Document:

exv10w2

 

EXECUTION COPY

Exhibit 10.2

FOURTH AMENDED AND RESTATED

REFUND ANTICIPATION LOAN

PARTICIPATION AGREEMENT

     THIS FOURTH AMENDED AND RESTATED REFUND ANTICIPATION LOAN PARTICIPATION AGREEMENT (this
“Agreement”), dated as of December ___, 2004, is made by and among BLOCK FINANCIAL
CORPORATION, a Delaware corporation (“BFC”), HSBC TAXPAYER FINANCIAL SERVICES INC.,
formerly known as HOUSEHOLD TAX MASTERS INC., a Delaware corporation (“HSBC TFS”), and,
solely for purposes of Section 7.18, HOUSEHOLD TAX MASTERS ACQUISITION CORPORATION, a Delaware
corporation (“HTMAC”).

RECITALS

     A. BFC, HSBC TFS and Household Bank, f.s.b., a federal savings bank (“HB”), are
parties to the Amended and Restated Refund Anticipation Loan Participation Agreement, dated as of
January 6, 2003 (the “First Amended and Restated RAL Participation Agreement”), where BFC
agreed to purchase from HSBC TFS and HSBC TFS agreed to sell to BFC a participation interest in
refund anticipation loans made to customers of both H&R Block Tax Services, Inc., a Delaware
corporation (“Block Tax Services”), and its affiliates and certain franchisees of HRB
Royalty, Inc., a Delaware corporation (“Royalty”) and their affiliates.

     B. HB ceased its operations and in connection therewith, HSBC TFS engaged Imperial Capital
Bank, a California state-chartered commercial bank (“ICB”), to perform the origination
function for Refund Anticipation Loans (“RALs”) and issuing function for Refund
Anticipation Checks (“RACs”) for 2003 and 2004.

     C. HSBC TFS, HTMAC and ICB entered into an Amended and Restated Sale and Servicing Agreement
for RALs and RACs, dated as of January 3, 2003 (the “Sale and Servicing Agreement”), which
represents the basic agreement between HSBC TFS, HTMAC and ICB regarding the RAL program pursuant
to which (i) HSBC TFS services the loans originated by ICB under the RAL program, and (ii) HTMAC
purchases participation interests in RALs from ICB. Redacted copies of the Sale and Servicing
Agreement and all amendments thereto will be delivered by HSBC TFS or HTMAC to BFC.

     D. H&R Block Services, Inc., a Missouri corporation (“Block Services”), on behalf of
itself and its subsidiaries, Block Tax Services, and Royalty (Block Services, Block Tax Services
and Royalty are collectively referred to herein as “Block Companies”), HSBC TFS and
Beneficial Franchise Company, Inc., a Delaware corporation (“Beneficial Franchise”) (HSBC
TFS and Beneficial Franchise are collectively referred to herein as “Household Companies”),
and for certain limited purposes, HB, have entered into an Amended and Restated Refund Anticipation
Loan Operations Agreement, dated as of January 6, 2003 (the “First Amended and Restated RAL
Operations Agreement”).

     E. Block Companies and Household Companies are parties to a letter agreement,

 

 

dated November 11, 2002 (the “First ICB Consent Letter”), pursuant to which Block
Companies consented to ICB as the RAL originator under the First Amended and Restated RAL
Operations Agreement, subject to the right of Block Companies in their sole discretion, during the
ten (10) day period from June 1 through June 10, 2003, to provide written notice to HSBC TFS,
Beneficial Franchise and ICB that ICB is not acceptable as the RAL originator and RAC issuer for
future Tax Periods, in which event Household Companies agree to substitute a financial institution
chartered by the Office of Thrift Supervision or the Office of the Comptroller of the Currency (a
“Federally Chartered Financial Institution”) as the RAL originator and RAC issuer for
future Tax Periods (the “Block ICB Termination Right”).

     F. Block Companies and Household Companies have entered into a Second ICB Consent Letter,
dated June 9, 2003 (the “Second ICB Consent Letter”), pursuant to which Block Companies
have agreed to refrain from exercising the Block ICB Termination Right for the 2004 Tax Period, on
certain terms and conditions, subject to Block Companies’ absolute right in their sole discretion
during the ten (10) day period from June 1 through June 10 of any year, to provide written notice
to HSBC TFS, Beneficial Franchise and ICB, that ICB is not acceptable as the RAL originator and RAC
issuer for future Tax Periods, in which event Household Companies agree to substitute a Federally
Chartered Financial Institution as the RAL Originator and RAC issuer for future Tax Periods,
provided that any entity selected by Household Companies (other than an Affiliate of Household
Companies that is a Federally Chartered Financial Institution having sufficient capital to fulfill
its anticipated obligations with respect to the RAL Program) shall be subject to the consent of
Block Companies, which consent shall not be unreasonably withheld.

     G. The Block Companies and the Household Companies have entered into a Second Amended and
Restated RAL Operations Agreement, dated as of June 9, 2003 (the “Second Amended and Restated
RAL Operations Agreement”).

     H. BFC and HSBC TFS are parties to the Second Amended and Restated Refund Anticipation Loan
Participation Agreement, dated as of June 9, 2003 (the “Second Amended and Restated RAL
Participation Agreement”), which reflected the continuation of ICB as the RAL originator and
RAC issuer for the 2004 Tax Period, subject to the terms and conditions of the Second ICB Consent
Letter and the Second Amended and Restated RAL Participation Agreement.

     I. Pursuant to a Waiver of Rights Under Amended and Restated Refund Anticipation Loan
Participation Agreement, dated January 6, 2003, BFC waived its right to purchase Participation
Interests with respect to RALs originated from January 1, 2003 to April 30, 2003, therefore, an
amendment to the Second Amended and Restated RAL Participation Agreement to reflect the fact that
HTMAC (not HSBC TFS) is the owner of the Participation Interests being sold to BFC, was not
necessary in the past.

     J. BFC, HSBC TFS, and HTMAC are parties to the Third Amended and Restated Refund Anticipation
Loan Participation Agreement, dated as of January 1, 2004 (the “Third Amended and Restated RAL
Participation Agreement”), which reflected the fact that HTMAC, rather than HSBC TFS, was the
seller of the Participation Interest to BFC for the 2004 Tax Period.

2

 

     K. The parties desire to amend and restate the Third Amended and Restated RAL Participation
Agreement as hereinafter set forth to reflect that fact that HSBC TFS, rather than HTMAC, shall be
the seller of the Participation Interests to BFC, and to eliminate HTMAC as a party to this
Agreement.

AGREEMENT

     NOW, THEREFORE, for and in consideration of the premises and of the agreements of the parties
hereto and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, BFC, HTMAC and HSBC TFS hereby covenant and agree that the Third Amended and Restated
RAL Participation Agreement is hereby amended and restated in its entirety with respect to
Participation Interests purchased by BFC and certain other acts and events that occur from and
after the effective date hereof, by deleting the provisions of Sections 1.1 through 7.17 as the
same now appear and by substituting therefor the following Sections 1.1 through 7.18:

ARTICLE I.

DEFINITIONS

     Section 1.1. Definitions. As used in this Agreement, the following terms shall have
the meaning set forth below:

     “Affiliate” of any Person shall mean any other Person controlling, controlled by or
under common control with such Person.

     “Applicable Percentage” shall mean the percentage set forth for a particular Tax
Period in Section 2.5.

     “Applicable Tax Period” shall mean any of the ten consecutive Tax Periods commencing
with and including the Tax Period beginning January 1, 1997 and ending with and including the Tax
Period beginning January 1, 2006.

     “BFC” shall mean Block Financial Corporation, a Delaware corporation.

     “Block Franchise” shall mean an office owned by a franchisee of Block Services or its
subsidiaries that operates under the “H&R Block” name that is open to the public for the
preparation of tax returns.

     “Block ICB Termination Right” shall have the meaning set forth in Recital E.

     “Block Office” shall mean (i) an office owned by Block Services or its subsidiaries
that operates under the “H&R Block” name and is open to the public for the preparation of tax
returns and (ii) a Corporate Franchise.

     “Block Services” shall mean H&R Block Services, Inc., a Missouri corporation.

     “Block Tax Services” shall mean H&R Block Tax Services, Inc., a Missouri corporation.

3

 

     “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in Bridgewater, New Jersey are authorized or obligated by law or executive
order to be closed.

     “Claim” shall have the meaning set forth in Section 6.2.

     “Closing Date” shall mean with respect to a Participation Interest, the date on which
such Participation Interest is sold to BFC pursuant to this Agreement.

     “Collections” shall mean (i) all finally collected funds received by HSBC TFS as
servicer for the RAL Originator and applied to Participated Pool RALs, whether such finally
collected funds arise from receipt of cash, checks, wire transfers, ATM transfers, exercise of
rights of offset or other form of payment, (ii) promissory notes and/or other evidence of
indebtedness accepted by HSBC TFS as servicer for the RAL Originator from or on behalf of Obligors
in payment of Participated Pool RALs (in which case such Collections shall be deemed to be received
by the RAL Originator for purposes of this Agreement on the Business Day on which such promissory
note or evidence of indebtedness was received by the RAL Originator) and (iii) all fees charged by
the RAL Originator to customers of Block Offices for issuing Pool RACs (in which case such
Collections shall be deemed to be received by the RAL Originator for purposes of this Agreement on
the Business Day on which such RAC is delivered to the customer).

     “Corporate Pool RAL” shall have the meaning given such term in the definition of “Pool
RAL.”

     “Corporate Franchise” or “Corporate Franchisee” shall mean a Person authorized
directly by Block Services (or an Affiliate of Block Services) pursuant to a corporate franchise
agreement to operate a Block Office. Corporate Franchise or Corporate Franchisee does not include
a Person authorized by a major franchise agreement between a Major Franchisee and Block Services,
or an Affiliate of Block Services, to operate a Block Franchise and to subfranchise others to
operate a Block Franchise within a specified territory, or a subfranchisee of a Major Franchisee.

     “Defaulted Pool RAL” shall mean each Participated Pool RAL which, in accordance with
the RAL Guidelines and HSBC TFS’ customary and usual servicing procedures for RALs, the RAL
Originator has charged off as uncollectible; provided, however, that no Pool RAL originated during
any Tax Period shall be classified as a Defaulted Pool RAL prior to January 1 of the following
year.

     “Eligible RAL” shall mean each Pool RAL:

     (a) that was created by the RAL Originator, and is in compliance in all material
respects, with the Second Amended and Restated RAL Operations Agreement (or a Major
Franchisee RAL Agreement, as the case may be) and the federal Equal Credit Opportunity Act,
15 U.S.C. §§ 1691 et seq.;

     (b) (i) as to which any blank preprinted form of disclosure statement supplied by HSBC
TFS on behalf of the RAL Originator to the tax preparation office at which

4

 

such Pool RAL was originated for use in connection with the origination of such Pool
RAL complied, as to form (subject to proper completion), with the requirements of the
federal Truth-in-Lending Act, 15 U.S.C. §§ 1601 et seq. (“TILA”) (it being
understood that the foregoing shall not be deemed a warranty by HSBC TFS that such form has
been properly completed) and (ii) that was created in compliance with the other requirements
of TILA; and

     (c) as to which, at the time of the sale of the Participation Interest in such Pool RAL
to BFC, HSBC TFS had good and marketable title thereto free and clear of all Liens arising
under or through HSBC TFS or any of its Affiliates.

     “ERA Operations Agreement” shall mean the ERA Operations Agreement as in effect from
time to time between BFC, Royalty, HSBC TFS and Beneficial Franchise.

     “Excluded RAL” shall have the meaning set forth in Section 5.2.

     “Federally Chartered Financial Institution” shall have the meaning set forth in
Recital E.

     “First Amended and Restated RAL Participation Agreement” shall have the meaning set
forth in Recital A.

     “First ICB Consent Letter “ shall have the meaning set forth in Recital E.

     “Governmental Authority” shall mean the United States of America, any state or other
political subdivision thereof and any entity exercising executive, legislative judicial, regulatory
or administrative functions pertaining to government.

     “HB” shall mean Household Bank, f.s.b., a federal savings bank.

     “HSBC Bank” shall mean HSBC Bank USA, National Association, a national banking
association.

     “HSBC TFS” shall mean HSBC Taxpayer Financial Services Inc., a Delaware corporation.

     “HTMAC” shall mean Household Tax Masters Acquisition Corporation, a Delaware
corporation.

     “ICB” shall mean Imperial Capital Bank, a California state chartered commercial bank.

     “Ineligible RAL” shall have the meaning set forth in Section 4.4(c).

     “Lien” shall mean any pledge, hypothecation, assignment, encumbrance, security
interest, lien (statutory or other) or other security agreement of any kind or nature whatsoever,
including (without limitation) any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing.

5

 

     “Major Franchisee” shall mean, subject to the terms of Section 7.17 hereof, the Person
authorized by a major franchise agreement with Block Services, or with an Affiliate of Block
Services, to operate a Block Office and to subfranchise others to operate Block Office within a
specified territory.

     “Major Franchisee Pool RAL” shall have the meaning given such term in the definition
of “Pool RAL.”

     “Major Franchisee RAL Agreement” shall mean an agreement from time to time between
HSBC TFS and/or any one or more Affiliates of HSBC TFS and a Major Franchisee pursuant to which
RALs are made to customers of Block Offices of such Major Franchisee or its subfranchisees, as the
same may be amended, modified or supplemented from time to time.

     “No Fee RAL” shall mean any RAL for which no RAL fee is charged to a customer.

     “Notifying Party” shall have the meaning set forth in Section 5.2.

     “Obligor” shall mean, with respect to any RAL, the Person or Persons obligated to make
payments to the RAL Originator, or an Affiliate of the RAL Originator, with respect to such RAL.

     “Originator Party” shall mean any Person or entity through whom Pool RALs or Pool RACs
are made or serviced, and any other Person or entity that prepares or arranges for the preparation
of a tax return for a Pool RAL or Pool RAC customer, or that files, makes or transmits or assists
or arranges for the filing, making or transmission of any such tax return, refund request or Pool
RAL or Pool RAC request, or that acts as a network or service bureau in connection with any of the
foregoing, or that owns, distributes, licenses or otherwise has an interest in any software or
other intellectual property used in connection with any of the foregoing or in any trademark,
service mark or brand name under which Pool RALs or Pool RACs are promoted.

     “Participated Pool RAL” shall mean any Pool RAL in which a Participation Interest has
been sold to BFC pursuant to Section 2.1 and has not been reassigned to HSBC TFS or repurchased by
HSBC TFS pursuant to this Agreement.

     “Participation Interest” shall have the meaning set forth in Section 2.1.

     “Person” shall mean any legal person, including any individual, corporation,
partnership, joint venture, association, joint-stock company, trust, unincorporated organization,
governmental entity or other entity of similar nature.

     “Pool RAC” shall mean any RAC issued by the RAL Originator through a Block Office
owned by Block Services, a Corporate Franchise, a Major Franchisee, a subfranchisee of a Major
Franchisee or any Affiliate of any of the foregoing.

     “Pool RAL” shall mean (a) any RAL made by the RAL Originator through a Block Office
owned by Block Services, a Corporate Franchise or either of their Affiliates, pursuant to or under
color of (i) the Second Amended and Restated RAL Operations Agreement or (ii) a

6

 

referral to the RAL Originator by Block Services, such Corporate Franchise or such Affiliates
pursuant to a contractual electronic filing arrangement with any other Person and (b) any
electronic refund advance (“ERA”) made by the RAL Originator originated through On-Line Tax
Preparation (“OTP”) software pursuant to the ERA Operations Agreement (a RAL or ERA
described in subclause (a) or (b) may hereinafter be referred to as a “Corporate Pool RAL”)
and (c) any RAL made during any Tax Period by a Major Franchisee or a subfranchisee of a Major
Franchisee, pursuant to or under color of (i) a Major Franchisee RAL Agreement or (ii) a referral
to the RAL Originator by a Major Franchisee, or a subfranchisee or such Major Franchisee, of an
Obligor whose federal income tax return was filed electronically by such Major Franchisee, or
subfranchisee of such Major Franchisee, pursuant to a contractual electronic filing arrangement
between such Major Franchisee or subfranchisee and any other Person (a RAL described in this
subclause (c) may hereinafter be referred to as a “Major Franchisee Pool RAL”).
Notwithstanding the foregoing, “Pool RAL”, “Corporate Pool RAL”, and “Major Franchisee Pool RAL”,
shall not include any RAL for which no RAL fee is charged to a customer (a “No Fee RAL”).

     “Principal Amount” of a RAL, shall mean:

     (a) the aggregate amount paid or payable by the RAL Originator to or for the account of
an Obligor in connection with a RAL, and shall in any event include (i) the amount of any
check properly issued or authorized to be issued by the RAL Originator to the order of any
such Obligor, and (ii) any amounts paid or payable by the RAL Originator for the account of
Obligor to any Originator Party, the Internal Revenue Service or any other Person (whether
or not the RAL Originator has a right, contingent or otherwise, to withhold or retain any
portion of such amount). The “Principal Amount” of a RAL shall not include any financing
fee or refund account fee payable by such Obligor to the RAL Originator for such RAL. Each
of the foregoing elements of a RAL shall be deemed to be made for purposes of this Agreement
on the Business Day on which the RAL check clears the bank account used by the RAL
Originator for the disbursement of RALs and such fact has been recorded in the computer
files the RAL Originator uses for administering RALs; and

     (b) shall also include any payment made at any time by the RAL Originator with respect
to any lost, altered or stopped check issued by or on behalf of the RAL Originator in
connection with a RAL described in paragraph (a) (the “Underlying RAL”), as well as
any payment by the RAL Originator with respect to any lost, altered or stopped replacement
check. Payments on any RAL described in this paragraph (b) shall be deemed to be made for
purposes of this Agreement on the Business Day when the replacement RAL check clears the
bank account used by the RAL Originator for the disbursement of RALs and such fact has been
recorded in the computer files the RAL Originator uses for administering RALs.

     “Purchase Price” shall mean the purchase price for a Participation Interest to be paid
by BFC to HSBC TFS as calculated pursuant to Section 2.3.

     “RAC” means a check issued by the RAL Originator and delivered to a taxpayer pursuant
to a Refund Anticipation Check Service.

7

 

     “RAL” shall mean any refund anticipation loan from time to time made by the RAL
Originator.

     “RAL Guidelines” shall mean the RAL Originator’s policies and procedures from time to
time relating to the operation of its refund anticipation loan business, including (without
limitation) the policies and procedures for determining the credit worthiness of refund
anticipation loan customers, the extension of credit to refund anticipation loan customers and
relating to the collection and charge off of refund anticipation loans.

     “RAL Originator” shall mean the insured depository institution engaged by HSBC TFS
(subject to the Block Companies’ rights under the Letter Agreement and the Second ICB Consent
Letter) to serve as the originator under the RAL Program.

     “RAL Participation Agreement” shall have the meaning set forth in Recital D.

     “RAL Program” shall have the meaning assigned to it in the Second Amended and Restated
RAL Operations Agreement.

     “Reassignment Amount” shall have the meaning set forth in Section 4.3.

     “Reassignment Date” shall have the meaning set forth in Section 4.3.

     “Refund Anticipation Check Service” shall mean a service pursuant to which a check in
the amount of a taxpayer’s federal income tax refund, less the sum of (a) fees charged for the
making of the check, (b) tax preparation fees and (c) other properly withheld amounts, is delivered
to a taxpayer on account of a direct deposit refund (other than in connection with a RAL made in
advance of receipt of the related refund). “Refund Anticipation Check Service” includes the
delivery of a direct deposit refund check to a taxpayer in connection with such taxpayer’s denied
RAL application.

     “Repurchase Value” of a Participated Pool RAL at any time shall mean the Principal
Amount of such Participated Pool RAL, less any Collections received with respect to such
Participated Pool RAL.

     “Sale and Servicing Agreement “ shall have the meaning set forth in Recital C.

     “Second Amended and Restated RAL Operations Agreement” shall have the meaning set
forth in Recital G.

     “Second Amended and Restated RAL Participation Agreement” shall have the meaning set
forth in Recital H.

     “Second ICB Consent Letter” shall have the meaning set forth in Recital F.

     “Tax Period” for any year shall mean the period from and including January 1 of such
year to and including August 15 of such year.

8

 

     “Third Amended and Restated RAL Operations Agreement” shall have the meaning set forth
in Recital J.

     “UCC” shall mean the Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.

     “Underlying RAL” shall have the meaning given that term in paragraph (b) of the
definition of “Principal Amount”.

     Section 1.2. Other Definitional Provisions. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular, the singular the plural
and the part the plural. The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement; and Section and subsection references contained in this Agreement are
references to Sections and subsections in this Agreement unless otherwise specified.

ARTICLE II.

PURCHASE AND SALE OF INTERESTS IN POOL RALS

     Section 2.1. Purchase and Sale of Participation Interests in Pool RALs.

     (a) Purchase and Sale. Subject to the conditions set forth in this Agreement,
HSBC TFS agrees to sell to BFC, and BFC agrees to purchase from HSBC TFS, from time to time,
on a “checks cleared” basis, an undivided ownership interest in, and in an amount equal to
the Applicable Percentage of, all of HSBC TFS’s right, title and interest in and to each
Pool RAL hereafter created, including all monies due or to become due with respect thereto
and all Collections pertaining thereto and other proceeds (as defined in the UCC as in
effect in the State of Delaware) thereof (a “Participation Interest”). Subject to
the conditions set forth herein BFC agrees to pay for, purchase and accept all Participation
Interests from time to time as provided herein. Except for the representations and
warranties expressly made by HSBC TFS in this Agreement, Participation Interests (and
acquisition thereof by BFC) shall be without recourse to HSBC TFS. HSBC TFS represents and
warrants to BFC that the Pool RALs were originated in compliance with the Final Credit
Criteria and Final RAL and RAC Fees (as defined in the Second Amended and Restated RAL
Operations Agreement) and applicable law, excluding, however, any failure to comply which
results from (i) any misrepresentation or omission to state a material fact by a RAL
Customer, or (ii) action or inaction by any Block Office, Major Franchisee or subfranchisee
of a Major Franchisee to perform its explicit obligations under this Agreement, or a
corporate franchise agreement between Block Services and a Corporate Franchise, a Major
Franchisee RAL Agreement, or a subfranchisee agreement relating to the RAL Program between a
Major Franchisee and a subfranchisee, as applicable (except for any action or inaction by
such entities due to changes to the RAL Program required by the RAL Originator or HSBC TFS
outside of the deadlines set forth in this Agreement for any such changes).

9

 

     (b) Conveyance of Participation Interest. The conveyance by HSBC TFS to BFC of
a Participation Interest in a Pool RAL shall be deemed to occur at the time when HSBC TFS
receives full payment from BFC of the Purchase Price in respect to such Participation
Interest corresponding to such Participated Pool RAL and all other Participated Pool RALs of
HSBC TFS arising on the same day. Upon such conveyance, BFC shall be the owner, to the
extent of the Applicable Percentage, of a Participation Interest in such Pool RAL. The
parties intend that if and to the extent that any conveyance of a Participation Interest in
a Pool RAL is not deemed a sale of a Participation Interest, HSBC TFS shall be deemed to
have granted to BFC a security interest in the Participation Interest that was purportedly
conveyed and that this Agreement shall constitute a security agreement under applicable law.
HSBC TFS agrees to authorize the filing of financing and continuation statements as BFC may
from time to time reasonably request with respect to Participation Interests hereafter
created or arising.

     (c) True Sale and Nonconsolidation Opinions. Upon BFC’s request, HSBC TFS
agrees to use all commercially reasonably efforts to obtain for BFC (i) a “true sale”
opinion of counsel to HSBC TFS with respect to the sale by HSBC TFS and the purchase by BFC
of the Participation Interests in the Pool RALs, and (ii) a “nonconsolidation” opinion of
counsel to HSBC TFS with respect to HSBC TFS and any other subsidiary of HSBC TFS that owns
the Participation Interests prior to such sale and purchase, in both cases in form and
substance typically employed in off-balance sheet financing or sale transactions generally;
provided, however, that in connection with such efforts (A) HSBC TFS shall
not be obligated to restructure the terms of any agreement relating to the RAL Program, or
any aspect of the RAL Program itself, in any way that adversely affects the economic
interests of HSBC TFS or its Affiliates, and (B) the failure of HSBC TFS to obtain such
opinions (after making commercially reasonable efforts to do so) shall not constitute a
breach of any of HSBC TFS’s obligations under this Agreement and shall in no event give rise
to any liability on the part of HSBC TFS or any of its Affiliates. With respect to such
opinions and the RAL Program for a particular Tax Year, (1) BFC shall use all commercially
reasonable efforts to request such opinions as soon as reasonably possible during the
immediately preceding calendar year, and in any event, no later than September 1st of such
preceding calendar year absent major structural changes to the RAL Program made or proposed
by HSBC TFS, (2) BFC shall use all commercially reasonable efforts to identify the entity,
if any, with whom it intends to effectuate any financing or sale transaction, and the
proposed structure of such financing or sale transaction, as soon as reasonably possible
during the immediately preceding calendar year, and in any event, no later than September
1st of such preceding calendar year absent major structural changes to the RAL Program made
or proposed by HSBC TFS, and (3) BFC and HSBC TFS shall cooperate and use all commercially
reasonable efforts to complete all changes to the RAL Program, if any, and the legal
documents and agreements reflecting such changes, if any, as soon as reasonably possible
during the immediately preceding calendar year, and in any event no later than October 15th
of such preceding calendar year absent major structural changes to the RAL Program made or
proposed by BFC or HSBC TFS. BFC shall be solely responsible for all legal fees of the
parties associated with any opinion undertaken pursuant to this Section 2.1(c). In
connection with any request by BFC for an opinion pursuant to this Section 2.1(c) for a
particular Tax Year, HSBC TFS shall, upon reasonable request by BFC, provide to BFC

10

 

copies of all material operative agreements executed by HSBC TFS or its Affiliates
relating to the origination of RALs by the RAL Originator, or the sale and servicing of HSBC
TFS’s retained interest in the Pool RALs, for such Tax Year, as well as all material
operative agreements executed by HSBC TFS or its Affiliates relating to the financing or
sale of such retained interest for such Tax Year, in each case only to the extent (i) such
agreements are reasonably necessary to be reviewed by BFC in connection with the opinions
contemplated by this Section 2.1(c), and (ii) the terms of such agreements permit disclosure
to third parties; provided, however, that HSBC TFS shall not add any
provision to any such agreement that unreasonably prohibits disclosure to BFC, its
accountants or counsel engaged in connection with the issuance of any opinion pursuant to
this Section 2.1(c), or the entity, if any, engaged by BFC to effectuate any financing or
sale transaction. BFC hereby agrees to hold all such agreements in strict confidence and
not provide any copies or disclose any terms therein to any party other than its
accountants, its counsel and the entity, if any, with whom BFC proposes to effectuate any
financing or sale transaction; provided, however, that, notwithstanding any
other provision in this Agreement, if such entity or an Affiliate of such entity is deemed
by HSBC TFS to be a competitor of HSBC TFS in the making or servicing of RALs, then the
disclosure of such agreements to such entity may be restricted by HSBC TFS to the extent
deemed necessary by HSBC TFS, in its sole discretion, to protect its business interests and
trade secrets. To the extent that the terms and conditions of this Section 2.1(c) are
inconsistent with the terms and conditions of the Second ICB Consent Letter, the terms and
conditions of the Second ICB Consent Letter shall control.

     Section 2.2. Payment. Each Business Day, not later than 9:00 a.m., New Jersey time,
HSBC TFS as servicer for the RAL Originator shall give notice to BFC (which notice may be by
telephone, e-mail or facsimile) of the number and Principal Amount of Pool RALs made by the RAL
Originator and in which HSBC TFS has purchased a Participation Interest on the preceding Business
Day (it being understood that, for such purpose, a Pool RAL shall be deemed to be made at the time
set forth in the definition of “Principal Amount” in this Agreement), together with the Purchase
Price for the Participation Interest corresponding to such Pool RALs. Not later than 4:00 p.m.,
New Jersey time, on such Business Day, BFC shall pay to HSBC TFS the full amount of such Purchase
Price. Such payment shall be made to HSBC TFS at such domestic account designated by HSBC TFS by
notice to BFC from time to time, in United States dollars and in funds immediately available at
such office at such time, without setoff, withholding, counterclaim or other deduction of any
nature whatsoever.

     Section 2.3. Purchase Price. The Purchase Price for a Participation Interest shall be
equal to the sum, for each Pool RAL corresponding to such Participation Interest, of the product of
(i) the Applicable Percentage applicable to such Pool RAL, times (ii) the Principal Amount of such
Pool RAL (the aggregate amount referred to in this Section being referred to as the “ Purchase
Price” with respect to such Participation Interest).

     Section 2.4. Float Adjustment. HSBC TFS shall pay to BFC an amount equal to the
product of $.50 times the number of Pool RACs (other than Pool RACs issued through a Major
Franchisee or a subfranchisee of a Major Franchisee) issued during the Tax Period. Such amount
shall be due and payable by HSBC TFS by wire transfer not later than thirty (30) days after the
last day that RACs are offered for such Tax Period.

11

 

     Section 2.5. Applicable Percentages. The Applicable Percentage for Corporate Pool
RALs shall be 40%; provided, however, the Applicable Percentage for Corporate Pool RALs shall be
49.999999% for each Tax Period during which HSBC TFS (or any of its Affiliates) is the exclusive
facilitator of a Refund Anticipation Check Service to customers of Block Offices owned by Block
Services, Corporate Franchisees and any of Block Services’ Affiliates. The Applicable Percentage
for a Major Franchisee Pool RAL shall be 25%. Notwithstanding the foregoing provisions of this
Section 2.5, any Applicable Percentage (a) for a particular Tax Period may be such lesser
percentage as specified by BFC by giving written notice to HSBC TFS on or before September 1
immediately prior to such Tax Period (it being understood that (i) such lesser percentage shall
pertain only to the particular Tax Period for which such notice is given and (ii) if no such notice
is given for a particular Tax Period, the Applicable Percentages shall be the percentages as set
forth in this Section 2.5), or (b) for any portion of a particular Tax Period shall be reduced to
zero if BFC has exceeded its internal funding limit (it being understood that (i) the reduction of
the percentage to zero shall only be in effect during the periods of time BFC has exceeded its
internal funding limit and (ii) for the periods of time BFC has not exceeded its internal funding
limit, the Applicable Percentages shall be the percentages as set forth in this Section 2.5).

ARTICLE III.

SERVICING, ADMINISTRATION AND COLLECTION OF POOL RALS

     Section 3.1. Servicing and Administration of Participated Pool RALs. HSBC TFS as
servicer for the RAL Originator shall underwrite, service and administer the Participated Pool RALs
and shall collect payments due under the Participated Pool RALs in accordance with its customary
and usual servicing procedures for servicing RALs made by the RAL Originator through Block Offices
or Major Franchisees or subfranchisees of Major Franchisees and in accordance with the RAL
Guidelines, and in which HSBC TFS has purchased a Participation Interest. HSBC TFS as servicer for
the RAL Originator shall, subject to the terms of this Section 3.1, have full power and authority,
acting alone or through any party properly designated by it hereunder, to do any and all things in
connection with such servicing and administration that it may deem necessary or desirable. Without
limiting the generality of the foregoing, HSBC TFS as servicer for the RAL Originator is hereby
authorized and empowered to execute and deliver, on behalf of BFC, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and all other comparable
instruments, with respect to the Participated Pool RALs and, after the delinquency of any
Participated Pool RAL and to the extent permitted under and in compliance with applicable law and
regulations, to commence enforcement proceedings with respect to such Participated Pool RALs. In
addition, without limiting the generality of the foregoing, HSBC TFS as servicer for the RAL
Originator is hereby authorized and empowered, in the ordinary course of collecting any Defaulted
Pool RAL, to sell or transfer such Defaulted Pool RAL free and clear of any interest of BFC
(proceeds of such sale or transfer being treated as Collections for purposes of Section 3.2). BFC
shall furnish HSBC TFS with any documents necessary or appropriate to enable HSBC TFS to carry out
its servicing and administrative duties hereunder. HSBC TFS shall not be obligated to use
servicing procedures, offices, employees or accounts for servicing the Participated Pool RALs that
are separate from the procedures, offices, employees and accounts used by HSBC TFS in connection
with servicing other refund anticipation loans.

12

 

     Section 3.2. Collections. On each Business Day not later than 4:00 p.m., New Jersey
time, HSBC TFS as servicer for the RAL Originator shall distribute the Applicable Percentage in all
Collections (except those payments received from the Internal Revenue Service (“IRS”) in
the normal processing of refunds designated for direct deposit) with respect to each Participated
Pool RAL received by HSBC TFS as servicer for the RAL Originator (or any of its Affiliates) on the
preceding Business Day (less collection fees payable by BFC to HSBC TFS or its Affiliates pursuant
to Section 3.4). Such distribution shall be made to BFC at such domestic account designated by BFC
by notice to HSBC TFS from time to time, in United States dollars and in funds immediately
available at such office at such time, without setoff, withholding, counterclaim or other deduction
of any nature whatsoever and regardless of the form of Collection received by HSBC TFS as servicer
for the RAL Originator (or any of its Affiliates). Funds received from the IRS as part of the
normal processing of refunds designated for direct deposit will be distributed to BFC in the manner
provided herein on the day that RAL Originator receives such funds in its designated account(s) at
the applicable United States Federal Reserve Bank; provided, that one day’s interest shall be
deducted by HSBC TFS as servicer for the RAL Originator from each such payment in order to reflect
the fact that the fundings of Participated Pool RALs are on a one-day delayed basis. For the
purpose of the above-referenced interest deduction, interest shall be calculated on the basis of a
365 day year (or a 366 day year in a leap year) at the 30 day dealer placed commercial paper rate
as published in the Money Rates section of the Wall Street Journal for the previous Business Day.

     Section 3.3. Reports; Records for BFC.

     (a) Daily Reports. On each Business Day during an Applicable Tax Period, HSBC
TFS as servicer for the RAL Originator shall prepare and forward to BFC a report setting
forth (i) the aggregate amount of Collections processed by HSBC TFS as servicer for the RAL
Originator (or any of its Affiliates) with respect to Participated Pool RALs on the
preceding Business Day and BFC’s share thereof, (ii) the number of, and aggregate
outstanding amount of, Participated Pool RALs as of the close of business on the preceding
Business Day and BFC’s share thereof, and (iii) the number of Pool RACs made by the RAL
Originator on the preceding Business Day and BFC’s share of RAC fees pertaining thereto.
HSBC TFS as servicer for the RAL Originator shall at all times maintain its computer files
with respect to Pool RACs and Participated Pool RALs in such a manner so that Pool RACs and
Participated Pool RALs may be specifically identified.

     (b) Monthly Reports. On the 8th day of each calendar month, or if such day is
not a Business Day, the immediately preceding Business Day, HSBC TFS as servicer for the RAL
Originator shall forward to BFC a report setting forth (i) the aggregate amount of
Collections processed with respect to Participated Pool RALs during the preceding calendar
month and BFC’s share thereof, (ii) the aggregate amount of Participated Pool RALs
outstanding as of the end of the last day of the preceding calendar month and BFC’s share
thereof, (iii) an aging of Participated Pool RALs outstanding as of the end of the last day
of the preceding calendar month, (iv) the aggregate Defaulted Pool RALs as of the end of
the last day of the preceding calendar month and BFC’s share thereof, (v) the number of
Pool RACs made during the preceding calendar month and BFC’s share of Collections pertaining
thereto, and (vi) the aggregate Participated Pool RALs

13

 

that are not Defaulted Pool RALs but with respect to which payment has not been
received within 30 days after such Participated Pool RALs were made by the RAL Originator
and a participation interest therein was purchased by BFC, and BFC’s share thereof. Such
report shall be accompanied by an officer’s certificate, stating that to the best of such
officer’s knowledge such report is complete and accurate.

     (c) Independent Accountants’ Reports. BFC may cause a firm of nationally
recognized independent accountants (who may also render services to HSBC TFS) to furnish, at
the expense of BFC, a report to BFC and HSBC TFS to the effect that such firm has made a
study and evaluation of the RAL Originator’s and HSBC TFS’s internal accounting controls
relative to the making of Pool RACs and servicing of Participated Pool RALs under this
Agreement, and that, on the basis of such study and evaluation, such firm is of the opinion
(assuming the accuracy of any reports generated by the RAL Originator’s and HSBC TFS’s third
party agents) that the systems of internal accounting controls in effect on the date set
forth in such report relating to making of Pool RALs by the RAL Originator and servicing
procedures performed by HSBC TFS as servicer for the RAL Originator pursuant to the terms of
this Agreement, taken as a whole, were sufficient for the prevention and detection of errors
for such exceptions, errors or irregularities as such firm shall believe to be immaterial to
the financial statements of the RAL Originator and HSBC TFS and such other exceptions,
errors or irregularities as shall be set forth in such report.

     Section 3.4. Collection Fee for Defaulted Pool RALs. BFC shall pay to HSBC TFS as
servicer for the RAL Originator a collection fee in an amount equal to the Applicable Percentage
with respect to a Defaulted Pool RAL, times 25% of the Principal Amount of each Defaulted Pool RAL
collected by collection offices of HSBC TFS as servicer for the RAL Originator or any of its
Affiliates. Such fee shall be paid in the form of a deduction from Collections remitted to HSBC
TFS (or an Affiliate of HSBC TFS) pursuant to Section 3.2 pertaining to such Participated Pool RAL.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

     Section 4.1. General Representations and Warranties of HSBC TFS. HSBC TFS hereby
represents and warrants to BFC as of the date hereof (which representations and warranties shall
survive any purchase and sale of Participation Interests pursuant to this Agreement):

     (a) Organization and Good Standing. HSBC Bank is a national bank duly
organized and validly existing under the laws of the United States of America, has its
principal banking office located in the State of Delaware. HSBC Bank has full corporate
power and authority to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted, and to execute, deliver and
perform its obligations under this Agreement. HSBC TFS is a corporation duly organized and
validly existing under the laws of the State of Delaware and has full corporate power and
authority to own its properties and conduct its business as such properties are

14

 

presently owned and such business is presently conducted, and to execute, deliver and
perform its obligations under this Agreement.

     (b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for in this Agreement have been duly authorized by
HSBC TFS by all necessary corporate action on its part and this Agreement will remain, from
the time of its execution, an official record of HSBC TFS.

     (c) No Conflict. The execution and delivery of this Agreement, the performance
of the transactions contemplated by this Agreement and the fulfillment of the terms hereof
will not conflict with, result in any breach of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material default under, any
indenture, contract, agreement mortgage, deed of trust, or other instrument to which HSBC
TFS is a party or by which it or any of its properties are bound.

     (d) HSBC Bank’s Deposit Accounts. Deposits in HSBC Bank’s deposit accounts are
insured to the limits provided by law by the Bank Insurance Fund administered by the Federal
Deposit Insurance Corporation.

     Section 4.2. Representations and Warranties of HSBC TFS Relating to the Participated Pool
RALs. HSBC TFS hereby represents and warrants to BFC as of each Closing Date (which
representations and warranties shall survive any purchase and sale of Participation Interests
pursuant to this Agreement):

     (a) Eligible RAL. Each Participated Pool RAL is an Eligible RAL as of the
Closing Date relating to the Participation Interest sold to BFC with respect to such
Participated Pool RAL.

     (b) Sale and Ownership; Title. Each sale of a Participation Interest by HSBC
TFS to BFC on such Closing Date constitutes either (i) a valid sale, transfer, assignment,
set over and conveyance to BFC of all right, title and interest of HSBC TFS in and to such
Participation Interest (and the Applicable Percentage in the underlying Pool RALs), free and
clear of any Lien of any Person claiming through or under HSBC TFS or any of its Affiliates,
or (ii) if it is ultimately determined by a court of competent jurisdiction that a sale from
HSBC TFS to BFC did not occur, then a grant of a security interest (as defined in the UCC as
in effect in the applicable state) by HSBC TFS to BFC in each Participation Interest
purportedly conveyed pursuant to such sale. On each Closing Date, immediately prior to any
such sale of (or grant of a security interest in) a Participation Interest, HSBC TFS will be
the sole legal and beneficial owner of, and will have marketable title to, the Participation
Interest in the underlying Pool RALs, free and clear of any Lien, claim or encumbrance
(other than the interests of BFC contemplated by this Agreement). Neither HSBC TFS nor any
Person claiming through or under HSBC TFS shall have any claim to or interest in such
Participation Interest, except for the interest of HSBC TFS therein as a “debtor”
(specifically, as seller of payment intangibles) for purposes of Article 9 of the UCC.

15

 

     Section 4.3. Remedy For Breach of Representations and Warranties. In the event of a
breach of any of the representations and warranties set forth in Section 4.1, BFC may by notice
then given in writing to HSBC TFS direct HSBC TFS to accept reassignment of the Participation
Interests within 30 days of such notice (or within such longer period as may be specified in such
notice but in no event later than 120 days), and HSBC TFS shall be obligated to accept reassignment
of the Participation Interests on a date specified by BFC (the “Reassignment Date”)
occurring within such applicable period on the terms and conditions set forth below;
provided, however, that no such reassignment shall be required to be made if, at
any time during such applicable period, the representations and warranties contained in Section 4.1
shall then be true and correct in all material respects. In connection with such reassignment,
HSBC TFS shall remit to BFC on the Reassignment Date an amount equal to the aggregate of the
respective Applicable Percentages of the Repurchase Values of each Participated Pool RAL (the
“Reassignment Amount”). Such remittance shall be made to BFC at such domestic account
designated by BFC by notice to HSBC TFS, in United States dollars and in funds immediately
available at such office at such time, without setoff, withholding, counterclaim or other deduction
of any nature whatsoever. Except as provided in Section 5.1, the obligation of HSBC TFS to
purchase the Participation Interests in accordance with this Section 4.3 shall constitute the sole
remedy respecting any breach of the representations and warranties set forth in Section 4.1
available to BFC.

     On the date on which the Reassignment Amount has been paid to BFC, the Participation Interests
in the uncollected Participated Pool RALs, all monies due or to become due with respect thereto and
all proceeds thereof shall be released to HSBC TFS, or its designee or assignee, and BFC shall
execute and deliver such instruments of transfer or assignment, in each case without recourse,
representation or warranty (except only for the warranty that since the date of sale by HSBC TFS to
BFC, BFC has not sold, transferred or encumbered any such Participated Pool RALs or interest
therein), as shall reasonably be requested by HSBC TFS to vest in HSBC TFS, or its designee or
assignee, all right, title and interest of BFC in and to the Participation Interests in the
uncollected Participated Pool RALs, all monies due or to become due with respect thereto and all
proceeds thereof. BFC’s right to resell and HSBC TFS’s obligation to repurchase a Participation
Interest pursuant to this Section 4.3 shall apply only to a Participation Interest that is
adversely affected by or impaired as a result of a breach of a representation or warranty.

     Section 4.4. Transfer of Ineligible RALs.

     (a) Repurchase. In the event of a breach with respect to a Participated Pool
RAL of any representations and warranties set forth in Section 4.2(b)(i), or in the event
that a Participated Pool RAL is not an Eligible RAL as a result of the failure to satisfy
the conditions set forth in clause (c) of the definition of Eligible RAL, and as a result of
such breach of event such Participated Pool RAL is charged off as uncollectible or BFC’s
rights in, to or under the Participation Interest therein are materially impaired, then,
upon the earlier to occur of the discovery by BFC of such breach or event, or receipt by BFC
of written notice from HSBC TFS of such breach or event, BFC may by notice then given in
writing to HSBC TFS direct HSBC TFS to repurchase the Participation Interest in each such
Participated Pool RAL within 30 days of such notice (or within such longer period as may be
specified in such notice but in no event later than 120 days) on a date specified

16

 

by BFC occurring within such applicable period on the terms and conditions set forth in
Section 4.4(c).

     (b) Repurchase After Cure Period. In the event of a breach of any of the
representations and warranties set forth in Sections 4.2 and 2.1(a), or in the event that a
Participated Pool RAL is not an Eligible RAL as a result of the failure to satisfy the
conditions set forth in the definition of Eligible RAL or Pool RAL (contingent on that
failure not being caused by (i) any misrepresentation or omission to state a material fact
by a RAL Customer, or (ii) action or inaction of any Block Office, Major Franchisee, or
subfranchisee of a Major Franchisee to perform its explicit obligations under this
Agreement, or a corporate franchise agreement between Block Services and a Corporate
Franchise a Major Franchisee RAL Agreement, or a subfranchisee agreement relating to the RAL
Program between a Major Franchisee and a subfranchisee, as applicable (except for any action
or inaction by such entities due to changes to the RAL Program required by the RAL
Originator or HSBC TFS outside of the deadlines set forth in this Agreement for any such
changes), other than a breach or event as set forth in Section 4.4(a), and as a result of
such breach any Participated Pool RAL becomes a Defaulted Pool RAL or BFC’s rights in, to or
under the Participated Pool RAL or its proceeds are materially impaired, then, upon the
expiration of 60 days (or such longer period as may be agreed to by BFC, but in not event
later than 120 days) from the earlier to occur of the discovery of any such event by BFC or
receipt by BFC of written notice from HSBC TFS of any such event, BFC may by notice then
given in writing to HSBC TFS direct HSBC TFS to repurchase the Participation Interest in
each such Participated Pool RAL within 30 days of such notice (or within such longer period
as may be specified in such notice but in no event later than 120 days) on the terms and
conditions set forth in Section 4.4(c); provided, however, that no such
repurchase shall be required to be made if, on any day prior to such repurchase, such
representations and warranties with respect to such Participated Pool RAL shall then be true
and correct in all material respects as if such Participated Pool RAL had been created on
such day.

     (c) Procedures for Repurchase. When the provisions of Sections 4.4(a) or
4.4(b) require repurchase of a Participation Interest in a Participated Pool RAL (such
Participated Pool RAL being hereinafter referred to as an “Ineligible RAL”), HSBC
TFS shall accept reassignment of such Participation by remitting to BFC an amount equal to
the Applicable Percentage of the Repurchase Value of the Ineligible RAL as of the date of
such repurchase. Such remittance shall be made to BFC at such domestic account designated
by BFC by notice to HSBC TFS, in United States dollars and in funds immediately available at
such office at such time, without setoff, withholding, counterclaim or other deduction of
any nature whatsoever. Upon such remittance, BFC shall automatically and without further
action be deemed to transfer, assign, set over and otherwise convey to HSBC TFS, without
recourse, representation or warranty (except for the warranty that since the date of
conveyance by HSBC TFS to BFC, BFC has not sold, transferred or encumbered any such
Participation Interest), all right, title and interest of BFC in and to such Participation
Interest. BFC shall execute such documents and instruments of transfer or assignment and
take other actions as shall reasonably be requested by HSBC TFS to evidence the conveyance
of such Participation Interest in the Ineligible RALs, all monies due or to become due with
respect thereto and all proceeds

17

 

thereof pursuant to this Section 4.4(c). The obligation of HSBC TFS to repurchase
Participation Interests in Ineligible RALs in accordance with this Section 4.4(c) shall
constitute the sole remedy respecting any breach of the representations and warranties set
forth in Section 4.2 available to BFC.

     (d) Impairment. For the purposes of Sections 4.4(a) and (b) above, proceeds of
a Participated Pool RAL shall not be deemed to be impaired hereunder solely because such
proceeds are held by HSBC TFS for more than the applicable period under Section 9-315(d) of
the UCC as in effect in the State of Delaware.

ARTICLE V.

TERM

     Section 5.1. Termination of Purchase and Sale Obligations. The obligations of HSBC
TFS to sell Participation Interests in Pool RALs pursuant to Section 2.1 that are RALs described in
paragraph (a) of the definition of “Principal Amount” in this Agreement and the obligations of BFC
to purchase Participation Interests in such Pool RALs pursuant to Section 2.1, may be terminated:

     (a) by the mutual written agreement of BFC and HSBC TFS;

     (b) by either party, if the Second Amended and Restated RAL Operations Agreement has
been terminated;

     (c) by HSBC TFS, if (i) there is a failure by BFC to perform or observe any material
term, covenant or agreement contained in this Agreement, and any such failure shall remain
unremedied for 10 days after written notice of such failure shall have been given to BFC by
HSBC TFS, (ii) there is an order or decree restraining, enjoining, prohibiting, invalidating
or otherwise preventing the transactions contemplated by this Agreement or HSBC TFS’s
performance of any of its material obligations under this Agreement, (iii) there shall be
pending, or any Governmental Authority shall have notified HSBC TFS of its intention to
institute, any action, suit or proceeding against HSBC TFS to restrain, enjoin, prohibit,
invalidate or otherwise prevent the transactions contemplated by this Agreement or HSBC
TFS’s performance of any of its material obligations under this Agreement, (iv) any
Participated Pool RAL or purchase or sale of a Participation Interest in a Participated Pool
RAL, or HSBC TFS’s performance of any of its material obligations under this Agreement,
would be illegal, and there are no reasonable steps that HSBC TFS could take to prevent such
illegality; or (v) there is a dissolution, termination of existence, insolvency, appointment
of a receiver of any part of the property of, or assignment for the benefit of creditors by,
or the commencement of any proceeding by or against BFC under any bankruptcy or insolvency
law;

     (d) by BFC, if (i) there is a failure by HSBC TFS to perform or observe any material
term, covenant or agreement contained in this Agreement and any such failure shall remain
unremedied for 10 days after written notice of such failure shall have been given to HSBC
TFS by BFC, (ii) there is an order or decree restraining, enjoining, prohibiting,
invalidating or otherwise preventing BFC’s performance of any of its

18

 

material obligations hereunder, (iii) there shall be pending, or any Governmental
Authority shall have notified BFC of its intention to institute, any action, suit or
proceeding against BFC to restrain, enjoin, prohibit, invalidate or otherwise prevent BFC’s
performance of any of its material obligations hereunder, (iv) BFC’s performance of any of
its material obligations hereunder would be illegal and there are no reasonable steps that
BFC could take to prevent such illegality, or (v) there is a dissolution, termination of
existence, insolvency, appointment of a receiver of any part of the property of, or
assignment for the benefit of creditors by, or the commencement of any proceeding by or
against HSBC TFS under any bankruptcy or insolvency law; or

     (e) by BFC, if as of any September 15, any representation or warranty of HSBC TFS set
forth in Section 4.1 would not be true, if repeated as of such date; provided that BFC gives
notice of such termination not later than the September 30 next following such September 15.

HSBC TFS or BFC shall exercise a right of termination provided above by written notice to the other
party. Upon such termination, all obligations of HSBC TFS to sell Participation Interests in Pool
RALs pursuant to Section 2.1 that are RALs described in paragraph (a) of the definition of
“Principal Amount” in this Agreement and all obligations of BFC to purchase Participation Interests
in such Pool RALs pursuant to Section 2.1 shall automatically cease and BFC shall have no further
obligation to purchase additional Participation Interests corresponding to such Participated Pool
RALs. Termination pursuant to this Section shall not otherwise affect the rights or obligations of
the parties hereto under this Agreement. Without limitation, such termination shall not affect the
obligations of HSBC TFS to sell Participation Interests pursuant to Section 2.1 with respect to
Pool RALs that are RALs described in paragraph (b) of the definition of “Principal Amount” in this
Agreement to the extent that the Underlying RAL is itself a Participated Pool RAL with respect to
which a Participation Interest was sold to BFC prior to such termination, and shall not affect the
obligation of BFC to purchase a Participation Interest with respect to such Pool RAL pursuant to
Section 2.1.

     Section 5.2. Right to Exclude Certain RALs. If, from time to time, BFC or HSBC TFS
believes in good faith that any specified RALs (of the type described in paragraph (a) of the
definition of “Principal Amount” in this Agreement) that otherwise would constitute Pool RALs may
violate or conflict with any requirement of law in any jurisdiction, such party (the “Notifying
Party”) may give notice to the other parties of such fact, specifying the applicable
jurisdictions, and specifying such further actions on the part of BFC, Block Tax Services, the RAL
Originator or other Persons, if any, as would in the opinion of the Notifying Party prevent such
violation or conflict. Unless such steps have been taken within seven days after receipt of such
notice, then, effective from and after such seventh day such RALs made after such day in such
specified jurisdiction shall not constitute Pool RALs (such RALs being hereinafter referred to as
“Excluded RALs”). If such steps subsequently are taken, and the other party gives notice
to the Notifying Party of such fact, then the Notifying Party, shall, as promptly as practicable
after such notice, by further notice to such other party, revoke its earlier designation of such
RALs as Excluded RALs, and RALs of the specified type made after the date of such revocation shall
not constitute Excluded RALs (and hence shall constitute Pool RALs).

19

 

ARTICLE VI.

CERTAIN RIGHTS OF HSBC TFS

     Section 6.1. Certain Rights of HSBC TFS.

     (a) Rescission. If any payment received or application of funds made by HSBC
TFS on account of any Participated Pool RAL shall be rescinded or otherwise shall be
required (or if HSBC TFS believes in good faith that such payment or application of funds is
or may be required) to be returned or paid over by HSBC TFS at any time, BFC, promptly upon
notice from HSBC TFS, shall pay to HSBC TFS an amount equal to the Applicable Percentage of
the amount so rescinded or returned or paid over, together with the Applicable Percentage of
any interest or penalties payable with respect thereto.

     (b) Payover. If BFC receives any payment or makes any application on account
of its Participation Interest in any Participated Pool RAL, BFC shall promptly pay over to
HSBC TFS the amount in excess of the Applicable Percentage of the amount so received or
applied and until so paid over, the same shall be held by BFC in trust for HSBC TFS.

     Section 6.2. Indemnification. Immediately upon HSBC TFS’s demand therefor, BFC shall
reimburse and indemnify HSBC TFS for and against the Applicable Percentage share of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses
and disbursements of every kind and nature whatsoever that may be imposed upon, incurred by or
asserted against HSBC TFS, acting pursuant hereto, or in any way relating to or arising out of this
Agreement or any Participated Pool RAL or the origination or servicing thereof, or any action taken
or omitted by HSBC TFS under this Agreement or any Participated Pool RAL, including, without
limitation, any amounts payable by HSBC TFS pursuant to the Second Amended and Restated RAL
Operations Agreement (pursuant to indemnification provisions thereof or otherwise), and any amounts
that HSBC TFS shall be required to pay or repay to any statutory representative of any Obligor or
Originator Party or to creditors of any such Obligor or Originator Party acting as such statutory
representative (all of the foregoing being referred to collectively as “Claims”);
provided, however, that BFC shall not be liable under this Section 6.2 for its
Applicable Percentage of (i) any obligation of HSBC TFS to repurchase Participation Interests in
accordance with Sections 4.3 and 4.4, (ii) any out-of-pocket expenses of HSBC TFS on account of
origination of ordinary and routine servicing of Participated Pool RALs, to the extent duplicative
of amounts as to which BFC has paid its Applicable Percentage share pursuant to Article II, (iii)
attorneys’ fees and related litigation expenses incurred by HSBC TFS with respect to Claims (it
being understood that each party shall be responsible for its own attorneys’ fees and related
litigation expenses with respect to Claims), (iv) any Claim attributable to a Participated Pool RAL
failing to be an Eligible RAL, (v) any Claim attributable to a breach by HSBC TFS of an express
obligation of HSBC TFS under this Agreement, or (vi) any Claim attributable to the gross negligence
or willful misconduct of HSBC TFS. Notwithstanding any other provision herein, if BFC breaches any
of its obligations hereunder and any such breach results in a claim for indemnification by the RAL
Originator against HSBC TFS, HSBC TFS shall have the right to indemnification from BFC to the
extent HSBC TFS is required to indemnify the RAL Originator.

20

 

     Nothing in this Section 6.2 shall be construed to make BFC liable for (i) any portion of any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses
and disbursements imposed upon, incurred by or asserted against HSBC TFS or any of its Affiliates
relating solely to or arising solely from any RAL other than a Participated Pool RAL or a RAC other
than a Pool RAC or (ii) any Claim with respect to which HSBC TFS is indemnified by any third party
(including, without limitation, Block Tax Services or any other Originator Party). HSBC TFS shall
remit to BFC the Applicable Percentage of any amount received by HSBC TFS as indemnification from a
third party to the extent such indemnification pertains to a Claim for which BFC previously
indemnified HSBC TFS pursuant to this Section 6.2.

     If different Applicable Percentages apply to Pool RALs with respect to which a Claim arises,
then (A) to the extent the Claim is identifiable to a particular Pool RAL or to Pool RALs made in a
particular Tax Period, the Applicable Percentage applicable to BFC’s indemnification obligation
with respect to such Claim shall be equal to the Applicable Percentage applicable to such
particular Pool RAL or to such Tax Period, as the case may be and (B) otherwise, the Applicable
Percentage applicable to BFC’s indemnification obligation with respect to such Claim shall be a
weighted average of the Applicable Percentages applicable to the Pool RALs or the Tax Period with
respect to which such Claim arose.

     Section 6.3. Survival. The obligations of BFC under this Article VI shall survive any
termination under Section 5.1 and all other events and conditions whatever. If and to the extent
that any obligation of BFC under this Article VI is unenforceable for any reason, BFC agrees to
make the maximum contribution to the payment and satisfaction of such obligation which is permitted
under applicable law.

ARTICLE VII.

MISCELLANEOUS

     Section 7.1. Customer Lists. To the extent permitted by applicable law, HSBC TFS as
servicer for the RAL Originator agrees to provide to BFC, or any Affiliate of BFC during the term
of this Agreement, within a reasonable time after BFC’s (or such Affiliate’s) request but not more
than twice during any calendar year, a list of all persons (and, their full mailing addresses) to
whom the RAL Originator made and HSBC TFS purchased Pool RALs or Pool RACs during the most recently
ended Tax Period. Such list shall be provided in electronic form and, to the extent reasonably
practicable, in a form typical of mailing lists purchased in the open market. Neither BFC nor its
Affiliates shall use, or permit the use of, such list for purposes of soliciting customers for
credit related products. BFC and such Affiliates shall take appropriate action by agreement with
third parties having access to such list to prohibit such third parties from using such list for
purposes of soliciting customers for credit related products. HSBC TFS shall be designated a
third-party beneficiary in any such agreement for purposes of enforcing such restricted use of such
list.

     Section 7.2. Independent Evaluation. BFC expressly acknowledges (i) that, except as
provided in Sections 2.1(a), 4.1 and 4.2, HSBC TFS has not made any representation or warranty,
express or implied, to BFC and no act by HSBC TFS heretofore or hereafter taken shall be deemed to
constitute any representation or warranty by HSBC TFS to BFC; and (ii) that, in connection with its
entry into and its performance of its obligations under this Agreement,

21

 

BFC has made and shall continue to make its own independent investigation of the economic and
legal risks associated with the making of RALs and purchase of Participation Interests.

     Section 7.3. Notices. All notices required or permitted to be given under this
Agreement shall be in writing and shall be given by registered or certified mail, return receipt
requested, or by nationally recognized overnight courier, addressed as follows:

If to BFC, to:

Block Financial Corporation

4400 Main Street

Kansas City, Missouri 64111

Attention: Jeffery A. Yabuki

If to HSBC TFS, to:

HSBC Taxpayer Financial Services, Inc.

200 Somerset Corporate Blvd.

Bridgewater, New Jersey 08807

Attention: Paul Creatura

     Any party may change the address to which it desires notices to be sent by giving the other
parties ten (10) days prior notice of any such change. Any notices shall be deemed given upon its
receipt by the party to whom the notice is addressed.

     Section 7.4. Modification; No Waiver. This Agreement shall not be modified or amended
except by an instrument in writing signed by or on behalf of the parties hereto. No waiver of any
breach of, or failure to perform or observe, any material term, covenant or agreement contained in
this Agreement shall constitute or be construed as a waiver by BFC or HSBC TFS of any subsequent
breach or failure or of any breach of or failure with respect to any of the other provisions of
this Agreement.

     Section 7.5. Prior Understandings. This Agreement supersedes all prior oral
understandings between the parties hereto relating to the transactions provided herein.

     Section 7.6. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of Delaware, without regard to choice of law rules thereof.

     Section 7.7. Counterparts.  This Agreement may be executed in as many counterparts as
may be deemed necessary and convenient, and by the different parties hereto in separate
counterparts, each of which, when so executed, shall be deemed to be an original, but all such
counterparts together shall constitute one and the same instrument.

     Section 7.8. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of BFC and HSBC TFS and their representative successors and assigns and shall not be
assigned by either party hereto without the prior written consent of the other parties hereto,
which consent shall not unreasonably be withheld, conditioned or delayed, and any purported
assignment without such consent shall be void.

22

 

     Section 7.9. Securitizations. HSBC TFS will use its reasonable efforts to assist BFC
with respect to the negotiation and execution of all instruments and documents and to take all
actions that are reasonably necessary, or as BFC may reasonably request, in order to facilitate the
sale by BFC of the Participation Interests acquired by BFC pursuant to this Agreement and the
assignment by BFC of BFC’s rights under this Agreement to an Affiliate of BFC, and the resale of
such Participation Interests and the reassignment of such rights by the Affiliate to one or more
liquidity providers. Notwithstanding such assignment of its rights, BFC shall remain liable to
perform all of its covenants and obligations under this Agreement. To the extent the terms and
conditions of this Section 7.9 are inconsistent with the terms and conditions of the Second ICB
Consent Letter, the terms and conditions of the Second ICB Consent Letter shall control.

     Section 7.10. Headings. The Article, Section and any other headings in this Agreement
are for convenience of reference only and shall not be deemed to alter or affect the meaning or
interpretation of any of the provisions hereof.

     Section 7.11. Confidentiality. Without limitation of any other obligations of
confidentiality contained in this Agreement, the Second Amended and Restated RAL Operations
Agreement or otherwise arising (but subject to the provisions of Section 7.1), all information,
materials and documents heretofore or hereafter furnished to BFC (or to its officers, directors,
agents, representatives or advisors) by HSBC TFS, by Persons acting on behalf of HSBC TFS or at
HSBC TFS’s direction, or otherwise in connection with this Agreement, either orally, in writing or
by inspection, regarding the Obligors, any RAL, any RAC, this Agreement or the Second Amended and
Restated RAL Operations Agreement shall be deemed confidential and, except to the extent required
by law, shall be kept in strict confidence under appropriate safeguards by BFC and its officers,
directors, agents, representatives and advisors.

     Section 7.12. Not a Joint Venture. Neither this Agreement nor the transactions
contemplated by this Agreement shall be deemed to give rise to a partnership or joint venture
between HSBC TFS and BFC.

     Section 7.13. HSBC TFS Not Tax Preparer. Nothing in this Agreement or the Second
Amended and Restated RAL Operations Agreement shall be construed to imply that HSBC TFS at any time
is in any way responsible for the preparation, filing or contents of any tax return of any Obligor
under a Pool RAL, and BFC shall indemnify HSBC TFS from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of every
kind and nature whatsoever which may be imposed upon, incurred by or asserted against HSBC TFS
arising from any claim, allegation or assertion that HSBC TFS is or may be in any way responsible
for the preparation, filing or contents of any such tax return, or that HSBC TFS, by virtue of its
participation in the transactions contemplated by this Agreement, is engaged in an activity that
subjects HSBC TFS to any penalty on account of the negotiation of any tax refund check in violation
of the Internal Revenue Code of 1986, as amended.

     Section 7.14. Events Prior to Amendment. The parties affirm that they are responsible
for performing all of their agreements, duties and obligations under the Third Amended and Restated
RAL Participation Agreement arising out of events occurring prior to the effective date of this
Agreement, and the provisions of the Third Amended and Restated RAL Participation

23

 

Agreement shall survive and continue to define the rights and obligations of the parties with
respect to such prior events.

     Section 7.15. Financial Privacy. HSBC TFS and BFC agree to comply with the financial
privacy provisions of Section 7.2 of the Second Amended and Restated RAL Operations Agreement.

     Section 7.16. Effective Date. This Agreement shall be effective as of the date of its
execution.

     Section 7.17. Acquisition of Major Franchisees. HSBC TFS acknowledges that Block
Services and its Affiliates are in the process of repurchasing the major franchise agreements from
certain of the Major Franchisees. The parties hereto expressly agree that, for purposes of this
Agreement, (a) any Major Franchisee that is acquired by Block Services or an Affiliate of Block
Services shall thereafter be considered a Block Office and shall cease to be considered a Major
Franchisee, and (b) any Major Franchisee whose major franchise agreement is terminated and who
enters into a corporate franchise agreement shall thereafter be treated as a Corporate Franchisee
and shall cease to be treated as a Major Franchisee.

     Section 7.18. Termination of HTMAC. The parties agree that HTMAC is hereby terminated
as a party to this Agreement, effective as of the date of execution of this Agreement.

24

 

     IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amended and Restated Refund
Anticipation Loan Participation Agreement to be executed by their respective officers thereunto
duly authorized, effective as of the date set forth above.

	 	 	 	 	 	 	 
	 	 	BLOCK FINANCIAL CORPORATION
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Mark Ciaramitaro
	

	 	 	 	 
	

	 	 	 	Name: 	Mark Ciaramitaro	 
	

	 	 	 	Title: 	VP DTS	 
	 
	 	 	 	 	 	 
	 	 	HSBC TAXPAYER FINANCIAL SERVICES INC.
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Susan E. Artmann
	

	 	 	 	 
	

	 	 	 	Name:	Susan E. Artmann	 
	

	 	 	 	Title: 	Vice President	 
	 
	 	 	 	 	 	 
	 	 	Solely for purposes of Section 7.18:
	 
	 	 	 	 	 	 
	 	 	HOUSEHOLD TAX MASTERS ACQUISITION CORPORATION
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Susan E. Artmann
	

	 	 	 	 
	

	 	 	 	Name: 	Susan E. Artmann	 
	

	 	 	 	Title:	Treasurer & CFO	 

25exv10w3

 

EXHIBIT 10.3

SECOND AMENDED AND RESTATED

LOAN PURCHASE AND CONTRIBUTION AGREEMENT

between

OPTION ONE LOAN WAREHOUSE CORPORATION
as Depositor

and

OPTION ONE MORTGAGE CORPORATION
as Loan Originator

Dated as of November 14, 2003

MORTGAGE-BACKED NOTES

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS; CONSTRUCTION
	 	 	1	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Construction
	 	 	2	 
	ARTICLE II SALE OF LOANS; PAYMENT OF PURCHASE PRICE
	 	 	2	 
	Section 2.01 Sale of Loans to Depositor
	 	 	2	 
	Section 2.02 Obligations of Loan Originator
	 	 	4	 
	Section 2.03 Dispositions; Transfer Obligation
	 	 	5	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
	 	 	6	 
	Section 3.01 Loan Originator’s Representations and Warranties
	 	 	6	 
	ARTICLE IV LOAN ORIGINATOR COVENANTS
	 	 	6	 
	Section 4.01 Covenants of the Loan Originator
	 	 	6	 
	ARTICLE V TERMINATION
	 	 	7	 
	Section 5.01 Termination
	 	 	7	 
	ARTICLE VI MISCELLANEOUS PROVISIONS
	 	 	7	 
	Section 6.01 Amendment
	 	 	7	 
	Section 6.02 Governing Law
	 	 	7	 
	Section 6.03 Notices
	 	 	7	 
	Section 6.04 Severability of Provisions
	 	 	8	 
	Section 6.05 Counterparts
	 	 	8	 
	Section 6.06 Further Agreements
	 	 	8	 
	Section 6.07 Intention of the Parties
	 	 	8	 
	Section 6.08 Successors and Assigns; Assignment of Agreement
	 	 	9	 
	Section 6.09 Survival
	 	 	9	 
	Section 6.10 Successors and Assigns
	 	 	9	 
	EXHIBIT
	 	 	 	 
	Exhibit A Form of LPA Assignment
	 	 	 	 

i

 

SECOND AMENDED AND RESTATED

LOAN PURCHASE AND CONTRIBUTION AGREEMENT

     SECOND AMENDED AND RESTATED LOAN PURCHASE AND CONTRIBUTION AGREEMENT,
dated as of November 14, 2003 (this “Agreement”), between OPTION ONE MORTGAGE
CORPORATION, a California corporation (the “Loan Originator”), and OPTION ONE
LOAN WAREHOUSE CORPORATION, a Delaware corporation (the “Depositor”).

W I T N E S S E T H

     WHEREAS, the Loan Originator owns and from time to time originates and
acquires certain loans (the “Loans”) secured primarily by mortgages, deeds of
trust and security deeds on certain Mortgaged Properties and the Loan Documents
related thereto;

     WHEREAS, the Loan Originator is the owner of 100% of the capital stock of
the Depositor;

     WHEREAS, the parties hereto desire that on each Transfer Date, the Loan
Originator sell and contribute all its right, title and interest in and to the
Loans and the related Loan Documents to Depositor pursuant to the terms of this
Agreement; and

     WHEREAS, the Depositor will sell, transfer, assign and otherwise convey
all of its rights, title and interest in and to each of the Loans and related
Loan Documents and its related rights under this Agreement to one of six trusts
(each a “Trust” and collectively, the “Trusts”), in each case pursuant to the
terms of either (i) the Sale and Servicing Agreement, dated as of April
1, 2001 (the “2001-1A Sale and Servicing Agreement”), among Option One Owner
Trust 2001-1A, as Issuer (the “2001-lA Issuer” or the “2001-1A Trust”), the
Depositor, the Loan Originator and Wells Fargo Bank Minnesota, National
Association, as Indenture Trustee on behalf of the related Noteholders (in such
capacity, the “Indenture Trustee”), or (ii) the Sale and Servicing Agreement,
dated as of April 1, 2001 (the “2001-1B Sale and Servicing Agreement”), among
Option One Owner Trust 2001-1B, as Issuer (the “2001-1B Issuer” or the “2001-1B
Trust”), the Depositor, the Loan Originator and the Indenture Trustee as
Indenture Trustee on behalf of the related Noteholders, or (iii) the Sale and
Servicing Agreement, dated as of April 1, 2001 (the “2001-2 Sale and Servicing
Agreement”), among Option One Owner Trust 2001-2, as Issuer (the “2001-2
Issuer” or the “2001-2 Trust”), the Depositor, the Loan Originator and the
Indenture Trustee, as Indenture Trustee on behalf of the related Noteholders;
or, (iv) the Sale and Servicing Agreement, dated as of July 2, 2002, (the
“2002-3 Sale and Serving Agreement”), among
Option One Owner Trust 2002-3, as Issuer (the “2002-3 Issuer” or the “2002-3
Trust”), the Depositor, the Loan Originator and the Indenture Trustee, as
Indenture Trustee on behalf of the related Noteholders, or (v) the Sale and
Servicing Agreement, dated as of August 8, 2003, (the “2003-4 Sale and
Servicing Agreement”), among Option One Owner Trust 2003-4, as Issuer (the
“2003-4 Issuer” or the “2003-4 Trust”), the Depositor, the Loan Originator and
the Indenture Trustee, as Indenture Trustee on behalf of the related
Noteholders, or (vi) the Sale and Servicing Agreement, dated as of November 1,
2003, (the “2003-5 Sale and Servicing Agreement”), among Option One Owner Trust
2003-5, as Issuer (the “2003-5 Issuer” or the “2003-5 Trust”), the Depositor,
the Loan Originator and the Indenture Trustee, as Indenture Trustee on behalf
of the related Noteholders.

1

 

     WHEREAS, the parties hereto have entered into the First Amended and
Restated Loan Purchase and Contribution Agreement, dated as of August 8, 2003
(the “First Amended and Restated Loan Purchase and Contribution Agreement”).

     WHEREAS, the parties to the First Amended and Restated Loan Purchase and
Contribution Agreement now seek to amend the First Amended and Restated Loan
Purchase and Contribution Agreement in its entirety as set forth in this Second
Amended and Restated Loan Purchase and Contribution Agreement (this
“Agreement”);

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

ARTICLE I

DEFINITIONS; CONSTRUCTION

     Section 1.01 Definitions. For purposes of this Agreement: (i) references
to the Trust or the Issuer shall mean the Trust to which the Depositor sells
the related Loans; (ii) references to the Sale and Servicing Agreement shall
mean the Sale and Servicing Agreement pursuant to which the Depositor sells the
related Loans; (iii) references to the Indenture Trustee shall mean Wells Fargo
Bank Minnesota, National Association, or its successor, in its capacity as
Indenture Trustee under the related Sale and Servicing Agreement; and (iv)
references to the Noteholder shall mean the Initial Noteholder in connection
with sales to the 2001-1A Trust, the 2001-1B Trust, the 2001-2 Trust, the
2003-4 Trust and the 2003-5 Trust and the Note Purchaser in connection with
sales to the 2002-3 Trust. All other capitalized terms used but not defined
herein shall have the meanings assigned thereto in the related Sale and
Servicing Agreement.

     Section 1.02 Construction. For purposes of this Agreement: (i) the
singular includes the plural and the plural includes the singular; (ii) words
importing any gender include the other genders; (iii) the words “and” and “or”
are used in the conjunctive or disjunctive as the sense and circumstances may
require, (iv) references to “writing” include printing, typing, lithography and
other means of reproducing words in a visible form; (v) references to
agreements and other contractual instruments include all subsequent amendments
thereto or changes therein entered into in accordance with their respective
terms and not prohibited by this Agreement or the Basic Documents; (vi)
references to Persons include their permitted successors and assigns;
(vii) any form of the word “include” shall be deemed to be followed by the
words “without limitation”; (viii) the phrase “in and to” shall be deemed to
include “under” and “with respect to” whenever appropriate; (ix) unless the
context clearly requires otherwise, the word “finance” shall be deemed to
include “refinance”; (x) the words “herein”, “hereof’ and “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and (xi) Article, Section,
Schedule and Exhibit references, unless otherwise specified, refer to Articles
and Sections of and Schedules and Exhibits to this Agreement. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding.”

2

 

ARTICLE II

SALE OF LOANS; PAYMENT OF PURCHASE PRICE

     Section 2.01 Sale of Loans to Depositor. (a) On the terms and conditions
of this Agreement, on each Transfer Date, the Loan Originator agrees to offer
for sale, and to sell, a portion of each of the Loans (equal to the Sales Price
therefor) to the Depositor and to contribute to the capital stock of the
Depositor the balance of each of the Loans and to deliver the related Loan
Documents to or at the direction of the Depositor. To the extent the Depositor
has or is able to obtain sufficient funds to pay the Sales Price thereof, the
Depositor agrees to purchase such Loans offered for sale by the Loan
Originator.

          (b) The price paid by the Depositor for the portion of each of the Loans
sold on each Transfer Date (the “Sales Price”) shall be the sum of the
Collateral Values as of the Transfer Date with respect to the Loans conveyed on
such date (determined after giving effect to all payments of principal received
thereon prior to the Transfer Cut-off Date as determined by the Servicer). The
market value of each of the Loans in excess of the Sales Price therefor shall
be a contribution to the capital of the Depositor.

          (c) On each Transfer Date, the Loan Originator shall convey to the
Depositor the Loans and the other property and rights related thereto described
in the related LPA Assignment, and the Depositor, only upon the satisfaction of
each of the conditions set forth below on or prior to such Transfer Date, shall
cause the deposit of cash in the amount of the Sales Price in the Advance
Account and shall cause the Servicer to, promptly after such deposit, withdraw
the Sales Price deposited in respect of applicable Additional Note Principal
Balance from the Advance Account and distribute such amount to or at the
direction of the Loan Originator:

               (i) the Loan Originator shall have delivered to the Issuer, the Depositor
and the Noteholder a duly executed LPA Assignment with respect to all of the
Loans conveyed on such Transfer Date, which shall have attached thereto a Loan
Schedule setting forth the appropriate information with respect to all Loans
conveyed on such Transfer Date and shall have delivered to the Noteholder a
computer readable
transmission of such Loan Schedule;

               (ii) the Loan Originator shall have provided to the Servicer for deposit
in the related Collection Account all collections received with respect to each
of the Loans on or after the applicable Transfer Cut-off Date;

               (iii) as of such date, neither the Loan Originator nor the Depositor shall
(A) be insolvent, (B) be made insolvent by its respective sale of Loans or (C)
have reason to believe that its insolvency is imminent;

               (iv) the Revolving Period shall not have terminated and shall be in effect
as of such Transfer Date;

               (v) except in the case of Wet Funded Loans, the Loan Originator shall have
delivered the Custodial Loan File to the Custodian in accordance with the
Custodial

3

 

Agreement and the Noteholder shall have received a copy of the Loan Schedule
and Exceptions Report and, where required under the Custodial Agreement, a copy
of the Trust Receipt;

               (vi) each of the representations and warranties made by the Loan
Originator set forth in Exhibit E to each of the Sale and Servicing Agreements
with respect to the Loans shall be true and correct as of the related Transfer
Date with the same effect as if then made, and the Loan Originator shall have
performed all obligations to be performed by it under each of the related Basic
Documents on and prior to such Transfer Date;

               (vii) the Loan Originator shall, at its own expense, within one Business
Day of the Transfer Date, indicate in its computer files that the Loans
identified in the related LPA Assignment have been sold to the Depositor
pursuant to this Agreement;

               (viii) the Loan Originator shall have taken any action requested by the
Indenture Trustee, the Issuer or the Noteholders required to maintain the
ownership interest of the Issuer in the Trust Estate and the first perfected
security interest therein of the Indenture Trustee;

               (ix) the Loan Originator shall have used no selection procedures that
identified any of the Loans identified in the related LPA Assignment as being
less desirable or valuable than other comparable Loans originated or acquired
by the Loan Originator; and such Loans collectively shall be representative of
the Loan Originator’s portfolio of fixed rate or adjustable rate Loans, as the
case may be;

               (x) the Loan Originator shall have provided the Depositor, the Trust and
the Noteholder, no later than 1:00 p.m. Eastern time on the date that is two
(2) Business Days prior to the issuance of Additional Note Principal Balance, a
Notice of Additional Note Principal Balance in the form of Exhibit A to the
related Sale and
Servicing Agreement;

               (xi) after giving effect to the Additional Note Principal Balance
purchased on such date, the related Note Principal Balance will not exceed the
related Maximum Note Principal Balance; and

               (xii) all conditions precedent to the Noteholder’s purchase of Additional
Note Principal Balance pursuant to the related Note Purchase Agreement shall
have been fulfilled as of such date.

          (d) Subject to Section 6.07, the parties hereto intend that each of the
conveyances contemplated hereby be sales from the Loan Originator to the
Depositor of all of the Loan Originator’s right, title and interest in and to
the Loans and other property described above.

     Section 2.02 Obligations of Loan Originator.

          (a) Within ten days of the Closing Date and on or prior to each Transfer
Date, the Noteholder shall have received evidence satisfactory to it of (i) the
completion of all recordings, registrations and filings as may be necessary or,
in the opinion of the Noteholder,

4

 

desirable to perfect or evidence the assignment by the Loan Originator to the
Depositor of the Loan Originator’s ownership interest in the Trust Estate
including, without limitation, the Loans and related property and the proceeds
thereof, (ii) the completion of all recordings, registrations and filings as
may be necessary or, in the opinion of the Noteholder, desirable to perfect or
evidence the assignment by the Depositor to the Issuer of the Depositor’s
ownership interest in the Trust Estate including, without limitation, the Loans
and the proceeds thereof and (iii) the completion of all recordings,
registrations and filings as may be necessary or, in the opinion of the
Noteholder, desirable to perfect or evidence the grant of a first priority
perfected security interest in the Trust’s ownership interest in the Trust
Estate including, without limitation, the Loans and the proceeds thereof, in
favor of the Indenture Trustee. The Loan Originator agrees to file all
necessary continuation statements and any amendments to the UCC financing
statements required to reflect a change in the name or corporate structure of
the Loan Originator and to file any additional UCC financing statements
required due to a change in the legal name, chief executive office, state of
incorporation or legal form of the Loan Originator as are necessary to perfect
the interest of the Depositor, the Trust and the Indenture Trustee in and to
the Trust Estate and to take such other action as may be necessary or, in the
opinion of the Depositor or the Noteholder, desirable to perfect or evidence
the Depositor’s, the Trust’s and Indenture Trustee’s interest in the Loans and
Loan Documents conveyed under the Basic Documents.

          (b) In connection with each sale of a Loan hereunder, the Loan Originator
shall deliver to, and deposit with the Custodian, on behalf of the Indenture
Trustee, as assignee of the Depositor, the Custodial Loan File with respect to
each Loan conveyed on such Transfer Date (i) in the case of each non-Wet Funded
Loan, on or before the related Transfer Date or such earlier time as required
by the related Sale and
Servicing Agreement and (ii) in the case of each Wet Funded Loan, on or
before the Wet Funded Custodial File Delivery Date.

     It is understood and agreed that the obligations set forth in this Section
2.02(b) shall survive delivery of the respective Custodial Loan Files to the
Custodian (as the agent of the Indenture Trustee) and shall inure to the
benefit of the related Securityholders, the Depositor, the Servicer, the
Indenture Trustee and the Issuer.

     With respect to any Loans that are set forth as exceptions in the Loan
Schedule and Exceptions Report, the Loan Originator shall cure such exceptions,
repurchase such Loan or provide a Qualified Substitute Loan in accordance with
Sections 2.05 and 3.06 of the related Sale and Servicing Agreement. The
obligations of the Loan Originator set forth in this paragraph and in Sections
2.05 and 3.06 of the related Sale and Servicing Agreement to cure any breach or
to substitute for or repurchase an affected Loan shall constitute the sole
remedies available hereunder to the Depositor respecting a breach of the Loan
Originator’s obligations contained in this Section 2.02(b) and in Sections 2.05
and 3.06 of the related Sale and Servicing Agreement.

          (c) In connection with each sale and contribution of a Loan hereunder, the
Loan Originator shall deliver to, and deposit with the Servicer, as the
designated agent of the Indenture Trustee, as assignee of the Depositor, on or
before the related Transfer Date, the Servicer’s Loan File with respect to each
Loan conveyed on such Transfer Date.

5

 

          (d) The Loan Originator hereby further confirms to the Depositor that,
within one Business Day of each Transfer Date, it shall cause the portions of
the Loan Originator’s electronic ledger relating to the Loans to be clearly and
unambiguously marked to indicate that the Loans have been sold and contributed
to the Depositor hereunder and sold by the Depositor to the Issuer under the
related Sale and Servicing Agreement.

          (e) On and after each Transfer Date, the Depositor shall own the Loans
which have been identified as being sold and contributed to the Depositor under
Section 2.01 hereof and the Loan Originator shall not take any action
inconsistent with such ownership and shall not claim any ownership interest in
any such conveyed Loan.

     Section 2.03 Dispositions; Transfer Obligation.

     In consideration of the consideration received from the Depositor under
this Agreement, in addition to the Loan Originator’s performance of its
obligations under this Agreement, the Loan Originator hereby agrees and
covenants that in connection with each Disposition it shall perform such duties
as specified in Section 3.07 of the related Sale and Servicing Agreement.

ARTICLE III

REPRESENTATIONS AND

WARRANTIES; REMEDIES FOR BREACH

     Section 3.01 Loan Originator’s Representations and Warranties. (a) The
Loan Originator makes each of the representations and warranties to the
Depositor as of the Closing Date and as of each Transfer Date as are set forth
in Section 3.02 of the related Sale and Servicing Agreement.

          (b) The Loan Originator further makes each of the representations and
warranties as of each Transfer Date as are set forth in Exhibit E to each of
the Sale and Servicing Agreements with respect to the Loans conveyed on such
Transfer Date.

          (c) Except as otherwise expressly set forth in the Basic Documents, it is
understood and agreed that the representations and warranties set forth in this
Section 3.01 shall survive delivery of the respective Custodial Loan Files to
the Custodian (as the agent of the Indenture Trustee) and shall inure to the
benefit of the related Securityholders, the Depositor, the Servicer, the
Indenture Trustee and the Issuer. Upon the discovery by the Servicer, the
Custodian, the Indenture Trustee, the Loan Originator, the Depositor or any
Securityholder of a breach of any of the representations and warranties of the
Loan Originator set forth in Section 3.02 of the related Sale and Servicing
Agreement or Exhibit E to the related Sale and Servicing Agreement that
materially and adversely affects the value of any of the Loans, or the
interests of the Securityholders in any Loan or the Securities with respect to
which such representation or warranty is made, and the Loan Originator shall
fail to cure such breach within the time period specified in Section 3.06 of
the related Sale and Servicing Agreement, the Loan Originator shall be
obligated to repurchase or substitute the affected Loan(s) in accordance with
the provisions of Section 3.06 of the related Sale and Servicing Agreement
promptly upon receipt of written

6

 

instructions from the Noteholder. The obligations of the Loan Originator set
forth herein and in Section 3.06 of the related Sale and Servicing Agreement to
cure any breach or to substitute for or repurchase an affected Loan shall
constitute the sole remedies available hereunder to the Depositor respecting a
breach of the representations and warranties contained in Sections 3.01 (a) and
(b) hereof, in Section 3.02 of the related Sale and Servicing Agreement or in
Exhibit E to the Sale and Servicing Agreements.

ARTICLE IV

LOAN ORIGINATOR COVENANTS

     Section 4.01 Covenants of the Loan Originator. The Loan Originator hereby
covenants that except for the sales and contributions hereunder, the Loan
Originator will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any lien on, any Loan, or any
interest therein; and the Loan Originator will defend the right, title and
interest of the Trust, as assignee of the Depositor, in, to and under the
Loans, against all claims of third parties claiming through or under the Loan
Originator.

     Whenever and so often as requested by the Depositor or the Noteholder, the
Loan Originator promptly will execute and deliver or cause to be executed and
delivered all such other and further instruments, documents, or assurances, and
promptly do or cause
to be done all such other things, as may be necessary and reasonably
required to vest more fully in the requesting party all rights, interests,
powers, benefits, privileges and advantages conferred or intended to be
conferred upon it by this Agreement.

     The Loan Originator further covenants that it will disclose on the Form
10-K filed on behalf of the Loan Originator with the Securities and Exchange
Commission the following information: (i) the net effect that the transaction
has on the Loan Originator’s financial condition, (ii) the nature, amount and
term of the material financial obligations incurred by the Loan Originator with
respect to the transaction and (iii) a description of the events that may cause
such a material financial obligation to arise, increase or become accelerated.
The Loan Originator will also deliver to its chief financial officer, chief
legal officer and independent accountants a complete set of final Basic
Documents.

ARTICLE V

TERMINATION

     Section 5.01 Termination. The respective obligations and responsibilities
of the Loan Originator and Depositor created hereby shall terminate upon the
termination of the last Trust to be terminated as provided in Article X of the
related Sale and Servicing Agreement.

7

 

ARTICLE VI

MISCELLANEOUS PROVISIONS

     Section 6.01 Amendment. This Agreement may be amended from time to time
with the prior written consent of the Noteholders with respect to each of the
2001-1 A Trust, the 2001-1B Trust, the 2001-2 Trust, the 2002-3 Trust, the
2003-4 Trust and the 2003-5 Trust, in their sole discretion, by a written
agreement signed by the Loan Originator and the Depositor.

     Section 6.02 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined
in accordance with such laws. With respect to all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby, each
party irrevocably submits to the non-exclusive jurisdiction of the courts of
the State of New York and the United States District Court located in the
Borough of Manhattan, City of New York, and each party irrevocably waives any
objection which it may have at any time to the laying of venue of any suit,
action or proceeding arising out of or relating hereto brought in any such
court, irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in any inconvenient forum and
further irrevocably waives the right to object, with respect to such claim,
suit, action or proceeding brought in any such court, that such court does not
have jurisdiction over such party, provided that service of process is made by

any lawful means. Nothing in this Section 6.02 shall affect the right of any
party hereto or its assignees, or of the Noteholder or its assignees, to bring
any other action or proceeding against any party hereto or its property in the
courts of other
jurisdictions.

     Section 6.03 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given upon receipt
thereof if (i) personally delivered or mailed by registered mail, postage
prepaid, or (ii) transmitted by facsimile (with a copy delivered by overnight
courier) upon telephone confirmation of receipt of such transmission, as
follows:

          (a) if to the Loan Originator:

	 	 	 
	 

	 	Option One Mortgage Corporation
	

	 	3 Ada Road
	

	 	Irvine, California 92618
	

	 	Attention: William O’Neill
	

	 	Telecopy number: (949) 790-7504
	

	 	Telephone number: (949) 790-7540

or, such other addresses, facsimile numbers and confirmation numbers as may
hereafter be furnished to the Depositor in writing by the Loan Originator.

          (b) if to the Depositor:

	 	 	 
	 

	 	Option One Loan Warehouse Corporation
	

	 	3 Ada Road

8

 

	 	 	 
	

	 	Irvine, California 92618
	

	 	Attention: William O’Neill
	

	 	Telecopy number: (949) 790-7504
	

	 	Telephone number: (949) 790-7540

or such other addresses, facsimile numbers and confirmation numbers as may hereafter be furnished to
the Loan Originator in writing by the Depositor.

     Section 6.04 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 he 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 6.05 Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original and such
counterparts, together, shall constitute one and the same agreement.

     Section 6.06 Further Agreements. The Loan Originator and the Depositor
each agree to execute and deliver to the other such amendments to documents and
such additional documents, instruments or agreements as may be necessary or

appropriate to effectuate the purposes of this Agreement or in connection with
the offering of securities representing interests in the Loans.

     Section 6.07 Intention of the Parties; Security Interest.

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

9

 

and other rights with respect to the Loans shall be “possession” by the secured
party or purchaser and required notices and other communications to and from
applicable financial intermediaries, bailees and other agents.

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

     Section 6.08 Successors and Assigns; Assignment of Agreement. This
Agreement shall bind and inure to the benefit of and be enforceable by the Loan
Originator, the Depositor, the Indenture Trustee and the Noteholder. The
obligations of the Loan Originator under this Agreement cannot be assigned or
delegated to a third party without the consent of each of the Depositor and the
Noteholder, which consent shall be at each such Person’s sole discretion. The
parties hereto acknowledge that the Depositor is acquiring the Loans for the
purpose of contributing them to the Trust that will issue the related Notes,
which will be secured by such Loans. As an inducement to the Depositor to
purchase the Loans and to the Noteholder to purchase the Note, the Loan
Originator acknowledges and consents to the assignment by the Depositor to the
Trust of all of the Depositor’s rights against the Loan Originator pursuant to
this Agreement and to the enforcement or exercise of any right or remedy
against the Loan Originator pursuant to this Agreement by the Owner Trustee,
for the benefit of the Issuer and the Noteholders, under the related Sale and
Servicing Agreement. Such enforcement of a right or remedy
by the Owner Trustee, for the benefit of the Issuer and the Noteholders,
shall have the same force and effect as if the right or remedy had been
enforced or exercised by the Depositor directly.

     Section 6.09 Survival. The representations and warranties set forth in
Article III and the provisions of Articles II, IV, V and VI shall survive the
purchase of the Loans hereunder.

     Section 6.10 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.

10

 

     IN WITNESS WHEREOF, the Loan Originator and the Depositor have caused this
Loan Purchase and Contribution Agreement to be duly executed on their behalf by
their respective officers thereunto duly authorized as of the day and year
first above written.

	 	 	 	 	 
	 	 	OPTION ONE LOAN WAREHOUSE CORPORATION, 
     as Depositor
	 
	 	 	 	 
	

	 	By:
	 	/s/ Bob Fulton
	

	 	 	 	

	

	 	Name:	 	Bob Fulton
	

	 	Title:	 	Vice President

	 	 	 	 	 
	 	 	OPTION ONE MORTGAGE CORPORATION, 
     as Loan Originator
	 
	 	 	 	 
	

	 	By:
	 	/s/ Bob Fulton
	

	 	 	 	

	

	 	Name:	 	Bob Fulton
	

	 	Title:	 	Vice President

11

 

EXHIBIT A

FORM OF LPA ASSIGNMENT

     ASSIGNMENT NO.      OF LOANS (“LPA Assignment”), dated                     (the
“Transfer Date”), by OPTION ONE MORTGAGE CORPORATION (the “Loan Originator”) to
OPTION ONE LOAN WAREHOUSE CORPORATION, (the “Depositor”) pursuant to the Loan
Purchase and Contribution Agreement referred to below.

WITNESSETH:

     WHEREAS, the Loan Originator and the Depositor are the parties to the
Second Amended and Restated Loan Purchase and Contribution Agreement, dated as
of November 14, 2003 (the “Agreement”), hereinafter as such agreement may have
been, or may from time to time be, amended, supplemented or otherwise modified;

     WHEREAS, pursuant to the Agreement, the Loan Originator wishes to sell,
contribute, convey, transfer and assign Loans to the Depositor in exchange for
cash
consideration and other good and valid consideration the receipt and
sufficiency of which is hereby acknowledged; and

     WHEREAS, the Depositor is willing to acquire such Loans subject to the
terms and conditions hereof and of the Agreement;

     NOW THEREFORE, the Loan Originator and the Depositor hereby agree as follows:

     1. Defined Terms. All capitalized terms defined in the Agreement and used
herein shall have such defined meanings when used herein, unless otherwise
defined herein.

     2. Designation of Loans. The Loan Originator does hereby deliver herewith
a Loan Schedule containing a true and complete list of each Loan to be conveyed
on the Transfer Date. Such list is marked as Schedule A to this LPA Assignment
and is hereby incorporated into and made a part of this LPA Assignment.

     3. Conveyance of Loans. The Loan Originator hereby sells, contributes,
transfers, assigns and conveys to the Depositor, without recourse and on a
servicing released basis, all of the right, title and interest of the Loan
Originator in and to the Loans (and all proceeds thereof and collections
thereon) listed on the Loan Schedule attached hereto, including all interest,
principal and prepayment fees received by the Loan Originator, or the Servicer
on or with respect to the Loans on or after the related Transfer Cut-off Date,
together with all right, title and interest in and to the proceeds of any
related Mortgage Insurance Policies.

     4. Depositor’s Acknowledge Assignment. As of the Transfer Date, pursuant
to this LPA Assignment and Section 2.01 (a) of the Agreement, the Depositor
acknowledges its receipt of the Loans listed on the attached Loan Schedule and
all other related property in the Trust Estate.

     5. Acceptance of Rights But Not Obligations. The foregoing sale,
contribution, transfer, assignment, set over and conveyance does not, and is
not intended to, result in a creation

A-1

 

or an assumption by the Depositor of any obligation of the Loan Originator or
any other Person in connection with this LPA Assignment or under any agreement
or instrument relating thereto except as specifically set forth herein.

     6. Loan Originator Acknowledges Receipt of Sales Price. The Loan
Originator hereby acknowledges receipt of the Sales Price or that it has
otherwise been distributed at its direction.

     [To be inserted when applicable] [7. Assignment of Certain Swap
Agreements. The Loan Originator hereby sells, contributes, transfers and
assigns all of its right title and interest in, to, and under, its rights and
obligations and the Depositor hereby accepts and assumes all of the Loan
Originator’s rights and obligations under the following confirmation(s) issued
under that certain master agreement between the Loan Originator
and [                   ] (the “Swap Agreement”); provided, that it is understood
by the parties hereto that the Issuer, as ultimate owner of the Loans, shall
assume and shall be delegated all of Depositor’s rights and obligations under
the Swap Agreement.]

     [7./8.] Conditions Precedent. The conditions precedent in Section 2.01(c)
of the Agreement have been satisfied.

     [8./9.] Amendment of the Agreement. The Agreement is hereby amended by
providing that all references to the “Agreement”, “this Agreement” and “herein”
shall be deemed from and after the Transfer Date to be a dual reference to the
Agreement as supplemented by this LPA Assignment. Except as expressly amended
hereby, all of the representations, warranties, terms, covenants and conditions
of the Agreement shall remain unamended and the Agreement shall continue to be,
and shall remain, in full force and effect in accordance with its terms and
except as expressly provided herein, this LPA Assignment shall not constitute
or be deemed to constitute a waiver of compliance with or consent to
noncompliance with any term or provision of the Agreement.

     [9./10.] Counterparts. This LPA Assignment may be executed in any number
of counterparts all of which taken together shall constitute one and the same
instrument.

A-2

 

Schedule A

[Loan Schedule]

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