of, and the execution and delivery by the Depositor of
each Basic Document to which the Depositor is a party and its performance and compliance with the
terms of each Basic Document to which the Depositor is a party will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations of the Depositor or any of
its properties or materially and adversely affect the performance of any of its duties hereunder;

          (e) There are no actions or proceedings against, or investigations of, the Depositor currently
pending with regard to which the Depositor has received service of process and no action or
proceeding against, or investigation of, the Depositor is, to the knowledge of the Depositor,
threatened or otherwise pending before any court, administrative agency or other tribunal that (A)
if determined adversely to the Depositor, would prohibit its entering into any of the Basic
Documents to which it is a party or render the Securities invalid, (B) seek to prevent the issuance
of the Securities or the consummation of any of the transactions contemplated by any of the Basic
Documents to which it is a party or (C) if determined adversely to the Depositor, would prohibit or
materially and adversely affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, any of the Basic Documents to which it is a party or the Securities;

          (f) No consent, approval, authorization or order of any court or governmental agency or body
is required for the execution, delivery and performance by the Depositor of, or compliance by the
Depositor with, any of the Basic Documents to which the Depositor is a party or the Securities, or
for the consummation of the transactions contemplated by any of the Basic Documents to which the
Depositor is a party, except for such consents, approvals, authorizations and orders, if any, that
have been obtained prior to such date;

 

 

          (g) The Depositor 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; it will not be rendered
insolvent by the execution and delivery of any of the Basic Documents to which it is a party or the
assumption of any of its obligations thereunder; no petition of bankruptcy (or similar insolvency
proceeding) has been filed by or against the Depositor;

          (h) The Depositor did not transfer the Loans sold thereon by the Depositor to the Trust with
any intent to hinder, delay or defraud any of its creditors; nor will the Depositor be rendered
insolvent as a result of such sale;

          (i) The Depositor had good title to, and was the sole owner of, each Loan sold thereon by the
Depositor free and clear of any lien other than any such lien released simultaneously with the sale
contemplated herein, and, immediately upon each transfer and assignment herein contemplated, the
Depositor will have delivered to the Trust good title to, and the Trust will be the sole owner of,
each Loan transferred by the Depositor thereon free and clear of any lien;

          (j) The Depositor acquired title to each of the Loans sold thereon by the Depositor in good
faith, without notice of any adverse claim;

          (k) None of the Basic Documents to which the Depositor is a party, nor any Officer’s
Certificate, statement, report or other document prepared by the Depositor and furnished or to be
furnished by it pursuant to any of the Basic Documents to which it is a party or in connection with
the transactions contemplated thereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained herein or therein not misleading;

          (l) The Depositor is not required to be registered as an “investment company,” under the
Investment Company Act of 1940, as amended;

          (m) The transfer, assignment and conveyance of the Loans by the Depositor thereon pursuant to
this Agreement is not subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction;

          (n) The Depositor’s principal place of business and chief executive offices are located at
Irvine, California or at such other address as shall be designated by such party in a written
notice to the other parties hereto;

          (o) The Depositor covenants that during the continuance of this Agreement it will comply in
all respects with the provisions of its organizational documents in effect from time to time; and

          (p) The representations and warranties set forth in (h), (i), (j) and (m) above were true and
correct (with respect to the applicable QSPE Affiliate) with respect to each Loan transferred to
the Trust by any QSPE Affiliate at the time such Loan was transferred to a QSPE Affiliate.

Section 3.02 Representations and Warranties of the Loan Originator.

 

 

          The Loan Originator hereby represents and warrants to the other parties hereto and the
Securityholders that as of the Closing Date and as of each Transfer Date:

          (a) The Loan Originator is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and (i) is duly qualified, in good standing
and licensed to carry on its business in each state where any Mortgaged Property related to a Loan
sold by it is located and (ii) is in compliance with the laws of any such jurisdiction, in both
cases, to the extent necessary to ensure the enforceability of such Loans in accordance with the
terms thereof and had at all relevant times, full corporate power to originate such Loans, to own
its property, to carry on its business as currently conducted and to enter into and perform its
obligations under each Basic Document to which it is a party;

          (b) The execution and delivery by the Loan Originator of each Basic Document to which it is a
party and its performance of and compliance with the terms thereof will not violate the Loan
Originator’s articles of organization or by-laws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result in the breach or
acceleration of, any contract, agreement or other instrument to which the Loan Originator is a
party or which may be applicable to the Loan Originator or any of its assets;

          (c) The Loan Originator has the full power and authority to enter into and consummate all
transactions contemplated by the Basic Documents to be consummated by it, has duly authorized the
execution, delivery and performance of each Basic Document to which it is a party and has duly
executed and delivered each Basic Document to which it is a party; each Basic Document to which it
is a party, assuming due authorization, execution and delivery by each of the other parties
thereto, constitutes a valid, legal and binding obligation of the Loan Originator, enforceable
against it in accordance with the terms hereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to
or affecting the rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

          (d) The Loan Originator is not in violation of, and the execution and delivery of each Basic
Document to which it is a party by the Loan Originator and its performance and compliance with the
terms of each Basic Document to which it is a party will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of the Loan Originator or its properties or
materially and adversely affect the performance of its duties under any Basic Document to which it
is a party;

          (e) There are no actions or proceedings against, or investigations of, the Loan Originator
currently pending with regard to which the Loan Originator has received service of process and no
action or proceeding against, or investigation of, the Loan Originator is, to the knowledge of the
Loan Originator, threatened or otherwise pending before any court, administrative agency or other
tribunal that (A) if determined adversely to the Loan Originator, would prohibit its entering into
any Basic Document to which it is a party or render the Securities invalid, (B) seek to prevent the
issuance of the Securities or the consummation of any of the transactions contemplated by any Basic
Document to which it is a party or (C) if

 

 

determined adversely to the Loan Originator, would prohibit or materially and adversely affect
the sale of the Loans to the Depositor, the performance by the Loan Originator of its obligations
under, or the validity or enforceability of, any Basic Document to which it is a party or the
Securities;

          (f) No consent, approval, authorization or order of any court or governmental agency or body
is required for: (1) the execution, delivery and performance by the Loan Originator of, or
compliance by the Loan Originator with, any Basic Document to which it is a party, (2) the issuance
of the Securities, (3) the sale and contribution of the Loans, or (4) the consummation of the
transactions required of it by any Basic Document to which it is a party, except such as shall have
been obtained before such date;

          (g) Immediately prior to the sale of any Loan to the Depositor, the Loan Originator had good
title to the Loans sold by it on such date without notice of any adverse claim;

          (h) The information, reports, financial statements, exhibits and schedules furnished in
writing by or on behalf of the Loan Originator to the Initial Noteholder in connection with the
negotiation, preparation or delivery of the Basic Documents to which it is a party or delivered
pursuant thereto, when taken as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All written information furnished after
the date hereof by or on behalf of the Loan Originator to the Initial Noteholder in connection with
the Basic Documents to which it is a party and the transactions contemplated thereby will be true,
complete and accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or certified.

          (i) The Loan Originator is solvent, is able to pay its debts as they become due and has
capital sufficient to carry on its business and its obligations under each Basic Document to which
it is a party; it will not be rendered insolvent by the execution and delivery of this Agreement or
by the performance of its obligations under each Basic Document to which it is a party; no petition
of bankruptcy (or similar insolvency proceeding) has been filed by or against the Loan Originator
prior to the date hereof;

          (j) The Loan Originator has transferred the Loans transferred by it on or prior to such
Transfer Date without any intent to hinder, delay or defraud any of its creditors;

          (k) The Loan Originator has received fair consideration and reasonably equivalent value in
exchange for the Loans sold by it on such Transfer Date to the Depositor;

          (l) The Loan Originator has not dealt with any broker or agent or other Person who might be
entitled to a fee, commission or compensation in connection with the transaction contemplated by
this Agreement;

          (m) The Loan Originator is in compliance with each of its financial covenants set forth in
Section 7.02; and

 

 

          (n) The Loan Originator’s principal place of business and chief executive offices are located
at Irvine, California or at such other address as shall be designated by such party in a written
notice to the other parties hereto.

          It is understood and agreed that the representations and warranties set forth in this Section
3.02 shall survive delivery of the respective Custodial Loan Files to the Custodian (as the agent
of the Indenture Trustee) and shall inure to the benefit of the Securityholders, the Depositor, the
Servicer, the Indenture Trustee, the Owner Trustee and the Issuer. Upon discovery by the Loan
Originator, the Depositor, the Servicer, the Indenture Trustee or the Trust of a breach of any of
the foregoing representations and warranties that materially and adversely affects the value of any
Loan or the interests of the Securityholders in any Loan or in the Securities, the party
discovering such breach shall give prompt written notice (but in no event later than two Business
Days following such discovery) to the other parties. The obligations of the Loan Originator set
forth in Sections 2.05 and 3.06 hereof to cure any breach or to substitute for or repurchase an
affected Loan shall constitute the sole remedies available hereunder to the Securityholders, the
Depositor, the Servicer, the Indenture Trustee or the Trust respecting a breach of the
representations and warranties contained in this Section 3.02. The fact that the Initial Noteholder
has conducted or has failed to conduct any partial or complete due diligence investigation of the
Loan Files shall not affect the Securityholders rights to demand repurchase or substitution as
provided under this Agreement.

Section 3.03 Representations, Warranties and Covenants of the Servicer.

          The Servicer hereby represents and warrants to and covenants with the other parties hereto and
the Securityholders that as of the Closing Date and as of each Transfer Date:

          (a) The Servicer is a corporation duly organized, validly existing and in good standing under
the laws of the State of California and (i) is duly qualified, in good standing and licensed to
carry on its business in each state where any Mortgaged Property is located, and (ii) is in
compliance with the laws of any such state, in both cases, to the extent necessary to ensure the
enforceability of the Loans in accordance with the terms thereof and to perform its duties under
each Basic Document to which it is a party and had at all relevant times, full corporate power to
own its property, to carry on its business as currently conducted, to service the Loans and to
enter into and perform its obligations under each Basic Document to which it is a party;

          (b) The execution and delivery by the Servicer of each Basic Document to which it is a party
and its performance of and compliance with the terms thereof will not violate the Servicer’s
articles of incorporation or by-laws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in the breach or acceleration
of, any material contract, agreement or other instrument to which the Servicer is a party or which
are applicable to the Servicer or any of its assets;

          (c) The Servicer has the full power and authority to enter into and consummate all
transactions contemplated by each Basic Document to which it is a party, has duly authorized the
execution, delivery and performance of each Basic Document to which it is a party and has duly
executed and delivered each Basic Document to which it is a party. Each Basic Document to which it
is a party, assuming due authorization, execution and delivery by each of the other parties thereto, constitutes a valid, legal and binding obligation of the
Servicer,

 

 

enforceable against it in accordance with the terms hereof, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity or at law);

          (d) The Servicer is not in violation of, and the execution and delivery of each Basic Document
to which it is a party by the Servicer and its performance and compliance with the terms of each
Basic Document to which it is a party will not constitute a violation with respect to, any order or
decree of any court or any order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and adversely affect the condition
(financial or otherwise) or operations of the Servicer or materially and adversely affect the
performance of its duties under any Basic Document to which it is a party;

          (e) There are no actions or proceedings against, or investigations of, the Servicer currently
pending with regard to which the Servicer has received service of process and no action or
proceeding against, or investigation of, the Servicer is, to the knowledge of the Servicer,
threatened or otherwise pending before any court, administrative agency or other tribunal that (A)
if determined adversely to the Servicer, would prohibit its entering into any Basic Document to
which it is a party, (B) seek to prevent the consummation of any of the transactions contemplated
by any Basic Document to which it is a party or (C) if determined adversely to the Servicer, would
prohibit or materially and adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, any Basic Document to which it is a party or the
Securities;

          (f) No consent, approval, authorization or order of any court or governmental agency or body
is required for the execution, delivery and performance by the Servicer of, or compliance by the
Servicer with, any Basic Document to which it is a party or the Securities, or for the consummation
of the transactions contemplated by any Basic Document to which it is a party, except for such
consents, approvals, authorizations and orders, if any, that have been obtained prior to such date;

          (g) The information, reports, financial statements, exhibits and schedules furnished in
writing by or on behalf of the Servicer to the Initial Noteholder in connection with the
negotiation, preparation or delivery of the Basic Documents to which it is a party or delivered
pursuant thereto, when taken as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All written information furnished after
the date hereof by or on behalf of the Servicer to the Initial Noteholder in connection with the
Basic Documents to which it is a party and the transactions contemplated thereby will be true,
complete and accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or certified.

          (h) The Servicer is solvent and will not be rendered insolvent as a result of the performance
of its obligations pursuant to under the Basic Documents to which it is a party;

          (i) The Servicer acknowledges and agrees that the Servicing Compensation represents reasonable
compensation for the performance of its services hereunder and that the

 

 

entire Servicing Compensation shall be treated by the Servicer, for accounting purposes, as compensation for the
servicing and administration of the Loans pursuant to this Agreement;

          (j) The Servicer is in compliance with each of its financial covenants set forth in Section
7.02; and

          (k) The Servicer is an Eligible Servicer and covenants to remain an Eligible Servicer or, if
not an Eligible Servicer, each Subservicer is an Eligible Servicer and the Servicer covenants to
cause each Subservicer to be an Eligible Servicer.

          It is understood and agreed that the representations, warranties and covenants set forth in
this Section 3.03 shall survive delivery of the respective Custodial Loan Files to the Indenture
Trustee or the Custodian on its behalf and shall inure to the benefit of the Depositor, the
Securityholders, the Indenture Trustee and the Issuer. Upon discovery by the Loan Originator, the
Depositor, the Servicer, the Indenture Trustee, the Owner Trustee or the Issuer of a breach of any
of the foregoing representations, warranties and covenants that materially and adversely affects
the value of any Loan or the interests of the Securityholders therein or in the Securities, the
party discovering such breach shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the other parties. The fact that the Initial Noteholder
has conducted or has failed to conduct any partial or complete due diligence investigation shall
not affect the Securityholders, rights to exercise their remedies as provided under this Agreement.

Section 3.04  Reserved.

Section 3.05  Representations and Warranties Regarding Loans.

          The Loan Originator makes each of the representations and warranties set forth on Exhibit E
hereto with respect to each Loan, provided, however, that with respect to each Loan transferred to
the Issuer by a QSPE Affiliate, to the extent that the Loan Originator has at the time of such
transfer actual knowledge of any facts or circumstances that would render any of such
representations and warranties materially false, the Loan Originator shall notify the Initial
Noteholder of such facts or circumstances and, in such event, shall have no obligation to make such
materially false representation and warranty.

          In addition, the Loan Originator represents and warrants with respect to each Loan sold by a
QSPE Affiliate that the Loan Originator has not been required to pay any amount to or on behalf of
such QSPE Affiliate that lowered the recourse to the Loan Originator available to such QSPE
Affiliate below the maximum recourse to the Loan Originator available to such QSPE Affiliate under
the terms of any loan purchase agreement providing for recourse by that QSPE Affiliate to the Loan
Originator.

Section 3.06 Purchase and Substitution.

          (a) It is understood and agreed that the representations and warranties set forth in Exhibit E
hereto shall survive the conveyance of the Loans to the Indenture Trustee on behalf of the Issuer,
and the delivery of the Securities to the Securityholders. Upon discovery by the Depositor, the
Servicer, the Loan Originator, the Custodian, the Issuer, the Indenture Trustee

 

 

or any Securityholder of a breach of any of such representations and warranties or the representations and
warranties of the Loan Originator set forth in Section 3.02 which materially and adversely affects
the value or enforceability of any Loan or the interests of the Securityholders in any Loan
(notwithstanding that such representation and warranty was made to the Loan Originator’s best
knowledge) or which constitutes a breach of the representations and warranties set forth in Exhibit
E, the party discovering such breach shall give prompt written notice to the others. The Loan
Originator shall within 5 Business Days of the earlier of the Loan Originator’s discovery or the
Loan Originator’s receiving notice of any breach of a representation or warranty, promptly cure
such breach in all material respects. If within 5 Business Days after the earlier of the Loan
Originator’s discovery of such breach or the Loan Originator’s receiving notice thereof such breach
has not been remedied by the Loan Originator and such breach materially and adversely affects the
interests of the Securityholders in the related Loan (an “Unqualified Loan”), the Loan Originator
shall promptly upon receipt of written instructions from the Majority Noteholders either (i) remove
such Unqualified Loan from the Trust (in which case it shall become a Deleted Loan) and substitute
one or more Qualified Substitute Loans in the manner and subject to the conditions set forth in
this Section 3.06 or (ii) purchase such Unqualified Loan at a purchase price equal to the
Repurchase Price with respect to such Unqualified Loan by depositing or causing to be deposited
such Repurchase Price in the Collection Account.

          Any substitution of Loans pursuant to this Section 3.06(a) shall be accompanied by payment by
the Loan Originator of the Substitution Adjustment, if any, (x) if no Overcollateralization
Shortfall exists on the date of such substitution (after giving effect to such substitution),
remitted to the Noteholders in accordance with Section 5.01(c)(4)(i) or (y) otherwise to be
deposited in the Collection Account pursuant to Section 5.01(b)(1) hereof.

          (b) As to any Deleted Loan for which the Loan Originator substitutes a Qualified Substitute
Loan or Loans, the Loan Originator shall effect such substitution by delivering to the Indenture
Trustee and Initial Noteholder a certification executed by a Responsible Officer of the Loan
Originator to the effect that the Substitution Adjustment, if any, has been (x) if no
Overcollateralization Shortfall exists on the date of such substitution (after giving effect to
such substitution), remitted to the Noteholders in accordance with Section 5.01(c)(4)(i), or (y)
otherwise deposited in the Collection Account. As to any Deleted Loan for which the Loan Originator
substitutes a Qualified Substitute Loan or Loans, the Loan Originator shall effect such
substitution by delivering to the Custodian the documents constituting the Custodial Loan File for
such Qualified Substitute Loan or Loans.

          The Servicer shall deposit in the Collection Account all payments received in connection with
each Qualified Substitute Loan after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Loans on or before the date of substitution will be retained by the
Loan Originator. The Trust will be entitled to all payments received on the Deleted Loan on or
before the date of substitution and the Loan Originator shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted Loan. The Loan Originator shall give written notice to the Issuer, the Servicer (if the Loan
Originator is not then acting as such), the Indenture Trustee and Initial Noteholder that such
substitution has taken place and the Servicer shall amend the Loan Schedule to reflect (i) the
removal of such Deleted Loan from the terms of this Agreement and (ii) the substitution of the

 

 

Qualified Substitute Loan. The Servicer shall promptly deliver to the Issuer, the Loan Originator,
the Indenture Trustee and Initial Noteholder, a copy of the amended Loan Schedule. Upon such
substitution, such Qualified Substitute Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Loan Originator shall be deemed to have made with respect to
such Qualified Substitute Loan or Loans, as of the date of substitution, the covenants,
representations and warranties set forth in Exhibit E hereto. On the date of such substitution, the
Loan Originator will (x) if no Overcollateralization Shortfall exists as of the date of
substitution (after giving effect to such substitution), remit to the Noteholders as provided in
Section 5.01(c)(4)(i) or (y) otherwise deposit into the Collection Account, in each case an amount
equal to the related Substitution Adjustment, if any. In addition, on the date of such
substitution, the Servicer shall cause the Indenture Trustee to release the Deleted Loan from the
lien of the Indenture and the Servicer will cause such Qualified Substitute Loan to be pledged to
the Indenture Trustee under the Indenture as part of the Trust Estate.

          (c) With respect to all Unqualified Loans or other Loans repurchased by the Loan Originator
pursuant to this Agreement, upon the deposit of the Repurchase Price therefor into the Collection
Account or the conveyance of one or more Qualified Substitute Loans and payment of any Substitution
Adjustment, (i) the Issuer shall assign to the Loan Originator, without representation or warranty,
all of the Issuer’s right, title and interest in and to such Unqualified Loan, which right, title
and interest were conveyed to the Issuer pursuant to Section 2.01 hereof and (ii) the Indenture
Trustee shall assign to the Loan Originator, without recourse, representation or warranty, all the
Indenture Trustee’s right, title and interest in and to such Unqualified Loans or Loans, which
right, title and interest were conveyed to the Indenture Trustee pursuant to Section 2.01 hereof
and the Indenture. The Issuer and the Indenture Trustee shall, at the expense of the Loan
Originator, take any actions as shall be reasonably requested by the Loan Originator to effect the
repurchase of any such Loans and to have the Custodian return the Custodial Loan File of the
deleted Loan to the Servicer.

          (d) It is understood and agreed that the obligations of the Loan Originator set forth in this
Section 3.06 to cure, purchase or substitute for a Unqualified Loan constitute the sole remedies
hereunder of the Depositor, the Issuer, the Indenture Trustee, the Owner Trustee and the
Securityholders respecting a breach of the representations and warranties contained in Sections
3.02 hereof and in Exhibit E hereto. Any cause of action against the Loan Originator relating to or
arising out of a defect in a Custodial Loan File or against the Loan Originator relating to or
arising out of a breach of any representations and warranties made in Sections 3.02 hereof and in
Exhibit E hereto shall accrue as to any Loan upon (i) discovery of such defect or breach by any
party and notice thereof to the Loan Originator or notice thereof by the Loan Originator to the
Indenture Trustee, (ii) failure by the Loan Originator to cure such defect or breach or purchase or
substitute such Loan as specified above, and (iii) demand upon the Loan Originator, as applicable,
by the Issuer or the Majority Noteholders for all amounts payable in respect of such Loan.

          (e) Neither the Issuer nor the Indenture Trustee shall have any duty to conduct any
affirmative investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Loan pursuant to this
Section or the eligibility of any Loan for purposes of this Agreement.

 

 

Section 3.07 Dispositions.

          (a) The Majority Noteholders may at any time, and from time to time, require that the Issuer
redeem all or any portion of the Note Principal Balance of the Notes by paying the Note Redemption
Amount with respect to the Note Principal Balance to be redeemed in accordance with Section 10.04.
In connection with any such redemption, the Issuer shall effect Dispositions at the direction of
the Majority Noteholders in accordance with this Agreement, including in accordance with this
Section 3.07.

          (b) (i) In consideration of the consideration received from the Depositor under the Loan
Purchase and Contribution Agreement, the Loan Originator hereby agrees and covenants that in
connection with each Disposition it shall effect the following:

(A) make such representations and warranties concerning the Loans as of the “cut-off
date” of the related Disposition to the Disposition Participants as may be necessary
to effect the Disposition and such additional representations and warranties as may
be necessary, in the reasonable opinion of any of the Disposition Participants, to
effect such Disposition; provided, that, to the extent that the Loan Originator has
at the time of the Disposition actual knowledge of any facts or circumstances that
would render any of such representations and warranties materially false, the Loan
Originator may notify the Disposition Participants of such facts or circumstances
and, in such event, shall have no obligation to make such materially false
representation and warranty;

(B) supply such information, opinions of counsel, letters from law and/or accounting
firms and other documentation and certificates regarding the origination of the
Loans as any Disposition Participant shall reasonably request to effect a
Disposition and enter into such indemnification agreements customary for such
transaction relating to or in connection with the Disposition as the Disposition
Participants may reasonably require;

(C) make itself available for and engage in good faith consultation with the
Disposition Participants concerning information to be contained in any document,
agreement, private placement memorandum, or filing with the Securities and Exchange
Commission relating to the Loan Originator or the Loans in connection with a
Disposition and shall use reasonable efforts to compile any information and prepare
any reports and certificates, into a form, whether written or electronic, suitable
for inclusion in such documentation;

(D) to implement the foregoing and to otherwise effect a Disposition, enter into, or
arrange for its Affiliates to enter into insurance and indemnity agreements,
underwriting or placement agreements, servicing agreements, purchase agreements and
any other documentation which may reasonably be required of or
reasonably deemed appropriate by the Disposition Participants in order to effect a
Disposition; and

(E) take such further actions as may be reasonably necessary to effect the
foregoing;

 

 

provided, that notwithstanding anything to the contrary, (a) the Loan Originator shall have no
liability for the Loans arising from or relating to the ongoing ability of the related Borrowers to
pay under the Loans; (b) none of the indemnities hereunder shall constitute an unconditional
guarantee by the Loan Originator of collectability of the Loans; (c) the Loan Originator shall have
no obligation with respect to the financial inability of any Borrower to pay principal, interest or
other amount owing by such Borrower under a Loan; and (d) the Loan Originator shall only be
required to enter into documentation in connection with Dispositions that is consistent with the
prior public securitizations of affiliates of the Loan Originator, provided that to the extent an
Affiliate of the Initial Noteholder acts as “depositor” or performs a similar function in a
Securitization, additional indemnities and informational representations and warranties are
provided which are consistent with those in the Basic Documents and may upon request of the Loan
Originator be set forth in a separate agreement between an Affiliate of the Initial Noteholder and
the Loan Originator.

               (ii) In the event of any Disposition to the Loan Originator or any of its Affiliates (except
in connection with a Securitization or a Disposition to a QSPE Affiliate), the purchase price paid
by the Loan Originator or any such Affiliate shall be the “fair market value” of the Loans subject
to such Disposition (as determined by the Market Value Agent based upon recent sales of comparable
loans or such other objective criteria as may be approved for determining “fair market value” by a
“Big Four” national accounting firm).

               (iii) As long as no Event of Default or Default shall have occurred and be continuing under
this Agreement or the Indenture, the Servicer may continue to service the Loans included in any
Disposition subject to any applicable “term-to-term” servicing provisions in Section 9.01(c) and
subject to any required amendments to the related servicing provisions as may be necessary to
effect the related Disposition including but not limited to the obligation to make recoverable
principal and interest advances on the Loans.

          After the termination of the Revolving Period, the Loan Originator, the Issuer and the
Depositor shall use commercially reasonable efforts to effect a Disposition at the direction of the
Disposition Agent.

          (c) The Issuer shall effect Dispositions at the direction of the Majority Noteholders in
accordance with the terms of this Agreement and the Basic Documents. In connection therewith, the
Trust agrees to assist the Loan Originator in such Dispositions and accordingly it shall, at the
request and direction of the Majority Noteholders:

               (i) transfer, deliver and sell all or a portion of the Loans, as of the “cut-off dates” of the
related Dispositions, to such Disposition Participants as may be necessary to effect the
Dispositions; provided, that any such sale shall be for “fair market value,” as determined by the
Market Value Agent in its reasonable discretion;

               (ii) deposit the cash Disposition Proceeds into the Distribution Account pursuant to Section
5.01(c)(2)(D);

               (iii) to the extent that a Securitization creates any Retained Securities, to accept such
Retained Securities as a part of the Disposition Proceeds in accordance with the terms of this
Agreement; and

 

 

               (iv) take such further actions, including executing and delivering documents, certificates and
agreements, as may be reasonably necessary to effect such Dispositions.

          (d) The Servicer hereby covenants that it will take such actions as may be reasonably
necessary to effect Dispositions as the Disposition Participants may request and direct, including
without limitation providing the Loan Originator such information as may be required to make
representations and warranties required hereunder, and covenants that it will make such
representations and warranties regarding its servicing of the Loans hereunder as of the Cut-off
Date of the related Disposition as reasonably required by the Disposition Participants.

          (e) [reserved]

          (f) The Majority Noteholders may effect Whole Loan Sales upon written notice to the Servicer
of its intent to cause the Issuer to effect a Whole Loan Sale at least 5 Business Days in advance
thereof. The Disposition Agent shall serve as agent for Whole Loan Sales and will receive a
reasonable fee for such services provided that no such fee shall be payable if (i) the Loan
Originator or its Affiliates purchase such Loans and (ii) no Event of Default or Default shall have
occurred. The Loan Originator or its Affiliates may concurrently bid to purchase Loans in a Whole
Loan Sale; provided, however, that neither the Loan Originator nor any such Affiliates shall pay a
price in excess of the fair market value thereof (as determined by the Market Value Agent based
upon recent sales of comparable loans or such other objective criteria as may be approved for
determining “fair market value” by a “Big Four” national accounting firm). In the event that the
Loan Originator does not bid in any such Whole Loan Sale, it shall have a right of first refusal to
purchase the Loans offered for sale at the price offered by the highest bidder. The Disposition
Agent shall conduct any Whole Loan Sale subject to the Loan Originator’s right of first refusal and
shall promptly notify the Loan Originator of the amount of the highest bid. The Loan Originator
shall have five (5) Business Days following its receipt of such notice to exercise its right of
first refusal by notifying the Disposition Agent in writing.

          (g) Except as otherwise expressly set forth under this Section 3.07, the parties’ rights and
obligations under this Section 3.07 shall continue notwithstanding the occurrence of an Event of
Default.

          (h) The Disposition Participants (and the Majority Noteholders to the extent directing the
Disposition Participants) shall be independent contractors to the Issuer and shall have no
fiduciary obligations to the Issuer or any of its Affiliates. In that connection, the Disposition
Participants shall not be liable for any error of judgment made in good faith and shall not be
liable with respect to any action they take or omits to take in good faith in the performance of
their duties.

Section 3.08 Servicer Put; Servicer Call.

          (a) Servicer Put. The Servicer shall promptly purchase, upon the written demand of the
Majority Noteholders, any Put/Call Loan; provided, however, that the Servicer may, upon receipt of
such demand, elect to repurchase such Put/Call Loan pursuant to (b) below, in which case such
repurchase shall be deemed a Servicer Call.

 

 

          (b) Servicer Call. The Servicer may repurchase any Put/Call Loan at any time. Such Servicer
Calls shall be solely at the option of the Servicer. Prior to exercising a Servicer Call, the
Servicer shall deliver written notice to the Majority Noteholders and the Indenture Trustee which
notice shall identify each Loan to be purchased and the Repurchase Price therefor; provided,
however, that the Servicer may irrevocably waive its right to repurchase any Put/Call Loan as soon
as reasonably practicable following its receipt of notice of the occurrence of any event or events
giving rise to such Loan being a Put/Call Loan.

          (c) In connection with each Servicer Put, the Servicer shall remit for deposit into the
Collection Account the Repurchase Price for the Loans to be repurchased. In connection with each
Servicer Call, the Servicer shall deposit into the Collection Account the Repurchase Price for the
Loans to be purchased. The aggregate Repurchase Price of all Loans transferred pursuant to Section
3.08(a) shall in no event exceed the Unfunded Transfer Obligation at the time of any Servicer Put.

Section 3.09 Modification of Underwriting Guidelines.

          The Loan Originator shall give the Initial Noteholder prompt written notification of any
modification or change to the Underwriting Guidelines. If the Noteholder objects in writing to any
modification or change to the Underwriting Guidelines within 15 days after receipt of such notice,
no Loans may be conveyed to the Issuer pursuant to this Agreement unless such Loans have been
originated pursuant to the Underwriting Guidelines without giving effect to such modification or
change. Notwithstanding anything contained in this Agreement to the contrary, any Loan conveyed to
the Issuer pursuant to this Agreement pursuant to a modification or change to the Underwriting
Guidelines that has been rejected by the Initial Noteholder or which the Initial Noteholder did not
receive notice of, such Loan shall be deemed an Unqualified Loan and be repurchased or substituted
for in accordance with Section 3.06.

ARTICLE IV

ADMINISTRATION AND SERVICING OF THE LOANS

     Section 4.01 Servicer’s Servicing Obligations.

          The Servicer, as independent contract servicer, shall service and administer the Loans in
accordance with the terms and provisions set forth in the Servicing Addendum, which Servicing
Addendum is incorporated herein by reference.

     Section 4.02 Financial Statements.

          (a) So long as the Notes remain outstanding, the Servicer shall furnish to the Initial
Noteholder:

               (i) annual consolidated audited financial statements of the Servicer and its Affiliates no
later than 105 days after the Servicer’s Fiscal Year;

               (ii) quarterly unaudited statements of the Servicer no later than 60 days after quarter-end;

 

 

               (iii) monthly unaudited statements of the Servicer no later than 45 days after month-end;

               (iv) on a timely basis, (i) quarterly and annual consolidating financial statements reflecting
material intercompany adjustments, (ii) all form 10-K, registration statements and other “corporate
finance” filings made with the SEC (other than 8-K filings), provided, however, that the Servicer
shall provide the Initial Noteholder a copy of the Servicer’s annual SEC Form 10-K filing no later
than 105 days after year-end, and (iii) any other financial information that the Initial Noteholder
may reasonably request; and

               (v) monthly portfolio performance data with respect to the mortgage loans the Servicer
services, including, without limitation, any outstanding delinquencies, prepayments in whole or in
part, and repurchases by the Servicer.

          (b) Any and all financial statements set forth in Section 4.02(a)(i)-(iv) above shall be
prepared in accordance with GAAP.

ARTICLE V

ESTABLISHMENT OF TRUST ACCOUNTS; TRANSFER OBLIGATION

Section 5.01 Collection Account and Distribution Account.

          (a) (1) Establishment of Collection Account. The Servicer, for the benefit of the
Noteholders, shall cause to be established and maintained one or more Collection Accounts
(collectively, the “Collection Account”), which shall be separate Eligible Accounts entitled
“Option One Owner Trust 2003-5 Collection Account, Wells Fargo Bank Minnesota, National
Association, as Indenture Trustee, for the benefit of the Option One Owner Trust 2003-5
Mortgage-Backed Notes.” The Collection Account shall be maintained with a depository institution
and shall satisfy the requirements set forth in the definition of Eligible Account. Funds in the
Collection Account shall be invested in accordance with Section 5.03 hereof. Net investment
earnings shall not be considered part of funds available in the Collection Account.

               (2) Establishment of Distribution Account. The Servicer, for the benefit of the Noteholders,
shall cause to be established and maintained, one or more Distribution Accounts (collectively, the
“Distribution Account”), which shall be separate Eligible
Accounts, entitled “Option One Owner Trust 2003-5 Distribution Account, Wells Fargo Bank
Minnesota, National Association, as Indenture Trustee, for the benefit of the Option One Owner
Trust 2003-5 Mortgage-Backed Notes.” The Distribution Account shall be maintained with a depository
institution and shall satisfy the requirements set forth in the definition of Eligible Account.
Funds in the Distribution Account shall be invested in accordance with Section 5.03 hereof. The
Servicer may, at its option, maintain one account to serve as both the Distribution Account and the
Collection Account, in which case, the account shall be entitled “Option One Owner Trust 2003-5
Collection/Distribution Account, Wells Fargo Bank Minnesota, National Association, as Indenture
Trustee, for the benefit of the Option One Owner Trust 2003-5 Mortgage-Backed Notes.” If the
Servicer makes such an election, all references herein or in any other Basic Document to either the
Collection Account or the Distribution Account shall mean the Collection/Distribution Account
described in the preceding sentence.

 

 

               (3) The Servicer will inform the Indenture Trustee of the location of any accounts held in the
Indenture Trustee’s name, including any location to which an account is transferred.

          (b) (1) Deposits to Collection Account. The Servicer shall deposit or cause to be deposited
(without duplication):

     (i) all payments on or in respect of each Loan collected on or after the related Transfer Cut-
off Date (net, in each case, of any Servicing Compensation retained therefrom) within two (2)
Business Days after receipt thereof;

     (ii) all Net Liquidation Proceeds within two (2) Business Days after receipt thereof;

     (iii) all Mortgage Insurance Proceeds within two (2) Business Days after receipt thereof;

     (iv) all Released Mortgaged Property Proceeds within two (2) Business Days after receipt
thereof;

     (v) any amounts payable in connection with the repurchase of any Loan and the amount of any
Substitution Adjustment pursuant to Sections 2.05 and 3.06 hereof concurrently with payment
thereof;

     (vi) any Repurchase Price payable in connection with a Servicer Call pursuant to Section 3.08
hereof concurrently with payment thereof;

     (vii) the deposit of the Termination Price under Section 10.02 hereof concurrently with
payment thereof;

     (viii) Nonutilization Fees;

     (ix) [reserved];

     (x) any payments received under Hedging Instruments or the return of amounts by the Hedging
Counterparty pledged pursuant to prior Hedge Funding Requirements in accordance with the last
sentence of this Section 5.01(b)(1); and

     (xi) any Repurchase Price payable in connection with a Servicer Put remitted by the Servicer
pursuant to Section 3.08.

          Except as otherwise expressly provided in Section 5.01(c)(4)(i), the Servicer agrees that it
will cause the Loan Originator, Borrower or other appropriate Person paying such amounts, as the
case may be, to remit directly to the Servicer for deposit into the Collection Account all amounts
referenced in clauses (i) through (xi) to the extent such amounts are in excess of a Monthly
Payment on the related Loan. To the extent the Servicer receives any such amounts, it will deposit
them into the Collection Account on the same Business Day as receipt thereof.

     (c) Withdrawals From Collection Account; Deposits to Distribution Account.

 

 

          (1) Withdrawals From Collection Account — Reimbursement Items. The Paying Agent shall
periodically but in any event on each Determination Date, make the following withdrawals from the
Collection Account prior to any other withdrawals, in no particular order of priority:

     (i) to withdraw any amount not required to be deposited in the Collection Account or deposited
therein in error, including Servicing Compensation;

     (ii) to withdraw the Servicing Advance Reimbursement Amount; and

     (iii) to clear and terminate the Collection Account in connection with the termination of this
Agreement.

(2) Deposits to Distribution Account — Payment Dates.

(A) On the Business Day prior to each Payment Date, the Paying Agent shall deposit
into the Distribution Account such amounts as are required from the Transfer
Obligation Account pursuant to Sections 5.05(e), 5.05(f), 5.05(g) and 5.05(h).

(B) After making all withdrawals specified in Section 5.01(c)(1) above, on each
Remittance Date, the Paying Agent (based on information provided by the Servicer for
such Payment Date), shall withdraw the Monthly Remittance Amount (or, with respect
to an additional Payment Date pursuant to Section 5.01(c)(4)(ii), all amounts on
deposit in the Collection Account on such date up to the amount necessary to make
the payments due on the related Payment Date in accordance with Section 5.01(c)(3))
from the Collection Account not later than 5:00 P.M., New York City time and deposit
such amount into the Distribution Account.

(C) [Reserved]

(D) The Servicer shall deposit or cause to be deposited in the Distribution Account
any cash Disposition Proceeds pursuant to Section 3.07. To the extent the Servicer
receives such amounts, it will deposit them into the Distribution Account on the
same Business Day as receipt thereof.

          (3) Withdrawals From Distribution Account — Payment Dates. On each Payment Date, to the extent
funds are available in the Distribution Account, the Paying Agent (based on the information
provided by the Servicer contained in the Servicer’s Remittance Report for such Payment Date) shall
make withdrawals therefrom for application in the following order of priority:

	 	(i)  	to distribute on such Payment Date the following amounts in the
following order: (a) to the Indenture Trustee, an amount equal to the Indenture
Trustee Fee and all unpaid Indenture Trustee Fees from prior Payment Dates and
all amounts owing to the Indenture Trustee pursuant to Section 6.07 of the
Indenture and not paid by the Servicer or the Depositor up to an amount not to
exceed $25,000 per annum, (b) to the Custodian, an 

 

 

	 	   	amount equal to the
Custodian Fee and all unpaid Custodian Fees from prior Payment Dates, (c) to
the Servicer, an amount equal to the Servicing Compensation and all unpaid
Servicing Compensation from prior Payment Dates (to the extent not retained
from collections or remitted to the Servicer pursuant to Section 5.01(c)) and
(d) to the Servicer, in trust for the Owner Trustee, an amount equal to the
Owner Trustee Fee and all unpaid Owner Trustee Fees from prior Payment Dates;
	 
	 	(ii)  	to distribute on such Payment Date, the Hedge Funding
Requirement to the appropriate Hedging Counterparties;
	 
	 	(iii)  	to the holders of the Notes pro rata, the sum of the Interest
Payment Amount for such Payment Date and the Interest Carry-Forward Amount for
the preceding Payment Date;
	 
	 	(iv)  	to the holders of the Notes pro rata, the sum of the
Overcollateralization Shortfall for such Payment Date; provided, however, that
if (a) a Rapid Amortization Trigger shall have occurred and not been Deemed
Cured or (b) an Event of Default under the Indenture or Default shall have
occurred, the holders of the Notes shall receive, in respect of principal, all
remaining amounts on deposit in the Distribution Account;
	 
	 	(v)  	to the Initial Noteholder, the Nonutilization Fee for such
Payment Date, to the extent payable, together with any Nonutilization Fees
unpaid from any prior Payment Dates;
	 
	 	(vi)  	to the appropriate Person, amounts in respect of
Issuer/Depositor Indemnities (as defined in the Trust Agreement) and Due
Diligence Fees until such amounts are paid in full;
	 
	 	(vii)  	to the Transfer Obligation Account, all remaining amounts
until the balance therein equals the Transfer Obligation Target Amount;
	 
	 	(viii)  	to the Indenture Trustee all amounts owing to the Indenture Trustee pursuant
to Section 6.07 of the Indenture and not paid pursuant to clause (i) above;
	 
	 	(ix)  	all Nonrecoverable Servicing Advances not previously
reimbursed; and
	 
	 	(x)  	to the holders of the Trust Certificates, subject to Section
5.2(b) of the Trust Agreement, all amounts remaining therein; provided,
however, if the Owner Trustee has notified the Paying Agent that any amounts
are due and owing to it and remain unpaid, then first to the Owner Trustee,
such amounts.

          (4) (i) If the Loan Originator or the Servicer, as applicable, repurchases, purchases or
substitutes a Loan pursuant to Section 2.05, 3.06, 3.08(a), 3.08(b) or 3.08(c), then the
Noteholders and the Issuer shall deem such date to be an additional Payment Date and the

 

 

Issuer
shall provide written notice to the Indenture Trustee and the Paying Agent of such additional
Payment Date at least one Business Day prior to such Payment Date. On such additional Payment Date,
the Loan Originator or the Servicer, in satisfaction of its obligations under 2.05, 3.06, 3.08(a)
3.08(b) or 3.08(c) and in satisfaction of the obligations of the Issuer and the Paying Agent to
distribute such amounts to the Noteholders pursuant to Section 5.01(c), shall remit to the
Noteholders, on behalf of the Issuer and the Paying Agent, an amount equal to the Repurchase Prices
and any Substitution Adjustments (as applicable) to be paid by the Loan Originator or the Servicer
by 12:00 p.m. New York City time, as applicable, under such Section, on such Payment Date, and the
Note Principal Balance will be reduced accordingly. Such amounts shall be deemed deposited into the
Collection Account and the Distribution Account, as applicable, and such amounts will be deemed
distributed pursuant to the terms of Section 5.01(c). Upon notice of an additional Payment Date to
the Paying Agent and the Indenture Trustee as provided above, the Paying Agent shall provide the
Loan Originator or the Servicer (as applicable) information necessary so that remittances to the
Noteholders pursuant to this clause (4)(i) may be made by the Loan Originator or the Servicer, as
applicable, in compliance with Section 5.02(a) hereof.

               (ii) To the extent that there is deposited in the Collection Account or the
Distribution Account any amounts referenced in Section 5.01(b)(1)(vii) and
5.01(c)(2)(D), the Majority Noteholders and the Issuer may agree, upon reasonable
written notice to the Paying Agent and the Indenture Trustee, to additional Payment
Dates. The Issuer and the Majority Noteholder shall give the Paying Agent and the
Indenture Trustee at least one (1) Business Day’s written notice prior to such
additional Payment Date and such notice shall specify each amount in Section 5.01(c)
to be withdrawn from the Collection Account and Distribution Account on such day.

               (iii) To the extent that there is deposited in the Distribution Account any
amounts referenced in Section 5.05(f), the Majority Noteholders may, in their sole
discretion, establish an additional Payment Date by written notice delivered to the
Paying Agent and the Indenture Trustee at least one Business Day prior to such
additional Payment Date. On such additional Payment Date, the Paying Agent shall pay
the sum of the Overcollateralization Shortfall to the Noteholders in respect of
principal on the Notes.

          Notwithstanding that the Notes have been paid in full, the Indenture Trustee, the Paying Agent
and the Servicer shall continue to maintain the Distribution Account hereunder until this Agreement
has been terminated.

          (D) [Reserved]

     Section 5.02 Payments to Securityholders.

          (a) All distributions made on the Notes on each Payment Date or pursuant to Section 5.04(b) of
the Indenture will be made on a pro rata basis among the Noteholders of record of the Notes on the
next preceding Record Date based on the Percentage Interest represented by their respective Notes,
without preference or priority of any kind, and, except as otherwise provided in the next
succeeding sentence, shall be made by wire transfer of

 

 

immediately available funds to the account
of such Noteholder, if such Noteholder shall own of record Notes having a Percentage Interest (as
defined in the Indenture) of at least 20% and shall have so notified the Paying Agent and the
Indenture Trustee 5 Business Days prior to the related Record Date, and otherwise by check mailed
to the address of such Noteholder appearing in the Notes Register. The final distribution on each
Note will be made in like manner, but only upon presentment and surrender of such Note at the
location specified in the notice to Noteholders of such final distribution.

          (b) All distributions made on the Trust Certificates on each Payment Date or pursuant to
Section 5.04(b) of the Indenture will be made in accordance with the Percentage Interest among the
holders of the Trust Certificates of record on the next preceding Record Date based on their
Percentage Interests (as defined in the Trust Agreement) on the date of distribution, without
preference or priority of any kind, and, except as otherwise provided in the next succeeding
sentence, shall be made by wire transfer of immediately available funds to the account of each such
holder, if such holder shall own of record a Trust Certificate in an original denomination
aggregating at least 25% of the Percentage Interests and shall have so notified the Paying Agent
and the Indenture Trustee 5 Business Days prior to the related Record Date, and otherwise by check
mailed to the address of such Certificateholder appearing in the Certificate Register. The final
distribution on each Trust Certificate will be made in like manner, but only upon presentment and
surrender of such Trust Certificate at the location specified in the notice to holders of the Trust
Certificates of such final distribution. Any amount distributed to the holders of the Trust
Certificates on any Payment Date shall not be subject to any claim or interest of the Noteholders.
In the event that at any time there shall be more than one Certificateholder, the Indenture Trustee
shall be entitled to reasonable additional compensation from the Servicer for any increase in its
obligations hereunder.

     Section 5.03 Trust Accounts; Trust Account Property.

          (a) Control of Trust Accounts. Each of the Trust Accounts established hereunder has been
pledged by the issuer to the Indenture Trustee under the Indenture and shall be subject to the lien
of the Indenture. Amounts distributed from each Trust Account in accordance with the terms of this
Agreement shall be released for the benefit of the Securityholders from the Trust Estate upon such
distribution thereunder or hereunder. The
Indenture Trustee shall possess all right, title and interest in and to all funds on deposit
from time to time in the Trust Accounts and in all proceeds thereof (including all income thereon)
and all such funds, investments, proceeds and income shall be part of the Trust Account Property
and the Trust Estate. If, at any time, any Trust Account ceases to be an Eligible Account, the
Indenture Trustee shall, within ten Business Days (or such longer period, not to exceed 30 calendar
days, with the prior written consent of the Majority Noteholders) (i) establish a new Trust Account
as an Eligible Account, (ii) terminate the ineligible Trust Account, and (iii) transfer any cash
and investments from such ineligible Trust Account to such new Trust Account.

          With respect to the Trust Accounts, the Issuer and the Indenture Trustee agree, that each such
Trust Account shall be subject to the “control” (in accordance with Section 9-104 of the Uniform
Commercial Code) of the Indenture Trustee for the benefit of the Noteholders, and, except as may be
consented to in writing by the Majority Noteholders, or provided in the

 

 

related Blocked Account
Agreement, the Indenture Trustee shall have sole signature and withdrawal authority with respect
thereto.

          The Servicer (unless it is also the Paying Agent) shall not be entitled to make any
withdrawals or payments from the Trust Accounts.

          (b) (1) Investment of Funds. Funds held in the Collection Account, the Distribution Account
and the Transfer Obligation Account may be invested (to the extent practicable and consistent with
any requirements of the Code) in Permitted Investments, as directed by the Servicer prior to the
occurrence of an Event of Default and by the Majority Noteholders thereafter, in writing or
facsimile transmission confirmed in writing by the Servicer or Majority Noteholders, as applicable.
In the event the Indenture Trustee has not received such written direction, such Funds shall be
invested in any Permitted Investment described in clause (i) of the definition of Permitted
Investments. In any case, funds in the Collection Account, the Distribution Account and the
Transfer Obligation Account must be available for withdrawal without penalty, and any Permitted
Investments must mature or otherwise be available for withdrawal, one Business Day prior to the
next Payment Date and shall not be sold or disposed of prior to its maturity subject to Subsection
(b)(2) of this Section. All interest and any other investment earnings on amounts or investments
held in the Collection Account, the Distribution Account and the Transfer Obligation Account shall
be paid to the Servicer immediately upon receipt by the Indenture Trustee. All Permitted
Investments in which funds in the Collection Account, the Distribution Account or the Transfer
Obligation Account are invested must be held by or registered in the name of “Wells Fargo Bank
Minnesota, National Association, as Indenture Trustee, in trust for the Option One Owner Trust
2003-5 Mortgage-Backed Notes.”

               (2) Insufficiency and Losses in Trust Accounts. If any amounts are needed for disbursement
from the Collection Account, the Distribution Account or the Transfer Obligation Account held by or
on behalf of the Indenture Trustee and sufficient uninvested funds are not available to make such
disbursement, the Indenture Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in the Collection Account, the Distribution Account or the
Transfer Obligation Account, as the case may be. The Indenture Trustee shall not be liable for any
investment loss or other charge resulting therefrom, unless such loss or charge is caused by the
failure of the Indenture Trustee to perform in accordance with written directions provided pursuant
to this Section 5.03.

          If any losses are realized in connection with any investment in the Collection Account, the
Distribution Account or the Transfer Obligation Account pursuant to this Agreement during a period
in which the Servicer has the right to direct investments pursuant to Section 5.03(b), then the
Servicer shall deposit the amount of such losses (to the extent not offset by income from other
investments in the Collection Account, the Distribution Account or the Transfer Obligation Account,
as the case may be) into the Collection Account, the Distribution Account or the Transfer
Obligation Account, as the case may be, immediately upon the realization of such loss. All interest
and any other investment earnings on amounts held in the Collection Account, the Distribution
Account and the Transfer Obligation Account shall be taxed to the Issuer and for federal and state
income tax purposes the Issuer shall be deemed to be the owner of the Collection Account, the
Distribution Account and/or the Transfer Obligation Account, as the case may be.

 

 

          (c) Subject to Section 6.01 of the Indenture, the Indenture Trustee shall not in any way be
held liable by reason of any insufficiency in any Trust Account held by the Indenture Trustee
resulting from any investment loss on any Permitted Investment included therein.

          (d) With respect to the Trust Account Property, the Indenture Trustee acknowledges and agrees
that:

(1) any Trust Account Property that is held in deposit accounts or securities
accounts shall be held solely in the Eligible Accounts, subject to the last sentence
of Subsection (a) of this Section 5.03; and each such Eligible Account shall be
subject to the “control” (in accordance with Section 9-104 of the Uniform Commercial
Code) of the Indenture Trustee as provided in the Blocked Account Agreement; and,
without limitation on the foregoing, the Indenture Trustee shall have sole signature
authority with respect thereto;

(2) any Trust Account Property that constitutes Physical Property shall be delivered
to the Indenture Trustee in accordance with paragraphs (a) and (b) of the definition
of “Delivery” in Section 1.01 hereof and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a securities intermediary (as such
term is defined in Section 8-102(a)(14) of the UCC) acting solely for the Indenture
Trustee;

(3) any Trust Account Property that is a book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations shall be delivered
in accordance with paragraph (c) of the definition of “Delivery” in Section 1.01
hereof and shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such Trust Account
Property as described in such paragraph; and

(4) any Trust Account Property that is an “uncertificated security” under Article 8
of the UCC and that is not governed by clause (3) above shall be delivered to the
Indenture Trustee in accordance with paragraph (d) of the definition of “Delivery”
in Section 1.01 hereof and shall be maintained by the Indenture Trustee, pending
maturity or disposition, through continued registration of the Indenture Trustee’s
(or its nominee’s) ownership of such security.

     Section 5.04 Advance Account.

          (a) The Servicer shall cause to be established and maintained in its name, an Advance Account
(the “Advance Account”), which need not be a segregated account. The Advance Account shall be
maintained with any financial institution the Servicer elects.

          (b) Deposits and Withdrawals. Amounts in respect of the transfer of Additional Note Principal
Balances and Loans shall be deposited in and withdrawn from the Advance Account as provided in
Sections 2.01(c) and 2.06 hereof and Section 3.01 of the Note Purchase Agreement.

     Section 5.05 Transfer Obligation Account.

 

 

          (a) The Servicer, for the benefit of the Noteholders, shall cause to be established and
maintained in the name of the Indenture Trustee a Transfer Obligation Account (the “Transfer
Obligation Account”), which shall be a separate Eligible Account and may be interest-bearing,
entitled “Option One Owner Trust 2003-5 Transfer Obligation Account, Wells Fargo Bank Minnesota,
National Association, as Indenture Trustee, in trust for the Option One Owner Trust 2003-5
Mortgage-Backed Notes.” The Indenture Trustee shall have no monitoring or calculation obligation
with respect to withdrawals from the Transfer Obligation Account. Amounts in the Transfer
Obligation Account shall be invested in accordance with Section 5.03.

          (b) In accordance with Section 5.06, the Loan Originator shall deposit into the Transfer
Obligation Account any amounts as may be required thereby.

          (c) On each Payment Date, the Paying Agent will deposit in the Transfer Obligation Account any
amounts required to be deposited therein pursuant to Section 5.01(c)(3)(vii).

          (d) On the date of each Disposition, the Paying Agent shall withdraw from the Transfer
Obligation Account such amount on deposit therein in respect of the payment of Transfer Obligations
as may be requested by the Disposition Agent in writing to effect such Disposition.

          (e) On each Payment Date, the Paying Agent shall withdraw from the Transfer Obligation Account
and deposit into the Distribution Account on such Payment Date the lesser of (x) the amount then on
deposit in the Transfer Obligation Account and (y) the Interest Carry-Forward Amount as of such
date.

          (f) If with respect to any Business Day there exists an Overcollateralization Shortfall, the
Paying Agent, upon the written direction of the Initial Noteholder, shall withdraw from the
Transfer Obligation Account and deposit into the Distribution Account on such Business Day the
lesser of (x) the amount then on deposit in the Transfer Obligation Account and (y) the amount of
such Overcollateralization Shortfall as of such date.

          (g) If with respect to any Payment Date there shall exist a Hedge Funding Requirement, the
Paying Agent, upon the written direction of the Servicer or the Initial
Noteholder, shall withdraw from the Transfer Obligation Account and deposit into the
Distribution Account on the Business Day prior to such Payment Date the lesser of (x) the amount
then on deposit in the Transfer Obligation Account (after making all other required withdrawals
therefrom with respect to such Payment Date) and (y) the amount of such Hedge Funding Requirement
as of such date.

          (h) In the event of the occurrence of an Event of Default under the Indenture, the Paying
Agent shall withdraw all remaining funds from the Transfer Obligation Account and apply such funds
in satisfaction of the Notes as provided in Section 5.04(b) of the Indenture.

          (i) (i) The Paying Agent shall return to the Loan Originator all amounts on deposit in the
Transfer Obligation Account (after making all other withdrawals pursuant to this Section 5.05)
until the Majority Noteholders provide written notice to the Indenture Trustee (with a copy to the
Loan Originator and the Servicer) of the occurrence of a default or event of

 

 

default (however
defined) under any Basic Document with respect to the Issuer, the Depositor, the Loan Originator or
any of their Affiliates and (ii) upon the date of the termination of this Agreement pursuant to
Article X, the Paying Agent shall withdraw any remaining amounts from the Transfer Obligation
Account and remit all such amounts to the Loan Originator.

     Section 5.06 Transfer Obligation.

          (a) In consideration of the transactions contemplated by the Basic Documents, the Loan
Originator agrees and covenants with the Depositor that:

               (i) In connection with each Disposition it shall fund, or cause to be funded, reserve funds,
pay credit enhancer fees, pay, or cause to be paid, underwriting fees, fund any negative difference
between the cash Disposition Proceeds and the aggregate Note Principal Balance at the time of such
Disposition, and make, or cause to be made, such other payments as may be, in the reasonable
opinion of the Disposition Agent, commercially reasonably necessary to effect Dispositions, in each
case to the extent that Disposition Proceeds are insufficient to pay such amounts;

               (ii) In connection with Hedging Instruments, on the Business Day prior to each Payment Date,
it shall deliver to the Servicer for deposit into the Transfer Obligation Account any Hedge Funding
Requirement (to the extent amounts available on the related Payment Date pursuant to Section 5.01
are insufficient to make such payment), when, as and if due to any Hedging Counterparty;

               (iii) If any Interest Carry-Forward Amount shall occur, it shall deposit into the Transfer
Obligation Account any such Interest Carry-Forward Amount on or before the Business Day preceding
such related Payment Date;

               (iv) If on any Business Day there exists an Overcollateralization Shortfall, upon the written
direction of the Initial Noteholder, it shall on such Business Day deposit into the Transfer
Obligation Account the full amount of the Overcollateralization Shortfall as of such date,
provided, that in the event that notice of such Overcollateralization Shortfall is provided to the
Loan Originator after 3:00 p.m. New York City time, the Loan Originator shall make such deposit on
the following Business Day; and

               (v) Notwithstanding anything to the contrary herein, in the event of the occurrence of an
Event of Default under the Indenture, the Loan Originator shall promptly deposit into the Transfer
Obligation Account the entire amount of the Unfunded Transfer Obligation;

provided, that notwithstanding anything to the contrary contained herein, the Loan Originator’s
cumulative payments under or in respect of the Transfer Obligations (after subtracting therefrom
any amounts returned to the Loan Originator pursuant to Section 5.05(i)(i)) together with the
Servicer’s payments in respect of any Servicer Puts shall not in the aggregate exceed the Unfunded
Transfer Obligation.

 

 

          (b) The Loan Originator agrees that the Noteholders, as ultimate assignee of the rights of the
Depositor under this Agreement and the other Basic Documents, may enforce the rights of the
Depositor directly against the Loan Originator.

ARTICLE VI

STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS

     Section 6.01 Statements.

          (a) No later than 12:00 noon (New York City time) on each Remittance Date, the Servicer shall
deliver to the Indenture Trustee and the Initial Noteholder by electronic transmission, the receipt
and legibility of which shall be confirmed by telephone, and with hard copy thereof to be delivered
no later than one (1) Business Day after such Remittance Date, the Servicer’s Remittance Report,
setting forth the date of such Report (day, month and year), the name of the Issuer (i.e., “Option
One Owner Trust 2003-5”), and the date of this Agreement, all in substantially the form set out in
Exhibit B hereto. Furthermore, on each Remittance Date, the Servicer shall deliver to the Indenture
Trustee and the Initial Noteholder a data file providing, with respect to each Loan in the Loan
Pool as of the last day of the related Remittance Period (i) if such Loan is an ARM, the current
Loan Interest Rate; (ii) the Principal Balance with respect to such Loan; (iii) the date of the
last Monthly Payment paid in full; and (iv) such other information as may be reasonably requested
by the Initial Noteholder and the Indenture Trustee. In addition, no later than 12:00 noon (New
York City time) on the 15th day of each calendar month (or if such day is not a Business Day, the
preceding Business Day), the Custodian shall prepare and provide to the Servicer and the Indenture
Trustee by facsimile, the Custodian Fee Notice for the Payment Date falling in such calendar month.

          (b) No later than 12:00 noon (New York City time) on each Remittance Date, the Servicer shall
prepare (or cause to be prepared) and provide to the Indenture Trustee electronically or via fax,
receipt confirmed by telephone, the Initial Noteholder and each Noteholder, a statement (the
“Payment Statement”), stating each date and amount of a purchase of Additional Note Principal
Balance (day, month and year), the name of the Issuer (i.e., “Option One Owner Trust 2003-5”), the
date of this Agreement and the following information:

               (1) the aggregate amount of collections in respect of principal of the Loans received by the
Servicer during the preceding Remittance Period;

               (2) the aggregate amount of collections in respect of interest on the Loans received by the
Servicer during the preceding Remittance Period;

               (3) all Mortgage Insurance Proceeds received by the Servicer during the preceding Remittance
Period and not required to be applied to restoration or repair of the related Mortgaged Property or
returned to the Borrower under applicable law or pursuant to the terms of the applicable Mortgage
Insurance Policy;

               (4) all Net Liquidation Proceeds deposited by the Servicer into the Collection Account during
the preceding Remittance Period;

 

 

               (5) all Released Mortgaged Property Proceeds deposited by the Servicer into the Collection
Account during the preceding Remittance Period;

               (6) the aggregate amount of all Servicing Advances made by the Servicer during the preceding
Remittance Period;

               (7) the aggregate of all amounts deposited into the Distribution Account in respect of the
repurchase of Unqualified Loans and the repurchase of Loans pursuant to Section 2.05 hereof during
the preceding Remittance Period;

               (8) the aggregate Principal Balance of all Loans for which a Servicer Call was exercised
during the preceding Remittance Period;

               (9) the aggregate Principal Balance of all Loans for which a Servicer Put was exercised during
the preceding Remittance Period;

               (10) the aggregate amount of all payments received under Hedging Instruments during the
preceding Remittance Period;

               (11) the aggregate amount of all withdrawals from the Distribution Account pursuant to Section
5.01(c)(1)(i) hereof during the preceding Remittance Period;

               (12) the aggregate amount of cash Disposition Proceeds received during the preceding
Remittance Period;

               (13) withdrawals from the Collection Account in respect of the Servicing Advance Reimbursement
Amount with respect to the related Payment Date;

               (14) [reserved];

               (15) the number and aggregate Principal Balance of all Loans that are (i) 30-59 days
Delinquent, (ii) 60- 89 days Delinquent, (iii) 90 or more days Delinquent as of the end of the
related Remittance Period;

               (16) the aggregate amount of Liquidated Loan Losses incurred (i) during the preceding
Remittance Period, and (ii) during the preceding three Remittance Periods;

               (17) the aggregate of the Principal Balances of all Loans in the Loan Pool as of the end of
the related Remittance Period;

               (18) the aggregate amount of all deposits into the Distribution Account from the Transfer
Obligation Account pursuant to Sections 5.05(e), 5.05(f), 5.05(g), and 5.05(h) on the related
Payment Date;

               (19) the aggregate amount of distributions in respect of Servicing Compensation to the
Servicer, and unpaid Servicing Compensation from prior Payment Dates for the related Payment Date;

 

 

               (20) the aggregate amount of distributions in respect of Indenture Trustee Fees and unpaid
Indenture Trustee Fees from prior Payment Dates for the related Payment Date;

               (21) the aggregate amount of distributions in respect of the Custodian Fee and unpaid
Custodian Fees from prior Payment Dates for the related Payment Date;

               (22) the aggregate amount of distributions in respect of the Owner Trustee Fees and unpaid
Owner Trustee Fees from prior Payment Dates and for the related Payment Date;

               (23) the Unfunded Transfer Obligation and Overcollateralization Shortfall on such Payment Date
for the related Payment Date;

               (24) the aggregate amount of distributions to the Transfer Obligation Account for the related
Payment Date;

               (25) the aggregate amount of distributions in respect of Trust/Depositor Indemnities for the
related Payment Date;

               (26) the aggregate amount of distributions to the holders of the Trust Certificates for the
related Payment Date;

               (27) the Note Principal Balance of the Notes as of the last day of the related Remittance
Period (without taking into account any Additional Note Principal Balance between the last day of
such Remittance Period and the related Payment Date) before and after giving effect to
distributions made to the holders of the Notes for such Payment Date;

               (28) the Pool Principal Balance as of the end of the preceding Remittance Period; and

               (29) whether a Rapid Amortization Trigger shall exist with respect to such Payment Date.

Such Payment Statement shall also be provided on the Remittance Date to the Initial Noteholder and
Indenture Trustee in the form of a data file in a form mutually agreed to by and between the
Initial Noteholder, the Indenture Trustee and the Servicer. The Indenture Trustee shall have no
duty to monitor the occurrence of a Rapid Amortization Trigger or any events resulting in
withdrawals from the Transfer Obligation Account.

     Section 6.02 Specification of Certain Tax Matters.

          The Paying Agent shall comply with all requirements of the Code and applicable state and local
law with respect to the withholding from any distributions made to any Securityholder of any
applicable withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith, giving due effect to any applicable exemptions from such
withholding and effective certifications or forms provided by the recipient. Any amounts withheld
pursuant to this Section 6.02 shall be deemed to have been

 

 

distributed to the Securityholders, as
the case may be, for all purposes of this Agreement. The Indenture Trustee shall have no
responsibility for preparing or filing any tax returns.

     Section 6.03
Valuation of Loans, Hedge Value and Retained Securities Value; Market Value Agent.

          (a) The Initial Noteholder hereby irrevocably appoints, and the Issuer hereby consents to the
appointment of, the Market Value Agent as agent on behalf of the Noteholders to determine the
Market Value of each Loan, the Hedge Value of each Hedging Instrument and the Retained Securities
Value of all Retained Securities.

          (b) Except as otherwise set forth in Section 3.07, the Market Value Agent shall determine the
Market Value of each Loan, for the purposes of the Basic Documents, in its sole and reasonable
discretion. In determining the Market Value of each Loan, the Market Value Agent may consider any
information that it may deem relevant, including, without limitation, the expected proceeds of the
sale of such Loan following the occurrence and continuation of an Event of Default. The Market
Value Agent’s determination, in its sole and reasonable discretion, of Market Value shall be
conclusive and binding upon the parties hereto, absent manifest error (including without
limitation, any error contemplated in Section 2.08).

          (c) On each Business Day the Market Value Agent shall determine in its sole judgment the Hedge
Value of each Hedging Instrument as of such Business Day. In making such determination the Market
Value Agent may rely exclusively on quotations provided by the Hedging Counterparty, by leading
dealers in instruments similar to such Hedging Instrument, which leading dealers may include the
Market Value Agent and its Affiliates and such other sources of information as the Market Value
Agent may deem appropriate.

          (d) On each Business Day, the Market Value Agent shall determine in its sole judgment the
Retained Securities Value of the Retained Securities, if any, expected to be issued pursuant to
such Securitization as of the closing date of such Securitization. In making such determination the
Market Value Agent may rely exclusively on quotations provided by leading dealers in instruments
similar to such Retained Securities, which leading dealers may include the Market Value Agent and
its Affiliates and such other sources of information as the Market Value Agent may deem
appropriate.

ARTICLE VII

HEDGING; FINANCIAL COVENANTS

     Section 7.01 Hedging Instruments.

          (a) On each Transfer Date, the Trust shall enter into such Hedging Instruments as the Market
Value Agent, on behalf of the Majority Noteholders, shall determine are necessary in order to hedge
the interest rate risk with respect to the Collateral Value of the Loans being purchased on such
Transfer Date. The Market Value Agent shall determine, in its sole discretion, whether any Hedging
Instrument conforms to the requirements of Section 7.01(b), (c) and (d).

 

 

          (b) Each Hedging Instrument shall expressly provide that in the event of a Disposition or
other removal of the Loan from the Trust, such portion of the Hedging Instrument shall terminate as
the Disposition Agent deems appropriate to facilitate the hedging of the risks specified in Section
7.01(a). In the event that the Hedging Instrument is not otherwise terminated, it shall contain
provisions that allow the position of the Trust to be assumed by an Affiliate of the Trust upon the
liquidation of the Trust. The terms of the assignment documentation and the credit quality of the
successor to the Trust shall be subject to the Hedging Counterparty’s approval.

          (c) Any Hedging Instrument that provides for any payment obligation on the part of the Issuer
must (i) be without recourse to the assets of the Issuer, (ii) contain a non-petition covenant
provision in the form of Section 11.13, (iii) limit payment dates thereunder to Payment Dates and
(iv) contain a provision limiting any cash payments due on any day under such Hedging Instrument
solely to funds available therefor in the Collection Account on such day pursuant to Section
5.01(c)(3)(ii) hereof and funds available therefor in the Transfer Obligation Account.

          (d) Each Hedging Instrument must (i) provide for the direct payment of any amounts thereunder
to the Collection Account pursuant to Section 5.01(b)(1)(x), (ii) contain an assignment of all of
the Issuer’s rights (but none of its obligations) under such Hedging Instrument to the Indenture
Trustee and shall include an express consent to the Hedging Counterparty to such assignment, (iii)
provide that in the event of the occurrence of an Event of Default, such Hedging Instrument shall
terminate upon the direction of the Majority Noteholders, (iv) prohibit the Hedging Counterparty
from “setting-off” or “netting” other obligations of the Issuer or its Affiliates against such
Hedging Counterparty’s payment obligations thereunder, (v) provide that the appropriate portion of
the Hedging Instrument will terminate upon the removal of the related Loans from the Trust Estate
and (vi) have economic terms that are fixed and not subject to alteration after the date of
assumption or execution.

          (e) If agreed to by the Majority Noteholders, the Issuer may pledge its assets in order to
secure its obligations in respect of Hedge Funding Requirements, provided that such right shall be
limited solely to Hedging Instruments for which an Affiliate of the Initial Noteholder is a Hedging
Counterparty.

          (f) The aggregate notional amount of all Hedging Instruments shall not exceed the Note
Principal Balance as of the date on which each Hedging Instrument is entered into by the Issuer and
a Hedging Counterparty.

     Section 7.02 Financial Covenants.

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

          (b) Neither the Loan Originator nor the Servicer may exceed a maximum leverage ratio (the
ratio of total liabilities (exclusive of non-recourse debt), determined in accordance with GAAP, to
its Tangible Net Worth) of 6.0x as of any day.

 

 

          (c) Neither the Loan Originator nor the Servicer may exceed a maximum non-warehouse leverage
ratio (the ratio of (i) the sum of (A) all funded debt (excluding debt from H&R Block, Inc. or any
of its Affiliates and all non-recourse debt) less (B) 100% of its mortgage loan inventory held for
sale less (C) 80% of servicing advance receivables (determined and valued in accordance with GAAP)
to (ii) Tangible Net Worth) of 0.50x at any time.

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

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

ARTICLE VIII

THE SERVICER

     Section 8.01 Indemnification; Third Party Claims.

          (a) The Servicer shall indemnify the Loan Originator, the Owner Trustee, the Trust, the
Depositor, the Indenture Trustee and the Noteholders, their respective officers, directors,
employees, agents and “control persons,” as such term is used under the Act and under the
Securities Exchange Act of 1934 as amended (each a “Servicer Indemnified Party”) and hold harmless
each of them against any and all claims, losses, damages, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a breach of any of the
Servicer’s representations and warranties and covenants contained in this Agreement or in any way
relating to the failure of the Servicer to perform its duties and service
the Loans in compliance with the terms of this Agreement except to the extent such loss arises
out of such Servicer Indemnified Party’s gross negligence or willful misconduct; provided, however,
that if the Servicer is not liable pursuant to the provisions of Section 8.01(b) hereof for its
failure to perform its duties and service the Loans in compliance with the terms of this Agreement,
then the provisions of this Section 8.01 shall have no force and effect with respect to such
failure.

          (b) None of the Loan Originator, the Depositor or the Servicer or any of their respective
Affiliates, directors, officers, employees or agents shall be under any liability to the Owner
Trustee, the Issuer, the Indenture Trustee or the Securityholders for any action taken, or for
refraining from the taking of any action, in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the Loan Originator, the
Depositor, the Servicer or any of their respective Affiliates, directors, officers, employees,

 

 

agents against the remedies provided herein for the breach of any warranties, representations or
covenants made herein, or against any expense or liability specifically required to be borne by
such party without right of reimbursement pursuant to the terms hereof, or against any expense or
liability which would otherwise be imposed by reason of misfeasance, bad faith or negligence in the
performance of the respective duties of the Servicer, the Depositor or the Loan Originator, as the
case may be. The Loan Originator, the Depositor, the Servicer and any of their respective
Affiliates, directors, officers, employees, agents may rely in good faith on any document of any
kind which, prima facie, is properly executed and submitted by any Person respecting any matters
arising hereunder.

          (c) The Loan Originator agrees to indemnify and hold harmless the Depositor and the
Noteholders, as the ultimate assignees from the Depositor (each an “Originator Indemnified Party,”
together with the Servicer Indemnified Parties, the “Indemnified Parties”), from and against any
loss, liability, expense, damage, claim or injury arising out of or based on (i) any breach of any
representation, warranty or covenant of the Loan Originator, the Servicer or their Affiliates, in
any Basic Document, including, without limitation, the origination or prior servicing of the Loans
by reason of any acts, omissions, or alleged acts or omissions arising out of activities of the
Loan Originator, the Servicer or their Affiliates, and (ii) any untrue statement by the Loan
Originator, the Servicer or its Affiliates of any material fact or any such Person’s failure to
state a material fact necessary to make such statements not misleading with respect to any such
Person’s statements contained in any Basic Document, including, without limitation, any Officer’s
Certificate, statement, report or other document or information prepared by any such Person and
furnished or to be furnished by it pursuant to or in connection with the transactions contemplated
thereby and not corrected prior to completion of the relevant transaction 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 Loans or any such Person’s business, operations or
financial condition, including reasonable attorneys’ fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or claim; provided that
the Loan Originator shall not indemnify an Originator Indemnified Party to the extent such loss,
liability, expense, damage or injury is due to either an Originator Indemnified Party’s willful
misfeasance, bad faith or negligence or by reason of an Originator Indemnified Party’s reckless
disregard of its obligations hereunder; provided, further, that the Loan Originator shall not be so
required to indemnify an Originator Indemnified Party or to otherwise be liable hereunder or under
any provision of the Basic Documents to an Originator
Indemnified Party for any losses in respect of the performance of the Loans, the insolvency,
bankruptcy, delinquency, creditworthiness and similar characteristics of the Borrowers under the
Loans, the uncollectability of any principal, interest, and any other charges (including late fees)
under such loans, changes in the market value of the Loans or other similar investment risks
associated with the Loans arising from a breach of any representation or warranty set forth in
Exhibit E hereto, the sole remedy for the breach of which is provided in Section 3.06 hereof. The
provisions of this indemnity shall run directly to and be enforceable by an Originator Indemnified
Party subject to the limitations hereof.

          (d) With respect to a claim subject to indemnity hereunder made by any Person against an
Indemnified Party (a “Third Party Claim”), such Indemnified Party shall notify the related
indemnifying parties (each an “Indemnifying Party”) in writing of the Third Party Claim within a
reasonable time after receipt by such Indemnified Party of written notice of the

 

 

Third Party Claim
unless the Indemnifying Parties shall have previously obtained actual knowledge thereof.
Thereafter, the Indemnified Party shall deliver to the Indemnifying Parties, within a reasonable
time after the Indemnified Party’s receipt thereof, copies of all notices and documents (including
court papers) received by the Indemnified Party relating to the Third Party Claim. No failure to
give such notice or deliver such documents shall effect the rights to indemnity hereunder. Each
Indemnifying Party shall promptly notify the Indenture Trustee and the Indemnified Party (if other
than the Indenture Trustee) of any claim of which it has been notified and shall promptly notify
the Indenture Trustee and the Indemnified Party (if applicable) of its intended course of action
with respect to any claim.

          (e) If a Third Party Claim is made against an Indemnified Party, while maintaining control
over its own defense, the Indemnified Party shall cooperate and consult fully with the Indemnifying
Party in preparing such defense, and the Indemnified Party may defend the same in such manner as it
may deem appropriate, including settling such claim or litigation after giving notice to the
Indemnifying Party of such terms and the Indemnifying Party will promptly reimburse the Indemnified
Party upon written request; provided, however, that the Indemnified Party may not settle any claim
or litigation without the consent of the Indemnifying Party; provided, further, that the
Indemnifying Party shall have the right to reject the selection of counsel by the Indemnified Party
if the Indemnifying Party reasonably determines that such counsel is inappropriate in light of the
nature of the claim or litigation and shall have the right to assume the defense of such claim or
litigation if the Indemnifying Party determines that the manner of defense of such claim or
litigation is unreasonable.

     Section 8.02 Merger or Consolidation of the Servicer.

          The Servicer shall keep in full effect its existence, rights and franchises as a corporation,
and will obtain and preserve its qualification to do business as a foreign corporation and maintain
such other licenses and permits in each jurisdiction necessary to protect the validity and
enforceability of each Basic Document to which it is a party and each of the Loans and to perform
its duties under each Basic Document to which it is a party; provided, however, that the Servicer
may merge or consolidate with any other corporation upon the satisfaction of the conditions set
forth in the following paragraph.

          Any Person into which the Servicer may be merged or consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Servicer shall be a party, or any Person
succeeding to the business of the Servicer, shall be an Eligible Servicer and shall be the
successor of the Servicer, as applicable hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Servicer shall send notice of any such merger, conversion, consolidation or
succession to the Indenture Trustee and the issuer.

     Section 8.03 Limitation on Liability of the Servicer and Others.

          The Servicer and any director, officer, employee or agent of the Servicer may rely on any
document of any kind which it in good faith reasonably believes to be genuine and to have been
adopted or signed by the proper authorities respecting any matters arising hereunder. Subject to
the terms of Section 8.01 hereof, the Servicer shall have no obligation to appear with

 

 

respect to,
prosecute or defend any legal action which is not incidental to the Servicer’s duty to service the
Loans in accordance with this Agreement.

     Section 8.04 Servicer Not to Resign; Assignment.

          The Servicer shall not resign from the obligations and duties hereby imposed on it except (a)
with the consent of the Majority Noteholders or (b) upon determination that its duties hereunder
are no longer permissible under applicable law. Any such determination pursuant to clause (b) of
the preceding sentence permitting the resignation of the Servicer shall be evidenced by an
Independent opinion of counsel to such effect delivered (at the expense of the Servicer) to the
Indenture Trustee and the Majority Noteholders. No resignation of the Servicer shall become
effective until a successor servicer, appointed pursuant to the provisions of Section 9.02 hereof
shall have assumed the Servicer’s responsibilities, duties, liabilities (other than those
liabilities arising prior to the appointment of such successor) and obligations under this
Agreement.

          Except as expressly provided herein, the Servicer shall not assign or transfer any of its
rights, benefits or privileges hereunder to any other Person, or delegate to or subcontract with,
or authorize or appoint any other Person to perform any of the duties, covenants or obligations to
be performed by the Servicer hereunder and any agreement, instrument or act purporting to effect
any such assignment, transfer, delegation or appointment shall be void.

          The Servicer agrees to cooperate with any successor Servicer in effecting the transfer of the
Servicer’s servicing responsibilities and rights hereunder pursuant to the first paragraph of this
Section 8.04, including, without limitation, the transfer to such successor of all relevant records
and documents (including any Loan Files in the possession of the Servicer) and all amounts received
with respect to the Loans and not otherwise permitted to be retained by the Servicer pursuant to
this Agreement. In addition, the Servicer, at its sole cost and expense, shall prepare, execute and
deliver any and all documents and instruments to the successor Servicer including all Loan Files in
its possession and do or accomplish all other acts necessary or appropriate to effect such
termination and transfer of servicing responsibilities.

     Section 8.05 Relationship of Servicer to Issuer and the Indenture Trustee.

          The relationship of the Servicer (and of any successor to the Servicer as servicer under this
Agreement) to the Issuer, the Owner Trustee and the Indenture Trustee under this Agreement is
intended by the parties hereto to be that of an independent contractor and not of a joint venturer,
agent or partner of the issuer, the Owner Trustee or the Indenture Trustee.

     Section 8.06 Servicer May Own Securities.

          Each of the Servicer and any Affiliate of the Servicer may in its individual or any other
capacity become the owner or pledgee of Securities with the same rights as it would have if it were
not the Servicer or an Affiliate thereof except as otherwise specifically provided herein;
provided, however, that at any time that Option One or any of its Affiliates is the Servicer,
neither the Servicer nor any of its Affiliates (other than an Affiliate which is a corporation
whose purpose is limited to holding securities and related activities and which cannot incur
recourse debt) may be a Noteholder. Securities so owned by or pledged to the Servicer or such
Affiliate shall have an equal and proportionate benefit under the provisions of this Agreement,
without

 

 

preference, priority, or distinction as among all of the Securities; provided, however,
that any Securities owned by the Servicer or any Affiliate thereof, during the time such Securities
are owned by them, shall be without voting rights for any purpose set forth in this Agreement
unless the Servicer or such Affiliate owns all outstanding Securities of the related class. The
Servicer shall notify the Indenture Trustee promptly after it or any of its Affiliates becomes the
owner or pledgee of a Security.

     Section 8.07 Indemnification of the Indenture Trustee and Initial Noteholder.

          The Servicer agrees to indemnify the Indenture Trustee and its employees, officers, directors
and agents, and reimburse its reasonable out-of-pocket expenses in accordance with Section 6.07 of
the Indenture as if it was a signatory thereto. The Servicer agrees to indemnify the Initial
Noteholder in accordance with Section 9.01 of the Note Purchase Agreement as if it were signatory
thereto.

ARTICLE IX

SERVICER EVENTS OF DEFAULT

     Section 9.01 Servicer Events of Default.

          (a) In case one or more of the following Servicer Events of Default shall occur and be
continuing, that is to say:

               (1) any failure by the Servicer to deposit into the Collection Account or the Distribution
Account any amounts required to be deposited therein or any failure by the Servicer to make any of
the required payments therefrom; or

               (2) any failure on the part of the Servicer duly to observe or perform in any material respect
any other of the material covenants or agreements on the part of the Servicer, contained in any
Basic Document to which it is a party, which continues unremedied for a period of 30 days (or, in
the case of payment of insurance premiums, for a period of 15 days) after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given to the Servicer by
any other party hereto or to the Servicer (with copy to each other party hereto), by Holders of 25%
of the Percentage Interests of the Notes or the Trust Certificates; or

               (3) any breach on the part of the Servicer of any representation or warranty contained in any
Basic Document to which it is a party that materially and adversely affects the interests of any of
the parties hereto or any Securityholder and which continues unremedied for a period of 30 days
after the date on which notice of such breach, requiring the same to be remedied, shall have been
given to the Servicer by any other party hereto or to the Servicer (with copy to each other party
hereto), by the Initial Noteholder or Holders of 25% of the Percentage Interests (as defined in the
Indenture) of the Notes; or

               (4) there shall have been commenced before a court or agency or supervisory authority having
jurisdiction in the premises an involuntary proceeding against the

 

 

Servicer under any present or
future federal or state bankruptcy, insolvency or similar law for the appointment of a conservator,
receiver, liquidator, trustee or similar official in any bankruptcy, insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, which action shall not have been dismissed for a period of 60 days; or

               (5) the Servicer shall consent to the appointment of a conservator, receiver, liquidator,
trustee or similar official in any bankruptcy, insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to it or of or relating to all or
substantially all of its property; or

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

               (7) Reserved; or

               (8) the Servicer or the Loan Originator fails to comply with any of its financial covenants
set forth in Section 7.02; or

               (9) a Change of Control of the Servicer; or

               (10) the occurrence of an Event of Default under the Indenture as a result of the action or
inaction of the Issuer.

          (b) Then, and in each and every such case, so long as a Servicer Event of Default shall not
have been remedied, the Indenture Trustee or the Majority Noteholders, by notice in writing to the
Servicer may, in addition to whatever rights such Person may have at law or in equity to damages,
including injunctive relief and specific performance, may terminate all the rights and obligations
of the Servicer under this Agreement and in and to the Loans and the proceeds thereof, as servicer
under this Agreement. Upon receipt by the Servicer of such written notice, all authority and power
of the Servicer under this Agreement, whether with respect to the Loans or otherwise, shall,
subject to Section 9.02 hereof, pass to and be vested in a successor servicer, and the successor
servicer is hereby authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or assignment of the Loans
and related documents. The Servicer agrees to cooperate with the successor servicer in effecting
the termination of the Servicer’s responsibilities and rights hereunder, including, without
limitation, the transfer to the successor servicer for administration by it of all amounts which
shall at the time be credited by the Servicer to each Collection Account or thereafter received
with respect to the Loans.

          (c) Upon the occurrence of (i) an Event of Default or Default under any of the Basic
Documents, (ii) a Servicer Event of Default under this Agreement or (iii) a Rapid Amortization
Trigger (each, a “Term Event”), the Servicer’s right to service the Loans pursuant

 

 

to the terms of
this Agreement shall be in effect for an initial period commencing on the date on which such Term
Event occurred and shall automatically terminate at 5:00 p.m. (New York City time), on the last
Business Day of the calendar month in which such Term Event occurred (the “Initial Term”).
Thereafter, the Initial Term shall be extendible in the sole discretion of the Initial Noteholder
by written notice (each, a “Servicer Extension Notice”) of the Initial Noteholder for successive
one-month terms (each such term ending at 5:00 p.m. (New York City time), on the last Business Day
of the related month). Following a Term Event, the Servicer hereby agrees that the Servicer shall
be bound for the duration of the Initial Term and the term covered by any such Servicer Extension
Notice to act as the Servicer pursuant to this Agreement. Following a Term Event, the Servicer
agrees that if, as of 3:00 p.m. (New York City time) on the last Business Day of any month, the
Servicer shall not have received a Servicer Extension Notice from the Initial Noteholder, the
Servicer shall give written notice of such non-receipt to the Initial Noteholder by 4:00 p.m. (New
York City time). Following a Term Event, the failure of the Initial Noteholder to deliver a
Servicer Extension Notice by 5:00 p.m. (New York City time) shall result in the automatic and
immediate termination of the Servicer (the “Termination Date”). Notwithstanding these time frames,
the Servicer and the Initial Noteholder shall comply with all applicable laws in connection with
such transfer and the Servicer shall continue to service the Loans until completion of such
transfer.

     Section 9.02 Appointment of Successor.

          On and after the date the Servicer receives a notice of termination pursuant to Section 9.01
hereof or is automatically terminated pursuant to Section 9.01(c) hereof, or the
Owner Trustee receives the resignation of the Servicer evidenced by an Opinion of Counsel or
accompanied by the consents required by Section 8.04 hereof, or the Servicer is removed as servicer
pursuant to this Article IX or Section 4.01 of the Servicing Addendum, then, the Majority
Noteholders shall appoint a successor servicer to be the successor in all respects to the Servicer
in its capacity as Servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof; provided, however, that the successor
servicer shall not be liable for any actions of any servicer prior to it.

          The successor servicer shall be obligated to make Servicing Advances hereunder. As
compensation therefor, the successor servicer appointed pursuant to the following paragraph, shall
be entitled to all funds relating to the Loans which the Servicer would have been entitled to
receive from the Collection Account pursuant to Section 5.01 hereof as if the Servicer had
continued to act as servicer hereunder, together with other Servicing Compensation in the form of
assumption fees, late payment charges or otherwise as provided in Section 4.15 of the Servicing
Addendum. The Servicer shall not be entitled to any termination fee if it is terminated pursuant to
Section 9.01 hereof but shall be entitled to any accrued and unpaid Servicing Compensation to the
date of termination.

          Any collections received by the Servicer after removal or resignation shall be endorsed by it
to the Indenture Trustee and remitted directly to the successor servicer. The compensation of any
successor servicer appointed shall be the Servicing Fee, together with other Servicing Compensation
provided for herein. The Indenture Trustee, the Issuer, any Custodian, the Servicer and any such
successor servicer shall take such action, consistent with this Agreement, as shall be reasonably
necessary to effect any such succession. Any costs or

 

 

expenses incurred by the Indenture Trustee in
connection with the termination of the Servicer and the succession of a successor servicer shall be
an expense of the outgoing Servicer and, to the extent not paid thereby, an expense of such
successor servicer. The Servicer agrees to cooperate with the Indenture Trustee and any successor
servicer in effecting the termination of the Servicer’s servicing responsibilities and rights
hereunder and shall promptly provide the successor servicer all documents and records reasonably
requested by it to enable it to assume the Servicer’s functions hereunder and shall promptly also
transfer to the successor servicer all amounts which then have been or should have been deposited
in any Trust Account maintained by the Servicer or which are thereafter received with respect to
the Loans. Upon the occurrence of an Event of Default, the Majority Noteholders shall have the
right to order the Servicer’s Loan Files and all other files of the Servicer relating to the Loans
and all other records of the Servicer and all documents relating to the Loans which are then or may
thereafter come into the possession of the Servicer or any third party acting for the Servicer to
be delivered to such custodian or servicer as it selects and the Servicer shall deliver to such
custodian or servicer such assignments as the Majority Noteholders shall request. No successor
servicer shall be held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the Servicer to deliver,
or any delay in delivering, cash, documents or records to it or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer hereunder. No appointment of a successor
to the Servicer hereunder shall be effective until written notice of such proposed appointment
shall have been provided to the Initial Noteholder, the Indenture Trustee, the Issuer and the
Depositor, the Majority Noteholders and the Issuer shall have consented in writing thereto.

          In connection with such appointment and assumption, the Majority Noteholder may make such
arrangements for the compensation of such successor servicer out of payments on the Loans as they
and such successor servicer shall agree.

     Section 9.03 Waiver of Defaults.

          The Majority Noteholders may waive any events permitting removal of the Servicer as servicer
pursuant to this Article IX. Upon any waiver of a past default, such default shall cease to exist
and any Servicer Event of Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair
any right consequent thereto except to the extent expressly so waived.

     Section 9.04 Accounting Upon Termination of Servicer.

          Upon termination of the Servicer under this Article IX, the Servicer shall, at its own
expense:

          (a) deliver to its successor or, if none shall yet have been appointed, to the Indenture
Trustee the funds in any Trust Account maintained by the Servicer;

          (b) deliver to its successor or, if none shall yet have been appointed, to the Custodian all
Loan Files and related documents and statements held by it hereunder and a Loan portfolio computer
tape;

 

 

          (c) deliver to its successor or, if none shall yet have been appointed, to the Indenture
Trustee and to the Issuer and the Securityholders a full accounting of all funds, including a
statement showing the Monthly Payments collected by it and a statement of monies held in trust by
it for payments or charges with respect to the Loans; and

          (d) execute and deliver such instruments and perform all acts reasonably requested in order to
effect the orderly and efficient transfer of servicing of the Loans to its successor and to more
fully and definitively vest in such successor all rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer under this Agreement.

ARTICLE X

TERMINATION; PUT OPTION

     Section 10.01 Termination.

          (a) This Agreement shall terminate upon either: (A) the later of (i) the satisfaction and
discharge of the Indenture and the provisions thereof, to the Noteholders of all amounts due and
owing in accordance with the provisions hereof or (ii) the disposition of all funds with respect to
the last Loan and the remittance of all funds due hereunder and the payment of all amounts due and
payable, including, in both cases, without limitation, indemnification payments payable pursuant to
any Basic Document to the Indenture Trustee, the Owner Trustee, the Issuer, the Servicer and the
Custodian, written notice of the occurrence of
either of which shall be provided to the Indenture Trustee by the Servicer; or (B) the mutual
consent of the Servicer, the Depositor and all Securityholders in writing and delivered to the
Indenture Trustee by the Servicer.

          (b) The Securities shall be subject to an early redemption or termination at the option of the
Servicer and the Majority Noteholders in the manner and subject to the provisions of Section 10.02
and 10.04 of this Agreement.

          (c) Except as provided in this Article X, none of the Depositor, the Servicer nor any
Certificateholder or Noteholder shall be entitled to revoke or terminate the Trust.

     Section 10.02 Optional Termination.

          (a) The Servicer may, at its option, effect an early termination of the Trust on any Payment
Date on or after the Clean-up Call Date. The Servicer shall effect such early termination by
providing notice thereof to the Indenture Trustee and Owner Trustee and by purchasing all of the
Loans at a purchase price, payable in cash, equal to or greater than the Termination Price. The
expense of any Independent appraiser required in connection with the calculation and payment of the
Termination Price under this Section 10.02 shall be a nonreimbursable expense of the Servicer.

          Any such early termination by the Servicer shall be accomplished by depositing into the
Collection Account on the third Business Day prior to the Payment Date on which the purchase is to
occur the amount of the Termination Price to be paid. The Termination Price and any amounts then on
deposit in the Collection Account (other than any amounts withdrawable

 

 

pursuant to Section
5.01(c)(1) hereof) shall be deposited in the Distribution Account and distributed by the Indenture
Trustee pursuant to Section 5.01(c)(3) of this Agreement and Section 9.1 of the Trust Agreement on
the next succeeding Payment Date; and any amounts received with respect to the Loans and
Foreclosure Properties subsequent to the final Payment Date shall belong to the purchaser thereof.

     Section 10.03 Notice of Termination.

          Notice of termination of this Agreement or of early redemption and termination of the Issuer
pursuant to Section 10.01 shall be sent by the Indenture Trustee to the Noteholders in accordance
with Section 10.02 of the Indenture.

     Section 10.04 Put Option.

          The Majority Noteholders may, at their option, effect a put of the entire outstanding Note
Principal Balance, or any portion thereof, to the Trust on any date by exercise of the Put Option.
The Majority Noteholders shall effect such put by providing notice thereof in accordance with
Section 10.05 of the Indenture.

          Unless otherwise agreed by the Majority Noteholders, on the third Business Day prior to the
Put Date, the Issuer shall deposit the Note Redemption Amount into the Distribution Account and, if
the Put Date occurs after the termination of the Revolving Period and constitutes a put of the
entire outstanding Note Principal Balance, any amounts then on deposit in the
Collection Account (other than any amounts withdrawable pursuant to Section 5.01(c)(1) hereof)
shall be deposited in the Distribution Account and distributed by the Paying Agent pursuant to
section 5.01(c)(3) of this Agreement on the Put Date; and any amounts received with respect to the
Loans and Foreclosure Properties subsequent to the Put Date shall belong to the Issuer.

ARTICLE XI

MISCELLANEOUS PROVISIONS

     Section 11.01 Acts of Securityholders.

          Except as otherwise specifically provided herein and except with respect to Section 11.02(b),
whenever action, consent or approval of the Securityholders is required under this Agreement, such
action, consent or approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Securityholders if the Majority Noteholders agree to take such action or give
such consent or approval.

     Section 11.02 Amendment.

          (a) This Agreement may be amended from time to time by the Depositor, the Servicer, the Loan
Originator, the Indenture Trustee and the Issuer by written agreement with notice thereof to the
Securityholders, without the consent of any of the Securityholders, to cure any error or ambiguity,
to correct or supplement any provisions hereof which may be defective or inconsistent with any
other provisions hereof or to add any other provisions with respect to matters or questions arising
under this Agreement; provided, however, that such action will not adversely affect in any material
respect the interests of the Securityholders, as evidenced by an

 

 

Opinion of Counsel to such effect
provided at the expense of the party requesting such Amendment.

          (b) This Agreement may also be amended from time to time by the Depositor, the Servicer, the
Loan Originator, the Indenture Trustee and the Issuer by written agreement, with the prior written
consent of the Majority Noteholders, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the
rights of the Securityholders; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, collections of payments on Loans or distributions
which are required to be made on any Security, without the consent of the holders of 100% of the
Securities, (ii) adversely affect in any material respect the interests of any of the holders of
the Securities in any manner other than as described in clause (i), without the consent of the
holders of 100% of the Securities, or (iii) reduce the percentage of the Securities, the consent of
which is required for any such amendment, without the consent of the holders of 100% of the
Securities.

          (c) It shall not be necessary for the consent of Securityholders under this Section to approve
the particular form of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof.

          Prior to the execution of any amendment to this Agreement, the Issuer and the Indenture
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution
of such amendment is authorized or permitted by this Agreement. The Issuer and the Indenture
Trustee may, but shall not be obligated to, enter into any such amendment which affects the
Issuer’s own rights, duties or immunities of the Issuer or the Indenture Trustee, as the case may
be, under this Agreement.

     Section 11.03 Recordation of Agreement.

     To the extent permitted by applicable law, this Agreement, or a memorandum thereof if
permitted under applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions in which any or all
of the Mortgaged Property is situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the Securityholders’ expense on
direction of the Majority Noteholders but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests of the
Securityholders or is necessary for the administration or servicing of the Loans.

     Section 11.04 Duration of Agreement.

          This Agreement shall continue in existence and effect until terminated as herein provided.

     Section 11.05 Governing Law.

          THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN

 

 

ACCORDANCE WITH
SUCH LAWS (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).

     Section 11.06 Notices.

          All demands, notices and communications hereunder shall be in writing and shall be deemed to
have been duly given if (i) delivered personally, mailed by overnight mail, certified mail or
registered mail, postage prepaid, or (ii) transmitted by telecopy, upon telephone confirmation of
receipt thereof, as follows: (I) in the case of the Depositor, to Option One Loan Warehouse
Corporation, 3 Ada, Irvine, California 92618, or such other addresses or telecopy or telephone
numbers as may hereafter be furnished to the Securityholders and the other parties hereto in
writing by the Depositor; (II) in the case of the Trust, to Option One Owner Trust 2003-5, c/o
Wilmington Trust Company, One Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890, Attention: Corporate Trust Administration, telecopy number: (302) 636-4144, telephone
number: (302) 636-1000, or such other address or telecopy or telephone numbers as may hereafter be
furnished to the Noteholders and the other parties hereto
in writing by the Trust; (III) in the case of the Loan Originator, to Option One Mortgage
Corporation, 3 Ada, Irvine, California 92618, Attention: William O’Neill, telecopy number: (949)
790-7540, telephone number: (949) 790-7504 or such other addresses or telecopy or telephone numbers
as may hereafter be furnished to the Securityholders and the other parties hereto in writing by the
Loan Originator; (IV) in the case of the Servicer, to Option One Mortgage Corporation 3 Ada,
Irvine, California 92618, Attention: William O’Neill, telecopy number: (949) 790-7540, telephone
number: (949) 790-7504 or such other addresses or telecopy or telephone numbers as may hereafter be
furnished to the Securityholders and the other parties hereto in writing by the Servicer; and (V)
in the case of the Indenture Trustee, at P.O. Box 98, Columbia, Maryland 21046, Attention: Option
One Owner Trust 2003-5, with a copy to it at the Corporate Trust Office, as defined in the
Indenture, any such notices shall be deemed to be effective with respect to any party hereto upon
the receipt of such notice or telephone confirmation thereof by such party, except; provided, that
notices to the Securityholders shall be effective upon mailing or personal delivery.

     Section 11.07 Severability of Provisions.

          If any one or more of the covenants, agreements, provisions or terms of this Agreement shall
be held invalid for any reason whatsoever, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.

     Section 11.08 No Partnership.

          Nothing herein contained shall be deemed or construed to create any partnership or joint
venture between the parties hereto and the services of the Servicer shall be rendered as an
independent contractor.

 

 

     Section 11.09 Counterparts.

     This Agreement may be executed in one or more counterparts and by the different parties hereto
on separate counterparts, each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same Agreement.

     Section 11.10 Successors and Assigns.

          This Agreement shall inure to the benefit of and be binding upon the Servicer, the Loan
Originator, the Depositor, the Indenture Trustee, the Issuer and the Securityholders and their
respective successors and permitted assigns.

     Section 11.11 Headings.

          The headings of the various Sections of this Agreement have been inserted for convenience of
reference only and shall not be deemed to be part of this Agreement.

     Section 11.12 Actions of Securityholders.

          (a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by Securityholders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Securityholders in person
or by an agent duly appointed in writing; and except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered to the Depositor,
the Servicer, the Loan Originator or the Issuer. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Depositor, the Servicer, the Loan Originator and the Issuer if made in
the manner provided in this Section 11.12.

          (b) The fact and date of the execution by any Securityholder of any such instrument or writing
may be proved in any reasonable manner which the Depositor, the Servicer, the Loan Originator or
the Issuer may deem sufficient.

          (c) Any request, demand, authorization, direction, notice, consent, waiver or other act by a
Securityholder shall bind every holder of every Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, in respect of anything done, or omitted to be
done, by the Depositor, the Servicer, the Loan Originator or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Security.

          (d) The Depositor, the Servicer, the Loan Originator or the Issuer may require additional
proof of any matter referred to in this Section 11.12 as it shall deem necessary.

     Section 11.13 Non-Petition Agreement.

          Notwithstanding any prior termination of any Basic Document, the Loan Originator, the
Servicer, the Depositor and the Indenture Trustee each severally and not jointly covenants that it
shall not, prior to the date which is one year and one day after the payment in

 

 

full of the all of
the Notes, acquiesce, petition or otherwise, directly or indirectly, invoke or cause the Trust or
the Depositor to invoke the process of any governmental authority for the purpose of commencing or
sustaining a case against the Issuer or Depositor 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 Depositor or any substantial part of their respective
property or ordering the winding up or liquidation of the affairs of the Issuer or the Depositor.

     Section 11.14 Holders of the Securities.

          (a) Any sums to be distributed or otherwise paid hereunder or under this Agreement to the
holders of the Securities shall be paid to such holders pro rata based on their Percentage
Interests;

          (b) Where any act or event hereunder is expressed to be subject to the consent or approval of
the holders of the Securities, such consent or approval shall be capable of being given by the
holder or holders evidencing in the aggregate not less than 51% of the Percentage Interests.

     Section 11.15 Due Diligence Fees, Due Diligence.

          The Loan Originator acknowledges that the Initial Noteholder has the right to perform
continuing due diligence reviews with respect to the Loans, for purposes of verifying compliance
with the representations, warranties and specifications made hereunder, or otherwise, and the Loan
Originator agrees that upon reasonable prior notice (with no notice being required upon the
occurrence of an Event of Default) to the Loan Originator, the Initial Noteholder, the Indenture
Trustee and Custodian or its authorized representatives will be permitted during normal business
hours to examine, inspect, and make copies and extracts of, the Loan Files and any and all
documents, records, agreements, instruments or information relating to such Loans in the possession
or under the control of the Servicer and the Indenture Trustee. The Loan Originator also shall make
available to the Initial Noteholder a knowledgeable financial or accounting officer for the purpose
of answering questions respecting the Loan Files and the Loans and the financial condition of the
Loan Originator. Without limiting the generality of the foregoing, the Loan Originator acknowledges
that the Initial Noteholder may purchase Notes based solely upon the information provided by the
Loan Originator to the Initial Noteholder in the Loan Schedule and the representations, warranties
and covenants contained herein, and that the Initial Noteholder, at its option, has the right at
any time to conduct a partial or complete due diligence review on some or all of the Loans securing
such purchase, including without limitation ordering new credit reports and new appraisals on the
related Mortgaged Properties and otherwise re-generating the information used to originate such
Loan. The Initial Noteholder may underwrite such Loans itself or engage a mutually agreed upon
third party underwriter to perform such underwriting. The Loan Originator agrees to cooperate with
the Initial Noteholder and any third party underwriter in connection with such underwriting,
including, but not limited to, providing the Initial Noteholder and any third party underwriter
with access to any and all documents, records, agreements, instruments or information relating to
such Loans in the possession, or under the control, of the Servicer. The Loan Originator further
agrees that the Loan Originator shall reimburse the Initial Noteholder for any and all reasonable
out-of-pocket costs and expenses incurred by the Initial Noteholder in connection with the Initial
Noteholder’s

 

 

activities pursuant to this Section 11.15 hereof , not to exceed $15,000 per quarter
(the “Due Diligence Fees”). In addition to the obligations set forth in Section 11.17 of this
Agreement, the Initial Noteholder agrees (on behalf of itself and its Affiliates, directors,
officers, employees and representatives) to use reasonable precaution to keep confidential, in
accordance with its customary procedures for handling confidential information and in accordance
with safe and sound practices, and not to disclose to any third party, any non-public information
supplied to it or otherwise obtained by it hereunder with respect to the Loan Originator or any of
its Affiliates (including, but not limited to, the Loan File); provided, however, that nothing
herein shall prohibit the disclosure of any such information to the extent required by statute,
rule, regulation or judicial process; provided, further that, unless specifically prohibited by
applicable law or court order, the Initial Noteholder shall, prior to disclosure thereof, notify
the Loan Originator of any request for disclosure of any such non-public information. The Initial
Noteholder further
agrees not to use any such non-public information for any purpose unrelated to this Agreement
and that the Initial Noteholder shall not disclose such non-public information to any third party
underwriter in connection with a potential Disposition without obtaining a written agreement from
such third party underwriter to comply with the confidentiality provisions of this Section 11.15.

     Section 11.16 No Reliance.

          Each of the Loan Originator, the Depositor, the Servicer and the Issuer hereby acknowledges
that it has not relied on the Initial Noteholder or any of its officers, directors, employees,
agents and “control persons” as such term is used under the Act and under the Securities Exchange
Act of 1934, as amended, for any tax, accounting, legal or other professional advice in connection
with the transactions contemplated by the Basic Documents, that each of the Loan Originator, the
Depositor, the Servicer and the Issuer has retained and been advised by such tax, accounting, legal
and other professionals as it has deemed necessary in connection with the transactions contemplated
by the Basic Documents and that the Initial Noteholder makes no representation or warranty, and
shall have no liability with respect to, the tax, accounting or legal treatment or implications
relating to the transactions contemplated by the Basic Documents.

     Section 11.17 Confidential Information.

          In addition to the confidentiality requirements set forth in Section 11.15 of the Agreement,
each Noteholder, as well as the Indenture Trustee and the Disposition Agent (each of said parties
singularly referred to herein as a “Receiving Party” and collectively referred to herein as the
“Receiving Parties”), agrees to hold and treat all Confidential Information (as defined below) in
confidence and in accordance with this Section. Such Confidential Information will not, without
the prior written consent of the Servicer and the Loan Originator, be disclosed or used by such
Receiving Parties or its subsidiaries, Affiliates, directors, officers, members, employees, agents
or controlling persons (collectively, the “Information Recipients”) other than for the purpose of
making a decision to purchase or sell Notes or taking any other permitted action under this
Agreement and or any other Basic Document. Each Receiving Party agrees to disclose Confidential
Information only to its Information Recipients who need to know it for the purpose of making a
decision to purchase or sell Notes or the taking of any other permitted action under this Agreement
and or any other Basic Document (including in connection with the servicing of the Loans and in
connection with any servicing transfers) and who are informed by

 

 

such Receiving Party of its
confidential nature and who agree to be bound by the terms of this Section 11.17. Disclosure that
is not in violation of the Right to Financial Privacy Act, the Gramm-Leach-Bliley Act or other
applicable law by such Receiving Party of any Confidential Information at the request of its
outside auditors or governmental regulatory authorities in connection with an examination of a
Receiving Party by any such authority shall not constitute a breach of its obligations under this
Section 11.17 and shall not require the prior consent of the Servicer and the Loan Originator.

          Each Receiving Party shall be responsible for any breach of this Section 11.17 by its
Information Recipients. The Initial Noteholder may use Confidential Information for internal due
diligence purposes in connection with its analysis of the transactions contemplated by the
Basic Documents. The Disposition Agent may disclose Confidential Information to the
Disposition Participants as required to effect Dispositions. This Section 11.17 shall terminate
upon the occurrence of an Event of Default; provided, however, that such termination shall not
relieve the Receiving Parties or their respective Information Recipients from the obligation to
comply with the Gramm-Leach-Bliley Act or other applicable law with respect to their use or
disclosure of Confidential Information following the occurrence of an Event of Default.

          As used herein, “Confidential Information” means non-public personal information (as defined
in the Gramm-Leach-Bliley Act and its enabling regulations issued by the Federal Trade Commission)
regarding Borrowers. Confidential information shall not include information which (i) is or
becomes generally available to the public other than as a result of a disclosure by a Receiving
Party or any Information Recipients; (ii) was available to a Receiving Party on a non-confidential
basis prior to its disclosure to Receiving Party by the Servicer or the Loan Originator; (iii) is
required to be disclosed by a governmental authority or related governmental agencies or as
otherwise required by law; or (iv) becomes available to a Receiving Party on a non-confidential
basis from a person other than the Servicer or the Loan Originator who, to the best knowledge of
such Receiving Party, is not otherwise bound by a confidentiality agreement with the Servicer or
the Loan Originator and is not otherwise prohibited from transmitting the information to such
Receiving Party.

     Section 11.18 Conflicts.

          Notwithstanding anything contained in the Basic Documents to the contrary, in the event of the
conflict between the terms of this Agreement and any other Basic Document, the terms of this
Agreement shall control.

     Section 11.19 Limitation on Liability.

          It is expressly understood and agreed by the parties hereto that (a) this Agreement is
executed and delivered by Wilmington Trust Company, not individually or personally, but solely as
Owner Trustee of Option One Owner Trust 2003-5, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and agreements herein
made on the part of the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any liability on
Wilmington Trust Company, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by

 

 

the parties hereto
and by any Person claiming by, through or under the parties hereto and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses
of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Issuer under this Agreement or any other related documents.

     Section 11.20 No Agency.

          Nothing contained herein or in the Basic Documents shall be construed to create an agency or
fiduciary relationship between the Initial Noteholder or the Majority Noteholders or any of their
Affiliates and the Issuer, the Depositor, the Loan Originator or the Servicer. None of
the Initial Noteholder, the Majority Noteholders or any of their Affiliates shall be liable
for any acts or actions affected in connection with a disposition of Loans, including without
limitation, any Securitization pursuant to Section 3.06, any Servicer Put or Servicer Call pursuant
to Section 3.08 hereof nor any Whole Loan Sale pursuant to Section 3.10 hereof.

(SIGNATURE PAGE FOLLOWS)

 

 

          IN WITNESS WHEREOF, the Issuer, the Depositor, the Servicer, the Indenture Trustee and the
Loan Originator have caused their names to be signed by their respective officers thereunto duly
authorized, as of the day and year first above written, to this SALE AND SERVICING AGREEMENT.

	 	 	 	 	 	 	 
	 	 	OPTION ONE OWNER TRUST 2003-5,
	

	 	By:
	 	Wilmington Trust Company

not in its individual capacity

but solely as Owner Trustee	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	                                  /s/ Mary Kay Pupillo
 	 
	 	 	Name:  	Mary Kay Pupillo 	 
	 	 	Title:  	Assistant Vice President 	 
	 

	 	 	 
	 

	 	OPTION ONE LOAN WAREHOUSE

CORPORATION, as Depositor

	 	 	 	 	 
	 	 	 
	 	By:  	                                                   /s/ C R Fulton
 	 
	 	 	Name:  	Charles R. Fulton 	 
	 	 	Title:  	Assistant Secretary 	 
	 

	 	 	 
	 

	 	OPTION ONE MORTGAGE CORPORATION, as
	

	 	Loan Originator and Servicer

	 	 	 	 	 
	 	 	 
	 	By:  	                                                   /s/ C R Fulton
 	 
	 	 	Name:  	Charles R. Fulton 	 
	 	 	Title:  	Vice President 	 
	 

	 	 	 
	 

	 	WELLS FARGO BANK, N.A., as Indenture
Trustee

	 	 	 	 	 
	 	 	 
	 	By:  	                                                   /s/ Reid Denny
 	 
	 	 	Name:  	Reid Denny 	 
	 	 	Title:  	Vice Presidentexv10w5

 

EXHIBIT 10.5

NOTE PURCHASE AGREEMENT

among

OPTION ONE OWNER TRUST 2003-5

as Issuer

and

OPTION ONE LOAN WAREHOUSE CORPORATION

as Depositor

and

CITIGROUP GLOBAL MARKETS REALTY CORP.

as Purchaser

Dated as of November 14, 2003

OPTION ONE OWNER TRUST 2003-5

MORTGAGE-BACKED NOTES

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page

	ARTICLE I
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	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
	 	 	 	 
	SECTION 2.01. Commitment
	 	 	3	 
	SECTION 2.02. Closing
	 	 	3	 
	ARTICLE III
	 	 	 	 
	TRANSFER DATES
	 	 	 	 
	SECTION 3.01. Transfer Dates
	 	 	4	 
	ARTICLE IV
	 	 	 	 
	CONDITIONS PRECEDENT TO

EFFECTIVENESS OF COMMITMENT
	 	 	 	 
	SECTION 4.01. Closing Subject to Conditions Precedent
	 	 	5	 
	ARTICLE V
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES OF

THE ISSUER AND THE DEPOSITOR
	 	 	 	 
	SECTION 5.01. Issuer
	 	 	7	 
	SECTION 5.02. Securities Act
	 	 	9	 
	SECTION 5.03. No Fee
	 	 	10	 
	SECTION 5.04. Information
	 	 	10	 
	SECTION 5.05. The Purchased Note
	 	 	10	 
	SECTION 5.06. Use of Proceeds
	 	 	10	 
	SECTION 5.07. The Depositor
	 	 	10	 
	SECTION
5.08. Taxes, etc.
	 	 	10	 
	SECTION 5.09. Financial Condition
	 	 	10	 

i

 

	 	 	 	 	 
	 	 	Page

	ARTICLE VI
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES

WITH RESPECT TO THE PURCHASER
	 	 	 	 
	SECTION 6.01. Organization
	 	 	11	 
	SECTION
6.02. Authority, etc.
	 	 	11	 
	SECTION 6.03. Securities Act
	 	 	11	 
	SECTION 6.04. Conflicts With Law
	 	 	11	 
	SECTION
6.05. Conflicts With Agreements, etc.
	 	 	11	 
	ARTICLE VII
	 	 	 	 
	COVENANTS OF THE ISSUER AND THE DEPOSITOR
	 	 	 	 
	SECTION 7.01. Information from the Issuer
	 	 	12	 
	SECTION 7.02. Access to Information
	 	 	12	 
	SECTION 7.03. Ownership and Security Interests; Further Assurances
	 	 	12	 
	SECTION 7.04. Covenants
	 	 	13	 
	SECTION 7.05. Amendments
	 	 	13	 
	SECTION 7.06. With Respect to the Exempt Status of the Purchased Note
	 	 	13	 
	ARTICLE VIII
	 	 	 	 
	ADDITIONAL COVENANTS
	 	 	 	 
	SECTION 8.01. Legal Conditions to Closing
	 	 	13	 
	SECTION 8.02. Expenses
	 	 	13	 
	SECTION 8.03. Mutual Obligations
	 	 	14	 
	SECTION 8.04. Restrictions on Transfer
	 	 	14	 
	SECTION 8.05. Confidentiality
	 	 	14	 
	SECTION 8.06. Information Provided by the Purchaser
	 	 	14	 
	ARTICLE IX
	 	 	 	 
	INDEMNIFICATION
	 	 	 	 
	SECTION 9.01. Indemnification of Purchaser
	 	 	15	 
	SECTION 9.02. Procedure and Defense
	 	 	15	 
	ARTICLE X
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	SECTION 10.01. Amendments
	 	 	16	 

ii

 

	 	 	 	 	 
	 	 	Page

	SECTION 10.02. Notices
	 	 	16	 
	SECTION 10.03. No Waiver; Remedies
	 	 	16	 
	SECTION 10.04. Binding Effect; Assignability
	 	 	16	 
	SECTION 10.05. Provision of Documents and Information
	 	 	17	 
	SECTION 10.06. GOVERNING LAW; JURISDICTION
	 	 	17	 
	SECTION 10.07. No Proceedings
	 	 	17	 
	SECTION 10.08. Execution in Counterparts
	 	 	17	 
	SECTION 10.09. No Recourse — Purchaser and Depositor
	 	 	17	 
	SECTION 10.10. Survival
	 	 	18	 
	SECTION 10.12. Conflicts
	 	 	18	 
	SECTION 10.13. Limitation on Liability
	 	 	18	 

Schedule I — Information for Notices

iii

 

NOTE PURCHASE AGREEMENT

          NOTE PURCHASE AGREEMENT dated as of November 14, 2003 (the “Note Purchase
Agreement”), among OPTION ONE OWNER TRUST 2003-5 (the “Issuer”), OPTION ONE
LOAN WAREHOUSE CORPORATION (the “Depositor”), and CITIGROUP GLOBAL MARKETS
REALTY CORP. (“Citigroup,” and in its capacity as Purchaser hereunder, 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 the Purchaser and any of its officers,
directors, employees, agents, representatives, assignees and Affiliates and any
Person who controls the Purchaser or its 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 October 1, 2003 between the
Issuer as Issuer and Wells Fargo Bank Minnesota, National Association as
Indenture Trustee.

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

          “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 Mortgage Corporation, a California
corporation.

          “Maximum Note Principal Balance” means an amount equal to $1,000,000,000.

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

          “Purchased Note” means the Option One Owner Trust 2003-5 Mortgage-Backed
Note issued by the Issuer pursuant to the Indenture.

          “Sale and Servicing Agreement” means the Sale and Servicing Agreement
dated as of November 1, 2003, among the Issuer, the Depositor, the Loan
Originator, the Servicer and Wells Fargo Bank Minnesota, National Association
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, schedules and Exhibits 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; Collateral Value Increase Dates.

          (a) At any time during the Revolving Period at least two Business

Days prior to a proposed Transfer Date, 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 and an estimate of the number of Loans and
aggregate Principal Balance of such Loans to be purchased by the Issuer on such
Transfer Date. On the identified Transfer Date, the Purchaser agrees to
purchase the Additional Note Principal Balances 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.

          (b) On any Collateral Value Increase Date during the Revolving Period, to
the extent that the Note Principal Balance (after giving effect to the proposed
increase in the Note Principal Balance) 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 equal to the related increase in the
Collateral Percentage of the related Loans. The Purchaser may in its sole
discretion agree to purchase such Additional Note Principal Balances.

          SECTION 2.02. Closing. The closing (the “Closing”) of the execution of the
Basic Documents and Purchased Note shall take place at 10:00 a.m. at the
offices of Thacher Proffitt & Wood, Two World Financial Center, New York, New
York 10281 on November 14, 2003, 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:

3

 

          (i) With respect to each Transfer Date, each condition set forth in Section
2.6 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);

          (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 Note;
occurring;

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

          (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 including, without limitation, the assignment of the Loans and the
proceeds thereof required to be assigned pursuant to the related LPA
Assignment, S&SA Assignment and the Indenture;

          (vi) Each Loan (i) has been originated in accordance with the Underwriting
Guidelines and (ii) is not “abusive” or “predatory”; and

          (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. Unless otherwise agreed
by the parties, the Purchaser shall make such determination, and shall deliver
written notice of such determination to the Loan Originator, by the close of
business on November 21, 2003. Should the Purchaser fail to deliver such notice
to the Loan Originator by the close of business on November 21, 2003, this
condition shall be deemed satisfied.

          (viii) With respect to any Transfer Date after the first Transfer Date and
on or before December 3, 2003 (unless otherwise agreed by the parties), the
Purchaser shall not have delivered to the Loan Originator a written notice to
the effect that it has completed its final due diligence review with respect to
the Loans and the Loan Originator and has determined, in its sole discretion,
that either the Loans or the origination, servicing or business practices of
the Loan Originator or both are not reasonably acceptable to the Purchaser.
Should the Purchaser fail to deliver such notice to the Loan Originator by the
close of business on December 3, 2003, this condition shall be deemed
satisfied.

4

 

          (b) 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.

          (c) 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 Note Principal Balance and shall be remitted not
later than 4:00 p.m. New York City time on the Transfer Date by wire transfer
of immediately available funds to the Advance Account.

          (d) The Purchaser shall record on the schedule attached to the Purchased
Note, 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 its right to receive interest
payments in respect of the Note Principal Balance actually held. Absent
manifest error, the Note Principal Balance of the Purchased Note 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.

ARTICLE IV

CONDITIONS PRECEDENT TO

EFFECTIVENESS OF COMMITMENT

          SECTION 4.01. Closing 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

5

 

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 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 acceptable to the
Purchaser, the Purchased Note and each and every document or certification
delivered by any party in connection with any of the Basic Documents or the
Purchased Note, and each such document shall be in full force and effect.

          (i) 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 Note and the documents
related thereto in any material respect.

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

          (k) 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.

6

 

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

          (m) 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.

          (n) Proceedings in Contemplation of Sale of Purchased Note. 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 Note
as herein contemplated shall be reasonably satisfactory in all respects to the
Purchaser and its counsel.

          (o) 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.

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

          (q) Wet Funding Agreement. The Issuer, the Depositor, the Loan Originator
and such other appropriate parties shall have entered into an agreement
concerning the terms, conditions and procedures applicable to the sale of Wet
Funded Loans to the Issuer and the pledge of such Loans to the Indenture
Trustee reasonably satisfactory to the Purchaser.

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

          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 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:

          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

7

 

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 have a material adverse effect on the Issuer or any
adverse effect on the interests of the Purchaser.

          (b) The issuance, sale, assignment and conveyance of the Purchased Note
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 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 on the transactions contemplated therein.

          (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 to the
Purchaser of the Purchased Note. 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 Note.

          (d) The Issuer possesses all material licenses, certificates, authorities
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, authority 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 on any of the transactions
contemplated therein.

8

 

          (g) The Issuer 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 material to the Issuer or the transactions
contemplated by the Basic Documents. 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 materially and adversely affects, or may in the future
materially and adversely affect (i) the ability of the Issuer to perform its
obligations under any of the Basic Documents to which it is a party or (ii) the
business, operations, financial condition, properties, assets or prospects of
the Issuer.

          (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 Note or the consummation of
any of the transactions contemplated by the Basic Documents or the Purchased
Note, or (iii) that, if adversely determined, could materially and adversely
affect the business, operations, financial condition, properties, assets or
prospects of the Issuer or the validity or enforceability of, or the
performance by the Issuer of its respective obligations under, any of the Basic
Documents to which it is a party or (iv) seeking to affect adversely the income
tax attributes of the Purchased Note.

          (i) The Issuer is not, and neither the issuance and sale of the Purchased
Note 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”).

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

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

          (l) The chief executive offices of the Issuer are located at
Option One Owner
Trust 2003-5, 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.

          (m) 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 Note.

          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 Note and the sale of Additional Note
Principal Balances pursuant to this 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 Note, 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,

9

 

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 or any Person acting on its behalf offer
or sell directly or indirectly, the Purchased Note 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 Note, would render the issuance and sale of the Purchased Note 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 any such Person 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 Note.

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

          SECTION 5.05. The Purchased Note. The Purchased Note has 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 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 Note 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.

10

 

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 as to enforcement to 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, the Depositor and the Servicer as of the date of this 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. 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

11

 

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, or which could be expected in the future to materially and adversely
affect 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 Note
remains 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;

          (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 five (5) Business Days
after the occurrence thereof, notice of each Event of Default under the Sale
and Servicing Agreement or the Indenture, and each Default;

          (d) promptly and in any event within 30 days after the occurrence thereof,
written notice of a change in address of the chief executive office of the
Issuer, the Loan Originator or the Depositor; and

12

 

          SECTION 7.02. Access to Information. So long as the Purchased Note remains
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 their 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 parties.

          SECTION 7.05. Amendments. Neither the Issuer nor the Depositor shall make,
or 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.

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

          (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 Note
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 Note.

13

 

          (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 such
subsequent purchaser so
requests, 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.

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 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 and (iii) all
reasonable fees and expenses of the Custodian and its counsel.

          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
the other party 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 Note set forth in the
Indenture and resell the Purchased Note only in compliance with such
restrictions.

14

 

          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 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 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 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

15

 

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 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 Note); provided, however, neither the Issuer nor

16

 

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 Note 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 8.05 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 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 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 join in any
institution against the Issuer or the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law.

17

 

          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 Purchaser 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 Note, acknowledges that such
Purchased Note represents an obligation of the Issuer and does 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 Agreement,
the Purchased Note 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 Note.

          SECTION 10.11. 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
Note 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 Note 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.

18

 

          SECTION 10.12. 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 10.13. 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 2003-5, in the exercise of
the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer
under this Note Purchase Agreement or any other related documents.

19

 

          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 2003-5
	 
	 	 	 	 	 	 
	

	 	By:
	 	Wilmington Trust Company not in its

individual capacity but solely as owner

trustee	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	
/s/ Joann A. Rozell	 
	 	Name:	Joann A. Rozell	 
	 	Title:	Financial Services Officer	 	 
	 

	 	 	 	 	 
	 	OPTION ONE LOAN WAREHOUSE

CORPORATION

 	 
	 	By:  	/s/ Bob Fulton	 
	 	Name:	Bob Fulton	 	 
	 	Title:	Vice President	 	 
	 

	 	 	 	 	 
	 	CITIGROUP GLOBAL MARKETS REALTY CORP.

 	 
	 	By:  	/s/ Susan Mills	 
	 	Name:	Susan Mills	 	 
	 	Title:	  	 	 

 

 

	 	 	 	 	 

Schedule I

Information for Notices

1. if to the Issuer:

Option One
Owner Trust 2003-5

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: William O’Neill

Telecopy number: (949) 790-7540

Telephone number: (949) 790-7504

2. if to the Depositor:

Option One Loan Warehouse Corporation

3 Ada Road

Irvine, California 92618

Attention: William O’Neill

Telecopy number: (949) 790-7540

Telephone number: (949) 790-7504

3. if to the Purchaser:

Citigroup Global Markets Realty Corp.

390 Greenwich Street 

New York, New York 10013

Attention: Randy Appleyard

Telecopy: (212) 723-8603

Telephone: (212) 723-6394

I-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}]]