NOTE PURCHASE AGREEMENT

Exhibit 10.8

EXECUTION COPY      

 

 

NOTE PURCHASE AGREEMENT

between

OPTION ONE ADVANCE TRUST 2007-ADV2

as Issuer,

and

GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
as Initial Purchaser and Agent

Dated as of October 1, 2007

OPTION ONE ADVANCE TRUST 2007-ADV2
ADVANCE RECEIVABLES BACKED NOTES,SERIES 2007-ADV2

 

 

TABLE OF CONTENTS

		Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms			1
SECTION 1.02. Other Definitional Provisions			2
ARTICLE II
COMMITMENT; CLOSING AND PURCHASES OF ADDITIONAL NOTE BALANCES
SECTION 2.01. Commitment			3
SECTION 2.02. Closing			5
ARTICLE III
FUNDING DATES
SECTION 3.01. Funding Dates			5
ARTICLE IV
CONDITIONS PRECEDENT TO EFFECTIVENESS OF COMMITMENT
SECTION 4.01. Closing Subject to Conditions Precedent			6
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
SECTION 5.01. Issuer			9
SECTION 5.02. Securities Act			11
SECTION 5.03. No Fee			11
SECTION 5.04. Information			12
SECTION 5.05. The Purchased Notes			12
SECTION 5.06. Use of Proceeds			12
SECTION 5.07. Taxes, etc			12
SECTION 5.08. Financial Condition			12
ARTICLE VI
COVENANTS OF THE ISSUER
SECTION 6.01. Information from the Issuer			12
SECTION 6.02. Access to Information			12
SECTION 6.03. Ownership and Security Interests; Further Assurances			13
SECTION 6.04. Covenants			13
SECTION 6.05. Amendments			13

		Page
SECTION 6.06. With Respect to the Exempt Status of the Purchased Notes			13
SECTION 6.07. Additional Deliveries			13
ARTICLE VII
ADDITIONAL COVENANTS
SECTION 7.01. Legal Conditions to Closing			14
SECTION 7.02. Expenses			14
SECTION 7.03. Mutual Obligations			14
SECTION 7.04. Restrictions on Transfer			14
SECTION 7.05. Securities Act			14
SECTION 7.06. Agreement and Consent to Agent			15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnification			15
SECTION 8.02. Procedure and Defense			15
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments			15
SECTION 9.02. Severability of Provisions			15
SECTION 9.03. Notices			15
SECTION 9.04. No Waiver Remedies			16
SECTION 9.05. Integration			16
SECTION 9.06. Negotiation			16
SECTION 9.07. Binding Effect; Assignability			16
SECTION 9.08. Provision of Documents and Information			16
SECTION 9.09. GOVERNING LAW; JURISDICTION			17
SECTION 9.10. No Proceedings			17
SECTION 9.11. Execution in Counterparts			17
SECTION 9.12. No Recourse — Purchaser			17
SECTION 9.13. Survival			17
SECTION 9.14. Tax Characterization			18
SECTION 9.15. No Recourse			18

EXECUTION COPY

NOTE PURCHASE AGREEMENT

     NOTE PURCHASE AGREEMENT dated as of October 1, 2007 (this “Note Purchase Agreement” or “Agreement”), between Option One Advance Trust 2007-ADV2, a Delaware statutory trust, as issuer (the “Issuer”), and Greenwich Capital Financial Products, Inc., a Delaware corporation (as “Initial Purchaser” and as “Agent” under the Indenture).

     The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

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

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

     “ Committed Purchaser ” the Purchaser, its successors and assigns.

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

     “ Commitment Interest ”: With respect to any Committed Purchaser and as of any date of determination, the percentage equal to a fraction, the numerator of which is the Maximum Note Principal Balance with respect to (and as indicated on) such Committed Purchaser’s Purchased Note(s) and the denominator of which is the Maximum Note Balance.

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

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

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

     “ Indemnified Party ” means each of the Agent, each Purchaser and any of their officers, directors, employees, agents, representatives, assignees and Affiliates and any Person

who controls any of the Agent or any Purchaser or their Affiliates within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act.

     “ Indemnified Proceeding ” shall have the meaning provided in Section 8.02.

     “ Indenture ” means the Indenture dated as of October 1, 2007 between the Issuer and Wells Fargo Bank, National Association, as Indenture Trustee.

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

     “ Maximum Note Balance ” means an amount equal to $400,000,000.

     “ Maximum Note Principal Balance ” means with respect to each Purchased Note, the amount set forth on Schedule A for such Purchased Note.

     “ Purchased Notes ” means the Option One Advance Trust 2007-ADV2, Advance Receivables Backed Notes, Series 2007-ADV2 issued by the Issuer pursuant to the Indenture.

     “ Purchaser ” means the Initial Purchaser, its successors and assigns.

     “ Receivables Purchase Agreement ” means the Receivables Purchase Agreement dated as of October 1, 2007, between the Issuer, the Depositor and the Receivables Seller, as the same may be amended, modified or supplemented from time to time.

     “ Receivables Seller ” means Option One Mortgage Corporation.

     “ Reference Rate ” means the rate of interest publicly announced by Wells Fargo Bank, National Association, its successors or any other commercial bank designated by the Agent to the Borrowers from time to time, in New York, New York from time to time as its prime rate or base rate. The prime rate or base rate is determined from time to time by such bank as a means of pricing some loans to its borrowers and neither is tied to any external rate of interest or index nor necessarily reflects the lowest rate of interest actually charged by such bank to any particular class or category of customers. Each change in the Reference Rate shall be effective from and including the date such change is publicly announced as being effective.

     SECTION 1.02. Other Definitional Provisions .

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

     (b) As used herein and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in Section 1.01, and accounting terms partially defined in Section 1.01 to the extent not defined, shall have the respective meanings

given to them under generally accepted accounting principles. To the extent that the definitions of accounting terms herein are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained herein shall control.

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

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

ARTICLE II

COMMITMENT; CLOSING AND PURCHASES OF
ADDITIONAL NOTE BALANCES

     SECTION 2.01. Commitment .

     (a) At any time during the Funding Period at least two (2) Business Days prior to a proposed Funding Date (or, with respect to any Funding Date described in clause (iii) of the definition thereof in the Indenture, at least one (1) Business Day prior to each such Funding Date), to the extent that the aggregate outstanding Note Principal Balance (after giving effect to the proposed purchase) is less than the Maximum Note Balance, and subject to the terms and conditions hereof and in accordance with the other Transaction Documents, the Issuer may deliver to the Agent, on behalf of the Purchasers, a written request that the Purchasers purchase Additional Note Balances (each such request, a “ Purchase Request ”). Each Purchase Request shall identify the proposed Funding Date, the Receivables Balance of the Receivables that will be sold and/or contributed to the Issuer on such Funding Date and the Cash Purchase Price thereof. On the identified Funding Date, the Committed Purchasers agree, severally and not jointly, to purchase the respective relative percentage of the Additional Note Balances requested in the Purchase Request set forth opposite such Committed Purchaser’s name in Schedule A hereto, subject to the terms and conditions and in reliance upon the covenants, representations and warranties set forth herein and in the other Transaction Documents.

     (b) (i) Except as otherwise provided in this Section 2.01(b), if there should be more than one Committed Purchaser, all purchases of Additional Note Balances under this Agreement shall be made by the Committed Purchasers simultaneously and proportionately based on each Committed Purchaser’s respective Commitment Interest, it being understood that no Committed Purchaser shall be responsible for any default by the other Committed Purchaser with respect to such other Committed Purchaser’s obligations to purchase an Additional Note Balance requested hereunder. The Commitment of any Committed Purchaser shall not be

enforced as a result of the default by the other Committed Purchaser in that other Committed Purchaser’s obligation to purchase an Additional Note Balance requested hereunder and any amounts paid in connection with the obligation to purchase shall be refunded with no penalty. No Committed Purchaser shall be obligated to purchase Additional Note Balances required to be made by it by the terms of this Agreement if the other Committed Purchaser fails to do so.

          (ii) Notwithstanding any other provision of this Agreement, and in order to reduce the number of fund transfers among the parties hereto, the Issuer, the Agent and the Purchasers agree that the Agent may (but shall not be obligated to), and the Issuer and the Purchasers hereby irrevocably authorize the Agent to, fund, on behalf of the Purchasers, purchases of Additional Note Balances pursuant to this Section 2.01; provided, however, that the Agent shall in no event fund such purchase of Additional Note Balances if the Agent shall have determined pursuant to Section 3.01(b) that one or more of the conditions precedent contained in Section 3.01 (a) will not be satisfied on the day of the proposed purchase of Additional Note Balances. If the Issuer gives a Purchase Request requesting a purchase of Additional Note Balances and the Agent elects not to fund such proposed purchase of Additional Note Balances on behalf of the Purchasers, then promptly after receipt of the Purchase Request requesting such purchase of Additional Note Balances, the Agent shall notify each Purchaser of the specifics contained in such Purchase Request and that it will not fund such Purchase Request on behalf of the Purchasers. If the Agent notifies the Purchasers that it will not fund a requested purchase of Additional Note Balances on behalf of the Purchasers, each Purchaser shall purchase its respective portion of the Additional Note Balance pursuant to Section 2.01 (a), by remitting the required funds to the Issuer pursuant to and in accordance with Section 3.01(c) hereto. If the Agent elects to fund a requested purchase of Additional Note Balances, the Agent will remit the required funds for such Purchase Request to the Issuer pursuant to and in accordance with Section 3.01(c) hereto.

          (iii) If the Agent has notified the Purchasers that the Agent, on behalf of the Purchasers, will fund a particular purchase of Additional Note Balances pursuant to Section 2.01(b)(ii), the Agent may assume that such Purchaser has made such amount available to the Agent on such day and the Agent, in its sole discretion, may, but shall not be obligated to, cause a corresponding amount to be made available to the Issuer on such day. If the Agent makes such corresponding amount available to the Issuer and such corresponding amount is not in fact made available to the Agent by such Purchaser, the Agent shall be entitled to recover such corresponding amount on demand from such Purchaser together with interest thereon, for each day from the date such payment was due until the date such amount is paid to the Agent, at the Reference Rate. During the period in which such Purchaser has not paid such corresponding amount to the Agent, notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document, the amount so advanced by the Agent to the Issuer shall, for all purposes hereof, be a purchase of Additional Note Balances made by the Agent for its own account. Upon any such failure by a Purchaser to pay the Agent, the Agent shall promptly thereafter notify the Issuer of such failure and the Issuer shall immediately pay such corresponding amount to the Agent for its own account.

          (iv) Nothing in this Section 2.01 (b) shall be deemed to relieve any Committed Purchaser from its obligations to fulfill its Commitment hereunder or to prejudice

any rights that the Agent or the Issuer may have against any Committed Purchaser as a result of any default by such Committed Purchaser hereunder.

     (c) From time to time during the Funding Period, the Issuer may request the Initial Purchasers’ consent to add transactions to the definition of Securitization Trusts, and such additional transactions may be added to the definition of Securitization Trusts with the written consent of the Initial Purchasers (such consent at the sole discretion of the Initial Purchaser). The Issuer understands and acknowledges that the Purchaser or Purchasers do not hereby commit to add any such transactions and any agreement to do so is subject to completion by the Initial Purchaser of due diligence to its satisfaction regarding such transactions and execution of such additional documentation as the Initial Purchaser deems appropriate in its sole discretion.

     SECTION 2.02. Closing . The closing (the “ Closing ”) of the execution of the Transaction Documents and the initial purchase of Purchased Notes hereunder shall take place at 2:00 PM at the offices of Thacher Proffitt & Wood llp, 2 World Financial Center, New York, New York 10281 on October 1, 2007, or if the conditions to closing set forth in Article IV of this Note Purchase Agreement shall not have been satisfied or waived by such date, as soon as practicable after such conditions shall have been satisfied or waived, or at such other time, date and place as the parties hereto shall agree upon (the date of the Closing being referred to herein as the “ Closing Date ”).

ARTICLE III

FUNDING DATES

     SECTION 3.01. Funding Dates.

     (a) Subject to the conditions and terms set forth herein and in Sections 7.01 and 7.02 of the Indenture with respect to each Funding Date, the Issuer may request, and the Committed Purchasers agree, severally and not jointly, to purchase Additional Note Balances from the Issuer from time to time in accordance with, and upon the satisfaction, as of the applicable Funding Date, of each of the following additional conditions:

               (i) With respect to each Funding Date, each of the Funding Conditions set forth in Section 7.02 of the Indenture shall have been satisfied;

               (ii) Each of the representations and warranties of the Servicer and the Receivables Seller made in the Transaction Documents shall be true and correct as if made as of such Funding Date (except to the extent they expressly relate to an earlier or later time);

               (iii) The Servicer and the Receivables Seller shall be in compliance with all of their respective covenants contained in the Transaction Documents;

               (iv) No Event of Default or default shall have occurred under the Indenture and be continuing; and

          (v) With respect to each Funding Date, the Agent shall have received evidence reasonably satisfactory to it of the completion of all recordings, registrations, and filings as may be necessary or, in the reasonable opinion of the Agent, desirable to perfect or evidence the assignments required to be effected on such Funding Date in accordance with the Receivables Purchase Agreement including, without limitation, the assignment of the Receivables and the proceeds thereof required to be assigned pursuant to the Indenture.

     (b) The Agent shall determine in its reasonable discretion whether each of the above conditions have been met and such determination shall be binding on the parties hereto.

     (c) The price paid by the Purchasers on each Funding Date for the Additional Note Balance purchased on such Funding Date shall be equal to the amount of such Additional Note Balance purchased by such Purchaser and shall be remitted not later than 3:00 PM New York City time on such Funding Date by wire transfer of immediately available funds to the Funding Account.

     (d) Each Purchaser or its designee shall record on the schedule attached to its related Purchased Note, the date and amount of any Additional Note Balance purchased by it; provided, that failure to make such recordation on such schedule or any error in such schedule shall not adversely affect such Purchaser’s rights with respect to its Note Principal Balance and its right to receive interest payments in respect of the Note Principal Balance actually held.

     (e) On or prior to the first Funding Date, the Purchased Notes representing the interest of each Committed Purchaser in the Issuer shall be delivered to the applicable indenture trustee for each Committed Purchaser.

ARTICLE IV

CONDITIONS PRECEDENT TO
EFFECTIVENESS OF COMMITMENT

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

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

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

     (c)  Officer’s Certificate . The Agent shall have received in form and substance reasonably satisfactory to the Agent an officer’s certificate from the Depositor, the Receivables Seller and the Servicer and a certificate of an Authorized Officer of the Issuer, dated the Closing Date, each certifying to the satisfaction of the conditions set forth in the preceding paragraphs (a) and (b), in each case, together with incumbency, by-laws, resolutions and good standing.

     (d)  Opinions of Counsel to the Issuer, the Depositor, the Receivables Seller and the Servicer . Counsel to the Issuer, the Depositor, the Receivables Seller and the Servicer shall have delivered to the Agent favorable opinions, dated as of the Closing Date and satisfactory in form and substance to the Agent and its counsel, relating to corporate matters, true sale, non-consolidation, and perfection and an opinion as to which state’s law applies to security interest and perfection matters. In addition to the foregoing, the Receivables Seller shall have caused its counsel to deliver to the Committed Purchasers a favorable opinion to the effect that the Issuer will not be treated as an association (or publicly traded partnership) taxable as a corporation or as a taxable mortgage pool, for federal income tax purposes satisfactory in form and substance of the Committed Purchasers and their counsel.

     (e)  Officer’s Certificate of Indenture Trustee . The Agent shall have received in form and substance reasonably satisfactory to the Agent an Officer’s Certificate from the Indenture Trustee, dated as of the Closing Date, with respect to the Indenture, together with incumbency, by-laws, resolutions and good standing.

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

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

     (h)  Filings and Recordations . The Agent shall have received evidence reasonably satisfactory to it of (i) the completion of all recordings, registrations, and filings as may be necessary or, in the reasonable opinion of the Agent, desirable to perfect or evidence the assignment by the Receivables Seller to the Depositor of the Receivables Seller’s ownership interest in the Aggregate Receivables conveyed pursuant to the Receivables Purchase Agreement and the proceeds thereo