Exhibit 10.10(a)

 

 

 

MASTER REPURCHASE AGREEMENT

Dated as of April 10, 2006

Among:

AAMES INVESTMENT CORPORATION, as a Seller,

 

AAMES CAPITAL CORPORATION, as a Seller,

 

AAMES FUNDING CORPORATION, as a Seller

and

GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., as Buyer

 

 

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TABLE OF CONTENTS

 

1.

APPLICABILITY

1

 

 

 

2.

DEFINITIONS AND ACCOUNTING MATTERS

1

 

 

 

3.

THE TRANSACTIONS

18

 

 

 

4.

PAYMENT AND TRANSFER

23

 

 

 

5.

TAXES; TAX TREATMENT

23

 

 

 

6.

MARGIN MAINTENANCE

24

 

 

 

7.

INCOME PAYMENTS

25

 

 

 

8.

SECURITY INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT

25

 

 

 

9.

CONDITIONS PRECEDENT

28

 

 

 

10.

RELEASE OF PURCHASED LOANS

32

 

 

 

11.

RELIANCE

33

 

 

 

12.

REPRESENTATIONS AND WARRANTIES

33

 

 

 

13.

COVENANTS OF SELLER

38

 

 

 

14.

REPURCHASE DATE PAYMENTS

46

 

 

 

15.

REPURCHASE OF PURCHASED LOANS

46

 

 

 

16.

SUBSTITUTION

47

 

 

 

17.

RESERVED

47

 

 

 

18.

EVENTS OF DEFAULT

47

 

 

 

19.

REMEDIES

50

 

 

 

20.

DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE

53

 

 

 

21.

NOTICES AND OTHER COMMUNICATIONS

53

 

 

 

22.

USE OF EMPLOYEE PLAN ASSETS

53

 

 

 

23.

INDEMNIFICATION AND EXPENSES.

53

 

 

 

24.

WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS

55

 

 

 

25.

REIMBURSEMENT

55

 

 

 

26.

FURTHER ASSURANCES

55

 

 

 

27.

TERMINATION

55

 

 

 

28.

SEVERABILITY

56

 

 

 

29.

BINDING EFFECT; GOVERNING LAW

56

 

 

 

30.

AMENDMENTS

56

 

 

 

31.

SUCCESSORS AND ASSIGNS

56

 

 

 

32.

SURVIVAL

56

 

 

 

33.

CAPTIONS

56

 

 

 

34.

COUNTERPARTS

57

 

 

 

35.

SUBMISSION TO JURISDICTION; WAIVERS

57

 

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36.

WAIVER OF JURY TRIAL

57

 

 

 

37.

ACKNOWLEDGEMENTS

57

 

 

 

38.

HYPOTHECATION OR PLEDGE OF PURCHASED ITEMS.

58

 

 

 

39.

ASSIGNMENTS; PARTICIPATIONS.

58

 

 

 

40.

SINGLE AGREEMENT

59

 

 

 

41.

INTENT

59

 

 

 

42.

CONFIDENTIALITY

59

 

 

 

43.

SERVICING

60

 

 

 

44.

PERIODIC DUE DILIGENCE REVIEW

61

 

 

 

45.

SET-OFF

62

 

 

 

46.

ENTIRE AGREEMENT

62

 

SCHEDULES

 

 

 

 

 

SCHEDULE 1

Representations and Warranties re: Loans

 

 

 

 

SCHEDULE 2

Filing Jurisdictions and Offices

 

 

 

 

SCHEDULE 3

Relevant States

 

 

 

 

SCHEDULE 4

Subsidiaries

 

 

 

 

SCHEDULE 5

List of Financing Facilities

 

 

 

 

EXHIBITS

 

 

 

 

 

EXHIBIT A

Forms of Monthly and Quarterly Certifications

 

 

 

 

EXHIBIT B

Form of Custodial Agreement

 

 

 

 

EXHIBIT C

Form of Opinion of Counsel to the Seller

 

 

 

 

EXHIBIT D

Form of Notice of Transaction Notice

 

 

 

 

EXHIBIT E

Underwriting Guidelines

 

 

 

 

EXHIBIT F

Required Fields for Servicing Transmission

 

 

 

 

EXHIBIT G

Required Fields for Loan Schedule

 

 

 

 

EXHIBIT H

Form of Confidentiality Agreement

 

 

 

 

EXHIBIT I

Form of Instruction Letter

 

 

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MASTER REPURCHASE AGREEMENT, dated as of April 10, 2006, among Aames Investment
Corporation, a Maryland corporation, Aames Capital Corporation, a California
corporation and Aames Funding Corporation, a California Corporation jointly and
severally as sellers (each, a “Seller” and collectively, the “Seller” or the
“Sellers”) and Greenwich Capital Financial Products, Inc., a Delaware
corporation (“Buyer”, which term shall include any “Principal” as defined and
provided for in Annex I), or as agent pursuant hereto (“Agent”),

 

1.             APPLICABILITY

 

Buyer shall, from time to time, upon the terms and conditions set forth herein,
agree to enter into transactions in which Sellers transfer to Buyer Eligible
Loans against the transfer of funds by Buyer, with a simultaneous agreement by
Buyer to transfer to Seller Purchased Loans at a date certain, against the
transfer of funds by Sellers.  Each such transaction shall be referred to herein
as a “Transaction”, and, unless otherwise agreed in writing, shall be governed
by this Agreement.

 

2.             DEFINITIONS AND ACCOUNTING MATTERS 

 

(A)           DEFINED TERMS.  AS USED HEREIN, THE FOLLOWING TERMS HAVE THE
FOLLOWING MEANINGS (ALL TERMS DEFINED IN THIS SECTION 2 OR IN OTHER PROVISIONS
OF THIS AGREEMENT IN THE SINGULAR TO HAVE THE SAME MEANINGS WHEN USED IN THE
PLURAL AND VICE VERSA):

 

“Aames Capital” shall mean Aames Capital Corporation and any permitted
successors and assigns.

 

“Aames Financial” shall mean Aames Financial Corporation and any permitted
successors and assigns.

 

“Aames Funding” shall mean Aames Funding Corporation and any permitted
successors and assigns.

 

“Aames Investment” shall mean Aames Investment Corporation and any permitted
successors and assigns.

 

“Accepted Servicing Practices” shall mean with respect to any Loan, those
accepted and prudent mortgage servicing practices (including collection
procedures) of prudent mortgage lending institutions which service mortgage
loans of the same type as the Loans in the jurisdiction where the related
Mortgaged Property is located, and which are in accordance with Fannie Mae
servicing practices and procedures for MBS pool mortgages, as defined in the
Fannie Mae servicing guides including future updates, and in a manner at least
equal in quality to the servicing the Sellers or Sellers’ designee provides to
mortgage loans which they own in their own portfolio.

 

“Additional Purchased Loans” shall have the meaning specified in Section 6(a)
hereof.

 

“Adjusted Indebtedness” shall mean, with respect to any Person, the Total
Indebtedness of such Person and its Subsidiaries, less outstanding REIT
portfolio debt.

 

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“Adjustable Rate Loan” shall mean a Loan which provides for the adjustment of
the Mortgage Interest Rate payable in respect thereto.

 

“Adjustment Date” shall mean with respect to each Adjustable Rate Loan, the date
set forth in the related Note on which the Mortgage Interest Rate on the Loan is
adjusted in accordance with the terms of the Note.

 

“Affiliate” means, with respect to any Person, any other Person which, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person, excluding any Person which would otherwise meet the definition of
Affiliate with respect to Aames Investment unless such Person directly owns more
than 21% of the capital stock of Aames Investment as of November 3, 2004.  For
purposes of this definition, “control” (together with the correlative meanings
of “controlled by” and “under common control with”) means possession, directly
or indirectly, of the power (a) to vote 10% or more of the securities (on a
fully diluted basis) having ordinary voting power for the directors or managing
general partners (or their equivalent) or such Person, or (b) to directly or
indirectly cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by contract, or otherwise.

 

“Agent” shall have the meaning set forth in the preamble to this Agreement.

 

“Agreement” shall mean this Master Repurchase Agreement (including all exhibits,
schedules and other addenda hereto or thereto), as supplemented by the Pricing
Side Letter, as it may be amended, further supplemented or otherwise modified
from time to time.

 

“ALTA” shall mean the American Land Title Association.

 

“Applicable Margin” shall have the meaning set forth in the Pricing Side Letter.

 

“Appraised Value” shall mean the value set forth in an appraisal made in
connection with the origination of the related Loan as the value of the
Mortgaged Property (or the related Cooperative Unit in the case of a Cooperative
Loan).

 

“Assignment of Mortgage” shall mean, with respect to any Mortgage, an assignment
of the Mortgage, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the assignment of the Mortgage to Buyer.

 

“Attorney Bailee Letter” shall have the meaning assigned to such term in the
Custodial Agreement.

 

“Bankruptcy Code” shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.

 

“Best’s” shall mean Best’s Key Rating Guide, as the same shall be amended from
time to time.

 

“Breakage Costs” shall have the meaning assigned thereto in Section 3(h) herein.

 

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“Business Day” shall mean any day other than (i) a Saturday or Sunday, (ii) a
day on which the New York Stock Exchange, the Federal Reserve Bank of New York,
the Custodian’s offices, banking and savings and loan institutions in the State
of New York, Connecticut or California, the City of New York or the city or
state in which the Custodian’s offices are located are closed, or (iii) a day on
which trading in securities on the New York Stock Exchange or any other major
securities exchange in the United States is not conducted.

 

“Capital Lease Obligations” shall mean, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

 

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor’s Ratings Group (“S&P”) or P-1 or the equivalent thereof by
Moody’s Investors Service, Inc. (“Moody’s”) and in either case maturing within
90 days after the day of acquisition, (e) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s, (f) securities with maturities of 90
days or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the requirements of clause (b) of this
definition or, (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.

 

“Change of Control” shall mean, Aames Investment, through its Subsidiaries, does
not own (100%) of the outstanding capital stock of Aames Capital or Aames
Funding.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

 

“Combined Loan-to-Value Ratio” or “CLTV” shall mean with respect to any Loan,
the ratio of (i) the original outstanding principal amount of the Loan and any
other loan which is secured by a lien on the related Mortgaged Property to (ii)
the lesser of (a) the Appraised Value of the Mortgaged Property at origination
of such Loan, or (b) if the Mortgaged Property was purchased within twelve (12)
months of the origination of the Loan, the purchase price of the Mortgaged
Property.

 

“Commonly Controlled Entity” shall mean an entity, whether or not incorporated,
which

 

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is under common control with the Sellers within the meaning of Section 4001 of
ERISA or is part of a group which includes any Seller and which is treated as a
single employer under Section 414 of the Code.

 

“Concurrent Second Lien Loan” shall mean a Second Lien Loan as to which the
prior lien on the related Mortgaged Property is secured by financing which was
obtained by the related Mortgagor from the related Seller at the same time that
such Second Lien Loan was originated.

 

“Confirmation” shall have the meaning assigned thereto in Section 3(a) hereof.

 

“Contractual Obligation” shall mean as to any Person, any material provision of
any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound or any material provision of any
security issued by such Person.

 

“Cooperative Corporation” shall mean with respect to any Cooperative Loan, the
cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to stockholders
through Proprietary Leases or similar arrangements.

 

“Cooperative Loan” shall mean a Loan that is secured by a First Lien on and
perfected security interest in Cooperative Shares and the related Proprietary
Lease granting exclusive rights to occupy the related Cooperative Unit in the
building owned by the related Cooperative Corporation.

 

“Cooperative Project” shall mean, with respect to any Cooperative Loan, all real
property and improvements thereto and rights therein and thereto owned by a
Cooperative Corporation including without limitation the land, separate dwelling
units and all common elements.

 

“Cooperative Shares” shall mean, with respect to any Cooperative Loan, the
shares of stock issued by a Cooperative Corporation and allocated to a
Cooperative Unit and represented by a stock certificate.

 

“Cooperative Unit” shall mean, with respect to a Cooperative Loan, a specific
unit in a Cooperative Project.

 

“Custodial Agreement” shall mean the Amended and Restated Custodial Agreement,
dated as of April 10, 2006, among Sellers, Buyer, and Custodian as the same
shall be modified and supplemented and in effect from time to time.

 

“Custodian” shall mean Deutsche Bank Trust Company Americas, or its successors
and permitted assigns.

 

“Custodian Loan Transmission” shall have the meaning assigned thereto in the
Custodial Agreement.

 

“Default” shall mean an Event of Default or any event, that, with the giving of
notice or the passage of time or both, would become an Event of Default.

 

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“Disbursement Account” shall mean the account established by Buyer pursuant to
which funds shall be disbursed to fund any Wet Loan.

 

“Document Deficiency Repurchased Mortgage Loan” shall mean any Loan that has
been repurchased by the Sellers pursuant to the terms of any whole loan transfer
or pass-through transfer due to document deficiencies, which document
deficiencies have been fully and accurately disclosed to the Buyer and are
acceptable to the Buyer in its sole discretion, and which, except for such
document deficiencies would otherwise qualify as an Eligible Loan pursuant to
the terms of the Program Documents.

 

“Dollars” or “$” shall mean lawful money of the United States of America.

 

“Dry Loan” shall mean a first or second lien Loan which is underwritten in
accordance with the Underwriting Guidelines and as to which the related Mortgage
File contains all required Loan Documents.

 

“Due Date” shall mean the day of the month on which the Monthly Payment is due
on a Loan, exclusive of any days of grace.

 

“Due Diligence Review” shall mean the performance by Buyer of any or all of the
reviews permitted under Section 44 hereof with respect to any or all of the
Loans or the Sellers or related parties, as desired by Buyer from time to time.

 

“Early Payment Default Repurchased Mortgage Loan” shall mean any Mortgage Loan
which has been repurchased by the a Seller pursuant to the terms of any whole
loan transfer or pass-through transfer due to a first or early payment default
by the related Mortgagor, and which, except for such first or early payment
default, would otherwise qualify as an Eligible Loan pursuant to the terms of
the Program Documents.

 

“Effective Date” shall mean the date upon which the conditions precedent set
forth in Section 9(a) have been satisfied.

 

“Electronic Transmission” shall mean the delivery of information in an
electronic format acceptable to the applicable recipient thereof.  An Electronic
Transmission shall be considered written notice for all purposes hereof (except
when a request or notice by its terms requires execution).

 

“Eligible Loan” shall have the meaning assigned thereto in the Pricing Side
Letter.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

“ERISA Affiliate” shall mean any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which any Seller is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which any Seller
is a member.

 

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“Escrow Letter” shall mean, with respect to any Wet Loan that becomes subject to
a Transaction before the end of the applicable rescission period, an escrow
agreement or letter, which is fully assignable to the Buyer, stating that in the
event of a Rescission or if for any other reason the Loan fails to fund on a
given day, the party conducting the closing is holding all funds which would
have been disbursed on behalf of the Mortgagor as agent for and for the benefit
of the Buyer and such funds shall be returned to the related Seller not later
than one Business Day after the date of Rescission or other failure of the Loan
to fund on a given day.

 

“Escrow Payments” shall mean, with respect to any Loan, the amounts constituting
ground rents, taxes, assessments, water charges, sewer rents, municipal charges,
mortgage insurance premiums, fire and hazard insurance premiums, condominium
charges, and any other payments required to be escrowed by the Mortgagor with
the Mortgagee pursuant to the terms of any Note or Mortgage or any other
document.

 

“Event of Default” shall have the meaning provided in Section 18 hereof.

 

“Exception” shall have the meaning assigned thereto in the Custodial Agreement.

 

“Exception Report” shall mean the exception report prepared by the Custodian
pursuant to the Custodial Agreement.

 

“Fannie Mae” shall mean Fannie Mae, or any successor thereto.

 

“First Lien” shall mean with respect to each Mortgaged Property, the lien of the
mortgage, deed of trust or other instrument securing a mortgage note which
creates a first lien on the Mortgaged Property.

 

“First Lien Loan” shall mean an Eligible Loan secured by a First Lien on the
related Mortgaged Property, subject only to Permitted Exceptions.

 

“Foreign Buyer” shall mean any Buyer that is not incorporated under the laws of
the United States, any State thereof, or the District of Columbia.

 

“Freddie Mac” shall mean Freddie Mac, or any successor thereto.

 

“Full Documentation Loan” means a mortgage loan which was underwritten in
accordance with Underwriting Guidelines which require the related Mortgagor to
complete a detailed application designed to provide pertinent credit information
and pursuant to which the Mortgagor is required to provide full documentation of
the Mortgagor’s income and assets and such information is fully verified by the
related Seller.

 

“GAAP” shall mean generally accepted accounting principles in effect from time
to time in the United States of America

 

“Governmental Authority” shall mean with respect to any Person, any nation or
government, any state or other political subdivision, agency or instrumentality
thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any court or
arbitrator having jurisdiction over such Person, any of its

 

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Subsidiaries or any of its properties.

 

“Gross Margin” shall mean with respect to each Adjustable Rate Loan, the fixed
percentage amount set forth in the related Note and the Loan Schedule that is
added to the Index on each Adjustment Date in accordance with the terms of the
related Note to determine the new Mortgage Interest Rate for such Loan.

 

“Guarantee” shall mean, as to any Person, any obligation of such Person directly
or indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise), provided that the term
“Guarantee” shall not include (i) endorsements for collection or deposit in the
ordinary course of business, or (ii) obligations to make servicing advances for
delinquent taxes and insurance, or other obligations in respect of a Mortgaged
Property, to the extent required by the Buyer. The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
“Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.

 

“Income” shall mean, with respect to any Purchased Loan at any time, any
principal and/or interest thereon and all dividends, sale proceeds (including,
without limitation, any proceeds from the securitization of such Purchased Loan
or other disposition thereof) and other collections and distributions thereon
(including, without limitation, any proceeds received in respect of mortgage
insurance), but not including any commitment fees, origination fees and/or
servicing fees accrued in respect of periods on or after the initial Purchase
Date with respect to such Purchased Loan.

 

“Indebtedness” shall mean, for any Person: (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (b) obligations of such Person to pay the deferred purchase
or acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective indebtedness so secured
has been assumed by such Person; (d) obligations (contingent or otherwise) of
such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for account of such Person;
(e) Capital Lease Obligations of such Person; (f) obligations of such Person
under repurchase agreements or like arrangements; (g) indebtedness of others
Guaranteed by such Person; (h) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person; (i)
indebtedness of general partnerships of which such Person is a general partner;
and (j) any other indebtedness of such Person by a note, bond, debenture or
similar instrument.

 

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“Index” shall mean with respect to each Adjustable Rate Loan, the index
identified on the related Loan Schedule and set forth in the related Note for
the purpose of calculating the interest rate thereon.

 

“Instruction Letter” shall mean a letter agreement between the related Seller
and each Subservicer substantially in the form of Exhibit I attached hereto.

 

“Insurance Proceeds” shall mean with respect to each Loan, proceeds of insurance
policies insuring the Loan or the related Mortgaged Property.

 

“Insured Closing Letter” shall mean, with respect to any Wet Loan that becomes
subject to a Transaction before the end of the applicable rescission period, a
letter of indemnification from an Approved Title Insurance Company, in any
jurisdiction where insured closing letters are permitted under applicable law
and regulation, addressed to the related Seller, which is fully assignable to
the Buyer, with coverage that is customarily acceptable to Persons engaged in
the origination of mortgage loans, identifying the Settlement Agent covered
thereby, which may be in the form of a blanket letter.

 

“Interest Period” shall mean, with respect to any Transaction, the period
commencing on the Purchase Date with respect to such Transaction and ending on
the calendar day prior to the related Repurchase Date.  Notwithstanding the
foregoing, no Interest Period may end after the Termination Date.

 

“Interest Rate Protection Agreement” shall mean with respect to any or all of
the Purchased Loans, any interest rate swap, cap or collar agreement or any
other applicable hedging arrangements providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies entered into by Sellers and
reasonably acceptable to Buyer.

 

“Investment Company Act” shall mean the Investment Company Act of 1940, as
amended, including all rules and regulations promulgated thereunder.

 

“IRS” shall mean the United States Internal Revenue Service.

 

“LIBO Base Rate” shall mean with respect to each day on which a Transaction is
outstanding (or if such day is not a Business Day, the next succeeding Business
Day), the rate per annum equal to the rate published by Bloomberg or if such
rate is not available, the rate appearing at page 3750 of the Telerate Screen,
as one-month LIBOR on such date, and if such rate shall not be so quoted, the
rate per annum at which the Buyer is offered Dollar deposits at or about 11:00
A.M., New York City time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Transactions are then being conducted for delivery
on such day for a period of one month and in an amount comparable to the amount
of the Transactions to be outstanding on such day.

 

“LIBO Rate” shall mean with respect to each Interest Period pertaining to a
Transaction, a rate (reset on a monthly basis) per annum determined by Buyer in
its sole discretion in accordance with the following formula (rounded upwards to
the nearest l/100th of one percent), which rate as determined by Buyer shall be
conclusive absent manifest error by Buyer:

 

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  LIBO Base Rate

 

 

  1.00 – LIBO Reserve Requirements

 

The LIBO Rate shall be calculated on each Purchase Date and Repurchase Date
commencing with the first Purchase Date.

 

“LIBO Reserve Requirements” shall mean for any Interest Period for any
Transaction, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements applicable to the Buyer in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction with
respect thereto), dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
such Board) maintained by a member bank of such Governmental Authority. As of
the Effective Date, the LIBO Reserve Requirements shall be deemed to be zero.

 

“Lien” shall mean any mortgage, lien, pledge, charge, security interest or
similar encumbrance.

 

“Loan” shall mean a first or second lien mortgage loan or Cooperative Loan which
the Custodian has been instructed to hold for the Buyer pursuant to the
Custodial Agreement, and which Loan includes, without limitation, (i) a Note,
the related Mortgage and all other Loan Documents and (ii) all right, title and
interest of the Sellers in and to the Mortgaged Property covered by such
Mortgage.

 

“Loan Documents” shall have the meaning assigned thereto in the Custodial
Agreement.

 

“Loan Schedule” shall mean a hard copy or electronic format incorporating the
fields identified on Exhibit G, any other information required by Buyer and any
other additional information to be provided pursuant to the Custodial Agreement.

 

“Loan-to-Value Ratio” or “LTV” shall mean with respect to any Loan, the ratio of
the outstanding principal amount of such Loan at the time of origination to the
lesser of (a) the Appraised Value of the related Mortgaged Property at
origination of such Loan and (b) if the related Mortgaged Property was purchased
within twelve (12) months of the origination of such Loan, the purchase price of
the related Mortgaged Property.

 

“Margin Call” shall have the meaning assigned thereto in Section 6(a) hereof.

 

“Margin Deficit” shall have the meaning assigned thereto in Section 6(a) hereof.

 

“Market Value” shall mean the value, determined by the Buyer in its sole
reasonable discretion, of the Loans if sold in their entirety to a single
third-party purchaser.  In determining Market Value, the Buyer may take into
account (a) customary factors, including, but not limited to current market
conditions and the fact that the Purchased Loans may be sold under circumstances
in which the Sellers, as originators of the Purchased Loans, are in default
under this Agreement, and (b) firm takeout commitments from investment grade
purchasers in favor of the Sellers covering the Purchased Loans or mortgage
loans substantially similar to the

 

9

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Purchased Loans to the extent recently obtained and during similar market
conditions.  The Buyer’s determination of Market Value shall be conclusive upon
the parties, absent manifest error on the part of the Buyer.  The Buyer shall
have the right to mark to market the Loans on a daily basis which Market Value
with respect to one or more of the Loans may be determined to be zero. The
Sellers acknowledge that the Buyer’s determination of Market Value is for the
limited purpose of determining the value of Purchased Loans which are subject to
Transactions hereunder without the ability to perform customary purchaser’s due
diligence and is not necessarily equivalent to a determination of the fair
market value of the Loans achieved by obtaining competing bids in an orderly
market in which the originator/servicer is not in default under a revolving debt
facility and the bidders have adequate opportunity to perform customary loan and
servicing due diligence.  The Market Value shall be deemed to be zero with
respect to each Loan which is not an Eligible Loan.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
property, business, operations, financial condition or prospects of any Seller,
(b) the ability of the Sellers to perform their obligations under any of the
Program Documents, (c) the validity or enforceability of any of the Program
Documents, (d) the rights and remedies of the Buyer under any of the Program
Documents, (e) the timely repurchase of the Purchased Loans or payment of other
amounts payable in connection therewith or (f) the Purchased Items.

 

“Maximum Aggregate Purchase Price” shall mean Seven Hundred Thousand Dollars
($700,000,000).

 

“Maximum Mortgage Interest Rate” shall mean with respect to each Adjustable Rate
Loan, a rate that is set forth on the related Loan Schedule and in the related
Note and is the maximum interest rate to which the Mortgage Interest Rate on
such Loan may be increased on any Adjustment Date.

 

“Monthly Payment” shall mean the scheduled monthly payment of principal and
interest on a Loan as adjusted in accordance with changes in the Mortgage
Interest Rate pursuant to the provisions of the Note for an Adjustable Rate
Loan.

 

“Mortgage” shall mean with respect to a Loan, the mortgage, deed of trust or
other instrument, which creates a First Lien or Second Lien (as indicated on the
Loan Schedule) on either (i) with respect to a Loan other than a Cooperative
Loan, the fee simple or leasehold estate in such real property or (ii) with
respect to a Cooperative Loan, the Proprietary Lease and related Cooperative
Shares, which in either case secures the Note.

 

“Mortgage File” shall have the meaning assigned thereto in the Custodial
Agreement.

 

“Mortgage Interest Rate” means the annual rate of interest borne on a Note,
which shall be adjusted from time to time with respect to Adjustable Rate Loans.

 

“Mortgaged Property” shall mean the real property (including all improvements,
buildings, fixtures, building equipment and personal property thereon and all
additions, alterations and replacements made at any time with respect to the
foregoing) and all other collateral securing repayment of the debt evidenced by
a Note.

 

10

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“Mortgagee” shall mean the record holder of a Note secured by a Mortgage.

 

“Mortgagor” shall mean the obligor or obligors on a Note, including any person
who has assumed or guaranteed the obligations of the obligor thereunder.

 

“Multiemployer Plan” shall mean a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been or are required to be made by
any Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.

 

“MV Margin Amount” means, with respect to any Transaction, as of any date of
determination, the amount obtained by application of the MV Margin Percentage to
the Repurchase Price (reduced by the amount of any accrued and unpaid Price
Differential) for such Transaction as of such date.

 

“MV Margin Percentage” shall have the meaning assigned thereto in the Pricing
Side Letter.

 

“Negative Amortization” shall mean with respect to each Negative Amortization
Loan, that portion of interest accrued at the Mortgage Interest Rate in any
month which exceeds the Monthly Payment on the related Loan for such month and
which, pursuant to the terms of the Note, is added to the principal balance of
the Loan.

 

“Negative Amortization Loan” shall mean each Loan that may be subject to
Negative Amortization.

 

“Net Income” shall mean, for any period, the net income of any Person for such
period as determined in accordance with GAAP.

 

“Note” shall mean, with respect to any Loan, the related promissory note
together with all riders thereto and amendments thereof or other evidence of
indebtedness of the related Mortgagor.

 

“Obligations” shall mean (a) all of Sellers’ obligation to pay the Repurchase
Price on the Repurchase Date and other obligations and liabilities of Sellers to
Buyer, its Affiliates, the Custodian or any other Person arising under, or in
connection with, the Program Documents or directly related to the Purchased
Loans, whether now existing or hereafter arising; (b) any and all sums paid by
Buyer or on behalf of Buyer pursuant to the Program Documents in order to
preserve any Purchased Loan or its interest therein; (c) in the event of any
proceeding for the collection or enforcement of any of Sellers’ indebtedness,
obligations or liabilities referred to in clause (a), the reasonable expenses of
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on any Purchased Loan, or of any exercise by Buyer or
any Affiliate of Buyer of its rights under the Program Documents, including
without limitation, reasonable attorneys’ fees and disbursements and court
costs; and (d) all of Sellers’ indemnity obligations to Buyer pursuant to the
Program Documents.

 

“Other Taxes” shall have the meaning assigned thereto in Section 5(b).

 

“Par Margin Amount” means, with respect to any Transaction, as of any date of

 

11

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determination, the amount obtained by application of the Par Margin Percentage
to the Repurchase Price (reduced by the amount of any accrued and unpaid Price
Differential) for such Transaction as of such date.

 

“Par Margin Percentage” shall have the meaning assigned thereto in the Pricing
Side Letter.

 

“Participants” shall have the meaning assigned thereto in Section 39 hereof.

 

“Payment Adjustment Date”  With respect to each Negative Amortization Loan, the
date on which Monthly Payments shall be adjusted.  A Payment Adjustment Date
with respect to a Negative Amortization Loan shall occur on the dates specified
on the Loan Schedule.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

 

“Permitted Exceptions” shall mean the following exceptions to lien priority: (i)
the lien of current real property taxes and assessments not yet due and payable;
(ii) covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording acceptable to mortgage
lending institutions generally and specifically referred to in the lender’s
title insurance policy delivered to the originator of the Loan and (A) referred
to or otherwise considered in the appraisal (if any) made for the originator of
the Loan or (B) which do not adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal; (iii) other matters to which
like properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property; and (iv) in
the case of a Second Lien Loan, a First Lien on the Mortgaged Property.

 

“Person” shall mean any individual, corporation, company, voluntary association,
partnership, joint venture, limited liability company, trust, unincorporated
association or government (or any agency, instrumentality or political
subdivision thereof).

 

“Plan” shall mean an employee benefit or other plan established or maintained by
either a Seller or any ERISA Affiliate and that is covered by Title IV of ERISA,
other than a Multiemployer Plan.

 

“PMI Policy” or “Primary Insurance Policy” shall mean a policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.

 

“Post-Default Rate” shall mean, in respect of the Repurchase Price for any
Transaction or any other amount under this Agreement, or any other Program
Document that is not paid when due to the Buyer (whether at stated maturity, by
acceleration or mandatory prepayment or otherwise), a rate per annum during the
period from and including the due date to but excluding the date on which such
amount is paid in full equal to 2% per annum, plus (a)(i) the Pricing Rate
otherwise applicable to such Loan or other amount, or (ii) if no Pricing Rate is
otherwise applicable, the LIBO Rate plus (b) the Applicable Margin.

 

“Price Differential” shall mean, with respect to each Transaction as of any date
of

 

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determination, the aggregate amount obtained by daily application of the Pricing
Rate (or during the continuation of an Event of Default, by daily application of
the Post-Default Rate) for such Transaction to the Purchase Price for such
Transaction on a 360-day-per-year basis for the actual number of days elapsed
during the period commencing on (and including) the Purchase Date and ending on
(but excluding) the date of determination (reduced by any amount of such Price
Differential in respect of such period previously paid by Sellers to Buyer with
respect to such Transaction).

 

“Pricing Rate” shall mean the per annum percentage rate for determination of the
Price Differential as set forth in the Pricing Side Letter.

 

“Pricing Side Letter” shall mean the pricing side letter, dated as of April 10,
2006, among Sellers and Buyer, as the same may be amended, supplemented or
modified from time to time.

 

“Principal” shall have the meaning assigned thereto in Annex I.

 

“Program Documents” shall mean this Agreement, the Custodial Agreement, any
Servicing Agreement, the Pricing Side Letter, any Instruction Letter, the
Securitization Side Letter, any assignment of an Interest Rate Protection
Agreement, and any other agreement entered into by Sellers, on the one hand, and
the Buyer and/or any of its Affiliates or Subsidiaries (or Custodian on its
behalf) on the other, in connection herewith or therewith.

 

“Property” shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.

 

“Proprietary Lease” shall mean the lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.

 

“Purchase Date” shall mean, with respect to each Transaction, the date on which
Purchased Loans are sold by Sellers to the Buyer hereunder.

 

“Purchase Price” shall have the meaning assigned thereto in the Pricing Side
Letter.

 

“Purchased Items” shall have the meaning assigned thereto in Section 8 hereof.

 

“Purchased Loans” shall mean any of the following assets sold by Sellers to
Buyer in a Transaction: the Loans, together with the related Records, Servicing
Rights, Sellers’ rights under any related Interest Rate Protection Agreement,
Sellers’ rights under any Escrow Letters and Insured Closing Letters with
respect to the Loans.  Sellers’ rights under any takeout commitment related to
the Loans and other Purchased Items, such other property, rights, titles or
interest as are specified on a related Transaction Notice, and all instruments,
chattel paper, and general intangibles comprising or relating to all of the
foregoing.  The term “Purchased Loans” with respect to any Transaction at any
time shall also include Additional Purchased Loans delivered pursuant to Section
6(a) hereof and Substitute Loans delivered pursuant to Section 16 hereof.

 

“Qualified Insurer” shall mean an insurance company duly qualified as such under
the laws of each state in which any Mortgaged Property is located, duly
authorized and licensed in each such state to transact the applicable insurance
business and to write the insurance provided,

 

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and approved as an insurer by Fannie Mae and Freddie Mac and whose claims paying
ability is rated in the two highest rating categories by any of the rating
agencies with respect to primary mortgage insurance and in the two highest
rating categories by Best’s with respect to hazard and flood insurance.

 

“Qualified Originator” shall mean (a) Sellers and (b) any other mutually agreed
upon originator of Loans.

 

“Reacquired Loans” shall have the meaning assigned thereto in Section 16.

 

“Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by Sellers or any other person or entity with respect to a Purchased
Loan.  Records shall include, without limitation, the Notes, any Mortgages, the
Mortgage Files, the Servicing File, and any other instruments necessary to
document or service a Loan that is a Purchased Loan, including, without
limitation, the complete payment and modification history of each Loan that is a
Purchased Loan.

 

“REIT” shall mean a qualified real estate investment trust under Section 856 of
the Code.

 

“Reportable Event” shall mean any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.  § 2615.

 

“Repurchase Date”  shall mean the date occurring on (i) the second Business Day
following the 15th day of each month following the related Purchase Date (or if
such date is not a Business Day, the following Business Day), (ii) any other
Business Day set forth in the related Transaction Notice and/or the related
Confirmation, or (iii) the date determined by application of Section 19, as
applicable.

 

“Repurchase Price” shall mean the price at which Purchased Loans are to be
transferred from Buyer to Sellers upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the outstanding Purchase Price for such Purchased Loans and the Price
Differential as of the date of such determination.

 

“Required Documents” shall have the meaning set forth in the Custodial
Agreement.

 

“Requirement of Law” shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

 

“Rescission”  shall mean the right of a Mortgagor to rescind the related Note
and related documents pursuant to applicable law.

 

“Responsible Officer” shall mean, as to any Person, the chief executive officer
or, with respect to financial matters, the chief financial officer or treasurer
of such Person; provided, that in the event any such officer is unavailable at
any time he or she is required to take any action

 

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hereunder, Responsible Officer shall mean any officer authorized to act on such
officer’s behalf as demonstrated by a certificate of corporate resolution.

 

“Restricted Payments” shall mean with respect to any Person, collectively, all
dividends or other distributions of any nature (cash, securities, assets or
otherwise), and all payments, by virtue of redemption or otherwise, on any class
of equity securities (including, without limitation, warrants, options or rights
therefor) issued by such Person, whether such securities are now or may
hereafter be authorized or outstanding and any distribution in respect of any of
the foregoing, whether directly or indirectly.

 

“Second Lien” shall mean with respect to each Mortgaged Property, the lien of
the mortgage, deed of trust or other instrument securing a mortgage note which
creates a second lien on the Mortgaged Property.

 

“Second Lien Loan” shall mean an Eligible Loan secured by the lien on the
Mortgaged Property, subject only to one prior lien on such Mortgaged Property
securing financing obtained by the related Mortgagor and to Permitted
Exceptions.

 

“Securitization Letter” shall mean that certain letter agreement by and among
Sellers and Buyer dated the date hereof, outlining rights and obligations with
respect to securitizations and whole loan sales of Loans subject to this
Agreement from time to time.

 

“Security Release Certification” shall mean a security release certification in
substantially the form set forth in Annex 18 to the Custodial Agreement.

 

“Servicer” shall mean each related Seller in its capacity as servicer or master
servicer of the Loans.

 

“Servicing Agreement” shall have the meaning provided in Section 43(c) hereof.

 

“Servicing File” shall mean with respect to each Loan, the file retained by the
related Seller (in its capacity as Servicer) consisting of all documents that a
prudent originator and servicer would have, including copies of the Loan
Documents, all documents necessary to document and service the Loans and any and
all documents required to be delivered pursuant to any of the Program Documents.

 

“Servicing Records” shall have the meaning assigned thereto in Section 43(b)
hereof.

 

“Servicing Rights” shall mean contractual, possessory or other rights of any
Seller or any other Person, whether arising under the Servicing Agreement, the
Custodial Agreement or otherwise, to administer or service a Purchased Loan or
to possess related Servicing Records.

 

“Servicing Transmission” shall mean a computer-readable magnetic or other
electronic format acceptable to the parties containing the information
identified on Exhibit F.

 

“Settlement Agent” shall have the meaning assigned thereto in the Custodial
Agreement.

 

“Single Employer Plan” shall mean any Plan which is covered by Title IV of
ERISA, but

 

15

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which is not a Multiemployer Plan.

 

“Subservicer” shall have the meaning provided in Section 43(c) hereof.

 

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

 

“Substitute Loans” has the meaning assigned thereto in Section 16.

 

“Tangible Net Worth” shall mean, with respect to Aames Investment, as of any
date of determination, the stockholders equity of Aames Investment, less the
consolidated net book value of all assets of Aames Investment and its
Subsidiaries (to the extent reflected as an asset in the balance sheet of Aames
Investment or any Subsidiary at such date) which will be treated as intangibles
under GAAP, provided, that residual securities issued by such Aames Investment
or its Subsidiaries shall not be treated as intangibles for purposes of this
definition.

 

“Termination Date” shall mean February 3, 2007, or such earlier date on which
this Agreement shall terminate in accordance with the provisions hereof or by
operation of law.

 

“Total Indebtedness” shall mean with respect to any Person, for any period, the
aggregate consolidated funded Indebtedness of such Person and its Subsidiaries
during such period (including any outstanding warehouse debt and [REIT portfolio
debt]).

 

“Transaction” has the meaning assigned thereto in Section 1.

 

“Transaction Notice” shall mean a written request by a Seller in the form of
Exhibit D hereto, to enter into a Transaction, in a format to be mutually agreed
upon among the related Seller and Buyer, which is delivered to Buyer.

 

“Trust Receipt” shall have the meaning provided in the Custodial Agreement.

 

“Underwriting Guidelines” shall mean the underwriting guidelines of the Sellers
attached as Exhibit E hereto in effect as of the date of this Agreement, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with terms of this Agreement, and which have been approved in writing
by Buyer (including any amendments, supplements or modifications thereto).

 

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Purchased Items is governed by
the Uniform Commercial Code as in effect in a jurisdiction other

 

16

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than New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.

 

“USC” shall mean the United States Code, as amended.

 

“Wet Loan” shall mean a wet-funded First Lien Loan or Second Lien Loan which is
underwritten in accordance with the Underwriting Guidelines and does not contain
all the required Loan Documents in the Mortgage File, which in order to be
deemed an Eligible Loan shall have the following additional characteristics:

 

(a)           the proceeds thereof have been funded (or, on the Purchase Date
supported by a Transaction Notice are being funded) by wire transfer or
cashier’s check, cleared check or draft or other form of immediately available
funds to the Settlement Agent for such Wet Loan;

 

(b)           the related Seller expects such Wet Loan to close and become a
valid lien securing actual indebtedness by funding to the order of the Mortgagor
thereunder;

 

(c)           the proceeds thereof have not been returned to the Buyer from the
Settlement Agent for such Wet Loan;

 

(d)           the related Seller has not learned that such Wet Loan will not be
closed and funded to the order of the Mortgagor;

 

(e)           upon recordation such Loan will constitute a First Lien Loan or
Second Lien on the premises described therein; and

 

(f)            the related Seller shall have obtained an Insured Closing Letter
and an Escrow Letter with respect to such Wet Loan (or, with respect to any
Mortgaged Property located in the State of New York, a comparable letter as
customarily provided for closings occurring in such state).

 

(B)           ACCOUNTING TERMS AND DETERMINATIONS.  EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, ALL ACCOUNTING TERMS USED HEREIN SHALL BE
INTERPRETED, AND ALL FINANCIAL STATEMENTS AND CERTIFICATES AND REPORTS AS TO
FINANCIAL MATTERS REQUIRED TO BE DELIVERED TO THE BUYER HEREUNDER SHALL BE
PREPARED, IN ACCORDANCE WITH GAAP.

 

(C)           INTERPRETATION.  THE FOLLOWING RULES OF THIS SUBSECTION (C) APPLY
UNLESS THE CONTEXT REQUIRES OTHERWISE.  A GENDER INCLUDES ALL GENDERS.  WHERE A
WORD OR PHRASE IS DEFINED, ITS OTHER GRAMMATICAL FORMS HAVE A CORRESPONDING
MEANING.  A REFERENCE TO A SUBSECTION, SECTION, ANNEX OR EXHIBIT IS, UNLESS
OTHERWISE SPECIFIED, A REFERENCE TO A SECTION OF, OR ANNEX OR EXHIBIT TO, THIS
AGREEMENT.  A REFERENCE TO A PARTY TO THIS AGREEMENT OR ANOTHER AGREEMENT OR
DOCUMENT INCLUDES THE PARTY’S SUCCESSORS AND PERMITTED SUBSTITUTES OR ASSIGNS. A
REFERENCE TO AN AGREEMENT OR DOCUMENT (INCLUDING ANY PROGRAM DOCUMENT) IS TO THE
AGREEMENT OR DOCUMENT AS AMENDED, MODIFIED, NOVATED, SUPPLEMENTED OR REPLACED,
EXCEPT TO THE EXTENT PROHIBITED THEREBY OR BY ANY PROGRAM DOCUMENT AND IN EFFECT
FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF.  A REFERENCE TO
LEGISLATION OR TO A PROVISION OF LEGISLATION INCLUDES A MODIFICATION OR
RE-ENACTMENT OF

 

17

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IT, A LEGISLATIVE PROVISION SUBSTITUTED FOR IT AND A REGULATION OR STATUTORY
INSTRUMENT ISSUED UNDER IT.  A REFERENCE TO WRITING INCLUDES A FACSIMILE
TRANSMISSION AND ANY MEANS OF REPRODUCING WORDS IN A TANGIBLE AND PERMANENTLY
VISIBLE FORM.  A REFERENCE TO CONDUCT INCLUDES, WITHOUT LIMITATION, AN OMISSION,
STATEMENT OR UNDERTAKING, WHETHER OR NOT IN WRITING.  THE WORDS “HEREOF”,
“HEREIN”, “HEREUNDER” AND SIMILAR WORDS REFER TO THIS AGREEMENT AS A WHOLE AND
NOT TO ANY PARTICULAR PROVISION OF THIS AGREEMENT.  THE TERM “INCLUDING” IS NOT
LIMITING AND MEANS “INCLUDING WITHOUT LIMITATION”.  IN THE COMPUTATION OF
PERIODS OF TIME FROM A SPECIFIED DATE TO A LATER SPECIFIED DATE, THE WORD “FROM”
MEANS “FROM AND INCLUDING”, THE WORDS “TO” AND “UNTIL” EACH MEAN “TO BUT
EXCLUDING”, AND THE WORD “THROUGH” MEANS “TO AND INCLUDING”.

 

Except where otherwise provided in this Agreement, any determination, consent,
approval, statement or certificate made or confirmed in writing with notice to
Seller by Buyer or an authorized officer of Buyer provided for in this Agreement
is conclusive and binds the parties in the absence of manifest error. A
reference to an agreement includes a security interest, guarantee, agreement or
legally enforceable arrangement whether or not in writing related to such
agreement.

 

A reference to a document includes an agreement (as so defined) in writing or a
certificate, notice, instrument or document, or any information recorded in
computer disk form.  Where Seller is required to provide any document to Buyer
under the terms of this Agreement, the relevant document shall be provided in
writing or printed form unless Buyer requests otherwise.  At the request of
Buyer, the document shall be provided in computer disk form or both printed and
computer disk form.

 

This Agreement is the result of negotiations among, and has been reviewed by
counsel to, Buyer and Seller, and is the product of all parties.  In the
interpretation of this Agreement, no rule of construction shall apply to
disadvantage one party on the ground that such party proposed or was involved in
the preparation of any particular provision of this Agreement or this Agreement
itself.  Except where otherwise expressly stated, Buyer may give or withhold, or
give conditionally, approvals and consents and may form opinions and make
determinations at its absolute discretion.  Any requirement of good faith,
discretion or judgment by Buyer shall not be construed to require Buyer to
request or await receipt of information or documentation not immediately
available from or with respect to Seller, a servicer of the Purchased Loans, any
other Person or the Purchased Loans themselves.

 

3.             THE TRANSACTIONS

 

(A)           BUYER SHALL, FROM TIME TO TIME ENTER INTO TRANSACTIONS WITH AN
AGGREGATE PURCHASE PRICE FOR ALL PURCHASED LOANS ACQUIRED BY BUYER NOT TO EXCEED
THE MAXIMUM AGGREGATE PURCHASE PRICE, SUBJECT TO THE TERMS AND CONDITIONS OF THE
PROGRAM DOCUMENTS, AND FURTHER SUBJECT TO THE FOLLOWING LIMITATIONS: 

 

(I)            THE BUYER SHALL ENTER INTO TRANSACTIONS WITH AAMES INVESTMENT AND
AAMES CAPITAL WITH RESPECT TO ELIGIBLE LOANS THAT ARE DRY LOANS ON ANY BUSINESS
DAY, WITH AN AGGREGATE OUTSTANDING PURCHASE PRICE AT ANY TIME UP TO, BUT NOT
EXCEEDING THE LESSER OF (A) THE MAXIMUM AGGREGATE PURCHASE PRICE, LESS THE SUM
OF (1) THE AGGREGATE OUTSTANDING PURCHASE PRICE OF ANY PURCHASED LOANS THAT ARE
THEN SUBJECT TO TRANSACTIONS

 

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BETWEEN THE BUYER AND AAMES FUNDING CORPORATION AND (2) THE AGGREGATE
OUTSTANDING PURCHASE PRICE OF ANY WET LOANS THAT ARE THEN SUBJECT TO
TRANSACTIONS, OR (B) THE AGGREGATE OUTSTANDING PURCHASE PRICE OF ALL PURCHASED
LOANS THEN SUBJECT TO TRANSACTIONS.  THE BUYER SHALL NOT BE REQUIRED TO ENTER
INTO MORE THAN ONE (1) TRANSACTION WITH RESPECT TO DRY LOANS IN ANY BUSINESS
DAY.

 

(ii)           The Buyer shall enter into Transactions with Aames Funding on any
Business Day, with an aggregate outstanding Purchase Price at any time up to,
but not exceeding $1,000,000; provided that in connection with any such
Transaction between the Buyer and Aames Funding, Aames Funding shall, in
addition to transferring the Purchased Loans that are subject to such
Transaction to Buyer, pledge to the Buyer Cash Equivalents with a face value
equal to the aggregate outstanding principal balance of such Purchased Loans. 
The Buyer shall not be required to enter into more than one (1) Transaction with
Aames Funding in any one-week period.

 

(iii)          The Buyer may, in its sole discretion, enter into up to three (3)
Transactions with the Sellers in any one (1) Business Day with respect to Wet
Loans. 

 

(B)           UNLESS OTHERWISE AGREED, SELLERS SHALL REQUEST THAT BUYER ENTER
INTO A TRANSACTION BY DELIVERING (I) A TRANSACTION NOTICE SUBSTANTIALLY IN THE
FORM OF EXHIBIT D HERETO (A “TRANSACTION NOTICE”), APPROPRIATELY COMPLETED, AND
A LOAN SCHEDULE TO BUYER AND CUSTODIAN, AND (II) THE MORTGAGE FILE TO
CUSTODIAN FOR EACH LOAN PROPOSED TO BE INCLUDED IN SUCH TRANSACTION, WHICH
TRANSACTION NOTICE AND LOAN SCHEDULE MUST BE RECEIVED NO LATER THAN 2:00 P.M.
(NEW YORK CITY TIME) ONE BUSINESS DAY PRIOR TO THE REQUESTED PURCHASE DATE WITH
RESPECT TO DRY LOANS AND NO LATER THAN 3:00 P.M. (NEW YORK CITY TIME) WITH
RESPECT TO WET LOANS. SUCH TRANSACTION NOTICE SHALL CLEARLY INDICATE THOSE LOANS
THAT ARE INTENDED TO BE WET LOANS AND DRY LOANS AND INCLUDE A LOAN SCHEDULE IN
RESPECT OF THE ELIGIBLE LOANS THAT THE RELATED SELLER PROPOSES TO INCLUDE IN THE
RELATED TRANSACTION. EACH TRANSACTION NOTICE SHALL SPECIFY THE PROPOSED PURCHASE
DATE, PURCHASE PRICE, PRICING RATE AND REPURCHASE DATE. SELLERS AGREE TO
IMMEDIATELY REPORT TO CUSTODIAN AND THE BUYER BY FACSIMILE TRANSMISSION WITHIN
ONE BUSINESS DAY OF DISCOVERY THAT ANY WET LOANS THAT WERE PREVIOUSLY SUBJECT TO
A TRANSACTION DO NOT CLOSE FOR ANY REASON INCLUDING, BUT NOT LIMITED TO, A
RESCISSION.  IN THE EVENT THAT THE PARTIES HERETO DESIRE TO ENTER INTO A
TRANSACTION, THE BUYER SHALL DELIVER TO THE RELATED SELLER, IN ELECTRONIC OR
OTHER FORMAT, A “CONFIRMATION” SPECIFYING SUCH TERMS, INCLUDING, WITHOUT
LIMITATION, THE PURCHASE DATE, THE PURCHASE PRICE, THE PRICING RATE THEREFOR AND
THE REPURCHASE DATE.  ANY SUCH CONFIRMATION AND THE RELATED TRANSACTION NOTICE,
TOGETHER WITH THIS AGREEMENT, SHALL CONSTITUTE CONCLUSIVE EVIDENCE OF THE TERMS
AGREED TO BETWEEN BUYER AND RELATED SELLER WITH RESPECT TO THE TRANSACTION TO
WHICH THE CONFIRMATION RELATES.  BY ENTERING IN TO A TRANSACTION WITH THE BUYER,
THE RELATED SELLER CONSENTS TO THE TERMS SET FORTH IN THE RELATED CONFIRMATION. 
IN THE EVENT OF ANY CONFLICT BETWEEN THIS AGREEMENT AND A CONFIRMATION, THE
TERMS OF THE CONFIRMATION SHALL CONTROL WITH RESPECT TO THE RELATED
TRANSACTION. 

 

(C)           PURSUANT TO THE CUSTODIAL AGREEMENT, THE CUSTODIAN SHALL REVIEW
ANY REQUIRED DOCUMENTS DELIVERED PRIOR TO 12:00 P.M. (NEW YORK CITY TIME) ON ANY
BUSINESS DAY ON THE SAME DAY.  NOT LATER THAN 5:30 P.M. (NEW YORK CITY TIME) ON
EACH BUSINESS DAY, THE CUSTODIAN SHALL DELIVER TO THE BUYER, VIA ELECTRONIC
TRANSMISSION ACCEPTABLE TO THE BUYER, THE CUSTODIAN LOAN TRANSMISSION AND AN
EXCEPTION REPORT SHOWING THE STATUS OF ALL LOANS THEN HELD BY THE

 

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CUSTODIAN, INCLUDING BUT NOT LIMITED TO THE WET LOANS AND DRY LOANS WHICH ARE
SUBJECT TO EXCEPTIONS, AND THE TIME THE RELATED LOAN DOCUMENTS HAVE BEEN
RELEASED PURSUANT TO SECTIONS 5(A) OR 5(B) OF THE CUSTODIAL AGREEMENT.  IN
ADDITION, THE CUSTODIAN SHALL DELIVER TO THE BUYER NO LATER THAN 5:30 P.M. (NEW
YORK CITY TIME) BY FACSIMILE TRANSMISSION ON EACH PURCHASE DATE, ONE OR MORE
TRUST RECEIPTS (AS DEFINED IN THE CUSTODIAL AGREEMENT) RELATING TO EITHER WET
LOANS OR DRY LOANS. THE ORIGINAL COPIES OF SUCH TRUST RECEIPTS SHALL BE
DELIVERED TO JPMORGAN CHASE BANK AT FOUR NEW YORK PLAZA, GROUND FLOOR,
OUTSOURCING DEPARTMENT, NEW YORK, NEW YORK 10004, ATTENTION: JENNIFER JOHN FOR
THE ACCOUNT OF GREENWICH CAPITAL MARKETS, TELEPHONE NUMBER (212) 623-5953, AS
AGENT FOR THE BUYER BY OVERNIGHT DELIVERY USING A NATIONALLY RECOGNIZED INSURED
OVERNIGHT DELIVERY SERVICE.

 

(D)           (I) UPON A SELLER’S REQUEST TO ENTER INTO A TRANSACTION WITH
RESPECT TO DRY LOANS PURSUANT TO SECTIONS 3(B), BUYER SHALL, ASSUMING ALL
CONDITIONS PRECEDENT SET FORTH IN THIS SECTION 3 AND IN SECTIONS 9(A) AND (B)
HAVE BEEN MET, AND PROVIDED NO DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING,
NOT LATER THAN 5:00 P.M. (NEW YORK CITY TIME) ON THE REQUESTED PURCHASE DATE
PURCHASE THE ELIGIBLE LOANS INCLUDED IN THE RELATED TRANSACTION NOTICE BY
TRANSFERRING, VIA WIRE TRANSFER (PURSUANT TO WIRE TRANSFER INSTRUCTIONS PROVIDED
BY THE SELLER ON OR PRIOR TO SUCH PURCHASE DATE), THE PURCHASE PRICE.

 

(ii)           Upon a Seller’s request to enter into a Transaction with respect
to Wet Loans pursuant to Section 3(b), Buyer may, in its sole discretion,
assuming all conditions precedent set forth in this Section 3 and in Sections
9(a) and (b) have been met, and provided no Default shall have occurred and be
continuing, not later than 3:30 p.m. (New York City time) on the requested
Purchase Date purchase the Eligible Loans included in the related Transaction
Notice by transferring, via wire transfer (pursuant to wire transfer
instructions provided by the Seller on or prior to such Purchase Date), the
Purchase Price.  With respect to any Transaction with respect to Wet Loans, the
Purchase Price shall be disbursed to the Settlement Agent from the Disbursement
Account.  Accordingly, in connection with any Wet Loan, the Sellers shall be
required to deposit in the Disbursement Account prior to the closing of such
Loan an amount equal to the excess of (i) the amount required to be remitted in
connection with the closing of such Loan over (ii) the related Purchase Price to
be paid to such Seller by Buyer for such Loan.  No later than one Business Day
following the related Purchase Date for each Wet Loan, the Sellers shall provide
to the Buyer a complete Loan Data Transmission with respect to each Wet Loan
subject to a Transaction, which Loan Data Transmission shall contain all fields
required for Dry Loans.  The Buyer and the Sellers agree that the procedures for
requesting and entering into a Transaction with respect to Wet Loans may be
modified from time to time by a written agreement executed by the Buyer and the
Sellers.

 

(E)           ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, IF, ON OR PRIOR
TO THE DETERMINATION OF ANY LIBO BASE RATE:

 

(I)       THE BUYER DETERMINES, WHICH DETERMINATION SHALL BE CONCLUSIVE, THAT
QUOTATIONS OF INTEREST RATES FOR THE RELEVANT DEPOSITS REFERRED TO IN THE
DEFINITION OF “LIBO BASE RATE” IN SECTION 2 ARE NOT BEING PROVIDED IN THE
RELEVANT AMOUNTS OR FOR THE RELEVANT MATURITIES FOR PURPOSES OF DETERMINING
RATES OF INTEREST FOR TRANSACTIONS AS PROVIDED HEREIN; OR

 

(II)      THE BUYER DETERMINES, WHICH DETERMINATION SHALL BE CONCLUSIVE, THAT
THE

 

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APPLICABLE MARGIN PLUS THE RELEVANT RATE OF INTEREST REFERRED TO IN THE
DEFINITION OF “LIBO BASE RATE” IN SECTION 2 UPON THE BASIS OF WHICH THE RATE OF
INTEREST FOR TRANSACTIONS IS TO BE DETERMINED IS NOT LIKELY ADEQUATELY TO COVER
THE COST TO THE BUYER OF PURCHASING AND HOLDING LOANS HEREUNDER; OR

 

(III)     IT BECOMES UNLAWFUL FOR BUYER TO ENTER INTO TRANSACTIONS WITH A
PRICING RATE BASED ON THE LIBO BASE RATE;

 

then the Buyer shall give the related Seller prompt notice thereof and, so long
as such condition remains in effect, the Buyer shall be under no obligation to
purchase Loans hereunder, and the related Seller shall, at its option, either
repurchase such Loans or pay a Pricing Rate at a rate per annum as determined by
the Buyer taking into account the increased cost to the Buyer of purchasing and
holding the Loans.

 

(F)            SELLERS SHALL REPURCHASE PURCHASED LOANS FROM BUYER ON EACH
RELATED REPURCHASE DATE.  EACH OBLIGATION TO REPURCHASE EXISTS WITHOUT REGARD TO
ANY PRIOR OR INTERVENING LIQUIDATION OR FORECLOSURE WITH RESPECT TO ANY
PURCHASED LOAN.  SELLERS ARE OBLIGATED TO OBTAIN THE PURCHASED LOANS FROM BUYER
OR ITS DESIGNEE (INCLUDING THE CUSTODIAN) AT SELLERS’ EXPENSE ON (OR AFTER) THE
RELATED REPURCHASE DATE.

 

(G)           PROVIDED THAT THE APPLICABLE CONDITIONS IN SECTIONS 9(A) AND (B)
HAVE BEEN SATISFIED, SELLERS MAY REQUEST THAT A PURCHASED LOAN THAT IS
REPURCHASED BY SELLERS ON THE REPURCHASE DATE BECOME SUBJECT TO A NEW
TRANSACTION BY DELIVERING NOTICE OF SUCH REQUEST TO BUYER WITH A COPY TO
CUSTODIAN NOT LATER THAN 11:00 A.M. NEW YORK CITY TIME AT LEAST TWO (2) BUSINESS
DAY PRIOR TO ANY SUCH REPURCHASE DATE.  BUYER SHALL PURCHASE THE RELATED
ELIGIBLE LOANS PURSUANT TO THE PROCEDURES SET FORTH IN SECTION 3(D).  FOR EACH
NEW TRANSACTION, UNLESS OTHERWISE AGREED, (Y) THE ACCRUED AND UNPAID PRICE
DIFFERENTIAL SHALL BE SETTLED IN CASH ON EACH RELATED REPURCHASE DATE, AND (Z)
THE PRICING RATE SHALL BE AS SET FORTH IN THE PRICING SIDE LETTER.

 

(H)           IF THE SELLERS INTEND TO REPURCHASE ANY LOANS ON ANY DAY WHICH IS
NOT A REPURCHASE DATE, THE SELLERS SHALL GIVE ONE (1) BUSINESS DAY’S PRIOR
WRITTEN NOTICE THEREOF TO THE BUYER.  IF SUCH NOTICE IS GIVEN, THE REPURCHASE
PRICE SPECIFIED IN SUCH NOTICE SHALL BE DUE AND PAYABLE ON THE DATE SPECIFIED
THEREIN, TOGETHER WITH THE PRICE DIFFERENTIAL TO SUCH DATE ON THE AMOUNT
PREPAID.  SUCH EARLY REPURCHASES SHALL BE IN AN AGGREGATE PRINCIPAL AMOUNT OF AT
LEAST $100,000.

 

(I)            IF SELLERS REPURCHASE PURCHASED LOANS OTHER THAN AS PROVIDED IN
SECTION 3(H) ABOVE, SELLERS SHALL INDEMNIFY BUYER AND HOLD BUYER HARMLESS FROM
ANY ACTUAL LOSS OR EXPENSE WHICH BUYER MAY SUSTAIN OR INCUR ARISING FROM (A) THE
RE-EMPLOYMENT OF FUNDS OBTAINED BY BUYER TO PERFORM HEREUNDER OR FROM (B) FEES
PAYABLE TO TERMINATE THE DEPOSITS FROM WHICH SUCH FUNDS WERE OBTAINED (“BREAKAGE
COSTS”), IN EITHER CASE, WHICH ACTUAL LOSS OR EXPENSE SHALL BE EQUAL TO THE
EXCESS, AS REASONABLY DETERMINED BY THE LENDER OF (I) ITS COST OF OBTAINING
FUNDS TO PERFORM UNDER SUCH TRANSACTIONS FOR THE PERIOD FROM THE DATE OF SUCH
PAYMENT THROUGH THE FOLLOWING REPURCHASE DATE OVER (II) THE AMOUNT OF INTEREST
LIKELY TO BE REALIZED BY LENDER IN REDEPLOYING THE FUNDS NO UTILIZED BY REASON
OF SUCH PAYMENT FOR SUCH PERIOD.  BUYER SHALL DELIVER TO SELLERS A STATEMENT
SETTING FORTH THE AMOUNT AND BASIS OF DETERMINATION OF ANY BREAKAGE COSTS IN
SUCH DETAIL AS DETERMINED IN GOOD FAITH BY BUYER TO BE ADEQUATE, IT BEING AGREED
THAT SUCH

 

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STATEMENT AND THE METHOD OF ITS CALCULATION SHALL BE ADEQUATE AND SHALL BE
CONCLUSIVE AND BINDING UPON SELLERS, ABSENT MANIFEST ERROR.  THE PROVISIONS OF
THIS SECTION 3(I) SHALL SURVIVE TERMINATION OF THIS AGREEMENT AND THE REPURCHASE
OF ALL PURCHASED LOANS SUBJECT TO TRANSACTIONS HEREUNDER.

 

(J)            IF ANY REQUIREMENT OF LAW (OTHER THAN WITH RESPECT TO ANY
AMENDMENT MADE TO THE BUYER’S CERTIFICATE OF INCORPORATION AND BY-LAWS OR OTHER
ORGANIZATIONAL OR GOVERNING DOCUMENTS) OR ANY CHANGE IN THE INTERPRETATION OR
APPLICATION THEREOF OR COMPLIANCE BY THE BUYER WITH ANY REQUEST OR DIRECTIVE
(WHETHER OR NOT HAVING THE FORCE OF LAW) FROM ANY CENTRAL BANK OR OTHER
GOVERNMENTAL AUTHORITY MADE SUBSEQUENT TO THE DATE HEREOF:

 

(I)       SHALL SUBJECT THE BUYER TO ANY TAX OF ANY KIND WHATSOEVER WITH RESPECT
TO THIS AGREEMENT OR ANY LOANS PURCHASED PURSUANT TO IT (EXCLUDING NET INCOME
TAXES) OR CHANGE THE BASIS OF TAXATION OF PAYMENTS TO THE BUYER IN RESPECT
THEREOF;

 

(II)      SHALL IMPOSE, MODIFY OR HOLD APPLICABLE ANY RESERVE, SPECIAL DEPOSIT,
COMPULSORY ADVANCE OR SIMILAR REQUIREMENT AGAINST ASSETS HELD BY DEPOSITS OR
OTHER LIABILITIES IN OR FOR THE ACCOUNT OF TRANSACTIONS OR EXTENSIONS OF CREDIT
BY, OR ANY OTHER ACQUISITION OF FUNDS BY ANY OFFICE OF THE BUYER WHICH IS NOT
OTHERWISE INCLUDED IN THE DETERMINATION OF THE LIBO BASE RATE HEREUNDER;

 

(III)     SHALL IMPOSE ON THE BUYER ANY OTHER CONDITION;

 

and the result of any of the foregoing is to increase the cost to the Buyer, by
an amount which the Buyer deems to be material, of effecting or maintaining
purchases hereunder, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Sellers shall promptly pay the Buyer such
additional amount or amounts as will compensate the Buyer for such increased
cost or reduced amount receivable thereafter incurred or shall repurchase all of
the Purchased Loans then subject to outstanding Transactions.  Any payment or
repurchase made by the Sellers as a result of this paragraph shall not be
subject to the provisions of Section 3(i).

 

If the Buyer shall have determined that the adoption of or any change in any
Requirement of Law (other than with respect to any amendment made to the Buyer’s
certificate of incorporation and by-laws or other organizational or governing
documents) regarding capital adequacy or in the interpretation or application
thereof or compliance by the Buyer or any corporation controlling the Buyer with
any request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date hereof
shall have the effect of reducing the rate of return on the Buyer’s or such
corporation’s capital as a consequence of its obligations hereunder to a level
below that which the Buyer or such corporation (taking into consideration the
Buyer’s or such corporation’s policies with respect to capital adequacy) by an
amount deemed by the Buyer to be material, then from time to time, the Seller
shall promptly pay to the Buyer such additional amount or amounts as will
thereafter compensate the Buyer for such reduction or shall repurchase all of
the Purchased Loans then subject to outstanding Transactions. Any payment or
repurchase made by the Sellers as a result of this paragraph shall not be
subject to the provisions of Section 3(i).

 

If the Buyer becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify the Sellers of the event by reason of which
it has become so

 

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entitled.  A certificate as to any additional amounts payable pursuant to this
subsection submitted by the Buyer to the Sellers shall be conclusive in the
absence of manifest error.

 

4.             PAYMENT AND TRANSFER

 

(A)           PAYMENTS.  EXCEPT TO THE EXTENT OTHERWISE PROVIDED HEREIN, ALL
PAYMENTS TO BE MADE BY THE SELLER UNDER THIS AGREEMENT SHALL BE MADE IN DOLLARS,
IN IMMEDIATELY AVAILABLE FUNDS, WITHOUT DEDUCTION, SET-OFF OR COUNTERCLAIM, TO
THE BUYER AT THE FOLLOWING ACCOUNT MAINTAINED BY THE BUYER AT JPMORGAN CHASE
BANK ACCOUNT NUMBER 140095961, FOR THE A/C OF GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., ABA# 021000021, ATTN: BRETT KIBBE, NOT LATER THAN 2:00 P.M., NEW
YORK CITY TIME, ON THE DATE ON WHICH SUCH PAYMENT SHALL BECOME DUE (EACH SUCH
PAYMENT MADE AFTER SUCH TIME ON SUCH DUE DATE TO BE DEEMED TO HAVE BEEN MADE ON
THE NEXT SUCCEEDING BUSINESS DAY). EACH SELLER ACKNOWLEDGES THAT IT HAS NO
RIGHTS OF WITHDRAWAL FROM THE FOREGOING ACCOUNT.

 

(B)           COMPUTATIONS.  THE PRICING DIFFERENTIAL SHALL BE COMPUTED ON THE
BASIS OF A 360-DAY YEAR FOR THE ACTUAL DAYS ELAPSED (INCLUDING THE FIRST DAY BUT
EXCLUDING THE LAST DAY) OCCURRING IN THE PERIOD FOR WHICH PAYABLE.

 

5.             TAXES; TAX TREATMENT

 

(A)           ALL PAYMENTS MADE BY THE SELLERS UNDER THIS AGREEMENT SHALL BE
MADE FREE AND CLEAR OF, AND WITHOUT DEDUCTION OR WITHHOLDING FOR OR ON ACCOUNT
OF, ANY PRESENT OR FUTURE TAXES, LEVIES, IMPOSTS, DEDUCTIONS, CHARGES OR
WITHHOLDINGS, AND ALL LIABILITIES (INCLUDING PENALTIES, INTEREST AND ADDITIONS
TO TAX) WITH RESPECT THERETO IMPOSED BY ANY GOVERNMENTAL AUTHORITY, EXCLUDING
INCOME TAXES, BRANCH PROFITS TAXES, FRANCHISE TAXES OR ANY OTHER TAX IMPOSED ON
THE NET INCOME BY THE UNITED STATES, A STATE OR A FOREIGN JURISDICTION UNDER THE
LAWS OF WHICH THE BUYER IS ORGANIZED OR OF ITS APPLICABLE LENDING OFFICE, OR ANY
POLITICAL SUBDIVISION THEREOF (COLLECTIVELY, “TAXES”), ALL OF WHICH SHALL BE
PAID BY THE RELATED SELLER FOR ITS OWN ACCOUNT NOT LATER THAN THE DATE WHEN
DUE.  IF ANY SELLER IS REQUIRED BY LAW OR REGULATION TO DEDUCT OR WITHHOLD ANY
TAXES FROM OR IN RESPECT OF ANY AMOUNT PAYABLE HEREUNDER, IT SHALL: (A) MAKE
SUCH DEDUCTION OR WITHHOLDING; (B) PAY THE AMOUNT SO DEDUCTED OR WITHHELD TO THE
APPROPRIATE GOVERNMENTAL AUTHORITY NOT LATER THAN THE DATE WHEN DUE; (C) DELIVER
TO BUYER, PROMPTLY, ORIGINAL TAX RECEIPTS AND OTHER EVIDENCE SATISFACTORY TO
BUYER OF THE PAYMENT WHEN DUE OF THE FULL AMOUNT OF SUCH TAXES; AND (D) PAY TO
THE BUYER SUCH ADDITIONAL AMOUNTS AS MAY BE NECESSARY SO THAT SUCH BUYER
RECEIVES, FREE AND CLEAR OF ALL TAXES, A NET AMOUNT EQUAL TO THE AMOUNT IT WOULD
HAVE RECEIVED UNDER THIS AGREEMENT, AS IF NO SUCH DEDUCTION OR WITHHOLDING HAD
BEEN MADE.

 

(B)           IN ADDITION, EACH SELLER AGREES TO PAY TO THE RELEVANT
GOVERNMENTAL AUTHORITY IN ACCORDANCE WITH APPLICABLE LAW ANY CURRENT OR FUTURE
STAMP OR DOCUMENTARY TAXES OR ANY OTHER EXCISE OR PROPERTY TAXES, CHARGES OR
SIMILAR LEVIES (INCLUDING, WITHOUT LIMITATION, MORTGAGE RECORDING TAXES,
TRANSFER TAXES AND SIMILAR FEES) IMPOSED BY THE UNITED STATES OR ANY TAXING
AUTHORITY THEREOF OR THEREIN THAT ARISE FROM ANY PAYMENT MADE HEREUNDER OR FROM
THE EXECUTION, DELIVERY OR REGISTRATION OF, OR OTHERWISE WITH RESPECT TO, THIS
AGREEMENT (“OTHER TAXES”).

 

(C)           EACH SELLER AGREES TO INDEMNIFY THE BUYER FOR THE FULL AMOUNT OF
TAXES (INCLUDING ADDITIONAL AMOUNTS WITH RESPECT THERETO) AND OTHER TAXES, AND
THE FULL AMOUNT OF TAXES OF ANY

 

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KIND IMPOSED BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 5, AND
ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR
WITH RESPECT THERETO, PROVIDED THAT THE BUYER SHALL HAVE PROVIDED THE SELLER
WITH EVIDENCE, REASONABLY SATISFACTORY TO THE SELLER, OF PAYMENT OF TAXES OR
OTHER TAXES, AS THE CASE MAY BE.

 

(D)           ANY FOREIGN BUYER SHALL PROVIDE THE SELLER WITH PROPERLY COMPLETED
IRS FORM W-8BEN OR W-8ECI OR ANY SUCCESSOR FORM PRESCRIBED BY THE IRS,
CERTIFYING THAT SUCH FOREIGN BUYER IS ENTITLED TO BENEFITS UNDER AN INCOME TAX
TREATY TO WHICH THE UNITED STATES IS A PARTY WHICH REDUCES THE RATE OF
WITHHOLDING TAX ON PAYMENTS OF INTEREST OR CERTIFYING THAT THE INCOME RECEIVABLE
PURSUANT TO THIS AGREEMENT IS EFFECTIVELY CONNECTED WITH THE CONDUCT OF A TRADE
OR BUSINESS IN THE UNITED STATES ON OR PRIOR TO THE DATE UPON WHICH EACH SUCH
FOREIGN BUYER BECOMES A BUYER.  EACH FOREIGN BUYER WILL RESUBMIT THE APPROPRIATE
FORM ON THE EARLIEST OF (A) THE THIRD ANNIVERSARY OF THE PRIOR SUBMISSION OR (B)
ON OR BEFORE THE EXPIRATION OF THIRTY (30) DAYS AFTER THERE IS A “CHANGE IN
CIRCUMSTANCES” WITH RESPECT TO SUCH FOREIGN BUYER AS DEFINED IN TREAS. REG.
SECTION 1.1441(E)(4)(II)(D).  FOR ANY PERIOD WITH RESPECT TO WHICH A FOREIGN
BUYER HAS FAILED TO PROVIDE THE SELLER WITH THE APPROPRIATE FORM OR OTHER
RELEVANT DOCUMENT PURSUANT TO THIS SECTION 5(D) (UNLESS SUCH FAILURE IS DUE TO A
CHANGE IN TREATY, LAW, OR REGULATION OCCURRING SUBSEQUENT TO THE DATE ON WHICH A
FORM ORIGINALLY WAS REQUIRED TO BE PROVIDED), SUCH FOREIGN BUYER SHALL NOT BE
ENTITLED TO ANY “GROSS-UP” OF TAXES OR INDEMNIFICATION UNDER SECTION 5(C) WITH
RESPECT TO TAXES IMPOSED BY THE UNITED STATES; PROVIDED, HOWEVER, THAT SHOULD A
FOREIGN BUYER, WHICH IS OTHERWISE EXEMPT FROM A WITHHOLDING TAX, BECOME SUBJECT
TO TAXES BECAUSE OF ITS FAILURE TO DELIVER A FORM REQUIRED HEREUNDER, THE SELLER
SHALL TAKE SUCH STEPS AS SUCH FOREIGN BUYER SHALL REASONABLY REQUEST TO ASSIST
SUCH FOREIGN BUYER TO RECOVER SUCH TAXES.

 

(E)           WITHOUT PREJUDICE TO THE SURVIVAL OR ANY OTHER AGREEMENT OF ANY
SELLER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF SELLERS CONTAINED IN THIS
SECTION 5 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.  NOTHING CONTAINED IN
THIS SECTION 5 SHALL REQUIRE BUYER TO MAKE AVAILABLE ANY OF ITS TAX RETURNS OR
OTHER INFORMATION THAT IT DEEMS TO BE CONFIDENTIAL OR PROPRIETARY.

 

(F)            EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT IT IS ITS INTENT
FOR PURPOSES OF U.S. FEDERAL, STATE AND LOCAL INCOME AND FRANCHISE TAXES TO
TREAT EACH TRANSACTION AS INDEBTEDNESS OF SELLER THAT IS SECURED BY THE
PURCHASED LOANS AND THAT THE PURCHASED LOANS ARE OWNED BY SELLER IN THE ABSENCE
OF AN EVENT OF DEFAULT BY SELLER.  ALL PARTIES TO THIS AGREEMENT AGREE TO SUCH
TREATMENT AND AGREE TO TAKE NO ACTION INCONSISTENT WITH THIS TREATMENT, UNLESS
REQUIRED BY LAW.

 

6.             MARGIN MAINTENANCE

 

(A)           IF AT ANY TIME EITHER (I) THE AGGREGATE MARKET VALUE OF ALL
PURCHASED LOANS SUBJECT TO ALL TRANSACTIONS IS LESS THAN THE AGGREGATE MV MARGIN
AMOUNT FOR ALL SUCH TRANSACTIONS, OR (II) THE AGGREGATE UNPAID PRINCIPAL BALANCE
OF THE PURCHASED LOANS FOR ALL TRANSACTIONS IS LESS THAN THE AGGREGATE PAR
MARGIN AMOUNT FOR ALL SUCH TRANSACTIONS (EITHER SUCH EVENT, A “MARGIN DEFICIT”),
THEN THE BUYER MAY, BY NOTICE TO SELLERS, REQUIRE SELLERS IN SUCH TRANSACTIONS
TO TRANSFER TO THE BUYER CASH OR, AT THE BUYER’S OPTION (AND PROVIDED SELLERS
HAVE ADDITIONAL ELIGIBLE LOANS), ADDITIONAL ELIGIBLE LOANS (“ADDITIONAL
PURCHASED LOANS”) WITHIN ONE (1) BUSINESS DAY OF SUCH NOTICE BY BUYER, SO THAT
BOTH (X) THE CASH AND AGGREGATE MARKET VALUE OF THE PURCHASED LOANS, INCLUDING
ANY SUCH ADDITIONAL PURCHASED LOANS, WILL THEREUPON EQUAL OR EXCEED SUCH

 

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AGGREGATE MV MARGIN AMOUNT, AND (Y) THE CASH AND UNPAID PRINCIPAL BALANCE OF
SUCH PURCHASED LOANS, INCLUDING ANY SUCH ADDITIONAL PURCHASED LOANS AND
PURCHASED LOANS, WILL THEREFORE EQUAL OR EXCEED SUCH AGGREGATE PAR MARGIN AMOUNT
(EITHER REQUIREMENT, A “MARGIN CALL”); PROVIDED THAT IF SELLERS TRANSFER CASH,
BUYER SHALL DEPOSIT SUCH CASH INTO A NON-INTEREST BEARING ACCOUNT UNTIL THE NEXT
SUCCEEDING REPURCHASE DATE.

 

(B)           NOTICE REQUIRED PURSUANT TO SECTION 6(A) MAY BE GIVEN BY ANY MEANS
PROVIDED IN SECTION 21 HEREOF.  ANY NOTICE GIVEN ON A BUSINESS DAY PRECEDING
1:00 P.M. (NEW YORK CITY TIME) SHALL BE MET, AND THE RELATED MARGIN CALL
SATISFIED, NO LATER THAN 5:00 P.M. (NEW YORK CITY TIME) ON THE SAME BUSINESS
DAY.  ANY NOTICE GIVEN ON A BUSINESS DAY FOLLOWING 1:00 P.M. (NEW YORK CITY
TIME) SHALL BE MET, AND THE RELATED MARGIN CALL SATISFIED, NO LATER THAN 1:00
P.M. (NEW YORK CITY TIME) ON THE FOLLOWING BUSINESS DAY.  THE FAILURE OF BUYER,
ON ANY ONE OR MORE OCCASIONS, TO EXERCISE ITS RIGHTS UNDER THIS SECTION 6, SHALL
NOT CHANGE OR ALTER THE TERMS AND CONDITIONS TO WHICH THIS AGREEMENT IS SUBJECT
OR LIMIT THE RIGHT OF BUYER TO DO SO AT A LATER DATE.  SELLERS AND BUYER EACH
AGREE THAT A FAILURE OR DELAY BY BUYER TO EXERCISE ITS RIGHTS HEREUNDER SHALL
NOT LIMIT OR WAIVE BUYER’S RIGHTS UNDER THIS AGREEMENT OR OTHERWISE EXISTING BY
LAW OR IN ANY WAY CREATE ADDITIONAL RIGHTS FOR SELLERS.

 

7.             INCOME PAYMENTS

 

Where a particular term of a Transaction extends over the date on which Income
is paid in respect of any Purchased Loan subject to that Transaction, such
Income shall be the property of Buyer. Notwithstanding the foregoing, and
provided no Default has occurred and is continuing, Buyer agrees that Sellers
shall be entitled to receive an amount equal to all Income received in respect
of the Purchased Loans, whether by Buyer, Custodian or any servicer or any other
Person, which is not otherwise received by Sellers, to the full extent it would
be so entitled if the Purchased Loans had not been sold to Buyer; provided that
any Income received by Sellers while the related Transaction is outstanding
shall be deemed to be held by Sellers solely in trust for Buyer pending the
repurchase on the related Repurchase Date.  Provided no Default has occurred,
Buyer shall, as the parties may agree with respect to any Transaction (or, in
the absence of any such agreement, as Buyer shall reasonably determine in its
sole discretion), on the Repurchase Date following the date any Income is
received by Buyer (or a servicer on its behalf) either (i) transfer (or permit
the servicer to transfer) to Sellers such Income with respect to any Purchased
Loans subject to such Transaction, or (ii) if a Margin Deficit then exists,
apply the Income payment to reduce the amount, if any, to be transferred to
Buyer by Sellers upon termination of such Transaction.  Buyer shall not be
obligated to take any action pursuant to the preceding sentences (A) to the
extent that such action would result in the creation of a Margin Deficit, unless
prior thereto or simultaneously therewith Sellers transfer to Buyer cash or
Additional Purchased Loans sufficient to eliminate such Margin Deficit, or (B)
if an Event of Default with respect to any Seller has occurred and is then
continuing at the time such Income is paid.

 

8.             SECURITY INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT

 

(A)           EACH SELLER AND BUYER INTEND THAT THE TRANSACTIONS HEREUNDER BE
SALES TO BUYER OF THE PURCHASED LOANS AND NOT LOANS FROM BUYER TO ANY SELLER
SECURED BY THE PURCHASED LOANS.  HOWEVER, IN ORDER TO PRESERVE BUYER’S RIGHTS
UNDER THIS AGREEMENT IN THE EVENT THAT A COURT OR

 

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OTHER FORUM RECHARACTERIZES THE TRANSACTIONS HEREUNDER AS OTHER THAN SALES, AND
AS SECURITY FOR EACH SELLER’S PERFORMANCE OF ALL OF ITS OBLIGATIONS, EACH SELLER
HEREBY GRANTS BUYER A FULLY PERFECTED FIRST PRIORITY SECURITY INTEREST IN THE
FOLLOWING PROPERTY, WHETHER NOW EXISTING OR HEREAFTER ACQUIRED: (I) ALL
PURCHASED LOANS IDENTIFIED ON A TRANSACTION NOTICE DELIVERED BY ANY SELLER TO
THE BUYER AND THE CUSTODIAN FROM TIME TO TIME, (II) ALL LOAN DOCUMENTS,
INCLUDING WITHOUT LIMITATION ALL PROMISSORY NOTES, AND ALL RECORDS, AND ANY
OTHER COLLATERAL PLEDGED OR OTHERWISE RELATING TO SUCH PURCHASED LOANS, TOGETHER
WITH ALL FILES, MATERIAL DOCUMENTS, INSTRUMENTS, SURVEYS (IF AVAILABLE),
CERTIFICATES, CORRESPONDENCE, APPRAISALS, COMPUTER RECORDS, COMPUTER STORAGE
MEDIA, LOAN ACCOUNTING RECORDS AND OTHER BOOKS AND RECORDS RELATING THERETO,
(III) ALL MORTGAGE GUARANTIES AND INSURANCE (ISSUED BY GOVERNMENTAL AGENCIES OR
OTHERWISE) AND ANY MORTGAGE INSURANCE CERTIFICATE OR OTHER DOCUMENT EVIDENCING
SUCH MORTGAGE GUARANTIES OR INSURANCE RELATING TO ANY PURCHASED LOANS AND ALL
CLAIMS AND PAYMENTS THEREUNDER, (IV) ALL OTHER INSURANCE POLICIES AND INSURANCE
PROCEEDS RELATING TO ANY PURCHASED LOANS OR THE RELATED MORTGAGED PROPERTY, (V)
ALL INTEREST RATE PROTECTION AGREEMENTS RELATING TO ANY OR ALL OF THE FOREGOING,
(VI) ANY PURCHASE AGREEMENTS OR OTHER AGREEMENTS OR CONTRACTS RELATING TO OR
CONSTITUTING ANY OR ALL OF THE FOREGOING, (VII) ALL PURCHASE OR TAKE-OUT
COMMITMENTS RELATING TO OR CONSTITUTING ANY OR ALL OF THE FOREGOING, (VIII) ALL
“ACCOUNTS”, “CHATTEL PAPER”, “COMMERCIAL TORT CLAIMS”, “DEPOSIT ACCOUNTS”,
“DOCUMENTS,” “EQUIVALENT”, “GENERAL INTANGIBLES”, “GOODS”, “INSTRUMENTS”,
“INVENTORY”, “INVESTMENT PROPERTY”, “LETTER OF CREDIT RIGHTS”, AND “SECURITIES’
ACCOUNTS” AS EACH OF THOSE TERMS IS DEFINED IN THE UNIFORM COMMERCIAL CODE AND
ALL CASH AND CASH EQUIVALENTS AND ALL PRODUCTS AND PROCEEDS RELATING TO OR
CONSTITUTING ANY OR ALL OF THE FOREGOING, (IX) SELLERS’ INTERESTS UNDER ANY
ESCROW LETTERS AND INSURED CLOSING LETTERS WITH RESPECT TO ANY PURCHASED LOANS,
(X) ALL INTERESTS IN REAL PROPERTY OWNED BY THE SELLERS OR COLLATERALIZING ANY
LOANS, AND (XI) ANY AND ALL REPLACEMENTS, SUBSTITUTIONS, DISTRIBUTIONS ON OR
PROCEEDS OF ANY OR ALL OF THE FOREGOING (COLLECTIVELY THE “PURCHASED ITEMS”).
EACH SELLER ACKNOWLEDGES AND AGREES THAT ITS RIGHTS WITH RESPECT TO THE
PURCHASED ITEMS (INCLUDING WITHOUT LIMITATION, ANY SECURITY INTEREST SELLERS MAY
HAVE IN THE PURCHASED LOANS AND ANY OTHER COLLATERAL GRANTED BY SELLERS TO BUYER
PURSUANT TO ANY OTHER AGREEMENT) ARE AND SHALL CONTINUE TO BE AT ALL TIMES
JUNIOR AND SUBORDINATE TO THE RIGHTS OF BUYER HEREUNDER.

 

(B)           AT ANY TIME AND FROM TIME TO TIME, UPON THE WRITTEN REQUEST OF THE
BUYER, AND AT THE SOLE EXPENSE OF THE SELLERS, THE SELLERS WILL PROMPTLY AND
DULY EXECUTE AND DELIVER, OR WILL PROMPTLY CAUSE TO BE EXECUTED AND DELIVERED,
SUCH FURTHER INSTRUMENTS AND DOCUMENTS AND TAKE SUCH FURTHER ACTION AS THE BUYER
MAY REASONABLY REQUEST FOR THE PURPOSE OF OBTAINING OR PRESERVING THE FULL
BENEFITS OF THIS AGREEMENT AND OF THE RIGHTS AND POWERS HEREIN GRANTED,
INCLUDING, WITHOUT LIMITATION, THE FILING OF ANY FINANCING OR CONTINUATION
STATEMENTS UNDER THE UNIFORM COMMERCIAL CODE IN EFFECT IN ANY JURISDICTION WITH
RESPECT TO THE PURCHASED ITEMS AND THE LIENS CREATED HEREBY.  THE SELLERS ALSO
HEREBY AUTHORIZES THE BUYER TO FILE ANY SUCH FINANCING OR CONTINUATION STATEMENT
WITHOUT THE SIGNATURE OF THE SELLERS TO THE EXTENT PERMITTED BY APPLICABLE LAW.
A CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION OF THIS AGREEMENT SHALL BE
SUFFICIENT AS A FINANCING STATEMENT FOR FILING IN ANY JURISDICTION.  THIS
AGREEMENT SHALL CONSTITUTE A SECURITY AGREEMENT UNDER APPLICABLE LAW.

 

(C)           EACH SELLER AGREES THAT IT SHALL NOT (I) CHANGE THE LOCATION OF
ITS CHIEF EXECUTIVE OFFICE/CHIEF PLACE OF BUSINESS FROM THAT SPECIFIED IN
SECTION 12(L) HEREOF, (II) CHANGE ITS NAME, IDENTITY OR CORPORATE STRUCTURE (OR
THE EQUIVALENT) OR CHANGE THE LOCATION WHERE IT MAINTAINS ITS RECORDS WITH
RESPECT TO THE PURCHASED ITEMS, OR (III) REINCORPORATE OR REORGANIZE UNDER THE
LAWS OF

 

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ANOTHER JURISDICTION UNLESS IT SHALL HAVE GIVEN THE BUYER AT LEAST 30 DAYS PRIOR
WRITTEN NOTICE THEREOF AND SHALL HAVE DELIVERED TO THE BUYER ALL UNIFORM
COMMERCIAL CODE FINANCING STATEMENTS AND AMENDMENTS THERETO AS THE BUYER SHALL
REQUEST AND TAKEN ALL OTHER ACTIONS DEEMED REASONABLY NECESSARY BY THE BUYER TO
CONTINUE ITS PERFECTED STATUS IN THE PURCHASED ITEMS WITH THE SAME OR BETTER
PRIORITY.

 

(D)           EACH SELLER HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS BUYER AND
ANY OFFICER OR AGENT THEREOF, WITH FULL POWER OF SUBSTITUTION, AS ITS TRUE AND
LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE POWER AND AUTHORITY IN THE PLACE
AND STEAD OF SUCH SELLER AND IN THE NAME OF SUCH SELLER OR IN ITS OWN NAME, FROM
TIME TO TIME IN BUYER’S DISCRETION, FOR THE PURPOSE OF CARRYING OUT THE TERMS OF
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, PROTECTING, PRESERVING AND
REALIZING UPON THE PURCHASED ITEMS, TO TAKE ANY AND ALL APPROPRIATE ACTION AND
TO EXECUTE ANY AND ALL DOCUMENTS AND INSTRUMENTS WHICH MAY BE NECESSARY OR
DESIRABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION, TO PROTECT, PRESERVE AND REALIZE UPON THE PURCHASED ITEMS, TO FILE
SUCH FINANCING STATEMENT OR STATEMENTS RELATING TO THE PURCHASED LOANS AND THE
PURCHASED ITEMS WITHOUT SUCH SELLER’S SIGNATURE THEREON AS BUYER AT ITS OPTION
MAY DEEM APPROPRIATE, AND, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SELLER HEREBY GIVES BUYER THE POWER AND RIGHT, ON BEHALF OF SUCH SELLER, WITHOUT
ASSENT BY, BUT WITH NOTICE TO, SUCH SELLER, IF AN EVENT OF DEFAULT SHALL HAVE
OCCURRED AND BE CONTINUING, TO DO THE FOLLOWING:

 

(I)       IN THE NAME OF SUCH SELLER, OR IN ITS OWN NAME, OR OTHERWISE, TO TAKE
POSSESSION OF AND ENDORSE AND COLLECT ANY CHECKS, DRAFTS, NOTES, ACCEPTANCES OR
OTHER INSTRUMENTS FOR THE PAYMENT OF MONEYS DUE WITH RESPECT TO ANY PURCHASED
LOANS AND TO FILE ANY CLAIM OR TO TAKE ANY OTHER ACTION OR PROCEEDING IN ANY
COURT OF LAW OR EQUITY OR OTHERWISE DEEMED APPROPRIATE BY BUYER FOR THE PURPOSE
OF COLLECTING ANY AND ALL SUCH MONEYS DUE WITH RESPECT TO ANY PURCHASED LOANS
WHENEVER PAYABLE;

 

(II)      TO PAY OR DISCHARGE TAXES AND LIENS LEVIED OR PLACED ON OR THREATENED
AGAINST THE PURCHASED LOANS;

 

(III)     (A) TO DIRECT ANY PARTY LIABLE FOR ANY PAYMENT UNDER ANY PURCHASED
LOANS TO MAKE PAYMENT OF ANY AND ALL MONEYS DUE OR TO BECOME DUE THEREUNDER
DIRECTLY TO BUYER OR AS BUYER SHALL DIRECT; (B) TO ASK OR DEMAND FOR, COLLECT,
RECEIVE PAYMENT OF AND RECEIPT FOR, ANY AND ALL MONEYS, CLAIMS AND OTHER AMOUNTS
DUE OR TO BECOME DUE AT ANY TIME IN RESPECT OF OR ARISING OUT OF ANY PURCHASED
LOANS; (C) TO SIGN AND ENDORSE ANY INVOICES, ASSIGNMENTS, VERIFICATIONS, NOTICES
AND OTHER DOCUMENTS IN CONNECTION WITH ANY PURCHASED LOANS; (D) TO COMMENCE AND
PROSECUTE ANY SUITS, ACTIONS OR PROCEEDINGS AT LAW OR IN EQUITY IN ANY COURT OF
COMPETENT JURISDICTION TO COLLECT THE PURCHASED LOANS OR ANY PROCEEDS THEREOF
AND TO ENFORCE ANY OTHER RIGHT IN RESPECT OF ANY PURCHASED LOANS; (E) TO DEFEND
ANY SUIT, ACTION OR PROCEEDING BROUGHT AGAINST SELLER WITH RESPECT TO ANY
PURCHASED LOANS; (F) TO SETTLE, COMPROMISE OR ADJUST ANY SUIT, ACTION OR
PROCEEDING DESCRIBED IN CLAUSE (E) ABOVE AND, IN CONNECTION THEREWITH, TO GIVE
SUCH DISCHARGES OR RELEASES AS BUYER MAY DEEM APPROPRIATE; AND (G) GENERALLY, TO
SELL, TRANSFER, PLEDGE AND MAKE ANY AGREEMENT WITH RESPECT TO OR OTHERWISE DEAL
WITH ANY PURCHASED LOANS AS FULLY AND COMPLETELY AS THOUGH BUYER WERE THE
ABSOLUTE OWNER THEREOF FOR ALL PURPOSES, AND TO DO, AT BUYER’S OPTION AND
SELLER’S EXPENSE, AT ANY TIME, AND FROM TIME TO TIME, ALL ACTS AND THINGS WHICH
BUYER DEEMS NECESSARY TO PROTECT,

 

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PRESERVE OR REALIZE UPON THE PURCHASED LOANS AND THE PURCHASED ITEMS AND BUYER’S
LIENS THEREON AND TO EFFECT THE INTENT OF THIS AGREEMENT, ALL AS FULLY AND
EFFECTIVELY AS SELLER MIGHT DO.

 

Each Seller hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof.  This power of attorney is a power coupled with an
interest and shall be irrevocable.

 

Each Seller also authorizes Buyer, if an Event of Default shall have occurred,
from time to time, to execute, in connection with any sale provided for in
Section 19 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Purchased Loans.

 

(E)           THE POWERS CONFERRED ON BUYER HEREUNDER ARE SOLELY TO PROTECT
BUYER’S INTERESTS IN THE PURCHASED LOANS AND SHALL NOT IMPOSE ANY DUTY UPON IT
TO EXERCISE ANY SUCH POWERS.  BUYER SHALL BE ACCOUNTABLE ONLY FOR AMOUNTS THAT
IT ACTUALLY RECEIVES AS A RESULT OF THE EXERCISE OF SUCH POWERS, AND NEITHER IT
NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS SHALL BE RESPONSIBLE TO
SELLER FOR ANY ACT OR FAILURE TO ACT HEREUNDER, EXCEPT FOR ITS OR THEIR OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(F)            IF THE SELLER FAILS TO PERFORM OR COMPLY WITH ANY OF ITS
AGREEMENTS CONTAINED IN THE PROGRAM DOCUMENTS AND THE BUYER MAY ITSELF PERFORM
OR COMPLY, OR OTHERWISE CAUSE PERFORMANCE OR COMPLIANCE, WITH SUCH AGREEMENT,
THE REASONABLE OUT-OF-POCKET EXPENSES OF THE BUYER INCURRED IN CONNECTION WITH
SUCH PERFORMANCE OR COMPLIANCE, TOGETHER WITH INTEREST THEREON AT A RATE PER
ANNUM EQUAL TO THE POST-DEFAULT RATE, SHALL BE PAYABLE BY THE SELLER TO THE
BUYER ON DEMAND AND SHALL CONSTITUTE OBLIGATIONS.

 

(G)           THE BUYER’S DUTY WITH RESPECT TO THE CUSTODY, SAFEKEEPING AND
PHYSICAL PRESERVATION OF THE PURCHASED ITEMS IN ITS POSSESSION, UNDER SECTION
9-207 OF THE UNIFORM COMMERCIAL CODE OR OTHERWISE, SHALL BE TO DEAL WITH IT IN
THE SAME MANNER AS THE BUYER DEALS WITH SIMILAR PROPERTY FOR ITS OWN ACCOUNT.
NEITHER THE BUYER NOR ANY OF ITS DIRECTORS, OFFICERS OR EMPLOYEES SHALL BE
LIABLE FOR FAILURE TO DEMAND, COLLECT OR REALIZE UPON ALL OR ANY PART OF THE
PURCHASED ITEMS OR FOR ANY DELAY IN DOING SO OR SHALL BE UNDER ANY OBLIGATION TO
SELL OR OTHERWISE DISPOSE OF ANY PURCHASED ITEMS UPON THE REQUEST OF THE SELLER
OR OTHERWISE.

 

(H)           ALL AUTHORIZATIONS AND AGENCIES HEREIN CONTAINED WITH RESPECT TO
THE PURCHASED ITEMS ARE IRREVOCABLE AND POWERS COUPLED WITH AN INTEREST.

 

9.             CONDITIONS PRECEDENT

 

(A)           AS CONDITIONS PRECEDENT TO THE INITIAL TRANSACTION, BUYER SHALL
HAVE RECEIVED ON OR BEFORE THE DATE ON WHICH SUCH INITIAL TRANSACTION IS
CONSUMMATED THE FOLLOWING, IN FORM AND SUBSTANCE SATISFACTORY TO BUYER AND DULY
EXECUTED BY EACH PARTY THERETO (AS APPLICABLE):

 

(I)       PROGRAM DOCUMENTS. THE PROGRAM DOCUMENTS DULY EXECUTED AND DELIVERED
BY THE SELLER THERETO AND BEING IN FULL FORCE AND EFFECT, FREE OF ANY
MODIFICATION, BREACH OR WAIVER.

 

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(II)      ORGANIZATIONAL DOCUMENTS.  A GOOD STANDING CERTIFICATE AND CERTIFIED
COPIES OF THE CHARTER AND BY-LAWS (OR EQUIVALENT DOCUMENTS) OF EACH SELLER, IN
EACH CASE DATED AS OF A RECENT DATE, BUT IN NO EVENT MORE THAN TEN (10) DAYS
PRIOR TO THE DATE OF SUCH INITIAL TRANSACTION AND OF ALL CORPORATE OR OTHER
AUTHORITY FOR THE RELATED SELLER WITH RESPECT TO THE EXECUTION, DELIVERY AND
PERFORMANCE OF THE PROGRAM DOCUMENTS AND EACH OTHER DOCUMENT TO BE DELIVERED BY
THE RELATED SELLER FROM TIME TO TIME IN CONNECTION HEREWITH (AND THE BUYER MAY
CONCLUSIVELY RELY ON SUCH CERTIFICATE UNTIL IT RECEIVES NOTICE IN WRITING FROM
THE SELLER TO THE CONTRARY).

 

(III)     INCUMBENCY CERTIFICATE.  AN INCUMBENCY CERTIFICATE OF THE SECRETARY OF
EACH SELLER CERTIFYING THE NAMES, TRUE SIGNATURES AND TITLES OF SELLER’S
REPRESENTATIVES DULY AUTHORIZED TO REQUEST TRANSACTIONS HEREUNDER AND TO EXECUTE
THE PROGRAM DOCUMENTS AND THE OTHER DOCUMENTS TO BE DELIVERED THEREUNDER;

 

(IV)     LEGAL OPINION.  A LEGAL OPINION OF COUNSEL TO THE SELLERS,
SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS EXHIBIT C.

 

(V)      FILINGS, REGISTRATIONS, RECORDINGS. (I)  ANY DOCUMENTS (INCLUDING,
WITHOUT LIMITATION, FINANCING STATEMENTS) REQUIRED TO BE FILED, REGISTERED OR
RECORDED IN ORDER TO CREATE, IN FAVOR OF THE BUYER, A PERFECTED, FIRST-PRIORITY
SECURITY INTEREST IN THE PURCHASED ITEMS, SUBJECT TO NO LIENS OTHER THAN THOSE
CREATED HEREUNDER, SHALL HAVE BEEN PROPERLY PREPARED AND EXECUTED FOR FILING
(INCLUDING THE APPLICABLE COUNTY(IES) IF THE BUYER DETERMINES SUCH FILINGS ARE
NECESSARY IN ITS REASONABLE DISCRETION), REGISTRATION OR RECORDING IN EACH
OFFICE IN EACH JURISDICTION IN WHICH SUCH FILINGS, REGISTRATIONS AND
RECORDATIONS ARE REQUIRED TO PERFECT SUCH FIRST-PRIORITY SECURITY INTEREST; AND
(II) UCC LIEN SEARCHES, DATED AS OF A RECENT DATE, IN NO EVENT MORE THAN 14 DAYS
PRIOR TO THE DATE OF SUCH INITIAL TRANSACTION, IN SUCH JURISDICTIONS AS SHALL BE
APPLICABLE TO THE SELLER AND THE PURCHASED ITEMS, THE RESULTS OF WHICH SHALL BE
SATISFACTORY TO THE BUYER.

 

(VI)     FEES AND EXPENSES. THE BUYER SHALL HAVE RECEIVED ALL FEES AND EXPENSES
REQUIRED TO BE PAID BY THE SELLERS ON OR PRIOR TO THE INITIAL PURCHASE DATE,
WHICH FEES AND EXPENSES MAY BE NETTED OUT OF ANY PURCHASE PROCEEDS PAID BY THE
BUYER HEREUNDER.

 

(VII)    FINANCIAL STATEMENTS. THE BUYER SHALL HAVE RECEIVED THE FINANCIAL
STATEMENTS REFERENCED IN SECTION 12(B).

 

(VIII)   UNDERWRITING GUIDELINES. THE BUYER AND THE SELLERS SHALL HAVE AGREED
UPON THE CURRENT UNDERWRITING GUIDELINES FOR LOANS AND THE BUYER SHALL HAVE
RECEIVED A COPY THEREOF CERTIFIED BY A RESPONSIBLE OFFICER OF EACH SELLER.

 

(IX)     CONSENTS, LICENSES, APPROVALS, ETC. THE BUYER SHALL HAVE RECEIVED
COPIES CERTIFIED BY EACH RELATED SELLER OF ALL CONSENTS, LICENSES AND APPROVALS,
IF ANY, REQUIRED IN CONNECTION WITH THE EXECUTION, DELIVERY AND PERFORMANCE BY
EACH RELATED SELLER OF, AND THE VALIDITY AND ENFORCEABILITY OF, THE LOAN
DOCUMENTS, WHICH CONSENTS, LICENSES AND APPROVALS SHALL BE IN FULL FORCE AND
EFFECT.

 

(X)      INSURANCE. THE BUYER SHALL HAVE RECEIVED EVIDENCE IN FORM AND SUBSTANCE

 

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SATISFACTORY TO THE BUYER SHOWING COMPLIANCE BY THE SELLERS AS OF SUCH INITIAL
PURCHASE DATE WITH SECTION 13(X) HEREOF.

 

(XI)     RESERVED.

 

(XII)    OTHER DOCUMENTS. THE BUYER SHALL HAVE RECEIVED SUCH OTHER DOCUMENTS AS
THE BUYER OR ITS COUNSEL MAY REASONABLY REQUEST.

 

(B)           THE OBLIGATION OF BUYER TO ENTER INTO EACH TRANSACTION PURSUANT TO
THIS AGREEMENT (INCLUDING THE INITIAL TRANSACTION) IS SUBJECT TO THE FOLLOWING
FURTHER CONDITIONS PRECEDENT, BOTH IMMEDIATELY PRIOR TO ANY TRANSACTION AND ALSO
AFTER GIVING EFFECT THERETO AND TO THE INTENDED USE THEREOF:

 

(I)       NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING.

 

(II)      BOTH IMMEDIATELY PRIOR TO ENTERING INTO SUCH TRANSACTION AND ALSO
AFTER GIVING EFFECT THERETO AND TO THE INTENDED USE OF THE PROCEEDS THEREOF, THE
REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER IN SECTION 12 AND SCHEDULE 1
HEREOF, AND IN EACH OF THE OTHER PROGRAM DOCUMENTS, SHALL BE TRUE AND COMPLETE
ON AND AS OF THE PURCHASE DATE IN ALL MATERIAL RESPECTS (IN THE CASE OF THE
REPRESENTATIONS AND WARRANTIES IN SECTION 12(V), 12(W) AND SCHEDULE 1, SOLELY
WITH RESPECT TO LOANS WHICH HAVE NOT BEEN REPURCHASED BY SELLER) WITH THE SAME
FORCE AND EFFECT AS IF MADE ON AND AS OF SUCH DATE (OR, IF ANY SUCH
REPRESENTATION OR WARRANTY IS EXPRESSLY STATED TO HAVE BEEN MADE AS OF A
SPECIFIC DATE, AS OF SUCH SPECIFIC DATE). AT THE REQUEST OF THE BUYER, THE BUYER
SHALL HAVE RECEIVED AN OFFICER’S CERTIFICATE SIGNED BY A RESPONSIBLE OFFICER OF
THE RELATED SELLER CERTIFYING AS TO THE TRUTH AND ACCURACY OF THE ABOVE, WHICH
CERTIFICATE SHALL SPECIFICALLY INCLUDE A STATEMENT THAT THE RELATED SELLER IS IN
COMPLIANCE WITH ALL GOVERNMENTAL LICENSES AND AUTHORIZATIONS AND IS QUALIFIED TO
DO BUSINESS AND IN GOOD STANDING IN ALL REQUIRED JURISDICTIONS.

 

(III)     THE THEN AGGREGATE OUTSTANDING PURCHASE PRICE FOR ALL PURCHASED LOANS,
WHEN ADDED TO THE PURCHASE PRICE FOR THE REQUESTED TRANSACTION, SHALL NOT EXCEED
THE MAXIMUM AGGREGATE PURCHASE PRICE.

 

(IV)     SUBJECT TO THE BUYER’S RIGHT TO PERFORM ONE OR MORE DUE DILIGENCE
REVIEWS PURSUANT TO SECTION 44 HEREOF, THE BUYER SHALL HAVE COMPLETED ITS DUE
DILIGENCE REVIEW OF THE LOAN DOCUMENTS FOR EACH PURCHASE AND SUCH OTHER
DOCUMENTS, RECORDS, AGREEMENTS, INSTRUMENTS, MORTGAGED PROPERTIES OR INFORMATION
RELATING TO SUCH PURCHASES AS THE BUYER IN ITS REASONABLE DISCRETION DEEMS
APPROPRIATE TO REVIEW AND SUCH REVIEW SHALL BE SATISFACTORY TO THE BUYER IN ITS
REASONABLE DISCRETION.

 

(V)      BUYER OR ITS DESIGNEE SHALL HAVE RECEIVED ON OR BEFORE THE DAY OF A
TRANSACTION WITH RESPECT TO ANY PURCHASED LOANS (UNLESS OTHERWISE SPECIFIED IN
THIS AGREEMENT) THE FOLLOWING, IN FORM AND SUBSTANCE SATISFACTORY TO BUYER AND
(IF APPLICABLE) DULY EXECUTED:

 

(A) THE TRANSACTION NOTICE AND LOAN SCHEDULE WITH RESPECT TO SUCH

 

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PURCHASED LOANS, DELIVERED PURSUANT TO SECTION 3(A);

 

(B) THE TRUST RECEIPT WITH RESPECT TO SUCH PURCHASED LOANS, WITH THE LOAN
SCHEDULE ATTACHED; AND

 

(C) SUCH CERTIFICATES, CUSTOMARY OPINIONS OF COUNSEL OR OTHER DOCUMENTS AS BUYER
MAY REASONABLY REQUEST, PROVIDED THAT SUCH OPINIONS OF COUNSEL SHALL NOT BE
REQUIRED ROUTINELY IN CONNECTION WITH EACH TRANSACTION BUT SHALL ONLY BE
REQUIRED FROM TIME TO TIME AS DEEMED NECESSARY BY BUYER IN ITS COMMERCIALLY
REASONABLE JUDGMENT.

 

(VI)     RESERVED.

 

(VII)    WITH RESPECT TO ANY LOAN THAT WAS FUNDED IN THE NAME OF OR ACQUIRED BY
A QUALIFIED ORIGINATOR WHICH IS AN AFFILIATE OF THE SELLERS, THE BUYER MAY, IN
ITS SOLE DISCRETION, REQUIRE THE SELLERS TO PROVIDE EVIDENCE SUFFICIENT TO
SATISFY THE BUYER THAT SUCH LOAN WAS ACQUIRED IN A LEGAL SALE, INCLUDING WITHOUT
LIMITATION, AN OPINION, IN FORM AND SUBSTANCE AND FROM AN ATTORNEY, IN BOTH
CASES, ACCEPTABLE TO THE BUYER IN ITS SOLE DISCRETION, THAT SUCH LOAN WAS
ACQUIRED IN A LEGAL SALE.

 

(VIII)   NONE OF THE FOLLOWING SHALL HAVE OCCURRED AND/OR BE CONTINUING:

 

(I)            AN EVENT OR EVENTS RESULTING IN THE INABILITY OF THE BUYER TO
FINANCE ITS PURCHASES OF ASSETS WITH TRADITIONAL COUNTERPARTIES AT RATES WHICH
WOULD HAVE BEEN REASONABLE PRIOR TO THE OCCURRENCE OF SUCH EVENT OR EVENTS OR A
MATERIAL ADVERSE CHANGE IN THE FINANCIAL CONDITION OF THE BUYER WHICH AFFECTS
(OR CAN REASONABLY BE EXPECTED TO AFFECT) MATERIALLY AND ADVERSELY THE ABILITY
OF THE BUYER TO FUND ITS OBLIGATIONS UNDER OR OTHERWISE COMPLY WITH THE TERMS OF
THIS AGREEMENT; OR

 

(II)           ANY OTHER EVENT BEYOND THE CONTROL OF THE BUYER WHICH THE BUYER
REASONABLY DETERMINES MAY RESULT IN THE BUYER’S INABILITY TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, ACTS OF GOD,
STRIKES, LOCKOUTS, RIOTS, ACTS OF WAR OR TERRORISM, EPIDEMICS, NATIONALIZATION,
EXPROPRIATION, CURRENCY RESTRICTIONS, FIRE, COMMUNICATION LINE FAILURES,
COMPUTER VIRUSES, POWER FAILURES, EARTHQUAKES, OR OTHER DISASTERS OF A SIMILAR
NATURE TO THE FOREGOING.

 

(IX)     IF ANY LOANS TO BE PURCHASED HEREUNDER WERE ACQUIRED BY THE SELLERS,
SUCH LOANS SHALL CONFORM TO THE UNDERWRITING GUIDELINES OR THE BUYER SHALL HAVE
RECEIVED UNDERWRITING GUIDELINES FOR SUCH LOANS ACCEPTABLE TO THE BUYER IN ITS
DISCRETION.

 

(X)      THE BUYER SHALL HAVE RECEIVED ALL INFORMATION REQUESTED FROM THE
SELLERS RELATING TO INTEREST RATE PROTECTION AGREEMENTS PURSUANT TO SECTION
13(AA), AND THE BUYER SHALL HAVE DETERMINED THAT SUCH INTEREST RATE PROTECTION
AGREEMENTS ADEQUATELY PROTECT THE SELLERS FROM INTEREST RATE FLUCTUATIONS.

 

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(XI)     IF REQUESTED BY THE BUYER, THE BUYER SHALL HAVE RECEIVED, NO LATER THAN
10:00 A.M. THREE (3) DAYS PRIOR TO THE REQUESTED PURCHASE DATE, AN INSTRUCTION
LETTER, EXECUTED BY THE SELLERS, WITH THE RELATED SERVICING AGREEMENT ATTACHED
THERETO, WHICH SUCH SERVICING AGREEMENT SHALL BE IN FORM AND SUBSTANCE
ACCEPTABLE TO BUYER.

 

(XII)    IN NO EVENT SHALL BUYER BE REQUIRED TO ENTER INTO (A) MORE THAN THREE
(3) TRANSACTIONS IN ANY ONE BUSINESS DAY, NOR (B) ANY TRANSACTION WHOSE PURCHASE
PRICE WOULD BE LESS THAN $1,000,000.

 

(XIII)   BUYER SHALL HAVE DETERMINED THAT ALL ACTIONS NECESSARY OR, IN THE
OPINION OF BUYER, DESIRABLE TO MAINTAIN THE BUYER’S PERFECTED INTEREST IN THE
PURCHASED LOANS AND OTHER PURCHASED ITEMS HAVE BEEN TAKEN, INCLUDING, WITHOUT
LIMITATION, DULY EXECUTED AND FILED UNIFORM COMMERCIAL CODE FINANCING STATEMENTS
ON FORM UCC-1.

 

(XIV)   SELLERS SHALL HAVE PAID TO BUYER ALL FEES AND EXPENSES OWED TO BUYER IN
ACCORDANCE WITH THIS AGREEMENT AND ANY OTHER PROGRAM DOCUMENT.

 

(XV)    BUYER OR ITS DESIGNEE SHALL HAVE RECEIVED ANY OTHER DOCUMENTS REASONABLY
REQUESTED BY BUYER.

 

(XVI)   THERE IS NO MARGIN DEFICIT AT THE TIME IMMEDIATELY PRIOR TO ENTERING
INTO A NEW TRANSACTION.

 

(XVII)  UNTIL SUCH TIME AS LIEN SEARCHES WITH RESPECT TO EACH SELLER ARE
DELIVERED TO BUYER’S COUNSEL, AND SUCH LIEN SEARCHES ARE IN SUBSTANCE
SATISFACTORY TO BUYER, THE RELEVANT SELLER SHALL DELIVER TO BUYER AN OFFICER’S
CERTIFICATE, IN WHICH SUCH SELLER CERTIFIES THAT THE LOANS SOLD TO BUYER IN
CONNECTION WITH SUCH TRANSACTION ARE NOT SUBJECT TO ANY LIEN; PROVIDED THAT IF
ANY SUCH LOAN IS SUBJECT TO A LIEN, SELLER SHALL INSTEAD COMPLY WITH (XVIII)
BELOW.

 

(XVIII) IF ANY LOAN SOLD TO BUYER IN CONNECTION WITH SUCH TRANSACTION IS SUBJECT
TO A LIEN IMMEDIATELY PRIOR TO THE PURCHASE DATE, THE RELATED SECURED PARTY
(INCLUDING ANY PARTY THAT HAS A PRECAUTIONARY SECURITY INTEREST IN A LOAN) SHALL
HAVE RELEASED ALL OF ITS RIGHT, TITLE AND INTEREST IN, TO AND UNDER SUCH LOAN
(INCLUDING, WITHOUT LIMITATION, ANY SECURITY INTEREST THAT SUCH SECURED PARTY OR
SECURED PARTY’S AGENT MAY HAVE BY VIRTUE OF ITS POSSESSION, CUSTODY OR CONTROL
THEREOF), AND SELLER SHALL EVIDENCE SUCH RELEASE BY DELIVERING TO BUYER AND TO
CUSTODIAN (AS PART OF THE MORTGAGE FILE) A DULY EXECUTED SECURITY RELEASE
CERTIFICATION AND FILED UNIFORM COMMERCIAL CODE TERMINATION STATEMENTS IN
RESPECT OF ANY UNIFORM COMMERCIAL CODE FILINGS MADE IN RESPECT OF SUCH LOAN. 

 

10.          RELEASE OF PURCHASED LOANS

 

Upon timely payment in full of the Repurchase Price and all other Obligations
(if any) then owing with respect to a Purchased Loan, unless a Default or Event
of Default shall have occurred and be continuing, then (a) Buyer shall be deemed
to have terminated any security interest that Buyer may have in such Purchased
Loan and any Purchased Items solely related to such Purchased Loan and (b) with
respect to such Purchased Loan, Buyer shall direct Custodian

 

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to release such Purchased Loan and any Purchased Items solely related to such
Purchased Loan to Sellers unless such release and termination would give rise to
or perpetuate a Margin Deficit.  Except as set forth in Section 16, Sellers
shall give at least one (1) Business Day’s prior written notice to Buyer if such
repurchase shall occur on any date other than the Repurchase Date in Section
3(i).

 

If such release and termination gives rise to or perpetuates a Margin Deficit,
Buyer shall notify Sellers of the amount thereof and Sellers shall thereupon
satisfy the Margin Call in the manner specified in Section 6.

 

11.          RELIANCE

 

With respect to any Transaction, Buyer may conclusively rely upon, and shall
incur no liability to Sellers in acting upon, any request or other communication
that Buyer reasonably believes to have been given or made by a person authorized
to enter into a Transaction on Sellers’ behalf.

 

12.          REPRESENTATIONS AND WARRANTIES

 

Each Seller represents and warrants to the Buyer that throughout the term of
this Agreement:

 

(A)           EXISTENCE.  EACH SELLER IS A CORPORATION DULY ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS
ORGANIZATION, (B) HAS ALL REQUISITE CORPORATE OR OTHER POWER, AND HAS ALL
GOVERNMENTAL LICENSES, AUTHORIZATIONS, CONSENTS AND APPROVALS, NECESSARY TO OWN
ITS ASSETS AND CARRY ON ITS BUSINESS AS NOW BEING OR AS PROPOSED TO BE
CONDUCTED, EXCEPT WHERE THE LACK OF SUCH LICENSES, AUTHORIZATIONS, CONSENTS AND
APPROVALS WOULD NOT BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT, (C)
IS QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING IN ALL OTHER JURISDICTIONS
IN WHICH THE NATURE OF THE BUSINESS CONDUCTED BY IT MAKES SUCH QUALIFICATION
NECESSARY, EXCEPT WHERE FAILURE SO TO QUALIFY WOULD NOT BE REASONABLY LIKELY
(EITHER INDIVIDUALLY OR IN THE AGGREGATE) TO HAVE A MATERIAL ADVERSE EFFECT, AND
(D) IS IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL REQUIREMENTS OF LAW.

 

(B)           FINANCIAL CONDITION.  THE SELLERS HAVE HERETOFORE FURNISHED TO THE
LENDER A COPY OF THE ANNUAL REPORT OF AAMES INVESTMENT ON FORM 10-K WHICH
INCLUDES AUDITED CONSOLIDATED FINANCIAL STATEMENTS AT AND FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2005 WITH THE OPINION THEREON OF ERNST & YOUNG LLP.  ALL SUCH
FINANCIAL STATEMENTS ARE MATERIALLY COMPLETE AND CORRECT AND FAIRLY PRESENT THE
CONSOLIDATED FINANCIAL CONDITION OF AAMES INVESTMENT AND ITS SUBSIDIARIES AND
THE CONSOLIDATED RESULTS OF THEIR OPERATIONS FOR THE FISCAL YEAR ENDED ON SAID
DATE, ALL IN ACCORDANCE WITH GAAP APPLIED ON A CONSISTENT BASIS.  AAMES
INVESTMENT HAS HERETOFORE FURNISHED TO THE LENDER A COPY OF THE QUARTERLY REPORT
OF AAMES INVESTMENT ON FORM 10-Q WHICH INCLUDES UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS AT AND FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2005.  ALL SUCH
FINANCIAL STATEMENTS ARE MATERIALLY COMPLETE AND CORRECT AND FAIRLY PRESENT THE
CONSOLIDATED FINANCIAL CONDITION OF AAMES INVESTMENT AND ITS SUBSIDIARIES AND
THE CONSOLIDATED RESULTS OF THEIR OPERATIONS FOR THE FISCAL QUARTER ENDED ON
SAID DATE, ALL IN ACCORDANCE WITH GAAP APPLIED ON A CONSISTENT BASIS. SINCE
DECEMBER 31, 2005 THERE HAS BEEN NO DEVELOPMENT OR EVENT NOR ANY PROSPECTIVE
DEVELOPMENT OR EVENT WHICH HAS HAD OR SHOULD

 

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reasonably be expected to have a Material Adverse Effect.

 

(C)           LITIGATION.  THERE ARE NO ACTIONS, SUITS, ARBITRATIONS,
INVESTIGATIONS OR PROCEEDINGS PENDING OR, TO ITS KNOWLEDGE, THREATENED AGAINST
ANY SELLER OR ANY OF ITS SUBSIDIARIES OR AFFILIATES OR AFFECTING ANY OF THE
PROPERTY THEREOF BEFORE ANY GOVERNMENTAL AUTHORITY, (I) AS TO WHICH INDIVIDUALLY
OR IN THE AGGREGATE THERE IS A REASONABLE LIKELIHOOD OF AN ADVERSE DECISION
WHICH WOULD BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT (EXCEPT AS
SET FORTH ON SCHEDULE 5 HERETO) OR (II) WHICH QUESTIONS THE VALIDITY OR
ENFORCEABILITY OF ANY OF THE PROGRAM DOCUMENTS OR ANY ACTION TO BE TAKEN IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED THEREBY AND THERE IS A REASONABLE
LIKELIHOOD OF A MATERIAL ADVERSE EFFECT OR ADVERSE DECISION.

 

(D)           NO BREACH.  NEITHER (A) THE EXECUTION AND DELIVERY OF THE PROGRAM
DOCUMENTS, OR (B) THE CONSUMMATION OF THE TRANSACTIONS THEREIN CONTEMPLATED IN
COMPLIANCE WITH THE TERMS AND PROVISIONS THEREOF WILL CONFLICT WITH OR RESULT IN
A BREACH OF THE CHARTER OR BY-LAWS OF THE SELLER, OR ANY APPLICABLE LAW, RULE OR
REGULATION, OR ANY ORDER, WRIT, INJUNCTION OR DECREE OF ANY GOVERNMENTAL
AUTHORITY, OR OTHER MATERIAL AGREEMENT OR INSTRUMENT TO WHICH THE SELLER, OR ANY
OF ITS SUBSIDIARIES, IS A PARTY OR BY WHICH ANY OF THEM OR ANY OF THEIR PROPERTY
IS BOUND OR TO WHICH ANY OF THEM OR THEIR PROPERTY IS SUBJECT, OR CONSTITUTE A
DEFAULT UNDER ANY SUCH MATERIAL AGREEMENT OR INSTRUMENT, OR (EXCEPT FOR THE
LIENS CREATED PURSUANT TO THIS AGREEMENT) RESULT IN THE CREATION OR IMPOSITION
OF ANY LIEN UPON ANY PROPERTY OF THE SELLER OR ANY OF ITS SUBSIDIARIES, PURSUANT
TO THE TERMS OF ANY SUCH AGREEMENT OR INSTRUMENT.

 

(E)           ACTION.  THE SELLER HAS ALL NECESSARY CORPORATE OR OTHER POWER,
AUTHORITY AND LEGAL RIGHT TO EXECUTE, DELIVER AND PERFORM ITS OBLIGATIONS UNDER
EACH OF THE PROGRAM DOCUMENTS TO WHICH IT IS A PARTY; THE EXECUTION, DELIVERY
AND PERFORMANCE BY THE SELLER OF EACH OF THE PROGRAM DOCUMENTS TO WHICH IT IS A
PARTY HAS BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE OR OTHER ACTION ON ITS
PART; AND EACH PROGRAM DOCUMENT HAS BEEN DULY AND VALIDLY EXECUTED AND DELIVERED
BY THE SELLER AND CONSTITUTES A LEGAL, VALID AND BINDING OBLIGATION OF THE
SELLER, ENFORCEABLE AGAINST THE SELLER IN ACCORDANCE WITH ITS TERMS.

 

(F)            APPROVALS.  NO AUTHORIZATIONS, APPROVALS OR CONSENTS OF, AND NO
FILINGS OR REGISTRATIONS WITH, ANY GOVERNMENTAL AUTHORITY, OR ANY OTHER PERSON,
ARE NECESSARY FOR THE EXECUTION, DELIVERY OR PERFORMANCE BY THE SELLER OF THE
PROGRAM DOCUMENTS TO WHICH IT IS A PARTY OR FOR THE LEGALITY, VALIDITY OR
ENFORCEABILITY THEREOF, EXCEPT FOR FILINGS AND RECORDINGS IN RESPECT OF THE
LIENS CREATED PURSUANT TO THIS AGREEMENT.

 

(G)           TAXES.  THE SELLER AND ITS SUBSIDIARIES HAVE FILED ALL FEDERAL
INCOME TAX RETURNS AND ALL OTHER MATERIAL TAX RETURNS THAT ARE REQUIRED TO BE
FILED BY THEM AND HAVE PAID ALL TAXES DUE PURSUANT TO SUCH RETURNS OR PURSUANT
TO ANY ASSESSMENT RECEIVED BY ANY OF THEM, EXCEPT FOR ANY SUCH TAXES, IF ANY,
THAT ARE BEING APPROPRIATELY CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS
DILIGENTLY CONDUCTED AND WITH RESPECT TO WHICH ADEQUATE RESERVES HAVE BEEN
PROVIDED. THE CHARGES, ACCRUALS AND RESERVES ON THE BOOKS OF THE SELLER AND ITS
SUBSIDIARIES IN RESPECT OF TAXES AND OTHER GOVERNMENTAL CHARGES ARE, IN THE
OPINION OF THE SELLER, ADEQUATE. ANY TAXES, FEES AND OTHER GOVERNMENTAL CHARGES
PAYABLE BY SELLER IN CONNECTION WITH A TRANSACTION AND THE EXECUTION AND
DELIVERY OF THE PROGRAM DOCUMENTS HAVE BEEN PAID.

 

(H)           INVESTMENT COMPANY ACT.  NEITHER THE SELLER NOR ANY OF ITS
SUBSIDIARIES IS AN

 

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“INVESTMENT COMPANY”, OR A COMPANY “CONTROLLED” BY AN “INVESTMENT COMPANY”,
WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. THE SELLER
IS NOT SUBJECT TO ANY FEDERAL OR STATE STATUTE OR REGULATION WHICH LIMITS ITS
ABILITY TO INCUR INDEBTEDNESS.

 

(I)            NO LEGAL BAR.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT, THE OTHER PROGRAM DOCUMENTS, THE SALES HEREUNDER AND THE USE OF THE
PROCEEDS THEREOF WILL NOT VIOLATE ANY REQUIREMENT OF LAW OR CONTRACTUAL
OBLIGATION OF THE SELLER OR OF ANY OF ITS SUBSIDIARIES AND WILL NOT RESULT IN,
OR REQUIRE, THE CREATION OR IMPOSITION OF ANY LIEN (OTHER THAN THE LIENS CREATED
HEREUNDER) ON ANY OF ITS OR THEIR RESPECTIVE PROPERTIES OR REVENUES PURSUANT TO
ANY SUCH REQUIREMENT OF LAW OR CONTRACTUAL OBLIGATION.

 

(J)            COMPLIANCE WITH LAW.  NO PRACTICE, PROCEDURE OR POLICY EMPLOYED
OR PROPOSED TO BE EMPLOYED BY SELLER IN THE CONDUCT OF ITS BUSINESS VIOLATES ANY
LAW, REGULATION, JUDGMENT, AGREEMENT, REGULATORY CONSENT, ORDER OR DECREE
APPLICABLE TO IT WHICH, IF ENFORCED, WOULD RESULT IN EITHER A MATERIAL ADVERSE
EFFECT WITH RESPECT TO SELLER.

 

(K)           NO DEFAULT.  NEITHER THE SELLER NOR ANY OF ITS SUBSIDIARIES IS IN
DEFAULT UNDER OR WITH RESPECT TO ANY OF ITS CONTRACTUAL OBLIGATIONS IN ANY
RESPECT WHICH SHOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING.

 

(L)            CHIEF EXECUTIVE OFFICE; CHIEF OPERATING OFFICE.  THE SELLERS’
CHIEF EXECUTIVE OFFICE AND CHIEF OPERATING OFFICE ON THE EFFECTIVE DATE IS
LOCATED AT 350 SOUTH GRAND AVENUE, LOS ANGELES, CALIFORNIA 90071.

 

(M)          LOCATION OF BOOKS AND RECORDS.  THE LOCATION WHERE THE SELLER KEEPS
ITS BOOKS AND RECORDS INCLUDING ALL COMPUTER TAPES AND RECORDS RELATING TO THE
PURCHASED ITEMS IS ITS CHIEF EXECUTIVE OFFICE OR CHIEF OPERATING OFFICE OR THE
OFFICES OF THE CUSTODIAN.

 

(N)           TRUE AND COMPLETE DISCLOSURE.  THE INFORMATION, REPORTS, FINANCIAL
STATEMENTS, EXHIBITS AND SCHEDULES FURNISHED IN WRITING BY OR ON BEHALF OF THE
SELLER OR ANY OF ITS SUBSIDIARIES TO THE BUYER IN CONNECTION WITH THE
NEGOTIATION, PREPARATION OR DELIVERY OF THIS AGREEMENT AND THE OTHER PROGRAM
DOCUMENTS OR INCLUDED HEREIN OR THEREIN OR DELIVERED PURSUANT HERETO OR THERETO,
WHEN TAKEN AS A WHOLE, DO NOT CONTAIN ANY UNTRUE STATEMENT OF MATERIAL FACT OR
OMIT TO STATE ANY MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS HEREIN OR
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING. ALL WRITTEN INFORMATION FURNISHED AFTER THE DATE HEREOF BY OR ON
BEHALF OF THE SELLER OR ANY OF ITS SUBSIDIARIES TO THE BUYER IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER PROGRAM DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY WILL BE TRUE, COMPLETE AND ACCURATE IN EVERY MATERIAL
RESPECT, OR (IN THE CASE OF PROJECTIONS) BASED ON REASONABLE ESTIMATES, ON THE
DATE AS OF WHICH SUCH INFORMATION IS STATED OR CERTIFIED. THERE IS NO FACT KNOWN
TO A RESPONSIBLE OFFICER THAT, AFTER DUE INQUIRY, COULD REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT THAT HAS NOT BEEN DISCLOSED HEREIN, IN THE
OTHER PROGRAM DOCUMENTS OR IN A REPORT, FINANCIAL STATEMENT, EXHIBIT, SCHEDULE,
DISCLOSURE LETTER OR OTHER WRITING FURNISHED TO THE BUYER FOR USE IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

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(O)           TANGIBLE NET WORTH; LIQUIDITY; RATIO OF TOTAL INDEBTEDNESS TO
TANGIBLE NET WORTH; RATIO OF ADJUSTED INDEBTEDNESS TO TANGIBLE NET WORTH;
PROFITABILITY.  (A) AAMES INVESTMENT’S TANGIBLE NET WORTH, ON A CONSOLIDATED
BASIS IS EQUAL TO OR GREATER THAN $250,000,000 PLUS 50% OF ANY SUBSEQUENT
ADDITIONAL CAPITAL RAISED IN A PUBLIC OR PRIVATE OFFERING BY AAMES INVESTMENT,
AND (B) THE AGGREGATE AMOUNT OF THE AAMES INVESTMENT’S CASH AND CASH EQUIVALENTS
OF (1) CASH AND LOANS HELD FOR SALE AND INVESTMENT (EXCLUDING SECURITIZED
MORTGAGE LOANS) REDUCED BY (2) THE SUM OF AMOUNTS OUTSTANDING ON REVOLVING
WAREHOUSE AND REPURCHASE FACILITIES, MARGIN ON LOANS HELD FOR SALE AND
INVESTMENT (EXCLUDING SECURITIZED MORTGAGE LOANS) AND LOANS HELD FOR SALE AND
INVESTMENT WHICH ARE INELIGIBLE TO BE PLEDGED BY AAMES INVESTMENT UNDER ANY OF
ITS REVOLVING WAREHOUSE AND REPURCHASE FACILITIES IN AN AMOUNT EQUAL TO NOT LESS
THAN $38,000,000.  AAMES INVESTMENTS’S RATIO OF TOTAL INDEBTEDNESS TO TANGIBLE
NET WORTH IS NOT GREATER THAN 20:1.  AAMES INVESTMENT’S RATIO OF ADJUSTED
INDEBTEDNESS TO TANGIBLE NET WORTH IS NOT GREATER THAN 7:1.  AS OF THE
IMMEDIATELY PRECEDING FISCAL QUARTER, AAMES INVESTMENT’S NET INCOME BEFORE TAX,
GENERATED OVER THE PREVIOUS TWO CONSECUTIVE FISCAL QUARTERS, MEASURED ON THE
LAST DAY OF EACH SUCH FISCAL QUARTER, WAS EQUAL TO OR GREATER THAN $1.00.

 

(P)           ERISA. EACH PLAN TO WHICH ANY SELLER OR ITS SUBSIDIARIES MAKE
DIRECT CONTRIBUTIONS, AND, TO THE KNOWLEDGE OF THE SELLER, EACH OTHER PLAN AND
EACH MULTIEMPLOYER PLAN, IS IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH, AND HAS
BEEN ADMINISTERED IN ALL MATERIAL RESPECTS IN COMPLIANCE WITH, THE APPLICABLE
PROVISIONS OF ERISA, THE CODE AND ANY OTHER FEDERAL OR STATE LAW. NO EVENT OR
CONDITION HAS OCCURRED AND IS CONTINUING AS TO WHICH THE SELLER WOULD BE UNDER
AN OBLIGATION TO FURNISH A REPORT TO THE BUYER UNDER SECTION 13(A)(V) HEREOF.

 

(Q)           LICENSES.  THE BUYER WILL NOT BE REQUIRED AS A RESULT OF
PURCHASING THE LOANS TO BE LICENSED, REGISTERED OR APPROVED OR TO OBTAIN PERMITS
OR OTHERWISE QUALIFY (I) TO DO BUSINESS IN ANY STATE IN WHICH IT CURRENTLY SO
REQUIRED OR (II) UNDER ANY STATE OR OTHER JURISDICTION’S CONSUMER LENDING, FAIR
DEBT COLLECTION OR OTHER APPLICABLE STATE OR OTHER JURISDICTION’S STATUTE OR
REGULATION.

 

(R)            FILING JURISDICTIONS; RELEVANT STATES.  SCHEDULE 2 SETS FORTH ALL
OF THE JURISDICTIONS AND FILING OFFICES IN WHICH A FINANCING STATEMENT SHOULD BE
FILED IN ORDER FOR BUYER TO PERFECT ITS SECURITY INTEREST IN THE PURCHASED
ITEMS. SCHEDULE 3 SETS FORTH ALL OF THE STATES OR OTHER JURISDICTIONS IN WHICH
THE SELLER ORIGINATES LOANS IN ITS OWN NAME OR THROUGH BROKERS ON THE DATE OF
THIS AGREEMENT.

 

(S)           TRUE SALES.  ANY AND ALL INTEREST OF A QUALIFIED ORIGINATOR IN, TO
AND UNDER ANY MORTGAGE FUNDED IN THE NAME OF OR ACQUIRED BY SUCH QUALIFIED
ORIGINATOR OR SELLER WHICH IS AN AFFILIATE OF THE SELLER HAS BEEN SOLD,
TRANSFERRED, CONVEYED AND ASSIGNED TO THE SELLER PURSUANT TO A LEGAL SALE AND
SUCH QUALIFIED ORIGINATOR RETAINS NO INTEREST IN SUCH LOAN, AND IF SO REQUESTED
BY THE BUYER, SUCH SALE IS COVERED BY AN OPINION OF COUNSEL TO THAT EFFECT IN
FORM AND SUBSTANCE ACCEPTABLE TO THE BUYER.

 

(T)            NO BURDENSOME RESTRICTIONS.  NO REQUIREMENT OF LAW OR CONTRACTUAL
OBLIGATION OF THE SELLER OR ANY OF ITS SUBSIDIARIES HAS A MATERIAL ADVERSE
EFFECT.

 

(U)           SUBSIDIARIES.  ALL OF THE SUBSIDIARIES OF THE SELLER AT THE DATE
HEREOF ARE LISTED ON SCHEDULE 4 TO THIS AGREEMENT.

 

(V)           ORIGINATION AND ACQUISITION OF LOANS.  THE LOANS WERE ORIGINATED
OR ACQUIRED BY

 

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THE SELLER, AND THE ORIGINATION AND COLLECTION PRACTICES USED BY THE SELLER OR
QUALIFIED ORIGINATOR, AS APPLICABLE, WITH RESPECT TO THE LOANS HAVE BEEN, IN ALL
MATERIAL RESPECTS LEGAL, PROPER, PRUDENT AND CUSTOMARY IN THE RESIDENTIAL
MORTGAGE LOAN ORIGINATION AND SERVICING BUSINESS, AND IN ACCORDANCE WITH THE
UNDERWRITING GUIDELINES. WITH RESPECT TO LOANS ACQUIRED BY THE SELLER, ALL SUCH
LOANS ARE IN CONFORMITY WITH THE UNDERWRITING GUIDELINES.  EACH OF THE LOANS
COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES LISTED IN SCHEDULE 1 HERETO.

 

(W)          NO ADVERSE SELECTION.  THE SELLER USED NO SELECTION PROCEDURES THAT
IDENTIFIED THE LOANS AS BEING LESS DESIRABLE OR VALUABLE THAN OTHER COMPARABLE
LOANS OWNED BY THE SELLER.

 

(X)            SELLER SOLVENT; FRAUDULENT CONVEYANCE.  AS OF THE DATE HEREOF AND
IMMEDIATELY AFTER GIVING EFFECT TO EACH TRANSACTION, THE FAIR VALUE OF THE
ASSETS OF THE SELLER IS GREATER THAN THE FAIR VALUE OF THE LIABILITIES
(INCLUDING, WITHOUT LIMITATION, CONTINGENT LIABILITIES IF AND TO THE EXTENT
REQUIRED TO BE RECORDED AS A LIABILITY ON THE FINANCIAL STATEMENTS OF THE SELLER
IN ACCORDANCE WITH GAAP) OF THE SELLER AND THE SELLER IS AND WILL BE SOLVENT, IS
AND WILL BE ABLE TO PAY ITS DEBTS AS THEY MATURE AND DOES NOT AND WILL NOT HAVE
AN UNREASONABLY SMALL CAPITAL TO ENGAGE IN THE BUSINESS IN WHICH IT IS ENGAGED
AND PROPOSES TO ENGAGE. SELLER DOES NOT INTEND TO INCUR, OR BELIEVE THAT IT HAS
INCURRED, DEBTS BEYOND ITS ABILITY TO PAY SUCH DEBTS AS THEY MATURE. SELLER IS
NOT CONTEMPLATING THE COMMENCEMENT OF INSOLVENCY, BANKRUPTCY, LIQUIDATION OR
CONSOLIDATION PROCEEDINGS OR THE APPOINTMENT OF A RECEIVER, LIQUIDATOR,
CONSERVATOR, TRUSTEE OR SIMILAR OFFICIAL IN RESPECT OF SELLER OR ANY OF ITS
ASSETS. SELLER IS NOT TRANSFERRING ANY LOANS WITH ANY INTENT TO HINDER, DELAY OR
DEFRAUD ANY OF ITS CREDITORS.

 

(Y)           NO BROKER.  SELLER HAS NOT DEALT WITH ANY BROKER, INVESTMENT
BANKER, AGENT, OR OTHER PERSON, EXCEPT FOR BUYER, WHO MAY BE ENTITLED TO ANY
COMMISSION OR COMPENSATION IN CONNECTION WITH THE SALE OF PURCHASED LOANS
PURSUANT TO THIS AGREEMENT; PROVIDED, THAT IF SELLER HAS DEALT WITH ANY BROKER,
INVESTMENT BANKER, AGENT, OR OTHER PERSON, EXCEPT FOR BUYER, WHO MAY BE ENTITLED
TO ANY COMMISSION OR COMPENSATION IN CONNECTION WITH THE SALE OF PURCHASED LOANS
PURSUANT TO THIS AGREEMENT, SUCH COMMISSION OR COMPENSATION SHALL HAVE BEEN PAID
IN FULL BY SELLER.

 

(Z)            CURRENT FINANCING FACILITIES.  ALL CREDIT FACILITIES, REPURCHASE
FACILITIES OR SUBSTANTIALLY SIMILAR FACILITIES OF SELLERS WHICH ARE PRESENTLY IN
EFFECT ARE LISTED ON SCHEDULE 5 ATTACHED HERETO (THE “EXISTING FINANCING
FACILITIES”) AND NO DEFAULTS OR EVENTS OF DEFAULT EXIST THEREUNDER.  SELLERS
SHALL GIVE BUYER PRIOR NOTIFICATION OF ANY AMENDMENT TO ANY FINANCIAL COVENANT
IN ANY SUCH EXISTING FINANCING FACILITY OR ANY MODIFICATION TO ANY SELLER’S
BORROWING CAPACITY UNDER ANY SUCH EXISTING FINANCING FACILITY.

 

(AA)         INSURED CLOSING LETTER. AS OF THE DATE HEREOF AND AS OF THE DATE OF
EACH DELIVERY OF A WET LOAN, THE SETTLEMENT AGENT HAS OBTAINED AN INSURED
CLOSING LETTER, CLOSING PROTECTION LETTER OR SIMILAR AUTHORIZATION LETTER FROM A
NATIONALLY RECOGNIZED TITLE INSURANCE COMPANY APPROVED BY THE BUYER (OR, WITH
RESPECT TO ANY MORTGAGED PROPERTY LOCATED IN THE STATE OF NEW YORK, A COMPARABLE
LETTER AS CUSTOMARILY PROVIDED FOR CLOSINGS OCCURRING IN SUCH STATE), COPIES OF
WHICH SHALL BE DELIVERED BY THE SELLER TO THE CUSTODIAN PRIOR TO THE PURCHASE
DATE.  AMONG OTHER THINGS, THE INSURED CLOSING LETTER COVERS ANY LOSSES
OCCURRING DUE TO THE FRAUD, DISHONESTY OR MISTAKES OF THE CLOSING AGENT.  THE
INSURED CLOSING LETTER INURES TO THE BENEFIT OF, AND THE RIGHTS THEREUNDER MAY
BE ENFORCED BY, THE LOAN ORIGINATOR AND ITS SUCCESSORS AND ASSIGNS, INCLUDING
THE

 

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BUYER.

 

(BB)         ESCROW AGREEMENT.  AS OF THE DATE HEREOF AND AS OF THE DATE OF EACH
DELIVERY OF A WET LOAN, THE SETTLEMENT AGENT HAS EXECUTED AN ESCROW AGREEMENT OR
LETTER STATING THAT IN THE EVENT OF A RESCISSION OF OR IF FOR ANY REASON THE
LOAN FAILS TO FUND ON A GIVEN DAY, THE PARTY CONDUCTING THE CLOSING IS HOLDING
ALL FUNDS WHICH WOULD HAVE BEEN DISBURSED ON BEHALF OF THE MORTGAGOR AS AGENT
FOR THE BENEFIT OF THE BUYER AND SUCH FUNDS SHALL BE REDEPOSITED IN THE
DISBURSEMENT ACCOUNT FOR BENEFIT OF THE BUYER NOT LATER THAN ONE BUSINESS DAY
AFTER THE DATE OF RESCISSION OR OTHER FAILURE OF THE LOAN TO FUND ON A GIVEN
DAY.  SUCH ESCROW AGREEMENT INURES TO THE BENEFIT OF, AND THE RIGHTS THEREUNDER
MAY BE ENFORCED BY, THE LOAN ORIGINATOR AND ITS SUCCESSORS AND ASSIGNS,
INCLUDING THE BUYER.

 

13.          COVENANTS OF SELLER

 

Each Seller covenants and agrees with Buyer that during the term of this
Agreement:

 

(A)           FINANCIAL STATEMENTS AND OTHER INFORMATION; FINANCIAL COVENANTS.

 

Sellers shall deliver to the Buyer:

 

(I)       AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 30 DAYS AFTER THE END OF
THE FIRST TWO MONTHS OF ANY QUARTERLY FISCAL PERIOD, THE CONSOLIDATED BALANCE
SHEETS OF THE SELLER AND EACH OF THE CONSOLIDATED SUBSIDIARIES OF THE SELLER AS
AT THE END OF SUCH MONTH AND THE RELATED UNAUDITED CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS AND OF CASH FLOWS FOR THE SELLER AND THE
CONSOLIDATED SUBSIDIARIES OF SELLER FOR SUCH MONTH AND THE PORTION OF THE FISCAL
YEAR THROUGH THE END OF SUCH MONTH. SUCH CONSOLIDATED FINANCIAL STATEMENTS SHALL
FAIRLY PRESENT THE CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE SELLER AND ITS SUBSIDIARIES IN ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED,
AS AT THE END OF, AND FOR, SUCH MONTH (SUBJECT TO NORMAL YEAR-END AUDIT
ADJUSTMENTS);

 

(II)      AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 45 DAYS AFTER THE END OF
EACH OF THE FIRST THREE QUARTERLY FISCAL PERIODS OF EACH FISCAL YEAR OF THE
SELLER, A CERTIFICATION IN THE FORM OF EXHIBIT A TOGETHER WITH THE CONSOLIDATED
BALANCE SHEETS OF THE SELLER AND ITS CONSOLIDATED SUBSIDIARIES AS AT THE END OF
SUCH PERIOD AND THE RELATED UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS AND OF CASH FLOWS FOR THE SELLER AND THE CONSOLIDATED
SUBSIDIARIES OF SELLER FOR SUCH PERIOD AND THE PORTION OF THE FISCAL YEAR
THROUGH THE END OF SUCH PERIOD, ACCOMPANIED BY A CERTIFICATE OF A RESPONSIBLE
OFFICER OF THE SELLER, WHICH CERTIFICATE SHALL STATE THAT SAID CONSOLIDATED
FINANCIAL STATEMENTS FAIRLY PRESENT THE CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF THE SELLER AND THE SUBSIDIARIES OF THE SELLER IN
ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED, AS AT THE END OF, AND FOR, SUCH
PERIOD (SUBJECT TO NORMAL YEAR-END AUDIT ADJUSTMENTS);

 

(III)     AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 90 DAYS AFTER THE END OF
EACH FISCAL YEAR OF THE SELLER, THE CONSOLIDATED BALANCE SHEETS OF THE SELLER
AND ITS CONSOLIDATED SUBSIDIARIES AS AT THE END OF SUCH FISCAL YEAR AND THE
RELATED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS AND OF CASH
FLOWS FOR THE SELLER AND ITS

 

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CONSOLIDATED SUBSIDIARIES FOR SUCH YEAR, SETTING FORTH IN EACH CASE IN
COMPARATIVE FORM THE FIGURES FOR THE PREVIOUS YEAR, ACCOMPANIED BY AN OPINION
THEREON OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF RECOGNIZED NATIONAL
STANDING, WHICH OPINION SHALL NOT BE QUALIFIED AS TO SCOPE OF AUDIT OR GOING
CONCERN AND SHALL STATE THAT SAID CONSOLIDATED FINANCIAL STATEMENTS FAIRLY
PRESENT THE CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE
SELLER AND ITS CONSOLIDATED SUBSIDIARIES AT THE END OF, AND FOR, SUCH FISCAL
YEAR IN ACCORDANCE WITH GAAP, AND A CERTIFICATE OF SUCH ACCOUNTANTS STATING
THAT, IN MAKING THE EXAMINATION NECESSARY FOR THEIR OPINION, THEY OBTAINED NO
KNOWLEDGE, EXCEPT AS SPECIFICALLY STATED, OF ANY DEFAULT OR EVENT OF DEFAULT;

 

(IV)     FROM TIME TO TIME SUCH OTHER INFORMATION REGARDING THE FINANCIAL
CONDITION, OPERATIONS, OR BUSINESS OF THE SELLER AS THE BUYER MAY REASONABLY
REQUEST; AND

 

(V)      AS SOON AS REASONABLY POSSIBLE, AND IN ANY EVENT WITHIN THIRTY (30)
DAYS AFTER A RESPONSIBLE OFFICER KNOWS, OR WITH RESPECT TO ANY PLAN OR
MULTIEMPLOYER PLAN TO WHICH THE SELLER, OR ANY SUBSIDIARIES OF THE SELLER MAKES
DIRECT CONTRIBUTIONS, HAS REASON TO BELIEVE, THAT ANY OF THE EVENTS OR
CONDITIONS SPECIFIED BELOW WITH RESPECT TO ANY PLAN OR MULTIEMPLOYER PLAN HAS
OCCURRED OR EXISTS, A STATEMENT SIGNED BY A SENIOR FINANCIAL OFFICER OF THE
SELLER SETTING FORTH DETAILS RESPECTING SUCH EVENT OR CONDITION AND THE ACTION,
IF ANY, THAT THE SELLER OR ITS ERISA AFFILIATE PROPOSES TO TAKE WITH RESPECT
THERETO (AND A COPY OF ANY REPORT OR NOTICE REQUIRED TO BE FILED WITH OR GIVEN
TO PBGC BY THE SELLER OR AN ERISA AFFILIATE WITH RESPECT TO SUCH EVENT OR
CONDITION):

 

A.             ANY REPORTABLE EVENT, AS DEFINED IN SECTION 4043(B) OF ERISA AND
THE REGULATIONS ISSUED THEREUNDER, WITH RESPECT TO A PLAN, AS TO WHICH PBGC HAS
NOT BY REGULATION OR OTHERWISE WAIVED THE REQUIREMENT OF SECTION 4043(A) OF
ERISA THAT IT BE NOTIFIED WITHIN THIRTY (30) DAYS OF THE OCCURRENCE OF SUCH
EVENT (PROVIDED THAT A FAILURE TO MEET THE MINIMUM FUNDING STANDARD OF SECTION
412 OF THE CODE OR SECTION 302 OF ERISA, INCLUDING, WITHOUT LIMITATION, THE
FAILURE TO MAKE ON OR BEFORE ITS DUE DATE A REQUIRED INSTALLMENT UNDER SECTION
412(M) OF THE CODE OR SECTION 302(E) OF ERISA, SHALL BE A REPORTABLE EVENT
REGARDLESS OF THE ISSUANCE OF ANY WAIVERS IN ACCORDANCE WITH SECTION 412(D) OF
THE CODE); AND ANY REQUEST FOR A WAIVER UNDER SECTION 412(D) OF THE CODE FOR ANY
PLAN;

 

B.             THE DISTRIBUTION UNDER SECTION 4041(C) OF ERISA OF A NOTICE OF
INTENT TO TERMINATE ANY PLAN OR ANY ACTION TAKEN BY THE SELLER OR AN ERISA
AFFILIATE TO TERMINATE ANY PLAN;

 

C.             THE INSTITUTION BY PBGC OF PROCEEDINGS UNDER SECTION 4042 OF
ERISA FOR THE TERMINATION OF, OR THE APPOINTMENT OF A TRUSTEE TO ADMINISTER, ANY
PLAN, OR THE RECEIPT BY THE SELLER OR ANY ERISA AFFILIATE OF A NOTICE FROM A
MULTIEMPLOYER PLAN THAT SUCH ACTION HAS BEEN TAKEN BY PBGC WITH RESPECT TO SUCH
MULTIEMPLOYER PLAN;

 

D.             THE COMPLETE OR PARTIAL WITHDRAWAL FROM A MULTIEMPLOYER PLAN BY

 

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THE SELLER OR ANY ERISA AFFILIATE THAT RESULTS IN LIABILITY UNDER SECTION 4201
OR 4204 OF ERISA (INCLUDING THE OBLIGATION TO SATISFY SECONDARY LIABILITY AS A
RESULT OF A PURCHASER DEFAULT) OR THE RECEIPT BY THE SELLER OR ANY ERISA
AFFILIATE OF NOTICE FROM A MULTIEMPLOYER PLAN THAT IT IS IN REORGANIZATION OR
INSOLVENCY PURSUANT TO SECTION 4241 OR 4245 OF ERISA OR THAT IT INTENDS TO
TERMINATE OR HAS TERMINATED UNDER SECTION 4041A OF ERISA;

 

E.             THE INSTITUTION OF A PROCEEDING BY A FIDUCIARY OF ANY
MULTIEMPLOYER PLAN AGAINST THE SELLER OR ANY ERISA AFFILIATE TO ENFORCE SECTION
515 OF ERISA, WHICH PROCEEDING IS NOT DISMISSED WITHIN 30 DAYS; AND

 

F.              THE ADOPTION OF AN AMENDMENT TO ANY PLAN THAT, PURSUANT TO
SECTION 401(A)(29) OF THE CODE OR SECTION 307 OF ERISA, WOULD RESULT IN THE LOSS
OF TAX-EXEMPT STATUS OF THE TRUST OF WHICH SUCH PLAN IS A PART IF THE SELLER OR
AN ERISA AFFILIATE FAILS TO TIMELY PROVIDE SECURITY TO SUCH PLAN IN ACCORDANCE
WITH THE PROVISIONS OF SAID SECTIONS.

 

The Seller will furnish to the Buyer, at the time it furnishes each set of
financial statements pursuant to paragraphs (a)(ii-v) above, a certificate of a
Responsible Officer of the Seller to the effect that, to the best of such
Responsible Officer’s knowledge, the Seller during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Agreement and the other
Program Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action the Seller has taken or proposes to take with respect
thereto).

 

(B)           LITIGATION.  THE SELLER WILL PROMPTLY, AND IN ANY EVENT WITHIN
SEVEN (7) DAYS AFTER SERVICE PROCESS ON ANY OF THE FOLLOWING, GIVE TO THE BUYER
NOTICE OF ALL LEGAL OR ARBITRABLE PROCEEDINGS AFFECTING THE SELLER OR ANY OF ITS
SUBSIDIARIES THAT QUESTIONS OR CHALLENGES THE VALIDITY OR ENFORCEABILITY OF ANY
OF THE PROGRAM DOCUMENTS OR AS TO WHICH THERE IS A REASONABLE LIKELIHOOD OF AN
ADVERSE DETERMINATION WHICH WOULD RESULT IN A MATERIAL ADVERSE EFFECT.

 

(C)           EXISTENCE, ETC.  EACH OF THE SELLER AND ITS SUBSIDIARIES WILL:

 

(I)       PRESERVE AND MAINTAIN ITS LEGAL EXISTENCE AND ALL OF ITS MATERIAL
RIGHTS, PRIVILEGES, LICENSES AND FRANCHISES (OTHER THAN SUBSIDIARIES WHICH ARE
NOT MATERIAL TO THE BUSINESS OF THE SELLERS);

 

(II)      COMPLY WITH THE REQUIREMENTS OF ALL APPLICABLE LAWS, RULES,
REGULATIONS AND ORDERS OF GOVERNMENTAL AUTHORITIES (INCLUDING, WITHOUT
LIMITATION, TRUTH IN LENDING, REAL ESTATE SETTLEMENT PROCEDURES AND ALL
ENVIRONMENTAL LAWS) IF FAILURE TO COMPLY WITH SUCH REQUIREMENTS WOULD BE
REASONABLY LIKELY (EITHER INDIVIDUALLY OR IN THE AGGREGATE) TO HAVE A MATERIAL
ADVERSE EFFECT;

 

(III)     KEEP ADEQUATE RECORDS AND BOOKS OF ACCOUNT, IN WHICH COMPLETE ENTRIES
WILL BE MADE IN ACCORDANCE WITH GAAP CONSISTENTLY APPLIED;

 

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(IV)     NOT MOVE ITS CHIEF EXECUTIVE OFFICE OR CHIEF OPERATING OFFICE FROM THE
ADDRESSES REFERRED TO IN SECTION 12(L) UNLESS IT SHALL HAVE PROVIDED THE BUYER
30 DAYS PRIOR WRITTEN NOTICE OF SUCH CHANGE (OTHER THAN SUBSIDIARIES WHICH ARE
NOT MATERIAL TO THE BUSINESS OF THE SELLERS);

 

(V)      PAY AND DISCHARGE ALL TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES OR
LEVIES IMPOSED ON IT OR ON ITS INCOME OR PROFITS OR ON ANY OF ITS PROPERTY PRIOR
TO THE DATE ON WHICH PENALTIES ATTACH THERETO, EXCEPT FOR ANY SUCH TAX,
ASSESSMENT, CHARGE OR LEVY THE PAYMENT OF WHICH IS BEING CONTESTED IN GOOD FAITH
AND BY PROPER PROCEEDINGS AND AGAINST WHICH ADEQUATE RESERVES ARE BEING
MAINTAINED; AND

 

(VI)     PERMIT REPRESENTATIVES OF THE BUYER, DURING NORMAL BUSINESS HOURS UPON
THREE (3) BUSINESS DAYS’ PRIOR WRITTEN NOTICE AT A MUTUALLY DESIRABLE TIME OR AT
ANY TIME DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO EXAMINE, COPY AND
MAKE EXTRACTS FROM ITS BOOKS AND RECORDS, TO INSPECT ANY OF ITS PROPERTIES, AND
TO DISCUSS ITS BUSINESS AND AFFAIRS WITH ITS OFFICERS, ALL TO THE EXTENT
REASONABLY REQUESTED BY THE BUYER.

 

(D)           PROHIBITION OF FUNDAMENTAL CHANGES.  SELLER SHALL NOT AT ANY TIME,
DIRECTLY OR INDIRECTLY, (I) ENTER INTO ANY TRANSACTION OF MERGER OR
CONSOLIDATION OR AMALGAMATION, OR LIQUIDATE, WIND UP OR DISSOLVE ITSELF (OR
SUFFER ANY LIQUIDATION, WINDING UP OR DISSOLUTION) OR SELL ALL OR SUBSTANTIALLY
ALL OF ITS ASSETS WITHOUT BUYER’S PRIOR CONSENT; OR (II) FORM OR ENTER INTO ANY
PARTNERSHIP, JOINT VENTURE, SYNDICATE OR OTHER COMBINATION WHICH WOULD HAVE A
MATERIAL ADVERSE EFFECT WITH RESPECT TO SELLER.

 

(E)           MARGIN DEFICIT. IF AT ANY TIME THERE EXISTS A MARGIN DEFICIT, THE
SELLER SHALL CURE THE SAME IN ACCORDANCE WITH SECTION 6 HEREOF.

 

(F)            NOTICES. SELLER SHALL GIVE NOTICE TO BUYER PROMPTLY IN WRITING OF
ANY OF THE FOLLOWING:

 

(I)       UPON THE SELLER BECOMING AWARE OF, AND IN ANY EVENT WITHIN ONE (1)
BUSINESS DAY AFTER THE OCCURRENCE OF ANY DEFAULT, EVENT OF DEFAULT OR ANY EVENT
OF DEFAULT OR DEFAULT UNDER ANY PROGRAM DOCUMENT OR OTHER MATERIAL AGREEMENT OF
THE SELLER;

 

(II)      UPON, AND IN ANY EVENT WITHIN THREE (3) BUSINESS DAYS AFTER, SERVICE
OF PROCESS ON THE SELLER OR ANY OF ITS SUBSIDIARIES, OR ANY AGENT THEREOF FOR
SERVICE OF PROCESS, IN RESPECT OF ANY LEGAL OR ARBITRABLE PROCEEDINGS AFFECTING
THE SELLER OR ANY OF ITS SUBSIDIARIES (I) THAT QUESTIONS OR CHALLENGES THE
VALIDITY OR ENFORCEABILITY OF ANY OF THE PROGRAM DOCUMENTS OR (II) IN WHICH THE
AMOUNT IN CONTROVERSY EXCEEDS $1,000,000;

 

(III)     UPON THE SELLER BECOMING AWARE OF ANY DEFAULT RELATED TO ANY PURCHASED
ITEMS, ANY MATERIAL ADVERSE EFFECT AND ANY EVENT OR CHANGE IN CIRCUMSTANCES
WHICH SHOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;

 

(IV)     UPON THE SELLER BECOMING AWARE DURING THE NORMAL COURSE OF ITS BUSINESS
THAT THE MORTGAGED PROPERTY IN RESPECT OF ANY LOAN OR LOANS WITH AN AGGREGATE
UNPAID

 

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PRINCIPAL BALANCE OF AT LEAST $1,000,000 HAS BEEN DAMAGED BY WASTE, FIRE,
EARTHQUAKE OR EARTH MOVEMENT, WINDSTORM, FLOOD, TORNADO OR OTHER CASUALTY, OR
OTHERWISE DAMAGED SO AS TO MATERIALLY AND ADVERSELY AFFECT THE VALUE OF SUCH
LOAN;

 

(V)      UPON THE ENTRY OF A JUDGMENT OR DECREE AGAINST THE SELLER OR ANY OF ITS
SUBSIDIARIES IN AN AMOUNT IN EXCESS OF $1,000,000;

 

(VI)     ANY MATERIAL CHANGE IN THE INSURANCE COVERAGE REQUIRED OF SELLER OR ANY
OTHER PERSON PURSUANT TO ANY PROGRAM DOCUMENT, WITH COPY OF EVIDENCE OF SAME
ATTACHED;

 

(VII)    ANY MATERIAL DISPUTE, LICENSING ISSUE, LITIGATION, INVESTIGATION,
PROCEEDING OR SUSPENSION BETWEEN SELLER OR ITS SUBSIDIARIES, ON THE ONE HAND,
AND ANY GOVERNMENTAL AUTHORITY OR ANY OTHER PERSON; AND

 

(VIII)   ANY MATERIAL CHANGE IN ACCOUNTING POLICIES OR FINANCIAL REPORTING
PRACTICES OF SELLER OR ITS SUBSIDIARIES.

 

Each notice pursuant to this Section 13(f) (other than (vi) above) shall be
accompanied by a statement of a Responsible Officer of the Seller, setting forth
details of the occurrence referred to therein and stating what action the Seller
has taken or proposes to take with respect thereto.

 

(G)           SERVICING.  EXCEPT AS PROVIDED IN SECTION 43, THE SELLER SHALL NOT
PERMIT ANY PERSON OTHER THAN THE SELLER TO SERVICE LOANS WITHOUT THE PRIOR
WRITTEN CONSENT OF THE BUYER, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.

 

(H)           UNDERWRITING GUIDELINES.  SELLER SHALL NOT PERMIT ANY MATERIAL
MODIFICATIONS TO BE MADE TO THE UNDERWRITING GUIDELINES THAT WILL IMPACT EITHER
THE BUYER OR THE PURCHASED LOANS WITHOUT THE PRIOR CONSENT OF BUYER (SUCH
CONSENT NOT TO BE UNREASONABLY WITHHELD).  SELLER AGREES TO DELIVER TO BUYER
COPIES OF THE UNDERWRITING GUIDELINES IN THE EVENT THAT ANY CHANGES ARE MADE TO
THE UNDERWRITING GUIDELINES FOLLOWING THE CLOSING DATE.

 

(I)            LINES OF BUSINESS.  SELLER SHALL NOT ENGAGE TO ANY SUBSTANTIAL
EXTENT IN ANY LINE OR LINES OF BUSINESS ACTIVITY OTHER THAN THE BUSINESSES
GENERALLY CARRIED ON BY IT AS OF THE EFFECTIVE DATE.

 

(J)            TRANSACTIONS WITH AFFILIATES.  THE SELLER WILL NOT (I) ENTER INTO
ANY TRANSACTION, INCLUDING, WITHOUT LIMITATION, ANY PURCHASE, SALE, LEASE OR
EXCHANGE OF PROPERTY OR THE RENDERING OF ANY SERVICE, WITH ANY AFFILIATE UNLESS
SUCH TRANSACTION IS (A) PURSUANT TO SUCH SELLER’S EXECUTIVE LOAN PROGRAM AS
APPROVED FROM TIME TO TIME BY ITS BOARD OF DIRECTORS, (B) OTHERWISE PERMITTED
UNDER THIS AGREEMENT, (C) IN THE ORDINARY COURSE OF THE SELLERS’ BUSINESS AND
(D) UPON FAIR AND REASONABLE TERMS NO LESS FAVORABLE TO THE SELLERS THAN IT
WOULD OBTAIN IN A COMPARABLE ARM’S LENGTH TRANSACTION WITH A PERSON WHICH IS NOT
AN AFFILIATE, OR (II) MAKE A PAYMENT THAT IS NOT OTHERWISE PERMITTED BY THIS
SECTION (J) TO ANY AFFILIATE.

 

(K)           DEFENSE OF TITLE.  SELLER WARRANTS AND WILL DEFEND THE RIGHT,
TITLE AND INTEREST OF BUYER IN AND TO ALL PURCHASED ITEMS AGAINST ALL ADVERSE
CLAIMS AND DEMANDS OF ALL PERSONS WHOMSOEVER.

 

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(L)            PRESERVATION OF PURCHASED ITEMS. SELLER SHALL DO ALL THINGS
NECESSARY TO PRESERVE THE PURCHASED ITEMS SO THAT SUCH PURCHASED ITEMS REMAIN
SUBJECT TO A FIRST PRIORITY PERFECTED SECURITY INTEREST HEREUNDER. WITHOUT
LIMITING THE FOREGOING, SELLER WILL COMPLY WITH ALL APPLICABLE LAWS, RULES AND
REGULATIONS OF ANY GOVERNMENTAL AUTHORITY APPLICABLE TO SELLER OR RELATING TO
THE PURCHASED ITEMS AND CAUSE THE PURCHASED ITEMS TO COMPLY WITH ALL APPLICABLE
LAWS, RULES, REGULATIONS OF ANY SUCH GOVERNMENTAL AUTHORITY.  SELLER WILL NOT
ALLOW ANY DEFAULT TO OCCUR FOR WHICH SELLER IS RESPONSIBLE UNDER ANY PURCHASED
ITEMS OR ANY PROGRAM DOCUMENTS AND SELLER SHALL FULLY PERFORM OR CAUSE TO BE
PERFORMED WHEN DUE ALL OF ITS OBLIGATIONS UNDER ANY PURCHASED ITEMS OR THE
PROGRAM DOCUMENTS.

 

(M)          NO ASSIGNMENT.  SELLER SHALL NOT SELL, ASSIGN, TRANSFER OR
OTHERWISE DISPOSE OF, OR GRANT ANY OPTION WITH RESPECT TO, OR PLEDGE,
HYPOTHECATE OR GRANT A SECURITY INTEREST IN OR LIEN ON OR OTHERWISE ENCUMBER
(EXCEPT PURSUANT TO THE PROGRAM DOCUMENTS), ANY OF THE PURCHASED LOANS OR ANY
INTEREST THEREIN, PROVIDED THAT THIS SECTION 13(M) SHALL NOT PREVENT ANY
CONTRIBUTION, ASSIGNMENT, TRANSFER OR CONVEYANCE OF PURCHASED LOANS IN
ACCORDANCE WITH THE PROGRAM DOCUMENTS.

 

(N)           LIMITATION ON SALE OF ASSETS. SELLERS SHALL NOT CONVEY, SELL,
LEASE, ASSIGN, TRANSFER OR OTHERWISE DISPOSE OF (COLLECTIVELY, “TRANSFER”), ALL
OR SUBSTANTIALLY ALL OF ITS PROPERTY, BUSINESS OR ASSETS (INCLUDING, WITHOUT
LIMITATION, RECEIVABLES AND LEASEHOLD INTERESTS) WHETHER NOW OWNED OR HEREAFTER
ACQUIRED OR ALLOW ANY SUBSIDIARY TO TRANSFER SUBSTANTIALLY ALL OF ITS ASSETS TO
ANY PERSON; PROVIDED, THAT (A) THE SELLERS MAY AFTER PRIOR WRITTEN NOTICE TO THE
BUYER ALLOW SUCH ACTION WITH RESPECT TO ANY SUBSIDIARY WHICH IS NOT A MATERIAL
PART OF THE SELLERS’ OVERALL BUSINESS OPERATIONS AND (B) THE FOREGOING SHALL NOT
PROHIBIT THE SELLERS FROM SECURITIZING OR SELLING ANY LOAN.

 

(O)           LIMITATION ON DISTRIBUTIONS.  WITHOUT THE BUYER’S CONSENT, THE
SELLERS SHALL NOT MAKE ANY PAYMENT ON ACCOUNT OF, OR SET APART ASSETS FOR A
SINKING OR OTHER ANALOGOUS FUND FOR THE PURCHASE, REDEMPTION, DEFEASANCE,
RETIREMENT OR OTHER ACQUISITION OF, ANY STOCK OR SENIOR OR SUBORDINATE DEBT OF
ANY SELLER, WHETHER NOW OR HEREAFTER OUTSTANDING, OR MAKE ANY OTHER DISTRIBUTION
IN RESPECT THEREOF, EITHER DIRECTLY OR INDIRECTLY, WHETHER IN CASH OR PROPERTY
OR IN OBLIGATIONS OF ANY SELLER.

 

(P)           MAINTENANCE OF LIQUIDITY.  THE SELLERS SHALL INSURE THAT, AS OF
THE END OF EACH CALENDAR MONTH, THE DIFFERENCE BETWEEN (1) THE AGGREGATE AMOUNT
OF AAMES INVESTMENT’S CASH, CASH EQUIVALENTS AND LOANS HELD FOR SALE AND
INVESTMENT (EXCLUDING SECURITIZED MORTGAGE LOANS), REDUCED BY (2) THE SUM OF
AMOUNTS OUTSTANDING ON AAMES INVESTMENT’S REVOLVING WAREHOUSE AND REPURCHASE
FACILITIES, MARGIN ON LOANS HELD BY AAMES INVESTMENT FOR SALE AND INVESTMENT
(EXCLUDING SECURITIZED MORTGAGE LOANS) AND LOANS HELD BY AAMES INVESTMENT FOR
SALE AND INVESTMENT WHICH ARE INELIGIBLE TO BE PLEDGED BY AAMES INVESTMENT UNDER
ANY OF ITS REVOLVING WAREHOUSE AND REPURCHASE FACILITIES SHALL BE EQUAL TO NOT
LESS THAN $38,000,000. 

 

(Q)           MAINTENANCE OF TANGIBLE NET WORTH.  THE SELLERS SHALL NOT PERMIT
THE TANGIBLE NET WORTH OF AAMES INVESTMENT AT ANY TIME TO BE LESS THAN THE SUM
OF (1) $250,000,000, PLUS (2) 50% OF ANY ADDITIONAL SUBSEQUENT ADDITIONAL
CAPITAL RAISED IN A PUBLIC OR PRIVATE OFFERING BY AAMES INVESTMENT.

 

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(R)            MAINTENANCE OF PROFITABILITY.  THE SELLERS SHALL NOT PERMIT AAMES
INVESTMENT’S NET INCOME BEFORE TAX, GENERATED OVER ANY TWO CONSECUTIVE FISCAL
QUARTERS, MEASURED ON THE LAST DAY OF EACH FISCAL QUARTER, TO BE LESS THAN
$1.00.

 

(S)           MAINTENANCE OF RATIO OF TOTAL INDEBTEDNESS TO TANGIBLE NET WORTH. 
THE SELLERS SHALL NOT PERMIT AAMES INVESTMENT’S RATIO OF TOTAL INDEBTEDNESS TO
TANGIBLE NET WORTH AT ANY TIME TO BE GREATER THAN 20.00 TO 1.00.

 

(T)            MAINTENANCE OF RATIO OF ADJUSTED INDEBTEDNESS TO TANGIBLE NET
WORTH.  THE SELLERS SHALL NOT PERMIT AAMES INVESTMENT’S RATIO OF ADJUSTED
INDEBTEDNESS TO TANGIBLE NET WORTH AT ANY TIME TO BE GREATER THAN 7 TO 1.00.

 

(U)           RESTRICTED PAYMENTS.  THE SELLER SHALL NOT MAKE ANY RESTRICTED
PAYMENTS FOLLOWING AN EVENT OF DEFAULT.

 

(V)           SERVICING TRANSMISSION.  THE SELLER SHALL PROVIDE TO THE BUYER ON
A MONTHLY BASIS NO LATER THAN 11:00 A.M. NEW YORK CITY TIME TWO (2) BUSINESS
DAYS PRIOR TO EACH REPURCHASE DATE (OR SUCH OTHER DAY REQUESTED BY BUYER) (I)
THE SERVICING TRANSMISSION, ON A LOAN-BY-LOAN BASIS AND IN THE AGGREGATE, WITH
RESPECT TO THE LOANS SERVICED HEREUNDER BY THE SELLER WHICH WERE FUNDED PRIOR TO
THE FIRST DAY OF THE CURRENT MONTH, SUMMARIZING THE SELLER’S DELINQUENCY AND
LOSS EXPERIENCE WITH RESPECT TO LOANS SERVICED BY THE SELLER (INCLUDING, IN THE
CASE OF THE LOANS, THE FOLLOWING CATEGORIES: CURRENT, 30-59, 60-89, 90-119,
120-180 AND 180+) AND (II) ANY OTHER INFORMATION REASONABLY REQUESTED BY THE
BUYER WITH RESPECT TO THE LOANS.

 

(W)          NO AMENDMENT OR COMPROMISE.  WITHOUT BUYER’S PRIOR WRITTEN CONSENT,
NONE OF SELLER OR THOSE ACTING ON SELLER’S BEHALF SHALL AMEND OR MODIFY, OR
WAIVE ANY TERM OR CONDITION OF, OR SETTLE OR COMPROMISE ANY CLAIM IN RESPECT OF,
ANY ITEM OF THE PURCHASED LOANS, ANY RELATED RIGHTS OR ANY OF THE PROGRAM
DOCUMENTS, PROVIDED THAT SELLER MAY AMEND OR MODIFY A LOAN IF SUCH AMENDMENT OR
MODIFICATION DOES NOT AFFECT THE AMOUNT OR TIMING OF ANY PAYMENT OF PRINCIPAL OR
INTEREST, EXTEND ITS SCHEDULED MATURITY DATE, MODIFY ITS INTEREST RATE, OR
CONSTITUTE A CANCELLATION OR DISCHARGE OF ITS OUTSTANDING PRINCIPAL BALANCE AND
DOES NOT MATERIALLY AND ADVERSELY AFFECT THE SECURITY AFFORDED BY THE REAL
PROPERTY, FURNISHINGS, FIXTURES, OR EQUIPMENT SECURING THE LOAN.

 

(X)            MAINTENANCE OF PROPERTY; INSURANCE.  THE SELLER SHALL KEEP ALL
PROPERTY USEFUL AND NECESSARY IN ITS BUSINESS IN GOOD WORKING ORDER AND
CONDITION.  THE SELLER SHALL MAINTAIN ERRORS AND OMISSIONS INSURANCE AND/OR
MORTGAGE IMPAIRMENT INSURANCE AND BLANKET BOND COVERAGE IN SUCH AMOUNTS AS ARE
IN EFFECT ON THE EFFECTIVE DATE (AS DISCLOSED TO BUYER IN WRITING) AND SHALL NOT
REDUCE SUCH COVERAGE WITHOUT THE WRITTEN CONSENT OF THE BUYER, AND SHALL ALSO
MAINTAIN SUCH OTHER INSURANCE WITH FINANCIALLY SOUND AND REPUTABLE INSURANCE
COMPANIES, AND WITH RESPECT TO PROPERTY AND RISKS OF A CHARACTER USUALLY
MAINTAINED BY ENTITIES ENGAGED IN THE SAME OR SIMILAR BUSINESS SIMILARLY
SITUATED, AGAINST LOSS, DAMAGE AND LIABILITY OF THE KINDS AND IN THE AMOUNTS
CUSTOMARILY MAINTAINED BY SUCH ENTITIES.

 

(Y)           FURTHER IDENTIFICATION OF PURCHASED ITEMS.  THE SELLER WILL
FURNISH TO THE BUYER FROM TIME TO TIME STATEMENTS AND SCHEDULES FURTHER
IDENTIFYING AND DESCRIBING THE PURCHASED ITEMS AND SUCH OTHER REPORTS IN
CONNECTION WITH THE PURCHASED ITEMS AS THE BUYER MAY

 

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REASONABLY REQUEST, ALL IN REASONABLE DETAIL.

 

(Z)            LOAN DETERMINED TO BE DEFECTIVE.  UPON DISCOVERY BY SELLER OR THE
BUYER OF ANY BREACH OF ANY REPRESENTATION OR WARRANTY LISTED ON SCHEDULE 1
HERETO APPLICABLE TO ANY LOAN, THE PARTY DISCOVERING SUCH BREACH SHALL PROMPTLY
GIVE NOTICE OF SUCH DISCOVERY TO THE OTHER.

 

(AA)         INTEREST RATE PROTECTION AGREEMENTS.  UPON THE BUYER’S REQUEST, THE
SELLER SHALL DELIVER TO THE BUYER ANY AND ALL INFORMATION RELATING TO INTEREST
RATE PROTECTION AGREEMENTS.

 

(BB)         CERTIFICATE OF A RESPONSIBLE OFFICER OF THE SELLER.  AT THE TIME
THAT THE SELLERS DELIVER FINANCIAL STATEMENTS TO THE BUYER IN ACCORDANCE WITH
SECTION 13(A) HEREOF, THE SELLERS SHALL FORWARD TO THE BUYER A CERTIFICATE OF A
RESPONSIBLE OFFICER OF AAMES INVESTMENT WHICH DEMONSTRATES THAT AAMES INVESTMENT
IS IN COMPLIANCE WITH THE COVENANTS SET FORTH IN SECTIONS 13(P)-(T) AND (AA).

 

(CC)         RESERVED.

 

(DD)         MAINTENANCE OF PAPERS, RECORDS AND FILES.  SELLER SHALL ACQUIRE,
AND SELLER SHALL BUILD, MAINTAIN AND HAVE AVAILABLE, A COMPLETE FILE IN
ACCORDANCE WITH LENDING INDUSTRY CUSTOM AND PRACTICE FOR EACH PURCHASED LOAN. 
SELLER WILL MAINTAIN ALL SUCH RECORDS NOT IN THE POSSESSION OF CUSTODIAN IN GOOD
AND COMPLETE CONDITION IN ACCORDANCE WITH INDUSTRY PRACTICES AND PRESERVE THEM
AGAINST LOSS OR DESTRUCTION.

 

(I)       SELLER SHALL COLLECT AND MAINTAIN OR CAUSE TO BE COLLECTED AND
MAINTAINED ALL RECORDS RELATING TO THE PURCHASED LOANS IN ACCORDANCE WITH
INDUSTRY CUSTOM AND PRACTICE, INCLUDING THOSE MAINTAINED PURSUANT TO THE
PRECEDING SUBSECTION, AND ALL SUCH RECORDS SHALL BE IN CUSTODIAN’S POSSESSION
UNLESS BUYER OTHERWISE APPROVES.  SELLER WILL NOT CAUSE OR AUTHORIZE ANY SUCH
PAPERS, RECORDS OR FILES THAT ARE AN ORIGINAL OR AN ONLY COPY TO LEAVE
CUSTODIAN’S POSSESSION, EXCEPT FOR INDIVIDUAL ITEMS REMOVED IN CONNECTION WITH
SERVICING A SPECIFIC LOAN, IN WHICH EVENT SELLER WILL OBTAIN OR CAUSE TO BE
OBTAINED A RECEIPT FROM THE CUSTODIAN FOR ANY SUCH PAPER, RECORD OR FILE.

 

(II)      FOR SO LONG AS BUYER HAS AN INTEREST IN OR LIEN ON ANY PURCHASED LOAN,
SELLER WILL HOLD OR CAUSE TO BE HELD ALL RELATED RECORDS IN TRUST FOR BUYER. 
SELLER SHALL NOTIFY, OR CAUSE TO BE NOTIFIED, EVERY OTHER PARTY HOLDING ANY SUCH
RECORDS OF THE INTERESTS AND LIENS GRANTED HEREBY.

 

(III)     UPON REASONABLE ADVANCE NOTICE FROM CUSTODIAN OR BUYER, SELLER SHALL
(X) MAKE ANY AND ALL SUCH RECORDS AVAILABLE TO CUSTODIAN OR BUYER TO EXAMINE ANY
SUCH RECORDS, EITHER BY ITS OWN OFFICERS OR EMPLOYEES, OR BY AGENTS OR
CONTRACTORS, OR BOTH, AND MAKE COPIES OF ALL OR ANY PORTION THEREOF, (Y) PERMIT
BUYER OR ITS AUTHORIZED AGENTS TO DISCUSS THE AFFAIRS, FINANCES AND ACCOUNTS OF
SELLER WITH ITS RESPECTIVE CHIEF OPERATING OFFICER AND CHIEF FINANCIAL OFFICER
AND TO DISCUSS THE AFFAIRS, FINANCES AND ACCOUNTS OF SELLER WITH ITS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS.

 

(EE)         MAINTENANCE OF LICENSES. SELLER SHALL (I) MAINTAIN ALL LICENSES,
PERMITS OR OTHER APPROVALS NECESSARY FOR SELLER TO CONDUCT ITS BUSINESS AND TO
PERFORM ITS OBLIGATIONS UNDER THE PROGRAM DOCUMENTS, (II) REMAIN IN GOOD
STANDING UNDER THE LAWS OF EACH STATE IN WHICH IT

 

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CONDUCTS BUSINESS OR ANY MORTGAGE PROPERTY IS LOCATED, AND (III) SHALL CONDUCT
ITS BUSINESS STRICTLY IN ACCORDANCE WITH APPLICABLE LAW.

 

(FF)           TAXES, ETC.  THE SELLER SHALL PAY AND DISCHARGE OR CAUSE TO BE
PAID AND DISCHARGED, WHEN DUE, ALL TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES
OR LEVIES IMPOSED UPON THE SELLER OR UPON ITS INCOME AND PROFITS OR UPON ANY OF
ITS PROPERTY, REAL, PERSONAL OR MIXED (INCLUDING WITHOUT LIMITATION, THE
PURCHASED LOANS) OR UPON ANY PART THEREOF, AS WELL AS ANY OTHER LAWFUL CLAIMS
WHICH, IF UNPAID, MIGHT BECOME A LIEN UPON SUCH PROPERTIES OR ANY PART THEREOF,
EXCEPT FOR ANY SUCH TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES, LEVIES OR
CLAIMS AS ARE APPROPRIATELY CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS
DILIGENTLY CONDUCTED AND WITH RESPECT TO WHICH ADEQUATE RESERVES ARE PROVIDED. 
THE SELLER SHALL FILE ON A TIMELY BASIS ALL FEDERAL, AND MATERIAL STATE AND
LOCAL TAX AND INFORMATION RETURNS, REPORTS AND ANY OTHER INFORMATION STATEMENTS
OR SCHEDULES REQUIRED TO BE FILED BY OR IN RESPECT OF IT.

 

(GG)         USE OF CUSTODIAN.  WITHOUT THE PRIOR WRITTEN CONSENT OF BUYER,
SELLER SHALL USE NO THIRD PARTY CUSTODIAN AS DOCUMENT CUSTODIAN OTHER THAN THE
CUSTODIAN WITH RESPECT TO THIRD PARTY PURCHASERS, PROSPECTIVE THIRD PARTY
PURCHASERS, LENDERS AND PROSPECTIVE THIRD PARTY LENDERS WITH RESPECT TO LOANS OF
THE SAME TYPE AS THE PURCHASED LOANS.

 

(HH)         CHANGE OF FISCAL YEAR.  SELLER WILL NOT AT ANY TIME, DIRECTLY OR
INDIRECTLY, EXCEPT UPON NINETY (90) DAYS’ PRIOR WRITTEN NOTICE TO BUYER, CHANGE
THE DATE ON WHICH SELLER’S FISCAL YEAR BEGINS FROM SELLER’S CURRENT FISCAL YEAR
BEGINNING DATE.

 

(II)           [DELIVERY OF SERVICING RIGHTS AND SERVICING RECORDS.  WITH
RESPECT TO THE SERVICING RIGHTS OF EACH RELATED PURCHASED LOAN, SELLER SHALL
DELIVER SUCH SERVICING RIGHTS TO BUYER ON THE RELATED PURCHASE DATE.  WITH
RESPECT TO THE SERVICING RECORDS AND THE PHYSICAL SERVICING OF THE PURCHASED
LOANS, THE SELLER SHALL DELIVER SUCH SERVICING RECORDS TO THE DESIGNEE OF BUYER,
WITHIN SEVENTY-FIVE (75) DAYS OF A PURCHASE DATE, UNLESS OTHERWISE STATED IN
WRITING BY BUYER; PROVIDED THAT ON EACH REPURCHASE DATE THAT IS SUBJECT TO A NEW
TRANSACTION, SUCH DELIVERY REQUIREMENT IS DEEMED RESTATED FOR SUCH NEW
TRANSACTION (AND THE IMMEDIATELY PRECEDING DELIVERY REQUIREMENT IS DEEMED TO BE
RESCINDED) IN THE ABSENCE OF DIRECTIONS TO THE CONTRARY FROM BUYER, AND A NEW
75-DAY PERIOD IS DEEMED TO COMMENCE AS OF SUCH REPURCHASE DATE.  SELLER’S
TRANSFER OF THE SERVICING RIGHTS AND SERVICING RECORDS UNDER THIS SECTION SHALL
BE IN ACCORDANCE WITH CUSTOMARY STANDARDS IN THE INDUSTRY.]

 

14.          REPURCHASE DATE PAYMENTS

 

On each Repurchase Date, Sellers shall remit or shall cause to be remitted to
Buyer the Repurchase Price together with any other Obligations then due and
payable.

 

15.          REPURCHASE OF PURCHASED LOANS

 

Upon discovery by any Seller of a breach of any of the representations and
warranties set forth on Schedule 1 to this Agreement, Sellers shall give prompt
written notice thereof to Buyer.  Upon any such discovery by Buyer, Buyer will
notify Sellers.  It is understood and agreed that the representations and
warranties set forth in Schedule 1 with respect to the Purchased Loans shall
survive delivery of the respective Mortgage Files to the Custodian and shall
inure to the benefit of Buyer.  The fact that Buyer has conducted or has failed
to conduct any partial or

 

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complete due diligence investigation in connection with its purchase of any
Purchased Loan shall not affect Buyer’s right to demand repurchase as provided
under this Agreement.  Sellers shall, within two (2) Business Days of the
earlier of Sellers’ discovery or any Seller receiving notice with respect to any
Purchased Loan of (i) any breach of a representation or warranty contained in
Schedule 1, or (ii) any failure to deliver any of the items required to be
delivered as part of the Mortgage File within the time period required for
delivery pursuant to the Custodial Agreement, promptly cure such breach or
delivery failure in all material respects.  If within two (2) Business Days
after the earlier of Sellers’ discovery of such breach or delivery failure or
any Seller receiving notice thereof that such breach or delivery failure has not
been remedied by Sellers, Sellers shall promptly upon receipt of written
instructions from Buyer, at Buyer’s option, either (i) repurchase such Purchased
Loan at a purchase price equal to the Repurchase Price with respect to such
Purchased Loan by wire transfer to the account designated by Buyer, or (ii)
transfer comparable Substitute Loans to Buyer, as provided in Section 16 hereof.

 

16.          SUBSTITUTION

 

Sellers may, subject to agreement with and acceptance by Buyer upon one (1)
Business Day’s notice, substitute other assets which are substantially the same
as the Purchased Loans (the “Substitute Loans”) for any Purchased Loans.  Such
substitution shall be made by transfer to Buyer of such Substitute Loans and
transfer to Sellers of such Purchased Loans (the “Reacquired Loans”) along with
the other information to be provided with respect to the applicable Substitute
Loan as described in the form of Transaction Notice.  Upon substitution, the
Substitute Loans shall be deemed to be Purchased Loans, the Reacquired Loans
shall no longer be deemed Purchased Loans, Buyer shall be deemed to have
terminated any security interest that Buyer may have had in the Reacquired Loans
and any Purchased Items solely related to such Reacquired Loans to Seller unless
such termination and release would give rise to or perpetuate a Margin Deficit. 
Concurrently with any termination and release described in this Section 16,
Buyer shall execute and deliver to Sellers upon request and Buyer hereby
authorizes Seller to file and record such documents as Seller may reasonably
deem necessary or advisable in order to evidence such termination and release.

 

17.          RESERVED

 

18.          EVENTS OF DEFAULT

 

Each of the following events shall constitute an Event of Default (an “Event of
Default”) hereunder:

 

(A)           A SELLER FAILS TO TRANSFER THE PURCHASED LOANS TO BUYER ON THE
APPLICABLE PURCHASE DATE (PROVIDED BUYER HAS TENDERED THE RELATED PURCHASE
PRICE);

 

(B)           A SELLER EITHER FAILS TO REPURCHASE THE PURCHASED LOANS ON THE
APPLICABLE REPURCHASE DATE OR FAILS TO PERFORM ITS OBLIGATIONS UNDER SECTION 6;

 

(C)           A SELLER SHALL DEFAULT IN THE PAYMENT OF ANY OTHER AMOUNT PAYABLE
BY IT HEREUNDER OR UNDER ANY OTHER PROGRAM DOCUMENT AFTER NOTIFICATION BY THE
BUYER OF SUCH DEFAULT, AND SUCH DEFAULT SHALL HAVE CONTINUED UNREMEDIED FOR
THREE BUSINESS DAYS; OR

 

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(D)           ANY REPRESENTATION, WARRANTY OR CERTIFICATION MADE OR DEEMED MADE
HEREIN OR IN ANY OTHER PROGRAM DOCUMENT BY A SELLER OR ANY CERTIFICATE FURNISHED
TO THE BUYER PURSUANT TO THE PROVISIONS THEREOF, SHALL PROVE TO HAVE BEEN FALSE
OR MISLEADING IN ANY MATERIAL RESPECT AS OF THE TIME MADE OR FURNISHED (OTHER
THAN THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SCHEDULE 1 WHICH SHALL BE
CONSIDERED SOLELY FOR THE PURPOSE OF DETERMINING THE MARKET VALUE OF THE LOANS;
UNLESS (I) A SELLER SHALL HAVE MADE ANY SUCH REPRESENTATIONS AND WARRANTIES WITH
KNOWLEDGE THAT THEY WERE MATERIALLY FALSE OR MISLEADING AT THE TIME MADE OR (II)
ANY SUCH REPRESENTATIONS AND WARRANTIES HAVE BEEN DETERMINED BY THE BUYER IN ITS
SOLE DISCRETION TO BE MATERIALLY FALSE OR MISLEADING ON A REGULAR BASIS); OR

 

(E)           THE SELLERS SHALL FAIL TO COMPLY WITH THE REQUIREMENTS OF
SECTION 13(C)(I), SECTION 13(D), SECTION 13(F)(I) OR (III), SECTIONS 13(K)
THROUGH 13(T) OR SECTION 13(X) HEREOF; OR THE SELLERS SHALL DEFAULT IN THE
PERFORMANCE OF ITS OBLIGATIONS UNDER SECTION 13(E) HEREOF, AND SUCH DEFAULT
SHALL CONTINUE UNREMEDIED FOR A PERIOD OF ONE (1) BUSINESS DAY; OR THE SELLERS
SHALL OTHERWISE FAIL TO OBSERVE OR PERFORM ANY OTHER AGREEMENT CONTAINED IN THIS
AGREEMENT OR ANY OTHER PROGRAM DOCUMENT AND SUCH FAILURE TO OBSERVE OR PERFORM
SHALL CONTINUE UNREMEDIED FOR A PERIOD OF FIVE (5) BUSINESS DAYS; OR

 

(F)            ANY FINAL, JUDGMENT OR JUDGMENTS OR ORDER OR ORDERS FOR THE
PAYMENT OF MONEY IN EXCESS OF $2,000,000 IN THE AGGREGATE (TO THE EXTENT THAT IT
IS, IN THE REASONABLE DETERMINATION OF BUYER, UNINSURED AND PROVIDED THAT ANY
INSURANCE OR OTHER CREDIT POSTED IN CONNECTION WITH AN APPEAL SHALL NOT BE
DEEMED INSURANCE FOR THESE PURPOSES) SHALL BE RENDERED AGAINST SELLER OR ANY OF
SELLER’S AFFILIATES/SUBSIDIARIES BY ONE OR MORE COURTS, ADMINISTRATIVE TRIBUNALS
OR OTHER BODIES HAVING JURISDICTION OVER THEM AND THE SAME SHALL NOT BE
DISCHARGED (OR PROVISIONS SHALL NOT BE MADE FOR SUCH DISCHARGE), SATISFIED, OR
BONDED, OR A STAY OF EXECUTION THEREOF SHALL NOT BE PROCURED, WITHIN SIXTY (60)
DAYS FROM THE DATE OF ENTRY THEREOF AND SELLER OR ANY OF SELLER’S
AFFILIATES/SUBSIDIARIES, AS APPLICABLE, SHALL NOT, WITHIN SAID PERIOD OF SIXTY
(60) DAYS, APPEAL THEREFROM AND CAUSE THE EXECUTION THEREOF TO BE STAYED DURING
SUCH APPEAL;

 

(G)           A SELLER SHALL ADMIT IN WRITING ITS INABILITY TO, OR INTENTION NOT
TO, PERFORM ANY OF SUCH SELLER’S OBLIGATIONS, OR BUYER SHALL HAVE DETERMINED IN
GOOD FAITH THAT ANY SELLER IS UNABLE TO MEET ITS COMMITMENTS;

 

(H)           A SELLER OR ANY OF SELLERS’ AFFILIATES/SUBSIDIARIES FILES A
VOLUNTARY PETITION IN BANKRUPTCY, SEEKS RELIEF UNDER ANY PROVISION OF ANY
BANKRUPTCY, REORGANIZATION, MORATORIUM, DELINQUENCY, ARRANGEMENT, INSOLVENCY,
READJUSTMENT OF DEBT, DISSOLUTION OR LIQUIDATION LAW OF ANY JURISDICTION WHETHER
NOW OR SUBSEQUENTLY IN EFFECT; OR CONSENTS TO THE FILING OF ANY PETITION AGAINST
IT UNDER ANY SUCH LAW; OR CONSENTS TO THE APPOINTMENT OF OR TAKING POSSESSION BY
A CUSTODIAN, RECEIVER, CONSERVATOR, TRUSTEE, LIQUIDATOR, SEQUESTRATOR OR SIMILAR
OFFICIAL FOR A SELLER OR ANY OF SELLERS’ AFFILIATES/SUBSIDIARIES, OR OF ALL OR
ANY PART OF A SELLER’S OR SELLERS’ AFFILIATES’/SUBSIDIARIES’ PROPERTY; OR MAKES
AN ASSIGNMENT FOR THE BENEFIT OF A SELLER OR SELLERS’  AFFILIATES’/SUBSIDIARIES’
CREDITORS;

 

(I)            A CUSTODIAN, RECEIVER, CONSERVATOR, LIQUIDATOR, TRUSTEE,
SEQUESTRATOR OR SIMILAR OFFICIAL FOR A SELLER, OR ANY OF SELLERS’
AFFILIATES/SUBSIDIARIES, OR OF ANY OF SELLERS’, OR THEIR RESPECTIVE PROPERTY (AS
A DEBTOR OR CREDITOR PROTECTION PROCEDURE), IS APPOINTED OR TAKES POSSESSION OF
SUCH PROPERTY; OR SELLER OR ANY OF SELLER’S AFFILIATES/SUBSIDIARIES GENERALLY
FAILS TO

 

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PAY SELLERS’ OR SELLERS’ AFFILIATES’/SUBSIDIARIES’ DEBTS AS THEY BECOME DUE; OR
A SELLER OR ANY OF SELLERS’ AFFILIATES/SUBSIDIARIES IS ADJUDICATED BANKRUPT OR
INSOLVENT; OR AN ORDER FOR RELIEF IS ENTERED UNDER THE FEDERAL BANKRUPTCY CODE,
OR ANY SUCCESSOR OR SIMILAR APPLICABLE STATUTE, OR ANY ADMINISTRATIVE INSOLVENCY
SCHEME, AGAINST A SELLER OR ANY OF SELLERS’ AFFILIATES/SUBSIDIARIES; OR ANY OF
SELLERS’ OR SELLERS’ AFFILIATES’/SUBSIDIARIES’ PROPERTY IS SEQUESTERED BY COURT
OR ADMINISTRATIVE ORDER; OR A PETITION IS FILED AGAINST ANY SELLER OR ANY OF
SELLERS’ AFFILIATES/SUBSIDIARIES UNDER ANY BANKRUPTCY, REORGANIZATION,
ARRANGEMENT, INSOLVENCY, READJUSTMENT OF DEBT, DISSOLUTION, MORATORIUM,
DELINQUENCY OR LIQUIDATION LAW OF ANY JURISDICTION, WHETHER NOW OR SUBSEQUENTLY
IN EFFECT;

 

(J)            ANY GOVERNMENTAL AUTHORITY OR ANY PERSON, AGENCY OR ENTITY ACTING
OR PURPORTING TO ACT UNDER GOVERNMENTAL AUTHORITY SHALL HAVE TAKEN ANY ACTION TO
CONDEMN, SEIZE OR APPROPRIATE, OR TO ASSUME CUSTODY OR CONTROL OF, ALL OR ANY
SUBSTANTIAL PART OF THE PROPERTY OF ANY SELLER OR ANY OF SELLERS’
AFFILIATES/SUBSIDIARIES, OR SHALL HAVE TAKEN ANY ACTION TO DISPLACE THE
MANAGEMENT OF ANY SELLER OR ANY OF SELLERS’ AFFILIATES/SUBSIDIARIES OR TO
CURTAIL ITS AUTHORITY IN THE CONDUCT OF THE BUSINESS OF ANY SELLER OR ANY OF
SELLERS’ AFFILIATES/SUBSIDIARIES, OR TAKES ANY ACTION IN THE NATURE OF
ENFORCEMENT TO REMOVE, LIMIT OR RESTRICT THE APPROVAL OF ANY SELLER OR ANY OF
SELLERS’ AFFILIATES/SUBSIDIARIES AS AN ISSUER, BUYER OR A SELLER/SERVICER OF
LOANS OR SECURITIES BACKED THEREBY, AND SUCH ACTION PROVIDED FOR IN THIS
SUBSECTION (J) SHALL NOT HAVE BEEN DISCONTINUED OR STAYED WITHIN THIRTY (30)
DAYS;

 

(K)           ANY PROGRAM DOCUMENT SHALL FOR WHATEVER REASON (INCLUDING AN EVENT
OF DEFAULT THEREUNDER) BE TERMINATED, THIS AGREEMENT SHALL FOR ANY REASON CEASE
TO CREATE A VALID, FIRST PRIORITY SECURITY INTEREST OR OWNERSHIP INTEREST UPON
TRANSFER IN ANY OF THE PURCHASED LOANS OR PURCHASED ITEMS PURPORTED TO BE
COVERED HEREBY OR ANY OF SELLERS’ MATERIAL OBLIGATIONS (INCLUDING SELLERS’
OBLIGATIONS HEREUNDER SHALL CEASE TO BE IN FULL FORCE AND EFFECT, OR THE
ENFORCEABILITY THEREOF SHALL BE CONTESTED BY THE SELLERS;

 

(L)            ANY MATERIAL ADVERSE EFFECT SHALL HAVE OCCURRED, AS DETERMINED BY
BUYER IN ITS SOLE DISCRETION;

 

(M)          (I) ANY PERSON SHALL ENGAGE IN ANY “PROHIBITED TRANSACTION” (AS
DEFINED IN SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE) INVOLVING ANY PLAN,
(II) ANY MATERIAL “ACCUMULATED FUNDING DEFICIENCY” (AS DEFINED IN SECTION 302 OF
ERISA), WHETHER OR NOT WAIVED, SHALL EXIST WITH RESPECT TO ANY PLAN OR ANY LIEN
IN FAVOR OF THE PBGC OR A PLAN SHALL ARISE ON THE ASSETS OF THE BUYER OR ANY
COMMONLY CONTROLLED ENTITY, (III) A REPORTABLE EVENT SHALL OCCUR WITH RESPECT
TO, OR PROCEEDINGS SHALL COMMENCE TO HAVE A TRUSTEE APPOINTED, OR A TRUSTEE
SHALL BE APPOINTED, TO ADMINISTER OR TO TERMINATE, ANY SINGLE EMPLOYER PLAN,
WHICH REPORTABLE EVENT OR COMMENCEMENT OF PROCEEDINGS OR APPOINTMENT OF A
TRUSTEE IS, IN THE REASONABLE OPINION OF THE BUYER, LIKELY TO RESULT IN THE
TERMINATION OF SUCH PLAN FOR PURPOSES OF TITLE IV OF ERISA, (IV) ANY SINGLE
EMPLOYER PLAN SHALL TERMINATE FOR PURPOSES OF TITLE IV OF ERISA, (V) THE SELLER
OR ANY COMMONLY CONTROLLED ENTITY SHALL, OR IN THE REASONABLE OPINION OF THE
BUYER IS LIKELY TO, INCUR ANY LIABILITY IN CONNECTION WITH A WITHDRAWAL FROM, OR
THE INSOLVENCY OR REORGANIZATION OF, A MULTIEMPLOYER PLAN OR (VI) ANY OTHER
EVENT OR CONDITION SHALL OCCUR OR EXIST WITH RESPECT TO A PLAN; AND IN EACH CASE
IN CLAUSES (I) THROUGH (VI) ABOVE, SUCH EVENT OR CONDITION, TOGETHER WITH ALL
OTHER SUCH EVENTS OR CONDITIONS, IF ANY, COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT;

 

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(N)                                 A CHANGE OF CONTROL SHALL HAVE OCCURRED
WITHOUT THE PRIOR CONSENT OF THE BUYER OR A MATERIAL CHANGE IN THE MANAGEMENT OF
THE SELLERS SHALL HAVE OCCURRED WHICH HAS NOT BEEN APPROVED BY BUYER;

 

(O)                                 SELLERS SHALL GRANT, OR SUFFER TO EXIST, ANY
LIEN ON ANY PURCHASED ITEMS EXCEPT THE LIENS CONTEMPLATED HEREBY; OR THE LIENS
CONTEMPLATED HEREBY SHALL CEASE TO BE FIRST PRIORITY PERFECTED LIENS ON THE
PURCHASED ITEMS IN FAVOR OF THE BUYER OR SHALL BE LIENS IN FAVOR OF ANY PERSON
OTHER THAN BUYER;

 

(P)                                 BUYER SHALL REASONABLY REQUEST, SPECIFYING
THE REASONS FOR SUCH REQUEST, REASONABLE INFORMATION, AND/OR WRITTEN RESPONSES
TO SUCH REQUESTS, REGARDING THE FINANCIAL WELL-BEING OF SELLER AND SUCH
REASONABLE INFORMATION AND/OR RESPONSES SHALL NOT HAVE BEEN PROVIDED WITHIN
THREE (3) BUSINESS DAYS OF SUCH REQUEST;

 

(Q)                                 SELLERS OR ANY SUBSIDIARY OR AFFILIATE OF
SELLERS SHALL DEFAULT UNDER, OR FAIL TO PERFORM AS REQUIRED UNDER, OR SHALL
OTHERWISE BREACH THE TERMS OF ANY INSTRUMENT, AGREEMENT OR CONTRACT BETWEEN THE
SELLER OR SUCH OTHER ENTITY, ON THE ONE HAND, AND THE BUYER OR ANY OF THE
BUYER’S AFFILIATES ON THE OTHER; OR THE SELLER OR ANY SUBSIDIARY OR AFFILIATE OF
THE SELLER SHALL DEFAULT UNDER, OR FAIL TO PERFORM AS REQUESTED UNDER, THE TERMS
OF ANY REPURCHASE AGREEMENT, LOAN AND SECURITY AGREEMENT OR SIMILAR CREDIT
FACILITY OR AGREEMENT FOR BORROWED FUNDS ENTERED INTO BY THE SELLER OR SUCH
OTHER ENTITY AND ANY THIRD PARTY, WHICH DEFAULT OR FAILURE ENTITLES ANY PARTY TO
REQUIRE ACCELERATION OR PREPAYMENT OF ANY INDEBTEDNESS THEREUNDER; AND

 

(R)                                    AAMES INVESTMENT SHALL FAIL TO MAINTAIN
ITS STATUS AS A REIT.

 

19.                               REMEDIES

 

Upon the occurrence of an Event of Default, Buyer, at its option (which option
shall be deemed to have been exercised immediately upon the occurrence of an
Event of Default pursuant to Section 18(g), (h), (i) or (j) hereof), shall have
the right to exercise any or all of the following rights and remedies:

 

(A)                                  (I)  THE REPURCHASE DATE FOR EACH
TRANSACTION HEREUNDER SHALL, IF IT HAS NOT ALREADY OCCURRED, BE DEEMED
IMMEDIATELY TO OCCUR (PROVIDED THAT, IN THE EVENT THAT THE PURCHASE DATE FOR ANY
TRANSACTION HAS NOT YET OCCURRED AS OF THE DATE OF SUCH EXERCISE OR DEEMED
EXERCISE, SUCH TRANSACTION SHALL BE DEEMED IMMEDIATELY CANCELED). SELLERS’
OBLIGATIONS HEREUNDER TO REPURCHASE ALL PURCHASED LOANS AT THE REPURCHASE PRICE
THEREFOR ON THE REPURCHASE DATE IN SUCH TRANSACTIONS SHALL THEREUPON BECOME
IMMEDIATELY DUE AND PAYABLE; ALL INCOME THEN HELD BY THE SELLER FOR THE BENEFIT
OF BUYER AND ALL INCOME PAID AFTER SUCH EXERCISE OR DEEMED EXERCISE SHALL BE
REMITTED TO AND RETAINED BY BUYER AND APPLIED TO THE AGGREGATE REPURCHASE PRICE
AND ANY OTHER AMOUNTS OWING BY SELLERS HEREUNDER; SELLERS SHALL IMMEDIATELY
DELIVER TO BUYER OR ITS DESIGNEE ANY AND ALL ORIGINAL PAPERS, SERVICING RECORDS
AND FILES RELATING TO THE PURCHASED LOANS SUBJECT TO SUCH TRANSACTION THEN IN
SELLERS’ POSSESSION AND/OR CONTROL; AND ALL RIGHT, TITLE AND INTEREST IN AND
ENTITLEMENT TO SUCH PURCHASED LOANS AND SERVICING RIGHTS THEREON SHALL BE DEEMED
TRANSFERRED TO BUYER OR ITS DESIGNEE.

 

(II)  BUYER SHALL HAVE THE RIGHT TO (A) SELL, ON OR FOLLOWING THE BUSINESS DAY
FOLLOWING THE DATE ON WHICH THE REPURCHASE PRICE BECAME DUE AND PAYABLE PURSUANT
TO

 

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SECTION 19(A)(I) WITHOUT NOTICE OR DEMAND OF ANY KIND, AT A PUBLIC OR PRIVATE
SALE AND AT SUCH PRICE OR PRICES AS BUYER MAY REASONABLY DEEM SATISFACTORY ANY
OR ALL PURCHASED LOANS AND/OR (B) IN ITS SOLE DISCRETION ELECT, IN LIEU OF
SELLING ALL OR A PORTION OF SUCH PURCHASED LOANS, TO GIVE SELLER CREDIT FOR SUCH
PURCHASED LOANS IN AN AMOUNT EQUAL TO THE MARKET VALUE OF THE PURCHASED LOANS
AGAINST THE AGGREGATE UNPAID REPURCHASE PRICE AND ANY OTHER AMOUNTS OWING BY
SELLER HEREUNDER. SELLERS SHALL REMAIN LIABLE TO BUYER FOR ANY AMOUNTS THAT
REMAIN OWING TO BUYER FOLLOWING A SALE AND/OR CREDIT UNDER THE PRECEDING
SENTENCE. THE PROCEEDS OF ANY DISPOSITION OF PURCHASED LOANS SHALL BE APPLIED
FIRST TO THE REASONABLE COSTS AND EXPENSES INCURRED BY BUYER IN CONNECTION WITH
OR AS A RESULT OF AN EVENT OF DEFAULT; SECOND TO BREAKAGE COSTS, IF ANY, COSTS
OF COVER AND/OR RELATED HEDGING TRANSACTIONS; THIRD TO THE AGGREGATE REPURCHASE
PRICES; AND FOURTH TO ALL OTHER OBLIGATIONS.

 

(III)  BUYER SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AND DECLARE ALL
OBLIGATIONS OF SELLER TO BE IMMEDIATELY DUE AND PAYABLE, BY A NOTICE IN
ACCORDANCE WITH SECTION 21 HEREOF.

 

(IV)  THE PARTIES RECOGNIZE THAT IT MAY NOT BE POSSIBLE TO PURCHASE OR SELL ALL
OF THE PURCHASED LOANS ON A PARTICULAR BUSINESS DAY, OR IN A TRANSACTION WITH
THE SAME PURCHASER, OR IN THE SAME MANNER BECAUSE THE MARKET FOR SUCH PURCHASED
LOANS MAY NOT BE LIQUID. IN VIEW OF THE NATURE OF THE PURCHASED LOANS, THE
PARTIES AGREE THAT LIQUIDATION OF A TRANSACTION OR THE UNDERLYING PURCHASED
LOANS DOES NOT REQUIRE A PUBLIC PURCHASE OR SALE AND THAT A GOOD FAITH PRIVATE
PURCHASE OR SALE SHALL BE DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY REASONABLE
MANNER. ACCORDINGLY, BUYER MAY ELECT THE TIME AND MANNER OF LIQUIDATING ANY
PURCHASED LOAN AND NOTHING CONTAINED HEREIN SHALL OBLIGATE BUYER TO LIQUIDATE
ANY PURCHASED LOAN ON THE OCCURRENCE OF AN EVENT OF DEFAULT OR TO LIQUIDATE ALL
PURCHASED LOANS IN THE SAME MANNER OR ON THE SAME BUSINESS DAY OR CONSTITUTE A
WAIVER OF ANY RIGHT OR REMEDY OF BUYER. NOTWITHSTANDING THE FOREGOING, THE
PARTIES TO THIS AGREEMENT AGREE THAT THE TRANSACTIONS HAVE BEEN ENTERED INTO IN
CONSIDERATION OF AND IN RELIANCE UPON THE FACT THAT ALL TRANSACTIONS HEREUNDER
CONSTITUTE A SINGLE BUSINESS AND CONTRACTUAL OBLIGATION AND THAT EACH
TRANSACTION HAS BEEN ENTERED INTO IN CONSIDERATION OF THE OTHER TRANSACTIONS.

 

(V)  TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE SELLER WAIVES ALL CLAIMS,
DAMAGES AND DEMANDS IT MAY ACQUIRE AGAINST THE BUYER ARISING OUT OF THE EXERCISE
BY THE BUYER OF ANY OF ITS RIGHTS HEREUNDER, OTHER THAN THOSE CLAIMS, DAMAGES
AND DEMANDS ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
BUYER. IF ANY NOTICE OF A PROPOSED SALE OR OTHER DISPOSITION OF PURCHASED ITEMS
SHALL BE REQUIRED BY LAW, SUCH NOTICE SHALL BE DEEMED REASONABLE AND PROPER IF
GIVEN AT LEAST 10 DAYS BEFORE SUCH SALE OR OTHER DISPOSITION.

 

(B)                                 EACH SELLER HEREBY ACKNOWLEDGES, ADMITS AND
AGREES THAT SELLERS’ OBLIGATIONS UNDER THIS AGREEMENT ARE JOINT AND SEVERAL
RECOURSE OBLIGATIONS OF THE SELLERS TO WHICH EACH SELLER PLEDGES ITS FULL FAITH
AND CREDIT. IN ADDITION TO ITS RIGHTS HEREUNDER, BUYER SHALL HAVE THE RIGHT TO
PROCEED AGAINST ANY OF ANY SELLER’S ASSETS WHICH MAY BE IN THE POSSESSION OF
BUYER, ANY OF BUYER’S AFFILIATES OR THEIR RESPECTIVE DESIGNEES (INCLUDING THE
CUSTODIAN), INCLUDING THE RIGHT TO LIQUIDATE SUCH ASSETS AND TO SET-OFF THE
PROCEEDS AGAINST MONIES OWED BY SELLERS TO BUYER

 

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PURSUANT TO THIS AGREEMENT. BUYER MAY SET OFF CASH, THE PROCEEDS OF THE
LIQUIDATION OF THE PURCHASED LOANS AND ADDITIONAL PURCHASED LOANS, ANY OTHER
PURCHASED ITEMS AND THEIR PROCEEDS AND ALL OTHER SUMS OR OBLIGATIONS OWED BY
BUYER TO SELLERS AGAINST ALL OF SELLERS’ OBLIGATIONS TO BUYER, WHETHER UNDER
THIS AGREEMENT, UNDER A TRANSACTION, OR UNDER ANY OTHER AGREEMENT BETWEEN THE
PARTIES, OR OTHERWISE, WHETHER OR NOT SUCH OBLIGATIONS ARE THEN DUE, WITHOUT
PREJUDICE TO BUYER’S RIGHT TO RECOVER ANY DEFICIENCY.

 

(C)                                  BUYER SHALL HAVE THE RIGHT TO OBTAIN
PHYSICAL POSSESSION OF THE SERVICING RECORDS AND ALL OTHER FILES OF SELLER
RELATING TO THE PURCHASED LOANS AND ALL DOCUMENTS RELATING TO THE PURCHASED
LOANS WHICH ARE THEN OR MAY THEREAFTER COME INTO THE POSSESSION OF ANY SELLER OR
ANY THIRD PARTY ACTING FOR ANY SELLER AND SELLERS SHALL DELIVER TO BUYER SUCH
ASSIGNMENTS AS BUYER SHALL REQUEST.

 

(D)                                 BUYER SHALL HAVE THE RIGHT TO DIRECT ALL
PERSONS SERVICING THE PURCHASED LOANS TO TAKE SUCH ACTION WITH RESPECT TO THE
PURCHASED LOANS AS BUYER DETERMINES APPROPRIATE.

 

(E)                                  BUYER SHALL, WITHOUT REGARD TO THE ADEQUACY
OF THE SECURITY FOR THE OBLIGATIONS, BE ENTITLED TO THE APPOINTMENT OF A
RECEIVER BY ANY COURT HAVING JURISDICTION, WITHOUT NOTICE, TO TAKE POSSESSION OF
AND PROTECT, COLLECT, MANAGE, LIQUIDATE, AND SELL THE PURCHASED LOANS AND ANY
OTHER PURCHASED ITEMS OR ANY PORTION THEREOF, COLLECT THE PAYMENTS DUE WITH
RESPECT TO THE PURCHASED LOANS AND ANY OTHER PURCHASED ITEMS OR ANY PORTION
THEREOF, AND DO ANYTHING THAT BUYER IS AUTHORIZED HEREUNDER OR BY LAW TO DO.
SELLER SHALL PAY ALL COSTS AND EXPENSES INCURRED BY BUYER IN CONNECTION WITH THE
APPOINTMENT AND ACTIVITIES OF SUCH RECEIVER.

 

(F)                                    BUYER MAY, AT ITS OPTION, ENTER INTO ONE
OR MORE INTEREST RATE PROTECTION AGREEMENTS COVERING ALL OR A PORTION OF THE
PURCHASED LOANS, AND THE SELLER SHALL BE RESPONSIBLE FOR ALL DAMAGES, JUDGMENTS,
COSTS AND EXPENSES OF ANY KIND WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST THE BUYER RELATING TO OR ARISING OUT OF SUCH INTEREST RATE PROTECTION
AGREEMENTS; INCLUDING WITHOUT LIMITATION ANY LOSSES RESULTING FROM SUCH INTEREST
RATE PROTECTION AGREEMENTS.

 

(G)                                 IN ADDITION TO ALL THE RIGHTS AND REMEDIES
SPECIFICALLY PROVIDED HEREIN, BUYER SHALL HAVE ALL OTHER RIGHTS AND REMEDIES
PROVIDED BY APPLICABLE FEDERAL, STATE, FOREIGN, AND LOCAL LAWS, WHETHER EXISTING
AT LAW, IN EQUITY OR BY STATUTE, INCLUDING, WITHOUT LIMITATION, ALL RIGHTS AND
REMEDIES AVAILABLE TO A PURCHASER OR A SECURED PARTY, AS APPLICABLE, UNDER THE
UNIFORM COMMERCIAL CODE.

 

Except as otherwise expressly provided in this Agreement, Buyer shall have the
right to exercise any of its rights and/or remedies without presentment, demand,
protest or further notice of any kind other than as expressly set forth herein,
all of which are hereby expressly waived by Seller.

 

Buyer may enforce its rights and remedies hereunder without prior judicial
process or hearing, and each Seller hereby expressly waives, to the extent
permitted by law, any right Seller might otherwise have to require Buyer to
enforce its rights by judicial process. Seller also waives, to the extent
permitted by law, any defense Seller might otherwise have to the Obligations,
arising from use of nonjudicial process, enforcement and sale of all or any
portion

 

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of the Purchased Loans and any other Purchased Items or from any other election
of remedies. Seller recognizes that nonjudicial remedies are consistent with the
usages of the trade, are responsive to commercial necessity and are the result
of a bargain at arm’s length.

 

Sellers shall cause all sums received by it with respect to the Purchased Loans
to be deposited with such Person as Buyer may direct after receipt thereof.
Sellers shall be liable to Buyer for the amount of all expenses (plus interest
thereon at a rate equal to the Post-Default Rate), and Breakage Costs including,
without limitation, all costs and expenses incurred within thirty (30) days of
the Event of Default in connection with hedging or covering transactions related
to the Purchased Loans, conduit advances and payments for mortgage insurance.

 

20.                               DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE

 

No failure on the part of Buyer to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by Buyer of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All rights and remedies of Buyer provided for herein are
cumulative and in addition to any and all other rights and remedies provided by
law, the Program Documents and the other instruments and agreements contemplated
hereby and thereby, and are not conditional or contingent on any attempt by
Buyer to exercise any of its rights under any other related document. Buyer may
exercise at any time after the occurrence of an Event of Default one or more
remedies, as they so desire, and may thereafter at any time and from time to
time exercise any other remedy or remedies.

 

21.                               NOTICES AND OTHER COMMUNICATIONS

 

Except as otherwise expressly permitted by this Agreement, all notices, requests
and other communications provided for herein and under the Custodial Agreement
(including, without limitation, any modifications of, or waivers, requests or
consents under, this Agreement) shall be given or made in writing (including,
without limitation, by telex or telecopy) delivered to the intended recipient at
the “Address for Notices” specified below its name on the signature pages
hereof); or, as to any party, at such other address as shall be designated by
such party in a written notice to each other party. Except as otherwise provided
in this Agreement and except for notices given by the Seller under Section 3(b)
(which shall be effective only on receipt), all such communications shall be
deemed to have been duly given when transmitted by telex or telecopier or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.

 

22.                               USE OF EMPLOYEE PLAN ASSETS

 

No assets of an employee benefit plan subject to any provision of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) shall be used by
either party hereto in a Transaction.

 

23.                               INDEMNIFICATION AND EXPENSES.

 

(A)                                  THE SELLERS AGREE TO HOLD THE BUYER, AND
ITS AFFILIATES AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND ADVISORS
(EACH AN “INDEMNIFIED PARTY”) HARMLESS FROM AND INDEMNIFY ANY

 

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INDEMNIFIED PARTY AGAINST ALL LIABILITIES, LOSSES, DAMAGES, JUDGMENTS, COSTS AND
EXPENSES OF ANY KIND WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST
SUCH INDEMNIFIED PARTY (COLLECTIVELY, THE “COSTS”) RELATING TO OR ARISING OUT OF
THIS AGREEMENT, ANY OTHER PROGRAM DOCUMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY, OR ANY AMENDMENT, SUPPLEMENT OR MODIFICATION OF, OR ANY
WAIVER OR CONSENT UNDER OR IN RESPECT OF, THIS AGREEMENT, ANY OTHER PROGRAM
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY, THAT, IN EACH CASE,
RESULTS FROM ANYTHING OTHER THAN ANY INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
SELLERS AGREE TO HOLD ANY INDEMNIFIED PARTY HARMLESS FROM AND INDEMNIFY SUCH
INDEMNIFIED PARTY AGAINST ALL COSTS WITH RESPECT TO ALL LOANS RELATING TO OR
ARISING OUT OF ANY VIOLATION OR ALLEGED VIOLATION OF ANY ENVIRONMENTAL LAW, RULE
OR REGULATION OR ANY CONSUMER CREDIT LAWS, INCLUDING WITHOUT LIMITATION LAWS
WITH RESPECT TO UNFAIR OR DECEPTIVE LENDING PRACTICES AND PREDATORY LENDING
PRACTICES, THE TRUTH IN LENDING ACT AND/OR THE REAL ESTATE SETTLEMENT PROCEDURES
ACT, THAT, IN EACH CASE, RESULTS FROM ANYTHING OTHER THAN SUCH INDEMNIFIED
PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN ANY SUIT, PROCEEDING OR
ACTION BROUGHT BY AN INDEMNIFIED PARTY IN CONNECTION WITH ANY LOAN FOR ANY SUM
OWING THEREUNDER, OR TO ENFORCE ANY PROVISIONS OF ANY LOAN, THE SELLER WILL
SAVE, INDEMNIFY AND HOLD SUCH INDEMNIFIED PARTY HARMLESS FROM AND AGAINST ALL
EXPENSE, LOSS OR DAMAGE SUFFERED BY REASON OF ANY DEFENSE, SET-OFF,
COUNTERCLAIM, RECOUPMENT OR REDUCTION OF LIABILITY WHATSOEVER OF THE ACCOUNT
DEBTOR OR OBLIGOR THEREUNDER, ARISING OUT OF A BREACH BY THE SELLERS OF ANY
OBLIGATION THEREUNDER OR ARISING OUT OF ANY OTHER AGREEMENT, INDEBTEDNESS OR
LIABILITY AT ANY TIME OWING TO OR IN FAVOR OF SUCH ACCOUNT DEBTOR OR OBLIGOR OR
ITS SUCCESSORS FROM THE SELLERS. THE SELLERS ALSO AGREE TO REIMBURSE AN
INDEMNIFIED PARTY AS AND WHEN BILLED BY SUCH INDEMNIFIED PARTY FOR ALL SUCH
INDEMNIFIED PARTY’S COSTS AND EXPENSES INCURRED IN CONNECTION WITH THE
ENFORCEMENT OR THE PRESERVATION OF SUCH INDEMNIFIED PARTY’S RIGHTS UNDER THIS
AGREEMENT, ANY OTHER PROGRAM DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR
THEREBY, INCLUDING WITHOUT LIMITATION THE REASONABLE FEES AND DISBURSEMENTS OF
ITS COUNSEL. THE SELLERS HEREBY ACKNOWLEDGE THAT, THE OBLIGATIONS OF THE SELLERS
UNDER THIS AGREEMENT ARE RECOURSE OBLIGATIONS OF THE SELLERS.

 

(B)                                 THE SELLERS AGREE TO PAY AS AND WHEN BILLED
BY THE BUYER ALL OF THE OUT-OF POCKET COSTS AND EXPENSES INCURRED BY THE BUYER
IN CONNECTION WITH THE DEVELOPMENT, PREPARATION AND EXECUTION OF, AND ANY
AMENDMENT, SUPPLEMENT OR MODIFICATION TO, THIS AGREEMENT, ANY OTHER PROGRAM
DOCUMENT OR ANY OTHER DOCUMENTS PREPARED IN CONNECTION HEREWITH OR THEREWITH.
THE SELLERS AGREE TO PAY AS AND WHEN BILLED BY THE BUYER ALL OF THE
OUT-OF-POCKET COSTS AND EXPENSES INCURRED IN CONNECTION WITH THE CONSUMMATION
AND ADMINISTRATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
INCLUDING, WITHOUT LIMITATION, (I) ALL THE REASONABLE FEES, DISBURSEMENTS AND
EXPENSES OF COUNSEL TO THE BUYER AND (II) ALL THE DUE DILIGENCE, INSPECTION,
TESTING AND REVIEW COSTS AND EXPENSES INCURRED BY THE BUYER WITH RESPECT TO
PURCHASED ITEMS UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, THOSE COSTS
AND EXPENSES INCURRED BY THE BUYER PURSUANT TO SECTIONS 23, 39 AND 44 HEREOF
OTHER THAN ANY COSTS AND EXPENSES INCURRED IN CONNECTION WITH THE BUYER’S
REHYPOTHECATION OF THE PURCHASED LOANS PRIOR TO AN EVENT OF DEFAULT. SELLERS
ALSO AGREE NOT TO ASSERT ANY CLAIM AGAINST BUYER OR ANY OF ITS AFFILIATES, OR
ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS, ON
ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE PROGRAM DOCUMENTS, THE
ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE TRANSACTIONS, THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE FOREGOING INDEMNITY
AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE
NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR

 

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WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.

 

(C)                                  IF SELLERS FAIL TO PAY WHEN DUE ANY COSTS,
EXPENSES OR OTHER AMOUNTS PAYABLE BY THEM UNDER THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, REASONABLE FEES AND EXPENSES OF COUNSEL AND INDEMNITIES,
SUCH AMOUNT MAY BE PAID ON BEHALF OF SELLERS BY BUYER, IN ITS SOLE DISCRETION
AND SELLERS SHALL REMAIN LIABLE FOR ANY SUCH PAYMENTS BY BUYER. NO SUCH PAYMENT
BY BUYER SHALL BE DEEMED A WAIVER OF ANY OF BUYER’S RIGHTS UNDER THE PROGRAM
DOCUMENTS.

 

(D)                                 WITHOUT PREJUDICE TO THE SURVIVAL OF ANY
OTHER AGREEMENT OF SELLERS HEREUNDER, THE COVENANTS AND OBLIGATIONS OF SELLERS
CONTAINED IN THIS SECTION 23 SHALL SURVIVE THE PAYMENT IN FULL OF THE REPURCHASE
PRICE AND ALL OTHER AMOUNTS PAYABLE HEREUNDER AND DELIVERY OF THE PURCHASED
LOANS BY BUYER AGAINST FULL PAYMENT THEREFOR.

 

24.                               WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS

 

Each Seller hereby expressly waives, to the fullest extent permitted by law,
every statute of limitation on a deficiency judgment, any reduction in the
proceeds of any Purchased Items as a result of restrictions upon Buyer or
Custodian contained in the Program Documents or any other instrument delivered
in connection therewith, and any right that it may have to direct the order in
which any of the Purchased Items shall be disposed of in the event of any
disposition pursuant hereto.

 

25.                               REIMBURSEMENT

 

All sums reasonably expended by Buyer in connection with the exercise of any
right or remedy provided for herein shall be and remain Sellers’ obligation
(unless and to the extent that Sellers are the prevailing party in any dispute,
claim or action relating thereto). Sellers agree to pay, with interest at the
Post-Default Rate to the extent that an Event of Default has occurred, the
reasonable out-of-pocket expenses and reasonable attorneys’ fees incurred by
Buyer and/or Custodian in connection with the preparation, negotiation,
enforcement (including any waivers), administration and amendment of the Program
Documents (regardless of whether a Transaction is entered into hereunder), the
taking of any action, including legal action, required or permitted to be taken
by Buyer (without duplication to Buyer) and/or Custodian pursuant thereto, any
“due diligence” or loan agent reviews conducted by Buyer or on its behalf or by
refinancing or restructuring in the nature of a “workout.”

 

26.                               FURTHER ASSURANCES

 

Sellers agree to do such further acts and things and to execute and deliver to
Buyer such additional assignments, acknowledgments, agreements, powers and
instruments as are reasonably required by Buyer to carry into effect the intent
and purposes of this Agreement and the other Program Documents, to perfect the
interests of Buyer in the Purchased Items or to better assure and confirm unto
Buyer its rights, powers and remedies hereunder and thereunder.

 

27.                               TERMINATION

 

This Agreement shall remain in effect until the Termination Date. However, no
such termination shall affect Sellers’ outstanding obligations to Buyer at the
time of such termination.

 

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Sellers’ obligations under Section 3(i), 3(j) Section 5, Section 12 and Section
23 and any other reimbursement or indemnity obligation of Seller to Buyer
pursuant to this Agreement or any other Program Documents shall survive the
termination hereof.

 

28.                               SEVERABILITY

 

If any provision of any Program Document is declared invalid by any court of
competent jurisdiction, such invalidity shall not affect any other provision of
the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.

 

29.                               BINDING EFFECT; GOVERNING LAW

 

This Agreement shall be binding and inure to the benefit of the parties hereto
and their respective successors and assigns, except that Seller may not assign
or transfer any of its respective rights or obligations under this Agreement or
any other Program Document without the prior written consent of Buyer. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

30.                               AMENDMENTS

 

Except as otherwise expressly provided in this Agreement, any provision of this
Agreement may be modified or supplemented only by an instrument in writing
signed by the Seller and the Buyer and any provision of this Agreement may be
waived by the Buyer.

 

31.                               SUCCESSORS AND ASSIGNS

 

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

 

32.                               SURVIVAL

 

The obligations of the Sellers under Sections 3(h), 3(i), 5, 23 and 25 hereof
and any other reimbursement or indemnity obligation of Seller to Buyer pursuant
to this Agreement or any other Program Document shall survive the repurchase of
the Loans hereunder and the termination of this Agreement. In addition, each
representation and warranty made, or deemed to be made by a request for a
purchase, herein or pursuant hereto shall survive the making of such
representation and warranty, and the Buyer shall not be deemed to have waived,
by reason of purchasing any Loan, any Default that may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that the Buyer may have had notice or knowledge or reason to
believe that such representation or warranty was false or misleading at the time
such purchase was made.

 

33.                               CAPTIONS

 

The table of contents and captions and section headings appearing herein are
included

 

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solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

 

34.                               COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.

 

35.                               SUBMISSION TO JURISDICTION; WAIVERS

 

EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(A)                               SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND/OR ANY OTHER PROGRAM
DOCUMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF,
TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

 

(B)                               CONSENTS THAT ANY SUCH ACTION OR PROCEEDING
MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

 

(C)                               AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO
ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF
WHICH THE BUYER SHALL HAVE BEEN NOTIFIED; AND

 

(D)                               AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

 

36.                               WAIVER OF JURY TRIAL

 

EACH OF THE SELLERS AND THE BUYER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

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37.                               ACKNOWLEDGEMENTS

 

Each Seller hereby acknowledges that:

 

(A)                                  IT HAS BEEN ADVISED BY COUNSEL IN THE
NEGOTIATION, EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER PROGRAM
DOCUMENTS TO WHICH IT IS A PARTY;

 

(B)                                 THE BUYER HAS NO FIDUCIARY RELATIONSHIP TO
THE SELLER; AND

 

(C)                                  NO JOINT VENTURE EXISTS AMONG OR BETWEEN
THE BUYER AND THE SELLER.

 

38.                               HYPOTHECATION OR PLEDGE OF PURCHASED ITEMS.

 

The Buyer shall have free and unrestricted use of all Loans and Purchased Items
and nothing in this Agreement shall preclude the Buyer from engaging in
repurchase transactions with the Loans and Purchased Items or otherwise
pledging, repledging, transferring, hypothecating, or rehypothecating the Loans
and Purchased Items. Nothing contained in this Agreement shall obligate the
Buyer to segregate any Loans or Purchased Items delivered to the Buyer by the
Sellers.

 

39.                               ASSIGNMENTS; PARTICIPATIONS.

 

(A)                                  THE SELLERS MAY ASSIGN ANY OF THEIR RIGHTS
OR OBLIGATIONS HEREUNDER ONLY WITH THE PRIOR WRITTEN CONSENT OF THE BUYER. THE
BUYER MAY ASSIGN OR TRANSFER TO ANY BANK OR OTHER FINANCIAL INSTITUTION THAT
MAKES OR INVESTS IN REPURCHASE AGREEMENTS OR LOANS OR ANY AFFILIATE OF THE BUYER
ALL OR ANY OF ITS RIGHTS UNDER THIS AGREEMENT AND THE OTHER PROGRAM DOCUMENTS.

 

(B)                                 THE BUYER MAY, IN ACCORDANCE WITH APPLICABLE
LAW, AT ANY TIME SELL TO ONE OR MORE ENTITIES (“PARTICIPANTS”) PARTICIPATING
INTERESTS IN THIS AGREEMENT, ITS AGREEMENT TO PURCHASE LOANS, OR ANY OTHER
INTEREST OF THE BUYER HEREUNDER AND UNDER THE OTHER PROGRAM DOCUMENTS. IN THE
EVENT OF ANY SUCH SALE BY THE BUYER OF PARTICIPATING INTERESTS TO A PARTICIPANT,
THE BUYER’S OBLIGATIONS UNDER THIS AGREEMENT TO THE SELLERS SHALL REMAIN
UNCHANGED, THE BUYER SHALL REMAIN SOLELY RESPONSIBLE FOR THE PERFORMANCE THEREOF
AND THE SELLERS SHALL CONTINUE TO DEAL SOLELY AND DIRECTLY WITH THE BUYER IN
CONNECTION WITH THE BUYER’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THE
OTHER PROGRAM DOCUMENTS. THE SELLERS AGREE THAT IF AMOUNTS OUTSTANDING UNDER
THIS AGREEMENT ARE DUE OR UNPAID, OR SHALL HAVE BEEN DECLARED OR SHALL HAVE
BECOME DUE AND PAYABLE UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, EACH
PARTICIPANT SHALL BE DEEMED TO HAVE THE RIGHT OF SET-OFF IN RESPECT OF ITS
PARTICIPATING INTEREST IN AMOUNTS OWING UNDER THIS AGREEMENT TO THE SAME EXTENT
AS IF THE AMOUNT OF ITS PARTICIPATING INTEREST WERE OWING DIRECTLY TO IT AS A
BUYER UNDER THIS AGREEMENT; PROVIDED, THAT SUCH PARTICIPANT SHALL ONLY BE
ENTITLED TO SUCH RIGHT OF SET-OFF IF IT SHALL HAVE AGREED IN THE AGREEMENT
PURSUANT TO WHICH IT SHALL HAVE ACQUIRED ITS PARTICIPATING INTEREST TO SHARE
WITH THE BUYER THE PROCEEDS THEREOF. THE BUYER ALSO AGREES THAT EACH PARTICIPANT
SHALL BE ENTITLED TO THE BENEFITS OF SECTIONS 3(H), 3(I) AND 23 WITH RESPECT TO
ITS PARTICIPATION IN THE LOANS AND PURCHASED ITEMS OUTSTANDING FROM TIME TO
TIME; PROVIDED, THAT THE BUYER AND ALL PARTICIPANTS SHALL BE ENTITLED TO RECEIVE
NO GREATER AMOUNT IN THE AGGREGATE PURSUANT TO SUCH SECTIONS THAN THE BUYER
WOULD HAVE BEEN ENTITLED TO RECEIVE HAD NO SUCH TRANSFER OCCURRED.

 

(C)                                  THE BUYER MAY FURNISH ANY INFORMATION
CONCERNING THE SELLERS OR ANY OF THEIR SUBSIDIARIES IN THE POSSESSION OF BUYER
FROM TIME TO TIME TO ASSIGNEES AND PARTICIPANTS

 

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(INCLUDING PROSPECTIVE ASSIGNEES AND PARTICIPANTS) ONLY AFTER NOTIFYING THE
SELLERS IN WRITING AND SECURING SIGNED CONFIDENTIALITY STATEMENTS (A FORM OF
WHICH IS ATTACHED HERETO AS EXHIBIT H) AND ONLY FOR THE SOLE PURPOSE OF
EVALUATING ASSIGNMENTS OR PARTICIPATIONS AND FOR NO OTHER PURPOSE.

 

(D)                                 THE SELLERS AGREE TO COOPERATE WITH THE
BUYER IN CONNECTION WITH ANY SUCH ASSIGNMENT AND/OR PARTICIPATION, TO EXECUTE
AND DELIVER REPLACEMENT NOTES, AND TO ENTER INTO SUCH RESTATEMENTS OF, AND
AMENDMENTS, SUPPLEMENTS AND OTHER MODIFICATIONS TO, THIS AGREEMENT AND THE OTHER
PROGRAM DOCUMENTS IN ORDER TO GIVE EFFECT TO SUCH ASSIGNMENT AND/OR
PARTICIPATION. THE SELLERS FURTHER AGREE TO FURNISH TO ANY PARTICIPANT
IDENTIFIED BY THE BUYER TO THE SELLERS COPIES OF ALL REPORTS AND CERTIFICATES TO
BE DELIVERED BY THE SELLERS TO THE BUYER HEREUNDER, AS AND WHEN DELIVERED TO THE
BUYER.

 

40.                               SINGLE AGREEMENT

 

Sellers and Buyer acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, Sellers and Buyer each agree (i) to perform all of their
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, and (ii) that payments, deliveries and other
transfers made by any of them in respect of any Transaction shall be deemed to
have been made in consideration of payments, deliveries and other transfers in
respect of any other Transaction hereunder, and the obligations to make any such
payments, deliveries and other transfers may be applied against each other and
netted.

 

41.                               INTENT

 

Sellers and Buyer recognize that each Transaction is a “repurchase agreement” as
that term is defined in Section 101 of Title 11 of the USC, and a “securities
contract” as that term is defined in Section 741 of Title 11 of the USC.

 

It is understood that Buyer’s right to liquidate the Purchased Loans delivered
to it in connection with the Transactions hereunder or to accelerate or
terminate this Agreement or otherwise exercise any other remedies pursuant to
Section 19 hereof is a contractual right to liquidate, accelerate or terminate
such Transaction as described in Sections 555 and 559 of Title 11 of the USC.

 

42.                               CONFIDENTIALITY

 

The Program Documents and their respective terms, provisions, supplements and
amendments, and transactions and notices thereunder, are proprietary to Buyer
and shall be held by Sellers in strict confidence and shall not be disclosed to
any third party without the consent of Buyer except for (i) disclosure to
Sellers’ direct and indirect parent companies, directors, attorneys, agents or
accountants, provided that such attorneys or accountants likewise agree to be
bound by this covenant of confidentiality, or are otherwise subject to
confidentiality restrictions or (ii) upon prior written notice to Buyer,
disclosure required by law, rule, regulation or order of a court or other
regulatory body or (iii) upon prior written notice to Buyer, disclosure to any
approved hedge counterparty to the extent necessary to obtain any Interest Rate
Protection

 

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Agreement hereunder or (iv) any disclosures or filing required under Securities
and Exchange Commission (“SEC”) or state securities’ laws; provided that in the
case of (ii), (iii) and (iv), Sellers shall take reasonable actions to provide
Buyer with prior written notice; provided further that in the case of (iv), the
Sellers shall not file any of the Program Documents other than the Agreement
with the SEC or state securities office unless Sellers shall have provided at
least thirty (30) days (or such lesser time as may be demanded by the SEC or
state securities office) prior written notice of such filing to Buyer.
Notwithstanding anything herein to the contrary, each party (and each employee,
representative, or other agent of each party) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure. For this purpose, tax treatment and tax structure shall not include
(i) the identity of any existing or future party (or any Affiliate of such
party) to this Agreement or (ii) any specific pricing information or other
commercial terms, including the amount of any fees, expenses, rates or payments
arising in connection with the transactions contemplated by this Agreement.
Buyer acknowledges that this Agreement may be filed with the Securities and
Exchange Commission; provided that, the Sellers shall redact any pricing and
other confidential provisions, including, without limitation, the amount of any
commitment fee, non-usage fee, Price Differential and Purchase Price from such
filed Agreement.

 

43.                               SERVICING

 

(A)                                  THE SELLER COVENANTS TO MAINTAIN OR CAUSE
THE SERVICING OF THE PURCHASED LOANS TO BE MAINTAINED IN CONFORMITY WITH
ACCEPTED SERVICING PRACTICES. IN THE EVENT THAT THE PRECEDING LANGUAGE IS
INTERPRETED AS CONSTITUTING ONE OR MORE SERVICING CONTRACTS, EACH SUCH SERVICING
CONTRACT SHALL TERMINATE AUTOMATICALLY UPON THE EARLIEST OF (I) AN EVENT OF
DEFAULT, OR (II) THE DATE ON WHICH ALL THE OBLIGATIONS HAVE BEEN PAID IN FULL,
OR (III) THE TRANSFER OF SERVICING TO ANY ENTITY APPROVED BY THE BUYER AND THE
ASSUMPTION THEREOF BY SUCH ENTITY.

 

(B)                                 DURING THE PERIOD ANY SELLER IS SERVICING
THE PURCHASED LOANS, (I) THE SELLERS AGREE THAT BUYER IS THE OWNER OF ALL
SERVICING RECORDS, INCLUDING BUT NOT LIMITED TO ANY AND ALL SERVICING
AGREEMENTS, FILES, DOCUMENTS, RECORDS, DATA BASES, COMPUTER TAPES, COPIES OF
COMPUTER TAPES, PROOF OF INSURANCE COVERAGE, INSURANCE POLICIES, APPRAISALS,
OTHER CLOSING DOCUMENTATION, PAYMENT HISTORY RECORDS, AND ANY OTHER RECORDS
RELATING TO OR EVIDENCING THE SERVICING OF SUCH LOANS (THE “SERVICING RECORDS”),
AND (II) THE SELLERS GRANT THE BUYER A SECURITY INTEREST IN ALL SERVICING FEES
AND RIGHTS RELATING TO THE PURCHASED LOANS AND ALL SERVICING RECORDS TO SECURE
THE OBLIGATION OF THE SELLERS OR ITS DESIGNEE TO SERVICE IN CONFORMITY WITH THIS
SECTION 43 AND ANY OTHER OBLIGATION OF SELLERS TO THE BUYER. THE SELLERS
COVENANT TO SAFEGUARD SUCH SERVICING RECORDS AND TO DELIVER THEM PROMPTLY TO THE
BUYER OR ITS DESIGNEE (INCLUDING THE CUSTODIAN) AT THE BUYER’S REQUEST. IT IS
UNDERSTOOD AND AGREED BY THE PARTIES THAT PRIOR TO AN EVENT OF DEFAULT, THE
SELLERS SHALL RETAIN THE SERVICING FEES WITH RESPECT TO THE PURCHASED LOANS.

 

(C)                                  IF THE LOANS ARE SERVICED BY ANY OTHER
THIRD PARTY SERVICER (SUCH THIRD PARTY SERVICER, THE “SUBSERVICER”) THE SELLERS
SHALL PROVIDE A COPY OF THE RELATED SERVICING AGREEMENT WITH A PROPERLY EXECUTED
INSTRUCTION LETTER TO THE BUYER AT LEAST THREE (3) BUSINESS DAYS PRIOR TO THE
APPLICABLE PURCHASE DATE OR THE DATE ON WHICH THE SUBSERVICER SHALL BEGIN
SUBSERVICING THE LOANS, WHICH SHALL BE IN THE FORM AND SUBSTANCE ACCEPTABLE TO
BUYER (THE “SERVICING

 

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AGREEMENT”) AND SHALL HAVE OBTAINED THE WRITTEN CONSENT OF THE BUYER FOR SUCH
SUBSERVICER TO SUBSERVICE THE LOANS. INITIALLY, THE SUBSERVICER SHALL BE AAMES
FUNDING.

 

(D)                                 THE SELLERS AGREE THAT UPON THE OCCURRENCE
OF AN EVENT OF DEFAULT, THE BUYER MAY TERMINATE THE SELLERS IN THEIR CAPACITY AS
SERVICER AND TERMINATE ANY SERVICING AGREEMENT AND SELLERS SHALL TRANSFER SUCH
SERVICING TO THE BUYER OR ITS DESIGNEE, AT NO COST OR EXPENSE TO THE BUYER. IN
ADDITION, THE SELLERS SHALL PROVIDE TO THE BUYER AN INSTRUCTION LETTER FROM THE
SELLERS TO THE EFFECT THAT UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE BUYER
MAY TERMINATE ANY SUBSERVICER OR SERVICING AGREEMENT AND DIRECT THAT COLLECTIONS
WITH RESPECT TO THE LOANS BE REMITTED IN ACCORDANCE WITH THE BUYER’S
INSTRUCTIONS. THE SELLERS AGREE TO COOPERATE WITH THE BUYER IN CONNECTION WITH
THE TRANSFER OF SERVICING.

 

(E)                                  AFTER THE PURCHASE DATE, UNTIL THE
REPURCHASE DATE, THE SELLERS WILL HAVE NO RIGHT TO MODIFY OR ALTER THE TERMS OF
THE LOAN OR CONSENT TO THE MODIFICATION OR ALTERATION OF THE TERMS OF ANY LOAN,
AND THE SELLERS WILL HAVE NO OBLIGATION OR RIGHT TO REPOSSESS ANY LOAN OR
SUBSTITUTE ANOTHER LOAN, EXCEPT AS PROVIDED IN ANY CUSTODIAL AGREEMENT.

 

(F)                                    THE SELLERS SHALL PERMIT THE BUYER TO
INSPECT UPON REASONABLE PRIOR WRITTEN NOTICE AT A MUTUALLY CONVENIENT TIME, THE
SELLER’S OR ITS AFFILIATE’S SERVICING FACILITIES, AS THE CASE MAY BE, FOR THE
PURPOSE OF SATISFYING THE BUYER THAT THE SELLERS OR ITS AFFILIATE, AS THE CASE
MAY BE, HAS THE ABILITY TO SERVICE THE LOANS AS PROVIDED IN THIS AGREEMENT. IN
ADDITION, WITH RESPECT TO ANY SUBSERVICER WHICH IS NOT AN AFFILIATE OF THE
SELLERS, THE SELLERS SHALL USE THEIR BEST EFFORTS TO ENABLE THE BUYER TO INSPECT
THE SERVICING FACILITIES OF SUCH SUBSERVICER.

 

44.                               PERIODIC DUE DILIGENCE REVIEW

 

The Sellers acknowledges that the Buyer has the right to perform continuing due
diligence reviews with respect to the Loans, for purposes of verifying
compliance with the representations, warranties, covenants and specifications
made hereunder or under any other Program Document, or otherwise, and the Seller
agrees that upon reasonable (but no less than one (1) Business Day’s) prior
notice to the Sellers (provided that upon the occurrence of a Default or an
Event of Default, no such prior notice shall be required), the Buyer or its
authorized representatives will be permitted during normal business hours to
examine, inspect, make copies of, and make extracts of, the Mortgage Files, the
Servicing Records and any and all documents, records, agreements, instruments or
information relating to such Loans in the possession, or under the control, of
the Sellers and/or the Custodian. The Sellers also shall make available to the
Buyer a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Files and the Loans. Without
limiting the generality of the foregoing, the Sellers acknowledge that the Buyer
shall purchase Loans from the Sellers based solely upon the information provided
by the Sellers to the Buyer in the Loan Schedule and the representations,
warranties and covenants contained herein, and that the Buyer, at its option,
has the right, at any time to conduct a partial or complete due diligence review
on some or all of the Purchased Loans, including, without limitation, ordering
new credit reports, new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Loan. The Buyer
may underwrite such Loans itself or engage a third party underwriter to perform
such underwriting. The Sellers agree to cooperate with the Buyer and any third
party underwriter in connection with such underwriting, including, but not
limited to,

 

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providing the Buyer and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such
Loans in the possession, or under the control, of the Sellers. In addition, the
Buyer has the right to perform continuing Due Diligence Reviews of the Sellers,
their Affiliates, directors, and their respective Subsidiaries and the officers,
employees and significant shareholders thereof. The Sellers and Buyer further
agree that all out-of-pocket costs and expenses incurred by the Buyer in
connection with the Buyer’s activities pursuant to this Section 44 shall be paid
by the Sellers.

 

45.                               SET-OFF

 

In addition to any rights and remedies of the Buyer provided by this Agreement
and by law, the Buyer shall have the right, without prior notice to the Sellers,
any such notice being expressly waived by the Sellers to the extent permitted by
applicable law, upon any amount becoming due and payable by the Sellers
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all Property and
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Buyer or any Affiliate thereof to or
for the credit or the account of the Sellers. The Buyer may set-off cash, the
proceeds of the liquidation of any Purchased Items and all other sums or
obligations owed by the Buyer or its Affiliates to Seller against all of
Sellers’ obligations to the Buyer or its Affiliates, whether under this
Agreement or under any other agreement between the parties or between Seller and
any Affiliate of the Buyer, or otherwise, whether or not such obligations are
then due, without prejudice to the Buyer’s or its Affiliate’s right to recover
any deficiency. The Buyer agrees promptly to notify the Sellers after any such
set-off and application made by the Buyer; provided that the failure to give
such notice shall not affect the validity of such set-off and application.

 

46.                               JOINT AND SEVERAL LIABILITY; CROSS-DEFAULT.

 

Each Seller hereby acknowledges and agrees that the Sellers are jointly and
severally liable to the Buyer for all representations, warranties, covenants,
obligations and liabilities of either Seller hereunder. Each Seller hereby
further acknowledges and agrees that any Default, Event of Default or breach of
a representation, warranty or covenant by either Seller under this Agreement is
hereby considered a Default, Event of Default or breach by each Seller, as
applicable. Each Seller hereby waives any defense to their obligations under
this Agreement based upon or arising out of the disability or other defense or
cessation of liability of one Seller versus another. A Seller’s subrogation
claim arising out of payments to Buyer shall constitute a capital investment in
another Seller subordinated to any claims of Buyer and equal to a ratable share
of the equity interests in such Seller.

 

47.                               ENTIRE AGREEMENT

 

This Agreement and the other Program Documents embody the entire agreement and
understanding of the parties hereto and thereto and supersede any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein and therein. No alteration, waiver, amendments, or change or supplement
hereto shall be binding or effective

 

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unless the same is set forth in writing by a duly authorized representative of
each party hereto.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.

 

 

AAMES INVESTMENT CORPORATION, a
Maryland corporation, as Seller

 

AAMES CAPITAL CORPORATION, a
California corporation, as Seller

 

 

 

 

 

 

By:

 

 

 

By:

 

 

Name:

 

 

 

Name:

 

 

Title:

 

 

 

Title:

 

 

 

 

 

 

 

 

Address for Notices:

 

Address for Notices:

350 South Grand Avenue
Los Angeles, California 90071
Attention: Chief Financial Officer
Telecopier No.: (323) 210-5036
Telephone No.: (323) 210-4855

 

350 South Grand Avenue
Los Angeles, California 90071
Attention: Chief Financial Officer
Telecopier No.: (323) 210-5036
Telephone No.: (323) 210-4855

 

 

 

With a copy to:

 

With a copy to:

Attention: Vice President/Treasury
Telecopier No.: (323) 210-5044
Telephone No.: (323) 210-5385

 

Attention: Vice President/Treasury
Telecopier No.: (323) 210-5044
Telephone No.: (323) 210-5385

 

 

 

With a copy to:

 

With a copy to:

Attention: General Counsel
Telecopier No.: (323) 210-5026
Telephone No.: (323) 210-4871

 

Attention: General Counsel
Telecopier No.: (323) 210-5026
Telephone No.: (323) 210-4871

 

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AAMES FUNDING CORPORATION, a
California corporation, as Seller

 

GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., a Delaware corporation, as
Buyer and Agent, as applicable

 

 

 

 

 

 

By:

 

 

 

By:

 

 

Name:

 

 

 

Name:

 

 

Title:

 

 

 

Title:

 

 

 

 

 

 

 

 

Address for Notices:

 

Address for Notices to the Buyer:

350 South Grand Avenue
Los Angeles, California 90071
Attention: Chief Financial Officer
Telecopier No.: (323) 210-5036
Telephone No.: (323) 210-4855

 

600 Steamboat Road
Greenwich, Connecticut 06830
Attention: Tony Palmisano
Telephone: (203) 618-2341
Fax: (203) 422-4718

 

 

 

With a copy to:

 

With a copy to:

Attention: Vice President/Treasury
Telecopier No.: (323) 210-5044
Telephone No.: (323) 210-5385

 

Attention: James Esposito
Telephone: (203) 625-6072
Fax: (203) 422-4072

 

 

 

With a copy to:

 

 

 

 

 

With a copy to:

 

 

Attention: General Counsel
Telecopier No.: (323) 210-5026
Telephone No.: (323) 210-4871

 

 

 

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ANNEX I

 

BUYER ACTING AS AGENT

 

This Annex I forms a part of the Master Repurchase Agreement dated as of April
10, 2006 (the “Agreement”) among Aames Investment Corporation, Aames Capital
Corporation, Aames Funding Corporation and Greenwich Capital Financial Products,
Inc. This Annex I sets forth the terms and conditions governing all transactions
in which the Buyer selling assets or buying assets, as the case may be
(“Agent”), in a Transaction is acting as agent for one or more third parties
(each, a “Principal”). Capitalized terms used but not defined in this Annex I
shall have the meanings ascribed to them in the Agreement.

 

1.                                       Additional Representations. Agent
hereby makes the following representations, which shall continue during the term
of any Transaction: Principal has duly authorized Agent to execute and deliver
the Agreement and the other Program Documents on its behalf, has the power to so
authorize Agent and to enter into the Transactions contemplated by the Agreement
and the other Program Documents and to perform the obligations of Seller or the
Buyer, as the case may be, under such Transactions, and has taken all necessary
action to authorize such execution and delivery by Agent and such performance by
it.

 

2.                                       Identification of Principals. Agent
agrees (a) to provide the other party, prior to the date on which the parties
agree to enter into any Transaction under the Agreement, with a written list of
Principals for which it intends to act as Agent (which list may be amended in
writing from time to time with the consent of the other party) and (b) to
provide the other party, before the close of business on the next business day
after orally agreeing to enter into a Transaction, with notice of the specific
Principal or Principals for whom it is acting in connection with such
Transaction. If (i) Agent fails to identify such Principal or Principals prior
to the close of business on such next business day or (ii) the other party shall
determine in its sole discretion any Principal or Principals identified by Agent
are not acceptable to it, the other party may reject and rescind any Transaction
with such Principal or Principals, return to Agent any Purchased Loans or
portion of the Purchase Price, as the case may be, previously transferred to the
other party and refuse any further performance under such Transaction, and Agent
shall immediately return to the other party any portion of the Purchase Price or
Purchased Loans, as the case may be, previously transferred to Agent in
connection with such Transaction; provided, however, that (A) the other party
shall promptly (and in any event within one business day) notify Agent of its
determination to reject and rescind such Transaction and (B) to the extent that
any performance was rendered by any party under any Transaction rejected by the
other party, and such party shall remain entitled to any Price Differential or
other amounts that would have been payable to it with respect to such
performance if such Transaction had not been rejected. The other party
acknowledges that Agent shall not have any obligation to provide it with
confidential information regarding the financial status of its Principals; Agent
agrees, however, that it will assist the other party in obtaining from Agent’s
Principals such Information regarding the financial status of such Principals as
the other party may reasonably request.

 

3.                                       Limitation of Agent’s Liability. The
parties expressly acknowledge that if the

 

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representations of Agent under the Agreement, including this Annex I, are true
and correct in all material respects during the term of any Transaction and
Agent otherwise complies with the provisions of this Annex I, then (a) Agent’s
obligations under the Agreement shall not include a guarantee of performance by
its Principal or Principals; provided that Agent shall remain liable for
performance pursuant to Section 10 of the Agreement, and (b) the other party’s
remedies shall not include a right of setoff in respect of rights or
obligations, if any, of Agent arising in other transactions in which Agent is
acting as principal.

 

4.                                       Multiple Principals.

 

(a)                                  In the event that Agent proposes to act for
more than one Principal hereunder, Agent and the other party shall elect whether
(i) to treat Transactions under the Agreement as transactions entered into on
behalf of separate Principals or (ii) to aggregate such Transactions as if they
were transactions by a single Principal. Failure to make such an election in
writing shall be deemed an election to treat Transactions under the Agreement as
transactions on behalf of a single Principal.

 

(b)                                 In the event that Agent and the other party
elect (or are deemed to elect) to treat Transactions under the Agreement as
transactions on behalf of separate Principals, the parties agree that (i) Agent
will provide the other party, together with the notice described in Section 2(b)
of this Annex I, notice specifying the portion of each Transaction allocable to
the account of each of the Principals for which it is acting (to the extent that
any such Transaction is allocable to the account of more than one Principal);
(ii) the portion of any individual Transaction allocable to each Principal shall
be deemed a separate Transaction under the Agreement; (iii) the margin
maintenance obligations of Seller under Section 6(a) of the Agreement shall be
determined on a Transaction-by-Transaction basis (unless the parties agree to
determine such obligations on a Principal-by-Principal basis); and (iv) Buyer’s
remedies under the Agreement upon the occurrence of an Event of Default shall be
determined as if Agent had entered into a separate Agreement with the other
party on behalf of each of its Principals.

 

(c)                                  In the event that Agent and the other party
elect to treat Transactions under the Agreement as if they were transactions by
a single Principal, the parties agree that (i) Agent’s notice under Section 2(b)
of this Annex I need only identify the names of its Principals but not the
portion of each Transaction allocable to each Principal’s account; (ii) the
margin maintenance obligations of Seller under Section 6(a) of the Agreement
shall, subject to any greater requirement imposed by applicable law, be
determined on an aggregate basis for all Transactions entered into by Agent on
behalf of any Principal; and (iii) Buyer’s remedies upon the occurrence of an
Event of Default shall be determined as if all Principals were a single Buyer.

 

(d)                                 Notwithstanding any other provision of the
Agreement (including, without limitation, this Annex I), the parties agree that
any Transactions by Agent on behalf of an employee benefit plan under ERISA
shall be treated as Transactions

 

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on behalf of separate Principals in accordance with Section 4(b) of this Annex I
(and all margin maintenance obligations of the parties shall be determined on a
Transaction-by-Transaction basis).

 

5.                                       Interpretation of Terms. All references
to “Buyer” in the Agreement shall, subject to the provisions of this Annex I
(including, among other provisions, the limitations on Agent’s liability in
Section 3 of this Annex 1), be construed to reflect that (i) each Principal
shall have, in connection with any Transaction or Transactions entered into by
Agent on its behalf, the rights, responsibilities, privileges and obligations of
a “Buyer”, directly entering into such Transaction or Transactions with the
other party under the Agreement, and (ii) Agent’s Principal or Principals have
designated Agent as their sole agent for performance of Buyer’s obligations to
Seller, and for receipt of performance by Seller of its obligations to Buyer, in
connection with any Transaction or Transactions under the Agreement (including,
among other things, as Agent for each Principal in connection with transfers of
Loans, securities, cash or other property and as agent for giving and receiving
all notices under the Agreement). Both Agent and its Principal or Principals
shall be deemed “parties” to the Agreement and all references to a “party” or
“either party” in the Agreement shall be deemed revised accordingly.

 

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Schedule 1

 

REPRESENTATIONS AND WARRANTIES RE: LOANS

 

Eligible Loans

 

As to each Loan that is subject to a Transaction hereunder (and the related
Mortgage, Note, Assignment of Mortgage and Mortgaged Property), each Seller
shall be deemed to make the following representations and warranties to Buyer as
of the Purchase Date and as of each date such Loan is subject to a Transaction:

 

(A)                                  LOANS AS DESCRIBED. THE INFORMATION SET
FORTH IN THE LOAN SCHEDULE WITH RESPECT TO THE LOAN IS COMPLETE, TRUE AND
CORRECT IN ALL MATERIAL RESPECTS.

 

(B)                                 PAYMENTS CURRENT. EXCEPT WITH RESPECT TO ANY
EARLY PAYMENT DEFAULT REPURCHASED LOAN, THE FIRST MONTHLY PAYMENT SHALL HAVE
BEEN MADE PRIOR TO THE SECOND SCHEDULED MONTHLY PAYMENT BECOMING DUE.

 

(C)                                  NO OUTSTANDING CHARGES. THERE ARE NO
DEFAULTS IN COMPLYING WITH THE TERMS OF THE MORTGAGE SECURING THE LOAN, AND ALL
TAXES, GOVERNMENTAL ASSESSMENTS, INSURANCE PREMIUMS, WATER, SEWER AND MUNICIPAL
CHARGES, LEASEHOLD PAYMENTS OR GROUND RENTS WHICH PREVIOUSLY BECAME DUE AND
OWING HAVE BEEN PAID, OR AN ESCROW OF FUNDS HAS BEEN ESTABLISHED IN AN AMOUNT
SUFFICIENT TO PAY FOR EVERY SUCH ITEM WHICH REMAINS UNPAID AND WHICH HAS BEEN
ASSESSED BUT IS NOT YET DUE AND PAYABLE. NEITHER THE SELLER NOR THE QUALIFIED
ORIGINATOR FROM WHICH THE SELLER ACQUIRED THE LOAN HAS ADVANCED FUNDS, OR
INDUCED, SOLICITED OR KNOWINGLY RECEIVED ANY ADVANCE OF FUNDS BY A PARTY OTHER
THAN THE MORTGAGOR, DIRECTLY OR INDIRECTLY, FOR THE PAYMENT OF ANY AMOUNT
REQUIRED UNDER THE LOAN, EXCEPT FOR INTEREST ACCRUING FROM THE DATE OF THE NOTE
OR DATE OF DISBURSEMENT OF THE PROCEEDS OF THE LOAN, WHICHEVER IS MORE RECENT,
TO THE DAY WHICH PRECEDES BY ONE MONTH THE DUE DATE OF THE FIRST INSTALLMENT OF
PRINCIPAL AND INTEREST THEREUNDER.

 

(D)                                 ORIGINAL TERMS UNMODIFIED. THE TERMS OF THE
NOTE AND MORTGAGE HAVE NOT BEEN IMPAIRED, WAIVED, ALTERED OR MODIFIED IN ANY
RESPECT, FROM THE DATE OF ORIGINATION; EXCEPT BY A WRITTEN INSTRUMENT WHICH HAS
BEEN RECORDED, IF NECESSARY TO PROTECT THE INTERESTS OF THE BUYER, AND WHICH HAS
BEEN DELIVERED TO THE CUSTODIAN AND THE TERMS OF WHICH ARE REFLECTED IN THE LOAN
SCHEDULE. THE SUBSTANCE OF ANY SUCH WAIVER, ALTERATION OR MODIFICATION HAS BEEN
APPROVED BY THE TITLE INSURER, TO THE EXTENT REQUIRED BY THE TITLE INSURANCE
POLICY, AND ITS TERMS ARE REFLECTED ON THE LOAN SCHEDULE. NO MORTGAGOR IN
RESPECT OF THE LOAN HAS BEEN RELEASED, IN WHOLE OR IN PART, EXCEPT IN CONNECTION
WITH AN ASSUMPTION AGREEMENT APPROVED BY THE TITLE INSURER, TO THE EXTENT
REQUIRED BY SUCH POLICY, AND WHICH ASSUMPTION AGREEMENT IS PART OF THE MORTGAGE
FILE DELIVERED TO THE CUSTODIAN AND THE TERMS OF WHICH ARE REFLECTED IN THE LOAN
SCHEDULE.

 

(E)                                  NO DEFENSES. THE LOAN IS NOT SUBJECT TO ANY
RIGHT OF RESCISSION, SETOFF, COUNTERCLAIM OR DEFENSE, INCLUDING WITHOUT
LIMITATION THE DEFENSE OF USURY, NOR WILL THE OPERATION OF ANY OF THE TERMS OF
THE NOTE OR THE MORTGAGE, OR THE EXERCISE OF ANY RIGHT THEREUNDER, RENDER EITHER
THE NOTE OR THE MORTGAGE UNENFORCEABLE, IN WHOLE OR IN PART AND NO SUCH RIGHT OF
RESCISSION, SET-OFF, COUNTERCLAIM OR DEFENSE HAS BEEN ASSERTED WITH RESPECT
THERETO, AND NO MORTGAGOR IN RESPECT OF THE LOAN WAS A DEBTOR IN ANY STATE OR
FEDERAL BANKRUPTCY OR INSOLVENCY PROCEEDING AT THE TIME THE LOAN WAS ORIGINATED.

 

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(F)                                    HAZARD INSURANCE. THE MORTGAGED PROPERTY
IS INSURED BY A FIRE AND EXTENDED PERILS INSURANCE POLICY, ISSUED BY A QUALIFIED
INSURER, AND SUCH OTHER HAZARDS AS ARE CUSTOMARY IN THE AREA WHERE THE MORTGAGED
PROPERTY IS LOCATED, AND TO THE EXTENT REQUIRED BY THE SELLER AS OF THE DATE OF
ORIGINATION CONSISTENT WITH THE UNDERWRITING GUIDELINES, AGAINST EARTHQUAKE AND
OTHER RISKS INSURED AGAINST BY PERSONS OPERATING LIKE PROPERTIES IN THE LOCALITY
OF THE MORTGAGED PROPERTY, IN AN AMOUNT NOT LESS THAN THE GREATEST OF (I) 100%
OF THE REPLACEMENT COST OF ALL IMPROVEMENTS TO THE MORTGAGED PROPERTY, (II)
EITHER (A) THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN WITH RESPECT TO EACH
FIRST LIEN LOAN OR (B) WITH RESPECT TO EACH SECOND LIEN LOAN, THE SUM OF THE
OUTSTANDING PRINCIPAL BALANCE OF THE FIRST LIEN LOAN AND THE OUTSTANDING
PRINCIPAL BALANCE OF THE SECOND LIEN LOAN, (III) THE AMOUNT NECESSARY TO AVOID
THE OPERATION OF ANY CO-INSURANCE PROVISIONS WITH RESPECT TO THE MORTGAGED
PROPERTY, AND CONSISTENT WITH THE AMOUNT THAT WOULD HAVE BEEN REQUIRED AS OF THE
DATE OF ORIGINATION IN ACCORDANCE WITH THE UNDERWRITING GUIDELINES OR (IV) THE
AMOUNT NECESSARY TO FULLY COMPENSATE FOR ANY DAMAGE OR LOSS TO THE IMPROVEMENTS
THAT ARE A PART OF SUCH PROPERTY ON A REPLACEMENT COST BASIS. IF ANY PORTION OF
THE MORTGAGED PROPERTY IS IN AN AREA IDENTIFIED BY ANY FEDERAL GOVERNMENTAL
AUTHORITY AS HAVING SPECIAL FLOOD HAZARDS, AND FLOOD INSURANCE IS AVAILABLE, A
FLOOD INSURANCE POLICY MEETING THE CURRENT GUIDELINES OF THE FEDERAL INSURANCE
ADMINISTRATION IS IN EFFECT WITH A GENERALLY ACCEPTABLE INSURANCE CARRIER, IN AN
AMOUNT REPRESENTING COVERAGE NOT LESS THAN THE LEAST OF (1) THE OUTSTANDING
PRINCIPAL BALANCE OF THE LOAN, (2) THE FULL INSURABLE VALUE OF THE MORTGAGED
PROPERTY, AND (3) THE MAXIMUM AMOUNT OF INSURANCE AVAILABLE UNDER THE FLOOD
DISASTER PROTECTION ACT OF 1973, AS AMENDED. ALL SUCH INSURANCE POLICIES
(COLLECTIVELY, THE “HAZARD INSURANCE POLICY”) CONTAIN A STANDARD MORTGAGEE
CLAUSE NAMING THE SELLER, ITS SUCCESSORS AND ASSIGNS (INCLUDING WITHOUT
LIMITATION, SUBSEQUENT OWNERS OF THE LOAN), AS MORTGAGEE, AND MAY NOT BE
REDUCED, TERMINATED OR CANCELED WITHOUT 30 DAYS’ PRIOR WRITTEN NOTICE TO THE
MORTGAGEE. NO SUCH NOTICE HAS BEEN RECEIVED BY THE SELLER. ALL PREMIUMS DUE AND
OWING ON SUCH INSURANCE POLICY HAVE BEEN PAID. THE RELATED MORTGAGE OBLIGATES
THE MORTGAGOR TO MAINTAIN ALL SUCH INSURANCE AND, AT SUCH MORTGAGOR’S FAILURE TO
DO SO, AUTHORIZES THE MORTGAGEE TO MAINTAIN SUCH INSURANCE AT THE MORTGAGOR’S
COST AND EXPENSE AND TO SEEK REIMBURSEMENT THEREFOR FROM SUCH MORTGAGOR. WHERE
REQUIRED BY STATE LAW OR REGULATION, THE MORTGAGOR HAS BEEN GIVEN AN OPPORTUNITY
TO CHOOSE THE CARRIER OF THE REQUIRED HAZARD INSURANCE, PROVIDED THE POLICY IS
NOT A “MASTER” OR “BLANKET” HAZARD INSURANCE POLICY COVERING A CONDOMINIUM, OR
ANY HAZARD INSURANCE POLICY COVERING THE COMMON FACILITIES OF A PLANNED UNIT
DEVELOPMENT. THE HAZARD INSURANCE POLICY IS THE VALID AND BINDING OBLIGATION OF
THE INSURER AND IS IN FULL FORCE AND EFFECT. THE SELLER HAS NOT ENGAGED IN, AND
HAS NO KNOWLEDGE OF THE MORTGAGOR’S HAVING ENGAGED IN, ANY ACT OR OMISSION WHICH
WOULD IMPAIR THE COVERAGE OF ANY SUCH POLICY, THE BENEFITS OF THE ENDORSEMENT
PROVIDED FOR HEREIN, OR THE VALIDITY AND BINDING EFFECT OF EITHER INCLUDING,
WITHOUT LIMITATION, NO UNLAWFUL FEE, COMMISSION, KICKBACK OR OTHER UNLAWFUL
COMPENSATION OR VALUE OF ANY KIND HAS BEEN OR WILL BE RECEIVED, RETAINED OR
REALIZED BY ANY ATTORNEY, FIRM OR OTHER PERSON, AND NO SUCH UNLAWFUL ITEMS HAVE
BEEN RECEIVED, RETAINED OR REALIZED BY THE SELLER.

 

(G)                                 COMPLIANCE WITH APPLICABLE LAWS. ANY AND ALL
REQUIREMENTS OF ANY FEDERAL, STATE OR LOCAL LAW INCLUDING, WITHOUT LIMITATION,
USURY, TRUTH-IN-LENDING, ALL APPLICABLE PREDATORY AND ABUSIVE LENDING, REAL
ESTATE SETTLEMENT PROCEDURES, CONSUMER CREDIT PROTECTION, EQUAL CREDIT
OPPORTUNITY OR DISCLOSURE LAWS APPLICABLE TO THE ORIGINATION AND SERVICING OF
SUCH LOAN HAVE BEEN COMPLIED WITH, THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY WILL NOT INVOLVE THE VIOLATION OF ANY SUCH LAWS OR
REGULATIONS, AND THE SELLER SHALL MAINTAIN OR SHALL CAUSE ITS AGENT TO MAINTAIN
IN ITS POSSESSION, AVAILABLE FOR THE INSPECTION OF THE BUYER, AND SHALL DELIVER
TO THE

 

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BUYER, UPON TWO BUSINESS DAYS’ REQUEST, EVIDENCE OF COMPLIANCE WITH ALL SUCH
REQUIREMENTS.

 

(H)                                 NO SATISFACTION OF MORTGAGE. THE MORTGAGE
HAS NOT BEEN SATISFIED, CANCELED, SUBORDINATED OR RESCINDED, IN WHOLE OR IN
PART, AND THE MORTGAGED PROPERTY HAS NOT BEEN RELEASED FROM THE LIEN OF THE
MORTGAGE, IN WHOLE-OR IN PART, NOR HAS ANY INSTRUMENT BEEN EXECUTED THAT WOULD
EFFECT ANY SUCH RELEASE, CANCELLATION, SUBORDINATION OR RESCISSION OTHER THAN IN
THE CASE OF A RELEASE OF A PORTION OF THE LAND COMPRISING A MORTGAGED PROPERTY
OR A RELEASE OF A BLANKET MORTGAGE WHICH RELEASE WILL NOT CAUSE THE LOAN TO FAIL
TO SATISFY THE UNDERWRITING GUIDELINES. THE SELLER HAS NOT WAIVED THE
PERFORMANCE BY THE MORTGAGOR OF ANY ACTION, IF THE MORTGAGOR’S FAILURE TO
PERFORM SUCH ACTION WOULD CAUSE THE LOAN TO BE IN DEFAULT, NOR HAS THE SELLER
WAIVED ANY DEFAULT RESULTING FROM ANY ACTION OR INACTION BY THE MORTGAGOR.

 

(I)                                     LOCATION AND TYPE OF MORTGAGED PROPERTY.
THE MORTGAGED PROPERTY IS LOCATED IN THE STATE IDENTIFIED IN THE LOAN SCHEDULE
AND CONSISTS OF A SINGLE PARCEL OF REAL PROPERTY WITH A DETACHED SINGLE FAMILY
RESIDENCE ERECTED THEREON, OR A TWO- TO FOUR-FAMILY DWELLING, OR AN INDIVIDUAL
CONDOMINIUM UNIT IN A CONDOMINIUM PROJECT, OR AN INDIVIDUAL UNIT IN A PLANNED
UNIT DEVELOPMENT OR A DE MINIMIS PLANNED UNIT DEVELOPMENT, PROVIDED, HOWEVER,
THAT ANY CONDOMINIUM UNIT OR PLANNED UNIT DEVELOPMENT SHALL CONFORM WITH THE
APPLICABLE FANNIE MAE AND FREDDIE MAC REQUIREMENTS REGARDING SUCH DWELLINGS,
THAT A DE MINIMUS PERCENTAGE OF THE LOANS MAY BE COOPERATIVE LOANS AND THAT NO
RESIDENCE OR DWELLING IS A MOBILE HOME OR A MANUFACTURED DWELLING. NO PORTION OF
THE MORTGAGED PROPERTY IS USED FOR COMMERCIAL PURPOSES.

 

(J)                                     VALID LIEN. THE MORTGAGE (INCLUDING ANY
NEGATIVE AMORTIZATION WHICH MAY ARISE THEREUNDER) IS A VALID, SUBSISTING,
ENFORCEABLE AND PERFECTED (A) FIRST LIEN AND FIRST PRIORITY SECURITY INTEREST
WITH RESPECT TO EACH LOAN WHICH IS INDICATED BY THE SELLER TO BE A FIRST LIEN
(AS REFLECTED ON THE LOAN SCHEDULE), OR (B) SECOND LIEN AND SECOND PRIORITY
SECURITY INTEREST WITH RESPECT TO EACH LOAN WHICH IS INDICATED BY THE SELLER TO
BE A SECOND LIEN (AS REFLECTED ON THE LOAN SCHEDULE), IN EITHER CASE, ON THE
REAL PROPERTY INCLUDED IN THE MORTGAGED PROPERTY, INCLUDING ALL BUILDINGS ON THE
MORTGAGED PROPERTY AND ALL INSTALLATIONS AND MECHANICAL, ELECTRICAL, PLUMBING,
HEATING AND AIR CONDITIONING SYSTEMS LOCATED IN OR ANNEXED TO SUCH BUILDINGS,
AND ALL ADDITIONS, ALTERATIONS AND REPLACEMENTS MADE AT ANY TIME WITH RESPECT TO
THE FOREGOING AND WITH RESPECT TO COOPERATIVE LOANS, INCLUDING THE PROPRIETARY
LEASE AND THE COOPERATIVE SHARES. THE LIEN OF THE MORTGAGE IS SUBJECT ONLY TO:

 

(1)                                  THE LIEN OF CURRENT REAL PROPERTY TAXES AND
ASSESSMENTS NOT YET DUE AND PAYABLE;

 

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

 

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

 

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(4)                                  with respect to each Loan which is
indicated by the Seller to be a Second Lien Loan (as reflected on the Loan
Schedule) a First Lien on the Mortgaged Property.

 

Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Loan establishes and creates a valid,
subsisting and enforceable (A) first lien and first priority security interest
with respect to each Loan which is indicated by the Seller to be a First Lien
(as reflected on the Loan Schedule), or (B) second lien and second priority
security interest with respect to each Loan which is indicated by the Seller to
be a Second Lien Loan (as reflected on the Loan Schedule), in either case, on
the property described therein and the Seller has full right to pledge and
assign the same to the Buyer. Except with respect to any First Lien Loan which
was originated in connection with a Concurrent Second Lien Loan, the Mortgaged
Property was not, as of the date of origination of the Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Mortgage.

 

(k)                                  Validity of Mortgage Documents. The Note
and the Mortgage and any other agreement executed and delivered by a Mortgagor
or guarantor, if applicable, in connection with a Loan are genuine, and each is
the legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms. All parties to the Note, the Mortgage and any other
such related agreement had legal capacity to enter into the Loan and to execute
and deliver the Note, the Mortgage and any such agreement, and the Note, the
Mortgage and any other such related agreement have been duly and properly
executed by such related parties. No fraud, error, omission, misrepresentation,
negligence or similar occurrence with respect to a Loan has taken place on the
part of any Person, including, without limitation, the Mortgagor, any appraiser,
any builder or developer, or any other party involved in the origination of the
Loan. The Seller has reviewed all of the documents constituting the Servicing
File and has made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein.

 

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

 

(m)                               Ownership. The Seller is the sole owner and
holder of the Loan. All Loans acquired by the Seller from third parties
(including affiliates) were acquired in a true and legal sale pursuant to which
such third party sold, transferred, conveyed and assigned to the Seller all of
its right, title and interest in, to and under such Loan and retained no
interest in such Loan. In connection with such sale, such third party received
reasonably equivalent value and fair consideration and, in accordance with GAAP
and for federal income tax purposes, reported the sale of such Loan to the
Seller as a sale of its interests in such Loan. The Loan is not assigned or
pledged, and the Seller has good, indefeasible and marketable title thereto, and
has full right to transfer, pledge and assign the Loan to the Buyer free and
clear of any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest, and has full right and authority subject to no
interest or participation of, or agreement with, any other party, to assign,
transfer and pledge each Loan pursuant to this Agreement and following the
pledge of each

 

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Loan, the Buyer will hold such Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest except
any such security interest created pursuant to the terms of this Agreement.

 

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

 

(o)                                 LTV. As of the date of origination of the
Loan, the LTV and CLTV (if applicable) are as identified on the Loan Schedule.
No First Lien Loan has an LTV greater than 100% and no First Lien Loan which is
not a Full Documentation Loan has an LTV greater than 90%.

 

(p)                                 Title Insurance. The Loan is covered by
either (i) an attorney’s opinion of title and abstract of title, the form and
substance of which is acceptable to prudent mortgage lending institutions making
mortgage loans in the area wherein the Mortgaged Property is located or (ii) an
ALTA lender’s title insurance policy or other generally acceptable form of
policy or insurance acceptable to Fannie Mae or Freddie Mac and each such title
insurance policy is issued by a title insurer acceptable to Fannie Mae or
Freddie Mac and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring the Seller, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount of the Loan
(including, to the extent a Note provides for Negative Amortization, the maximum
amount of Negative Amortization in accordance with the Mortgage), subject only
to the exceptions contained in clauses (1), (2), (3) and, with respect to each
Loan which is indicated by the Seller to be a Second Lien Loan (as reflected on
the Loan Schedule) clause (4) of paragraph (j) of this Part I of Schedule 1, and
in the case of Adjustable Rate Loans, against any loss by reason of the
invalidity or unenforceability of the lien resulting from the provisions of the
Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly
Payment and Negative Amortization. Where required by state law or regulation,
the Mortgagor has been given the opportunity to choose the carrier of the
required mortgage title insurance. Additionally, such lender’s title insurance
policy affirmatively insures ingress and egress and against encroachments by or
upon the Mortgaged Property or any interest therein. The title policy does not
contain any special exceptions (other than the standard exclusions) for zoning
and uses and has been marked to delete the standard survey exception or to
replace the standard survey exception with a specific survey reading. The
Seller, its successors and assigns, are the sole insureds of such lender’s title
insurance policy, and such lender’s title insurance policy is valid and remains
in full force and effect and will be in force and effect upon the consummation
of the transactions contemplated by this Agreement. No claims have been made
under such lender’s title insurance policy, and no prior holder or servicer of
the related Mortgage, including the Seller, has done, by act or omission,
anything which would impair the coverage of such lender’s title insurance
policy, including, without limitation, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other Person, and no such unlawful
items have been received, retained or

 

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realized by the Seller.

 

(q)                                 No Defaults. There is no default, breach,
violation or event of acceleration existing under the Mortgage or the Note and
no event has occurred which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration, and neither the Seller nor its predecessors
have waived any default, breach, violation or event of acceleration. With
respect to each Loan which is indicated by the Seller to be a Second Lien Loan
(as reflected on the Loan Schedule) (i) the First Lien is in full force and
effect, (ii) there is no default, breach, violation or event of acceleration
existing under such First Lien mortgage or the related mortgage note, (iii) no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration thereunder, and either (A) the First Lien mortgage contains a
provision which allows or (B) applicable law requires, the mortgagee under the
second lien Loan to receive notice of, and affords such mortgagee an opportunity
to cure any default by payment in full or otherwise under the First Lien
mortgage.

 

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

 

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

 

(t)                                    Origination; Payment Terms. The Loan was
originated by or in conjunction with a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act, a savings and loan association, a savings bank, a commercial bank,
credit union, insurance company or similar banking institution which is
supervised and examined by a federal or state authority. Principal payments on
the Loan commenced no more than sixty (60) days after funds were disbursed in
connection with the Loan. The Mortgage Interest Rate is adjusted, with respect
to Adjustable Rate Loans, on each Interest Rate Adjustment Date to equal the
Index plus the Gross Margin (rounded up or down to the nearest .125%), subject
to the Mortgage Interest Rate Cap. The Mortgage Interest Rate is adjusted, with
respect to Adjustable Rate Loans, on each Interest Rate Adjustment Date to equal
the Index plus the Gross Margin (rounded up or down to the nearest .125%),
subject to the Mortgage Interest Rate Cap. With respect to each Loan that is not
a Negative Amortization Loan, the Mortgage Note is payable on the first day of
each month in equal monthly installments of principal and interest, which
installments of interest, with respect to an Adjustable Rate Mortgage Loan, are
subject to change due to the adjustments to the Mortgage Interest Rate on each
Adjustment Date, with interest calculated and payable in arrears, sufficient to
amortize the Asset fully by the stated maturity date, over an original term of
not more than 30 years from commencement of amortization. With respect to each
Negative Amortization Loan, the related Note requires a Monthly Payment which is
sufficient during the period following each Payment

 

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Adjustment Date, to fully amortize the outstanding principal balance as of the
first day of such period (including any Negative Amortization) over the then
remaining term of such Note and to pay interest at the related Mortgage Interest
Rate; provided, that the Monthly Payment shall not increase to an amount that
exceeds 107.5% of the amount of the Monthly Payment that was due immediately
prior to the Payment Adjustment Date; provided, further, that the payment
adjustment cap shall not be applicable with respect to the adjustment made to
the Monthly Payment that occurs in a year in which the Loan has been outstanding
for a multiple of five (5) years and in any such year the Monthly Payment shall
be adjusted to fully amortize the Loan over the remaining term. The Due Date of
the first payment under the Note is no more than 60 days from the date of the
Note.

 

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

 

(v)                                 Conformance with Underwriting Guidelines and
Agency Standards. The Loan was underwritten in accordance with the applicable
Underwriting Guidelines. The Note and Mortgage are on forms similar to those
used by Freddie Mac or Fannie Mae and the Seller has not made any
representations to a Mortgagor that are inconsistent with the mortgage
instruments used. Any Concurrent Second Lien Loan was underwritten in accordance
with the Seller’s Underwriting Guidelines for the Seller’s “80-20” program, a
copy of which guidelines has been provided to the Buyer.

 

(w)                               Occupancy of the Mortgaged Property. As of the
Purchase Date the Mortgaged Property is either vacant or lawfully occupied under
applicable law. All inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities. The Seller has not received written
notification from any governmental authority that the Mortgaged Property is in
material non-compliance with such laws or regulations, is being used, operated
or occupied unlawfully or has failed to have or obtain such inspection, licenses
or certificates, as the case may be. The Seller has not received notice of any
violation or failure to conform with any such law, ordinance, regulation,
standard, license or certificate. Except as otherwise set forth in the Loan
Schedule, the Mortgagor represented at the time of origination of the Loan that
the Mortgagor would occupy the Mortgaged Property as the Mortgagor’s primary
residence.

 

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

 

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

 

(z)                                   Delivery of Mortgage Documents. If the
Loan is a Dry Loan, the Note, the Mortgage, the Assignment of Mortgage and any
other documents required to be delivered under the Custodial Agreement for each
Loan have been delivered to the Custodian. The Seller or its agent is in
possession of a complete, true and materially accurate Mortgage File in
compliance with the Custodial Agreement, except for such documents the originals
of which have been delivered to the Custodian.

 

(aa)                            Transfer of Loans. The Assignment of Mortgage is
in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.

 

(bb)                          Due-On-Sale. The Mortgage contains an enforceable
provision for the acceleration of the payment of the unpaid principal balance of
the Loan in the event that the Mortgaged Property is sold or transferred without
the prior written consent of the mortgagee thereunder.

 

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

 

(dd)                          Consolidation of Future Advances. Any future
advances made to the Mortgagor prior to the origination of the Loan have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term. The lien of the Mortgage securing the consolidated
principal amount is expressly insured as having (A) first lien priority with
respect to each Loan which is indicated by the Seller to be a First Lien (as
reflected on the Loan Schedule), or (B) second lien priority with respect to
each Loan which is indicated by the Seller to be a Second Lien Loan (as
reflected on the Loan Schedule), in either case, by a title insurance policy, an
endorsement to the policy insuring the mortgagee’s consolidated interest or by
other title evidence acceptable to Fannie Mae and Freddie Mac. The consolidated
principal amount does not exceed the original principal amount of the Loan plus
any Negative Amortization.

 

(ee)                            Mortgaged Property Undamaged. The Mortgaged
Property (and with respect to any Cooperative Loan, the Cooperative Unit) is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value of the Mortgaged
Property as security for the Loan or the use for which the premises were
intended and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings

 

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with respect to the Mortgaged Property and the Seller has no knowledge of any
such proceedings.

 

(ff)                                Collection Practices; Escrow Deposits:
Interest Rate Adjustments. The origination and collection practices used by the
originator, each servicer of the Loan and the Seller with respect to the Loan
have been in all material respects in compliance with Accepted Servicing
Practices, applicable laws and regulations, and have been in all respects legal
and proper. With respect to escrow deposits and Escrow Payments (other than with
respect to each Loan which is indicated by the Seller to be a Second Lien Loan
and for which the mortgagee under the First Lien is collecting Escrow Payments
(as reflected on the Loan Schedule)), all such payments are in the possession
of, or under the control of, the Seller and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof have
not been made. All Escrow Payments have been collected in full compliance with
state and federal law. An escrow of funds is not prohibited by applicable law
and has been established in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the Seller have
been capitalized under the Mortgage or the Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Note. Any interest required to be paid pursuant to
state, federal and local law has been properly paid and credited.

 

(gg)                          Conversion to Fixed Interest Rate. With respect to
Adjustable Rate Loans, the Loan is not convertible to a fixed interest rate
Loan.

 

(hh)                          Other Insurance Policies. No action, inaction or
event has occurred and no state of facts exists or has existed that has resulted
or will result in the exclusion from, denial of, or defense to coverage under
any applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Seller or by any officer, director, or employee
of the Seller or any designee of the Seller or any corporation in which the
Seller or any officer, director, or employee had a financial interest at the
time of placement of such insurance.

 

(ii)                                  Servicepersons’ Civil Relief Act. The
Mortgagor has not notified the Seller, and the Seller has no knowledge, of any
relief requested or allowed to the Mortgagor under the Servicepersons’ Civil
Relief Act.

 

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

 

(kk)                            Disclosure Materials. The Mortgagor has executed
a statement to the effect that

 

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the Mortgagor has received all disclosure materials required by applicable law
with respect to the making of adjustable rate mortgage loans, and the Seller
maintains such statement in the Mortgage File.

 

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

 

(mm)                      No Defense to Insurance Coverage. No action has been
taken or failed to be taken, no event has occurred and no state of facts exists
or has existed on or prior to the Purchase Date (whether or not known to the
Seller on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any private mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured) whether arising out
of actions, representations, errors, omissions, negligence, or fraud of the
Seller, the related Mortgagor or any party involved in the application for such
coverage, including the appraisal, plans and specifications and other exhibits
or documents submitted therewith to the insurer under such insurance policy, or
for any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer’s breach of such insurance policy or
such insurer’s financial inability to pay.

 

(nn)                          Capitalization of Interest. The Note does not by
its terms provide for the capitalization or forbearance of interest.

 

(oo)                          No Equity Participation. No document relating to
the Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Note is not convertible to an ownership interest in the Mortgaged
Property or the Mortgagor and the Seller has not financed nor does it own
directly or indirectly, any equity of any form in the Mortgaged Property or the
Mortgagor.

 

(pp)                          Withdrawn Loans. If the Loan has been released to
the Seller pursuant to a Request for Release as permitted under Section 5 of the
Custodial Agreement, then the promissory note relating to the Loan was returned
to the Custodian within 10 days (or if such tenth day was not a Business Day,
the next succeeding Business Day).

 

(qq)                          No Exception. Other than as noted by the Custodian
on the Exception Report; no Exception exists (as defined in the Custodial
Agreement) with respect to the Loan which would materially adversely affect the
Loan or the Buyer’s security interest, granted by the Seller, in the Loan as
determined by the Buyer in its sole discretion.

 

(rr)                                Qualified Originator. The Loan has been
originated by, and, if applicable, purchased by the Seller from, a Qualified
Originator.

 

(ss)                            Mortgage Submitted for Recordation. The Mortgage
has been submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located.

 

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(tt)                                First Lien Consent. With respect to each
Loan which is a Second Lien Loan, (i) if the related first lien provides for
negative amortization, the LTV was calculated at the maximum principal balance
of such first lien that could result upon application of such negative
amortization feature, and (ii) either no consent for the Loan is required by the
holder of the first lien or such consent has been obtained and is contained in
the Mortgage File.

 

(uu)                          Acceptable Investment. No specific circumstances
or conditions exist with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor’s credit standing that should reasonably be expected
to (i) cause private institutional investors which invest in Loans similar to
the Loan to regard the Loan as an unacceptable investment, (ii) cause the Loan
to be more likely to become past due in comparison to similar Loans, or (iii)
adversely affect the value or marketability of the Loan in comparison to similar
Loans;

 

(vv)                          Environmental Matters. The Mortgaged Property is
free from any and all toxic or hazardous substances and there exists no
violation of any local, state or federal environmental law, rule or regulation;

 

(ww)                      Ground Leases. With respect to each ground lease to
which the Mortgaged Property is subject (a “Ground Lease”): (i) the Mortgagor is
the owner of a valid and subsisting interest as tenant under the Ground Lease;
(ii) the Ground Lease is in full force and effect, unmodified and not
supplemented by any writing or otherwise; (iii) all rent, additional rent and
other charges reserved therein have been paid to the extent they are payable to
the date hereof; (iv) the Mortgagor enjoys the quiet and peaceful possession of
the estate demised thereby, subject to any sublease; (v) the Mortgagor is not in
default under any of the terms thereof and there are no circumstances which,
with the passage of time or the giving of notice or both, would constitute an
event of default thereunder; (vi)  the lessor under the Ground Lease is not in
default under any of the terms or provisions thereof on the part of the lessor
to be observed or performed; (vii) the lessor under the Ground Lease has
satisfied all of its repair or construction obligations, if any, to date
pursuant to the terms of the Ground Lease; (viii) the remaining term of the
Ground Lease extends not less than ten (10) years following the maturity date of
such Loan; and (ix) the execution, delivery and performance of the Mortgage do
not require the consent (other than those consents which have been obtained and
are in full force and effect) under, and will not contravene any provision of or
cause a default under, the Ground Lease;

 

(xx)                              Value of Mortgaged Property. The Seller has no
knowledge of any circumstances existing that should reasonably be expected to
adversely affect the value or the marketability of the Mortgaged Property or the
Loan or to cause the Loan to prepay during any period materially faster or
slower than the Loans originated by the Seller generally;

 

(yy)                          HOEPA. No Loan is (a) subject to the provisions of
the Homeownership and Equity Protection Act of 1994 as amended (“HOEPA”), (b) a
“high cost” mortgage loan, “covered” mortgage loan, “high risk home” mortgage
loan, or “predatory” mortgage loan or any other comparable term, no matter how
defined under any federal, state or local law, (c) subject to any comparable
federal, state or local statutes or regulations, or any other statute or
regulation providing for heightened regulatory scrutiny or assignee liability to
holders of such mortgage loans, or (d) a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the current Standard & Poor’s LEVELS®
Glossary Revised, Appendix E);

 

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(zz)                              No Predatory Lending. No predatory, abusive or
deceptive lending practices, including but not limited to, the extension of
credit to a mortgagor without regard for the mortgagor’s ability to repay the
Loan and the extension of credit to a mortgagor which has no tangible net
benefit to the mortgagor, were employed in connection with the origination of
the Loan;

 

(aaa)                      Georgia Mortgage Loans. No Loan which is secured by a
Mortgaged Property which is located in the state of Georgia was originated prior
to March 7, 2004; and

 

(bbb)                   Cooperative Loans. With respect to each Cooperative
Loan, each original UCC financing statement, continuation statement or other
governmental filing or recordation necessary to create or preserve the
perfection and priority of the first priority lien and security interest in the
Cooperative Shares and Proprietary Lease has been timely and properly made. Any
security agreement, chattel mortgage or equivalent document related to the
Cooperative Loan and delivered to the Seller or its designee establishes in the
Seller a valid and subsisting perfected first lien on and security interest in
the Mortgaged Property described therein, and the Seller has full right to sell
and assign the same.

 

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Schedule 2

 

Filing Jurisdictions and Offices

 

Aames Investment Corporation: State of Maryland

 

Aames Capital Corporation: State of California

 

Aames Funding Corporation: State of California, State of New York, New York
County

 

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Schedule 3

 

Relevant States

 

Arizona

California

Colorado

Connecticut

District of Columbia

Delaware

Florida

Georgia

Hawaii

Iowa

Idaho

Illinois

Indiana

Kansas

Kentucky

Louisiana

Massachusetts

Maryland

Maine

Michigan

Minnesota

Missouri

Mississippi

North Carolina

Nebraska

New Hampshire

New Jersey

New Mexico

Nevada

New York

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Virginia

Washington

Wisconsin

 

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West Virginia

Wyoming

 

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Schedule 4

 

Subsidiaries

 

SUBSIDIARIES OF AAMES INVESTMENT CORPORATION

 

Name of Subsidiary

 

Jurisdiction of Organization

Aames Capital Acceptance Corp.

 

Delaware

Aames Capital Corporation

 

California

Aames Financial Corporation

 

California

Aames Funding Corporation

 

California

Aames Investment Acceptance Corporation

 

Delaware

Aames Holding Corporation

 

California

AaRCs, LLC

 

Pennsylvania

One Stop Mortgage, Inc.

 

Wyoming

Oxford Aviation Corporation, Inc.

 

California

Rossmore Financial Insurance Services, Inc.

 

California

Serrano Insurance Services

 

Nevada

Windsor Management Co.

 

California

Windsor Management of Washington Inc.

 

Washington

 

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Schedule 5

 

Litigation

 

1.                                       Webb v. Aames Investment Corporation,
et. al. brought in the United States District Court, Central District of
California. Consumer alleges violation of the Fair Credit Reporting Act.
Specifically, he claims that Aames, after obtaining his consumer report not
initiated by him, failed to make a firm offer of credit in the advertisement
mailed to him and failed to provide the required disclosures in a clear and
conspicuous manner.

 

2.                                       Cooper v. Aames Invesment Corporation,
et. al. brought in the United States District Court, Eastern District of
Wisconsin. This putative class action alleges violation of the Fair Credit
Reporting Act. Specifically, lead plaintiff claims that Aames failed to make a
firm offer of credit in the advertisement mailed to her.

 

3.                                       Federal Trade Commission. On April 27,
2004, Aames Financial Corporation received a civil investigative demand from the
Federal Trade Commission that, although not alleging any wrongdoing, sought
documents and data relating to Aames Financial’s business and lending practices.
The demand was issued pursuant to an April 8, 2004 resolution of the FTC
authorizing non-public investigations of various unnamed subprime lenders and
loan brokers to determine whether there have been violations of certain consumer
protection laws. Aames Financial believes it is in material compliance under
applicable consumer protection laws. Aames Financial has cooperated and intends
to continue to cooperate fully with the FTC in this investigation.

 

4.                                       State of Iowa. In September 2004, Aames
Financial received a Civil Investigative Demand and Notice to Proceed from the
Office of the Attorney General of Iowa, that, although not alleging any
wrongdoing, sought documents and data relating to our business and lending
practices in Iowa. Aames Financial has cooperated and intends to continue to
cooperate fully with the Office of the Attorney General of Iowa in this
investigation.

 

I-20

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Schedule 6

 

List of Financing Facilities

 

Lender

 

Size of Facility

 

Expiration Date

Lehman

 

$

500,000,000

 

1/17/07

Morgan Stanley

 

$

500,000,000

 

12/1/06

Countrywide

 

$

300,000,000

 

4/30/06

Citigroup

 

$

200,000,000

 

9/29/06

Bear Stearns

 

$

500,000,000

 

8/4/06

 

I-21

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EXHIBIT A

 

QUARTERLY CERTIFICATION

 

I,                                                    ,                                     of
Aames Investment Corporation, do hereby certify that

 

(i)                                     each of Aames Investment Corporation,
Aames Capital Corporation and Aames Funding Corporation (each, a “Sellers” and
jointly and severally, the “Sellers”) is in compliance with all provisions and
terms of the Master Repurchase Agreement, dated as of April 10, 2006, by and
among Greenwich Capital Financial Products, Inc. and the Sellers;

 

(ii)                                  no Default has occurred thereunder;

 

(iii)                               there have not been any modifications to the
Underwriting Guidelines that have not been approved by Buyer;

 

(iv)                              all additional modifications to the
Underwriting Guidelines since the date of the most recent disclosure to Buyer of
any modification to the Underwriting Guidelines are set forth herewith; and

 

(v)                                 (a) Aames Investment’s Tangible Net Worth,
on a consolidated basis is equal to or greater than $250,000,000 plus 50% of any
subsequent additional capital raised in a public or private offering by Aames
Investment, and (b) the aggregate amount of the Aames Investment’s cash and Cash
Equivalents of (1) cash and loans held for sale and investment (excluding
securitized mortgage loans) reduced by (2) the sum of amounts outstanding on
revolving warehouse and repurchase facilities, margin on loans held for sale and
investment (excluding securitized mortgage loans) and loans held for sale and
investment which are ineligible to be pledged by Aames Investment under any of
its revolving warehouse and repurchase facilities in an amount equal to not less
than $38,000,000. Aames Investments’s ratio of Total Indebtedness to Tangible
Net Worth is not greater than 20:1. Aames Investment’s ratio of Adjusted
Indebtedness to Tangible Net Worth is not greater than 7:1. As of the
immediately preceding fiscal quarter, Aames Investment’s Net Income before tax,
generated over the previous two consecutive fiscal quarters, measured on the
last day of each such fiscal quarter, was equal to or greater than $1.00; and

 

(vi)                              Aames Investment Corporation has maintained
its REIT Status continuously from the Effective Date through the date hereof.

 

IN WITNESS WHEREOF, I have signed this certificate.

 

A-2-1

--------------------------------------------------------------------------------

 

Date:                                , 200    

 

 

AAMES INVESTMENT CORPORATION

 

 

 

 

 

By:

 

, as Administrator

 

 

 

 

 

 

 

 

Name:

 

Title:

 

A-2-2

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EXHIBIT B

 

FORM OF CUSTODIAL AGREEMENT

 

B-1

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EXHIBIT C

 

FORM OF OPINION OF COUNSEL TO THE SELLER

 

 

 

(date)

 

Greenwich Capital Financial Products, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830

 

Dear Sirs and Mesdames:

 

You have requested [our] [my] opinion, as counsel to Aames Investment
Corporation, a Maryland corporation, Aames Capital Corporation, a California
corporation and Aames Funding Corporation, a California Corporation (each, a
“Seller” and jointly and severally, the “Seller” or the “Sellers”), with respect
to certain matters in connection with respect to certain matters in connection
with (i) the Master Repurchase Agreement, dated as of April 10, 2006 (the
“Repurchase Agreement”), by and among the Sellers and Greenwich Capital
Financial Products, Inc. (the “Buyer”), (ii) the Custodial Agreement, dated as
of April 10, 2006, by and among the Sellers, Deutsche Bank Trust Company
Americas (the “Custodian”), and the Buyer, (iii) the Pricing Side Letter, dated
as of April 10, 2006, by and among the Buyer and the Sellers, and (iv) the
Securitization Side Letter, dated as of April 10, 2006 (the “Securitization Side
Letter”), by and among the Buyer, the Sellers and Greenwich Capital Markets,
Inc. Items (i)-(iv) above are collectively referred to herein as the “Program
Documents”. Capitalized terms not otherwise defined herein have the meanings set
forth in the Repurchase Agreement.

 

[We] [I] have examined the following documents:

 

1.                                       the Repurchase Agreement;

 

2.                                       Custodial Agreement;

 

3.                                       the Pricing Side Letter;

 

4.                                       the Securitization Side Letter;

 

5.                                       such other documents, records and
papers as we have deemed necessary and relevant as a basis for this opinion.

 

The documents referred to in items in 1 through 6 shall be referred to herein as
the “Program Documents.” To the extent [we] [I] have deemed necessary and
proper, [we] [I] have relied upon the representations and warranties of the
Seller contained in the Agreement. [We] [I] have assumed the authenticity of all
documents submitted to me as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.

 

Based upon the foregoing, it is [our] [my] opinion that:

 

C-1

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1.                                       Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
[state] and is qualified to transact business in, duly licensed and is in good
standing under, the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Loan and
the servicing of each Loan pursuant to the Agreement.

 

2.                                       Each Seller has the corporate power to
engage in the transactions contemplated by the Program Documents and all
requisite corporate power, authority and legal right to execute and deliver the
Program Documents and observe the terms and conditions of such instruments. Each
Seller has all requisite corporate power to enter into Transactions under the
Repurchase Agreement and to grant a security interest in the Purchased Items
pursuant to the Repurchase Agreement.

 

3.                                       The execution, delivery and performance
by each Seller of the Program Documents, and the sale by each related Seller of
the Purchased Items under the Repurchase Agreement have been duly authorized by
all necessary corporate action on the part of the Sellers. Each of the Program
Documents have been executed and delivered by each Seller and are legal, valid
and binding agreements enforceable in accordance with their respective terms
against such Seller, subject to bankruptcy laws and other similar laws of
general application affecting rights of creditors and subject to the application
of the rules of equity, including those respecting the availability of specific
performance, none of which will materially interfere with the realization of the
benefits provided thereunder or with the Buyer’s security interest in the Loans.

 

4.                                       No consent, approval, authorization or
order of, and no filing or registration with, any court or governmental agency
or regulatory body is required on the part of any Seller for the execution,
delivery or performance by the Sellers of Program Documents or for the
borrowings by the Sellers under the Repurchase Agreement or the granting of a
security interest to the Buyer in the Purchased Items, pursuant to the
Repurchase Agreement.

 

5.                                       The execution, delivery and performance
by the Sellers of, and the consummation of the transactions contemplated by, the
Program Documents do not and will not (a) violate any provision of any Seller’s
charter or by-laws, (b) violate any applicable law, rule or regulation, (c)
violate any order, writ, injunction or decree of any court or governmental
authority or agency or any arbitral award applicable to the Seller of which I
have knowledge (after due inquiry) or (d) result in a breach of, constitute a
default under, require any consent under, or result in the acceleration or
required prepayment of any indebtedness pursuant to the terms of, any agreement
or instrument of which I have knowledge (after due inquiry) to which any Seller
is a party or by which it is bound or to which it is subject, or (except for the
Liens created pursuant to the Repurchase Agreement) result in the creation or
imposition of any Lien upon any Property of the Sellers pursuant to the terms of
any such agreement or instrument.

 

C-2

--------------------------------------------------------------------------------

 

6.                                       There is no action, suit, proceeding or
investigation pending or, to the best of [our] [my] knowledge, threatened
against the Seller which, in [our] [my] judgment, either in any one instance or
in the aggregate, would be reasonably likely to result in any material adverse
change in the properties, business or financial condition, or prospects of the
Seller or in any material impairment of the right or ability of the Seller to
carry on its business substantially as now conducted or in any material
liability on the part of the Seller or which would draw into question the
validity of the Program Documents or the Loans or of any action taken or to be
taken in connection with the transactions contemplated thereby, or which would
be reasonably likely to impair materially the ability of the Seller to perform
under the terms of the Repurchase Agreement, the Custodial Agreement or the
Loans.

 

7.                                       The Repurchase Agreement is effective
to create, in favor of the Buyer, a valid security interest under the Uniform
Commercial Code in all of the right, title and interest of the Seller in, to and
under the Purchased Items as collateral security for the payment of the Secured
Obligations (as defined in the Repurchase Agreement), except that (a) such
security interests will continue in the Purchased Items after their sale,
exchange or other disposition only to the extent provided in Section 9-306 of
the Uniform Commercial Code, (b) the security interests in Purchased Items in
which the Seller acquires rights after the commencement of a case under the
Bankruptcy Code in respect of any Seller may be limited by Section 552 of the
Bankruptcy Code.

 

8.                                       When the Notes are delivered to the
Custodian, endorsed in blank by a duly authorized officer of any Seller, the
security interest referred to in paragraph 7 above in the Notes will constitute
a fully perfected first priority security interest in all right, title and
interest of the Sellers therein, in the Loan evidenced thereby and in the
Seller’s interest in the related Mortgaged Property.

 

(a)                                  Upon the filing of financing statements on
Form UCC-1 naming the Buyer as “Secured Party” and the Seller as “Debtor”, and
describing the Purchased Items, in the jurisdictions and recording offices
listed on Schedule 1 attached hereto, the security interests referred to in
paragraph 8 above will constitute fully perfected security interests under the
Uniform Commercial Code in all right, title and interest of the Sellers in, to
and under such Purchased Items, which can be perfected by filing under the
Uniform Commercial Code.

 

(b)                                 The UCC Search Report sets forth the proper
filing offices and the proper debtors necessary to identify those Persons who
have on file in the jurisdictions listed on Schedule 1 financing statements
covering the Filing Collateral as of the dates and times specified on Schedule
2. Except for the matters listed on Schedule 2, the UCC Search Report identifies
no Person who has filed in any Filing Office a financing statement describing
the Filing Collateral prior to the effective dates of the UCC Search Report.

 

9.                                       Neither the Sellers nor any of their
Subsidiaries is an “investment

 

C-3

--------------------------------------------------------------------------------

 

company”, or a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended. The Sellers are not
subject to any Federal or state statute or regulation which limits their ability
to incur indebtedness.

 

10.                                 The Assignments of Mortgage are in
recordable form, except for the insertion of the name of the assignee, and upon
the name of the assignee being inserted, are acceptable for recording under the
laws of the state where each related Mortgaged Property is located.

 

11.                                 Each Seller is duly registered as a
[                              ] in each state in which Loans were originated to
the extent such registration is required by applicable law, and has obtained all
other licenses and governmental approvals in each jurisdiction to the extent
that the failure to obtain such licenses and approvals would render any Loan
unenforceable or would materially and adversely affect the ability of the Seller
to perform any of its obligations under, or the enforceability of, the Program
Documents.

 

12.                                 Assuming that all other elements necessary
to render a Loan legal, valid, binding and enforceable were present in
connection with the execution, delivery and performance of each Loan (including
completion of the entire Loan fully, accurately and in compliance with all
applicable laws, rules and regulations) and assuming further that no action was
taken in connection with the execution, delivery and performance of each Loan
(including in connection with the sale of the related Mortgaged Property) that
would give rise to a defense to the legality, validity, binding effect and
enforceability of such Loan, nothing in the forms of such Loans, as attached
hereto as Exhibit A, would render such Loans other than legal, valid, binding
and enforceable.

 

13.                                 Assuming their validity, binding effect and
enforceability in all other respects (including completion of the entire Loan
fully, accurately and in compliance with all applicable laws, rules and
regulations), the forms of Loans attached hereto as Exhibit A are in sufficient
compliance with                   law and Federal consumer protection laws so as
not to be rendered void or voidable at the election of the Mortgagor thereunder.

 

14.                                 The Repurchase Agreement is a “repurchase
agreement” and a “securities contract” within the meaning of Bankruptcy Code
Section[s] 101(47) [and 741(7)], and the rights of the Buyer contained in
Section [9] thereof to setoff mutual debts and claims, and in Section [35]
thereof to liquidate, terminate and accelerate the Repurchase Agreement, in the
event of the bankruptcy of any Seller will not be stayed, avoided, or otherwise
limited by operation of any provision of the Bankruptcy Code or by order of a
court or administrative agency in any proceeding thereunder, including without
limitation the automatic stay provisions of Bankruptcy Code Section 362(a)
pursuant to Sections 362(b)[(6) and] (7) thereof.

 

C-4

--------------------------------------------------------------------------------

 

Very truly yours,

 

C-5

--------------------------------------------------------------------------------

 

EXHIBIT D

 

FORM OF TRANSACTION NOTICE

 

 

 

[insert date]

 

Greenwich Capital Financial Products, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Attention:                                                   

 

Transaction Notice No.:                                          

 

Ladies/Gentlemen:

 

Reference is made to the Master Repurchase Agreement, dated as of April 10, 2005
(the “Repurchase Agreement”; capitalized terms used but not otherwise defined
herein shall have the meaning given them in the Repurchase Agreement), among
Aames Investment Corporation, Aames Capital Corporation, Aames Funding
Corporation (each, a “Seller”, and jointly and severally, the “Seller” or
“Sellers”) and Greenwich Capital Financial Products, Inc. (the “Buyer”).

 

In accordance with Section 3(b) of the Repurchase Agreement, the undersigned
Seller hereby requests that you, the Buyer, agree to enter into a Transaction
with us in connection with our delivery of Loans
on                                           [insert requested Purchase Date,
which in the case of Dry Loans must be at least two (2) Business Days following
the date of the request] (the “Purchase Date”), in connection with which we
shall sell to you the Loans set forth on the Loan Schedule attached hereto. The
Purchase Price shall be                [insert applicable Purchase Price
pursuant to the terms of the Pricing Side Letter], the Pricing Rate shall
be                [insert applicable Pricing Rate pursuant to the terms of the
Pricing Side Letter], and the Seller agrees to repurchase such Loans
on                       [insert requested Repurchase Date] at the Repurchase
Price.

 

The Seller hereby certifies, as of such Purchase Date, that:

 

1.                                       no Default or Event of Default has
occurred and is continuing on the date hereof nor will occur after giving effect
to such Transaction as a result of such Transaction;

 

2.                                       each of the representations and
warranties made by the Seller in or pursuant to the Program Documents is true
and correct in all material respects on and as of such date (in the case of the
representations and warranties in respect of Loans, solely with respect to Loans
being purchased on the Purchase Date) as if made on and as of the date hereof
(or, if any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date);

 

3.                                       the Seller is in compliance with all
governmental licenses and

 

D-1

--------------------------------------------------------------------------------

 

authorizations and is qualified to do business and is in good standing in all
required jurisdictions; and

 

4.                                       the Seller has satisfied all conditions
precedent in Sections 9(a) and (b) of the Repurchase Agreement and all other
requirements of the Program Documents.

 

The undersigned duly authorized officer of Seller further represents and
warrants that (1) the documents constituting the Custodial File (as defined in
the Custodial Agreement) with respect to the Loans that are the subject of the
Transaction requested herein and more specifically identified on the mortgage
loan schedule or computer readable magnetic transmission delivered to both the
Buyer and the Custodian in connection herewith (the “Receipted Loans”) [with
respect to Dry Loans: have been or are hereby submitted] [with respect to Wet
Loans: shall be delivered, within                 (      ) days of the date of
the execution of this Transaction Notice] to Custodian and such Required
Documents are to be held by the Custodian for the Buyer, (2) all other documents
related to such Receipted Loans (including, but not limited to, mortgages,
insurance policies, loan applications and appraisals) have been or will be
created and held by Seller in trust for Buyer, (3) all documents related to such
Receipted Loans withdrawn from Custodian shall be held in trust by Seller for
Buyer, and (4) upon Buyer’s wiring of the Purchase Price pursuant to Section
3(d) of the Repurchase Agreement, Buyer will have agreed to the terms of the
Transaction as set forth herein and purchased the Receipted Loans from Seller.

 

Seller hereby represents and warrants that (x) the Receipted Loans have an
unpaid principal balance as of the date hereof of $                        and
(y) the number of Receipted Loans is                     .

 

 

Very truly yours,

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

D-2

--------------------------------------------------------------------------------

 

EXHIBIT E

 

UNDERWRITING GUIDELINES

 

[Underwriting guidelines to be attached]

 

E-1

--------------------------------------------------------------------------------

 

EXHIBIT F

 

REQUIRED FIELDS FOR SERVICING TRANSMISSION

 

[Required fields to be provided by Buyer]

 

F-1

--------------------------------------------------------------------------------

 

EXHIBIT G

 

REQUIRED FIELDS FOR LOAN SCHEDULE

 

[Required fields to be provided by Buyer]

 

G-1

--------------------------------------------------------------------------------

 

EXHIBIT H

 

FORM OF CONFIDENTIALITY AGREEMENT

 

In connection with your consideration of a possible or actual acquisition of a
participating interest (the “Transaction”) in an advance, note or commitment of
Greenwich Capital Financial Products, Inc. (“Buyer”) pursuant to a Master
Repurchase Agreement among Aames Investment Corporation, Aames Capital
Corporation, Aames Funding Corporation (each, a “Seller” and jointly and
severally, the “Seller” or the “Sellers”) and Buyer dated as of April 10, 2006,
you have requested the right to review certain non-public information regarding
the Seller that is in the possession of Buyer. In consideration of, and as a
condition to, furnishing you with such information and any other information
(whether communicated in writing or communicated orally) delivered to you by
Buyer or its affiliates, directors, officers, employees, advisors, agents or
“controlling persons” (within the meaning of the Securities Exchange Act of
1934, as amended (the “1934 Act”)) (such affiliates and other persons being
herein referred to collectively as Buyer “Representatives”) in connection with
the consideration of a Transaction (such information being herein referred to as
“Evaluation Material”), Buyer hereby requests your agreement as follows:

 

1.                                       The Evaluation Material will be used
solely for the purpose of evaluating a possible Transaction with Buyer involving
you or your affiliates, and unless and until you have completed such Transaction
pursuant to a definitive agreement between you or any such affiliate and Buyer,
such Evaluation Material will be kept strictly confidential by you and your
affiliates, directors, officers, employees, advisors, agents or controlling
persons (such affiliates and other persons being herein referred to collectively
as “your Representatives”), except that the Evaluation Material or portions
thereof may be disclosed to those of your Representatives who need to know such
information for the purpose of evaluating a possible Transaction with Buyer (it
being understood that prior to such disclosure your Representatives will be
informed of the confidential nature of the Evaluation Material and shall agree
to be bound by this Agreement). You agree to be responsible for any breach of
this Agreement by your Representatives.

 

2.                                       The term “Evaluation Material” does not
include any information which (i) at the time of disclosure or thereafter is
generally known by the public (other than as a result of its disclosure by you
or your Representatives) or (ii) was or becomes available to you on a
nonconfidential basis from a person not otherwise bound by a confidential
agreement with Buyer or its Representatives or is not otherwise prohibited from
transmitting the information to you. As used in this Agreement, the term
“person” shall be broadly interpreted to include, without limitation, any
corporation, company, joint venture, partnership or individual.

 

3.                                       In the event that you receive a request
to disclose all or any part of the information contained in the Evaluation
Material under the terms of a valid and effective subpoena or order issued by a
court of competent jurisdiction, you agree to (i) immediately notify Buyer and
the Seller of the existence, terms and circumstances surrounding such a request,
(ii) consult with the Seller on the advisability of taking legally available
steps to resist or narrow such request, and (iii) if disclosure of such

 

H-1

--------------------------------------------------------------------------------

 

information is required, exercise your best efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to such
information.

 

4.                                       Unless otherwise required by law in the
opinion of your counsel, neither you nor your Representative will, without our
prior written consent, disclose to any person the fact that the Evaluation
Material has been made available to you.

 

5.                                       You agree not to initiate or maintain
contact (except for those contacts made in the ordinary course of business) with
any officer, director or employee of the Seller regarding the business,
operations, prospects or finances of the Seller or the employment of such
officer, director or employee, except with the express written permission of the
Seller.

 

6.                                       You understand and acknowledge that the
Seller is not making any representation or warranty, express or implied, as to
the accuracy or completeness of the Evaluation Material or any other information
provided to you by Buyer. The Seller, its respective affiliates or
Representatives, nor any of its respective officers, directors, employees,
agents or controlling persons (within the meaning of the 1934 Act) shall have
any liability to you or any other person (including, without limitation, any of
your Representatives) resulting from your use of the Evaluation Material.

 

7.                                       You agree that neither Buyer or the
Seller has not granted you any license, copyright, or similar right with respect
to any of the Evaluation Material or any other information provided to you by
Buyer.

 

8.                                       If you determine that you do not wish
to proceed with the Transaction, you will promptly deliver to Buyer all of the
Evaluation Material, including all copies and reproductions thereof in your
possession or in the possession of any of your Representatives.

 

9.                                       Without prejudice to the rights and
remedies otherwise available to the Seller, the Seller shall be entitled to
equitable relief by way of injunction if you or any of your Representatives
breach or threaten to breach any of the provisions of this Agreement. You agree
to waive, and to cause your Representatives to waive, any requirement for the
securing or posting of any bond in connection with such remedy.

 

10.                                 The validity and interpretation of this
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of New York applicable to agreements made and to be fully
performed therein (excluding the conflicts of law rules). You submit to the
jurisdiction of any court of the State of New York or the United States District
Court for the Southern District of the State of New York for the purpose of any
suit, action, or other proceeding arising out of this Agreement.

 

11.                                 The benefits of this Agreement shall inure
to the respective successors and assigns of the parties hereto, and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon the respective successors and assigns.

 

12.                                 If it is found in a final judgment by a
court of competent jurisdiction (not

 

H-2

--------------------------------------------------------------------------------

 

subject to further appeal) that any term or provision hereof is invalid or
unenforceable, (i) the remaining terms and provisions hereof shall be unimpaired
and shall remain in full force and effect and (ii) the invalid or unenforceable
provision or term shall be replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of such invalid
or unenforceable term or provision.

 

13.                                 This Agreement embodies the entire agreement
and understanding of the parties hereto and supersedes any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein. No alteration, waiver, amendments, or change or supplement hereto shall
be binding or effective unless the same is set forth in writing by a duly
authorized representative of each party and may be modified or waived only by a
separate letter executed by the Seller and you expressly so modifying or waiving
such Agreement.

 

14.                                 For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto.
Each such counterpart shall be, and shall be deemed to be, an original
instrument, but all such counterparts taken together shall constitute one and
the same Agreement.

 

H-3

--------------------------------------------------------------------------------

 

Kindly execute and return one copy of this letter which will constitute our
Agreement with respect to the subject matter of this letter.

 

 

GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.

 

 

 

 

 

By:

 

 

 

 

Confirmed and agreed to

 

this            day of                            , 200   .

 

By:

 

 

Name

Title:

 

H-4

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EXHIBIT I

 

FORM OF INSTRUCTION LETTER

 

[Required fields to be provided by Buyer]

 

                       , 200   

 

                                          , as Subservicer

                                          

                                          

Attention:                                    

 

Re:                               Master Repurchase Agreement, dated as of April
10, 2006 by and among Greenwich Capital Financial Products, Inc., (“Buyer”), and
Aames Investment Corporation, Aames Capital Corporation and Aames Funding
Corporation (each, a “Seller” and together, the “Seller” or the “Sellers”)

 

Ladies and Gentlemen:

 

Pursuant to the Master Repurchase Agreement, dated as of April 10, 2006 (the
“Repurchase Agreement”), among the Buyer and the Sellers, you are hereby
notified that: (i) the undersigned Seller has sold to the Buyer the assets
described on Schedule 1 hereto (the “Eligible Assets”), (ii) each of the
Eligible Assets is subject to a security interest in favor of the Buyer, and
(iii) effective as of the delivery of this letter to the Subservicer, unless
otherwise notified by the Buyer in writing, any payments or distributions made
with respect to such Eligible Assets shall be remitted immediately by the
Subservicer in accordance with the Buyer’s wiring instructions provided below:

 

Bank:

 

JPMorgan Chase Bank

Account No.:

 

140095961

ABA No.:

 

021000021

Attn:

 

Brett Kibbe

Reference:

 

For the A/C of Greenwich Capital Financial Products, Inc. – Aames

 

Upon notification by the Buyer of an occurrence of an Event of Default, the
Subservicer shall remit all collections with respect to the Eligible Asset in
accordance with the Buyer’s instructions. The Subservicer also acknowledges its
consent to terminate such Servicing Agreement upon notification by the Buyer of
an occurrence of an Event of Default.

 

Please acknowledge receipt of this instruction letter by signing in the
signature block below and forwarding an executed copy to the Buyer promptly upon
receipt. Any notices to the Buyer should be delivered to the following address:
                                    Attention:                           ,
Telephone:                           , Facsimile:                         .

 

J-5

--------------------------------------------------------------------------------

 

 

Very truly yours,

 

 

 

AAMES INVESTMENT CORPORATION

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

AAMES CAPITAL CORPORATION

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

AAMES FUNDING CORPORATION

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

ACKNOWLEDGED:

 

                                                                                       ,
as Subservicer]

 

 

By:

Name:

Title:

Telephone:

Facsimile:

 

J-6

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