Document:

<PAGE>
                                                                     Exhibit 4.2

                    FREMONT MORTGAGE SECURITIES CORPORATION,

                                  as Purchaser

                                       and

                           FREMONT INVESTMENT & LOAN,

                                  as Originator

                        MORTGAGE LOAN PURCHASE AGREEMENT

                          Dated as of December 1, 2005

                  Fixed-Rate and Adjustable-Rate Mortgage Loans

                         Fremont Home Loan Trust 2005-E,
                   Mortgage-Backed Certificates, Series 2005-E

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
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                                                                                   PAGE
                                                                                   ----
<S>                                                                                <C>

                       ARTICLE I DEFINITIONS AND SCHEDULES

Section 1.01. Definitions.......................................................     1

          ARTICLE II SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE

Section 2.01. Sale of Mortgage Loans............................................     1
Section 2.02. Obligations of the Originator Upon Sale...........................     2
Section 2.03. Payment of Purchase Price for the Mortgage Loans..................     3

         ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH

Section 3.01. Originator's Representations and Warranties Relating to the
                 Mortgage Loans.................................................     3
Section 3.02. Additional Originator's Representations and Warranties............     3
Section 3.03. Remedies for Breach of Representations and Warranties.............     6

                        ARTICLE IV ORIGINATOR'S COVENANTS

Section 4.01. Covenants of the Originator.......................................     9

          ARTICLE V INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS

Section 5.01. Indemnification...................................................     9

                             ARTICLE VI TERMINATION

Section 6.01. Termination.......................................................    10

                      ARTICLE VII MISCELLANEOUS PROVISIONS

Section 7.01. Amendment.........................................................    10
Section 7.02. Governing Law.....................................................    10
Section 7.03. Notices...........................................................    10
Section 7.02. Severability of Provisions........................................    11
Section 7.05. Counterparts......................................................    11
Section 7.06. Further Agreements................................................    11
Section 7.07. Intention of the Parties..........................................    12
Section 7.08. Successors and Assigns: Assignment of Purchase Agreement..........    13
Section 7.09. Survival..........................................................    13
Section 7.10. Third Party Beneficiaries.........................................    13
Section 7.11. Confidentiality...................................................    13
</TABLE>

Fremont 2005-E
Mortgage Loan Purchase Agreement
i

<PAGE>

<TABLE>
<S>           <C>
Exhibit A:    Representations and Warranties Relating to the Mortgage Loans

Exhibit B:    Appendix E of the Standard & Poor's Glossary for File Format for
              LEVELS(R) Version 5.6c Revised

Schedule A:   Mortgage Loan Schedule
</TABLE>

<PAGE>

     THIS MORTGAGE LOAN PURCHASE AGREEMENT, dated as of December 1, 2005 (the
"Agreement"), is made and entered into between Fremont Investment & Loan (the
"Originator" or "Fremont") and Fremont Mortgage Securities Corporation (the
"Purchaser").

                                   WITNESSETH

     WHEREAS, the Originator is the owner of the notes or other evidence of
indebtedness (collectively, the "Mortgage Notes") so indicated on Schedule A
attached hereto and the other documents or instruments constituting the Mortgage
File (collectively, the "Mortgage Loans"); and

     WHEREAS, the Originator, as of the date hereof, owns the mortgages
(collectively, the "Mortgages") on the properties (collectively, the "Mortgaged
Properties") securing the Mortgage Loans, including rights to (a) any property
acquired by foreclosure or deed in lieu of foreclosure or otherwise and (b) the
proceeds of any insurance policies covering such Mortgage Loans or the related
Mortgaged Properties or the obligors on such Mortgage Loans; and

     WHEREAS, the parties hereto desire that the Originator sell the Mortgage
Loans to the Purchaser pursuant to the terms of this Agreement; and

     WHEREAS, pursuant to the terms of that certain Pooling and Servicing
Agreement dated as of December 1, 2005 (the "Pooling and Servicing Agreement")
among the Purchaser, as depositor, Fremont, as originator and servicer, HSBC
Bank USA, National Association, as trustee (the "Trustee"), Wells Fargo Bank,
N.A., as master servicer (in such capacity, the "Master Servicer") and as trust
administrator (in such capacity, the "Trust Administrator"), the Purchaser will
convey the Mortgage Loans to Fremont Home Loan Trust 2005-E (the "Trust").

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

                                    ARTICLE I

                            DEFINITIONS AND SCHEDULES

     Section 1.01. Definitions.

     Any capitalized term used but not defined herein and below shall have the
meaning assigned thereto in the Pooling and Servicing Agreement.

                                   ARTICLE II

                SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE

     Section 2.01. Sale of Mortgage Loans.

     The Originator, concurrently with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over, and otherwise convey to
the Purchaser, without recourse,

<PAGE>

(i) all of its right, title and interest in and to each of the Mortgage Loans,
including the related principal balance of such Mortgage Loan as of the Cut-off
Date (the "Cut-off Date Principal Balance") and interest and principal received
on or with respect thereto after the Cut-off Date, other than such amounts which
were due on the Mortgage Loans on or before the Cut-off Date; (ii) property
which secured such Mortgage Loan and which has been acquired by foreclosure,
deed in lieu of foreclosure or otherwise; (iii) its interest in any insurance
policies in respect of the Mortgage Loans; and (iv) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property.

     Section 2.02. Obligations of the Originator Upon Sale.

     In connection with the transfer pursuant to Section 2.01 hereof, the
Originator further agrees, at its own expense, on or prior to the Closing Date
or as otherwise indicated in this Section 2.02, (a) to indicate in its books,
records and computer systems that the Mortgage Loans have been sold to the
Purchaser pursuant to this Agreement, (b) to deliver to the Purchaser and the
Trustee a computer file containing a true and complete list of all such Mortgage
Loans specifying for each Mortgage Loan, as of the Cut-off Date, (i) its account
number and (ii) the Cut-off Date Principal Balance and such file, which forms a
part of Schedule I to the Pooling and Servicing Agreement, shall also be marked
as Schedule A to this Agreement and is hereby incorporated into and made a part
of this Agreement and (c) for each Mortgage Loan that is not a MERS Mortgage
Loan, to execute an Assignment of Mortgage in blank for each Mortgage Loan.

     In connection with such conveyance by the Originator, the Originator shall
on behalf of the Purchaser deliver to, and deposit with the Trust Administrator,
as custodian on behalf of the Trustee, as assignee of the Purchaser, the
Mortgage Files relating to the Mortgage Loans on or before the Closing Date in
the manner set forth in Section 2.01 of the Pooling and Servicing Agreement.

     The Purchaser hereby acknowledges its acceptance of all right, title and
interest to the Mortgage Loans and other property, now existing or hereafter
created, conveyed to it pursuant to Section 2.01 hereof.

     The parties hereto intend that the transaction set forth herein be a
non-recourse sale by the Originator to the Purchaser of all of the Originator's
right, title and interest in and to the Mortgage Loans and other property
described above. Nonetheless, in the event the transaction set forth herein is
deemed not to be a sale, the Originator hereby grants to the Purchaser a
security interest in all of the Originator's right, title and interest in, to
and under the Mortgage Loans and other property described above, whether now
existing or hereafter created, to secure all of the Originator's obligations
hereunder, and this Agreement shall constitute a security agreement under
applicable law. The Originator and the Purchaser shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of the Pooling and Servicing Agreement.

<PAGE>

     Section 2.03. Payment of Purchase Price for the Mortgage Loans.

     In consideration of the sale of the Mortgage Loans from the Originator to
the Purchaser on the Closing Date, the Purchaser agrees to pay to the Originator
on the Closing Date by transfer of immediately available funds, an amount equal
to the net proceeds received from the sale of the Offered Certificates (other
than the Class B2 Certificates) and to transfer to the Originator or its
designee on the Closing Date the Class B2, Class C, Class P, Class R and Class
RX Certificates (collectively, the "Purchase Price"). The Originator shall pay,
and be billed directly for, all reasonable expenses incurred by the Purchaser in
connection with the issuance of the Certificates, including, without limitation,
printing fees incurred in connection with the offering documents relating to the
Certificates, fees and expenses of Purchaser's counsel, fees of the rating
agencies requested to rate the Certificates, accountant's fees and expenses and
the fees and expenses of the Trustee and the Trust Administrator and other
out-of-pocket costs, if any.

                                   ARTICLE III

               REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH

     Section 3.01. Originator's Representations and Warranties Relating to the
Mortgage Loans.

     The Originator represents and warrants to the Purchaser the representations
and warranties set forth in Exhibit A attached hereto with respect to each
Mortgage Loan as of the Closing Date (or as of such date specifically provided
therein).

     Section 3.02. Additional Originator's Representations and Warranties.

     The Originator represents, warrants and covenants to the Purchaser as of
the Closing Date (or as of such other date specifically provided herein) that:

     (a) The Originator is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or formation
and has all licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in each state wherein it owns or
leases any material properties or where a Mortgaged Property is located, if the
laws of such state require licensing or qualification in order to conduct
business of the type conducted by the Originator, and in any event the
Originator is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Mortgage Loan in
accordance with the terms of this Agreement; the Originator has the full
corporate power, authority and legal right to hold, transfer and convey the
Mortgage Loans and to execute and deliver this Agreement and to perform its
obligations hereunder; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by the Originator and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement and
all agreements contemplated hereby have been duly executed and delivered and
constitute the valid,

<PAGE>

legal, binding and enforceable obligations of the Originator, regardless of
whether such enforcement is sought in a proceeding in equity or at law; and all
requisite corporate action has been taken by the Originator to make this
Agreement and all agreements contemplated hereby valid and binding upon the
Originator in accordance with their terms;

     (b) Neither the execution and delivery of this Agreement, the acquisition
or origination of the Mortgage Loans by the Originator, the sale of the Mortgage
Loans to the Purchaser, the consummation of the transactions contemplated hereby
and by the Pooling and Servicing Agreement, nor the fulfillment of or compliance
with the terms and conditions of this Agreement, will conflict with or result in
a breach of any of the terms, conditions or provisions of the Originator's
charter, by-laws or other organizational documents or any legal restriction or
any agreement or instrument to which the Originator is now a party or by which
it is bound, or constitute a default or result in an acceleration under any of
the foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Originator or its property is subject, or result
in the creation or imposition of any lien, charge or encumbrance that would have
material adverse effect upon any of its properties pursuant to the terms of any
mortgage, contract, deed of trust or other instrument, or impair the ability of
the Purchaser to realize on the Mortgage Loans, impair the value of the Mortgage
Loans, or impair the ability of the Purchaser to realize the full amount of any
insurance benefits accruing pursuant to this Agreement;

     (c) The Originator does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement. The Originator is solvent and the sale of the Mortgage Loans will not
cause the Originator to become insolvent. The sale of the Mortgage Loans is not
undertaken with the intent to hinder, delay or defraud any of Originator's
creditors;

     (d) Immediately prior to the delivery of each Mortgage Loan, the Originator
was the owner of the related Mortgage and the indebtedness evidenced by the
related Mortgage Note. In the event that the Originator retains record title, it
shall retain such record title to each Mortgage, each related Mortgage Note and
the related Mortgage Files with respect thereto in trust for the Purchaser or
its assignee as the owner thereof and only for the purpose of servicing and
supervising the servicing of each such Mortgage Loan;

     (e) There is no action, suit, proceeding or investigation pending or, to
the best of the Originator's knowledge, threatened against the Originator,
before any court, administrative agency or other tribunal (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement, (iii) which, either in any one
instance or in the aggregate, is likely to result in any material adverse change
in the business, operations, financial condition, properties or assets of the
Originator, or in any material impairment of the right or ability of the
Originator to carry on its business substantially as now conducted, or in any
material liability on the part of the Originator, or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the Originator
contemplated herein, or which would be likely to impair materially the ability
of the Originator to perform under the terms of this Agreement, (iv) relating to
fraud, or (v) relating to predatory lending, or the Originator's

<PAGE>

origination, servicing or closing practices which is likely to result in any
material adverse change in the business, operations, financial condition,
properties or assets of the Originator.

     (f) No consent, approval, authorization or order of, or registration or
filing with, or notice to any court or governmental agency is required for the
execution, delivery and performance by the Originator of or compliance by the
Originator with this Agreement or the Mortgage Loans, the delivery of a portion
of the Mortgage Files to the Trustee or the sale of the Mortgage Loans or the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date;

     (g) The consummation of the transactions contemplated by this Agreement are
in the ordinary course of business of the Originator, and the transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by the
Originator pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions in effect in any applicable jurisdiction;

     (h) Neither this Agreement nor any information, statement, tape, diskette,
report, form, or other document furnished or to be furnished by the Originator
pursuant to this Agreement or any Transaction Agreement or in connection with
the transactions contemplated hereby contains or will contain any material
untrue statement of fact;

     (i) The Originator, as Servicer, has the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Originator is duly qualified, licensed,
registered and otherwise authorized under all applicable federal, state and
local laws, and regulations, and is in good standing to enforce, originate, sell
mortgage loans, and service mortgage loans in each jurisdiction wherein the
Mortgaged Properties are located;

     (j) The Originator is a member of MERS in good standing, and will comply in
all material respects with the rules and procedures of MERS in connection with
the servicing of the MERS Mortgage Loans for as long as such Mortgage Loans are
registered with MERS.

     (k) The Mortgage Loans were not intentionally selected from among the
outstanding one- to four-family mortgage loans in the Originator's portfolio at
the Closing Date as to which the representations and warranties set forth in
Exhibit A could not be made;

     (l) The Originator has delivered to the Purchaser financial statements as
to its last three complete fiscal years and any later quarter ended more than 60
days prior to the execution of this Agreement. All such financial statements
fairly present the pertinent results of operations and changes in financial
position for each of such periods and the financial position at the end of each
such period of the Originator and its subsidiaries and have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth in the notes thereto or as
required by the Originator's regulator. There has been no change in the
business, operations, financial condition, properties or assets of the
Originator since the date of the Originator's financial statements that would
have a material adverse effect on its ability to perform its obligations under
this Agreement;

     (m) The Originator has been advised by its independent certified public
accountants that under generally accepted accounting principles the transfer of
the Mortgage Loans may be

<PAGE>

treated as a sale on the books and records of the Originator and the Originator
has determined that the disposition of the Mortgage Loans pursuant to this
Agreement will be afforded sale treatment for tax and accounting purposes;

     (n) The consideration received by the Originator upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans;

     (o) The Originator's decision to purchase or originate any mortgage loan or
to deny any mortgage loan application is an independent decision based upon
Originator's underwriting guidelines, and is in no way made as a result of
Purchaser's decision to purchase, or not to purchase, or the price Purchaser may
offer to pay for, any such mortgage loan, if originated;

     (p) The Originator makes the following additional representations and
warranties:

          (i) This Agreement conforms to all statutory and regulatory
     requirements applicable to the Originator. This Agreement is (a) executed
     contemporaneously with the agreement reached by the Originator and the
     Purchaser, (b) approved by a specific corporate or banking association
     resolution by the board of directors of the Originator, which approval
     shall be reflected in the minutes of said board, and (c) continuously, from
     the time of its execution, an official record of the Originator;

          (ii) This Agreement has been duly and validly authorized by a specific
     corporate or banking association resolution by the board of directors of
     the Originator. A copy of such resolution, certified by the corporate
     secretary of the Originator or attested to by a vice president or higher
     officer of the Originator has been provided to the Purchaser; and

          (iii) The Originator will maintain a copy of this Agreement in its
     official books and records.

     Section 3.03. Remedies for Breach of Representations and Warranties.

     It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and shall inure to the benefit of the Purchaser and the Trustee,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment or the examination or lack of examination of any Mortgage File. With
respect to the representations and warranties contained herein that are made to
the knowledge or the best knowledge of the Originator or as to which the
Originator has no knowledge, if it is discovered that the substance of any such
representation and warranty is inaccurate and the inaccuracy materially and
adversely affects the value of the Mortgage Loan or Loans, or the interest
therein of the Purchaser or the Purchaser's assignee, designee or transferee,
then notwithstanding such lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
and warranty was made, such inaccuracy shall be deemed a breach of the
applicable representation and warranty. Upon discovery by the Originator, the
Servicer, the Master Servicer, the Trust Administrator, the Trustee or the
Purchaser of a breach of any of the foregoing representations and warranties
that

<PAGE>

materially and adversely affects the value of any Mortgage Loan or the interest
of the Purchaser or the Trustee (or which materially and adversely affects the
value of a Mortgage Loan or the interests of the Purchaser or the Trustee in
such Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan) (it being understood that a breach of the
representations and warranties set forth in clauses I(ss), I(tt), I(uu), I(ww),
I(bbb), I(jjj), I(lll) and II of Exhibit A attached hereto will be deemed to
materially and adversely affect the value of any Mortgage Loan or the interest
of the Purchaser or the Trustee), the party discovering such breach shall give
prompt written notice to the other parties.

     Within 60 days of the earlier of either discovery by or notice to the
Originator of any breach of a representation or warranty that materially and
adversely affects the value of a Mortgage Loan or the interest of the Purchaser
or the Trustee in such Mortgage Loan, the Originator shall use its best efforts
promptly to cure such breach in all material respects. If such breach is not so
cured, the Originator shall, (i) if such 60-day period expires prior to the
second anniversary of the Closing Date, remove such Mortgage Loan (a "Deleted
Mortgage Loan") from the Trust Fund and substitute in its place a Qualified
Substitute Mortgage Loan or Loans, in the manner and subject to the conditions
set forth in this Section and the Pooling and Servicing Agreement; or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the
Purchase Price in the manner set forth in this Section and in the Pooling and
Servicing Agreement; provided, however, that any such substitution pursuant to
(i) above shall not be effected prior to the delivery to the Trustee and the
Trust Administrator of an Opinion of Counsel required by Section 2.04 of the
Pooling and Servicing Agreement, if any. The Originator shall promptly reimburse
the Trustee, the Master Servicer and the Trust Administrator for any actual
out-of-pocket expenses reasonably incurred by the Trustee, the Master Servicer
and the Trust Administrator in respect of enforcing the remedies for such
breach.

     At the time of substitution or repurchase of any deficient Mortgage Loan,
the Purchaser and Originator shall arrange for the reassignment of the deficient
or repurchased Mortgage Loan to the Originator, including delivery to the
Trustee of a Request for Release substantially relating to the Deleted Mortgage
Loan, and the delivery to the Originator of any documents held by the Trustee
relating to the deficient or repurchased Mortgage Loan. In the event the
Purchase Price is deposited in the Collection Account, the Originator shall,
simultaneously with such deposit, give written notice to the Purchaser that such
deposit has taken place. Upon such repurchase, the Mortgage Loan Schedule shall
be amended to reflect the withdrawal of the repurchased Mortgage Loan from this
Agreement and, if applicable, the substitution of the applicable Qualified
Substitute Mortgage Loan or Loans.

     If pursuant to this Section 3.03 the Originator repurchases or substitutes
a Mortgage Loan that is a MERS Mortgage Loan, the Originator shall, at the
Originator's expense, either (i) cause MERS to execute and deliver an Assignment
of Mortgage in recordable form to transfer the Mortgage from MERS to the
Originator and shall cause such Mortgage to be removed from registration on the
MERS(R) System in accordance with MERS' rules and regulations or (ii) cause MERS
to designate on the MERS(R) System the Originator as the beneficial holder of
such Mortgage Loan.

     As to any Deleted Mortgage Loan for which the Originator substitutes a
Qualified Substitute Mortgage Loan or Loans, the Originator shall effect such
substitution by delivering to

<PAGE>

the Purchaser or its designee for such Qualified Substitute Mortgage Loan or
Loans the Mortgage File and such other documents and agreements as are required
by the Pooling and Servicing Agreement, with the Mortgage Note endorsed as
required therein. No substitution is permitted to be made in any calendar month
after the Determination Date for such month.

     The amount, if any, by which (x) the aggregate principal balance of all
such Qualified Substitute Mortgage Loans as of the date of substitution is less
than (y) the sum of the aggregate Stated Principal Balance of all such Deleted
Mortgage Loans (after application of the scheduled principal portion of the
monthly payments due in the month of substitution) (the "Substitution Adjustment
Amount") plus an amount equal to the aggregate of any unreimbursed Advances with
respect to such Deleted Mortgage Loans shall be deposited in the Collection
Account by the Originator on or before the Business Day immediately preceding
the Distribution Date in the month succeeding the calendar month during which
the Originator became obligated hereunder to repurchase or replace the related
Mortgage Loan. Upon any such substitution and the deposit to the Collection
Account of any required Substitution Adjustment Amount, the Trustee or the
custodian, as applicable, shall release the Mortgage File held for the benefit
of the Certificateholders relating to such Deleted Mortgage Loan and shall
execute and deliver at the Originator's direction such instruments of transfer
or assignment prepared by the Originator, in each case without recourse, as
shall be necessary to transfer title to the Originator, or its designee, of the
Trustee's interest in any Deleted Mortgage Loan substituted pursuant to this
Section 3.03. Upon such substitution, the Qualified Substitute Mortgage Loans
shall be subject to the terms of this Agreement in all respects, and the
Originator shall be deemed to have made with respect to such Qualified
Substitute Mortgage Loan or Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Subsections 3.01 and 3.02
hereof.

     One or more mortgage loans may be substituted for one or more Deleted
Mortgage Loans, provided, however, that any such substitution shall not be
effected prior to the delivery to the Trustee and the Trust Administrator of an
Opinion of Counsel required by Section 2.04 of the Pooling and Servicing
Agreement, if any. The determination of whether a mortgage loan is a Qualified
Substitute Mortgage Loan may be satisfied on an individual basis. Alternatively,
if more than one mortgage loan is to be substituted for one or more Deleted
Mortgage Loans, the characteristics of such mortgage loans and Deleted Mortgage
Loans shall be aggregated or calculated on a weighted average basis, as
applicable, in determining whether such mortgage loans are Qualified Substitute
Mortgage Loans.

     In the event that the Originator shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Collection Account on or
before the Business Day immediately preceding the Distribution Date in the month
following the month during which the Originator became obligated hereunder to
repurchase or replace such Mortgage Loan and upon such deposit of the Purchase
Price and receipt of a Request for Release in the form of Exhibit J to the
Pooling and Servicing Agreement, the Trustee or the custodian, as applicable,
shall release the related Mortgage File held for the benefit of the
Certificateholders to the Originator or its designee, and the Trustee shall
execute and deliver at such Person's direction such instruments of transfer or
assignment prepared by such Person, in each case without recourse, as shall be
necessary to transfer title to the Originator or its designee of the Trustee's
interest in such Mortgage Loan.

<PAGE>

     It is understood and agreed that the representations and warranties set
forth in Section 3.01 shall survive delivery of the respective Mortgage Files to
the Trustee on behalf of the Purchaser.

     It is understood and agreed that the obligations of the Originator set
forth in this Section 3.03 to cure, repurchase or substitute for a defective
Mortgage Loan and to indemnify the Purchaser as provided in Section 5.01
constitute the sole remedies of the Purchaser respecting a missing or defective
document or a breach of the representations and warranties contained in Section
3.01.

                                   ARTICLE IV

                             ORIGINATOR'S COVENANTS

     Section 4.01. Covenants of the Originator.

     The Originator hereby covenants that except for the transfer hereunder, it
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any Mortgage Loan, or any interest
therein; it will notify the Trustee, as assignee of the Purchaser, of the
existence of any Lien on any Mortgage Loan immediately upon discovery thereof;
and it will defend the right, title and interest of the Trustee, as assignee of
the Purchaser, in, to and under the Mortgage Loans, against all claims of third
parties claiming through or under the Originator; provided, however, that
nothing in this Section 4.01 shall prevent or be deemed to prohibit the
Originator from suffering to exist upon any of the Mortgage Loans any Liens for
municipal or other local taxes and other governmental charges if such taxes or
governmental charges shall not at the time be due and payable or if the
Originator shall currently be contesting the validity thereof in good faith by
appropriate proceedings and shall have set aside on its books adequate reserves
with respect thereto.

                                    ARTICLE V

               INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS

     Section 5.01. Indemnification.

     (a) The Originator agrees to indemnify and to hold the Purchaser, each of
its officers and directors and each person or entity who controls the Purchaser
or such person, the Trustee and each Certificateholder harmless against any and
all claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Purchaser or any such
person or entity and any Certificateholder may sustain in any way (i) related to
the failure of the Originator to perform its duties in compliance with the terms
of this Agreement, (ii) arising from a breach by the Originator of its
representations and warranties in Section 3.01 or (iii) related to the
origination or prior servicing of the Mortgage Loans by reason of any acts,
omissions, or alleged acts or omissions of the Originator or any servicer. The
Originator shall promptly notify the Purchaser and the Trustee if a claim is
made by a third party with respect to this Agreement. The Originator shall
assume the defense of any such claim and

<PAGE>

pay all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Purchaser or any such person or entity and/or the Trustee or any
Certificateholder in respect of such claim.

                                   ARTICLE VI

                                   TERMINATION

     Section 6.01. Termination.

     The respective obligations and responsibilities of the Originator and the
Purchaser created hereby shall terminate, except for the Originator's indemnity
obligations as provided herein, upon the termination of the Trust as provided in
Article IX of the Pooling and Servicing Agreement.

                                   ARTICLE VII

                            MISCELLANEOUS PROVISIONS

     Section 7.01. Amendment.

     This Agreement may be amended from time to time by the Originator and the
Purchaser by written agreement signed by the parties hereto.

     Section 7.02. Governing Law.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to its material conflict of laws
rules (except for Section 5-1401 of the General Obligations Law which shall
apply hereto), and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.

     Section 7.03. Notices.

     All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:

          if to the Originator:

          Fremont Investment & Loan
          2727 East Imperial Highway
          Brea, California 92821
          Attention: Senior Vice President - Finance

          with a copy to:

          Fremont General Corporation
          2425 Olympic Boulevard
          Santa Monica, California 90404

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          Attention: General Counsel

or such other address as may hereafter be furnished to the Purchaser in writing
by the Originator.

          if to the Purchaser:

          Fremont Mortgage Securities Corporation
          2727 East Imperial Highway
          Brea, California 92821
          Attention: Senior Vice President - Treasurer

          with a copy to:

          Fremont General Corporation
          2425 Olympic Boulevard
          Santa Monica, California 90404
          Attention: General Counsel

or such other address as may hereafter be furnished to Fremont in writing by the
Purchaser.

     Section 7.04. 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 provisions of this
Agreement.

     Section 7.05. Counterparts.

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

     Section 7.06. Further Agreements.

     The parties hereto each agree to execute and deliver to the other such
additional documents, instruments or agreements as may be necessary or
reasonable and appropriate to effectuate the purposes of this Agreement or in
connection with the issuance of any Series of Certificates representing
interests in the Mortgage Loans.

     Without limiting the generality of the foregoing, as a further inducement
for the Purchaser to purchase the Mortgage Loans from the Originator, the
Originator will cooperate with the Purchaser in connection with the sale of any
of the securities representing interests in the Mortgage Loans. In that
connection, the Originator will provide to the Purchaser any and all information
and appropriate verification of information, whether through letters of its
auditors

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and counsel or otherwise, as the Purchaser shall reasonably request and will
provide to the Purchaser such additional representations and warranties,
covenants, opinions of counsel, letters from auditors, and certificates of
public officials or officers of the Originator as are reasonably required in
connection with such transactions and the offering of investment grade
securities rated by the Rating Agencies.

     Without limiting the foregoing, the Originator agrees to deliver to the
Purchaser the following documents and opinions in connection with the issuance
of the Fremont Home Loan Trust 2005-E, Mortgage-Backed Certificates, Series
2005-E (the "Certificates") on or before the Closing Date:

          1. one or more opinions of counsel addressed to the Purchaser, and to
     any Person designated by the Purchaser, in a form reasonably acceptable to
     the Purchaser, from counsel to the Originator as to due incorporation and
     good standing, due authorization, execution and delivery by Fremont of
     related agreements for which Fremont is a signatory; the enforceability of
     such documents by Fremont; and other corporate matters;

          2. an opinion of counsel to the Originator, addressed to the
     Purchaser, and to any Person designated by the Purchaser, in a form
     acceptable to the Purchaser, addressing the characterization of the
     transfer of the Mortgage Loans from the Originator to the Purchaser;

          3. an indemnification agreement executed by and among Fremont, Credit
     Suisse First Boston LLC, Barclays Capital Inc., Deutsche Bank Securities,
     Inc., Greenwich Capital Markets, Inc., and UBS Securities LLC
     (collectively, the "Underwriters") for losses as a result of material
     misstatements and omissions in the information provided by or on behalf of
     the parties thereto and their affiliates for inclusion in the prospectus
     supplement or any other offering document relating to the Certificates; and

          4. a statement rendered by counsel for Fremont to the Purchaser and
     the Underwriters as to the lack of material misstatements and omissions in
     the information provided by Fremont for inclusion in the prospectus
     supplement or any other offering document relating to the Certificates.

     In addition, the Originator shall sign the certification for the benefit of
Wells Fargo Bank, N.A., relating to the Form 10-K relating to the Trust to be
filed on or before March 31, 2006. The Originator shall execute the Pooling and
Servicing Agreement in its capacity as originator and servicer and will make the
representations and warranties set forth in Sections 3.01 and 3.02 herein to the
Trustee in the Pooling and Servicing Agreement.

     Section 7.07. Intention of the Parties.

     It is the intention of the parties that the Purchaser is purchasing, and
the Originator is selling, the Mortgage Loans rather than pledging such Mortgage
Loans to secure a loan by the Purchaser to the Originator. Accordingly, the
parties hereto each intend to treat the transaction

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as a sale by the Originator, and a purchase by the Purchaser, of the Mortgage
Loans. The Purchaser will have the right to review the Mortgage Loans and the
related Mortgage Files to determine the characteristics of the Mortgage Loans
which will affect the federal income tax consequences of owning the Mortgage
Loans and the Originator will cooperate with all reasonable requests made by the
Purchaser in the course of such review.

     Section 7.08. Successors and Assigns: Assignment of Purchase Agreement.

     This Agreement shall bind and inure to the benefit of and be enforceable by
the Originator, the Purchaser and the Trustee. The obligations of the Originator
under this Agreement cannot be assigned or delegated to a third party without
the consent of the Purchaser which consent shall be at the Purchaser's sole
discretion, except that the Purchaser acknowledges and agrees that the
Originator may assign its obligations hereunder to any Person into which the
Originator is merged or any corporation resulting from any merger, conversion or
consolidation to which the Originator is a party or any Person succeeding to the
business of the Originator. The parties hereto acknowledge that the Purchaser is
acquiring the Mortgage Loans for the purpose of contributing them to a trust
that will issue a Series of Certificates representing undivided interests in
such Mortgage Loans. As an inducement to the Purchaser to purchase the Mortgage
Loans, the Originator acknowledges and consents to the assignment by the
Purchaser directly or indirectly through an affiliate to the Trustee of all of
the Purchaser's rights against the Originator pursuant to this Agreement insofar
as such rights relate to Mortgage Loans transferred to the Trustee and to the
enforcement or exercise of any right or remedy against the Originator pursuant
to this Agreement by the Trustee. Such enforcement of a right or remedy by the
Trustee shall have the same force and effect as if the right or remedy had been
enforced or exercised by the Purchaser directly.

     Section 7.09. Survival.

     The representations and warranties set forth in Sections 3.01 and 3.02 and
the provisions of Article V hereof shall survive the purchase of the Mortgage
Loans hereunder.

     Section 7.10. Third Party Beneficiaries.

     The Trustee and the Trust Administrator are the intended third-party
beneficiaries of this Agreement.

     Section 7.11. Confidentiality.

     The parties hereto understand and agree that personal information relating
to the borrowers under the Mortgage Loans subject of this Agreement, including,
names, addresses, social security numbers and/or other identifying information
(collectively, the "Borrower Information") is confidential, and the Purchaser,
and each person that acquires an interest in the Mortgage Loans through the
Purchaser, agrees to hold such Borrower Information confidential and not to
divulge such information to anyone except (a) to the extent required by law or
judicial order or to enforce its rights or remedies under any agreements
executed in connection with the sale contemplated hereunder or any agreements
executed in connection with the securitization of

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the Mortgage Loans, (b) to the extent such information enters into the public
domain other than through the wrongful act of the Purchaser or any person that
acquires an interest in the Mortgage Loans through the Purchaser or (c) as is
necessary in working with legal counsel, auditors, agents, rating agencies,
taxing authorities or other governmental agencies.

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          IN WITNESS WHEREOF, the Originator and the Purchaser have caused their
names to be signed to this Mortgage Loan Purchase Agreement by their respective
officers thereunto duly authorized as of the day and year first above written.

                                        FREMONT MORTGAGE SECURITIES CORPORATION,
                                        as Purchaser

                                        By: /s/ Jeff Crusinberry
                                            ------------------------------------
                                        Name: Jeff Crusinberry
                                        Title: Vice President

                                        FREMONT INVESTMENT & LOAN,
                                        as Originator

                                        By: /s/ Jeff Crusinberry
                                            ------------------------------------
                                        Name: Jeff Crusinberry
                                        Title: Senior Vice President/Finance

<PAGE>

STATE OF CALIFORNIA   )
                      ) ss.:
COUNTY OF ORANGE      )

     On the 15th day of December, 2005 before me, a Notary Public in and for
said State, personally appeared Jeff Crusinberry, known to me to be a Vice
President of FREMONT MORTGAGE SECURITIES CORPORATION, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

/s/ Elisa B. Avina
-------------------------------------
Elisa B. Avina
Notary Public

My Commission Expires on June 15, 2009

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STATE OF CALIFORNIA   )
                      ) ss.:
COUNTY OF ORANGE      )

     On the 15th day of December, 2005 before me, a Notary Public in and for
said State, personally appeared Jeff Crusinberry, known to me to be an Senior
Vice President/Finance of FREMONT INVESTMENT & LOAN, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

/s/ Elisa B. Avina
-------------------------------------
Elisa B. Avina
Notary Public

My Commission Expires on June 15, 2009

<PAGE>

                                    EXHIBIT A

          Representations and Warranties Relating to the Mortgage Loans

     I. The Originator hereby represents and warrants to the Purchaser, with
respect to each Mortgage Loan that is a Mortgage Loan as of the Closing Date (or
in the case of certain specified representations and warranties, as of the
Cut-off Date) or as of such other date specifically provided herein (except that
with respect to any Qualified Substitute Mortgage Loan such representations and
warranties shall be as of the date of substitution and made by the Originator),
that:

     (a) Mortgage Loans as Described. The information set forth in the Mortgage
Loan Schedule is complete, true and correct in all material respects as of the
Cut-off Date;

     (b) Payments Current. As of the Closing Date, other than with respect to
not more than 0.55% of the Mortgage Loans by outstanding principal balance, all
payments required to be made up to the Closing Date for the Mortgage Loan under
the terms of the Mortgage Note, other than payments not yet one month
delinquent, have been made and credited. No payment required under the Mortgage
Loan is one month or more delinquent nor has any payment under the Mortgage Loan
been delinquent for more than one month at any time since the origination of the
Mortgage Loan;

     (c) No Outstanding Charges. As of the Closing Date, other than payments due
but not yet one month or more delinquent, there are no defaults in complying
with the terms of the Mortgage, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid, or an escrow
of funds has been established in an amount sufficient to pay for every such item
which remains unpaid and which has been assessed but is not yet due and payable.
The Originator has not advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required under the Mortgage Loan,
except for interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is earlier, to the date
which precedes by one month the Due Date of the first installment of principal
and interest;

     (d) Original Terms Unmodified. The terms of the Mortgage Note and Mortgage
have not been impaired, waived, altered or modified in any respect, from the
date of origination except by a written instrument which has been recorded, if
necessary to protect the interests of the Purchaser, and which has been
delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the Mortgage Loan
Schedule. No Mortgage Loan has been modified so as to restructure the payment
obligations or re-age the Mortgage Loan. The substance of any such waiver,
alteration or modification has been approved by the title insurer, if any, to
the extent required by the policy, and its terms are reflected on the Mortgage
Loan Schedule, if applicable. No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement, approved by the title
insurer, to the extent required by the policy, and which assumption agreement is
part of the

Fremont 2005-E
Mortgage Loan Purchase Agreement

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Mortgage Loan File delivered to the Custodian or to such other Person as the
Purchaser shall designate in writing and the terms of which are reflected in the
Mortgage Loan Schedule;

     (e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, and no Mortgagor
was a debtor in any state or federal bankruptcy or insolvency proceeding at, or
subsequent to, the time the Mortgage Loan was originated;

     (f) Hazard Insurance. Pursuant to the terms of the Mortgage, all buildings
or other improvements upon the Mortgaged Property are insured by a generally
acceptable insurer against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged Property is
located. If required by the National Flood Insurance Act of 1968, as amended,
each Mortgage Loan is covered by a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
as in effect. All individual insurance policies contain a standard mortgagee
clause naming the Originator and its successors and assigns as mortgagee, and
all premiums thereon have been paid and such policies may not be reduced,
terminated or cancelled without 30 days' prior written notice to the mortgagee.
The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor from
the Mortgagor. Where required by state law or regulation, the Mortgagor has been
given an opportunity to choose the carrier of the required hazard insurance,
provided the policy is not a "master" or "blanket" hazard insurance policy
covering a condominium, or any hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy is the
valid and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser upon
the consummation of the transactions contemplated by this Agreement. The
Originator has not engaged in, and has no knowledge of the Mortgagor's or any
servicer's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of such policy, including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other person or entity, and no such unlawful items have been
received, retained or realized by the Originator;

     (g) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity and disclosure laws, all predatory and abusive lending
laws or unfair and deceptive practices laws applicable to the Mortgage Loan,
including, without limitation, any provisions relating to Prepayment Penalties,
have been complied with; the consummation of the transactions contemplated
hereby will not involve the violation of any such laws or regulations.
Originator shall maintain in its possession,

A-2

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available for the Purchaser's inspection, and shall deliver to the Purchaser
upon demand, evidence of compliance with all such requirements;

     (h) No Satisfaction of Mortgage. The Mortgage has not been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission. The Originator has not waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Originator waived any default resulting from any action or inaction by the
Mortgagor;

     (i) Location and Type of Mortgaged Property. The Mortgaged Property is a
fee simple property located in the state identified in the Mortgage Loan
Schedule except that with respect to real property located in jurisdictions in
which the use of leasehold estates for residential properties is a
widely-accepted practice, the Mortgaged Property may be a leasehold estate and
consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a low-rise condominium project, or an individual
unit in a planned unit development and that no residence or dwelling is (i) a
mobile home or (ii) a manufactured home. As of the date of origination, no
portion of the Mortgaged Property was used for commercial purposes, and since
the date of origination, no portion of the Mortgaged Property has been used for
commercial purposes; provided, that Mortgaged Properties which contain a home
office shall not be considered as being used for commercial purposes as long as
the Mortgaged Property has not been altered for commercial purposes and is not
storing any chemicals or raw materials other than those commonly used for
homeowner repair, maintenance and/or household purposes;

     (j) Valid First or Second Lien. Each Mortgage is a valid and subsisting
first or second lien of record on a single parcel of real estate constituting
the Mortgaged Property, including all buildings and improvements on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time, with respect
to the related Mortgage Loan, which exceptions are generally acceptable to
prudent mortgage lending companies, and such other exceptions to which similar
properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended
to be provided by such Mortgage. The lien of the Mortgage is subject only to:

          (i) the lien of current real property taxes and assessments not yet
     due and payable;

          (ii) covenants, conditions and restrictions, rights of way, easements
     and other matters of the public record as of the date of recording
     acceptable to prudent mortgage lending institutions generally and
     specifically referred to in the lender's title insurance policy delivered
     to the originator of the Mortgage Loan and (A) specifically referred to or
     otherwise considered in the appraisal made for the originator of the
     Mortgage Loan or (B) which do not adversely affect the Appraised Value of
     the Mortgaged Property set forth in such appraisal;

A-3

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          (iii) with respect to each second lien Mortgage, the first or senior
     lien on the related Mortgaged Property; and

          (iv) other matters to which like properties are commonly subject which
     do not materially interfere with the benefits of the security intended to
     be provided by the Mortgage or the use, enjoyment, value or marketability
     of the related Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting, enforceable and perfected first lien and first priority security
interest on the property described therein and the Originator has full right to
sell and assign the same to Purchaser;

     (k) Validity of Mortgage Documents. The Mortgage Note and the Mortgage and
any other agreement executed and delivered by a Mortgagor in connection with a
Mortgage Loan are genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its terms (including,
without limitation, any provisions therein relating to Prepayment Penalties),
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 a proceeding in equity or
a law). All parties to the Mortgage Note, the Mortgage and any other such
related agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such agreement, and
the Mortgage Note, the Mortgage and any other such related agreement have been
duly and properly executed by other such related parties. The documents,
instruments and agreements submitted for loan underwriting were not falsified
and contain no untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the information and
statements therein not misleading. No fraud, error, omission, misrepresentation,
gross negligence or similar occurrence with respect to a Mortgage Loan has taken
place on the part of any Person, including without limitation, the Mortgagor,
any appraiser, any builder or developer, or any other party involved in the
origination or servicing of the Mortgage Loan. The Originator has reviewed all
of the documents constituting the Servicing File;

     (l) Full Disbursement of Proceeds. The Mortgage Loan has been closed and
the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;

     (m) Ownership. Immediately prior to the sale of the Mortgage Loan hereunder
on the Closing Date, the Originator is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon
the sale of the Mortgage Loans to the Purchaser, the Originator will retain the
Mortgage Files or any part thereof not delivered to the Custodian, the Purchaser
or the Purchaser's designee, in trust only for the purpose of servicing and
supervising the servicing of each Mortgage Loan. The Mortgage Loan is not
assigned or

A-4

<PAGE>

pledged, and the Originator has good, indefeasible and marketable title thereto,
and has full right to transfer and sell the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest, and has full right and authority subject to
no interest or participation of, or agreement with, any other party, to sell and
assign each Mortgage Loan pursuant to this Agreement and following the sale of
each Mortgage Loan, the Purchaser will own such Mortgage Loan free and clear of
any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Originator intends to relinquish all rights to possess,
control and monitor the Mortgage Loan. After the Closing Date, the Originator
will have no right to modify or alter the terms of the sale of the Mortgage Loan
and the Originator will have no obligation or right to repurchase the Mortgage
Loan or substitute another Mortgage Loan, except as provided in this Agreement;

     (n) Doing Business. All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (i) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (ii) either (A) organized under
the laws of such state, or (B) qualified to do business in such state, or (C) a
federal savings and loan association, a savings bank or a national bank having a
principal office in such state, or (iii) not doing business in such state;

     (o) LTV. No Mortgage Loan was originated with an LTV greater than 100%;

     (p) Title Insurance. The Mortgage Loan is covered by an ALTA lender's title
insurance policy, or with respect to any Mortgage Loan for which the related
Mortgaged Property is located in California a CLTA lender's title insurance
policy, and each such title insurance policy is issued by a title insurer and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Originator, its successors and assigns, as to the first or
second priority lien of the Mortgage in the original principal amount of the
Mortgage Loan, subject only to the exceptions contained in clauses (i), (ii) and
(iv) of paragraph (j) above and in the case of second liens, the exception
contained in clause (iii) of paragraph (j) above, and in the case of Adjustable
Rate Mortgage Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy affirmatively insures ingress
and egress, and against encroachments by or upon the Mortgaged Property or any
interest therein. The title policy does not contain any special exceptions
(other than the standard exclusions) for zoning and uses and has been marked to
delete the standard survey exception or to replace the standard survey exception
with a specific survey reading. The Originator, its successor and assigns, are
the sole insureds of such lender's title insurance policy, and such lender's
title insurance policy is valid and remains in full force and effect and will be
in force and effect upon the consummation of the transactions contemplated by
this Agreement. No claims are pending under such lender's title insurance
policy, and no prior holder of the related Mortgage, including the Originator,
has done, by act or omission, anything which would impair the coverage of such
lender's title insurance policy, including without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will

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be received, retained or realized by any attorney, firm or other person or
entity, and no such unlawful items have been received, retained or realized by
the Originator;

     (q) No Defaults. As of the Closing Date, other than with respect to not
more than 0.55% of the Mortgage Loans by outstanding principal balance and other
than payment delinquencies of less than one month, there is no default, breach,
violation or event which would permit acceleration existing under the Mortgage
or the Mortgage Note and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event which would permit acceleration, and as of the
Closing Date neither the Originator nor any of its affiliates nor any of their
respective predecessors, have waived any default, breach, violation or event
which would permit acceleration; in addition, as of the Closing Date, no
Mortgage Loan was in foreclosure, nor are foreclosure proceedings imminent with
respect to any Mortgage Loan;

     (r) No Mechanics' Liens. As of the Closing Date, there are no mechanics' or
similar liens or claims which have been filed for work, labor or material (and
no rights are outstanding that under law could give rise to such liens)
affecting the related Mortgaged Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage;

     (s) Location of Improvements; No Encroachments. All improvements which were
considered in determining the Appraised Value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation;

     (t) Origination; Payment Terms. The Mortgage Loan was originated by a
mortgagee approved by the Secretary of Housing and Urban Development pursuant to
Sections 203 and 211 of the National Housing Act, savings and loan association,
a savings bank, a commercial bank, credit union, insurance company or other
similar institution which is supervised and examined by a federal or state
authority. The documents, instruments and agreements submitted for loan
underwriting were not falsified and contain no untrue statement of material fact
or omit to state a material fact required to be stated therein or necessary to
make the information and statements therein not misleading. No Mortgage Loan
contains terms or provisions which would result in negative amortization.
Principal payments on the Mortgage Loan (other than a Mortgage Loan that does
not provide for payment of principal for a period of twenty-four to thirty-six
months after the date of origination (such Mortgage Loan, an "Interest Only
Mortgage Loan")) commenced no more than sixty days after funds were disbursed in
connection with the Mortgage Loan. The Mortgage Interest Rate as well as the
Lifetime Rate Cap and the Periodic Mortgage Interest Rate Cap are as set forth
on the Mortgage Loan Schedule. With respect to any Mortgage Loan other than an
Interest Only Mortgage Loan, the Mortgage Note is payable in equal monthly
installments of principal and interest, which installments of interest, with
respect to Adjustable Rate Mortgage Loans, are subject to change due to the
adjustments to the Mortgage Interest Rate on each Mortgage Interest Rate
Adjustment Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, over an original
term of not more than thirty years from commencement of amortization. None of
the Mortgage Loans allows for conversion of the interest rate thereon from an
adjustable rate to a fixed rate. No Mortgage Loan is a simple interest mortgage
loan;

A-6

<PAGE>

     (u) Customary Provisions. The Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits of
the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial
foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant to the proper procedures,
the holder of the Mortgage Loan will be able to deliver good and merchantable
title to the Mortgaged Property. There is no homestead or other exemption
available to a Mortgagor which would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage,
subject to applicable federal and state laws and judicial precedent with respect
to bankruptcy and right of redemption or similar law;

     (v) Conformance with Underwriting Guidelines. The Mortgage Loan was
underwritten in accordance with the Underwriting Guidelines in effect as of the
date of origination of such Mortgage Loan (as described in the Prospectus
Supplement). The Mortgage Note and Mortgage are on forms generally acceptable to
Freddie Mac or Fannie Mae and the Originator has not made any representations to
a Mortgagor that are inconsistent with the mortgage instruments used;

     (w) Occupancy of the Mortgaged Property. As of the Closing Date the
Mortgaged Property is lawfully occupied under applicable law. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities;

     (x) No Additional Collateral. The Mortgage Note is not and has not been
secured by any collateral except the lien of the corresponding Mortgage and the
security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above;

     (y) Deeds of Trust. In the event the Mortgage constitutes a deed of trust,
a trustee, authorized and duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Purchaser to
the trustee under the deed of trust, except in connection with a reconveyance of
the deed of trust or a trustee's sale after default by the Mortgagor;

     (z) Condominiums/Planned Unit Developments. If the Mortgaged Property is a
condominium unit or a planned unit development (other than a de minimis planned
unit development) such condominium or planned unit development project is
acceptable to Originator and underwritten in accordance with the Underwriting
Guidelines;

     (aa) Transfer of Mortgage Loans. The Assignment of Mortgage with respect to
each Mortgage Loan is in recordable form and is acceptable for recording under
the laws of the jurisdiction in which the Mortgaged Property is located. The
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Originator is not subject to the bulk transfer or similar statutory
provisions in effect in any applicable jurisdiction;

A-7

<PAGE>

     (bb) Due-On-Sale. The Mortgage contains an enforceable provision (except as
such enforcement may be effected by bankruptcy and insolvency laws or by general
principals of equity) for the acceleration of the payment of the unpaid
principal balance of the Mortgage Loan in the event that the Mortgaged Property
is sold or transferred without the prior written consent of the mortgagee
thereunder, and to the best of the Originator's knowledge, such provision is
enforceable;

     (cc) Assumability. None of the Mortgage Loans are, by their terms,
assumable;

     (dd) No Buydown Provisions; No Graduated Payments or Contingent Interests.
The Mortgage Loan does not contain provisions pursuant to which Monthly Payments
are paid or partially paid with funds deposited in any separate account
established by the Originator, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature;

     (ee) Consolidation of Future Advances. Any future advances made to the
Mortgagor prior to the Cut-off Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first or second lien priority, as applicable, by a title insurance
policy, an endorsement to the policy insuring the mortgagee's consolidated
interest or by other title evidence. The consolidated principal amount does not
exceed the original principal amount of the Mortgage Loan;

     (ff) Mortgaged Property Undamaged; No Condemnation Proceedings. There is no
proceeding pending or, to the best of the Originator's knowledge, threatened for
the total or partial condemnation of the Mortgaged Property. As of the Closing
Date, the Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended and each Mortgaged Property is inhabitable
under applicable state and local laws;

     (gg) Collection Practices; Escrow Deposits; Interest Rate Adjustments. The
origination, servicing and collection practices used by the Originator with
respect to the Mortgage Loan have been in all respects in compliance with
Accepted Servicing Practices, applicable laws and regulations, and have been in
all respects legal and proper and prudent in the mortgage origination and
servicing business. With respect to escrow deposits and Escrow Payments, all
such payments are in the possession of, or under the control of, the Originator
and there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All Escrow Payments have
been collected in full compliance with state and federal law and the provisions
of the related Mortgage Note and Mortgage. An escrow of funds is not prohibited
by applicable law and has been established in an amount sufficient to pay for
every item that remains unpaid and has been assessed but is not yet due and
payable. No escrow deposits or Escrow Payments or other charges or payments due
the Originator have been capitalized under the Mortgage or the Mortgage Note.
All Mortgage

A-8

<PAGE>

Interest Rate adjustments have been made in strict compliance with state and
federal law and the terms of the related Mortgage and Mortgage Note on the
related Interest Rate Adjustment Date. If, pursuant to the terms of the Mortgage
Note, another index was selected for determining the Mortgage Interest Rate, the
same index was used with respect to each Mortgage Note which required a new
index to be selected, and such selection did not conflict with the terms of the
related Mortgage Note. The Originator executed and delivered any and all notices
required under applicable law and the terms of the related Mortgage Note and
Mortgage regarding the Mortgage Interest Rate and the Monthly Payment
adjustments. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited;

     (hh) Conversion to Fixed Interest Rate. With respect to Adjustable Rate
Mortgage Loans, the Mortgage Loan is not a Convertible Mortgage Loan;

     (ii) No Violation of Environmental Laws. To the best of the Originator's
knowledge, the Mortgaged Property is free from any and all toxic or hazardous
substances and there exists no violation of any local, state or federal
environmental law, rule or regulation. To the best of the Originator's
knowledge, there is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property; and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;

     (jj) Servicemembers Civil Relief Act. The Mortgagor has not notified the
Originator, and the Originator has no knowledge of any relief requested or
allowed to the Mortgagor under the Servicemembers Civil Relief Act;

     (kk) Appraisal. The Mortgage File contains an appraisal of the related
Mortgaged Property signed prior to the approval of the Mortgage Loan application
by a qualified appraiser, duly appointed by the related originator, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 and the regulations promulgated thereunder, all as in effect on the
date the Mortgage Loan was originated;

     (ll) Disclosure Materials. The Mortgagor has received all disclosure
materials required by, and the Originator has complied with, all applicable law
with respect to the making of the Mortgage Loans;

     (mm) Construction or Rehabilitation of Mortgaged Property. No Mortgage Loan
was made in connection with the construction or rehabilitation of a Mortgaged
Property or facilitating the trade-in or exchange of a Mortgaged Property;

     (nn) Value of Mortgaged Property. The Originator has no knowledge of any
circumstances existing that could reasonably be expected to adversely affect the
value or the marketability of any Mortgaged Property or Mortgage Loan or to
cause the Mortgage Loans to

A-9

<PAGE>

prepay during any period materially faster or slower than similar mortgage loans
originated to the same Underwriting Guidelines held by the Originator generally
secured by properties in the same geographic area as the related Mortgaged
Property;

     (oo) No Defense to Insurance Coverage. The Originator has caused or will
cause to be performed any and all acts required to preserve the rights and
remedies of the Purchaser in any insurance policies applicable to the Mortgage
Loans including, without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of coinsured,
joint loss payee and mortgagee rights in favor of the Purchaser. No action has
been taken or failed to be taken, no event has occurred and no state of facts
exists or has existed on or prior to the Closing Date (whether or not known to
the Originator on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any applicable, special
hazard insurance policy, or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured) whether arising out of actions, representations, errors, omissions,
negligence, or fraud of the Originator, the related Mortgagor or any party
involved in the application for such coverage, including the appraisal, plans
and specifications and other exhibits or documents submitted therewith to the
insurer under such insurance policy, or for any other reason under such
coverage, but not including the failure of such insurer to pay by reason of such
insurer's breach of such insurance policy or such insurer's financial inability
to pay;

     (pp) Escrow Analysis. With respect to each Mortgage with an Escrow Account,
the Originator has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;

     (qq) Prior Servicing. Each Mortgage Loan has been serviced in all material
respects in compliance with Accepted Servicing Practices and the Originator has
reported or caused to be reported, the Mortgagor credit files to each of the
three primary credit repositories monthly in a timely manner;

     (rr) Leaseholds. If the Mortgage Loan is secured by a long-term residential
lease, (i) the lessor under the lease holds a fee simple interest in the land;
(ii) the terms of such lease expressly permit the mortgaging of the leasehold
estate, the assignment of the lease without the lessor's consent and the
acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (iii) the terms of such lease
do not (A) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (B) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence, (C)
prohibit the holder of the Mortgage from being insured (or receiving proceeds of
insurance) under the hazard insurance policy or policies relating to the
Mortgaged Property or (D) permit any increase in rent other than pre-established
increases set forth in the lease; (iv) the original term of such lease is not
less than 15 years; (v) the term of such lease does not terminate earlier than
five years after

A-10

<PAGE>

the maturity date of the Mortgage Note; and (vi) the Mortgaged Property is
located in a jurisdiction in which the use of leasehold estates in transferring
ownership in residential properties is a widely accepted practice;

     (ss) Prepayment Penalty. The Mortgage Loan is subject to a prepayment
penalty as provided in the related Mortgage Note except as set forth on the
Mortgage Loan Schedule. With respect to each Mortgage Loan that has a prepayment
penalty feature, each such prepayment penalty is enforceable and will be
enforced by the Originator, as servicer of the Mortgage Loan, for the benefit of
the Purchaser, and each prepayment penalty is permitted pursuant to federal,
state and local law. Each such prepayment penalty is in an amount equal to the
maximum amount permitted under applicable law and no such prepayment penalty may
be imposed for a term in excess of three (3) years. With respect to any Mortgage
Loan that contains a provision permitting imposition of a prepayment penalty
upon a prepayment prior to maturity: (i) prior to the loan's origination, the
borrower agreed to such prepayment penalty in exchange for a monetary benefit,
including but not limited to a rate or fee reduction, (ii) originator has
available programs that offered the option of obtaining a mortgage loan that did
not require payment of such a prepayment penalty and prior to the Mortgage
Loan's origination, the Mortgage Loan was available to the Mortgagor with and
without the prepayment penalty, (iii) the prepayment penalty was disclosed to
the borrower in the loan documents pursuant to applicable state and federal law,
and (iv) notwithstanding any state or federal law to the contrary, the Servicer
shall not impose such prepayment penalty in any instance when the mortgage debt
is accelerated as the result of the borrower's default in making the loan
payments;

     (tt) Predatory Lending Regulations. None of the Mortgage Loans are (i)
covered by the Home Ownership and Equity Protection Act of 1994 as amended or
(ii) in violation of, or classified as "high cost", "threshold", "covered",
"high risk" or "predatory" loans under, any other applicable state, federal or
local law (or a similarly classified loan using different terminology under a
law imposing heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or fees);

     (uu) Single-Premium Credit Life Insurance Policy. In connection with the
origination of any Mortgage Loan, no proceeds from any Mortgage Loan were used
to finance or acquire single-premium credit insurance policies. No Mortgagor was
required to purchase any credit life, disability, accident or health insurance
product as a condition of obtaining the extension of credit. No Mortgagor
obtained a prepaid single-premium credit life, credit disability, credit
unemployment, credit property, accident or health insurance policy in connection
with the origination of the Mortgage Loan;

     (vv) Tax Service Contract; Flood Certification Contract. Each Mortgage Loan
is covered by a paid in full, life of loan, tax service contract and a paid in
full, life of loan, flood certification contract and each of these contracts is
assignable to the Purchaser;

     (ww) Qualified Mortgage. Each Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code;

     (xx) Regarding the Mortgagor. The Mortgagor is one or more natural persons
and/or trustees for an Illinois land trust;

A-11

<PAGE>

     (yy) Recordation. Each original Mortgage was recorded and, except for those
Mortgage Loans subject to the MERS identification system, all subsequent
assignments of the original Mortgage (other than the assignment to the
Purchaser) have been recorded in the appropriate jurisdictions wherein such
recordation is necessary to perfect the lien thereof as against creditors of the
Originator, or is in the process of being recorded;

     (zz) Credit Scores. Except as permitted by the Underwriting Guidelines,
each Mortgagor has a non-zero credit score;

     (aaa) Compliance with Anti-Money Laundering Laws. The Originator has
complied with all applicable anti-money laundering laws and regulations,
including without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws"); to the extent required to comply with the
Anti-Money Laundering Laws, as of the Closing Date, the Originator has
established an anti-money laundering compliance program as required by the
Anti-Money Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Mortgage Loan for purposes of the
Anti-Money Laundering Laws, including with respect to the legitimacy of the
applicable Mortgagor and the origin of the assets used by the said Mortgagor to
purchase the property in question, and maintains, and will maintain, sufficient
information to identify the applicable Mortgagor for purposes of the Anti-Money
Laundering Laws;

     (bbb) Georgia Fair Lending Act. There is no Mortgage Loan that was
originated on or after October 1, 2002 and on or prior to March 7, 2003, which
is secured by property located in the State of Georgia. There is no Mortgage
Loan that was originated on or after March 7, 2003 that is a "high cost home
loan" as defined under the Georgia Fair Lending Act;

     (ccc) New York State Banking Law. There is no Mortgage Loan that (a) is
secured by property located in the State of New York; (b) had an original
principal balance of $300,000 or less, and (c) has an application date on or
after April 1, 2003, the terms of which loan equal or exceed either the annual
percentage rate or the points and fees threshold for "high-cost home loans," as
defined in Section 6-L of the New York State Banking Law;

     (ddd) New Jersey Mortgage Loans. All Mortgage Loans originated in New
Jersey on or after November 27, 2003 are ratable by Standard & Poor's and
Moody's;

     (eee) New Mexico Mortgage Loans. There is no Mortgage Loan that was
originated on or after January 1, 2004, and is a "high-cost" loan subject to the
New Mexico Home Loan Protection Act.

     (fff) MERS Designations. With respect to each MERS Designated Mortgage
Loan, the Originator has designated the Custodian as the Investor and no Person
is listed as Interim Funder on the MERS(R) System;

     (ggg) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered with
respect to each Mortgage Loan pursuant to this Agreement and the Pooling and
Servicing Agreement, have been delivered to the Trust Administrator in its
capacity as Custodian all in compliance with the specific requirements of this
Agreement and the Pooling and Servicing Agreement;

A-12

<PAGE>

     (hhh) Reports. On or prior to the Closing Date, the Originator has provided
the Custodian and the Purchaser with a MERS Report listing the Custodian as the
Investor with respect to each MERS Designated Mortgage Loan;

     (iii) Payoffs. No Mortgage Loans prepaid in full prior to the Closing Date;

     (jjj) Credit Information. As to each consumer report (as defined in the
Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Originator to the Purchaser, the Originator has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded by the terms of
the Mortgage Loan Documents from furnishing the same to any subsequent or
prospective purchaser of such Mortgage. The Originator shall hold the Purchaser
harmless from any and all damages, losses, costs and expenses (including
attorney's fees) arising from disclosure of credit information in connection
with the Purchaser's secondary marketing operations and the purchase and sale of
mortgages. The Originator has or has caused the related servicer to, for each
Mortgage Loan, fully furnish, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian and
Trans Union Credit Information Company (three of the credit repositories), on a
monthly basis;

     (kkk) Origination Practices. Each Mortgagor was assigned the highest credit
grade available with respect to a mortgage loan product offered by such Mortgage
Loan's originator, taking into account the credit history, debt to income ratio
and loan requirement of such Mortgagor;

     (lll) No Arbitration Provision. No mortgage loan originated on or after
August 1, 2004 requires the borrower to submit to arbitration to resolve any
dispute arising out of or relating in any way to the mortgage loan transaction;

     (mmm) S&P Glossary. No Mortgage Loan is a High Cost Loan or Covered Loan,
as applicable (as such terms are defined in the then current Standard & Poor's
LEVELS(R) Glossary which is now Version 5.6c Revised, Appendix E) and no
Mortgage Loan originated on or after October 1, 2002 through March 6, 2003 is
governed by the Georgia Fair Lending Act; and

     (nnn) Manufactured Housing. No manufactured home securing any manufactured
housing contract is other than a "single family residence" as defined in section
25(e)(10) of the Code, i.e., it is used as a single family residence, has a
minimum living space of 400 square feet and a minimum width of over 102 inches
and is of the kind customarily used at a fixed location. The manufactured home
securing each manufactured housing contract is a "manufactured home" as defined
in 42 U.S.C. section 5402(6).

     II. [RESERVED]

A-13

<PAGE>

                                    EXHIBIT B

                APPENDIX E OF THE STANDARD & POOR'S GLOSSARY FOR
                 FILE FORMAT FOR LEVELS(R) VERSION 5.6c REVISED

                              REVISED July 11, 2005

                     (Appendix begins on the following page)

Fremont 2005-E
Mortgage Loan Purchase Agreement

B-1

<PAGE>

           APPENDIX E - STANDARD & POOR'S PREDATORY LENDING CATEGORIES

Standard & Poor's has categorized loans governed by anti-predatory lending laws
in the Jurisdictions listed below into three categories based upon a combination
of factors that include (a) the risk exposure associated with the assignee
liability and (b) the tests and thresholds set forth in those laws. Note that
certain loans classified by the relevant statute as Covered are included in
Standard & Poor's High Cost Loan Category because they included thresholds and
tests that are typical of what is generally considered High Cost by the
industry.

STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION

<TABLE>
<CAPTION>
                                                                                         Category under Applicable
   State/Jurisdiction         Name of Anti-Predatory Lending Law/Effective Date         Anti-Predatory Lending Law
   ------------------         -------------------------------------------------         --------------------------
<S>                        <C>                                                       <C>
Arkansas                   Arkansas Home Loan Protection Act, Ark. Code Ann.         High Cost Home Loan
                           Sections 23-53-101 et seq.
                           Effective July 16, 2003

Cleveland Heights, OH      Ordinance No. 72-2003 (PSH), Mun. Code Sections 757.01    Covered Loan
                           et seq.
                           Effective June 2, 2003

Colorado                   Consumer Equity Protection, Colo. Stat. Ann. Sections     Covered Loan
                           5-3.5-101 et seq.
                           Effective for covered loans offered or entered into
                           on or after January 1, 2003. Other provisions of the
                           Act took effect on June 7, 2002

Connecticut                Connecticut Abusive Home Loan Lending Practices           High Cost Home Loan
                           Act, Conn. Gen. Stat. Sections 36a-746 et seq.
                           Effective October 1, 2001

District of Columbia       Home Loan Protection Act, D.C. Code Sections 26-1151.01   Covered Loan
                           et seq.
                           Effective for loans closed on or after January 28,
                           2003

Florida                    Fair Lending Act, Fla. Stat. Ann. Sections 494.0078 et    High Cost Home Loan
                           seq.
                           Effective October 2, 2002

Georgia (Oct. 1, 2002 -    Georgia Fair Lending Act, Ga. Code Ann. Sections 7-6A-1   High Cost Home Loan
Mar. 6, 2003)              et seq.
                           Effective October 1, 2002 - March 6, 2003
</TABLE>

Fremont 2005-E
Mortgage Loan Purchase Agreement

B-2

<PAGE>

STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION (CONTINUED)

<TABLE>
<CAPTION>
                                                                                         Category under Applicable
   State/Jurisdiction        Name of Anti-Predatory Lending Law/Effective Date          Anti-Predatory Lending Law
   ------------------        -------------------------------------------------          --------------------------
<S>                        <C>                                                       <C>
Georgia as amended         Georgia Fair Lending Act, Ga. Code Ann. Sections          High Cost Home Loan
(Mar. 7, 2003 - current)   7-6A-1 et seq.
                           Effective for loans closed on or after March 7, 2003

HOEPA Section 32           Home Ownership and Equity Protection Act of 1994, 15      High Cost Loan
                           U.S.C. Section 1639, 12 C.F.R. Sections 226.32 and
                           226.34
                           Effective October 1, 1995, amendments October 1, 2002

Illinois                   High Risk Home Loan Act, Ill. Comp. Stat. tit. 815,       High Risk Home Loan
                           Sections 137/5 et seq.
                           Effective January 1, 2004 (prior to this date,
                           regulations under Residential Mortgage License Act
                           effective from May 14, 2001)

Kansas                     Consumer Credit Code, Kan. Stat. Ann. Sections            High Loan to Value Consumer Loan
                           16a-1-101 et seq.                                         (id. Section 16a-3-207) and;
                           Sections 16a-1-301  and 16a-3-207 became effective        High APR Consumer Loan (id.
                           April 14, 1999;  Section 16a-3-308a became effective      Section 16a-3-308a)
                           July 1, 1999

Kentucky                   2003 KY H.B. 287 - High Cost Home Loan Act, Ky. Rev.      High Cost Home Loan
                           Stat. Sections 360.100 et seq.
                           Effective June 24, 2003

Maine                      Truth in Lending, Me. Rev. Stat. tit. 9-A, Sections       High Rate High Fee Mortgage
                           8-101 et seq.
                           Effective September 29, 1995 and as amended from time
                           to time

Massachusetts              Part 40 and Part 32, 209 C.M.R. Sections 32.00 et seq.    High Cost Home Loan
                           and 209 C.M.R. Sections 40.01 et seq.
                           Effective March 22, 2001 and amended from time to time
</TABLE>

B-3

<PAGE>

STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION (CONTINUED)

<TABLE>
<CAPTION>
                                         Name of Anti-Predatory Lending                       Category under Applicable
State/Jurisdiction                             Law/Effective Date                            Anti-Predatory Lending Law
------------------                       ------------------------------                      --------------------------
<S>                  <C>                                                                     <C>
Nevada               Assembly Bill No. 284, Nev. Rev. Stat. Sections 598D.010 et seq.        Home Loan
                     Effective October 1, 2003

New Jersey           New Jersey Home Ownership Security Act of 2002, N.J. Rev. Stat.         High Cost Home Loan
                     Sections 46:10B-22 et seq.
                     Effective for loans closed on or after November 27, 2003

New Mexico           Home Loan Protection Act, N.M. Rev. Stat. Sections 58-21A-1 et seq.     High Cost Home Loan
                     Effective as of January 1, 2004; Revised as of February 26, 2004

New York             N.Y. Banking Law Article 6-l                                            High Cost Home Loan
                     Effective for applications made on or after April 1, 2003

North Carolina       Restrictions and Limitations on High Cost Home Loans, N.C. Gen. Stat.    High Cost Home Loan
                     Sections 24-1.1E et seq.
                     Effective July 1, 2000; amended October 1, 2003 (adding open-end
                     lines of credit)

Ohio                 H.B. 386 (codified in various Sections of the Ohio Code), Ohio Rev.     Covered Loan
                     Code Ann. Sections 1349.25 et seq.
                     Effective May 24, 2002

Oklahoma             Consumer Credit Code (codified in various sections of Title 14A)        Subsection 10 Mortgage
                     Effective July 1, 2000; amended effective January 1, 2004

South Carolina       South Carolina High Cost and Consumer Home Loans Act, S.C. Code         High Cost Home Loan
                     Ann. Sections 37-23-10 et seq.
                     Effective for loans taken on or after January 1, 2004
</TABLE>

B-4

<PAGE>

STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION (CONTINUED)

<TABLE>
<CAPTION>
                                         Name of Anti-Predatory Lending                       Category under Applicable
State/Jurisdiction                             Law/Effective Date                            Anti-Predatory Lending Law
------------------                       ------------------------------                      --------------------------
<S>                  <C>                                                                     <C>
West Virginia        West Virginia Residential Mortgage Lender, Broker and Servicer Act,     West Virginia Mortgage
                     W. Va. Code Ann. Sections 31-17-1 et seq.                               Loan Act Loan
                     Effective June 5, 2002
</TABLE>

STANDARD & POOR'S COVERED LOAN CATEGORIZATION

<TABLE>
<CAPTION>
                                         Name of Anti-Predatory Lending                       Category under Applicable
State/Jurisdiction                             Law/Effective Date                            Anti-Predatory Lending Law
------------------                       ------------------------------                      --------------------------
<S>                       <C>                                                                <C>
Georgia (Oct. 1, 2002 -   Georgia Fair Lending Act, Ga. Code Ann. Sections 7-6A-1 et seq.    Covered Loan
Mar. 6, 2003)             Effective October 1, 2002 - March 6, 2003

New Jersey                New Jersey Home Ownership Security Act of 2002, N.J. Rev.          Covered Home Loan
                          Stat. Sections 46:10B-22 et seq.
                          Effective November 27, 2003 - July 5, 2004
</TABLE>

B-5

<PAGE>

STANDARD & POOR'S HOME LOAN CATEGORIZATION

<TABLE>
<CAPTION>
                                         Name of Anti-Predatory Lending                       Category under Applicable
State/Jurisdiction                             Law/Effective Date                            Anti-Predatory Lending Law
------------------                       ------------------------------                      --------------------------
<S>                       <C>                                                                <C>
Georgia (Oct. 1, 2002 -   Georgia Fair Lending Act, Ga. Code Ann. Sections 7-6A-1 et seq.    Home Loan
Mar. 6, 2003)             Effective October 1, 2002 - March 6, 2003

New Jersey                New Jersey Home Ownership Security Act of 2002, N.J. Rev.          Home Loan
                          Stat. Sections 46:10B-22 et seq.
                          Effective for loans closed on or after November 27, 2003

New Mexico                Home Loan Protection Act, N.M. Rev. Stat. Sections 58-21A-1 et     Home Loan
                          seq.
                          Effective as of January 1, 2004; Revised as of February 26, 2004

North Carolina            Restrictions and Limitations on High Cost Home Loans, N.C. Gen.    Consumer Home Loan
                          Stat. Sections 24-1.1E et seq.
                          Effective July 1, 2000; amended October 1, 2003 (adding open-end
                          lines of credit)

South Carolina            South Carolina High Cost and Consumer Home Loans Act, S.C. Code    Consumer Home Loan
                          Ann. Sections 37-23-10 et seq.
                          Effective for loans taken on or after January 1, 2004
</TABLE>

B-6

<PAGE>

                                        SCHEDULE A

                                  MORTGAGE LOAN SCHEDULE

                            [On file with Trust Administrator]

Fremont 2005-E
Mortgage Loan Purchase Agreement

                                        Schedule AForm of Unit Option Agreement

 

EXHIBIT 4.4

THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOT
SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER
OF THIS PURCHASE OPTION AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS
PURCHASE OPTION FOR A PERIOD OF ONE YEAR FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE
OTHER THAN (I) MORGAN JOSEPH & CO. INC. (“MORGAN JOSEPH”), WEDBUSH MORGAN SECURITIES
(“WEDBUSH MORGAN”) OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING,
OR (II) A BONA FIDE OFFICER OR PARTNER OF MORGAN JOSEPH OR OF ANY SUCH UNDERWRITER OR SELECTED
DEALER.

THIS PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF THE CONSUMMATION BY GENERAL FINANCE
CORPORATION OF A MERGER, CAPITAL STOCK EXCHANGE, ASSET ACQUISITION OR OTHER SIMILAR BUSINESS
COMBINATION (“BUSINESS COMBINATION”) (AS DESCRIBED MORE FULLY IN THE COMPANY’S REGISTRATION
STATEMENT (DEFINED HEREIN)) OR             
        , 2007. VOID AFTER 5:00 P.M. LOS ANGLES LOCAL TIME,
          
          , 2011.

UNIT PURCHASE OPTION

FOR THE PURCHASE OF

1,000,000 UNITS

OF

GENERAL FINANCE CORPORATION

1 Purchase Option

     THIS CERTIFIES THAT, in consideration of $100.00 duly paid to General Finance Corporation (the
“Company”), Morgan Joseph & Co. Inc. (“Morgan Joseph”) or registered assigns
(“Holder”) is entitled, at any time or from time to time upon the later of the consummation
of a Business Combination or                     , 2007 (“Commencement Date”), and at or before 5:00
p.m., Los Angeles local time,                     , 2011 (“Expiration Date”), but not thereafter, to
subscribe for, purchase and receive, in whole or in part, up to One Million (1,000,000) units
(“Units”) of the Company, each Unit consisting of one share of common stock of the Company,
par value $0.0001 per share (“Common Stock”), and two warrants (“Warrants”)
expiring four years from the effective date (“Effective Date”) of the registration
statement (“IPO Registration Statement”) pursuant to which Units are offered for sale to
the public (the “IPO”). Each Warrant shall be in the same form as the warrants included in
the Units being registered for sale to the public by way of the IPO Registration Statement
(“Public Warrants”) except that the exercise price of each Warrant shall be $6.00 per share
(subject to adjustment under the same circumstances that the exercise price of the Public Warrants
is adjusted). If the Expiration Date is a day on which banking institutions are authorized by law
to close, then this Purchase Option

 

 

may be exercised on the next succeeding day that is not such a day in accordance with the
terms herein. During the period ending on the Expiration Date, the Company agrees not to take any
action that would terminate the Purchase Option. This Purchase Option is initially exercisable at
$7.50 per Unit so purchased; provided, however, that upon the occurrence of any of
the events specified in Section 6 hereof, the rights granted by this Purchase Option, including the
exercise price per Unit and the number of Units (and shares of Common Stock and Warrants) to be
received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price”
shall mean the initial exercise price or the adjusted exercise price, depending on the context.

2 Exercise

     2.1 Exercise Form. In order to exercise this Purchase Option, the exercise form
attached hereto must be duly executed and completed and delivered to the Company, together with
this Purchase Option and payment of the Exercise Price for the Units being purchased, payable in
cash or by certified check or official bank check. If the subscription rights represented hereby
shall not be exercised at or before 5:00 p.m., Los Angeles local time, on the Expiration Date, this
Purchase Option shall become and be void without further force or effect, and all rights
represented hereby shall cease and expire.

     2.2 Legend. Each certificate for the securities purchased under this Purchase Option
shall bear a legend as follows unless such securities have been registered under the Securities Act
of 1933, as amended (the “Securities Act”):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR APPLICABLE STATE
LAW. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
APPLICABLE STATE LAW.”

     2.3 Cashless Exercise

          2.3.1 Determination of Amount. In lieu of the payment of the Exercise Price
multiplied by the number of Units for which this Purchase Option is exercisable and in lieu of
being entitled to receive Common Stock and Warrants in the manner required by Section 2.1, the
Holder shall have the right (but not the obligation) to convert any exercisable but unexercised
portion of this Purchase Option into Units (“Conversion Right”) as follows: upon exercise
of the Conversion Right, the Company shall deliver to the Holder (without payment by the Holder of
any of the Exercise Price in cash) that number of Units equal to the quotient obtained by dividing
(x) the “Value” (as defined below) of the portion of the Purchase Option being converted by (y) the
Current Market Value (as defined below). The “Value” of the portion of the Purchase Option
being converted shall equal the remainder derived from subtracting (a) (i) the Exercise Price
multiplied by (ii) the number of Units underlying the portion of this Purchase Option being
converted from (b) the Current Market Value of a Unit multiplied by the number of Units underlying
the portion of the Purchase Option being converted. As used herein, the term

2

 

“Current Market Value” per Unit at any date means the remainder derived from
subtracting (x) the exercise price of the Warrants multiplied by the number of shares of Common
Stock issuable upon exercise of the Warrants underlying one Unit from (y) the Current Market Price
of the Common Stock multiplied by the number of shares of Common Stock underlying the Warrants and
the Common Stock issuable upon exercise of one Unit.

The “Current Market Price” of a share of Common Stock shall mean (i) if the Common Stock is
listed on a national securities exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap
Market or Over-The-Counter Bulletin Board (or successor), the last sale price of the Common Stock
in the principal trading market for the Common Stock as reported by the exchange, Nasdaq or the
NASD, as the case may be; (ii) if the Common Stock is not listed on a national securities exchange
or quoted on the Nasdaq National Market, Nasdaq SmallCap Market or the Over-The-Counter Bulletin
Board (or successor), but is traded in the residual over-the-counter market, the closing bid price
for the Common Stock on the last trading day preceding the date in question for which such
quotations are reported by the Pink Sheets, LLC or similar publisher of such quotations; and (iii)
if the fair market value of the Common Stock cannot be determined pursuant to clause (i) or (ii)
above, such price as the Board of Directors of the Company shall determine, in good faith.

          2.3.2 Mechanics of Cashless Exercise. The Cashless Exercise Right may be exercised by
the Holder on any business day on or after the Commencement Date and not later than the Expiration
Date by delivering the Purchase Option with the duly executed exercise form attached hereto with
the cashless exercise section completed to the Company, exercising the Cashless Exercise Right and
specifying the total number of Units the Holder will purchase pursuant to such Cashless Exercise
Right.

3 Transfer

     3.1 General Restrictions. The Holder, by its acceptance hereof, agrees that it will
not sell, transfer, assign, pledge or hypothecate this Purchase Option or its underlying shares for a period of one year
following the Effective Date to anyone other than (i) Morgan Joseph & Co., Inc. (“Morgan
Joseph”), Wedbush Morgan Securities (“Wedbush Morgan”) or an underwriter or a selected
dealer in connection with the IPO, or (ii) a bona fide officer or partner of Morgan Joseph, Wedbush
Morgan or of any such underwriter or selected dealer in accordance with the National Association of Securities
Dealers, Inc. (“NASD”) Conduct Rule 2710(g)(1). On and after the first anniversary of the
Effective Date, transfers to others may be made subject to compliance with or exemptions from
applicable securities laws. In order to make any permitted assignment, the Holder must deliver to
the Company the assignment form attached hereto duly executed and completed, together with the
Purchase Option and payment of all transfer taxes, if any, payable in connection therewith. The
Company shall within five business days transfer this Purchase Option on the books of the Company
and shall execute and deliver a new Purchase Option or Purchase Options of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Units
purchasable hereunder or such portion of such number as shall be contemplated by any such
assignment.

     3.2 Restrictions Imposed by the Securities Act. The securities evidenced by this
Purchase Option shall not be transferred unless and until (i) the Company has received the opinion
of counsel for the Holder that the securities may be transferred pursuant to an exemption

3

 

from registration under the Securities Act and applicable state securities laws, the
availability of which is established to the reasonable satisfaction of the Company, or (ii) a
registration statement or a post-effective amendment to the IPO Registration Statement relating to
such securities has been filed by the Company and declared effective by the Securities and Exchange
Commission (the “SEC”) and compliance with applicable state securities law has been
established.

4 Partial Exercises or Transfers; Lost Certificates

     4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof,
this Purchase Option may be exercised or assigned in whole or in part. In the event of the
exercise or assignment hereof in part only, upon surrender of this Purchase Option for
cancellation, together with the duly executed exercise or assignment form and funds sufficient to
pay any Exercise Price and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Purchase Option of like tenor to this Purchase Option in the name of the
Holder evidencing the right of the Holder to purchase the number of Units purchasable hereunder as
to which this Purchase Option has not been exercised or assigned.

     4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Purchase Option and of reasonably satisfactory
indemnification and, if required by the Company, the posting of a bond, the Company shall execute
and deliver a new Purchase Option of like tenor and date. Any such new Purchase Option executed
and delivered as a result of such loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.

5 Registration Rights

     5.1 Definitions. For purposes of this Purchase Option, the following terms shall have
the meanings set forth below

          5.1.1 “Demand Registration” shall have the meaning set forth in Section 5.2.

          5.1.2 “Demanding Holders” shall mean, in connection with any Demand Registration or
Piggyback Registration, the Eligible Holders whose Registrable Securities are included in such
Registration.

          5.1.3 “Eligible Holder” shall mean a Holder of one of more of the Purchase Options,
Units, Common Stock or Warrants included in the Units issued upon exercise of the Purchase Option,
or Common Stock issued upon exercise of such Warrants, and “Eligible Holders” means the
Holders of all of the Purchase Options, Units, Common Stock or Warrants issued upon exercise of the
Purchase Options, or Common Stock issued upon exercise of such Warrants; provided,
however, that “Eligible Holder” shall not include any person or entity that holds
Common Stock acquired upon exercise of the Purchase Option or upon exercise of Warrants acquired
upon exercise of such Warrants that has been acquired pursuant to a transfer pursuant to Rule 144
or registered under the Securities Act (other than the registration statement pursuant to which the
Purchase Option was registered).

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

4

 

          5.1.5 “Investor Securities” shall mean the securities eligible for registration
pursuant to the Registration Rights Agreement.

          5.1.6 “Piggyback Registration” shall have the meaning set forth in Section 5.3.

          5.1.7 “Purchase Options” shall mean this Purchase Option and any other identical
Purchase Options (other than the number of Units that may be acquired and the identity of the
Holder) derived from this Purchase Option as a result of transfer of a portion of this Purchase
Option.

          5.1.8 “Registrable Securities” shall mean the Common Stock included in the Units
issuable upon exercise of the Purchase Options and the Common Stock issued or issuable upon
exercise of the Warrants included in the Purchase Options, and all shares of Common Stock issued
with respect to such securities as a result of any stock split or stock dividend; provided,
however, that such shares of Common Stock shall cease to be Registrable Securities: (a)
upon sale or transfer pursuant to an effective registration statement under the Securities Act; or
(b) when all Registrable Shares held by an Eligible Holder can be sold or by the Eligible Holder
under Rule 144 under the Securities Act within any three-month period.

          5.1.9 “Registration” shall mean a Demand Registration or a Piggyback Registration.

          5.1.10 “Registration Rights Agreement” shall mean that certain Registration Rights
Agreement dated as of
                    , 2006 between the Company and the initial investors in the Company.

          5.1.11 “Underwriting Agreement” shall mean that certain Underwriting Agreement dated
                    ,
2006 by and among the Company, on one hand, and Morgan Joseph, Wedbush Morgan and several
other underwriters on the other hand.

     5.2 Demand Registration

          5.2.1 Grant of Right. The Company, upon written demand (“Initial Demand
Notice”) of the Eligible Holder(s) of at least 51% of the Registrable Securities
(“Initiating Holders”) at any time within the four-year period commencing one year
after the Effective Date, agrees to register (the “Demand Registration”) under the
Securities Act on one occasion all or any portion of the Registrable Securities requested by the
Initiating Holders in the Initial Demand Notice and the Registrable Securities requested to be
included by each other Eligible Holder within 15 days of receipt of notice of the Demand
Registration from the Company. The Initial Demand Notice shall specify the number of shares of
Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. As
a condition to including Registrable Securities in the Demand Registration, each Demanding Holder
must furnish to the Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be reasonably required to
effect the registration of the Registrable Securities.

          5.2.2 Effective Registration. A Registration will not count as a Demand Registration
until the Registration Statement filed with the SEC with respect to such Demand

5

 

Registration has been declared effective; provided, however, that (a) if such
a majority in interest of the Demanding Holders request withdrawal of the Registration Statement
prior to its effectiveness, such Registration will count as a Demand Registration unless the
Demanding Holders reimburse the Company for its out-of-pocket costs and expenses incurred prior to
such withdrawal within 30 days after receipt of invoice therefor from the Company; and (b) once the
Registration Statement has been declared effective, the offering of Registrable Securities pursuant
to a Demand Registration is interfered with by any stop order or injunction of the SEC or any other
governmental agency or court, the Registration Statement with respect to such Demand Registration
will be deemed not to have been declared effective, unless and until (i) such stop order or
injunction is removed, rescinded or otherwise terminated, and (ii) Demanding Holders holding a
majority of the Registrable Securities that have not be sold pursuant to the Registration Statement
thereafter elect to continue the offering.

          5.2.3 Filing Registration Statement. The Company shall, as expeditiously as possible
and in any event within 60 days after receipt of the Initial Demand Notice, prepare and file with
the SEC a Registration Statement on any form for which the Company then qualifies or which counsel
for the Company shall deem appropriate and which form shall be available for the sale of all
Registrable Securities to be registered thereunder in accordance with the intended method(s) of
distribution thereof, and shall use its best efforts to cause such Registration Statement to become
and remain effective for the period required by Section 5.2.5; provided, however,
that the Company shall have the right to defer any Demand Registration for up to 60 days if the
Company shall furnish to the Demanding Holders a certificate signed by the Chief Executive Officer
or Chairman of the Company stating that, in the good faith judgment of the Board of Directors of
the Company, it would be materially detrimental to the Company and its stockholders for such
Registration Statement to be effected at such time; provided further,
however, that the Company shall not have the right to exercise the right set forth in the
immediately preceding proviso more than twice in any 365-day period in respect of a Demand
Registration hereunder.

          5.2.4 Underwritten Offering

               (a) Election for Underwritten Offering. If the Initiating Holders so elect and advise
the Company as part of the Initial Demand Notice, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of a firm commitment underwritten
offering with such managing underwriter or underwriters selected by the Initiating Holders, subject
to reasonable approval of the Company. In such event, the right of any Eligible Holder to include
its Registrable Securities in such registration shall be conditioned upon such Holder’s
participation in such firm commitment underwritten offering and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein.

               (b) Reduction of Offering. If the managing underwriter or underwriters for a Demand
Registration that is to be a firm commitment underwritten offering advises the Company and the
Demanding Holders in writing that the dollar amount or number of shares of Registrable Securities
which the Demanding Holders desire to sell, taken together with all other shares of Common Stock or
other securities which the Company desires to sell and the shares of Common Stock, if any, as to
which registration has been requested pursuant to written

6

 

contractual piggy-back registration rights held by other stockholders of the Company who
desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in
such offering without adversely affecting the proposed offering price, the timing, the distribution
method, or the probability of success of such offering (such maximum dollar amount or maximum
number of shares, as applicable, the “Maximum Number of Shares”), then the Company shall
include in such registration: (i) first, the Registrable Securities as to which Demand Registration
has been requested by the Demanding Holders (pro rata in accordance with the number of shares that
each such Holder has requested be included in such registration, regardless of the number of shares
held by each such Holder (such proportion is referred to herein as “Pro Rata”)) that can be
sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clause (i), the shares of Common Stock or
other securities that the Company desires to sell that can be sold without exceeding the Maximum
Number of Shares; (iii) third, to the extent that the Maximum Number of Shares has not been reached
under the foregoing clauses (i) and (ii), the Investor Securities that the holders thereof have
requested be included in such registration, Pro Rata, that can be sold without exceeding the
Maximum Number of Shares; and (iv) fourth, to the extent that the Maximum Number of Shares have not
been reached under the foregoing clauses (i), (ii) and (iii), the shares of Common Stock or other
securities for the account of other persons that the Company is obligated to register pursuant to
written contractual arrangements with such persons and that can be sold without exceeding the
Maximum Number of Shares.

               (c) Underwriting Agreement. If the offering pursuant to the Demand Registration will
be in the form of a firm commitment underwritten offering, the Company shall enter into an
underwriting agreement with the managing underwriter(s) in form and substance reasonably
satisfactory to the Company, which agreement shall contain such representations, warranties and
covenants by the Company and such other terms as are customarily contained in agreements of that
type. In addition, and as a condition to including their Registrable Securities in the Demand
Registration, each Demanding Holder must: (i) enter into the underwriting agreement in a form
approved by a majority-in-interest of the Initiating Holders; and (ii) execute appropriate custody
agreements and otherwise cooperate fully in the preparation of the registration statement and other
documents relating to any offering.

               (d) Blue Sky Filings. The Company agrees to use its reasonable best efforts to
qualify or register the Registrable Securities in such states as are reasonably requested by the
Initiating Holder(s); provided, however, that in no event shall the Company be required to
register the Registrable Securities in a state in which such registration would cause (i) would
cause the Company to be obligated to qualify to do business in such state, (ii) would subject the
Company to taxation as a foreign corporation doing business in such jurisdiction or (iii) would
require the principal stockholders of the Company to be obligated to escrow their shares of capital
stock of the Company.

          5.2.5 Period of Effectiveness. The Company shall cause any registration statement
filed pursuant to the Demand Registration to remain effective until the first to occur of (i) sale
or transfer of all the Registrable Securities included in such registration statement and (ii) nine
months from the effective date of such registration statement, which period shall be

7

 

extended by the number of days in such period that the Company has advised the Demanding
Holders cannot sell their Registrable Securities under the registration statement.

     5.3 Piggyback Registration

          5.3.1 Piggyback Rights. If at any time during the seven-year period commencing on the
Effective Date, the Company proposes to file a registration statement under the Securities Act with
respect to an offering of equity securities, or securities or other obligations exercisable or
exchangeable for, or convertible into, equity securities, by the Company for its own account or for
stockholders of the Company for their account (or by the Company and by stockholders of the Company
including, other than a registration statement (i) filed in connection with any employee stock
option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the
Company’s existing stockholders, (iii) for an offering of debt that is convertible into equity
securities of the Company, (iv) for a dividend reinvestment plan, or (v) for a reorganization,
including a merger, sale of assets or an acquisition of a business, then the Company shall (x) give
written notice of such proposed filing to the Eligible Holders as soon as practicable but in no
event less than 10 days before the anticipated filing date, which notice shall describe the amount
and type of securities to be included in such offering, the intended method(s) of distribution, and
the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y)
offer to the holders of Registrable Securities in such notice the opportunity to register the sale
of such number of shares of Registrable Securities as such holders may request in writing within
five days following receipt of such notice (a “Piggyback Registration”). The Company shall
cause such Registrable Securities to be included in such registration and shall request the
managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggyback Registration on the same terms and conditions as
any similar securities of the Company and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method(s) of distribution thereof. All
Demanding Holders proposing to distribute Registrable Securities through a Piggyback Registration
that involves an underwriter or underwriters shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such Piggyback Registration.

          5.3.2 Reduction of Offering. If the managing underwriter or underwriters for a
Piggyback Registration that is to be an underwritten offering advises the Company and the Demanding
Holders in writing that the dollar amount or number of shares of Common Stock which the Company
desires to sell, taken together with shares of Common Stock, if any, as to which registration has
been demanded pursuant to written contractual arrangements with persons other than the Demanding
Holders, and the shares of Common Stock, if any, as to which registration has been requested
pursuant to the written contractual piggy-back registration rights of other stockholders of the
Company, exceeds the Maximum Number of Shares, then the Company shall include in any such
registration:

               (a) If the registration is undertaken for the Company’s account: (i) first, the shares of
Common Stock or other securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Shares; (iii) second, to the extent that the Maximum Number of
Shares has not been reached under the foregoing clause (i), the shares of Common Stock or other
securities, if any, comprised of Registrable Securities and Investor

8

 

Securities, as to which registration has been requested pursuant to the applicable written
contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold
without exceeding the Maximum Number of Shares; and (iii) third, to the extent that the Maximum
Number of shares has not been reached under the foregoing clauses (i) and (ii), the shares of
Common Stock or other securities for the account of other persons that the Company is obligated to
register pursuant to written contractual piggy-back registration rights with such persons and that
can be sold without exceeding the Maximum Number of Shares;

               (b) If the registration is a “demand” registration undertaken at the demand of holders of
Investor Securities, (i) first, the shares of Common Stock or other securities for the account of
the demanding persons, Pro Rata, that can be sold without exceeding the Maximum Number of Shares;
(ii) second, to the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the shares of Common Stock or other securities that the Company desires to
sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent
that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii),
the shares of Registrable Securities, Pro Rata, as to which registration has been requested
pursuant to the terms hereof, that can be sold without exceeding the Maximum Number of Shares; and
(iv) fourth, to the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (i), (ii) and (iii), the shares of Common Stock or other securities for the
account of other persons that the Company is obligated to register pursuant to written contractual
arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares;
and

               (c) If the registration is a “demand” registration undertaken at the demand of persons other
than holders of Investor Securities, (i) first, the shares of Common Stock or other securities for
the account of the demanding persons that can be sold without exceeding the Maximum Number of
Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the shares of Common Stock or other securities that the Company desires to
sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent
that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii),
collectively the shares of Common Stock or other securities comprised of Registrable Securities and
Investor Securities, Pro Rata, as to which registration has been requested pursuant to the terms
hereof and of the Registration Rights Agreement, as applicable, that can be sold without exceeding
the Maximum Number of Shares; and (iv) fourth, to the extent that the Maximum Number of Shares has
not been reached under the foregoing clauses (i), (ii) and (iii), the shares of Common Stock or
other securities for the account of other persons that the Company is obligated to register
pursuant to written contractual arrangements with such persons, that can be sold without exceeding
the Maximum Number of Shares.

          5.3.3 Withdrawal. Any Demanding Holder may elect to withdraw such Holder’s request
for inclusion of Registrable Securities in any Piggyback Registration by giving written notice to
the Company of such request to withdraw prior to the effectiveness of the registration statement.
The Company (whether on its own determination or as the result of a withdrawal by persons making a
demand pursuant to written contractual obligations) may withdraw a registration statement at any
time prior to the effectiveness of the registration statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred

9

 

by the Demanding Holders in connection with such Piggyback Registration as provided in Section
5.3.4.

     5.4 General Terms

          5.4.1 Indemnification. In connection with each Registration, the Company shall
indemnify the Demanding Holders and each person, if any, who controls such Holders within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act against all loss,
claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses
reasonably incurred in investigating, preparing or defending against litigation, commenced or
threatened, or any claim whatsoever whether arising out of any action between the underwriter and
the Company or between the underwriter and any third party or otherwise) to which any of them may
become subject under the Securities Act, the Exchange Act or otherwise, arising from such
registration statement but only to the same extent and with the same effect as the provisions
pursuant to which the Company has agreed to indemnify the underwriters contained in Section 5 of
the Underwriting Agreement. The Demanding Holders, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, against all loss, claim, damage, expense or liability (including all
reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may become subject under the Securities Act,
the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders,
or their successors or assigns, in writing, for specific inclusion in such registration statement
to the same extent and with the same effect as the provisions contained in Section 5 of the
Underwriting Agreement.

          5.4.2 Listing. The Company shall use its best efforts to cause all Registrable
Securities included in any registration to be listed on such exchanges or otherwise designated for
trading in the same manner as similar securities issued by the Company are then listed or
designate.

          5.4.3 Registration Expenses. The Company shall bear all costs and expenses incurred
in connection with each Registration and all expenses incurred in performing or complying with its
other obligations under this Agreement, whether or not the Registration Statement becomes
effective, including, without limitation: (a) all registration and filing fees; (b) fees and
expenses of compliance with securities or “blue sky” laws (including fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable Securities); (c) printing
expenses; (d) the Company’s internal expenses (including, without limitation, all salaries and
expenses of its officers and employees); (e) the fees and expenses incurred in connection with the
listing of the Registrable Securities as required by Section 5.4.2; (f) NASD fees; (g) fees and disbursements of counsel for the Company and fees and
expenses for independent certified public accountants retained by the Company; (h) the fees and
expenses of any special experts retained by the Company in connection with such registration and
(i) the fees and expenses of one legal counsel for all holders of securities included in such
Registration. The Company shall have no obligation to pay any underwriting discounts or selling
commissions attributable to the Registrable Securities being sold by the Demanding Holders, which
underwriting discounts or selling commissions

10

 

shall be borne by such Demanding Holders. Additionally, in an underwritten offering, all
selling stockholders and the Company shall bear the expenses of the underwriter pro rata in
proportion to the respective amount of shares each is selling in such offering.

          5.4.4 Exercise of Purchase Options. Nothing contained in this Purchase Option shall
be construed as requiring the Holder to exercise this Purchase Option or Warrants underlying this
Purchase Option prior to or after the initial filing of any registration statement or the
effectiveness thereof.

          5.4.5 Documents Delivered to Holders. If requested by Morgan Joseph in connection
with any Demand Registration, the Company shall furnish to them, as representatives of the
Demanding Holders, a signed counterpart, addressed to the Demanding Holders, of (i) an opinion of
counsel to the Company, dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the date of the closing
under any underwriting agreement related thereto), and (ii) a “cold comfort” letter dated the
effective date of such registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the underwriting agreement) signed by
the independent public accountants who have issued a report on the Company’s financial statements
included in such registration statement, in each case covering substantially the same matters with
respect to such registration statement (and the prospectus included therein) and, in the case of
such accountants’ letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters
delivered to underwriters in underwritten public offerings of securities. The Company shall also
deliver promptly to Morgan Joseph, as representative of the Demanding Holders, the correspondence
and memoranda described below and copies of all correspondence between the SEC and the Company, its
counsel or auditors and all memoranda relating to discussions with the SEC or its staff with
respect to the registration statement and permit Morgan Joseph, as representative of the Demanding
Holders, to do such investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably necessary to comply
with applicable securities laws or rules of the NASD. Such investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and independent auditors,
all to such reasonable extent and at such reasonable times and as often as Morgan Joseph, as
representative of the Demanding Holders, shall reasonably request. The Company shall not be
required to disclose any confidential information or other records to Morgan Joseph, as
representative of the Demanding Holders, or to any other person, until and unless such persons
shall have entered into reasonable confidentiality agreements (in form and substance reasonably
satisfactory to the Company), with the Company with respect thereto.

          5.4.6 Supplemental Prospectus. Each Holder agrees, that upon receipt of any notice
from the Company of the happening of any event as a result of which the prospectus included in the
registration statement, as then in effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, such Holder will immediately
discontinue disposition of Registrable Securities pursuant to the registration statement covering
such Registrable Securities until such Holder’s receipt of the copies of a

11

 

supplemental or amended prospectus, and, if so desired by the Company, such Holder shall
deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of such destruction) all copies, other than permanent file copies then in such Holder’s
possession, of the prospectus covering such Registrable Securities current at the time of receipt
of such notice.

6 Adjustments

     6.1 Adjustments to Exercise Price and Number of Securities. The Exercise Price and
the number of Units underlying the Purchase Option shall be subject to adjustment from time to time
as hereinafter set forth:

          6.1.1 Stock Dividends and Splits. If after the date hereof, and subject to the
provisions of Section 6.4 below, the number of outstanding shares of Common Stock is increased by a
stock dividend payable in shares of Common Stock or by a split-up of shares of Common Stock or
other similar event, then, on the effective date thereof, the number of shares of Common Stock
underlying each of the Units purchasable hereunder shall be increased in proportion to such
increase in outstanding shares. In such case, the number of shares of Common Stock, and the
exercise price applicable thereto, underlying the Warrants underlying each of the Units purchasable
hereunder shall be adjusted in accordance with the terms of the Warrants. For example, if the
Company declares a two-for-one stock dividend and at the time of such dividend this Purchase Option
is for the purchase of one Unit at $7.50 per whole Unit (each Warrant underlying the Units is
exercisable for $6.00 per share), upon effectiveness of the dividend, this Purchase Option will be
adjusted to allow for the purchase of one Unit at $7.50 per Unit, each Unit entitling the holder to
receive two shares of Common Stock and four Warrants (each Warrant exercisable for $3.00 per
share).

          6.1.2 Aggregation of Shares. If after the date hereof, and subject to the provisions
of Section 6.4, the number of outstanding shares of Common Stock is decreased by a consolidation,
combination or reclassification of shares of Common Stock or other similar event, then, on the
effective date thereof, the number of shares of Common Stock underlying each of the Units
purchasable hereunder shall be decreased in proportion to such decrease in outstanding shares. In
such case, the number of shares of Common Stock, and the exercise price applicable thereto,
underlying the Warrants underlying each of the Units purchasable hereunder shall be adjusted in
accordance with the terms of the Warrants.

          6.1.3 Replacement of Securities upon Reorganization, etc. In case of any
reclassification or reorganization of the outstanding shares of Common Stock other than a change
covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such shares of
Common Stock, or in the case of any merger or consolidation of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or reorganization of the outstanding
shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity
of the property of the Company as an entirety or substantially as an entirety in connection with
which the Company is dissolved, the Holder of this Purchase Option shall have the right thereafter
(until the expiration of the right of exercise of this Purchase Option) to receive upon the
exercise hereof, for the same aggregate Exercise Price payable hereunder

12

 

immediately prior to such event, the kind and amount of shares of stock or other securities or
property (including cash) receivable upon such reclassification, reorganization, merger or
consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number
of shares of Common Stock of the Company obtainable upon exercise of this Purchase Option and the
underlying Warrants immediately prior to such event; and if any reclassification also results in a
change in shares of Common Stock covered by Section 6.1.1 or 6.1.2, then such adjustment shall be
made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section
6.1.3 shall similarly apply to successive reclassifications, reorganizations, mergers or
consolidations, sales or other transfers.

          6.1.4 Changes in Form of Purchase Option. This form of Purchase Option need not be
changed because of any change pursuant to this Section, and Purchase Options issued after such
change may state the same Exercise Price and the same number of Units as are stated in the Purchase
Options initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Purchase Options reflecting a required or permissive change shall not be deemed to waive any
rights to an adjustment occurring after the Commencement Date or the computation thereof.

     6.2 Substitute Purchase Option. In case of any consolidation of the Company with, or
merger of the Company with, or merger of the Company into, another corporation (other than a
consolidation or merger which does not result in any reclassification or change of the outstanding
Common Stock), the corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental Purchase Option providing that the holder of each Purchase Option then
outstanding or to be outstanding shall have the right thereafter (until the stated expiration of
such Purchase Option) to receive, upon exercise of such Purchase Option, the kind and amount of
shares of stock and other securities and property receivable upon such consolidation or merger, by
a holder of the number of shares of Common Stock of the Company for which such Purchase Option
might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such
supplemental Purchase Option shall provide for adjustments that shall be identical to the
adjustments provided in Section 6. The above provision of this Section shall similarly apply to
successive consolidations or mergers.

     6.3 Elimination of Fractional Interests. The Company shall not be required to issue
certificates representing fractions of shares of Common Stock or Warrants upon the exercise of the
Purchase Option, nor shall it be required to issue scrip or pay cash in lieu of any fractional
interests, it being the intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of Warrants, shares of Common Stock or other
securities, properties or rights.

7 Reservation and Listing

     The Company shall at all times reserve and keep available out of its authorized shares of
Common Stock, solely for the purpose of issuance upon exercise of the Purchase Options or the
Warrants underlying the Purchase Options, such number of shares of Common Stock or other
securities, properties or rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Purchase Options and payment of the Exercise Price
therefor, all shares of Common Stock and other securities issuable upon such exercise shall

13

 

be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights
of any stockholder. The Company further covenants and agrees that upon exercise of the Warrants
underlying the Purchase Options and payment of the respective Warrant exercise price therefor, all
shares of Common Stock and other securities issuable upon such exercise shall be duly and validly
issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. As
long as the Purchase Options shall be outstanding, the Company shall use its best efforts to cause
all Registrable Securities to be listed (subject to official notice of issuance) on all securities
exchanges (or, if applicable on the Nasdaq National Market, SmallCap Market, OTC Bulletin Board or
any successor trading market) on which the Common Stock of the Company may then be listed and/or
quoted.

8 Certain Notice Requirements

     8.1 Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring
upon the Holder the right to vote or consent as a stockholder for the election of directors or any
other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Purchase Option and its exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give
written notice of such event at least 10 days prior to the date fixed as a record date or the date
of closing the transfer books for the determination of the stockholders entitled to such dividend,
distribution, conversion or exchange of securities or subscription rights, or entitled to vote on
such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record
date or the date of the closing of the transfer books, as the case may be. Notwithstanding the
foregoing, the Company shall deliver to each Holder a copy of each notice given to the other
stockholders of the Company at the same time and in the same manner that such notice is given to
the stockholders.

     8.2 Events Requiring Notice. The Company shall be required to give the notice
described in this Section 8.2 upon one or more of the following events: (i) if the Company shall
take a record of the holders of its shares of Common Stock for the purpose of entitling them to
receive a cash dividend or distribution payable otherwise than out of retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the books of the Company,
or (ii) the Company shall offer to all the holders of its Common Stock any additional shares of
capital stock of the Company or securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe therefor, or (iii) a
dissolution, liquidation or winding up of the Company.

     8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event
requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders
of such event and change (“Price Notice”). The Price Notice shall describe the event
causing the change and the method of calculating same and shall be certified as being true and
accurate by the Company’s Chief Financial Officer.

     8.4 Transmittal of Notices. All notices, requests, consents and other communications
under this Purchase Option shall be in writing and shall be deemed to have been duly made when hand
delivered, or mailed by express mail or private courier service: (i) if to the registered Holder of
this Purchase Option, to the address of such Holder as shown on the books of the

14

 

Company, or (ii) if to the Company, to the executive offices of the Company, Attn; Chief
Executive Officer.

9 Miscellaneous

     9.1 Amendments. The Company and Morgan Joseph may from time to time supplement or
amend this Purchase Option without the approval of any of the Holders in order to cure any
ambiguity, to correct or supplement any provision contained herein that may be defective or
inconsistent with any other provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder that the Company and Morgan Joseph may deem necessary or desirable
and that the Company and Morgan Joseph deem shall not adversely affect the interest of the Holders.
All other modifications or amendments shall require the written consent of and be signed by the
party against whom enforcement of the modification or amendment is sought.

     9.2 Headings. The headings contained herein are for the sole purpose of convenience
of reference, and shall not in any way limit or affect the meaning or interpretation of any of the
terms or provisions of this Purchase Option.

     9.3 Entire Agreement. This Purchase Option (together with the other agreements and
documents being delivered pursuant to or in connection with this Purchase Option) constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes
all prior agreements and understandings of the parties, oral and written, with respect to the
subject matter hereof.

     9.4 Binding Effect. This Purchase Option shall inure solely to the benefit of and
shall be binding upon, the Holder and the Company and their permitted assignees, respective
successors, legal representative and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by virtue of this
Purchase Option or any provisions herein contained.

     9.5 Governing Law; Submission to Jurisdiction. This Purchase Option shall be governed
by and construed and enforced in accordance with the laws of the State of New York, without giving
effect to conflict of laws. The Company hereby agrees that any action, proceeding or claim against
it arising out of, or relating in any way to this Purchase Option shall be brought and enforced in
the courts of the State of New York or of the United States of America for the Southern District of
New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The
Company hereby waives any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum. Any process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8.4 of this Agreement. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company in any action,
proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such
action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees
and expenses relating to such action or proceeding and/or incurred in connection with the
preparation therefor.

15

 

     9.6 Waiver, Etc. The failure of the Company or the Holder to at any time enforce any
of the provisions of this Purchase Option shall not be deemed or construed to be a waiver of any
such provision, nor to in any way affect the validity of this Purchase Option or any provision
hereof or the right of the Company or the Holder to thereafter enforce each and every provision of
this Purchase Option. No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Purchase Option shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such waiver is sought; and no
waiver of any such breach, non-compliance or non- fulfillment shall be construed or deemed to be a
waiver of any other or subsequent breach or non-compliance.

     9.7 Execution in Counterparts. This Purchase Option may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been signed by each of the
parties hereto and delivered to each of the other parties hereto.

     9.8 Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this
Purchase Option, Holder agrees that, at any time prior to the complete exercise of this Purchase
Option by Holder, if the Company and Morgan Joseph enter into an agreement (“Exchange
Agreement”) pursuant to which they agree that all outstanding Purchase Options will be
exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange
and become a party to the Exchange Agreement.

     IN WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by its duly
authorized officer as of the                      , 20___.

	 	 	 	 	 	 	 
	 	 	GENERAL FINANCE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

16

 

Form to be used to exercise Purchase Option:

General Finance Corporation

[Address]

Date:                                        , 200___

     The undersigned hereby elects irrevocably to exercise all or a portion of the within Purchase
Option and to purchase                      Units of General Finance Corporation and hereby makes payment of
$                     (at the rate of $                     per Unit) in payment of the Exercise Price pursuant
thereto. Please issue the Common Stock and Warrants as to which this Purchase Option is exercised
in accordance with the instructions given below.

or

     The undersigned hereby elects irrevocably to convert its right to purchase                      Units
purchasable under the within Purchase Option by surrender of the unexercised portion of the
attached Purchase Option (with a “Value” of $                     based on a “Market Price” of $                    ).
Please issue the securities comprising the Units as to which this Purchase Option is exercised in
accordance with the instructions given below.

	 	 	 
	 

	 	 
	 

	 	NOTICE: The signature to this assignment must correspond
with the name as written upon the face of the Purchase Option
in every particular, without alteration or enlargement or any
change whatever.

Signature(s) Guaranteed:

 

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO
S.E.C. RULE 17Ad-15).

INSTRUCTIONS FOR REGISTRATION OF SECURITIES

	 	 	 
	Name
	 	 
	 

	 	 
	 

	 	(Print in Block Letters)
	 
	 	 
	Address
	 	 
	 

	 	 

17

 

Form to be used to assign Purchase Option:

ASSIGNMENT

     (To be executed by the registered Holder to effect a transfer of the within Purchase Option):

     FOR VALUE RECEIVED,                                                                                 does hereby sell, assign and
transfer unto                                                                                 the right to purchase                      Units of
General Finance Corporation (“Company”) evidenced by the within Purchase Option and does
hereby authorize the Company to transfer such right on the books of the Company.

Dated:                                         , 2005

	 	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	 
	 

	 	NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the Purchase Option in every particular,
without alteration or enlargement or any change
whatever.

Signature(s) Guaranteed:

 

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO
S.E.C. RULE 17Ad-15).

18

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