Exhibit 10.4
WAIVER AND AMENDMENT NUMBER TWO
TO
AMENDED AND RESTATED SALE AND SERVICING AGREEMENT,
THIS
WAIVER AND AMENDMENT NUMBER TWO TO AMENDED AND RESTATED SALE AND
SERVICING AGREEMENT (the “Waiver and Amendment”)
is entered into as of July 19, 2007 by and among OPTION ONE
OWNER TRUST 2003-5 (the “ Issuer ”), OPTION ONE
MORTGAGE CORPORATION (“ OOMC ”) and OPTION ONE
MORTGAGE CAPITAL CORPORATION (“OOMCC,” and together
with OOMC, the “ Loan Originator ”) and as
servicer (in such capacity, the “ Servicer ”),
OPTION ONE LOAN WAREHOUSE LLC (as successor-in-interest to Option
One Loan Warehouse Corporation, the “ Depositor,
” and together with the Loan Originator and Depositor, the
“ OO Entities ”), WELLS FARGO BANK, NATIONAL
ASSOCIATION, as indenture trustee (the “ Indenture
Trustee ”) and the MAJORITY NOTEHOLDERS party hereto.
Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Sale and Servicing Agreement
referred to below.
PRELIMINARY STATEMENTS
A. The
Issuer, OOMC, OOMCC, the Depositor and the Indenture Trustee are
parties to that certain Amended and Restated Sale and Servicing
Agreement dated as of November 12, 2004, as heretofore amended
(as so amended, and as it may be restated, supplemented or
otherwise modified from time to time, the “Sale and
Servicing Agreement”) and the Basic Documents as defined
therein.
B.
Pursuant to Section 7.02(e) of the Sale and Servicing
Agreement, entitled “Financial Covenants,” OOMC is
required to maintain a minimum “Net Income” (defined
and determined in accordance with GAAP) of at least $1 based on the
total of the current quarter combined with the previous three
quarters (the “ Minimum Income Covenant ”).
Pursuant to the Basic Documents, OOMC periodically represents and
warrants its compliance with the Minimum Income Covenant. In
addition, under the Basic Documents, a failure by OOMC to satisfy
the Minimum Income Covenant, if not waived, could be or become a
Default, Event of Default or Servicing Event of Default, as those
terms are used in the Basic Documents, or could result in a
termination of the Revolving Period.
C. OOMC
now believes that the Minimum Income Covenant will not be satisfied
as of the quarter ending July 31, 2007. The Issuer has
requested that the Majority Noteholders waive the Minimum Income
Covenant, for the quarter ending July 31, 2007, and, subject
to the terms hereof, the Majority Noteholders have agreed to waive
the Minimum Income Covenant for the quarter ending July 31, 2007 on
and subject to the terms and conditions hereinafter set
forth.
D. The
parties have also agreed to amend the Sale and Servicing Agreement
to end the Revolving Period not later than October 2,
2007.
NOW,
THEREFORE, in consideration of the premises set forth above, and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1.
Accuracy of Preliminary Statements. The OO Entities agree
and represent that the foregoing Preliminary Statements are true
and correct in all respects.
2.
Temporary Waiver of the Minimum Income Covenant. Effective
as of the date first above written and subject to the satisfaction
of the conditions precedent set forth in Section 3 below,
the Majority Noteholders hereby agree to waive the Minimum Income
Covenant for the quarter ending July 31, 2007.
3.
Conditions Precedent. This Waiver shall become effective and
be deemed effective as of the date first above written upon
(i) receipt by OOMC of an executed counterpart of this Waiver
from each of the Issuer, the Depositor, the Majority Noteholders
and the Indenture Trustee and (ii) execution by each of the OO
Entities’ warehouse lenders of a waiver of such
lender’s right to declare a default or event of default based
on the failure of any of the OO Entities to satisfy the Minimum
Income Covenant. Each such waiver executed under (ii) above
shall be substantially similar to the terms hereof.
4.
Condition to Continuing Effectiveness. This Waiver shall
continue to be effective until July 31, 2007 only so long as
no breach of any representation and warranty, covenant or Event of
Default (other than the Minimum Income Covenant for any quarter
ending, on or before July 31, 2007) has occurred; and provided
that the Majority Noteholders shall have the right to require that
the Minimum Income Covenant be measured immediately upon the
earlier to occur of any of the following: (i) any of the OO
Entities’ current warehouse lenders cease to provide
financing to the related OO Entities or reduce the amount of any
financing provided under any existing warehouse line from the
amount provided under any such warehouse line as of the date
hereof, (ii) OOMC is not purchased by Cerberus Capital
Management, L.P. (“Cerberus”) prior to
September 30, 2007, (iii) Cerberus withdraws its offer to
purchase OOMC at any time, or (iv) October 2, 2007. This
Waiver shall no longer be effective upon the occurrence of any of
(i) through (iv) above if the Minimum Income Covenant is
not met as of the date of such occurrence.
5.
Covenants, Representations and Warranties of the Issuer, OOMC,
OOMCC and the Depositor.
(a) As
consideration for this Waiver, each of the Issuer, OOMC (in its
capacities as Servicer and Loan Originator), OOMCC and the
Depositor hereby reaffirms all covenants, representations and
warranties made by the Issuer, OOMC, OOMCC and the Depositor, as
applicable, in the Sale and Servicing Agreement, except with
respect to Minimum Income Covenant for any quarter ending on or
before July 31, 2007, which is modified hereby and agrees that
all such covenants, representations and warranties shall be deemed
to have been re-made as of the effective date of this Waiver.
(b) Each
of the Issuer, OOMC, OOMCC and the Depositor hereby represents and
warrants that this Waiver constitutes the legal, valid and binding
obligation of the Issuer,
2
OOMC,
OOMCC and the Depositor, as applicable, enforceable against the
Issuer, OOMC, OOMCC and the Depositor, as applicable, in accordance
with its terms. The execution, delivery and performance by the
Issuer, OOMC, OOMCC and the Depositor of this Waiver: (i) are
within the Issuer’s, OOMC’s, OOMCC’s and the
Depositor’s power; (ii) have been duly authorized by all
necessary or proper corporate action; (iii) are not in
contravention of any provision of the Issuer’s, OOMC’s,
OOMCC’s or the Depositor’s certificate of
incorporation, bylaws or other organizational documents; (iv) will
not violate any law applicable to the Issuer, OOMC, OOMCC or the
Depositor, as applicable; (v) will not conflict with or result
in the breach or termination of, constitute a default under or
accelerate any performance required by, any indenture, mortgage,
deed of trust, lease, agreement or other instrument to which the
Issuer, OO
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