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AGREEMENT OF LEASE  

 BETWEEN  

 JAMBOREE LLC,  

 LANDLORD  

 AND  

 AAMES FINANCIAL CORPORATION,  

 TENANT  

  
 

    BASIC LEASE INFORMATION    
    
    PARK PLACE LEASE    
  

        1.    Lease Date:    As of September     , 2002. 

        2.    Landlord:    Jamboree LLC, a Delaware limited liability company 

        3.    Address of Landlord:

3333
Michelson Drive, Suite 210

Irvine, California 92612

Attention:  Ms. Janine R. Padia 

        4.    Tenant:    Aames Financial Corporation, Inc., a Delaware corporation. 

        5.    Address of Tenant:

Aames
Financial Corporation

350 South Grand Avenue, 43rd Floor

Los Angeles, California 90071

Attention:  Audry A. Patterson 

        6.    Premises:    collectively (a) Suite 300, deemed to contain approximately 46,911 rentable square feet and
41,885 usable square feet located on the third (3rd) floor of the building at 3347 Michelson Drive, Irvine, California as depicted on  Exhibit B-1 attached hereto and incorporated herein by
reference and (b) Suite 100, deemed to contain approximately 46,337
rentable square feet and 41,372 usable square feet located on the first (1st) floor of the building at 3351 Michelson Drive, Irvine, California as depicted on  Exhibit B-2 attached hereto
and incorporated herein by reference, on the land described on  Exhibit A attached hereto an made a part hereof and on the land depicted on the site plan attached hereto as
Exhibit A-1 and incorporated herein by reference, and subject to adjustment as provided in the Lease. 

        7.    Scheduled Term Commencement Date:    January 1, 2003 

        8.    Scheduled Length of Term:    approximately seventy-one (71) months 

        9.    Scheduled Term Expiration Date:    November 30, 2008 

        10.  Basic Rent:    The Basic Rent shall be paid according to the following schedule, based upon 93,248 rentable
square feet of space deemed to be in the Premises: 

        (a)  for
the period commencing on the Term Commencement Date through and including January 31, 2006, Two Million Fourteen Thousand One Hundred Fifty-Six
and 80/100 ($2,014,156.80) Dollars per annum, payable in equal monthly installments of One Hundred Sixty-Seven Thousand Eight Hundred Forty-Six and 40/100 ($167,846.40) Dollars each; and 

        (b)  for
the period commencing on February 1, 2006 through and including the Term Expiration Date, Two Million One Hundred Twenty-Six Thousand
Fifty-Four and 40/100 ($2,126,054.40) Dollars per annum, payable in equal monthly installments of One Hundred Seventy-Seven Thousand One Hundred Seventy-One and 20/100
($177,171.20) Dollars each. 

Basic
Rent shall be payable in equal monthly installments, in advance, on the first day of each and every calendar month during the term of this Lease without any set-off or deduction
whatsoever. Notwithstanding the foregoing, so long as this Lease is in full force and effect and Tenant is not in default under this Lease, Tenant shall be entitled to a credit against the Basic Rent
for the months of August, September, October and November 2008 in the aggregate amount of Seven Hundred Eight Thousand Six Hundred Eighty-Four and 80/100 ($708,684.80) Dollars,
which credit shall be applied against the Basic Rent in four (4) equal monthly installments of One Hundred Seventy-Seven Thousand One Hundred Seventy-One and 20/100 ($177,171.20)
Dollars each. 

        11.  Rent Commencement Date:    January 1, 2003 

        12.  Base Year:    calendar year 2003 

        13.  Tenant's Operating Expenses:    Tenant shall pay as additional rent in each calendar year of the Term, the
difference between (a) the actual amount of Tenant's Share of Operating Expenses for the subject calendar year, and (b) the actual amount of Tenant's Share of Operating Expenses for the
Base Year (the "Base Year Operating Expenses"). The difference between (a) and (b) is referred to in this Lease as "Tenant's Operating Expenses." Tenant shall pay monthly installments of
Tenant's Operating Expenses as provided in Article XXV. 

        14.  Tenant's Share:    Five and fifty-five hundredths percent (5.55%). 

        15.  Permitted Use:    General Offices, provided that Landlord acknowledges that in addition to
office/administrative use, Tenant may use the Premises for processing loan applications, which use will involve substantial traffic of brokers, couriers and borrowers provided, however, in no event
shall
Tenant use or permit the Premises to be used for a use which constitutes an "off the street" retail use, unless Tenant shall pay Landlord (or as Landlord may otherwise direct), within fifteen
(15) days following demand therefor, all legal compliance and other costs related thereto. 

        16.  Security Deposit:    $228,027.10, subject to reduction as provided in Section 4.03. 

        17.  Parking Spaces:    collectively up to 445 non-exclusive non-reserved, surface parking
spaces (not within a parking structure) and up to twenty-seven (27) reserved surface parking spaces (not within a parking structure), subject to the terms of Article XXXIII. 

        18.  Intentionally Deleted.

        19.  Brokers:    Cushman & Wakefield of California and Winthrop West Coast Realty Services, Inc. 

        The
foregoing Basic Lease Information is incorporated into and made a part of this Lease. Each reference in this Lease to any of the Basic Lease Information shall mean the respective
information above set forth and shall be construed to incorporate all of the terms provided under the particular Lease paragraph pertaining to such information. In the event of any conflict between
the Basic Lease Information and this Lease, the provisions of the Lease shall control. 

	INITIAL:

  	 	 
	

LANDLORD                         	
 	

TENANT                         

 
 

PARK PLACE OFFICE LEASE    
  

        THIS LEASE ("Lease") is made as of this            day of September, 2002, between Jamboree LLC, a Delaware limited liability
company ("Landlord"), and Aames
Financial Corporation, a Delaware corporation ("Tenant"). 

 
 

R E C I T A L S:    
  

        A.    Landlord
is the owner of a complex of buildings and improvements known by street numbers as 3333-3355 Michelson Drive in the City of Irvine, County of Orange,
State of California, and referred to herein as the "Facility", which Facility is located on the tract of real property more fully described in  Exhibit A attached hereto and incorporated herein by
this reference. The Facility and the Project within which the Facility is located is
depicted on the site plan attached hereto as Exhibit A-1. 

        B.    Landlord
desires to lease to Tenant and Tenant desires to hire from Landlord, the Premises, within the Facility, as designated on the floor plan of the Premises attached
hereto as Exhibit B and incorporated herein by reference. 

        NOW,
THEREFORE, in consideration of the rents and covenants provided for below, Landlord and Tenant do hereby agree as follows: 

 
 

ARTICLE I—DEFINITIONS    
  

        The defined terms for this Lease are set forth on Exhibit C attached hereto and incorporated herein by
reference. A defined term is identified by initial capital letters throughout all provisions of this Lease, including, without limitation, the Basic Lease Information, the Recitals and the Exhibits.
Reference should be made to Exhibit C for the meaning of a defined term. 

 
 

ARTICLE II—PREMISES    
  

        2.01    Lease of Premises.    Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the Premises.
Landlord and Tenant agree that the letting and hiring of the Premises is upon and subject to the terms, covenants and conditions contained in this Lease and each party covenants as a material part of
the consideration of this Lease to keep and perform their respective obligations under this Lease. Tenant acknowledges that this Lease is subject to all existing liens, encumbrances, deeds of trust,
reservations, restrictions and other matters of record or of which Tenant has knowledge or notice affecting the Premises and to all Applicable Laws; provided, however, Landlord represents and warrants
to Tenant that none of the provisions of any such liens, encumbrances, deeds of trust or reservations or other matters nor any Applicable Laws known to Landlord preclude Landlord from leasing the
Premises to Tenant as herein provided. 

        2.02    Calculations of Areas.    Throughout the Term, the Facility may change in size as a result of additional
development. In such event however, no adjustments relating to Tenant's Share of Operating Expenses and other calculations based on areas of the Facility shall be made by Landlord. All usable square
footage of a particular area of the Facility to be measured under this Lease after the date hereof shall be measured by Landlord in accordance with BOMAI Standards and the rentable square footage of
any such space(s) in the Facility other than the Tower shall be determined by multiplying the usable square footage of such space by 1.12, and (ii) the usable square footage in the Tower shall
be determined by multiplying the usable square footage of such space by 1.18. Tenant shall execute and return to Landlord an appropriate certificate provided by Landlord when necessitated because of
any change in or recalculation of the Premises or the Facility or any redesignation of the Common Area within fifteen (15) days of receipt from Landlord. 

        2.03    Common Area.    Throughout the Term of this Lease, Tenant shall have the non-exclusive right to
the use, in common with others, of the Common Area and the Facility Common Area subject to the provisions of this Lease, all Applicable Laws and the Rules and Regulations referred to in
Article XVII and incorporated herein by reference. Tenant's right to use the Common Area and the 

 

Facility Common Area shall terminate upon the termination of this Lease. Landlord reserves for itself and for all other owner(s) and operator(s) of the Common Area, the Facility Common Area and the
balance of the Facility, the right from time to time, without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor, except as expressly set
forth in Section 11.06 hereof, to: (i) install, use, maintain, repair, replace and relocate pipes, ducts, conduits, wires and appurtenant meters and equipment above the ceiling surfaces,
below the floor surfaces,
within the walls and in the central core areas of the Building; (ii) make changes to the design and layout of the Facility, including, without limitation, changes to buildings, driveways,
entrances, passageway, doors and doorways, corridors, elevators, stairs, toilets and other public parts of the Facility, loading and unloading areas, direction of traffic, landscaped areas, walkways
and parking spaces and parking areas; and (iii) use or close temporarily the Common Area, the Facility Common Area and/or other portions of the Facility or the Project while engaged in making
improvements, repairs or alterations to the Building, the Common Area, the Facility Common Area, the Facility, or any portion thereof and (iv) change the name and numbers of designation by
which the Building and the Facility are commonly known. In the event that Landlord shall unilaterally change the name or street Building or the suite number of the Premises, Landlord shall provide
Tenant with ninety (90) days advance written notice thereof and Landlord shall reimburse Tenant for all reasonable costs incurred by Tenant as a result thereof, including, without limitation,
the cost of Tenant's address change announcements and replacement of existing stock stationery. To the extent the location or amount, or both, of Common Area changes or the Facility Common Area
changes in or during any calendar year Landlord shall include the Common Area and the Facility Common Area, as so adjusted and calculated, for purposes of calculating Operating Expenses for such
portion of the calendar year as such change was in and all subsequent calendar years. In connection with the exercise of any of the foregoing rights, Landlord shall use its reasonable efforts to
exercise such rights in a manner intended to minimize material interference with Tenant's use of the Premises. 

        2.04    Access.    Subject to the terms of this Lease, Tenant shall have continuous access twenty-four
(24) hours per day, seven (7) days per week to the Premises. Landlord reserves the right to require Tenant to comply with Landlord's security procedures and practices as may be
established from time to time by Landlord. 

 
 

ARTICLE III—TERM AND POSSESSION    
  

        3.01    Term Commencement.    The Term of this Lease shall be for the period designated in the Basic Lease Information
and, except as otherwise provided herein, shall continue in full force and effect until the Term Expiration Date. Promptly following the Term Commencement Date, Landlord shall deliver to Tenant a
declaration in the form attached hereto as Exhibit D and incorporated herein by reference (the "Commencement Memorandum"). The Commencement
Memorandum shall specify the Term Commencement Date, the Term Expiration Date, the rentable and usable square footage deemed to be in the Premises and Tenant's Share and shall be binding upon Tenant
as to the matters therein stated unless Tenant objects thereto within ten (10) days of Tenant's receipt of the Commencement Memorandum. Unless otherwise provided herein, Tenant's obligation to
pay Basic Rent and its other obligations for payment under this Lease shall commence upon the Term Commencement Date. 

        3.02    Intentionally Deleted.    

        3.03    Condition of Premises.    Landlord represents and warrants that, as of the date hereof, (i) Landlord
does not know (or have reason to know) of any alleged violation of any Applicable Law at the Premises with respect to Hazardous Materials except as is disclosed in that certain Proposition 65
Compliance Notification (which Landlord has delivered to Tenant) and (ii) to the best of Landlord's knowledge, the Base Building (as hereinafter defined) is in good operating condition. In
addition, Landlord has or will exercise reasonable good faith efforts to cause the portions of the Facility 

2

 

Common Areas within the Building to comply with the provisions of Title III of the Americans with Disabilities Act of 1990 ("ADA"); provided however Tenant shall be responsible, at Tenant's sole cost
and expense, for compliance with ADA to the extent the need therefor arises out of or in connection with (a) any act, omission or alteration performed by or on behalf of Tenant (excluding the
Tenant Improvements) and any act, omission or alteration failed to be performed by or on behalf of Tenant which is Tenant's responsibility to be performed hereunder, subject to the terms of
Section 7.01 hereof, (b) Tenant's particular manner of use of the Premises (as opposed to general office use or other uses expressly permitted hereunder) or (c) Tenant's hiring of
a disabled employee who requires special accommodations not otherwise required by law. Tenant is the current occupant of the Premises, is aware of their condition and the condition of the Building and
the Facility and Tenant agrees to accept the same in their respective condition and state of repair existing as of the date hereof and understands and agrees that no work is to be performed or
materials supplied by Landlord to prepare the Premises for Tenant's continued occupancy except as expressly provided in the Tenant Improvement Agreement attached hereto as  Exhibit E and made a part
hereof. Tenant further agrees that Landlord shall have no obligation to perform any work, make any installations or
incur any expense in order to prepare the Premises for Tenant's occupancy other than as is expressly set forth in the preceding sentence or Section 5.01 of this Lease. Continued possession of
the Premises shall be deemed to be conclusive evidence as against Tenant that the Premises, the Building, the Facility and the Project were in good and satisfactory condition, except for the
correction of latent defects identified by Tenant within six (6) months of the Term Commencement Date and that the Tenant Improvements were satisfactorily performed. Nothing contained in this
Article III shall abrogate or affect Landlord's obligation to perform repairs to the Facility, or any portion thereof, which are expressly set forth in this Lease. Tenant acknowledges that,
except as expressly set forth herein, neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises, the Building, the Facility, the Project or any
portions thereof or with respect to the suitability of same for the conduct of Tenant's business and Tenant further acknowledges that Landlord will have no obligation to construct or complete any
additional buildings or improvements within the Facility or the Project. 

 
 

ARTICLE IV—RENT    
  

        4.01    Basic Rent.    Tenant shall pay to Landlord throughout the Term, Basic Rent as specified in the Basic Lease
Information, payable in equal monthly installments in advance commencing on the Term Commencement Date and continuing on the first day of each calendar month during every year of the Term in lawful
money of the United States, without deduction or offset whatsoever, except as otherwise expressly set forth herein. Basic Rent shall be paid to Landlord at the address specified in the Basic Lease
Information or to such other firm or to such other place as Landlord may from time to time designate in writing by notice given as herein provided. If payment of Basic Rent is to begin on a day other
than the first day of a calendar month as provided in this Section 4.01, then Basic Rent shall be
prorated on a per diem basis, and the prorated on a per diem basis installment shall be paid on the first day of the calendar month next succeeding the Term Commencement Date. If the Term terminates
on other than the last day of a calendar month, then the Basic Rent shall be prorated as well and the prorated installment shall be paid on the first day of the calendar month next preceding the date
of termination. 

        4.02    Operating Expenses.    In addition to Basic Rent, Tenant shall pay as additional rent, Tenant's Operating
Expenses as provided in Article XXV, without abatement or offset, except as otherwise expressly set forth herein. 

        4.03    Security Deposit.    

        (a)  Landlord
is currently holding $79,748.70 as the security deposit under the One Stop Lease and Landlord is currently holding $148,278.40 as the security deposit under the
United Lending Lease, $228,027.10 in the aggregate (collectively, the "Security Deposit"). Tenant hereby 

3

 

authorizes and directs Landlord to transfer the Security Deposit currently being held by Landlord under the One Stop Lease and the United Lending Lease and to hold the same as the security deposit
under this Lease as security for the full and faithful performance and observance by Tenant of all of its covenants and obligations under this Lease, including, without limitation, the surrender of
possession of the Premises to Landlord as herein provided. Landlord agrees to deposit the Security Deposit in an interest bearing bank account located in the State of California. The interest received
on such account shall be added to and held as part of the Security Deposit subject to and in accordance with the provisions of this Lease. Landlord shall not be required to credit Tenant with any
interest for any period during which Landlord does not receive interest on the Security Deposit, nor shall Landlord have any liability or obligation for loss of all or any portion of the Security
Deposit by reason of the insolvency or failure of the bank in which the Security Deposit is deposited. If Tenant fails to pay Rent or other charges due hereunder, or otherwise defaults with respect to
any provision of this Lease, after notice and the expiration of any applicable cure period, Landlord may use, apply or retain all or any portion of the Security Deposit for the payment of any Rent or
other charge in default, or for the payment of any other sum which Landlord may expend or be required to expend in connection with Tenant's default, or to compensate Landlord for any loss or damage
sustained by Landlord in connection with Tenant's default including, but not limited to, any damages or deficiency in the reletting of the Premises, whether such damages or deficiency accrue or
accrues before or after summary proceedings or other re-entry by Landlord. If Landlord uses or applies all or any portion of the Security Deposit, Tenant shall immediately on demand pay
Landlord in cash or readily available funds, a sum equal to the portion of the Security Deposit expended or applied by Landlord as provided in this Section so as to restore the Security Deposit to its
original amount. Tenant's failure to deposit the Security Deposit or maintain the Security Deposit in its original amount, shall constitute an Event of Default under Article XIX of this Lease.
If Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Lease, Landlord shall return the Security Deposit to Tenant within thirty
(30) days after the Term Expiration Date and after delivery of the entire possession of the Premises to Landlord in accordance with the terms of this Lease. Landlord shall not be deemed to be a
trustee with respect to the Security Deposit, and shall not be required to keep the Security Deposit separate from its general funds. Tenant shall be entitled to no interest on the Security Deposit.
Should Landlord transfer its interest in the Premises during the Term hereof and deposit with the
transferee thereof the unappropriated Security Deposit funds, Landlord's obligations with respect to the Security Deposit will be discharged and Tenant shall look solely to the new landlord for the
return of the Security Deposit. 

        (b)  The
Security Deposit shall be reduced by the amount of $28,000.00 (the "Reduction Amount") on the first day of the month in which the first (1st)
anniversary of the Term Commencement Date shall occur (the "Reduction Date") provided that (i) this Lease shall be in full force and effect and Tenant shall not be or have been in default
hereunder, (ii) and Tenant shall have made payments of Basic Rent and additional rent in a timely fashion for one (1) year following the Term Commencement Date and (iii) Landlord
has not previously drawn on the Security Deposit by reason of default on the part of Tenant. 

        4.04    Payment; Late Charges.    Tenant shall pay Landlord all amounts due from Tenant to Landlord hereunder, whether
for Rent or otherwise, in lawful money of the United States, without deduction or offset whatsoever, except as otherwise expressly set forth herein, and without notice or demand except as otherwise
provided herein. Tenant acknowledges that late payment by Tenant of any payment owed to Landlord under this Lease will cause Landlord to incur costs not contemplated by this Lease, the exact amount of
such costs being extremely difficult and impracticable to fix. Therefore, if any installment of Rent due from Tenant is not received by Landlord within ten (10) days after the date when such
payment is due, Tenant shall pay to Landlord, in addition to such installment of Rent or such additional rent, as the case may be an additional sum of five percent (5%) of the overdue Rent 

4

 

as a late charge; provided, however, Tenant shall not be required to pay such additional late charge the first (1st) time in any twelve (12) month period during the Term an installment of Rent
is not received by Landlord within ten (10) days after the date when such payment is due if such failure is a result of an administrative error. Payment of the late charge is not an alternative
means of performance of Tenant's obligation to pay Rent when due, and acceptance of the late charge shall not cure or waive Tenant's default, nor prevent Landlord from exercising, before or after such
acceptance, any rights or remedies for a default provided by this Lease. The parties agree that such late charge represents a fair and reasonable estimate of the detriment that Landlord will suffer by
reason of late payment by Tenant. If Tenant is subject to late charges more than three (3) times in any period of twelve (12) months during the Term, Landlord shall have the right to
require Tenant thereafter to pay all installments of Rent quarterly in advance throughout the remainder of the Term. 

        4.05    All Payments as Rent.    Any and all payments of Basic Rent, Tenant's Operating Expenses and any and all
taxes, fees, charges, costs, expenses, insurance obligations and all other payments, disbursements or reimbursements which are attributable to, payable by or the responsibility of Tenant under and by
reason of this Lease are payable as additional rent and shall constitute "rent" within the meaning of California Civil Code Section 1951(a). 

 
 

ARTICLE V—RESTRICTIONS ON USE/COMPLIANCE WITH LAWS    
  

        5.01    Use.    Tenant shall use the Premises for the Permitted Use and for no other use or purpose. Nothing in this
Lease shall be deemed to give Tenant any exclusive right to such use in the Building, the Facility or the Project. Tenant shall not do or permit to be done in or about the Premises nor bring, keep or
permit to be brought or kept therein, anything which is prohibited by the attached Exhibit H or which is in conflict with or will invalidate any
insurance policy covering the Building, the Facility, the Project or any part thereof or which will in any way increase the existing rate of, or affect, any fire or other insurance upon the building
or its contents, or which will cause a weight load or stress on the floor or any other portion of the Premises in excess of the weight load or stress which the floor or other portion of the Premises
is designed to bear. Tenant shall comply with all Applicable Laws affecting the Premises, and the requirements of any board of fire underwriters or other similar body, now or hereafter instituted, and
shall also comply with any order, directive or certificate of occupancy issued pursuant to any Applicable Laws, which affect the condition, use or occupancy of the Premises, including but not limited
to, any requirements of structural changes or other alterations necessitated by or in connection with Tenant's acts, particular manner of use or occupancy of the Premises or alteration of the
Premises. The judgment of any court of competent jurisdiction or the admission of Tenant in any action against Tenant, whether or not Landlord is a party to such action, shall be conclusive as between
Landlord and Tenant in establishing such violation. Notwithstanding the foregoing, (a) Landlord represents that to Landlord's actual knowledge, without any additional inquiry or investigation,
Tenant's intended use of the Premises will not cause any change in the insurance ratings of the Facility or impose any special structural requirements, and (b) Landlord shall be responsible to
remove any violation and to correct any condition existing as of the date hereof (whether or not a notice of violation has been issued) in the event such violation or condition must be corrected as a
prerequisite to the issuance of a governmental approval for the Tenant Improvements or prevents Tenant from obtaining a Certificate of Occupancy for the Premises; it being understood and agreed,
however, if any such violation or condition is deemed to exist within the Premises, or outside of the Premises (including the Base Building) in connection with or as a result of Tenant's particular
manner of use of (as opposed to general office use), or particular operation of its business in, the Premises, including the Tenant Improvements, then Tenant shall be responsible for curing such
violation or condition, as the case may be. If by reason of Tenant's failure to comply with the provisions of this Article, the fire insurance rate shall at the beginning of this Lease or at any time
thereafter be higher than it otherwise would be, then Tenant shall reimburse Landlord, as additional rent hereunder, for that part of all fire insurance premiums thereafter paid by Landlord which
shall have been charged because of such failure 

5

 

of Tenant, and shall make such reimbursement upon the first day of the month following such outlay by Landlord. In any action or proceeding wherein Landlord and Tenant are parties, a schedule or
"make up" of rates for the Facility, the Building or the Premises issued by the California Fire Insurance Rating Organization, or other body fixing such fire insurance rates, shall be conclusive
evidence of the facts therein stated and of the several items and charges in the fire insurance rates then applicable to the Premises. 

 
 

ARTICLE VI—ALTERATIONS    
  

        6.01    Tenant Alterations.    Tenant shall not make or perform or permit the making or performance of any
alterations, additions or improvements (collectively, "Alterations") to the Premises without Landlord's prior written consent, which consent Landlord shall not unreasonably delay or withhold.
Notwithstanding the foregoing, Tenant shall have the right to make Cosmetic Alterations without Landlord's prior written consent, provided that in both cases, Tenant shall provide to Tenant, at least
ten (10) days prior to the commencement of such Alterations, notice of the Alterations to be performed and the terms, conditions and provisions of this Lease regarding Alterations are otherwise
fully complied with. If Landlord consents to the making of any Alterations by Tenant, the same shall be made by Tenant, at Tenant's sole cost and expense, and all such Alterations shall be done in
strict compliance with the provisions of this Article VI. Notwithstanding the foregoing, with respect to Cosmetic Alterations only, Tenant shall not be required to cause drawings, plans and
specifications to be prepared with respect to such Cosmetic Alterations if such drawings, plans and specifications are not otherwise required to be prepared in order to obtain any permit or other
required governmental or quasi-governmental approval, but Tenant shall furnish Landlord with copies of any existing drawings, plans and specifications actually prepared with respect to such Cosmetic
Alterations, if any. 

        6.02    Installation of Alterations.    Any Alterations installed by or on behalf of Tenant within the Premises shall
be done in strict compliance with all of the following: 

        (a)  No
such work shall proceed without (i) Landlord's prior approval of Tenant's contractor(s) and subcontractor(s), which approval shall not be unreasonably withheld
or delayed; (ii) Landlord's receipt of duplicate original policies of comprehensive public liability (including property damage coverage) insurance and worker's compensation insurance (covering
all persons to be employed by Tenant and Tenant's contractors and subcontractors in connection with such Alteration) in such form, with such companies, for such periods and in such amounts as Landlord
may reasonably require, naming Landlord, its property manager and their respective agents as additional insureds; (iii) Landlord's receipt and approval of detailed plans and specifications
(including layout, architectural, mechanical and structural drawings stamped by a professional engineer or architect licensed in the State of California) for each proposed Alteration, except as
expressly set forth in Section 6.01(ii) hereof; (iv) Tenant paying to Landlord all reasonable out of pocket costs and expenses incurred by Landlord in connection with Landlord's
review of Tenant's plans and specifications; it being understood and agreed that Landlord shall not engage any third party consultant to review the named Tenant's plans and specifications in
connection with Non-Structural Alterations and Cosmetic Alterations; it being further understood and agreed that Tenant shall not be required to pay any such costs and expenses in
connection with the Tenant Improvements; and (v) Tenant obtaining, at its expense, all permits, approvals and certificates required by any governmental or quasi-governmental bodies. 

        (b)  All
such work shall be performed: (i) in accordance with the plans and specifications submitted to and approved by Landlord, which approval shall be granted
subject to and in accordance with the terms of Section 6.01 above; (ii) in a lien-free and first-class and workmanlike manner, (iii) in compliance with all Applicable
Laws including, without limitation, the Americans with Disabilities Act of 1990, a valid building permit and/or all other permits or licenses when and where required, copies of which shall be
furnished to Landlord before the work is commenced; 

6

 

(iv) in such a manner so as not to interfere (other than to a de minimus extent) with the occupancy and enjoyment of any other tenant or occupant in the Facility and not to impose any
additional expense upon or delay Landlord in the maintenance and operation of the Facility and (v) in such a manner so as not to affect (other than to a de minimus extent) any part of the
Building or the Facility other than the Premises. Any work not acceptable to any governmental authority or agency having or exercising jurisdiction over such work, or not reasonably satisfactory to
Landlord, shall be promptly replaced and/or corrected at Tenant's expense. Landlord's approval or consent to any such work shall not impose any liability upon Landlord as to completeness, design
sufficiency or compliance with Applicable Laws. 

        (c)  All
materials and equipment to be incorporated in the Premises (i) shall be first quality and (ii) shall not be subject to any lien, encumbrance, chattel
mortgage, title retention or security agreement. 

        (d)  Provided
Landlord has first given Tenant notice of any substandard work or inadequate clean up (other than in event of an emergency) and Tenant fails to correct such
work or clean up to Landlord's reasonable satisfaction within a reasonable period of time under the circumstances, Tenant shall promptly reimburse Landlord for any reasonable expense incurred by
Landlord in connection with any substandard work performed by Tenant or Tenant's contractors, by reason of delays caused by such work and by reason of inadequate cleanup following completion of such
work. 

        (e)  Other
than as expressly provided in Section 6.01, Tenant or its contractors will in no event be allowed to make Alterations which: (i) affect the plumbing,
mechanical, electrical, sanitary, life safety, heating, ventilation or air conditioning or other systems or services of the Facility or the proper functioning thereof, (ii) affect the
structural integrity of the Facility; (iii) affect any area outside the Premises including the exterior appearance of the Facility or any of the Common Areas; (iv) in Landlord's
reasonable opinion, lessen the value or utility of the Facility; or (v) will violate or require a change in any occupancy certificate or permit applicable to the Premises. 

        (f)    All
work by Tenant shall be scheduled through Landlord and shall be diligently and continuously pursued from the date of its commencement through its completion. If
Tenant's Alterations have not been completed within a reasonable time after the commencement of such Alterations and if Tenant shall thereafter fail to complete such Alterations within sixty
(60) days after notice thereof to Tenant, Landlord may cause such Alterations to be completed in which event Tenant shall reimburse Landlord for Landlord's reasonable costs of completing such
work upon Landlord's demand, and the amount of Landlord's completion costs to be reimbursed by Tenant, together with interest thereon at the Interest Rate shall constitute additional rent under this
Lease and shall be paid by Tenant with the next due monthly Basic Rent payment after Landlord's demand. 

        (g)  Tenant
(other than the named Tenant herein) shall obtain any bonds reasonably required by Landlord. 

        (h)  To
the extent applicable, upon completion of any Alteration, Tenant, at Tenant's expense, shall (i) obtain certificates of final approval of such Alteration
required by any governmental or quasi-
governmental bodies and shall furnish Landlord with copies thereof and (ii) furnish Landlord with "as-built" drawings showing such Alterations. 

        (i)    Tenant
shall not knowingly, at any time prior to or during the Term, directly or indirectly employ, or permit the employment of, any contractor, mechanic or laborer in
the Premises whether in connection with any material Alterations or otherwise, if, in Landlord's reasonable discretion, such employment will interfere (other than to a de minimus extent) with other
contractors, mechanics or laborers engaged in the construction, maintenance or operation of the Facility or the 

7

 

Project by Landlord, Tenant or others. In the event of any interference, Tenant upon demand of Landlord, shall cause all contractors, mechanics or laborers causing such interference to leave the
Facility or the Project, as the case may be, immediately. 

        6.03    Removal of Alterations.    Landlord shall not require Tenant to remove any Alteration that exists in the
Premises as of the Scheduled Term Commencement Date. The initial Tenant Improvements, including, without limitation, all affixed sinks, dishwashers, microwave ovens and other fixtures and all
Alterations made by Tenant (but excluding Tenant's trade fixtures and personal property) shall become the property of Landlord immediately upon installation within the Premises and shall remain on and
be surrendered with the Premises upon expiration or termination of the Term, except that Landlord reserves the right to require that Tenant remove all Non-Standard Alterations upon the
expiration or termination of the Term; it being understood and agreed, however, that any moveable personal property and equipment brought into the Premises by or on behalf of Tenant following the
completion of the Tenant Improvements (which is not affixed to or installed within the Premises) shall be and remain Tenant's personal property. Notwithstanding the foregoing, Landlord shall notify
Tenant at the time of the approval of Tenant's plans and specifications of those Non-Standard Alterations which Tenant may be required to remove in accordance with the terms of this
Section prior to the expiration of the Term or the termination of this Lease and Tenant shall, upon the expiration of the Term or upon such termination, unless instructed otherwise by Landlord, be
required to remove only such Non-Standard Alterations specified in Landlord's notice. If Landlord requires Tenant to remove any Non-Standard Alterations, Tenant, at its cost,
shall repair and restore in a good and workmanlike manner any damage caused to the Premises, the Building or the Facility resulting in connection with the removal of any of its
Non-Standard Alterations, trade fixtures and/or personal property and shall restore the Premises, the Building or the Facility, as applicable, to the condition same were in when the
Premises were received by Tenant, ordinary wear and tear excepted. 

        6.04    Intentionally Deleted.    

        6.05    Removal of Personal Property.    All articles of personal property owned by Tenant or installed by Tenant at
its expense in the Premises (including Tenant's business and trade fixtures, furniture, movable partitions and equipment such as telephones, copy machines, computer terminals, refrigerators and
facsimile machines) will be and remain the property of Tenant, and must be removed by Tenant from the Premises, at Tenant's sole cost and expense, on or before the expiration or sooner termination of
this Lease. Tenant agrees to repair any damage caused by such removal at its cost on or before the expiration or sooner termination of this Lease. 

        6.06    Failure to Remove Items.    If Tenant fails to remove by the expiration or sooner termination of this Lease
all of its personal property, trade fixtures, equipment or any Non-Standard Alterations identified by Landlord for removal, Landlord may, at its option, after ten (10) days written
notice to Tenant personal property and/or Non-Standard Alterations as abandoned and, at Tenant's sole cost and in addition to Landlord's other rights and remedies under this Lease, at law
or in equity: (a) remove and store such items; and/or (b) sell, discard or otherwise dispose of all or any such items at private or public sale for such price as Landlord may obtain or
by other commercially reasonable means. Tenant shall be liable for all costs of disposition of Tenant's abandoned property and Landlord shall have no liability to Tenant with respect to any such
abandoned property. Landlord agrees to apply the proceeds of any sale of any such property to any amounts due to Landlord under this Lease from Tenant (including Landlord's attorneys' fees and other
costs incurred in the removal, storage and/or sale of such items), with any remainder to be paid to Tenant. 

 
 

ARTICLE VII—REPAIRS    
  

        7.01    Landlord's Obligations.    Landlord agrees to repair and maintain the Building structure including the roof,
the foundations and the exterior surfaces of exterior walls and the exterior surfaces 

8

 

of common demising walls of the Building, the Common Areas of the Building and the plumbing, heating, ventilating, air conditioning, elevator, electrical and fire/life safety systems installed or
furnished by Landlord to the point of connection into the Premises, utility closets, transformers and electrical panels, doorways and access portals (collectively the "Base Building"), in good order,
repair and first class condition, unless such maintenance and repairs are (i) attributable to items installed in Tenant's Premises which are above standard interior improvements (such as, for
example, custom lighting, special HVAC and/or electrical panels or systems, kitchen or restroom facilities and appliances constructed or installed within Tenant's Premises) or (ii) caused in
part or in whole by the act, neglect or omission of any duty by Tenant, its agents, servants, employees or invitees or (iii) Tenant's responsibility pursuant to the terms of this Lease, in any
which case Tenant will pay to Landlord, as additional rent, the reasonable cost of such maintenance and repairs. Tenant shall promptly notify Landlord of the necessity of any repairs which Tenant is
aware of and which Landlord is responsible for under the provisions of this Lease. Except as otherwise expressly set forth herein, Tenant will not be entitled to any abatement of rent and Landlord
will not have any liability by reason of any injury to or interference with Tenant's business arising from the making, or failure to make, any repairs, alterations or improvements in or to any portion
of the Building, the Facility or the Premises or in or to fixtures, appurtenances and equipment therein other than any injury or interference arising solely and directly from Landlord's negligence or
wilful misconduct. Tenant waives the right to make repairs at Landlord's expense under any Applicable Laws (including, without limitation, the provisions of California Civil Code Sections 1941 and
1942 and any successor statutes or laws of a similar nature). 

        7.02    Tenant's Obligations.    Except for Landlord's repair obligations described in Section 7.01 above and
Landlord's maintenance obligations described in Section 11.01, Tenant agrees to keep, maintain and
preserve all portions of the Premises in first class condition and repair and, when and if needed, at Tenant's sole cost and expense, to make all necessary and reasonable repairs to the Premises and
every part thereof. Any such maintenance and repairs will be performed by contractor(s) and subcontractor(s) selected by Tenant and reasonably acceptable to Landlord or contractors as Tenant may
choose from an approved list to be submitted by Landlord. Tenant agrees to pay all costs and expenses incurred in such maintenance and repair within thirty (30) days after billing by Landlord
or such contractor or contractors. Tenant agrees to cause any mechanics' liens or other liens arising as a result of work performed by Tenant or at Tenant's direction to be eliminated as provided in
Article VIII below. Except as expressly provided in Section 7.01 above, Landlord has no obligation to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof. 

        7.03    Tenant's Failure to Repair.    If Tenant refuses or neglects to repair and maintain the Premises properly as
required hereunder, Landlord, at any time following ten (10) days from the date on which Landlord makes a written demand on Tenant to effect such repair and maintenance, may enter upon the
Premises and make such repairs and/or maintenance, and upon completion thereof, Tenant agrees to pay to Landlord as additional rent, Landlord's costs for making such repairs plus an amount not to
exceed ten percent (10%) of such costs for overhead, within ten (10) days of receipt from Landlord of a written itemized bill therefor. Any amounts not reimbursed by Tenant within such ten
(10) day period will bear interest at the Interest Rate until paid by Tenant. 

 
 

ARTICLE VIII—LIENS    
  

        Except for any liens resulting from Landlord's failure to make required payments subject to and in accordance with the express terms of the Tenant Improvement
Agreement attached to this Lease as Exhibit E and made a part hereof, after satisfaction by Tenant of all conditions precedent and other requirements set forth therein and in Article VI
of this Lease (collectively, "Landlord Liens"), Tenant agrees not to permit any mechanic's, materialmen's or other liens to be filed against all or any part of the Project, the Facility, the Building
or the Premises, nor against Tenant's leasehold interest in the Premises, by reason of or in connection with any repairs, Alterations, improvements or other work 

9

 

contracted for or undertaken by or on behalf of Tenant or materials or supplies furnished to or obligations incurred by or on behalf of Tenant, or by reason of any other act or omission of Tenant or
Tenant's agents, employees, contractors, licensees or invitees. Tenant agrees to indemnify, protect, defend and hold Landlord harmless from and against any and all claims for any such liens. At
Landlord's request, Tenant agrees to provide Landlord with enforceable, conditional and final lien releases (or other evidence reasonably requested by Landlord to demonstrate protection from liens)
from all persons furnishing labor and/or materials at the Premises. Landlord will have the right at all reasonable times to post on the Premises and record any notices of
non-responsibility which it deems necessary for protection from such liens. If any such liens are filed, Tenant will, at its sole cost, promptly cause such liens to be released of record
or bonded so that it no longer affects title to the Project, the Facility, the Building or the Premises. If Tenant fails to cause any such liens to be so released or bonded within thirty
(30) days after filing thereof, such failure will be deemed an Event of Default under Article XIX without the benefit of any additional notice or cure period, and Landlord may, without
waiving its rights and remedies based on such breach, and without releasing Tenant from any of its obligations, cause such liens to be released by any means it shall deem proper, including payment in
satisfaction of the claims giving rise to such liens. Tenant agrees to pay to Landlord as
additional rent within thirty (30) days after receipt of invoice from Landlord, any sum paid by Landlord to remove such liens, together with interest at the Interest Rate from the date of such
payment by Landlord. 

 
 

ARTICLE IX—ASSIGNMENT AND SUBLETTING    
  

        9.01    Right to Assign, Sublease and Encumber.    Landlord and Tenant recognize and specifically agree that this
Article IX is an economic provision, like Rent, and that Landlord's right to recapture, and to receive any excess consideration, has been granted by Tenant to Landlord in consideration for
other economic concessions granted by Landlord to Tenant in this Lease. Except as expressly set forth in this Article IX, Tenant may not assign or encumber its interest in this Lease or in the
Premises, or sublease all or any part of the Premises, or allow any other person or entity to occupy or use all or any part of the Premises (any such assignment, encumbrance, sublease, or the like
shall sometimes be referred to herein as a "Transfer"), without first obtaining Landlord's prior written consent, which consent Landlord will not unreasonably withhold or delay; provided, however,
that a merger, sale of business, acquisition or similar transaction involving Tenant will not constitute a Transfer for purposes of this Article IX. Any Transfer without Landlord's prior
written prior consent shall be voidable, at Landlord's election, and shall constitute an Event of Default under Article XIX. No consent to any Transfer shall constitute a further waiver of the
provisions of this Section. 

        9.02    Proposed Transfer Notice.    If Tenant desires to effect a Transfer covering more than one (1) floor of
the Premises or for a term of thirty (30) months or more (each, a "Recapture Transfer"), then at least thirty (30) days prior to the date when Tenant desires the Transfer to be
effective, Tenant shall give Landlord a notice identifying the space to be assigned, encumbered, subleased or otherwise transferred (the "Transfer Premises") and the rentable square footage of the
Transfer Premises (the "Proposed Transfer Notice"). Delivery to Landlord of a Proposed Transfer Notice shall be deemed an offer from Tenant to Landlord whereby Landlord may, at its option, recapture
the Transfer Premises for the balance of the Term hereof. Said option may be exercised by Landlord by notice given to Tenant at any time within thirty (30) days after Landlord's receipt of the
Proposed Transfer Notice (the "Recapture Period"); and during such thirty (30) day period Tenant shall not assign this Lease nor sublet such space to any person or entity. If Landlord fails to
exercise its option to recapture as aforesaid within such thirty (30) day period, then for the nine (9) month period commencing on the date of Landlord's receipt of the Proposed Transfer
Notice, Landlord shall have no right to recapture the Transfer Premises in connection with a proposed Transfer involving only the Transfer Premises. However, if Tenant shall desire to Transfer part of
the Transfer Premises or if Tenant shall desire to Transfer the Transfer Premises together with another portion of the Premises, then Landlord shall again 

10

 

have the recapture option described in this Section, exercisable by notice to Tenant given within thirty (30) days after a new Proposed Transfer Notice has been delivered to Landlord pursuant
to the provisions hereof. 

        9.03    Notice of Transfer; Landlord's Options.    If Tenant desires to effect a Transfer which is not a Recapture
Transfer, then at least thirty (30) days prior to the date when Tenant desires the Transfer to be effective (the "Transfer Date"), Tenant agrees to give Landlord a notice ("a"Transfer Notice")
stating the name, address and business of the proposed assignee, sublessee or other transferee (sometimes referred to herein as "Transferee") and its proposed use of the Premises, reasonable
information (including references) concerning the character, ownership and financial condition of the proposed Transferee (including, without limitation, its most recent financial reports), the
Transfer Date, any ownership or commercial relationship between Tenant and the proposed Transferee, and the consideration and all other material terms and conditions of the proposed Transfer, all in
such detail as Landlord may reasonably require and such additional information related to the proposed Transfer or Transferee as Landlord may reasonably request. Within thirty (30) days of
Landlord's receipt of any Transfer Notice and any additional information requested by Landlord, Landlord will elect to either: 

        (a)  consent
to the proposed Transfer; or 

        (b)  refuse
such consent, which refusal shall be on reasonable grounds including, without limitation, those set forth in Section 9.04 below. 

        9.04    Reasonable Disapproval.    Landlord and Tenant hereby acknowledge that Landlord's disapproval of any proposed
Transfer pursuant to Section 9.03(b) will be deemed reasonably withheld if based upon any reasonable factor, including, without limitation, any or all of the following factors: (i) the
proposed Transferee is a Governmental Entity, if the proposed Transferee is entitled, directly or indirectly, to diplomatic or sovereign immunity or shall not be subject to the service of process in,
and the jurisdiction of, the courts of the State of California; (ii) the portion of the Premises to be sublet or assigned is irregular in shape with inadequate means of ingress and egress;
(iii) the use of the Premises by the Transferee (A) is not permitted by the use provisions in Article V hereof, or (B) violates any exclusive use granted by Landlord to
another tenant in the Project or the Facility, it being understood that within ten (10) business days of receipt of Tenant's Transfer Notice, together with Tenant's specific written request for
a written list of uses which would violate exclusives granted by Landlord to other tenants in the Project or the Facility, Landlord shall provide Tenant with a written list of such uses; (iv) 
the Transferee does not have the financial capability to fulfill the obligations imposed by the Transfer and this Lease (or has not furnished Landlord with reasonable proof thereof); (v) the
proposed Transferee is engaged in a business or activity, or the Premises or the relevant part thereof, will be used in a manner, which is not in keeping with the then standards of the Building or the
Facility; (vi) there shall be more than five (5) subtenants of the Premises excluding Occupants (as hereinafter defined); or (vii) the form of the proposed sublease or instrument
of assignment (A) shall not be in form reasonably satisfactory to Landlord, or (B) shall not comply with the applicable provisions of this Article IX. 

        9.05    Additional Conditions.    A condition to Landlord's consent to any Transfer of this Lease will be the delivery
to Landlord of a true copy of the fully executed instrument of assignment, sublease, transfer or hypothecation, and, in the case of an assignment, the delivery to Landlord of an agreement executed by
the Transferee in form and substance reasonably satisfactory to Landlord, whereby the Transferee assumes and agrees to be bound by all of the terms and provisions of this Lease and to perform all of
the obligations of Tenant hereunder; it being understood, however, that in the case of a sublease, the Transferee shall not be obligated to pay the amount of the Basic Rent set forth in the Basic
Lease Information and instead shall be obligated to pay the amount of rent to be paid during the sublease
term. As a condition for granting its consent to any assignment or sublease, Landlord may require that the assignee or sublessee remit directly to Landlord on a monthly basis, all monies due to 

11

 

Tenant by said assignee or sublessee; it being understood and agreed, however, if in any month during the Term, Landlord shall receive payment from both Tenant and Tenant's assignee or sublessee, as
the case may be, then (i) if Landlord shall receive more than one hundred percent (100%) of the Rent Landlord is entitled to hereunder, Landlord shall refund any excess to Tenant or
(ii) if Landlord shall bill and receive from such assignee or subtenant, as the case may be, less than one hundred percent (100%) of the Rent Landlord is entitled to hereunder, Tenant shall not
be obligated to pay any amounts paid by such assignee or subtenant. As a condition to Landlord's consent to any sublease, such sublease must provide that it is subject and subordinate to this Lease
and to all mortgages; that Landlord may enforce the provisions of the sublease, including collection of rent; that in the event of a default by the sublessee or termination of this Lease for any
reason, including, without limitation, a voluntary surrender by Tenant, or in the event of any reentry or repossession of the Premises by Landlord, Landlord may, at its option, either
(i) terminate the sublease, or (ii) take over all of the right, title and interest of Tenant, as sublessor, under such sublease, in which case such sublessee will attorn to Landlord, but
that nevertheless Landlord will not (1) be liable for any previous act or omission of Tenant under such sublease, (2) be subject to any counterclaim, defense or offset previously accrued
in favor of the sublessee against Tenant, or (3) be bound by any previous modification of any sublease made without Landlord's written consent, or by any previous prepayment by sublessee of
more than one month's rent. 

        9.06    Excess Rent.    If Landlord shall give its consent to any assignment of this Lease or to any sublease or if
Tenant shall enter into any other assignment or sublease permitted hereunder, Tenant shall in consideration therefor, pay to Landlord, as additional rent: 

        (a)  in
the case of an assignment (other than an assignment pursuant to Section 9.12 hereof), an amount equal to fifty percent (50%) of all sums and other
consideration paid to Tenant by the assignee on account of the assignment (including, but not limited to, sums paid for the sale of Tenant's fixtures, leasehold improvements, equipment, furniture,
furnishings or other personal property, less, in the case of a sale thereof, the fair market value thereof after recoupment of all expenses reasonably and actually incurred by Tenant in connection
with such assignment, provided that Tenant shall submit to Landlord a receipt evidencing the payment of such expenses (or other proof of payment as Landlord shall require); and 

        (b)  in
the case of a sublease (other than a sublease pursuant to Section 9.12 hereof), fifty percent (50%) of any rents, additional charges or other consideration
payable under the sublease on a per square foot basis to Tenant by the subtenant which is in excess of the Basic Rent and additional rent accruing during the term of the sublease in respect of the
subleased space (at the rate per square foot payable by Tenant hereunder) pursuant to the terms hereof (including, but not limited to, sums paid for the sale or rental of Tenant's fixtures, leasehold
improvements, equipment, furniture or other personal property, less, in the case of the sale thereof, the fair market value thereof), after recoupment of all expenses reasonably and actually incurred
by Tenant in connection with such sublease, provided that Tenant shall submit to Landlord a receipt evidencing the payment of such expenses (or other proof of payment as Landlord shall require). 

        The
sums payable under this Section 9.06 shall be paid to Landlord after Tenant has recouped any sublease/assignment expenses actually incurred by Tenant in connection with the
transaction in question. 

        9.07    Effect of Recapture.    If Landlord exercises its option to recapture the Transfer Premises, then the Transfer
Premises shall be deemed surrendered on the day following the expiration of the Recapture Period, and the Basic Rent and additional rent due hereunder shall be paid and apportioned to such date. If
the Transfer Premises constitutes only a portion of the Premises, Landlord, at Tenant's expense, may make such alterations as Landlord reasonably deems necessary to physically separate the Transfer
Premises from the balance of the Premises and to comply with all applicable laws and 

12

 

insurance requirements relating to such separation. Tenant shall reimburse Landlord for the reasonable costs thereof within thirty (30) days following demand. If Landlord exercises its
recapture option pursuant to this Article, Tenant shall be released from its obligations arising under this Lease (or its obligations that relate to the portion of the Premises being recaptured (i.e.,
the Transfer Premises), as applicable) from and after the effective date of such recapture, except for any obligation or liability accrued or incurred under this Lease prior thereto which expressly
survives the expiration or earlier termination of this Lease. Tenant understands and acknowledges that the option, as provided in this Article IX, to terminate this Lease or recapture the
Transfer Premises, as applicable, is a material inducement for Landlord's agreeing to lease the Premises to Tenant upon the terms and conditions herein set forth. 

        9.08    No Release.    No Transfer will release Tenant of Tenant's obligations under this Lease or alter the primary
liability of Tenant to pay the Rent and to perform all other obligations to be performed by Tenant hereunder. Landlord may require that any Transferee remit directly to Landlord on a monthly basis,
all monies due Tenant by said Transferee if Tenant is in default hereunder. However, the acceptance of Rent by Landlord from any other person will not be deemed to be a waiver by Landlord of any
provision hereof. Consent by Landlord to one Transfer will not be deemed consent to any subsequent Transfer. In the event of default by any Transferee of Tenant or any successor of Tenant in the
performance of any of the terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such Transferee or successor. Landlord may consent to
subsequent assignments of this Lease or sublettings or amendments or modifications to this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining
Tenant's consent thereto and any such actions of Landlord will not relieve Tenant of liability under this Lease; provided, however, Landlord shall notify Tenant of any such assignment, subletting,
amendment or modification and Landlord shall not diminish Tenant's rights hereunder (other than to a de minimis extent) or reduce Tenant's income
without Tenant's consent. If Landlord shall decline to give its consent to any proposed Transfer, or if Landlord shall exercise any of its options under Section 9.03, Tenant shall indemnify,
defend and hold harmless Landlord against and from any and all loss, liability, damages, costs and expenses (including reasonable counsel fees) resulting from any claims that may be made against
Landlord by the proposed Transferee or by any brokers or other persons claiming a commission or similar compensation in connection with the proposed Transfer, but the foregoing shall not constitute a
waiver of any of Tenant's express rights under this Lease. 

        9.09    Administrative and Attorneys' Fees.    If Tenant effects a Transfer (other than pursuant to the express terms
of Sections 9.12 and 9.13) or requests the consent of Landlord to any Transfer (whether or not such Transfer is consummated), then within ten (10) days following Landlord's written demand
therefor, Tenant agrees to pay Landlord a non-refundable administrative fee of One Thousand Five Hundred Dollars ($1,500.00) which fee includes all fees for Landlord's legal services. 

        9.10    Effectiveness Conditioned Upon Assumption.    Any Transfer shall be made only if, and shall not be effective
until, the Transferee shall execute, acknowledge and deliver to Landlord an agreement in form and substance satisfactory to Landlord whereby the Transferee shall assume the obligations of this Lease
on the part of Tenant to be performed or observed and whereby the Transferee shall agree that the provisions in Section 9.01 shall, notwithstanding such Transfer, continue to be binding upon it
in respect of all future Transfers. The original named Tenant covenants that, notwithstanding any Transfer, whether or not in violation of the provisions of this Lease, and notwithstanding the
acceptance of Rent and/or additional rent by Landlord from an assignee, transferee or any other party, the original named Tenant shall remain fully liable for the payment of the Rent and additional
rent and for the other obligations of this Lease on the part of Tenant to be performed or observed. 

        9.11    Liability of Tenant.    The joint and several liability of Tenant and any immediate or remote successor in
interest of Tenant and the due performance of the obligations of this Lease on Tenant's 

13

 

part to be performed or observed shall not be discharged, released or impaired in any respect by any agreement or stipulation made by Landlord extending the time, or modifying any of the obligations,
of this Lease, or by any waiver or failure of Landlord to enforce any of the obligations of this Lease. 

        9.12    Related Corporation.    Tenant may, without Landlord's consent, permit any Related Corporation to sublet all
or part of the Premises or take an assignment of this Lease for any of the purposes permitted to Tenant, provided and upon the condition that Tenant has given Landlord not less than thirty
(30) days prior written notice thereof and Tenant shall utilize a form of sublease or assignment, as the case may be, reasonably acceptable to Landlord and meeting the requirements of this
Lease, including, without limitation this Article IX. Notwithstanding the foregoing, Tenant may sublease or assign all or any portion of the Premises to Aames Funding Corporation, Aames Home
Loan and/or Aames Capital Corporation without having to comply with the provisions of this Section 9.12. Such subletting shall not relieve, release, impair or discharge any of Tenant's
obligations under this Lease. Furthermore, such sublease or assignment, as the case may be, shall be subject to Tenant furnishing Landlord, prior to the commencement of the term thereof, with
(i) adequate proof that such Related Corporation has been duly organized or formed, as the case may be, and is in good standing in the jurisdiction of its incorporation or formation, as the
case may be, and (ii) resolutions of its Board of Directors certified by the appropriate corporate officer or partnership consents, as applicable, authorizing such sublease or assignment, as
the case may be. 

        9.13    Desk Space Occupancy.    Notwithstanding anything to the contrary contained herein, Tenant shall have the
right, without Landlord's consent, to enter into occupancy agreements with attorneys, accountants, loan agents and other professionals (each, an "Occupant") with respect to individual offices within
the Premises for not more than ten percent (10%) of the rentable area of the Premises in
the aggregate, provided that this Lease shall not have been assigned (other than an assignment to an entity controlled or under common control with Tenant) and that the portion of the Premises
occupied by the Occupant shall not be physically separate from the portion of the Premises occupied by Tenant, and no walls, barriers, public corridors or other indication of separate space shall be
constructed or placed in the Premises. 

 
 

ARTICLE X—INSURANCE AND INDEMNIFICATION    
  

        10.01    Limitation on Landlord's Liability.    Subject to the terms of Section 10.03 below, neither Landlord
nor Landlord's agents or employees shall be liable to Tenant and Tenant hereby waives all claims against Landlord, its agents and employees for any injury or damage to any person or property in, upon
or about the Premises, the Building or the Facility, by or from any cause whatsoever (other than due to negligence or willful misconduct of the Landlord, or its agents or employees) and, without
limiting the generality of the foregoing, whether caused by water leakage of any character from the roof, walls, basement or other portion of the Premises, the Building or the Facility, or caused by
gas, fire, steam, oil or electricity in, upon or about the Premises or Facility. Subject to the terms of Section 10.03 below, Landlord and Landlord's agents and employees shall not be liable
for any damage to any of Tenant's personal property entrusted to Landlord, and its employees, nor for loss of or damage to any of Tenant's personal property by theft or otherwise except when caused by
Landlord's gross negligence or willful misconduct. Except as may be expressly set forth herein, Landlord and Landlord's agents and employees shall not be liable for any latent or patent defect in the
Premises or the Facility or for any consequential damages arising out of any loss of use of the Premises. Tenant shall give prompt written notice to Landlord in case of damage caused by fire or
accident on the Premises. Tenant shall look solely to Landlord to enforce Landlord's obligations hereunder and shall not seek any damages against any of Landlord Indemnified Parties (as hereinafter
defined). The liability of Landlord for Landlord's obligations under this Lease shall not exceed and shall be limited to Landlord's interest in the Building and Tenant shall not look to any other
property or assets in seeking either to enforce Landlord's obligations under this Lease to satisfy a judgment for Landlord's failure to 

14

 

perform such obligations. Notwithstanding the foregoing, Tenant shall have recourse against Landlord to the extent of (i) the net proceeds actually realized by Landlord in connection with the
sale of the Building, (ii) any net insurance proceeds actually received by Landlord for fire or other casualty at the Building and (iii) any net condemnation proceeds actually received
by Landlord in connection with a taking or appropriation of the Building under the power of eminent domain. 

        10.02    Indemnification of Landlord.    Tenant hereby agrees to indemnify, protect, defend and hold Landlord and its
partners, shareholders, officers, directors, employees, agents and representatives ("Landlord Indemnified Parties") harmless from and against any and all claims, damages, costs, losses or liability
(i) for any death, injury or damage to any person or property whatsoever (A) occurring in, on or about the Premises or any portion thereof, or (B) occurring in, on or about the
Premises, the Facility or the Project or any portion thereof, when such injury or damage shall be caused in part or in whole by the act, neglect, fault or omission of any duty with respect to the same
by Tenant, its agents,
servants, employees, guests, licensees or invitees excluding therefrom any injury or damage to the extent caused by or resulting from the negligence or willful misconduct of Landlord, and
(ii) of whatever nature against Landlord arising from any act, omission or negligence of Tenant, its contractors, licensees, agents, servants, employees, invitees or visitors including any
claims arising from any act, omission or negligence of Landlord and Tenant to the extent not caused by the negligence or willful misconduct of Landlord. Tenant hereby agrees to indemnify, protect,
defend and hold harmless Landlord and all Landlord Indemnified Parties from and against any and all claims, damages, costs, liability or losses by or on behalf of any person, firm or corporation
arising from the conduct or management of any work, alteration, addition, improvement or thing whatsoever done by or on behalf of Tenant in or about the Premises or arising from transactions of Tenant
concerning the Premises and hereby agrees to indemnify, protect, defend and hold Landlord and all Landlord Indemnified Parties harmless from and against any and all liens or claims arising from any
breach or default on the part of Tenant beyond the expiration of any applicable grace or cure period in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to
the terms of this Lease or arising from any act or negligence of its agents, contractors, subcontractors, material men, servants, employees or licensees, and from and against all costs, reasonable
attorney's fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon. In case any action or proceeding is brought against Landlord or any
Landlord Indemnified Parties by reason of any claims or liability within the limits of the foregoing indemnities, Tenant shall defend such action or proceeding at Tenant's sole expense by counsel
reasonably satisfactory to Landlord. In the event Tenant does not provide such a defense against any and all claims, demands, actions or causes of action, threatened or actual, then Tenant shall in
addition to the above, pay to Landlord the reasonable attorneys' fees, legal expenses and costs incurred by Landlord in providing or preparing such defense, and Tenant agrees to cooperate with
Landlord in such defense, including, without limitation, the providing of affidavits and testimony upon request of Landlord. Landlord agrees to cooperate with Tenant in such defense in the event that
Tenant and not Landlord undertakes such defense. 

        10.03    Landlord's Indemnity.    Notwithstanding anything to the contrary contained in Sections 10.01 or 10.02 above,
Tenant shall not be required to protect, defend, save harmless or indemnify Landlord from any liability for injury, loss, accident or damage to any person or property resulting from Landlord's
negligence or willful misconduct or that of Landlord's agents or employees in connection with Landlord's activities on or about the Premises, the Building or the Facility (including the Common Areas),
and, subject to the terms of Section 10.06 below, Landlord hereby indemnifies and agrees to protect, defend and hold Tenant harmless from and against any liability for injury, loss, accident or
damage to any person or property resulting from Landlord's negligence or willful misconduct in connection with Landlord's activities in or about the Building or the Facility. Such exclusion from
Tenant's indemnity and such agreement by Landlord to so indemnify and hold Tenant harmless are not intended to and shall not relieve any insurance carrier of its obligations under policies required to
be carried by Tenant pursuant to the provisions of this Lease to the extent that such policies cover (or, if 

15

 

such policies would have been carried as required, would have covered) the result of gross negligence or willful misconduct of Landlord or those of its agents or employees. In case any action or
proceeding is brought against Tenant by reason of any claims or liability within the limits of the foregoing indemnity, Landlord shall defend such action or proceeding at Landlord's sole expense by
counsel selected by Tenant and satisfactory to Landlord. 

        10.04    Survival of Indemnities.    The provisions of Sections 10.01, 10.02 and 10.03 together with any other
indemnification provisions in this Lease shall survive the expiration or termination of this Lease with
respect to any claims, expenses or liability occurring prior to such expiration or termination. Tenant's covenants, agreements and indemnification obligations in Sections 10.01 and 10.02 above are not
intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Tenant pursuant to the provisions of this Lease. 

        10.05    Tenant's Insurance.    Tenant shall purchase, at its own expense, and keep in force during the Term, the
following insurance: 

        (a)  "All
Risks" property insurance including at least the following perils: fire and extended coverage, smoke damage, vandalism, malicious mischief, sprinkler leakage
(including earthquake sprinkler leakage). This insurance policy must be upon all property owned by Tenant, for which Tenant is legally liable, or which is installed by or on behalf of Tenant and which
is located in the Building including, without limitation, any tenant improvements made in or to the Premises including, without limitation, the initial Tenant Improvements to be installed pursuant to
the Tenant Improvement Agreement attached hereto as Exhibit E and made a part thereof and any Alterations, and all furniture, fittings,
installations, fixtures and any other personal property of Tenant, in an amount not less than the full replacement cost thereof. 

        (b)  Commercial
General Liability Insurance or Comprehensive General Liability Insurance (on an occurrence form) insuring bodily injury, personal injury and property damage
including the following divisions and extensions of coverage: Premises and Operations; Owners and Contractors protective; blanket contractual liability (including coverage for Tenant's indemnity
obligations under this Lease); products and completed operations; liquor liability (if Tenant serves alcohol on the Premises); and fire and water damage legal liability in an amount sufficient to
cover the replacement value of the Premises, including tenant improvements, that are rented under the terms of this Lease. Such insurance must have the following minimum limits of liability: bodily
injury, personal injury and property damage—$3,000,000 each occurrence, provided that if liability coverage is provided by a Commercial General Liability policy the general aggregate limit
shall apply separately and in total to this location only (per location general aggregate), and provided further, such minimum limits of liability may be adjusted from year to year to reflect
commercially reasonable insurance coverages for tenants of first class office complexes comparable to the Facility, rounded to the nearest five hundred thousand dollars. 

        (c)  Comprehensive
Automobile Liability insuring bodily injury and property damage arising from all of Tenant's owned and hired vehicles, if any, with minimum limits of
liability of $1,000,000 per accident. 

        (d)  Worker's
Compensation as required by the laws of the State of California with the following minimum limits of liability: Coverage A—statutory benefits;
Coverage B—$1,000,000 per accident and disease. 

        (e)  Any
other form or forms of insurance as Tenant or Landlord or any mortgagees of Landlord may reasonably require from time to time in form, in amounts, and for insurance
risks against which, a prudent tenant would protect itself, but only to the extent coverage for such risks and amounts are
available in the insurance market at commercially acceptable rates. Landlord makes no representation that the limits of liability required to be carried by Tenant under the 

16

 

terms of this Lease are adequate to protect Tenant's interests and Tenant should obtain such additional insurance or increased liability limits as Tenant deems appropriate. Tenant's insurance
policies shall in all events: (i) name Landlord, Landlord's property manager and any party holding an interest in this Lease or to which this Lease may be subordinated, as additional insureds;
(ii) provide that said insurance shall not be canceled or altered unless thirty (30) days' prior written notice shall have been given to Landlord and such cancellation or alteration
shall not be effective until such notice shall have been given to Landlord; and (iii) be issued by companies licensed to do business in the State of California and have a Best key rating of at
least "B+" "VIII" or better. All liability insurance under this Section 10.05 shall be primary and noncontributing with any insurance which may be carried by Landlord. The limits of said
insurance shall not, however, limit the liability of Tenant under Sections 10.01 and 10.02. Tenant shall deliver to Landlord original certificates from the issuing insurance companies evidencing that
said insurance is in full force and effect and complies with the requirements of this Section 10.05. 

        10.06    Waiver of Subrogation.    To the extent permitted by law and without affecting the coverage provided by
insurance required to be maintained hereunder, Landlord and Tenant each waive any right to recover against the other for (i) damages for injury to or death of persons, (ii) damage to
property, (iii) damage to the Premises or the Facility or any part thereof, (iv) claims arising by reason of the foregoing, but only to the extent that any of the foregoing damage or
damages and/or claims referred to above are covered (and only to the extent of such coverage) by insurance actually carried by either Landlord or Tenant. This provision is intended to waive fully, and
for the benefit of each party, any rights and or claims which might give rise to a right of subrogation on any insurance carrier. The coverage obtained by each party pursuant to this Lease shall
include, without limitation, a waiver of subrogation by the carrier which conforms to the provisions of this Article X. 

        10.07    Right to Self Insure.    Tenant shall have the right to self-insure as to its insurance
obligations under this Lease. Tenant shall notify Landlord in writing if Tenant shall elect at any time to so self-insure and if Tenant shall so elect, Tenant shall look to itself for any
losses it may sustain with respect to the Premises, the Building or the Facility except as expressly provided in Section 10.03 hereof; it being agreed, however, that if Tenant elects to
self-insure any of its insurance obligations hereunder, Tenant shall be treated as if Tenant carried all insurance required to be carried by Tenant hereunder for purposes of any claims
including Section 10.06 containing Tenant's waiver of subrogation. Tenant's notice to Landlord shall include the name, address and telephone number of the party to whom Landlord should direct
all insurance claims and inquiries. 

        10.08    Landlord's Insurance.    Landlord shall at all times during the Term of this Lease cause the core and shell
of the Building including the Common Areas thereof and the boiler and similar machinery installed therein to be insured against fire and extended coverage perils (but excluding loss or damage by
earthquake unless required by the holder of any mortgage or the beneficiary of any deed of trust covering the Building) with losses payable to Landlord and/or the holder of any such mortgage or the
beneficiary of any such deed of trust in an amount not less than full replacement cost value or in such lesser amount as will avoid co-insurance provided, however, if (i) such
insurance coverage ceases to be available or (ii) the cost of such insurance increases so that owners of similar properties in the Newport
Beach/Irvine (including the John Wayne Airport)/South Coast Plaza area generally cease to carry such insurance, Landlord shall maintain such insurance coverage as is customarily maintained by owners
of similar properties in the Newport Beach/Irvine (including the John Wayne Airport)/South Coast Plaza area and Landlord shall carry and maintain such other insurance in such amounts as may from time
to time be reasonably and customarily carried by owners of facilities similarly situated in the Newport Beach/Irvine (including the John Wayne Airport)/South Coast Plaza area, due regard being given
to the height and type of facility, its construction, age, use and occupancy. It is expressly understood and agreed that Landlord will not be obligated to carry insurance on any trade fixtures,
furnishings, equipment or other personal property or effects of Tenant, or insurance against 

17

 

interruption of Tenant's business, any consequential losses or damages which may be suffered by Tenant or any insurance against vandalism to or theft of any property of Tenant, Tenant hereby
expressly assuming the risk of any and all such damage or loss and the obligations to insure against all or any such damage or loss as provided in Sections 10.01 and 10.07 above. The cost of all
insurance maintained by Landlord pursuant to this Section 10.08 shall be included in Operating Expenses. 

 
 

ARTICLE XI—SERVICES AND UTILITIES    
  

        11.01    Maintenance by Landlord.    Landlord shall cause to be maintained the Facility Common Area, including
lobbies, stairs, elevators, corridors and restrooms, the windows in the Facility, the mechanical, plumbing and electrical equipment serving the Premises or the Facility, and the structure itself, in
first class condition comparable to the respective condition thereof existing as of the date hereof, subject to reasonable wear and tear and damage by fire or other casualty. Notwithstanding the
foregoing, Landlord shall cause to be repaired, at Tenant's expense, any damage occasioned by the act of Tenant. 

        11.02    Delivery of Services and Utilities.    Subject to other provisions in this Lease, Landlord shall cause to be
furnished to the Premises during the periods from 7:00 A.M. to 6:00 P.M., Monday through Friday and 8:00 A.M. to 1:00 P.M., Saturday (but exclusive, in any event, of New
Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas) (collectively, "Normal Business Hours"), heat and air conditioning required, in Landlord's judgment, for the
comfortable use and occupation for the Permitted Use of the Premises. Landlord shall provide water suitable for the Permitted Use of the Premises and up to five (5) watts of electricity (demand
load) per usable square foot of space deemed to be in the Premises on a twenty-four (24) hour per day, seven (7) days per week basis. Additional or after-hours heating or air
conditioning shall be available to Tenant subject to and in accordance with the terms of Section 11.05. Tenant also agrees at all times to cooperate fully with Landlord and to abide by all the
regulations and requirements which Landlord may prescribe for the proper function and protection of heating, ventilating and air conditioning systems. Wherever heat-generating machines,
excess lighting or equipment are used in the Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install supplementary air
conditioning units in the Premises, and the cost thereof, including the cost of installation, operation and maintenance thereof, shall be paid by Tenant to Landlord within ten (10) days after
written notice by Landlord. Landlord shall provide janitorial services sufficient to keep the Premises in a clean condition, provided that Tenant shall leave the Premises in a reasonably tidy
condition at the end of each business
day. The cleaning specifications in effect as of the date hereof are attached hereto as Exhibit F and made a part of hereof, which cleaning
specifications are subject to change from time to time; provided, however, Landlord shall not materially reduce the level of cleaning service delineated on such cleaning specifications. Subject to
events beyond Landlord's reasonable control, Landlord shall provide a minimum of two (2) passenger elevators to serve the Premises at all times. 

        11.03    Equipment Requiring Excessive Utilities.    Landlord acknowledges that Tenant, without Landlord's consent,
shall have the right to install and operate equipment and machinery normal for modern office purposes including, without limitation, calculators, typewriters, word processors, personal computers,
copying machines and computer terminals. Landlord's review and approval hereunder shall be principally directed for determining the adequacy of the existing HVAC system to accommodate Tenant's
intended uses. Tenant shall not, without the prior written consent of Landlord, use (except as provided in the first sentence of this Section 11.03) any apparatus or device in the Premises
using excess lighting or using current in excess of that which is determined by Landlord as reasonable and normal for the Permitted Use or which will in any way increase the amount of electricity or
water usually furnished or supplied for the Permitted Use of the Premises. If Tenant shall require electrical energy in any portion of the Premises, such as Tenant's computer rooms, in excess of five
(5) watts per 

18

 

usable square foot and such electrical energy is available as determined by Landlord, Landlord (shall install, at Tenant's expense, meter(s) to measure Tenant' consumption of electrical energies in
such portions of the Premises in excess of five (5) watts per usable square foot. Tenant shall pay Landlord for all costs incurred in connection with the installation of such submeters upon
demand. The cost of electricity utilized by Tenant, in excess of the five (5) watts of electricity per usable square foot of space deemed to be contained in the Premises as provided in
Section 11.02, shall be paid for by Tenant to Landlord as additional rent and shall be calculated at the then applicable rate prescribed by the public utility company servicing the Premises for
submetered electrical energy plus Landlord's administrative fee (not to exceed five (5%) percent) and all taxes, if any, incurred in connection therewith. If any tax shall be imposed upon Landlord's
receipts from the sale or resale of electrical energy to Tenant, the pro rata share applicable to the electrical energy service received by Tenant shall be passed on to and included in the bill of and
paid by Tenant. Landlord shall bill Tenant monthly, for the cost of its consumption of electricity in the Premises in excess of five (5) watts per usable square foot and Tenant shall pay such
bill within fifteen (15) days following billing receipt therefor. 

        11.04    Right to Curtail Services and Utilities.    Landlord in its sole but reasonable discretion may temporarily
cease any services or utilities to the Premises or the Facility by reason of (i) the installation, use or interruption of use of any equipment in connection with the furnishing of any of the
foregoing utilities and services, (ii) failure to furnish or delay in furnishing any such utilities or services when such failure or delay is caused by acts of God or the elements, labor
disturbances of any character or any other accidents or breakage or other conditions beyond the reasonable control of Landlord, (iii) the limitation, curtailment, rationing or restriction on
use of water, electricity, gas or any other form of energy or any other services or utilities whatsoever serving the Premises or the Facility, necessary to comply with Applicable Law or any
governmental energy conservation program, and (iv) the making of any repairs, additions, alterations or improvements to the Facility or the Premises until such repairs, additions, alterations,
or improvements have been completed. Except as expressly provided in Section 11.06 hereof, no such reduction or cessation of services or utilities shall constitute an eviction or disturbance of
Tenant's use or possession of the Facility, or a breach by Landlord of any of its obligations hereunder, or render Landlord liable for damages, including but not limited to any damages, compensation
or claims arising from any reduction or cessation of services or entitle Tenant
to any compensation or to any abatement or diminution of Rent or relieve Tenant of any of its obligations under this Lease. Notwithstanding the foregoing, except in an emergency, Landlord shall
endeavor to provide Tenant with reasonable advance notice of any planned interruption of services of a material nature and Landlord shall use reasonable efforts to minimize interference with Tenant's
business operations during the exercise of these rights and Landlord shall use reasonable diligence to cause such services to be restored where it is within Landlord's reasonable control to do so. 

        11.05    After Hours and Additional Services.    The Rent does not include any charge to Tenant for the furnishing of
any additional service of heat, cooled air or mechanical ventilation or elevator service (beyond the elevator service described in Section 11.02 above) to the Premises during periods other than
during Normal Business Hours (hereinafter referred to as "Overtime Periods"). Accordingly, if Landlord shall furnish any (i) passenger elevator facilities (beyond the elevator service described
in Section 11.02 above) to Tenant during Overtime Periods or freight elevator facilities or (ii) heat, cooled air or ventilation to the Premises during Overtime Periods, then Tenant
shall pay Landlord additional rent for such facilities or services at the standard rates then fixed by Landlord for the Facility or, if no such rates are then fixed, at reasonable rates. Landlord
represents that its current rate for heat, cooled air and ventilation to the Premises during Overtime Periods is $75.00 per hour, which rate is subject to reasonable change from time to time. Neither
the facilities nor the services referred to in this Section 11.05 shall be furnished to Tenant or the Premises if Landlord has not received advance notice from Tenant specifying the particular
facilities or services requested by Tenant at least twenty-four (24) hours prior to the date on which the facilities or services are to be furnished (other than if Tenant is
requesting the use of HVAC during periods other than during Normal Business Hours, hereinafter 

19

 

referred to as "Extra HVAC Use", in which case Tenant must give Landlord a minimum of two (2) hours advance notice specifying the times of Extra HVAC Use, which notice must be given to
Landlord during Normal Business Hours). 

        11.06    Failure to Provide Essential Services.    Notwithstanding anything to the contrary contained in this Lease,
if Landlord fails to provide essential services which Landlord is obligated to supply to the Premises pursuant to the express terms of this Lease to more than thirty percent (30%) of the Premises, if
the failure is a result of any act or omission of Landlord (a "Landlord Act") and if such failure continues for three (3) consecutive business days after notice from Tenant to Landlord of such
failure, then for each day that Landlord fails to provide such essential services, the Rent shall be abated in the proportion to the amount of the Premises not receiving essential services (provided
and upon the condition that the failure to so provide any essential service is not caused by or in connection with any act or omission of Tenant or any act or omission of any of Tenant's employees,
agents, contractors, licensees or invitees). In addition, if Landlord fails to provide essential services which Landlord is obligated to supply to the Premises pursuant to the express terms of this
Lease to more than thirty percent (30%) of the Premises for any reason whatsoever other than a Landlord Act and if such failure continues for seven (7) consecutive business days after notice
from Tenant to Landlord of such failure, then for each day that Landlord fails to provide such essential services, the Rent shall be abated in the proportion to the amount of the Premises not
receiving essential services (provided and upon the condition that the failure to so provide any essential service is not caused by or in connection with any act or omission of Tenant or any act or
omission of any of Tenant's employees, agents, contractors, licensees or invitees). Notwithstanding the foregoing, if Landlord is diligently pursuing the repair of any such service and Landlord is
providing a substitute service reasonably suitable for Tenant's purposes, (i.e., bringing in portable air-conditioning equipment when the Building air-conditioning system is
not functioning), then Tenant shall not be entitled to any abatement of Rent. The above described
rental abatement shall constitute Tenant's sole and exclusive remedy with respect to Landlord's failure to provide essential services and Tenant hereby waives all other rights and remedies Tenant may
have at law or in equity with respect to the failure to so provide essential services; provided, however, such waiver shall not be deemed to limit Tenant's right to a rental abatement in the event of
a fire or other casualty or a taking by condemnation or eminent domain as set forth in Articles XX and XXI hereof. 

 
 

ARTICLE XII—ESTOPPEL CERTIFICATE    
  

        Within fifteen (15) days following any written request which Landlord or Tenant may make from time to time, the other party shall execute and deliver to
Landlord or Tenant, as the case may be, an estoppel certificate substantially in the form attached hereto as Exhibit G and incorporated herein by
reference, indicating thereon any exceptions thereto which may exist at that time. Failure by Tenant or Landlord, as the case may be, to execute and deliver such certificate shall constitute an
acknowledgment by Tenant or Landlord, as the case may be, that the statements included in Exhibit G are true and correct without exception.
Landlord and Tenant intend that any statement delivered pursuant to this Article XII may be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the Project, the
Facility or any interest therein or any potential lender or purchaser of Tenant. Landlord shall have the right to substitute for the attached Exhibit G a certificate in form reasonably required
by Landlord's mortgagee, provider of financing or purchaser of property. 

 
 

ARTICLE XIII—EXTENSION OF TERM    
  

        13.01    Option to Extend Term.    Provided (i) this Lease shall then be in full force and effect and Tenant
shall not then be in default hereunder beyond the expiration of any applicable grace or cure period either at the time of the exercise of such option or upon commencement of the Extension Term, and
(ii) Tenant shall accept the Premises for the Extension Term "as is", Tenant shall have the right, at 

20

 

its option, to extend the Term for one consecutive five (5) year period (the "Extension Term"). The Extension Term shall commence on the day after the Term Expiration Date and shall expire on
the day immediately preceding the fifth (5th) anniversary of the Term Expiration Date (the "Extension Term Expiration Date") unless such Extension Term shall sooner end pursuant to any of the terms,
covenants or conditions of this Lease or pursuant to law. Tenant shall give Landlord written notice of Tenant's intention to exercise any such option at least one hundred eighty (180) days but
not more than two hundred forty (240) days prior to the scheduled Term Expiration Date, the time of exercise being of the essence and upon the giving of such notice, this Lease and the Term
shall be extended without execution or delivery of any other or further documents, with the same force and effect as if the Extension Term had originally been included in the Term and the Scheduled
Term Expiration Date and the Term Expiration Date shall thereupon be deemed to be the last day of the Extension Term. All of the terms, covenants and conditions of this Lease shall continue in full
force and effect during any such Extension Term, including items of additional rent and escalation which shall remain payable on the terms herein set forth, except that the Basic Rent shall be
determined in accordance with the terms of
Section 13.02 below and after Tenant shall have exercised its right to extend the Term for the Extension Term, Tenant shall have no further right to extend the Term of this Lease pursuant to
this Article XIII. 

        13.02    Fair Market Rental Value.    The annual Basic Rent payable by Tenant for the Premises during the Extension
Term shall be the "Fair Market Rental Value" for the Premises during the Extension Term, determined prior to the exercise of the option to extend the Term in accordance with the terms of
Section 13.03 hereof. 

        13.03    Appraisal.    The term "Fair Market Rental Value" for the purposes of this Lease shall mean the annual amount
per rentable square foot that a willing, comparable, new non-renewal, non-equity, non-expansion tenant (excluding sublease and assignment transactions) will pay for
unencumbered space, and a willing comparable landlord of a comparable quality facility located in the Newport Beach/South Coast Plaza, Irvine area would accept, at arm's length (what Landlord is
accepting in current transactions for the Facility may be considered), giving appropriate consideration to annual rental rates per rentable square foot (calculated pursuant to BOMAI Standards, as
amended pursuant to the terms of Section 2.02 hereof), escalation (including whether or not Tenant is being given a current base year, the type, gross or net, and if gross, whether base year or
expense "stop"), and abatement provisions reflecting free rent and/or no rent during the period of construction or any other period during the lease term, the presence or absence of a tenant
improvement allowance, brokerage commissions, if any, parking charges, length of the lease term, size and location of premises being leased, and other generally applicable terms and conditions of
tenancy for comparable space in comparable facilities in the Newport Beach/South Coast Plaza/Irvine (including the John Wayne Airport) area as evidenced where possible by recently consummated lease
transactions in such comparable facilities. Landlord shall determine the Fair Market Rental Value by using its good faith judgment and shall provide written notice of such amount and the corresponding
Basic Rent to Tenant within fifteen (15) business days after Tenant provides notice to Landlord electing to extend the Term. Tenant shall have twenty (20) days ("Tenant's Review Period")
after receipt of Landlord's notice of the Fair Market Rental Value and the new Basic Rent within which to accept such determination or to object thereto in writing. If Tenant so objects, Landlord and
Tenant shall attempt to agree upon such Fair Market Rental Value, using their good faith efforts. If Landlord and Tenant fail to reach an agreement within thirty (30) days following Tenant's
Review Period (the "Outside Agreement Date"), Tenant shall have the right to cancel its exercise of its option to extend the Term of this Lease by written notice delivered to Landlord not later than
five (5) business days after the Outside Agreement Dates not exercise its right to cancel its election to extend the Term of this Lease, then the determination of Fair Market Rental Value shall
be made by appraisal, in accordance with the following terms of this Section 13.03. Failure of Tenant to object to Landlord's determination in writing within such period shall conclusively be
deemed Tenant's approval of the Fair Market Rental Value and corresponding new Basic Rent determined by Landlord. Landlord and Tenant shall each select a 

21

 

reputable, qualified, licensed appraiser having an office in Orange County (i) who shall be a member in good standing of the Member Appraisal Institute or any successor association or body of
comparable standing if such institute is not then in existence (the "Institute"), (ii) who shall have been active over the five (5) year period ending on the date of such appointment in
the appraisal of facilities comparable to the Facility in the Newport Beach/South Coast Plaza/Irvine (including the John Wayne Airport) area and (iii) who shall be familiar with the rentals
then being charged in the Facility (respectively, "Landlord's Appraiser" and "Tenant's Appraiser"; any appraiser satisfying the criteria set forth in (i), (ii) and (iii) above shall be
deemed to be "Qualified") who shall confer promptly after their selection by Landlord and Tenant and shall use their reasonable efforts to agree upon the Fair Market Rental Value
of the Premises for the applicable Extension Term. If Landlord's Appraiser and Tenant's Appraiser cannot reach agreement within thirty (30) days after the date of Tenant's notice of the
exercise of its option, then, within fifteen (15) days thereafter, Landlord's Appraiser and Tenant's Appraiser shall together designate a third, reputable, Qualified licensed real estate
appraiser having an office in Orange County (the "Independent Appraiser"). Upon the failure of Landlord's Appraiser and Tenant's Appraiser to agree upon the designation of the Independent Appraiser,
then either Landlord's Appraiser or Tenant's Appraiser may request such appointment by the Institute or by the presiding judge of the Superior Court of Orange County, California upon ten
(10) days notice. Concurrently with such appointment, Landlord's Appraiser and Tenant's Appraiser shall each submit a letter to the Independent Appraiser, with a copy to Landlord and Tenant,
setting forth such appraiser's estimate of the Fair Market Rental Value of the Premises for the applicable Extension Term (respectively, "Landlord's Appraiser's Letter" and "Tenant's Appraiser's
Letter"). The Independent Appraiser shall conduct such investigations and hearings as he/she may deem appropriate and shall, within thirty (30) days after the date of his/her designation,
choose either the Fair Market Rental Value set forth in Landlord's Appraiser's Letter or Tenant's Appraiser's Letter to be the Basic Rent for the Premises for the applicable Extension Term and such
determination shall be binding upon Landlord and Tenant. Landlord and Tenant shall each pay the fees and expenses of its respective appraiser. The fees and expenses of the Independent Appraiser shall
be shared equally by Landlord and Tenant. 

 
 

ARTICLE XIV—AUDITORIUM/CONFERENCE ROOMS    
  

        During the Term of this Lease, provided that the corporate auditorium in the Tower (the "Auditorium") and the classrooms (collectively, the
"Conference Rooms") are available for use by tenants of the Facility and provided that Tenant shall have an Approved Appointment (as hereinafter
defined) for each desired use, Landlord shall make the Auditorium or the Conference Rooms available for Tenant's use up to twice per month during Normal Business Hours for up to eight (8) hours
each, without charge to Tenant. Tenant acknowledges that its right to use the Auditorium and the Conference Rooms are noncumulative and that if during any month of the Term, Tenant shall fail to use
the Auditorium or the Conference Rooms twice per month as aforesaid, Tenant shall have no right at any time thereafter to use the Auditorium or the Conference Rooms more than twice per month. Tenant
shall use the Auditorium and the Conference Rooms in accordance with the reasonable rules and regulations Landlord may adopt, from time to time, with respect thereto. Tenant acknowledges and agrees
that Landlord shall have no obligation of any kind to provide any set up, food, cleaning or any other service of any kind to the Auditorium, the Conference Rooms or any other locations within the
Facility, as the case may be, in connection with Tenant's use thereof and further acknowledges and agrees that if Tenant does not deliver the Auditorium, the Conference Rooms or any other location
within the Facility, as the case may be, to Landlord immediately following an Approved Appointment in the condition same was in prior to the Approved Appointment, then Landlord may charge Tenant the
published hourly rate then in effect for such usage as Landlord's customary costs incurred to clean the Auditorium and/or the Conference Rooms. 

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ARTICLE XV—SURRENDER OF PREMISES; HOLDING OVER    
  

        15.01    Surrender of Premises.    Subject to the provisions of Article VI regarding Alterations, at the end of
the Term or other sooner termination of this Lease, Tenant shall peaceably deliver up to Landlord possession of the Premises, broom clean and in good order and condition, together with all
improvements, fixtures or additions thereto by whomsoever made, in the same condition as received, or first installed, damage by fire, earthquake, reasonable wear and tear, act of God or the elements
alone excepted. Tenant shall, upon or prior to the termination of this Lease, remove all movable furniture and equipment belonging to Tenant, at Tenant's sole cost, title to which shall be in Tenant
until such termination, and shall repair any damage caused by such removal. Property not so removed, upon termination, shall be deemed abandoned by Tenant, and title to the same shall thereupon pass
to Landlord, but the foregoing shall not be deemed to relieve Tenant of responsibility for the cost of removal of any such property and the repair of any damage caused by such removal. 

        15.02    No Merger.    The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof,
shall not work a merger and shall, at Landlord's option, terminate all or any existing subleases or subtenancies or may, at Landlord's option, operate as an assignment to it of any or all such
subleases or subtenancies. 

        15.03    Holding Over.    If Tenant shall retain possession of the Premises or any part thereof without Landlord's
consent following the expiration of the Term or sooner termination of this Lease for any reason, then, Tenant shall pay to Landlord for each day of such retention (i) from the date of the
expiration or earlier termination of this Lease to but not including the sixtieth (60th) day thereafter (the "Two Month Holdover Date"), Basic Rent at a rate which is equal to one
hundred fifty percent (150%) of the Basic Rent, and (ii) thereafter, Basic Rent at a rate which is equal to two hundred percent (200%) of the then Basic Rent. Tenant shall also be liable for
the Holdover Percentage of Tenant's Share of Operating Expenses and all other items of additional rent and for the performance of all other Lease obligations for any holdover period. Tenant shall
indemnify, protect, defend and hold Landlord harmless from any loss or liability resulting from delay by Tenant in surrendering the Premises, including, without limitation, any claims made by any
succeeding tenant founded on such delay; provided, however, that such indemnification shall not include losses or liability incurred prior to the Two Month Holdover Date. Acceptance of Rent and/or any
other consideration by Landlord following expiration or termination shall not constitute a renewal of this Lease, and nothing contained in this Article XV shall waive Landlord's right of
reentry or any other right. Tenant shall be only a tenant at sufferance, whether or not Landlord accepts any Rent and/or other consideration from Tenant while Tenant is holding over without Landlord's
written consent. 

 
 

ARTICLE XVI—SUBORDINATION AND QUIET ENJOYMENT    
  

        16.01    Subordination.    Provided Landlord obtains from its current lender and any future lender with an interest in
the Facility which is superior to Tenant's interest, a non-disturbance agreement on such
lender's then customary form for Tenant's benefit, at the election of Landlord or any mortgagee or beneficiary under a deed of trust which covers the Premises, or any lessor under a ground or any
underlying lease with respect to the Facility, this Lease shall be subject and subordinate at all times to: (i) all ground leases, master leases or underlying leases and covenants, conditions
and restrictions, reciprocal easement agreements, and parking agreements relating to the operation, management and development of the Facility which may now exist or hereafter be executed affecting
the Facility, and all amendments, renewals, modifications, consolidations, supplements and extensions thereof, and (ii) the lien of any and all mortgages or deeds of trust which may now exist
or hereafter be executed in any amount or amounts for which the Facility, the Premises, ground leases or underlying leases, or any portion thereof or Landlord's interest or estate in any such items,
is specified as security and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof and the rights of the parties
in all such leases, agreements and 

23

 

instruments (collectively, the "Superior Interests"). Notwithstanding the foregoing, Landlord shall have the unconditional right to subordinate or cause to be subordinated any such Superior Interests
which may now exist or hereafter be executed in any amount or amounts for purposes stated hereinabove to this Lease. Landlord represents that as of the date hereof, State Street Bank and Trust Company
is the only entity which is a beneficiary under a deed of trust which covers the Premises. If any such Superior Interest shall terminate or be foreclosed upon, for any reason, then, at the election of
Landlord's successor in interest, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant of the successor in interest to Landlord, subject to and in accordance with the terms
and conditions of this Lease and any modifications hereto. The provisions of this Section 16.01 shall be self-operative upon any election by Landlord or any mortgagee or beneficiary
and no further instrument shall be required to give effect to said provisions. Tenant, however, upon demand of Landlord or any such mortgagee or beneficiary, agrees to execute, from time to time,
instruments in confirmation of the foregoing provisions of this Section 16.01, satisfactory to Landlord or any mortgagee or beneficiary, acknowledging such attornment and setting forth the
terms and conditions of its tenancy. Nothing contained in this Section 16.01 shall be construed to impair any right otherwise exercisable by Landlord or any such mortgagee or beneficiary. 

        16.02    Quiet Enjoyment.    Subject to the provisions of Section 16.01, Landlord covenants and agrees that, if
and so long as no Event of Default shall occur, Tenant may peaceably and quietly hold and enjoy the Premises for the Term of this Lease, without hindrance from Landlord or persons claiming, by,
through or under Landlord. Tenant's right to use the Premises and the Common Area as provided in this Lease shall be subject to all Applicable Laws now in force or which may hereafter be in force and
no such Applicable Laws shall in any way affect this Lease, abate Rent, relieve Tenant of any liabilities or obligations under this Lease, or give rise to any claims whatsoever against Landlord. 

 
 

ARTICLE XVII—RULES AND REGULATIONS    
  

        Tenant shall comply with all of the rules and regulations contained on Exhibit H attached hereto and
incorporated herein by reference, as such rules and regulations may be revised from time to time by Landlord. To the extent reasonably practicable, Landlord shall endeavor to provide Tenant with
thirty (30) days prior notice of the adoption of new rules and regulations or any changes or additions to existing rules and regulations; provided, however, no new rule or regulation shall
materially reduce Tenant's rights or materially increase Tenant's obligations under this Lease. To the extent that there is
any inconsistency between the terms of this Lease and the terms of any new Rule or Regulation, the terms of this Lease shall control. The rules and regulations, as same may be revised from time to
time, shall not be enforced against Tenant in a discriminatory manner. 

 
 

ARTICLE XVIII—ENTRY    
  

        Landlord reserves the right to enter the Premises at all reasonable hours upon reasonable prior notice (except in cases of emergency) by means of a master key for
any reasonable purpose. In addition, if Tenant fails to exercise the option to extend the Term as set forth in Article XIII hereof, or, if the Term shall have been extended, nine
(9) months prior to the end of the Term, as extended, Landlord shall be permitted to enter the Premises for purposes of showing the Premises to prospective tenants. Landlord must provide Tenant
with a minimum of two (2) hours notice, which notice must be given to Tenant during Normal Business Hours, prior to showing the Premises. If Tenant shall not be personally present to open and
permit entry into the Premises at any time, Landlord may enter by means of a master key without liability to Tenant and without affecting the Lease. Tenant understands and agrees that all parts
(except surfaces facing the interior of the Premises) of all walls, windows and doors bounding the Premises (including exterior Building walls, core corridor walls, doors and entrances), all
balconies, terraces and roofs adjacent to the Premises, all space in or adjacent to the Premises used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air 

24

 

cooling, plumbing and other mechanical facilities, service closets and other Building facilities are not part of the Premises, and Landlord shall have the use thereof, as well as access thereto,
through the Premises for the purposes of cooperation, maintenance, alteration and repair. In connection with the exercise of any of the foregoing rights, Landlord shall use its reasonable efforts to
exercise such rights in a manner intended to minimize material interference with Tenant's use of the Premises; provided however, Landlord shall not be obligated to use overtime or premium pay labor in
connection therewith. 

 
 

ARTICLE XIX—DEFAULT BY TENANT    
  

        19.01    Events of Default.    The occurrence of any of the following and the expiration of the applicable cure period
shall constitute an "Event of Default" on the part of Tenant: 

        (a)  Failure
to pay any installment of Basic Rent, Operating Expenses or any other item of Rent due and payable hereunder within ten (10) days after Tenant's receipt
of written notice from Landlord that said payment has not been received. 

        (b)  Failure
to perform or breach of any obligations, agreement or covenant under this Lease other than as specified in Subsection (a), where such failure or breach continues
for thirty (30) days after Tenant's receipt of written notice of such failure, provided, however, that if the default cannot be cured within thirty (30) days, Tenant shall not be in
default of the Lease if Tenant promptly after notice from Landlord commences to cure the default within the thirty (30) day period and thereafter diligently prosecutes the same to completion.
Such notice shall be in lieu of and not in addition to any notice required under Section 1161 of the California Code of Civil Procedure. 

        (c)  Intentionally
Deleted. 

        (d)  A
general assignment by Tenant for the benefit of creditors. 

        (e)  The
filing of any voluntary petition by Tenant under the Bankruptcy Code, or the filing of an involuntary petition by Tenant's creditors, which involuntary petition
remains undischarged for a period of sixty (60) days. If under Applicable Laws the trustee in bankruptcy or Tenant may affirm this Lease and continue to perform Tenant's obligations hereunder,
such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of
this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant's obligations under this Lease. 

        (f)    The
employment of a trustee, receiver, liquidator, assignee, custodian, examiner, sequestrator (or similar official) in all cases to take possession of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in this Lease or the Premises, if such receivership remains undissolved for a period of ninety (90) days after creation
thereof. 

        (g)  The
attachment, execution or other judicial seizure or non-judicial seizure of all or substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease or the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of ninety (90) days after the levy thereof. 

        (h)  Tenant's
admission in writing of its inability to pay its debts as they become due, Tenant's filing of a petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, Tenant's filing of an answer admitting or failing timely to contest a material
allegation of such a petition filed against Tenant in any such proceeding or, if within sixty (60) days after the commencement of any proceeding against Tenant seeking any reorganization or
arrangement, composition, readjustment, 

25

 

liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed. 

        If,
at any time, (i) Tenant shall be comprised of two (2) or more persons, or (ii) Tenant's obligations under this Lease shall have been guaranteed by any person
other than Tenant, or (iii) Tenant's interest in this Lease shall have been assigned, the word "Tenant" as used in clauses (d), (e), (f), (g) and (h), shall be deemed to mean any one or
more of the persons primarily or secondarily liable for Tenant's obligations under this Lease. Any monies received by Landlord from or on behalf of Tenant during the pendency of any proceeding of the
types referred to in said clauses (d), (e), (f), (g) and (h) shall be deemed paid as compensation for the use and occupation of the Premises and the acceptance of any such compensation
by Landlord shall not be deemed an acceptance of Rent or a waiver on the part of Landlord of any rights under this Section 19.01. 

        19.02    Remedies Upon Default or Termination.    

        (a)  Any
failure to pay Basic Rent, Operating Expenses and any other monetary obligation to be paid by Tenant under this Lease which is specifically designated as additional
rent in this Lease shall be construed as failure to perform the obligation for payment of Rent. 

        (b)  In
the event of the occurrence of any Event of Default, Landlord shall have the right immediately to terminate this Lease, and at any time thereafter to recover
possession of the Premises or any part thereof and expel and remove therefrom Tenant and any other person occupying the same, pursuant to the order of any court of competent jurisdiction entered after
notice to Tenant and an opportunity for Tenant to be heard, and again repossess and enjoy the Premises without prejudice to any of the remedies that Landlord may have under this Lease, at law or
equity by reason of Tenant's default or of such termination. 

        (c)  Even
though Tenant has breached this Lease and/or abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant's right
to possession under Section 19.02(b) hereof, and Landlord may enforce all its rights and remedies under this Lease, including, without limitation, the right to recover Rent as it becomes due;
and Landlord, without terminating this Lease, may exercise all of the rights and remedies of a landlord under Section 1951.4 of the Civil Code of the State of California or any successor code
section. Acts of maintenance, preservation or efforts to lease the Premises or the appointment of a receiver upon application of Landlord to protect Landlord's interests under this Lease shall not
constitute Landlord's election to terminate Tenant's right to possession. 

        19.03    Damages Upon Termination.    Should Landlord terminate this Lease pursuant to the provisions of
Section 19.02(b) hereof, Landlord shall have all the rights and remedies of a landlord provided by Section 1951.2 of the Civil Code of the State of California, or successor code section.
Upon such termination, in addition to any other rights and remedies to which Landlord may be entitled under Applicable Laws, Landlord shall be entitled to recover from Tenant: (i) the worth at
the time of award of the unpaid Rent and other amounts which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid Rent which would
have been earned after termination until the time of award exceeds the amount of such Rent loss that the Tenant proves could
have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid Rent for the balance of the term after the time of award exceeds the amount of such Rent
loss that the Tenant proves could be reasonably avoided; and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom including, without limitation, attorneys' fees and costs; brokers' commissions; the costs
of refurbishment, alterations, renovations and repair of the Premises, as well as the unamortized value of free rent, reduced rent, tenant improvement allowance amounts and any other economic
concessions provided, paid for or incurred by Landlord. The "worth at the time of award" of the amounts referred 

26

 

to in subsections (i) and (ii) shall be computed with interest at the Interest Rate. The "worth at the time of award" of the amount referred to in subsection (iii) shall be
computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award, plus one percent (1%). 

        19.04    Operating Expenses.    For purposes of computing unpaid Rent which would have accrued and become payable
under this Lease pursuant to the provisions of Section 19.03, for the calendar year of the default and each future calendar year in the Term shall be deemed to be equal to Tenant's Share of
Operating Expenses for the calendar year prior to the year in which default occurs compounded at a per annum rate equal to the mean average rate of increase of Operating Expenses for the preceding
three (3) calendar years. 

        19.05    Performance by Landlord.    All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant's sole cost and expense and without any abatement of Rent, except as otherwise expressly set forth herein. If Tenant shall fail to pay any sum of
money, other than Rent, required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder, and such failure shall continue for thirty (30) days
after notice thereof by Landlord, Landlord may, but shall not be obligated to do so, and without waiving or releasing Tenant from any obligations of the Tenant, make any such payment or perform any
such act on the Tenant's part to be made or performed. All sums so paid by Landlord and all necessary incidental costs together with interest thereon at the Interest Rate, accruing from the date of
such payment by Landlord until the date of repayment by Tenant shall be payable as additional rent to Landlord on demand, if such sums are specifically designated to be payable as additional rent in
this Lease, and Tenant covenants to pay such sums, and Landlord shall have, in addition to any other right or remedy of Landlord, the same right and remedies in the event of the nonpayment thereof by
Tenant as in the case of default by Tenant in the payment of the Rent. 

        19.06    Remedies Cumulative.    All rights, privileges and elections or remedies of the parties are cumulative and
not alternative to the extent permitted by law except as otherwise provided herein. 

	Initial:

  	 	 
	

Landlord                         	
 	

Tenant                         

27

  

 
 

ARTICLE XX—DAMAGE BY FIRE OR OTHER CASUALTY    
  

        20.01    Notice of Loss.    If the Premises shall be damaged by fire or other casualty, the damage to the Base
Building shall be repaired by and at the expense of Landlord promptly following notice by Tenant to Landlord of the damage to the Premises and following Landlord's receipt of insurance proceeds and
the Rent until such repairs shall be made shall be reduced in the proportion which the area of the part of the Premises which is not usable (and is not used) by Tenant as a result of Landlord's
failure to complete repairs bears to the total area of the Premises; provided, however, should Tenant reoccupy a portion of the Premises for the conduct of its business prior to the date such repairs
are made, the Rent shall be reinstated with respect to such reoccupied portion of the Premises and shall be payable by Tenant from the date of such occupancy. Landlord shall have no obligation to
repair any damage to, or to replace, any of the Tenant Improvements including, without limitation, the initial Tenant Improvements, installed pursuant to the Tenant Improvement Agreement, any
Alterations made by or on behalf of Tenant or any fixtures, furniture, furnishings, equipment or other property or effects of Tenant, all of which shall be repaired by Tenant at its expense; provided
however Landlord may (but shall have no obligation to) repair or replace such items as part of the repair or reconstruction of the base building shell improvements, provided Tenant shall deliver to
Landlord insurance proceeds and/or funds of Tenant sufficient to pay for the cost of such repair or reconstruction. Within sixty (60) days after notice to Landlord of damage to the Premises or
any part thereof by fire or other casualty, Landlord shall deliver to Tenant an estimate prepared by a reputable contractor selected by Landlord setting forth such contractor's estimate as to the
reasonable time required to repair such damage. If the estimated time period exceeds nine (9) months, or if Landlord is actually unable to restore the Premises within such nine (9) month
period for reasons other than Tenant Delays or Force Majeure Delays, Tenant may elect to terminate this Lease by notice to Landlord given not later than fifteen (15) days following the delivery
of such estimate to Tenant. If Tenant elects to terminate this Lease, the Term of this Lease shall expire upon the thirtieth (30th) day after notice of such election is given by Tenant and Tenant
shall vacate the Premises and surrender the same to Landlord and Tenant's obligation to pay rent and additional rent under this Lease shall terminate with respect to the portion of the Term occurring
after the effective date of such termination. 

        20.02    Substantial or Total Damage.    Anything in subsection 20.01 of this Article XX to the contrary
notwithstanding, if the Premises are totally damaged or are rendered wholly untenantable, and if Landlord shall decide not to restore the Premises, or if the Building or the Facility shall be so
damaged by fire or other casualty that, in Landlord's opinion, either substantial alteration, demolition or reconstruction of the Building or the Facility shall be required (whether or not the
Premises shall have been damaged or rendered untenantable) or the Building or the Facility, after its repair, alteration or restoration shall not be economically viable as an office complex, then in
any of such events, Landlord,
at Landlord's option, may, not later than ninety (90) days following the damage, give Tenant a notice in writing terminating this Lease. If Landlord elects to terminate this Lease, the Term
shall expire upon the thirtieth (30th) day after such notice is given, and Tenant shall vacate the Premises and surrender the same to Landlord. If Tenant shall not be in default under this Lease, then
upon the termination of this Lease under the conditions provided for in the preceding sentence, Tenant's liability for Rent shall cease as of the day following such damage. 

        20.03    Intentionally Deleted.    

        20.04    Destruction During Final Year.    Notwithstanding anything to the contrary contained in this Lease, if the
Premises, the Building or the Facility is wholly, substantially or materially damaged or destroyed within the final twelve (12) months of the Term of this Lease, Landlord may, at its option, by
giving Tenant notice within sixty (60) days after notice to Landlord of the occurrence of such damage or destruction, elect to terminate this Lease. Tenant shall then have the right
(notwithstanding anything to the contrary set forth in Section 13.01), which right shall be exercisable within fifteen (15) days thereafter, to exercise its option to extend the Term of
this Lease granted pursuant to the terms of 

28

 

Section 13.01 hereof (provided and upon the condition that Tenant shall not have previously exercised its right to so extend the Term of this Lease pursuant to the terms of
Section 13.01 hereof). If Tenant shall exercise its right to extend the Term as aforesaid, Landlord's option to terminate this Lease shall be null and void and of no further force and effect
and Tenant shall have no further right to extend the Term of this Lease pursuant to Section 13.01. In addition, Tenant shall have the option to terminate this Lease if the Premises are wholly
damaged, or damaged to the extent that Tenant's use thereof is materially impaired for a period in excess of one (1) month, within the last twelve (12) months of the Term, such option to
be exercised by Tenant delivering Landlord written notice thereof within thirty (30) days of such damage. 

        20.05    Destruction of Tenant's Personal Property, Tenant's Extra Improvements or Property of Tenant's
Employees.    In the event of any damage to or destruction of the Premises, the Building or the Facility, under no circumstance shall Landlord be required to repair
any injury, or damage to, or make any repairs to or replacements of any Tenant Improvements, including, without limitation, any of the Tenant Improvements installed pursuant to the Tenant Improvement
Agreement, any Alterations made by or on behalf of Tenant, any fixtures, furniture, furnishings, equipment and other property or effects of Tenant installed or placed in the Premises by or on behalf
of Tenant, and Tenant shall repair and restore all such Tenant Improvements, personal property, improvement, Alterations, furniture, fixtures, equipment and effects at Tenant's sole cost and expense.
Landlord shall have no responsibility for any contents placed or kept in or on the Premises, the Building or the Facility by Tenant or Tenant's Employees. 

        20.06    Exclusive Remedy.    This Article XX shall be Tenant's sole and exclusive remedy in the event of
damage or destruction to the Premises, the Facility or the Project, and Tenant, as a material inducement to Landlord entering into this Lease, irrevocably waives and releases Tenant's rights under
California Civil Code Sections 1932(2) and 1933(4) or any successor statute or laws of a similar nature. No damages, compensation or claims shall be payable by Landlord for any inconvenience, any
interruption or cessation of Tenant's business, or any annoyance, arising from any damage to or destruction of all or any portion of the Premises or any of Tenant's property. 

        20.07    Delays.    Landlord shall not be liable for reasonable delays which may arise by reason of adjustment of fire
insurance on the part of Landlord and/or Tenant, and for reasonable delays on account of "labor troubles" or any other cause beyond Landlord's control. 

        20.08    Property Damage.    Any Facility employee to whom any property shall be entrusted by or on behalf of Tenant
shall be deemed to be acting as Tenant's agent with respect to such property and neither Landlord nor its agents shall be liable for any damage to property of Tenant or of others entrusted to
employees of the Facility, nor for the loss of or damage to any property of Tenant by theft or otherwise. Neither Landlord nor its agents shall be liable for any injury or damage to persons or
property or interruption of Tenant's business resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Facility or from the pipes,
appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature; nor shall Landlord or its agents be liable for
any such damage caused by other tenants or persons in the Facility or caused by construction of any private, public or quasi-public work other than damage caused directly as a result of Landlord's
negligence or wilful misconduct; nor, except as otherwise expressly set forth herein, shall Landlord be liable for any latent defect in the Premises or in the Facility. Anything in this
Article XX to the contrary notwithstanding, nothing in this Lease shall be construed to relieve Landlord from responsibility directly to Tenant for any loss or damage caused directly to Tenant
wholly or in part by the negligence or willful misconduct of Landlord. Nothing in the foregoing sentence shall affect any right of Landlord to the indemnity from Tenant to which Landlord may be
entitled. Tenant shall reimburse and compensate Landlord as additional rent within five (5) days after rendition of a statement for all expenditures made by, or damages or fines sustained or
incurred by, Landlord due to nonperformance or noncompliance with or 

29

 

breach or failure to observe any term, covenant or condition of this Lease upon Tenant's part to be kept, observed, performed or complied with. Tenant shall give immediate notice to Landlord in case
of fire or accident in the Premises, the Building or the Facility. 

 
 

ARTICLE XXI—EMINENT DOMAIN    
  

        21.01    Total or Substantial Taking.    If more than twenty-five percent (25%) of the Premises are taken
or appropriated under the power of eminent domain or conveyed in lieu thereof, either party shall have the right to terminate this Lease at its option, and if a material portion of the 3351 Building,
the 3347 Building or the Facility shall be taken or appropriated under power of eminent domain or conveyed in lieu thereof, Landlord may terminate this Lease at its option, provided Landlord also
terminates the Leases of other tenants of the Building which are leasing comparably sized space for comparable lease terms; provided, however, that notwithstanding any other provision to the contrary,
such termination shall be effective only to terminate Tenant's rights of possession and Tenant's obligations to pay Rent.
This Lease shall remain in effect in the event that and to the extent that the effectiveness of the Lease is necessary under Applicable Laws to allow the parties to obtain or receive any award of
compensation in connection with the exercise of such power of eminent domain. In either of such events, Landlord shall receive (and Tenant shall assign to Landlord upon demand from Landlord) any
income, rent, award or any interest therein which may be paid in connection with the exercise of such power of eminent domain except as otherwise provided herein, and Tenant shall have no claim
against Landlord for any part of the sums paid by virtue of such proceedings; provided, however, Tenant will have the right to recover from the condemning authority (but not from Landlord) any
compensation as may be separately awarded or recoverable by Tenant for the taking of Tenant's furniture, fixtures, equipment and other personal property taken, if any, for Tenant's relocation
expenses, and for any loss of goodwill or other compensable damage to Tenant's business and if and only if such award shall not reduce Landlord's award, Tenant will also have the right to recover from
the condemning authority (but not from Landlord) any compensation as may be separately awarded or recoverable by Tenant for the value of Tenant's leasehold interest. 

        21.02    Partial Taking.    If less than all of the Premises is taken and neither party shall have elected to
terminate this Lease pursuant to its right to do so under Section 21.01, and the Premises have been damaged as a consequence of such partial taking or appropriation or conveyance, Landlord
shall restore the Premises continuing under this Lease, at Landlord's cost and expense; provided, however, that Landlord shall not be required to repair or restore any injury or damage to the property
of Tenant or to make any repairs or restoration of any Alterations, additions, fixtures or improvements installed on the Premises by or at the expense of Tenant, except to the extent that Landlord has
been compensated for such damage. Thereafter, the Rent for the remainder of the Term shall be proportionately reduced in the proportion which the area of the part of the Premises which is taken,
appropriated or conveyed bears to the total area of the Premises. 

        21.03    Temporary Taking.    Notwithstanding anything to the contrary contained in this Article XXI, if the
temporary use or occupancy of any part of the Premises shall be taken or appropriated under the power of eminent domain during the Term, this Lease shall be and remain unaffected by such taking or
appropriation and Tenant shall continue to pay in full all Rent payable hereunder by Tenant during the Term; in the event of any such temporary appropriation or taking, Tenant shall be entitled to
receive that portion of any award which represents compensation for the use of or occupancy of the Premises during the Term, and Landlord shall be entitled to receive that portion of any award which
represents the cost of restoration of the Premises and the use and occupancy of the Premises after the end of the Term. 

30

 

 
 

ARTICLE XXII—SALE BY LANDLORD    
  

        The obligations of Landlord under this Lease shall not be binding upon Landlord named herein after the sale, conveyance, assignment or transfer by such Landlord
(or upon any subsequent landlord after the sale, conveyance, assignment or transfer by such subsequent landlord) of its interest in the Facility or this Lease, as the case may be, and in the event of
any such sale, conveyance, assignment or
transfer, Landlord shall be and hereby is entirely freed and relieved of all future covenants and obligations of Landlord hereunder, provided that, the purchaser, grantee, assignee or other transferee
has assumed and agreed to carry out all covenants of Landlord hereunder by written agreement or by law. Neither the shareholders, directors or officers of Landlord, if Landlord is a corporation, nor
the partners comprising Landlord (nor any of the shareholders, directors or officers of such partners), if Landlord is a partnership (collectively, the "Parties"), shall be liable for the performance
of Landlord's obligations under this Lease. Tenant shall look solely to Landlord to enforce Landlord's obligations hereunder and shall not seek any damages against any of the Parties. This Lease shall
not be affected by any such sale and Tenant agrees to attorn to the purchaser or assignee. 

 
 

ARTICLE XXIII—WAIVER    
  

        If either Landlord or Tenant waives the performance of any term, covenant or condition contained in this Lease, such waiver shall not be deemed to be a waiver of
any subsequent breach of the same or of any other term, covenant or condition contained herein. Landlord's acceptance of any item of Rent shall not constitute a waiver of any preceding breach by
Tenant of any term, covenant or condition of this Lease, regardless of Landlord's knowledge of such preceding breach at the time Landlord accepted such Rent. Failure by Landlord to enforce any of the
terms, covenants or conditions of this Lease for any length of time shall not be deemed to waive Landlord's right to insist thereafter upon strict performance by Tenant. Waiver by Landlord of any
term, covenant or condition contained in this Lease may only be made by a written document signed by Landlord. 

 
 

ARTICLE XXIV—NOTICES    
  

        All notices, demands and requests which may be required to be given by either party to the other hereunder shall be in writing and shall be sent either by hand
delivery or by a nationally recognized overnight courier service (e.g., Federal Express), in either case return receipt requested, to the address of the appropriate party. Landlord or Tenant may from
time to time designate in a notice to the other party hereto additional or different addressees and addresses for purposes of delivery of notices. Notices, demands and requests sent as herein provided
shall be deemed given when the same are received or refused. Notices to Tenant shall be sent to the attention of: 

Aames
Financial Corporation

350 South Grand Avenue, Suite 43rd Floor

Los Angeles, California 90071

Attn: Senior Vice President, Administration 

with
a copy to: 

Aames
Financial Corporation

350 South Grand Avenue, Suite 43rd Floor

Los Angeles, California 90071

Attn: General Counsel 

31

 

and:

Cushman &
Wakefield of California, Inc.

601 South Figueroa Street, 47th Floor

Los Angeles, California 90017

Attn: Tom McDonald 

Notices
to Landlord shall be sent to the attention of: 

Jamboree
LLC

c/o Winthrop Management

3333 Michelson Drive, Suite 210

Irvine, California 92612

Attention: Ms. Janine R. Padia 

 
 

ARTICLE XXV—OPERATING EXPENSES    
  

        In addition to Basic Rent provided to be paid hereunder, Tenant shall pay as additional rent, Tenant's Share of Operating Expenses in the manner set forth below. 

        25.01    General.    During and for each calendar year of the Term (or portion thereof) occurring on or after the
calendar year 2003, Tenant shall pay the difference between (i) the actual amount of Tenant's Share of Operating Expenses for the subject calendar year, and (ii) the actual amount of
Tenant's Share of Operating Expenses for the Base Year, in monthly installments along with its installment payments of Basic Rent. The difference between (i) and (ii) in the preceding
sentence shall be referred to in this Lease as "Tenant's Operating Expenses." 

        25.02    Payment Of Operating Expenses.    Prior to the Term Commencement Date, and during December of each calendar
year thereafter during the Term, or as soon thereafter as practicable, Landlord shall give Tenant written notice of the estimated Operating Expenses for the ensuing calendar year and the calculated
estimated Tenant's Operating Expenses for the ensuing year ("Tenant's Estimated Operating Expenses") (failure to deliver such notice shall not excuse Tenant's obligation to pay Tenant's Operating
Expenses). Tenant shall thereafter pay equal monthly installments of Tenant's Estimated Operating Expenses for the calendar year to which the estimate applies on the first day of each calendar month
during such calendar year, in advance, and continuing thereafter on the first day of each subsequent month of such calendar year. All such payments shall be construed to be payments of Rent for all
purposes hereof. If Tenant's Share changes at any time then, Tenant's monthly payments of Operating Expenses under this Section 25.02 shall be modified commencing on the date of such change to
reflect Tenant's Share as modified. If at any time during the course of the calendar year, Landlord reasonably determines and documents to Tenant that Tenant's Operating Expenses will vary from
Tenant's Estimated Operating Expenses by more than five percent (5%), Landlord may, by written notice to Tenant, revise Tenant's Estimated Operating Expenses for the balance of such calendar year and
Tenant shall thereafter pay Tenant's Estimated Operating Expenses as so revised for the balance of the then current calendar year on the first day of each subsequent month of such calendar year. 

        25.03    Computation Of Operating Expenses Adjustment.    Within one hundred twenty (120) days (but in no event
more than one hundred eighty (180) days) after the end of each calendar year, Landlord shall deliver to Tenant a statement of the actual Operating Expenses for the year just ended in reasonable
detail. If such statement shows that Tenant's Operating Expenses amounted to less than Tenant's Share of actual Operating Expenses for the calendar year just ended, then Tenant shall pay the
difference within thirty (30) days after receipt of such statement, such payment to constitute additional rent hereunder. If such statement shows that Tenant's Operating Expenses amounted to
more than Tenant's Share of actual Operating Expenses for the calendar year just ended, then (provided that no 

32

 

Event of Default has occurred and remains uncured) Tenant shall receive a credit for the amount of such payment against Tenant's obligation for payment of Rent next becoming due hereunder. If in
connection with an audit performed by another tenant of the Facility, such tenant's share of Operating Expenses is adjusted because costs and expenses that were not properly includable as Operating
Expenses were included in such tenant's Operating Expenses and if such items are not properly chargeable to Tenant's Proportionate Share of Operating Expenses (i.e., because of a different definition
of Operating Expenses contained in this Lease), then Landlord shall recalculate Tenant's Share of Operating Expenses for the period of time in question and Landlord shall allow Tenant a credit against
the Rent for such cost and expenses paid by Tenant which were not properly includable in Tenant's Share Operating Expenses. If this Lease has been terminated or the Term hereof has expired before the
date of such statement, then any adjustment to Tenant's Operating Expenses shall be paid by the appropriate party within twenty (20) days after the date of delivery of the statement. Landlord
shall utilize and cause to be utilized, accounting records and procedures for each Lease Year conforming to generally accepted accounting principles consistently applied with respect to all of the
Operating Expenses for such Lease Year. Any statement of Landlord sent to Tenant under this Article XXV shall be conclusively binding upon Tenant unless, within one hundred twenty
(120) days after such statement is sent, Tenant shall (i) pay to Landlord the amount set forth in such statement, without prejudice to Tenant's right to dispute the same, and
(ii) send a written notice to Landlord objecting to such statement and specifying the respects in which such statement is claimed to be incorrect and (iii) request an audit.
Notwithstanding anything to the contrary contained in this Article XXV, Tenant acknowledges and agrees that Tenant shall have no right to contest or dispute any category or type of expense
comprising Operating Expenses (as opposed to the calculation of any such
expense) if such category or type of expense, as the case may be, has been included both in the Base Expense Year and the Lease Year in question. 

        25.04    Audit Rights.    Tenant may cause an audit of Landlord's books and records to be performed in order to verify
the accuracy of Tenant's Operating Expenses provided and on the condition that: (i) Tenant acknowledges the unavailability of Landlord's books and records because of the confidential nature
thereof and agrees that any such audit shall be performed by, and the decision of any issues raised in such audit shall be determined by, a reputable independent firm of certified public accountants
selected by Tenant and reasonably acceptable to Landlord (the "CPA") and the decision of the CPA shall be conclusively binding upon the parties; it being agreed that such review may not be performed
by any person or entity if the compensation of such person or entity is determined or paid, in whole or in part, on a contingency, percentage, bonus or similar basis; (ii) such audit shall be
conducted only during regular business hours at the office where Landlord maintains Operating Expense records and only after Tenant shall have given Landlord at least fifteen (15) days notice;
(iii) Tenant shall deliver to Landlord a copy of the results of such audit within fifteen (15) days of its receipt by Tenant; it being understood and agreed that (A) Tenant shall
use all commercially reasonable good faith efforts to conduct any such audit jointly with other tenants of the Facility conducting an audit with respect to the same time period Tenant intends to
audit; and (B) Tenant shall have no right to unreasonably object to the selection of any CPA firm selected by another tenant to conduct such joint audit; (iv) Tenant may not so audit
Landlord's books and records if Tenant shall then be, or shall have been in the prior twelve (12) month period, in default of any of the terms, covenants or conditions of this Lease beyond the
expiration of any applicable grace or cure period; (v) only the Tenant named herein shall have the right to cause Landlord's books and records to be audited as aforesaid; it being understood
and agreed that no subtenant or assignee of Tenant or any other person or entity shall have any right t fees and expenses of such review and involved in any such decision shall be borne by Landlord if
the Operating Expenses were overstated, and the amount paid by Tenant pursuant to Landlord's statement exceeded the amount actually payable as determined by the CPA, by more than five percent (5%),
otherwise Tenant shall pay all such fees and expenses of such audit and decision as additional rent upon demand; (vii) Tenant shall agree that it shall not divulge or 

33

 

disseminate, or permit to be divulged or disseminated, and Tenant shall cause the CPA to agree that it shall not divulge or disseminate, and shall not permit to be divulged or disseminated, any
information learned or observed from auditing Landlord's books and records to any other third party whatsoever; and (viii) Tenant may cause an audit to be performed no more than one
(1) time in any Lease Year. In connection with any such audit, Landlord shall endeavor to make such personnel available to Tenant as is reasonably necessary for the CPA and its employees to
conduct the audit and the CPA and its employees shall be entitled to make photostatic copies of such records, provided that Tenant shall bear the expense of such copying. 

        25.05    Minimum Rent.    Anything in this Article XXV to the contrary notwithstanding, under no circumstances
shall the Rent payable under this Lease be less than the Rent set forth on the Basic Lease Information page. 

 
 

ARTICLE XXVI—TAXES PAYABLE BY TENANT    
  

        26.01    Personalty.    Tenant shall pay before delinquency any and all taxes levied or assessed and which become
payable by Landlord during the Term, whether or not now customary or within the contemplation of the parties hereto, which are based upon, measured by or otherwise calculated with respect to:
(i) the value of Tenant's equipment, furniture, fixtures or other personal property located in the Premises; or (ii) the value of any above building standard alterations, or additions
made in or to the Premises excluding the initial Tenant Improvements, regardless of whether title to such improvements, alterations or additions shall be in the name of Tenant or Landlord. 

        26.02    Taxes as Rent.    If it shall not be lawful for Tenant so to reimburse Landlord, the Rent shall be revised to
net Landlord the same net Rent after imposition of any such tax upon Landlord as would have been payable to Landlord prior to the imposition of any such tax, unless such additional rent payment is
unlawful. 

        26.03    Other Property Taxes.    Landlord shall have the right, at its option, to increase the monthly Rent payable
to Landlord by Tenant under this Lease to provide to Landlord the same effective monthly Rent after imposition of any Property Taxes or fee upon Landlord as Landlord would have received had such
Property Taxes or fee not been imposed. 

 
 

ARTICLE XXVII—LANDLORD'S DEFAULT    
  

        27.01    Notice.    Landlord shall not be deemed to be in default in the performance of any obligation required of it
under this Lease unless and until it has failed to perform such obligation within thirty (30) days after written notice by Tenant to Landlord and Landlord specifying when and how Landlord has
failed to perform such obligation; provided, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for its performance, Landlord shall not be in
default if Landlord commences to cure the default within such thirty (30) day period and thereafter diligently prosecutes the same to completion. 

        27.02    Landlord's Default.    If Landlord refuses or neglects to repair or maintain any portion of the Premises or
the Building which Landlord is obligated to repair or maintain pursuant to the express terms of this Lease within a reasonable period of time given the nature of the need for the repair or maintenance
under the circumstances, but in any event within forty-five (45) days after receipt of written notice from Tenant (unless the repair or maintenance reasonably requires more than
forty-five (45) days to complete, in which event Landlord shall not be in default unless Landlord shall fail to commence such repair or maintenance within such
forty-five (45) day period or Landlord shall fail to diligently prosecute such cure to completion), and if the required repair or maintenance prevents Tenant's access to the
Premises or materially and adversely interferes with Tenant's use of the Premises for ten
(10) consecutive days, or threatens imminent risk of harm or damage to persons or property, Tenant shall be permitted to perform such repair or maintenance obligations on Landlord's behalf, 

34

 

provided Tenant shall first deliver to Landlord an additional ten (10) day prior notice indicating that Tenant will be performing such obligations (including the nature and extent of Tenant's
intended performance and the estimated cost thereof) and provided Landlord shall fail to either (i) commence to perform its obligation(s) within such additional ten (10) day period or
(ii) deliver to Tenant a notice that Landlord reasonably disputes the need for or the extent of the repair or maintenance demanded by Tenant (a "Landlord Objection Notice") and provided further
(a) Tenant shall use only a duly licensed and bonded contractor from a list furnished by Landlord within two (2) business days following Tenant's request therefor (unless Landlord shall
fail to furnish such list of approved contractors, in which event Tenant shall use only a duly licensed and bonded contractor reasonably selected by Tenant) and (b) all requisite permits shall
be obtained for the desired work. Any work performed by or on behalf of Tenant shall be performed in accordance with the provisions of this Lease governing Alterations by Tenant except for the
requirement that Tenant obtain Landlord's consent. If Landlord does not deliver a Landlord Objection Notice, Landlord agrees to reimburse Tenant for all reasonable and actual
out-of-pocket costs incurred by Tenant in performing such obligations on behalf of Landlord. If Landlord delivers to Tenant a Landlord's Objection Notice, and the parties are
not able despite their good faith efforts to resolve such dispute within thirty (30) days after delivery of Landlord's Objection Notice, the dispute shall be submitted for summary dispute
resolution in accordance with the terms of Section 34.22 below. If Tenant shall prevail in any such arbitration, Landlord shall reimburse Tenant for Tenant's reasonable
out-of-pocket costs actually incurred in performing Landlord's obligations as provided herein. Notwithstanding anything contained in this Section 27.02 to the contrary,
if the required repair or maintenance threatens immediate risk of harm or material damage to persons or property, then Tenant may, at its election, proceed with the required repair or maintenance
notwithstanding Landlord's delivery of a Landlord's Objection Notice. In such event, the parties will submit the matter to arbitration for resolution as to the need for and the scope of repair or
maintenance performed by Tenant after Tenant completes the repair or maintenance. 

        27.03    Remedy for Breach.    Notwithstanding anything to the contrary in this Lease, Tenant's remedy for any breach
of this Lease by Landlord shall be limited to an action for damages or specific performance, and Landlord's liability to Tenant for damages resulting from Landlord's breach of any provision or
provisions of this Lease shall not exceed the value of Landlord's interest in the Facility. Landlord, its partners whether general or limited, shall never be personally liable for any such judgment. 

 
 

ARTICLE XXVIII—FORCE MAJEURE    
  

        Landlord shall not be chargeable with, or liable to Tenant for anything or in any amount for any failure to perform or delay caused by any of the following
(herein "Force Majeure Delays"): fire; earthquake; explosion; flood; hurricane; the elements; acts of God or the public enemy; actions, restrictions, limitations or interference of governmental
authorities or agents; enforcement of Applicable Laws; war; invasion; insurrection; rebellion; riots; strikes or lockouts; inability to perform, control or prevent which is beyond the reasonable
control of Landlord; and any such failure or delay due to said causes or any of them shall not be deemed a breach of or default in the performance of this Lease by Landlord; provided, however, lack of
funds shall not be deemed a Force Majeure Delay. Other than for a failure by Tenant to pay all Basic Rent and additional rent payable hereunder when due, Tenant shall not be
chargeable with, or liable to Landlord for anything or in any amount for, any failure to perform or delay caused by any Force Majeure Delay. 

 
 

ARTICLE XXIX—LANDLORD'S MORTGAGEES AND LESSORS    
  

        29.01    Modifications.    If, in connection with Landlord's obtaining or entering into any financing or ground lease
for any portion of the Building or the Facility, the lender or ground lessor requests modifications to this Lease, Tenant, within fifteen (15) days after request therefor, agrees to execute an 

35

 

amendment to this Lease incorporating such modifications, provided such modifications are reasonable and do not reduce (other than to a de minimus extent) the privileges, benefits, rights or remedies
of Tenant hereunder or increase Tenant's financial obligations under this Lease or increase (other than to a de minimus extent) the other obligations of Tenant under this Lease or adversely affect
(other than to a de minimus extent) the leasehold estate created by this Lease. 

        29.02    Cure Rights.    In the event of any default on the part of Landlord, Tenant will give notice by registered or
certified mail to any beneficiary of a deed of trust or mortgage covering the Premises or ground lessor of Landlord whose address has been furnished to Tenant, and Tenant agrees to offer such
beneficiary, mortgagee or ground lessor a reasonable opportunity not to exceed any time period granted to Landlord under this Lease to cure the default (including with respect to any such beneficiary
or mortgagee, time to obtain possession of the Premises, subject to this Lease and Tenant's rights hereunder, by power of sale or a judicial foreclosure, if such should prove necessary to effect a
cure). 

 
 

ARTICLE XXX—RIGHT OF FIRST OFFER    
  

        30.01    Exercise of Right.    If Landlord shall desire to lease any space in the 3347 Building (any such space is
herein referred to as a "ROFO Space") to a third party other than the existing tenant in any such space or to any other person or entity having any preexisting rights in such space as of the date
hereof, Landlord shall first give Tenant notice ("Landlord's Notice") of the terms and conditions upon which Landlord is willing to lease such ROFO Space. 

        30.02    Effect of Exercise.    Provided this Lease shall be in full force and effect and Tenant shall not be in
default hereunder beyond the expiration of any applicable grace or cure period, either at the time of
the exercise of the option or upon the inclusion of such ROFO Space in the Premises, Tenant shall have the right, exercisable by notice to Landlord given within ten (10) business days of the
date of Landlord's Notice, the time of giving of such notice to be of the essence of this agreement, to lease the entire ROFO Space identified in Landlord's notice, upon the terms and conditions
contained in Landlord's Notice, in which event Landlord and Tenant shall enter into an amendment of this Lease reasonably acceptable to Landlord and Tenant to provide for (i) the inclusion of
such ROFO Space in the Premises; (ii) an increase in the Rent by an amount equal to the fair market value of the ROFO Space as determined by Landlord in its sole but reasonable judgment,
(iii) a modification of the definition of Tenant's Share to accurately represent the percentage that the rentable area deemed to be in the Premises, together with the rentable area deemed to be
in the ROFO Space; it being understood and agreed that such rentable area shall be determined in accordance with BOMAI Standards, as modified pursuant to the terms of Section 2.02 hereof, bears
to the total rentable area deemed to be contained in the Facility, and (iv) an increase in the number of non-exclusive, un-reserved surface parking spaces by an amount
equal to four (4) such spaces per one thousand (1000) usable square feet of space in any such ROFO Space included in the Premises. In all other respects, the terms and conditions contained in
this Lease (including the Term, escalations and base years) shall remain unmodified. In the event that Tenant fails to exercise its right as aforesaid within ten (10) business days of the date
of Landlord's Notice or, in the event Tenant shall have exercised its right and Landlord and Tenant shall not have executed an amendment of this Lease as aforesaid within thirty (30) days from
the date of Landlord's Notice or within ten (10) business days of Landlord's providing the amendment to Tenant for execution, whichever is later, Tenant shall be deemed to have waived its
rights under this Article XXX, Landlord shall have the absolute right to lease such ROFO Space to any other person or entity and Tenant shall have no further rights under this
Article XXX. Notwithstanding the foregoing, if Tenant shall not exercise its rights to lease any portion of the ROFO Space solely as a result of Tenant's disagreement with Landlord's
determination of the Fair Market Rental Value thereof, then provided that Tenant shall have notified Landlord of such disagreement within ten (10) days of the date of Landlord's Notice, the
time of giving such notice to be of the essence of this agreement, then 

36

 

Landlord shall not within the ninety (90) day period commencing on the date of Landlord's Notice and terminating on the eighty-ninth (89th) day thereafter, enter into a lease with respect to
such portion of the ROFO Space in question on financial terms more favorable to the tenant thereunder than those set forth in Landlord's Notice without first offering to effectuate such deal with
Tenant and (b) thereafter, Landlord shall not enter into a lease with respect to such portion of the ROFO Space in question on financial terms materially more favorable to the tenant thereunder
than those set forth in Landlord's Notice without first giving Tenant a one-time notice of such materially more favorable terms and the one-time right to effectuate such deal
with Tenant; it being understood, however, that Landlord shall only be required to give Tenant notice of such materially more favorable terms one time following the expiration of the ninety
(90) day period referred to above. As used herein, the term "materially more favorable" shall mean that the Basic Rent shall be more than ten percent (10%) less than the Basic Rent set forth in
Landlord's Notice. 

 
 

ARTICLE XXXI—FINANCIAL STATEMENTS    
  

        Prior to the execution of this Lease by Landlord and at any time during the Term of this Lease upon thirty (30) days prior written notice from Landlord
(but not more frequently than once per calendar year), Tenant agrees to provide Landlord with a current annual financial statement for Tenant and any guarantors of Tenant and annual financial
statements for the two (2) years prior to the current financial statement year for Tenant and any guarantors of Tenant. Notwithstanding the foregoing, Landlord
acknowledges that the Tenant named herein currently does not prepare financial statements but that Aames Financial Corporation, Tenant's parent company, prepares consolidated financial statements
which include financial statements for Tenant and that whenever a financial statement is required of the named Tenant, the named Tenant may provide such consolidated financial statement of Aames
Financial Corporation. All such financial statements are to be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant, audited by an
independent certified public accountant. 

 
 

ARTICLE XXXII—Intentionally Deleted    
  

 
  ARTICLE XXXIII—PARKING    
  

        33.01    Spaces.    Subject to the terms of this Lease and provided Tenant shall pay the fees therefor, Landlord shall
provide Tenant with, or cause Tenant to be provided with, the number of non-exclusive, unreserved surface parking spaces (not within a parking structure) and the number of exclusive,
reserved surface parking spaces (not within a parking structure), designated in the Summary of Basic Lease Information in the lots shown hatched on the site plan attached hereto as  Exhibit I (the
"Parking Areas") and made part hereof. Notwithstanding the foregoing, Tenant shall have the option to relinquish its right to
lease any of such parking spaces upon not less than sixty (60) days prior written notice to Landlord, following which Tenant shall have no obligation to pay for any of such relinquished parking
spaces. Notwithstanding the foregoing, Landlord acknowledges that if Tenant relinquishes any or all of its reserved and unreserved parking spaces during the Term, but thereafter requires the use of
such parking spaces, then Landlord upon ten (10) days prior notice from Tenant shall make such parking spaces available to Tenant. Tenant's use of parking spaces within the Parking Facilities
may be subject to any sticker, permit system or parking control implemented by Landlord at any time (subject to the terms of Section 33.03 hereof). Landlord or the operator of the Parking
Facilities shall have the right to change the location of parking from time to time; provided, however, Landlord shall not relocate Tenant's parking spaces outside of the Parking Areas without the
consent of Tenant, which consent shall not be unreasonably withheld or delayed. Tenant acknowledges that access to the Parking Facilities for monthly users is currently by parking identification
devices, which are currently transponders. Upon Tenant's request, Landlord shall cause to be issued to Tenant's employees, agents, subtenants or other authorized users, vehicle transponders in an
amount not to exceed the maximum 

37

 

number of unreserved surface parking spaces allocated to Tenant under this Lease. As a condition of the issuance of any transponders hereunder, Tenant shall pay to Landlord a transponder security
deposit of Twenty-Five ($25.00) Dollars for each transponder requested by Tenant. Landlord reserves the right to reasonably increase the amount of the transponder security deposit in
conjunction with future requests for transponders, whether such transponders are requested for replacement purposes or for new users. So long as this Lease is in effect, Tenant's visitor's and guests
will be entitled to use those parking areas designated for short term visitor parking or unreserved spaces elsewhere within the
Parking Facilities. Tenant's visitors and guests shall pay therefor the then current market rates established by the operator of the Parking Facilities. Tenant, at its sole cost and expense, may elect
to validate such parking for its visitors and guests. All such visitor parking will be on a non-exclusive, in common basis with all other tenants, visitors and guests of the Facility. 

        33.02    Control.    Subject to the terms of the REA, Landlord or the operator of the Parking Facilities shall have
the sole and exclusive control of the Parking Facilities. Landlord or the operator of the Parking Facilities may, at any time and from time to time during the Term exclude any person from use or
occupancy thereof who is not a tenant or occupant of the Facility or an employee, invitee, subtenant, guest or licensee of Tenant. Tenant shall not cause or permit any obstruction to the free and
clear use of the Parking Facilities. Tenant shall not use or allow any of its employees or invitees to use any parking spaces which have been specifically assigned by Landlord or the operator of the
Parking Facilities to other tenants or occupants or for other uses such as visitor or short-term parking or which have been designated by any Governmental Entity as being restricted to
certain uses. Landlord shall have no liability to Tenant, nor shall Tenant's obligations under this Lease be in any way excused or modified, if Tenant's parking privileges under this Lease are
affected or impaired in any way by reason of any moratorium, initiative, referendum, statute, regulation or other governmental decree or action; provided, however, if Tenant's parking privileges under
this Lease are adversely affected or impaired in any way pursuant to the terms of the REA, then Landlord shall use its reasonable efforts to enforce Landlord's rights under the REA, including, without
limitation, commencing and/or continuing arbitration proceedings, litigation or alternate means of dispute resolution if Landlord, in its reasonable judgment, deems such action to be appropriate. Any
governmental charges, surcharges or other monetary obligations which may be imposed in connection with parking privileges appurtenant to this Lease or with the operation of the Parking Facilities
shall be included as Rent. Tenant and its invitees, subtenants, employees, agents and guests shall faithfully observe and comply with all Applicable Laws relating to the trafficking, operation,
occupancy or use of the parking and the Parking Facilities. 

        33.03    General Provisions.    Landlord reserves the right to set and increase monthly fees and/or daily and hourly
rates for parking privileges from time to time during the Term of this Lease; it being agreed that parking in reserved parking spaces and non-exclusive, unreserved parking spaces in the
Parking Facilities (whether or not within a parking structure) during the Term or the Extension Term shall be at the respective fair market rates therefor determined by Landlord or the operator of the
Parking Facilities from time to time, except that (i) from the Term Commencement Date to but not including July 1, 2004 (the "Parking Imposition Date") the rate for Tenant's use of
non-exclusive unreserved surface parking spaces (not within a parking structure) shall be $30.00 per space per month, (ii) from the Term Commencement Date to but not including the
Parking Imposition Date, the rate for Tenant's use of reserved surface parking spaces (not within a parking structure) shall be $100.00 per space per month; and (iii) from and after the Parking
Imposition Date, Tenant shall pay, from time to time, the then market rate for all non-exclusive, unreserved surface parking spaces and for all reserved surface parking spaces, provided
that the cost for non-exclusive, unreserved surface parking spaces (not within a parking structure) and for reserved surface parking spaces (not within a parking structure) shall not in
any twelve (12) month period increase by more than five dollars ($5.00) per parking space per month. In addition, if Tenant shall be permitted to use more than the number of parking spaces
designated in the Summary of Basic Lease Information or if at any time after November 30, 2008 Tenant shall use reserved surface parking spaces, or non-exclusive, unreserved surface
parking spaces, 

38

 

whether or not within a parking structure, or if Tenant shall use parking spaces of any kind during the Extension Term or attributable to ROFO Space or any additional space in the Facility, Tenant
shall
pay, from time to time, the then respective market rates therefor. Currently the monthly charge for transponder access to: (a) reserved parking spaces (not within a parking structure) is
$100.00 per space per month, (b) non-exclusive, unreserved parking spaces within a parking structure is $70.00 per space per month, and (c) reserved parking spaces within a
parking structure is $125.00-$175.00 per space per month. The monthly charges for parking hereinabove set forth are subject to increase from time to time. Tenant shall pay its parking fees
to Landlord monthly in advance as additional rent, concurrently with its payments of Basic Rent under this Lease. Landlord may assign any unreserved and unassigned parking spaces and/or make all or
any portion of such spaces reserved, if Landlord reasonably determines that it is necessary for orderly and efficient parking or for any other reasonable reason. Failure to pay or cause to be paid the
rent including, without limitation, visitor parking charges for any particular parking spaces or failure to comply with any terms and conditions of this Lease applicable to parking may be treated by
Landlord as a default under this Lease and, in addition to all other remedies available to Landlord under the Lease, at law or in equity, Landlord may elect to recapture such parking spaces for the
balance of the Term of this Lease if Tenant does not cure such failure within the applicable cure period set forth in Article XIX of this Lease. Tenant's parking rights and privileges described
herein may not be assigned or transferred, or otherwise conveyed, without Landlord's prior written consent, which consent Landlord shall not unreasonably withhold or delay. In any event, under no
circumstance may Tenant's parking rights and privileges be transferred, assigned or otherwise conveyed separate and apart from Tenant's interest in this Lease. 

        33.04    Cooperation with Traffic Mitigation Measures.    Tenant agrees to use its reasonable, good faith efforts to
cooperate in traffic mitigation programs which may be undertaken in cooperation with local municipalities or governmental agencies. Such programs may include, but will not be limited to, carpools,
vanpools and other ridesharing programs, public and private transit, flexible work hours, preferential assigned parking programs and programs to coordinate tenants within the Facility and the Project
with existing or proposed traffic mitigation programs. 

        33.05    Parking Rules and Regulations.    Tenant shall comply with all rules and regulations regarding parking set
forth in Exhibit H attached hereto and Tenant agrees to cause its employees, subtenants, assignees, contractors, suppliers, customers and
invitees to comply with such rules and regulations. Landlord reserves the right from time to time to modify and/or adopt such other reasonable and non-discriminatory rules and regulations
for the Parking Facilities as it deems reasonably necessary for the operation of the Parking Facilities. If the rules and regulations regarding parking shall conflict with the terms of this Lease, the
terms of this Lease shall control. In addition, Tenant shall complete, and shall cause all of its employees, invitees, subtenants, guests and licensees utilizing the Parking Facilities which are
monthly parkers to complete, a parker information form which shall include, without limitation, the name of such parker, such parker's vehicle registration number and other identification information
and the parkers' driver's license number and such other information required by Landlord or the operator of the Parking Facilities from time to time. 

 
 

ARTICLE XXXIV—SIGNAGE    
  

        Subject to the terms of the REA, all covenants, conditions and restrictions affecting or governing the Premises, all Applicable Laws and all applicable municipal
and governmental permits and approvals (i) Landlord shall add Tenant's name to the top position of the existing monument sign adjacent to the main entrance of the 3347 Building and the building
known as 3345 Michelson Drive, at Tenant's sole
cost and expense; (ii) Landlord shall use commercially reasonable efforts to obtain from the City of Irvine (and any other authority claiming to have jurisdiction therefor) approval to install
an additional "eye brow sign" with Tenant's name above the first floor level of the 3351 Building (the reasonable costs of processing such application with the City of Irvine to be paid by Landlord)
and if such 

39

 

approvals are granted, Landlord shall install such "eye brow sign" above the first floor level of the 3351 Building in a location determined by Landlord, at Tenant's cost; and (iii) Landlord
shall use commercially reasonable efforts to obtain from the City of Irvine (and any other authority or entity having approval rights or claiming to have jurisdiction therefor) approval to install a
corporate name sign on the top of the 3347 Building parapet, at Tenant's sole cost, and if such approvals are granted, Landlord shall install a sign in such location determined by Landlord at Tenant's
cost; it being understood and agreed, however, that (a) currently Landlord has no right to install, or permit to be installed, either the "eyebrow sign" or the corporate name sign on the top of
the 3347 Building parapet contemplated herein without modifying the existing signage program for the Facility and without obtaining various approvals, including, without limitation, approvals required
pursuant to the terms of the REA, all covenants, conditions and restrictions affecting or governing the Premises, all Applicable Laws and all applicable municipal and governmental permits and
approvals, and (b) Landlord shall have no liability to Tenant if any such approvals are not granted. Landlord will also designate the location on the Premises, if any, for one or more Tenant
identification sign(s), which location shall be reasonably acceptable to Tenant. Tenant agrees to have Landlord install and maintain Tenant's identification sign(s) in such designated location in
accordance with the forms of this Article XXXIV at Tenant's sole cost and expense. Tenant has no right to install Tenant identification signs in any other location in, on or about the Premises
or the Facility and will not display or erect any other signs, displays or other advertising materials that are visible from the exterior of the Building or the Facility or from within the Building or
the Facility in any interior or exterior Common Area. The size, design, color and other physical aspects of any and all permitted sign(s) and the installation, use and maintenance of all Tenant
signage will be subject to (a) Landlord's written approval prior to installation, which approval may be withheld in Landlord's discretion, (b) covenants, conditions or restrictions
affecting or governing the Premises and all Applicable Laws, (c) any applicable municipal and governmental permits and approvals (d) those requirements set forth in the signage criteria
for the Facility from time to time and otherwise set forth herein, and (e) the terms of the REA. Tenant will be responsible for all costs for installation, maintenance, repair and removal of
any Tenant identification sign(s). If Tenant fails to remove Tenant's sign(s) upon termination of this Lease and repair any damage caused by such removal or if prior to termination of this Lease,
Tenant shall be in default hereunder or under this Lease beyond the expiration of any applicable grace or cure period, Landlord may remove Tenant's signage at Tenant's sole expense. Tenant agrees to
reimburse Landlord for all costs incurred by Landlord to effect any installation, maintenance or removal on Tenant's account, which amount will be deemed additional rent, and may include, without
limitation, all sums disbursed, incurred or deposited by Landlord including Landlord's costs, expenses and actual attorneys' fees with interest thereon at the Interest Rate from the date of Landlord's
demand until paid by Tenant. Any sign rights granted to Tenant under this Lease with respect to the "eye brow sign" or the corporate name sign on the top of the 3347 Building parapet may not be
assigned, transferred or otherwise conveyed to any assignee or subtenant of Tenant without Landlord's prior written consent,; provided, however, Landlord shall not unreasonably withhold or delay its
consent to a transfer of the "eye brow sign" rights to an approved assignee of the named Tenant if such assignee is a company of comparable stature, prestige and financial standing to the named
Tenant. 

 
 

ARTICLE XXXV—MISCELLANEOUS    
  

        35.01    Successors and Assigns.    Subject to the provisions of Article IX, the terms, covenants and
conditions contained herein shall be binding upon and inure to the benefit of the heirs, successors, executors, administrators and assigns of the parties hereto. 

        35.02    Attorneys' Fees.    If any action or proceeding is brought to enforce any term, covenant or condition of this
Lease on the part of Landlord or Tenant, the prevailing party in such litigation shall be entitled to its fees and costs, including, but not limited to, reasonable attorneys' fees to be fixed by the
court in such action or proceeding, both at trial and on appeal. 

40

 

        35.03    Light and Air.    No diminution of light, air or view by any structure which may hereafter be erected
(whether or not by Landlord) shall entitle Tenant to any reduction of Rent, result in any liability of Landlord to Tenant, or in any other way affect this Lease or Tenant's obligations hereunder. 

        35.04    Public Transportation.    Tenant shall encourage use of public transportation by personnel of Tenant employed
on the Premises and shall distribute to such employees written materials provided by or through Landlord explaining the convenience and availability of public transportation facilities adjacent or
proximate to the Facility. 

        35.05    Headings.    The Article and Section headings herein are for convenience of reference and shall in no way
define, increase, limit or describe the scope or intent of any provision of this Lease. 

        35.06    Use of Pronouns.    Any pronoun used in place of a noun shall indicate and include the masculine or feminine,
the singular or plural number, individuals, firms or corporations, and their and each of their respective successors, executors, administrators, assigns, according to the context hereof. 

        35.07    Time of the Essence.    Time is of the essence of this Lease. 

        35.08    Governing Law.    This Lease shall in all respects to the maximum extent legally permissible be governed by
the laws of the State of California. 

        35.09    Brokers.    The parties acknowledge that the broker(s) who negotiated this Lease are stated in the Basic
Lease Information. Landlord agrees to pay any commission due to the broker stated in the Basic Lease Information pursuant to a separate written agreement between Landlord and such broker. Landlord's
obligations under such agreement constitute obligations of Landlord under this Lease and such agreement is incorporated herein by reference and made a part of this Lease. Each party represents and
warrants to the other, that, to its knowledge, no other broker, agent or finder (i) negotiated or was instrumental in negotiating or consummating this Lease on its behalf, and (ii) is or
might be entitled to a commission or compensation in connection with this Lease. Landlord and Tenant each agree to promptly indemnify, protect, defend and hold harmless the other from and against any
and all claims, damages, judgments, suits, causes of action, losses, liabilities, penalties, fines, expenses and costs (including attorneys' fees and court costs) resulting from any breach by the
indemnifying party of the foregoing representation, including, without limitation, any claims that may be asserted by any broker, agent or finder undisclosed by the indemnifying party. The foregoing
mutual indemnity shall survive the expiration or earlier termination of this Lease. 

        35.10    Modifications.    This Lease may not be modified except by a written instrument by the parties hereto. 

        35.11    Unenforceable Provisions.    If for any reason whatsoever any of the provisions hereof shall be unenforceable
or ineffective, all of the other provisions shall be and remain in full force and effect. 

        35.12    Covenants and Conditions.    All provisions, whether covenants or conditions, on the part of Tenant and
Landlord herein shall be deemed and construed to be both covenants and conditions as though the words specifically expressing or imparting covenants and conditions were used in each separate provision
hereof. 

        35.13    Incorporation.    Exhibits A, A-1, B-1,
B-2, C, D, E, F, G, H and I and any other Exhibits, Addenda and Riders attached to this Lease are hereby
incorporated by this reference and made a part of this Lease. 

        35.14    Recordation of Memorandum; Quitclaim and Release Agreement.    Landlord and Tenant agree that in no event and
under no circumstances shall this Lease be recorded. A short-form memorandum may be recorded at Landlord's sole election. Tenant represents, warrants and covenants to Landlord that upon
the expiration or termination of this Lease, Tenant at its sole cost and expense shall at Landlord's request, deliver to Landlord a fully executed quitclaim and release agreement in 

41

 

recordable form wherein Tenant quitclaims, conveys, assigns and releases to Landlord any and all of Tenant's interest in this Lease and the Premises and the Facility. 

        35.15    Additional Instruments.    Upon the request of either party at any time, the other party shall execute and
file any additional instruments and take any actions as may be reasonably necessary or desirable to carry out the intent and to fulfill the provisions of this Lease. 

        35.16    Entire Lease Between Parties.    This Lease and all exhibits and attachments to this Lease and any written
modifications or amendments to all of the foregoing entered into by the parties after the date of this Lease, constitutes the entire lease between the parties with respect to the subject matter of
this Lease and supersedes all prior and contemporaneous leases and understandings, whether oral or written. Each party to this Lease acknowledges that no representations, inducements, promises or
leases, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied in this Lease and that no other lease, statement or promise not contained in
this Lease shall be valid or binding. The parties intend by this Lease to establish the relationship of landlord and tenant only, and do not intend to create a partnership, joint venture, joint
enterprise, or any business relationship other than that of landlord and tenant. 

        35.17    Nondisclosure of Lease Terms.    Tenant acknowledges and agrees that the terms of this Lease are confidential
and constitute proprietary information of Landlord. Disclosure of the terms could adversely affect the ability of Landlord to negotiate other leases and impair Landlord's relationship with other
tenants. Accordingly, Tenant agrees that it, and its partners, officers, directors, employees and attorneys, shall not intentionally and voluntarily disclose the terms and conditions of this Lease to
any newspaper or other publication or any other tenant or apparent prospective tenant of the Building or other portion of the Facility, or real estate agent, either directly or indirectly, without the
prior written consent of Landlord, provided, however, that Tenant may disclose the terms of this Lease (i) to prospective subtenants or assignees under this Lease and (ii) in its
periodic and current reports filed with the United States Securities and Exchange Commission. Nothing in this paragraph shall prohibit Landlord from disclosing the terms of this Lease to any current
or prospective lender, partner or purchaser or to Landlord's attorneys, financial advisors and property management personnel. 

        35.18    Joint and Several Obligations.    If more than one person or entity executes this Lease as Tenant, their
execution of this Lease will constitute their covenant and agreement that (i) each of them is jointly and severally liable for the keeping, observing and performing of all of the terms,
covenants, conditions, provisions and agreements of this Lease to be kept, observed and performed by Tenant, and (ii) the term "Tenant" as used in this Lease means and includes each of them
jointly and severally. The act of or notice from, or notice or refund to, or the signature of any one or more of them, with respect to the tenancy of this Lease, including, but not limited to, any
renewal, extension, expiration, termination or modification of this Lease, will be binding upon each and all of the persons executing this Lease as Tenant with the same force and effect as if each and
all of them had so acted or so given or received such notice or refund or so signed. 

        35.19    Tenant as Corporation or Partnership.    If Tenant executes this Lease as a corporation or partnership, then
Tenant and the persons executing this Lease on behalf of Tenant represent and warrant that such entity is duly qualified and in good standing to do business in California and that the individuals
executing this Lease on Tenant's behalf are duly authorized to execute and deliver this Lease on its behalf, and in the case of a corporation, in accordance with a duly adopted resolution of the board
of directors of Tenant, a copy of which is to be delivered to Landlord on execution hereof, if requested by Landlord, and in accordance with the by-laws of Tenant, and, in the case of a
partnership,
in accordance with the partnership agreement and the most current amendments thereto, if any, copies of which are to be delivered to Landlord on execution hereof, if requested by Landlord, and that
this Lease is binding upon Tenant in accordance with its terms. In addition, if Tenant is a partnership or if Tenant's interest in this Lease shall be assigned to a partnership, (i) the
liability of each of the parties 

42

 

comprising the partnership Tenant shall be joint and several, (ii) each of the parties comprising the partnership Tenant hereby consents in advance to, and agrees to be bound by, any written
instrument which may hereafter be executed, changing, modifying or discharging this Lease, in whole or in part, or surrendering all or any part of the Premises to Landlord and by any notices, demands,
requests or other communications which may hereafter be given by a partnership Tenant, (iii) any bills, statements, notices, demands, requests or other communications given or rendered to a
partnership Tenant and to all such parties shall be binding upon a partnership Tenant and all such parties, (iv) if a partnership Tenant shall admit new partners, all of such new partners
shall, by their admission to a partnership Tenant shall be deemed to have assumed performance of all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed,
and (v) a partnership Tenant shall give prompt notice to Landlord of the admission of any such new partners, and upon demand of Landlord, shall cause each such new partner to execute and
deliver to Landlord an agreement in form satisfactory to Landlord, wherein each such new partner shall assume performance of all of the terms and conditions of this Lease on Tenant's part to be
observed and performed (but neither Landlord's failure to request any such agreement nor the failure of any such new partner to execute or deliver any such agreement shall vitiate the provisions of
subdivision 35.19). 

        35.20    Examination of Lease.    Submission of this instrument by Landlord to Tenant for examination or signature by
Tenant does not constitute a reservation of or option for lease, and it is not effective as a lease or otherwise until execution by and delivery to both Landlord and Tenant. 

        35.21    Intentionally Deleted.    

        35.22    Satellite Antenna.    Tenant shall have the non-exclusive right, at its sole cost and expense, to
install a satellite dish, microwave dish or a radio antenna on the roof of the Facility, provided, as a condition to Tenant's right to install, use, operate and maintain any such rooftop equipment,
Tenant shall enter into a written license agreement in the form of Exhibit I attached hereto and incorporated herein by reference. 

        35.23    Landlord's Authority.    If Landlord executes this Lease as a corporation or partnership, then Landlord and
the persons executing this Lease on behalf of Landlord represent and warrant that such entity has full power and authority to execute this Lease. 

        35.24    Counterparts.    This Lease may be executed in several counterparts, each of which shall be deemed an
original and together shall constitute one and the same instrument. 

[Signatures
on following page] 

43

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first above written. 

	LANDLORD:	 
	

WINTHROP CALIFORNIA MANAGEMENT LIMITED PARTNERSHIP

as authorized agent for JAMBOREE LLC
	

By:	

WINTHROP WEST COAST REALTY SERVICES, INC.

  
	

 	

By:	

 	

 
	 	 	
 Janine R. Padia
 Its Vice President and Secretary	 

	

TENANT:	

 
	

AAMES FINANCIAL CORPORATION,

a Delaware corporation

  
	

By:	

 	

 	

 
	 	
	 
	 	Print Name:	 	 
	 	 	
	 
	 	Print Title:	 	 
	 	 	
	 

44

 
 

EXHIBIT A    
    
    LEGAL DESCRIPTION OF LAND COMPRISING THE FACILITY    
  

PARCEL A:  

        PARCEL 1, IN THE CITY OF IRVINE, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A PARCEL MAP FILED IN BOOK 200 PAGES 42 THROUGH 45, INCLUSIVE, OF PARCEL MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. 

        EXCEPTING
THEREFROM, AN UNDIVIDED FIFTY PERCENT (50%) INTEREST IN OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME
KNOWN, THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING, AND OPERATING THEREFOR, AND STORING IN AND REMOVING THE
SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO,
THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS
THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OR
THE UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AS RESERVED BY IRVINE INDUSTRIAL COMPLEX, IN DEED RECORDED JULY 23, 1974 IN BOOK 11202 PAGE 450, OFFICIAL RECORDS. 

 
 

EXHIBIT A-1    
    
    SITE PLAN OF THE FACILITY AND THE PROJECT    
  

 
 

EXHIBIT B-1    
    
    FLOOR PLAN OF THE SUITE 300 PREMISES    
  

 
 

EXHIBIT B-2    
    
    FLOOR PLAN OF THE SUITE 100 PREMISES    
  

 
 

EXHIBIT C    
    
    DEFINITIONS    
  

        The following terms shall be defined as set forth below. A term is identified by initial capital letters throughout all provisions of this Lease, including,
without limitation, the Recitals and the Exhibits. 

        "Anniversary Date" means the anniversary of the Term Commencement Date. 

        "Applicable Laws" means any law, statute, directive, regulation, rule, order or ordinance of any governmental or quasi-public entity or
authority and any covenants, conditions and restrictions, reciprocal easement agreements, operating agreements, ground leases or master leases which are applicable to the Premises or the Facility or
the use or occupancy thereof, and which are now in effect or are hereafter promulgated. 

        "Article" means an article of this Lease. 

        "Bankruptcy Code" means 11 U.S.C. §§ 101 et seq. or such similar
laws or amendments thereto which may be enacted from time to time. 

        "Base Year" means the twelve (12) month period set forth in the Basic Lease Information Section of this Lease. 

        "Base Year Operating Expenses" means the Operating Expenses incurred for the Base Year. 

        "Basic Rent" means the portion of the Rent payable as determined pursuant to Section 4.01 and net of Tenant's Operating Expenses to
be paid by Tenant pursuant to Article XXV. 

        "Building" means collectively, the 3347 Building and the 3351 Building. 

        "BOMAI Standards" means the standards and methods for measuring usable floor area in office buildings as promulgated by the Building
Owners and Managers Association International (ANSI Z65.1-1989) ("BOMAI"). 

        "Common Area" means the total of all areas now or at any time hereafter which, based on Landlord's reasonable discretion, are or become
within or part of the Project but outside of the Facility which are made available for general non-exclusive use, convenience and benefit of Landlord, Tenant and all other owners,
landlords, tenants and permitted occupants of the Project as now or hereafter improved and configured and their respective employees and invitees and which are neither occupied by buildings nor
devoted to the specific use of a particular tenant, including, without limitation: 

        (i)      all
sidewalks, walkways, pedestrian tunnels, sky walks, plazas, bridges, driveway entrances and exits, curbs, service drives, loading areas, alleys,
transportation facilities, if any, outside lighting fixtures, shrubbery, grass, planters and other landscaped areas, common storm drain and sewer systems; and 

        (ii)    all
Parking Facilities. 

        "Control" means ownership of not less than fifty percent (50%) of the voting stock of any corporation in question or not less than fifty
percent (50%) of all the legal and equitable interests in any other business entity in question. 

        "Cosmetic Alterations" means Alterations which (1) are nonstructural and which do not affect the Facility's mechanical, electrical,
plumbing, life-safety or other Building systems or the structural integrity of the Facility, (2) do not affect any part of the Facility other than the Premises, do not affect any
service required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Facility and do not reduce the value of utility of the Facility or any part thereof, (3) are of
a purely cosmetic or decorative nature (such as painting or installation of wall covering or carpeting), and (4) have an estimated cost for all labor and material in connection with such
Alterations in any one instance (or in a series of instances effectuating a single alteration plan) of less than Twenty-Five Thousand ($25,000.000) Dollars. 

 

        "CWDLP" means Crow Winthrop Development Limited Partnership, a Maryland Limited Partnership or any of its successors or assigns. 

        "Development Parcel" means that certain parcel or parcels of land contiguous to and which surround the Facility as shown on  Exhibit A-1 on which is presently
situated all Parking Facilities, the retail center, restaurants and other buildings and related
improvements, the Common Area and certain improvements presently under construction. 

        "Estimated Operating Expenses" means for any particular calendar year Landlord's estimate of the Operating Expenses for such calendar year
made prior to commencement of such calendar year as provided in Article XXV. 

        "Event of Default" means any of the events specified in Section 19.01 after the expiration of the applicable cure period set forth
therein, if any. 

        "Facility" means the complex of buildings and improvements presently located at 3333 to 3355 Michelson Drive, Irvine, California
containing 1,499,028 usable square feet of area as well as land underlying such buildings and improvements and all overlying space above such land, buildings and improvements, as the same may be
hereafter expanded, altered, improved, contracted or otherwise modified. 

        "Facility Common Areas" means the total of all areas now or at any time hereafter which, based on Landlord's reasonable discretion, are or
become within or part of the Facility and are made available for the general non-exclusive use, convenience and benefit of Landlord, Tenant and all other tenants of the Facility or other
tenants in buildings to be constructed within the Facility and their respective employees and invitees, including, without limitation: 

        (i)      all
lobbies, entrances, stairs, structural components, exterior walls of the Facility, roofs, elevators, escalators, hallways, passageways and other
interior public portions of the Facility which are not specifically leased to Tenant or any other tenant of the Facility; 

        (ii)    all
exterior walkways, landscaped areas, open space areas, plazas, driveways and transportation facilities on, in or above the Facility; and 

        (iii)    all
pedestrian linkages, whether covered or not, between any portion of the Facility, whether existing or hereafter constructed, excluding therefrom any
portions of such pedestrian linkages which are specifically identified as tenant space. 

        "First Transfer" means the first sale or other disposition of the Facility or any interest therein occurring after the date of the mutual
execution and delivery hereof. 

        "Governmental Entity" means any subdivision, authority, body, agency, instrumentality or other entity created and/or controlled pursuant
to the laws of the State of California or any city, town or village of such state or of the federal government. 

        "Holdover Percentage" means (1) one hundred percent fifty (150%) for the period commencing on the expiration or earlier termination
of this Lease to but not including the Two Month Holdover Date, and (2) two hundred percent (200%) thereafter. 

        "Interest Rate" means the greater of eight percent (8%) per annum or four percent (4%) in excess of the prime lending or reference rate of
Wells Fargo Bank N.A. or any successor bank in effect on the twenty-fifth (25th) day of the calendar month immediately prior to the event giving rise to the Interest Rate imposition; provided,
however, the Interest Rate will in no event exceed the maximum interest rate permitted under Applicable Laws. 

        "Lease" means this instrument. 

        "Lease Year" means one (1) full year from the Term Commencement Date to the first Anniversary Date or between two
(2) consecutive Anniversary Dates. 

2

 

        "Non-Standard Alterations" shall mean Alterations which include: (1) Tenant's trade fixtures, (2) raised
flooring, (3) Alterations which penetrate floor slabs or affect the exterior of the 3351 Building, the 3347 Building or any other portion of the Facility, (4) safes or vaults and other
installations which would be unusually difficult or expensive to remove, (5) security system(s), (6) exterior storm windows, and (7) other Alterations which are not standard in
nature or which involve extraordinary demolition work, as determined by Landlord in its sole but reasonable discretion or which are otherwise inconsistent with those Alterations normally installed in
office space in the Facility as determined by Landlord in its sole but reasonable discretion. 

        "Non-Structural Alterations" means Alterations which (1) are non-structural and which do not affect the
Facility's mechanical, electrical, plumbing, life-safety or other Building systems or the structural integrity of the Facility, (2) do not affect any part of the Facility other than
the Premises, do not affect any service required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Facility and do not reduce the value or utility of the Facility or any
part thereof and (3) are not Cosmetic Alterations. 

        "One Stop Lease" shall mean that certain Agreement of Lease dated as of October 15, 1997 between Landlord, as landlord and to One
Stop Mortgage, Inc. ("One Stop"), the predecessor-in-interest of Tenant, as tenant, covering Suite 300 on the third
(3rd) floor of the 3347 Building; 

        "Operating Expenses" shall mean all expenses and costs (and taxes, if any, thereon) of every kind and nature determined by Landlord in it
sole judgment to the extent they are in accordance with sound management principles respecting the operation of large first class office complexes in the Newport Beach/Irvine (including the John Wayne
Airport)/South Coast Plaza area which principles shall be consistently applied (with accruals appropriate to Landlord's business), which Landlord shall pay or become obligated to pay because of, or in
connection with, the ownership, management, maintenance, repair, replacement, restoration or operation of (1) the Facility or the Building or the sidewalks and areas adjacent thereto (but not
the cost of development of the Facility), (2) the Common Area, the Facility Common Area and all areas which become part of the Common Area or the Facility Common Area, (3) the Parking
Facilities, (4) such additional facilities to be constructed as part of the Common Area or the Facility Common Area in subsequent years as may be determined to be desirable for the Facility and
(5) the personal property of Landlord used in the operation of the Facility, including, but not limited to the following: 

        (i)      Property
Taxes; 

        (ii)    Any
and all assessments and payments imposed with respect to the Facility or the Premises pursuant to any Applicable Laws; 

        (iii)    The
costs of all utilities and services provided under the Lease, including water and sewer charges and the costs of electricity, heating, ventilation
and air conditioning; 

        (iv)    All
maintenance, janitorial and other service costs for the Premises and for the Facility and the equipment therein, including, without limitation,
security services, alarm services, window cleaning, elevator and escalator maintenance, and rubbish removal; 

        (v)    All
maintenance, repair, restoration, replacement and operation costs of the Common Area, the Facility Common Area and the Parking Facilities, including,
without limitation, with respect to signage
(other than tenant signage), lighting, landscaping and gardening, parking lot resurfacing, repairing and restriping; 

        (vi)    Wages,
salaries and related expenses and benefits of all personnel whether Landlord's employees or employees of Landlord's agents, or other third parties'
independent contractors, whether on-site or off-site, engaged in the operation, management, maintenance, repair, engineering and security of the Facility, and the rental value
of a management office in the 

3

 

Facility; provided, however, that Operating Expenses shall not include wages, salaries or commissions paid for any real estate broker, salesperson or agent for leasing areas within the Facility; 

        (vii)   the
cost of all supplies, tools, materials and equipment, whether leased or owned, used in the operation, security, management, repair and maintenance of
the Facility; 

        (viii)  A
management fee equal to four percent (4%) of gross rent derived from the Facility; 

        (ix)    Legal
expenses, accounting costs, including costs of audits by certified public accountants and other professional fees and expenses in connection with
the operation, ownership, management, maintenance, repair, replacement or restoration of the Facility or the Building; 

        (x)    All
insurance premiums and costs, including but not limited to, the premiums and cost of fire, casualty and liability coverage and rental abatement or
comprehensive rental interruption insurance and earthquake insurance (if Landlord elects to provide such coverage) applicable to the Facility and Landlord's personal property used in connection
therewith, however, excluding therefrom any personal property of Landlord used by Landlord exclusively in connection with the use and occupation of portions of the Facility other than the Premises or
the Common Areas or the Parking Facilities; 

        (xi)    Repairs,
service and general maintenance (excluding repairs and general maintenance paid by proceeds of insurance or by Tenant or other third parties, and
alterations attributable solely to tenants of the Facility other than Tenant) of the Facility, and replacements costing less than $10,000.00, in and to the Facility and the systems and equipment
therein, including, without limitation all systems and equipment, including but not limited to, elevators, plumbing, heating, air conditioning, ventilating, lighting, electrical, security, and fire
alarms, fire pumps, fire extinguishers and hose cabinets, mail chutes and those related to guard service, painting, window cleaning, service area, mechanical rooms and Facility exteriors; 

        (xii)   All
supplies, materials, rental of equipment, security, management, utilities, repairs, replacements and maintenance costs and all other costs and
expenses attributable to, related to or used in connection with the Common Area, the Facility Common Area and the Parking Facilities; 

        (xiii)  All
of Landlord's costs and expenses of contesting by legal proceedings any matter concerning the operation or management of the Facility, or the amount
or validity of any Property Taxes levied against all or any part of the Facility; 

        (xv)   The
costs of personnel, utilities, insurance, materials, supplies, payroll and equipment related to or used in connection with services provided or
available to be provided within the Facility for the use and benefit of all tenants, including Tenant, in the Facility, to the extent not recovered from charges made for the cost of such services; 

        (xiv)   The
cost of capital improvements, modifications or improvements made to the Facility, amortized on a straight line basis over the useful life thereof as
determined in accordance with sound accounting principles, together with interest on the amortized costs of each expenditure; 

        (xv)   Energy
allocation or use charges or surcharges or developmental or environmental charges imposed in connection with the operation or management of the
Facility; 

        (xvi)   Costs
incurred in connection with the implementation and operation of any transportation management program or similar program if required by any
Governmental Entity or any applicable governmental authority; 

        (xvii)  Cost
of supplying and cleaning employees' uniforms and work clothes; 

        (xviii)  Reasonable
dues and expenses for trade and industry associations; 

4

 

        (xix)   Reasonable
administrative costs, such as (but not limited to) postage, stationery, photocopy expenses and other management office supplies; 

        (xx)   Imputed
cost equal to the loss of rent by Landlord for space used for on-site management at an imputed cost which is equal to the rental rate
then charged by Landlord for comparable space in the Facility; 

        (xxi)   Costs
of providing pest control for the Facility; 

        (xxii)  Cost
of casualty, liability and other insurance; 

        (xxiii)  Any
and all occupancy, gross receipts or rental taxes paid by Landlord in connection with the Facility, but not income or any other tax imposed or
measured by Landlord's income or profits (unless such tax is in lieu of real estate taxes or sales taxes); 

        Notwithstanding
anything to the contrary herein contained, Operating Expenses shall not include: 

        (aa)   depreciation
of the Building; 

        (bb)   the
cost of providing tenant improvements to Tenant or any other tenant or the cost of renovating space for existing or new tenants; 

        (cc)   principal,
interest or debt required to be paid on any mortgage or deed of trust recorded with respect to the Facility and/or the Premises; 

        (dd)   the
cost of special services, goods or materials provided to any tenant; 

        (ee)   advertising
costs incurred in renting individual space in the Facility; 

        (ff)    any
compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord; 

        (gg)   material
damages incurred due to the violation by any tenant of the terms and conditions of any lease of space in the Facility; 

        (hh)   The
cost to Landlord of repairs made, or other work done, by Landlord as a result of fire, windstorm or other insurable casualty or by the exercise of
eminent domain, other than the aggregate amount of commercially reasonable deductibles under any insurance policy covering fire, windstorm or other casualty; 

        (ii)    specific
costs incurred for the account of and separately billed to specific tenants and other specific services or Property Taxes which could have been
billed to tenants under their leases; 

        (jj)    all
costs associated with Landlord's general corporate overhead and general administrative expenses that are not related to the operation and maintenance
of the Facility; 

        (kk)   costs
incurred by Landlord in connection with the correction of defends in the original design and construction of the Building or the Facility; 

        (ll)    expenses
in connection with services or other benefits which are provided to another tenant or occupant of the Building and do not benefit Tenant; 

        (mm)  any
cost or expense related to the removal, abatement or remediation of any "hazardous material" in or about the Common Area of the Building or the
Facility Common Area, including without limitation, hazardous substances in the ground water or soil; 

        (nn)   any
fines, costs, penalties or interest resulting from the negligence or willful misconduct of Landlord or its agents or employees acting within the scope
of their employment or agency, as the case may be; 

        (oo)   the
costs of any individual capital acquisition in excess of $10,000.00 and the costs of capital improvements as determined in accordance with generally
accepted accounting principles, 

5

 

except the costs of any capital acquisition or capital improvement, as the case may be, (1) made to, or effectuated with respect to, the Project which, in Landlord's reasonable judgment,
should reduce Operating Expenses in excess of the amortized cost of any such capital acquisition or capital improvement, as the case may be, or (2) which is required by any governmental
regulation or Applicable Law enacted or promulgated following the Term Commencement Date; 

        (pp)   overhead
or profits paid to subsidiaries or affiliates of Landlord, or other similar non-arms-length transactions for management
or other services provided to the Facility, or for supplies or other materials furnished to the Facility, to the extent that the costs of such services, supplies or materials, as the case may be,
exceed market rates or charges therefor; 

        (qq)   Landlord's
gross receipts, personal and corporate income taxes, inheritance and estate taxes, franchise and gift taxes; 

        (rr)    any
rental payments and related costs pursuant to any ground lease of land underlying all or any portion of the Building and the Facility Common Areas,
excluding any costs related to the REA, which costs shall be included in Operating Expenses; 

        (ss)    any
costs, fees, dues or contributions for any political or charitable organizations; or 

        (tt)    legal
fees incurred by Landlord as a result of Landlord's default under the Lease; 

        (uu)   costs
of advertising or other promotional materials unless agreed to by Tenant in its sole and absolute discretion; 

        (vv)   costs
for providing any fire, life or safety code enhancements to the Building as a result of legal requirements in effect prior to the Term Commencement
Date; 

        (ww)  tax
penalties or other costs incurred as a result of Landlord's or its employees' gross negligence or wilful misconduct; 

        (xx)   costs
arising from the presence of hazardous materials or substances which are present in or around the Facility on or prior to the Term Commencement Date
(as defined by Applicable Laws in effect on the Term Commencement Date); 

        (yy)   the
cost of any "warranty" work or replacements; 

        (zz)   the
cost of insurance on leasehold improvements to the premises of tenants of the Project (unless the cost of such insurance on Tenant's leasehold
improvements is also included within Operating Expenses); 

        (aaa)  attorneys
fees in connection with disputes with any existing or prior tenant of the Facility; 

        (bbb)  lease
payments under capital leases; and 

        (ccc)  any
individual cost, expense or charge incurred during the Term in excess of $100,000.00 which is of a nature of a cost, expense or charge not included
as an Operating Expense in the Base Year (unless the cost, expense or charge is imputed to have been included in Operating Expenses for the Base Year so that the Operating Expenses or "expense
allowance" for such Base Year is appropriately adjusted); 

        Operating
Expenses with respect to new or modified Common Area shall be allocated to the Facility and the Premises on a reasonable basis. In determining the amount of Operating Expenses
for any calendar year, if less than ninety-five (95%) of the rentable area in the Facility shall have been occupied by tenants at any time during such calendar year, Operating Expenses
shall be determined for such calendar year to be an amount equal to the like expenses which would normally be expected to be incurred had such occupancy been ninety-five (95%) throughout
such calendar year. 

6

 

        If
any capital improvement is made any lease year in compliance with requirements of any federal, state or local law or environmental regulation, whether or not such law or regulation is
valid or mandatory, then the reasonable annual amortization, with interest of the cost of such improvements shall be deemed an Operating Expense in each of the lease years which such amortization
occurs unless same is specifically excluded above. 

        "Parking Facilities" means all surface, aboveground and underground parking facilities (including, without limitation, accessways, parking
spaces, parking structures, pedestrian crossings or paths or ramps) now or hereafter constructed and designated by Landlord for use by tenants of or within the Project. 

        "Permitted Use" means use as general offices and related uses and for no other purpose. 

        "Phased-In Tax Increases" means collectively (i) twenty percent (20%) of the increases in Property Taxes attributable
to the First Transfer for the period commencing on the Transfer Date and terminating on the day preceding the first anniversary of the Transfer Date, (ii) forty percent (40%) of the increases
in Property Taxes attributable to the First Transfer for the period commencing on the first anniversary of the Transfer Date and terminating on the day preceding the second anniversary of the Transfer
Date,
(iii) sixty percent (60%) of the increases in Property Taxes attributable to the First Transfer for the period commencing on the second anniversary of the Transfer Date and terminating on the
day preceding the third anniversary of the Transfer Date, and (iv) eighty percent (80%) of the increases in Property Taxes attributable to the First Transfer for the period commencing on the
third anniversary of the Transfer Date and terminating on the day preceding the fourth anniversary of the Transfer Date; it being agreed that increases in Property Taxes attributable to the
inflationary increase thereof (which subject to the terms of Proposition 13, as presently promulgated, are up to two percent (2%) annually) shall not be deemed to be increases in Property Taxes
attributable to the First Transfer. 

        "Premises" means that certain space consisting of that approximate number of rentable square feet as set forth in the Basic Lease
Information located on the floor(s) designated on the Basic Lease Information and as outlined on the floor plans attached hereto as  Exhibit B-1 and Exhibit B-2 incorporated herein by reference. The
Premises shall include the interior surface of all walls, but shall not include the exterior walls of the Facility, or any structural components or any Facility Common Area or Common Area. All
references to the Premises in this Lease shall mean the Premises under this Lease in any given Lease Year. 

        "Project" means the land and improvements, and the overlying space, that presently exist or as same may be expanded, developed or altered
from time to time, designated on Exhibit A-1 attached hereto and incorporated herein by reference, presently known as Park Place,
including, without limitation, the Facility, the retail center and related improvements, all improvements presently under construction within the area depicted on  Exhibit A-1, the Common Area and
all Parking Facilities. 

        "Property Taxes" means all real and personal property taxes and assessments, general or special, and all other taxes, charges, levies and
license and permit fees of any kind or nature whatsoever, foreseen or unforeseen, general or special, ordinary or extraordinary, which are now or any time the term of this Lease levied, assessed,
imposed upon, confirmed or become due and payable out of or with respect to the Facility and the improvements, fixtures, equipment and other items of personal property of Landlord therein which are
used in the operation and maintenance of the Facility; any taxes which become payable by Landlord, whether or not now customary or within the contemplation of Landlord or Tenant, which are levied in
addition to or in lieu of such real or personal property taxes or assessments including, without limitation, any occupancy, gross receipts or rental tax (i) allocable to or measured by Rent or
other amounts payable to Landlord hereunder, (ii) with respect to the receipt of such Rents or amounts by Landlord, (iii) with respect to any activity or right of Tenant in the leasing,
possession, occupancy, use, operation, management, repair, maintenance, alteration, or improvement of the Premises or (iv) upon this transaction or any document to which Tenant is a party 

7

 

creating or transferring an interest or an estate in the Premises; and any interest, penalties or delinquency charges thereon which attach for any reason other than late payment or
non-payment thereof by Landlord, unless such late payment or non-payment by Landlord is in connection with a late payment or non-payment by Tenant. Property taxes
shall include transit impact development fees, housing impact development fees (fees for services such as fire protection, street, sidewalk and road maintenance, refuse removal and other governmental
services), and other fees or taxes payable by Landlord, in connection with the Facility that are levied with respect to the Facility and which are payable with monthly Rent as provided in subparagraph
(b) below. 

        (a)  Property
Taxes shall not include: (i) any taxes or assessments against the personal property of Tenant or any
other tenant of the Facility which taxes and assessments are separately billed to Tenant or such other tenant by the tax collecting authority; or (ii) any income tax, franchise tax or transfer
tax (exclusive of any transfer tax imposed on this Lease) for which Landlord may be or become personally liable or (iii) for the four (4) year period immediately following the Transfer
Date, any increase in Property Taxes other than the Phased-In Tax Increases. 

        (b)  In
addition to all monthly Rent and other charges to be paid by Tenant under this Lease, Tenant shall reimburse Landlord upon demand for Tenant's Share of any and all
transit impact development fees, housing impact development fees and other fees or taxes payable by Landlord, whether or not now customary or within the contemplation of the parties hereto, that are
levied with respect to the Facility that are not due or attributable to the development of the Facility and related to the cost of providing governmental or public facilities or services. Property
Taxes shall not include transit impact development fees or housing impact development fee which (i) are imposed solely on Landlord as a result of development of the Facility and (ii) are
not imposed generally upon other landowners within the taxing agency's jurisdiction. 

        (c)  There
shall be deducted from Property Taxes the net amount of any refunds actually received by Landlord, after reasonable expenses. To the extent reasonably practicable,
all such refunds to be applied against said Property Taxes for the same calendar year to which the Property Taxes apply. 

        (d)  The
amount of special taxes or special assessments to be Included as Property Taxes shall be limited to the amount of the installments of special taxes or special
assessments required to be paid during the calendar year in respect to which these special taxes or special assessments are to be determined; however, Landlord shall elect the longest period of time
allowed by the authority imposing the tax or assessment in which to pay installments of special taxes or special assessments. 

        (e)  Property
Taxes shall include expenses incurred by Landlord in attempting to protest, reduce or minimize Property Taxes for the year in which such expenses are incurred.
If for any Lease Year subsequent to the Base Year, Property Taxes are reduced, then commencing in the Lease Year in which such decrease occurs and continuing for all subsequent Lease Years, Base Year
Operating Expenses shall be deemed reduced by the amount of such decrease to Property Taxes. 

        "REA" means that certain Construction, Operation and Reciprocal Easement Agreement for the Facility recorded July 30, 1985 as
Instrument No. 85-279768 in the Official Records of Orange County, California. 

        "Related Corporation" means any corporation or other business entity (but not including any Governmental Entity) which Controls, is
Controlled by or is under common Control with Tenant. 

        "Rent" means all rent and other payments to Landlord under this Lease, including, without limitation, (i) Basic Rent as set forth
in Section 4.01, and (ii) such other charges and payments as are designed as Rent, rent or additional rent under this Lease. 

8

 

        "Scheduled Term Commencement Date" means the date set forth as the Scheduled Term Commencement Date in the Basic Lease Information of this
Lease. 

        "Scheduled Term Expiration Date" means the date set forth as the Scheduled Term Expiration Date in the Basic Lease Information of this
Lease. 

        "Section" means a section of this Lease. 

        "Tenant" means the tenant under this Lease as set forth in the Basic Lease Information, or its permitted successors and assigns. 

        "Tenant Delays" means any delay resulting from or in connection with an act or omission of Tenant or any person acting by or on behalf of
Tenant. 

        "Tenant Improvement Agreement" means that certain tenant improvement agreement dated as of the date hereof between Landlord and Tenant
attached hereto as Exhibit E and made a part hereof. 

        "Tenant Improvements" means improvements to the Premises to prepare the same for Tenant's continued occupancy thereof, which improvements
shall be performed by Tenant as provided in the Tenant Improvement Agreement attached to this Lease as Exhibit E and incorporated herein by
reference. 

        "Tenant's Operating Expenses" means the difference between Tenant's Share of Operating Expenses and Tenant's Share of Base Year Operating
Expenses to be determined and paid as provided in Article XXV. 

        "Tenant's Share" means the ratio (expressed as percentage) of the usable floor area deemed to be in the Premises to the usable floor area
deemed to be in the Facility. Such ratio is five and fifty-five hundredths percent (5.55%). 

        "Term" means the term of this Lease. 

        "Term Commencement Date" means the actual date on which the Term of this Lease commences. 

        "Term Expiration Date" means November 30, 2008. 

        "3347 Building" means the building located at and commonly known as 3347 Michelson Drive, Irvine, California. 

        "3351 Building" means the building located at and commonly known as 3351 Michelson Drive, Irvine, California. 

        "Transfer Date" means the date of the First Transfer. 

        "Tower" means the building located at and commonly known as 3333 Michelson Drive, Irvine, California. 

        "United Lending Lease" means that certain Agreement of Lease dated as of March 6, 1997 between Crow Winthrop Operating Partnership
("CWOP"), Landlord's predecessor-in-interest, as landlord, and California Lending Group, Inc. d/b/a United Lending Group
("United Lending"), Tenant's predecessor-in-interest, as tenant, covering Suite 100 on the first (1st) floor of
the 3351 Building, as amended pursuant to (a) that certain First Amendment of Lease dated as of January 16, 1998 between Landlord and United Lending, and (b) that certain letter
dated April 13, 2000 from Landlord. 

9

 
 

EXHIBIT D    
    
    COMMENCEMENT MEMORANDUM    
  

To:

 

 

        Date:                               
     

	Re:
	Lease
dated as of                        , 2002 (the "Lease"), between Jamboree LLC, Landlord, and Aames Financial Corporation, Tenant,
concerning Suite 300 located at 3347 Michelson Drive,
Irvine, CA and Suite 100 located at 3351 Michelson Drive, Irvine, CA (collectively, the "Premises"). 

To
Whom It May Concern: 

        In
accordance with the subject Lease, we wish to advise and/or confirm as follows: 

        1.    That
the Premises have been accepted by the Tenant as being substantially complete in accordance with the subject Lease and that, to the Tenant's actual knowledge, there
is no deficiency in construction. 

        2.    That
the Tenant has possession of the subject Premises and acknowledges that under the provisions of the Lease the Term Commencement Date is January 1, 2003, and
the Term Expiration Date is November 30, 2008. 

        3.    That
in accordance with the Lease, rent commenced to accrue on January 1, 2003. 

        4.    If
the Term Commencement Date of the Lease is other than the first day of the month, the first billing will contain a pro rata adjustment. Each billing thereafter will be
for the full amount of the monthly installment as provided for in the Lease. 

        5.    Rent
is due and payable in advance on the first day of each and every month the Term of the Lease. Your rent checks should be made payable
to                                         
                                          
             at
                                         
                                          
                                     . 

        6.    The
number of square feet deemed to be in the Premises is approximately 83,257 usable and approximately 93,248 rentable square feet. 

        7.    The
number of square feet within the Facility is deemed to be approximately 1,499,028 usable square feet. 

        8.    Tenant's
Share, as adjusted based upon the number of rentable square feet deemed to be within the Premises, is 5.55%. 

	LANDLORD:	 
	

WINTHROP CALIFORNIA MANAGEMENT LIMITED PARTNERSHIP

as authorized agent for JAMBOREE LLC
	

By:	

WINTHROP WEST COAST REALTY SERVICES, INC.

  
	

 	

By:	

 	

 
	 	 	
 Janine R. Padia
 Its Vice President and Secretary	 

	

TENANT:	

 
	

AAMES FINANCIAL CORPORATION,

a Delaware corporation

  
	

By:	

 	

 	

 
	 	
	 
	 	Print Name:	 	 
	 	 	
	 
	 	Title:	 	 
	 	 	
	 

 
 

EXHIBIT E
  
    TENANT IMPROVEMENT AGREEMENT    
  

        THIS TENANT IMPROVEMENT AGREEMENT ("Tenant Improvement Agreement") is entered into as of the      day of
September, 2002 by and between JAMBOREE LLC, a Delaware limited liability company ("Landlord"), and AAMES FINANCIAL CORPORATION, a Delaware corporation ("Tenant"). 

 
 

R E C I T A L S:    
  

        A.    Concurrently
with the execution of this Tenant Improvement Agreement, Landlord and Tenant have entered into a lease agreement (the "Lease") covering certain premises (the
"Premises") more particularly described in Exhibits B-1 and B-2 attached to the Lease (the "Lease"). All terms not defined
herein have the same meaning as set forth in the Lease. To the extent applicable, the provisions of the Lease are incorporated herein by this reference. 

        B.    In
order to induce Tenant to enter into the Lease and in consideration of the mutual covenants hereinafter contained, Landlord and Tenant agree as follows: 

        1.    TENANT IMPROVEMENTS.    As used in the Lease and this Tenant Improvement Agreement, the
term "Tenant Improvements" or "Tenant Improvement Work" means those items of general tenant improvement construction shown on the Final Plans (described in Paragraph 4 below), including, but
not limited to, partitioning and modifications to Tenant's existing furniture systems to reconfigure same to increase the number of work stations therein, doors, ceilings, floor coverings, wall
finishes (including paint and wall covering), electrical (including lighting, switching, telephones, cabling, outlets, etc.), relocation of the data center, plumbing, heating, ventilating and air
conditioning, fire protection, cabinets and other millwork and distribution of Building services such as sprinkler and electrical service. 

        2.    WORK SCHEDULE.    At least ten (10) days prior to commencing the Tenant
Improvement Work, Tenant will deliver to Landlord, for Landlord's review and approval, a schedule (the "Work Schedule") which
will set forth the timetable for the planning and completion of the installation of the Tenant Improvements, and will include milestone dates for, among other things, completion of the Space Plans,
completion of the Final Plans and projected dates of completion of the Tenant Improvement Work. The Work Schedule will set forth each of the various items of work to be done or approval to be given by
Landlord and Tenant in connection with the completion of the Tenant Improvements. The Work Schedule will be submitted to Landlord for its approval, and, once approved by both Landlord and Tenant, all
plans and drawings required by this Tenant Improvement Agreement and all work performed pursuant thereto are to be prepared and performed in accordance with the Work Schedule. Notwithstanding anything
to the contrary contained herein, Tenant acknowledges that the coordination of, and the scheduling for, cabling work, if any, shall be determined by Landlord in its sole discretion and that such
cabling work, if any, shall only be performed after normal business hours and as otherwise directed by Landlord or Landlord's Representative (as hereinafter defined). 

        3.    CONSTRUCTION REPRESENTATIVES.    Landlord hereby appoints the following person(s) as
Landlord's representative ("Landlord's Representative") to act for Landlord in all matters covered by this Tenant Improvement Agreement: Bob Negohosian. Tenant hereby appoints the following person(s)
as Tenant's representative ("Tenant's Representative") to act for Tenant in all matters covered by this Tenant Improvement Agreement: Audry Patterson. All communications with respect to the matters
covered by this Tenant Improvement Agreement are to made to Landlord's Representative or Tenant's Representative, as the case may be, in writing in compliance with the notice provisions of the Lease.
Either party may change its representative under this Tenant Improvement Agreement at any time by written notice to the other party in compliance with the notice provisions of the Lease. 

 

        4.    TENANT IMPROVEMENT PLANS.    

        (a)    Preparation of Space Plans.    In accordance with the Work Schedule, and at Landlord's
cost (subject to payment of the Allowance by Landlord pursuant to the express terms of Paragraph 5 hereof), Tenant shall cause an architect and/or space planner acceptable to Landlord
("Tenant's Architect") to prepare preliminary space plans for the layout of the Premises ("Space Plans"). The Space Plans are to be sufficient to convey the architectural design of the Premises and
layout of the Tenant Improvements therein and are to be submitted to Landlord in accordance with the Work Schedule for Landlord's approval. If Landlord reasonably disapproves any aspect of the Space
Plans, Landlord, within five (5) business days of receipt of the Space Plans, will advise Tenant in writing of such disapproval and the reasons therefor in accordance with the Work Schedule.
Within a reasonable period of time thereafter, Tenant will submit to Landlord for Landlord's approval, in accordance with the Work Schedule, a redesign of the Space Plans incorporating the revisions
reasonably required by Landlord. If Landlord shall fail to respond in writing to Tenant's written request for approval of Tenant's Space Plans within
the time frames provided for herein, then Landlord shall be deemed to have disapproved such Space Plans. 

        (b)    Preparation of Final Plans.    Based on the approved Space Plans, and in accordance
with the Work Schedule, Tenant's Architect will prepare complete architectural plans, drawings and specifications and complete engineered mechanical, structural and electrical working drawings for all
of the Tenant Improvements for the Premises (collectively, the "Final Plans"); it being understood and agreed that Landlord shall have the right (but not the obligation) to "actively participate" in
the development of the Final Plans and the performance of the Tenant Improvement Work, including, without limitation, being invited to attend, observe and make recommendations in all work meetings and
having the right to review and approve all reasonable plans, drawings, specifications and other documents prepared in connection with the Tenant Improvements including, without limitation, the Final
Plans. The Final Plans will show: (a) the subdivision (including partitions and walls), layout, lighting, finish and decoration work (including carpeting and other floor coverings) for the
Premises; (b) all internal and external communications and utility facilities which will require conduiting or other improvements from the base Building shell work and/or within common areas;
and (c) all other specifications for the Tenant Improvements. The Final Plans will be submitted to Landlord for Landlord's approval. If Landlord disapproves any aspect of the Final Plans and
Landlord so notifies Tenant, Tenant will then submit to Landlord for Landlord's approval a redesign of the Final Plans incorporating the revisions reasonably required by Landlord. This process shall
continue until the Final Plans have been approved by Landlord. The design of any work affecting any of the Facility systems must be approved by Landlord's consultants who are at such time responsible
for maintaining any such system. Notwithstanding anything to the contrary contained herein, Landlord shall not require Tenant to modify its proposed finish or decorating work specifications provided
that Tenant's specifications and the Tenant Improvement Work reflected therein conform with the requirements herein and in the Lease set forth and are compatible with and are of at least equal quality
as the standards approved by Landlord. 

        (c)    Requirements of Tenant's Final Plans.    Tenant's Final Plans will include locations
and complete dimensions, and the Tenant Improvements, as shown on the Final Plans, will: (i) be compatible with the Building shell and with the design, construction and equipment of the
Building; (ii) if not comprised of the Building standards set forth in the written description thereof (the "Standards"), then compatible with and of at least equal quality as the Standards and
approved by Landlord; (iii) comply with all applicable laws, ordinances, rules and regulations of all governmental authorities having jurisdiction, and all applicable insurance regulations;
(iv) not require Building service beyond the level normally provided to other tenants in the Building and will not overload the Building floors; and (v) be of a nature and quality
consistent with the overall 

2

 

objectives of Landlord for the Building, as determined by Landlord in its reasonable but subjective discretion. 

        (d)    Submittal of Final Plans.    Once approved by Landlord and Tenant, Tenant's Architect
will submit the Final Plans to the appropriate governmental agencies for plan checking and the issuance of a building permit. Tenant's Architect, with Landlord's cooperation at Tenant's cost, will
make any changes to the Final Plans which are requested by the applicable governmental authorities to obtain the building permit. After approval of the Final Plans no further changes may be made
without the prior written
approval of both Landlord and Tenant, and then only after agreement by Tenant to pay any excess costs resulting in connection with such changes. 

        5.    PAYMENT FOR THE TENANT IMPROVEMENTS.    

        (a)    Tenant Responsibility.    Except as expressly set forth in subparagraph
(b) below, Tenant shall be responsible for and pay all costs associated with the design and construction of the Tenant Improvements. Prior to August 1, 2003, Tenant shall have no right
to, and shall not, perform (or cause to be performed) work costing in excess of $83,257.00 in the aggregate or incur costs and expenses in connection with the Tenant Improvement Work in excess of
$83,257.00 prior to August 1, 2003, unless Tenant shall (i) timely pay, or cause to be paid, all costs and expenses of the contractors, subcontractors and materialmen performing such
work which are in excess of $83,257.00 (which excess costs may be reimbursable to Tenant after August 1, 2003, subject to and in accordance with the express terms of subparagraph
(b) below), (ii) obtain from all contractors, subcontractors and materialmen evidence of the absence of liens (including, without limitation, conditional lien releases applicable to the
work in question), and (iii) obtain invoices, receipts and bills evidencing the costs in question. 

        (b)    Allowance.    Notwithstanding the foregoing, Landlord agrees to pay for the cost of the
Tenant Improvement Work, as approved by Landlord and made by Tenant within fifteen (15) months of the Term Commencement Date to the extent of the lesser of (x) the actual cost of the
Tenant Improvement Work and (y) Three Hundred Thirty-Three Thousand and Twenty-Eight and 00/100 ($333,028.00) Dollars per usable square foot of space deemed to be contained in the Premises
(such lesser amount is herein referred to as the "Allowance"). The Allowance is to be used only for: 

        (i)    Payment
of the cost of preparing the Space Plans and the Final Plans, including mechanical, electrical, plumbing and structural drawings and of all other aspects
necessary to complete the Tenant Improvement Plans. The Allowance will not be used for the payment of extraordinary design work not consistent with the scope of Landlord's Building Standards (i.e.,
above-standard design work) or for payments to any other consultants, designers or architects other than Landlord's architect and/or Tenant's Architect. 

        (ii)  The
payment of plan check, permit and license fees relating to construction of the Tenant Improvements. 

        (iii)  Construction
of the Tenant Improvements, including, without limitation, the following: 

        (aa) Installation
within the Premises of all partitioning, doors, floor coverings, ceilings, wall coverings and painting, millwork and similar items; 

        (bb) All
electrical wiring, lighting fixtures, outlets and switches, and other electrical work necessary for the Premises; 

        (cc) The
furnishing and installation of all duct work, terminal boxes, diffusers and accessories necessary for the heating, ventilation and air conditioning systems within
the Premises, including the cost of meter and key control for after-hour air conditioning; 

3

 

        (dd) Any
additional improvements to the Premises required for Tenant's use of the Premises including, but not limited to, odor control, special heating, ventilation and air
conditioning, noise or vibration control or other special systems or improvements; 

        (ee) All
fire and life safety control systems such as fire walls, sprinklers, halon, fire alarms, including piping, wiring and accessories, necessary for the Premises; 

        (ff)  All
plumbing, fixtures, pipes and accessories necessary for the Premises; 

        (gg) Testing
and inspection costs; 

        (hh) Fees
for Tenant's contractor and tenant improvement coordinator including, but not limited to, fees and costs attributable to general conditions associated with the
construction of the Tenant Improvements; 

        (ii)  expenses
and costs relating to alteration of the data center in Suite 300 of the 3347 Building and expenses and costs relating to the relocation of the data center in
Suite 100 of the 3351 Building; and 

        (jj)  expenses
and costs relating to alterations, additions or modifications to Tenant's furniture system. 

        (c)    Changes.    If, after the Final Plans have been prepared Tenant requires any changes or
substitutions to the Final Plans, any additional costs related thereto are to be charged against the Allowance to the extent not theretofore exhausted, or if the Allowance has been exhausted, such
costs are to be promptly paid by Tenant to its general contractor or Landlord, as applicable. Any changes to the Final
Plans will be approved by Landlord and Tenant in the manner set forth in Paragraph 4 above. Landlord will have the right to decline Tenant's request for a change to the Final Plans if such
changes are inconsistent with the provisions of Paragraph 4 above. 

        (d)    Governmental Cost Increases.    If increases in the cost of the Tenant Improvements are
due to requirements of any governmental agency, Tenant agrees to pay Landlord the amount of such increase within five (5) days of Landlord's written notice; provided, however, that Landlord
will first apply toward any such increase any remaining balance of the Allowance. 

        (e)    Disbursement of Allowance.    Provided the Lease is in full force and effect and Tenant
is not in default under the Lease beyond the expiration of any applicable cure period, Landlord shall pay in progress payments (and Tenant hereby directs Landlord to pay directly to Tenant's general
contractor) the Allowance to pay for the Tenant Improvement Work as follows: 

        (i)    No
more frequently than once per month, Tenant shall cause Tenant's general contractor to deliver to Landlord, by the fifth (5th) day of each month (the
"Current Month") an application for payment in the form of a typed, itemized, reasonably detailed statement (the "Statement"). The Statement shall be applicable to the period commencing on the first
(1st) day of the month preceding the Current Month and ending on the last day of each month (the "Payment Request Period"). Delivered with the Statement shall be (A) evidence of
the absence of liens which are the subject of the Statement as reasonably required by Landlord (including, without limitation, conditional lien releases applicable to all work performed prior to or
during the Payment Request Period, (B) invoices, receipts and bills evidencing the costs which are the subject of the Statement (collectively, the "Supporting Items"), (C) a certificate
of Tenant's Architect certifying that the portions of the Tenant Improvement Work reflected on such Supporting Items have been completed in accordance with the Final Plans, and (D) a
notification of the estimated amount of the statement and invoices which will need to be paid with respect to the next succeeding Payment Request Period (the "Next Funding Notice"). The Statement
shall constitute a representation by Tenant that the work identified therein has been approved by Tenant and performed in 

4

 

accordance with the Final Plans, the requirements of the Lease and this Tenant Improvement Agreement and that Tenant's general contractor has been paid in full for all work performed prior to and
during the Payment Request Period. 

        (ii)  All
Statements from the Tenant's general contractor (except for the final payment) shall be for no more than ninety (90%) percent of the cost of the work performed,
providing for a ten (10%) percent retainer. Except as hereinafter set forth, Landlord will review the Statement and the Supporting Items for each Payment Request Period and will, within thirty
(30) days after receipt of said Statement, the Supporting Items and the Next Funding Notice pay (and Tenant hereby directs Landlord to pay) to the party(ies) entitled thereto, the amount
Landlord reasonably approves (provided such amount does not exceed the amount set forth in the Next Funding Notice given by Tenant in the preceding month); in the event Landlord does not approve a
Statement or any Supporting Items for reasons related to defective work or work which is not in conformity with the Final Plans, the requirements of the Lease or this Tenant Improvement Agreement,
Landlord will only be obligated to pay the portion it approves.
Notwithstanding anything to the contrary contained herein, Landlord shall have no obligation to, and shall not, approve or pay progress payments in excess of $83,257.00 in the aggregate prior to
August 1, 2003, even if the work in question shall have been completed, a Statement and all Supporting Items shall have been delivered in accordance with the terms hereof and all other
applicable terms and conditions shall have been complied with. 

        (iii)  Final
payment, including the retainer, shall be due and payable thirty-five (35) days after recordation of a valid "Notice of Completion" with
respect to the Tenant Improvements, provided Tenant's general contractor has timely delivered to Landlord the last Statement and all Supporting Items and all conditional and unconditional lien
releases provided for herein. 

        (iv)  Each
Statement and the Supporting Items shall only include amounts for work authorized under this Tenant Improvement Agreement and actually performed. 

        (v)  Notwithstanding
anything to the contrary set forth above, Landlord shall not be required to make final payment until: (A) Tenant's Architect has certified to
Landlord that the Tenant Improvements have been completed in accordance with the Final Plans, (B) Tenant has delivered to Landlord one (1) set of reproducible "record set" plans for the
Tenant Improvements as prepared by Tenant's Architect or space planner, as applicable, and discs with such plan thereon on CAD format for each floor of the Premises, (C) the time period for the
filing of a mechanic's, materialmen's or similar lien by Tenant's general contractor and any subcontractor performing all or any portion of the Tenant Improvement Work shall have expired and
(D) after August 1, 2003. 

        (f)    Books and Records.    Tenant shall request that Tenant's general contractor maintain
complete and accurate books and records in accordance with generally accepted accounting principles of all expenditures made in connection with the Tenant Improvement Work for at least two
(2) years. Tenant shall request that Tenant's general contractor make available to Landlord within five (5) business days following Landlord's notice requesting an audit, all books and
records maintained by Tenant's general contractor pertaining to the construction and completion of the Tenant Improvements. 

        (g)    Unused Allowance Amounts.    In the month following the later of
(i) April 1, 2004 and (ii) the date of notice from Landlord that Tenant desires to use the remaining Allowance as a credit against Rent obligations under this Lease, Landlord
shall permit Tenant to apply any unused portion of the Allowance as a credit against any obligations of Tenant under the Lease; provided that this Lease is in full force and effect and Tenant is not
in default hereunder and that the Tenant Improvements have been completed. 

5

 

        6.    CONSTRUCTION OF TENANT IMPROVEMENTS.    Tenant shall retain a general contractor
approved by Landlord to construct the Tenant Improvements. Tenant shall enter into a construction contract in form and substance reasonably acceptable to Landlord for the installation of the Tenant
Improvements in accordance with the Final Plans. Landlord shall have the right to approve all change order requests relating to changes in the Final Plans, provided that Landlord shall promptly
respond to a change order request. Tenant shall supervise the completion of such work and shall use diligent efforts to secure completion of the Tenant Improvements in a good and workmanlike manner in
accordance with the Final Plans and the approved construction contract. Landlord shall approve or disapprove of Tenant's general contractor promptly after Landlord's receipt of qualifications of such
proposed contractor. Tenant agrees to use diligent efforts to cause the construction of the Tenant Improvements to commence promptly following the issuance of a building permit for the Tenant
Improvements. 

        7.    MISCELLANEOUS CONSTRUCTION COVENANTS.    

        (a)    No Liens.    Except for any Landlord Liens, at no time shall Tenant do or permit
anything to be done whereby the Tenant Improvement Work, the Premises, the Building, the Project or the Facility, or any portion thereof, may be subject to any mechanic's, materialmen's or other lien
or encumbrance arising out of or in connection with the Tenant Improvement Work, and if any mechanic's, materialmen's or other lien is filed against the Tenant Improvement Work, the Premises, the
Building, the Project or the Facility, or any portion thereof, as a result of or in connection with the performance of the Tenant Improvement Work, Tenant shall immediately cause such lien to be
removed of record by either paying off the lien or procuring and recording a release bond in accordance with California Civil Code Section 3143 and Section 3171. If Tenant fails to
remove such lien, and such failure continues for ten (10) days after written demand of Landlord to do so, Landlord shall have the right, but not the obligation, in addition to all other rights
and remedies available to Landlord under the Lease and this Tenant Improvement Agreement, to procure and cause to be recorded a statutory lien release bond and to deduct from the Allowance all costs
incurred in procuring and recording such bond. 

        (b)    Diligent Construction.    Tenant will promptly, diligently and continuously pursue
construction of the Tenant Improvements to successful completion in compliance with the Final Plans and this Tenant Improvement Agreement. 

        (c)    Compliance with Laws.    Tenant shall construct the Tenant Improvements in a safe and
lawful manner. Tenant shall, at its sole cost and expense, comply with all applicable laws and all regulations and requirements of, and all licenses and permits issued by, all municipal or other
governmental bodies now or hereafter having or claiming to have jurisdiction. Any portion of the Tenant Improvements which is not acceptable to any applicable governmental body, agency or department,
or not constructed in accordance with the Final Plans, shall be promptly repaired or replaced by Tenant, at Tenant's expense. Notwithstanding Landlord's approval of such Tenant Improvements or any
failure by Landlord to object to any such Tenant Improvements, Landlord shall have no responsibility therefor. 

        (d)    Indemnification.    Tenant hereby indemnifies and agrees to defend and hold Landlord
and its agents and employees harmless from and against any and all suits, claims, actions, damages, losses, costs and expenses (including, without limitation, claims for workers' compensation) of any
nature whatsoever,
together with costs and fees of attorneys selected by Landlord, arising out of or in connection with the Tenant Improvements (including, but not limited to, claims for breach of warranty, personal
injury or property damage). 

        (e)    Insurance.    Construction of the Tenant Improvements shall not proceed without Tenant
causing Tenant's general contractor to obtain workers' compensation, commercial general public liability insurance, property damage insurance and such other insurance coverage as is required 

6

 

under the Lease from an insurance company reasonably satisfactory to Landlord. Not less than ten (10) business days before commencing the construction of the Tenant Improvements, certificates
of such insurance shall be furnished to Landlord for Landlord's approval. All such policies shall provide that thirty (30) days prior written notice must be given to Landlord before
modification, termination or cancellation thereof. All insurance policies maintained pursuant to this Tenant Improvement Agreement shall name Landlord, Landlord's designated managing agent and any
lender with an interest in the Premises and any other portion of the Facility or the Facility Common Areas, as additional insureds, and comply with all of the applicable terms and provisions of the
Lease relating to insurance. 

        (f)    Construction Defects.    Landlord shall have no responsibility for the Tenant
Improvements and Tenant will remedy, at Tenant's own expense, and be responsible for any and all defects in the Tenant Improvements that may appear during or after the completion thereof, whether the
same shall affect the Tenant Improvements in particular or any parts of the Premises or the Facility in general. Tenant shall reimburse Landlord for any costs or expenses incurred by Landlord by
reason of any defect in any portion of the Tenant Improvements constructed by or on behalf of Tenant's general contractor or any subcontractor, or by reason of inadequate cleanup following completion
of the Tenant Improvements. 

        (g)    Work in Adjacent Areas.    Any work to be performed in areas outside of the Premises
shall be performed only after obtaining Landlord's express written consent, which consent may be granted or withheld in Landlord's reasonable discretion, and shall be done only if an agent or employee
of Landlord is present; it being understood and agreed that Tenant will pay to Landlord in advance Landlord's then current charges for the supervision of any such employee or agent. Tenant agrees to
use its best efforts to minimize interference with, and inconvenience to, other tenants' and Landlord's business operation in the Building, the Facility and the Project as the result of Tenant's
construction activities; it being understood and agreed that Tenant shall, among other things, perform during other than business hours any of the Tenant Improvement Work, as the case may be, which
Landlord determines (i) is likely to be unreasonably noisy or otherwise disruptive, including, without limitation, coring, drilling and other similar types of construction or (ii) is
likely to cause or permit noxious or offensive odors. Tenant shall be responsible for repairing all portions of the Building, the Facility, the Facility Common Areas and the Project damaged in
connection with any of its construction activities or the performance of the Tenant Improvements hereunder. 

        (h)    Coordination of Labor.    All of Tenant's contractors, subcontractors, employees,
servants and agents must work in harmony with and shall not interfere with any labor employed by Landlord or Landlord's contractors or by any other tenant or its contractors with respect to any
portion of the Project. 

        (i)    Systems.    Tenant shall cause its general contractor to subcontract with
subcontractors reasonably acceptable to Landlord (i) for the engineering and installation of the fire and life safety systems, (ii) for the design and installation of the mechanical
systems, and (iii) for the design and installation of the electrical system. 

        (j)    Freight/Construction Elevator.    Landlord will, consistent with its obligation to
other tenants in the Building, if appropriate and necessary, make the freight/construction elevator reasonably available to Tenant in connection with the construction of Tenant Improvements to the
Premises. Tenant agrees to pay for any after-hours staffing of the freight/construction elevator, if needed. 

        (k)    Coordination with Lease.    Any default by Tenant with respect to any portion of this
Tenant Improvement Agreement shall be deemed a breach of the Lease for which Landlord shall have all the rights and remedies as in the case of a breach of the Lease. 

7

 

        (l)    Approval of Plans.    Landlord's approval of the Space Plans, the Final Plans or the
Tenant Improvement Work shall not constitute a representation or warranty of Landlord of any kind with respect thereto; it being acknowledged and agreed that Landlord shall not be required to check
any such plans for building code compliance or any other matter, and Tenant shall be totally responsible for such matters. 

        (m)    Tenant's Deliveries.    Tenant shall deliver to Landlord, prior to the commencement of
construction of the particular trade or portion of the Tenant Improvement Work, the following information: 

        (i)    The
names and addresses of the general, mechanical and electrical contractors Tenant intends to engage in the performance of the Tenant Improvement Work; 

        (ii)  The
date on which the Tenant Improvement Work will commence, together with the estimated dates of completion of Tenant's construction and fixturing work and the date on
which Tenant expects to be ready to operate its business in the Premises; and 

        (iii)  One
fully executed copy of the construction contract. 

        (n)    Qualification of Contractors and Subcontractors.    All contractors and subcontractors
engaged by or on behalf of Tenant shall be bonded, licensed contractors, possessing good labor relations, capable of performing quality workmanship and working in harmony with all other contractors
performing work at the Facility and shall otherwise be subject to the approval of Landlord as required herein. 

        (o)    Warranties.    Tenant shall cause the contractors to provide warranties for not less
than one (1) year against defects in workmanship, materials and equipment, which warranties shall run to the benefit of Landlord and Tenant and shall be assignable to Landlord. 

        IN
WITNESS WHEREOF, the undersigned Landlord and Tenant have caused this Tenant Improvement Agreement to be duly executed by their duly authorized representatives as of the date of the
Lease. 

	LANDLORD:	 
	

WINTHROP CALIFORNIA MANAGEMENT LIMITED PARTNERSHIP

as authorized agent for JAMBOREE LLC
	

By:	

WINTHROP WEST COAST REALTY SERVICES, INC.

  
	

 	

By:	

 	

 
	 	 	
 Janine R. PadiaPadia
 Its Vice President and Secretary	 

	

TENANT:	

 
	

AAMES FINANCIAL CORPORATION,

a Delaware corporation

  
	

By:	

 	

 	

 
	 	
	 
	 	Name:	 	 
	 	 	
	 
	 	Title:	 	 
	 	 	
	 

8

 
 

EXHIBIT F    
    
    CLEANING SPECIFICATIONS    
  

NIGHTLY—General Office and Common Areas  

	•
	Spot
clean or shampoo all carpets as needed.

	•
	Empty
all waste baskets and trash containers.

	•
	Wipe
or wash all soiled waste baskets and trash containers.

	•
	Replace
liners as necessary in office waste receptacles and trash containers. 

NIGHTLY—Executive Office Areas  

	•
	Dust
desk chairs, chair legs and bases, furniture, fixtures and telephones, tops of partitions, doors, ledges, window-casing, versatile surfaces and
baseboards with chemically treated cloths.

	•
	Vacuum
all carpeted areas thoroughly and remove surface litter.

	•
	Sweep,
wet mop all vinyl tile. 

EVERY OTHER NIGHT—General Office Areas  

	•
	Dust
with chemically treated cloths: furniture, furniture legs, chair legs and bases, fixtures and telephones, tops of partitions, door ledges, window
casings, vertical surfaces and baseboards.

	•
	Vacuum
all carpeted areas thoroughly and remove surface litter.

	•
	Sweep,
wet mop all vinyl tile.

	•
	Spot
clean interior office glass.

	•
	Clean
glass doors and windows in doors.

	•
	Spot
clean walls.

	•
	Remove
fingerprints and smudge marks from partitions, doors, door frames and wall switches. 

WEEKLY—General Office Areas  

	•
	Conference
Rooms—vacuum and check for soiled chairs. Wash chalkboards unless told not to do so by Supervisor or a note placed on the board. 

WEEKLY—Executive Office Areas  

	•
	Spot
clean all interior windows. 

MONTHLY  

	•
	Dust
and wash window blinds.

	•
	All
interior glass to be cleaned.

	•
	Dust
and removed lint from vents. 

 
 

EXHIBIT G    
    
    FORM OF ESTOPPEL CERTIFICATE    
  

        The undersigned,
                                         
                               , a
                                         
                               , ("Landlord"), with a mailing address c/o
                                         
                               . and
                                         
                               , a
                                         
                                ("Tenant"), hereby certify to
                                         
                               , as follows: 

        1.    Attached
hereto is a true, correct and complete copy of that certain lease dated
                                         
       , 2002, between Landlord and Tenant (the
"Lease"), regarding the premises located at
                                         
                                (the "Premises"). The Lease is now in full force and effect
and has not been amended, modified or supplemented,
except as set forth in Paragraph 4 below. 

        2.    The
Term of the Lease commenced on
                                         
                               , 20    . 

        3.    The
Term of the Lease shall expire on
                                         
                               , 20    .
 

        4.    The
Lease has: (Initial one) 

        (    )    not
been amended, modified, supplemented, extended, renewed or assigned. 

        (    )    been
amended, modified, supplemented, extended, renewed or assigned by the following described terms or agreements, copies of
which are attached hereto: 

        5.    Tenant
has accepted and is now in possession of the Premises. 

        6.    Tenant
and Landlord acknowledge that Landlord's interest in the Lease will be assigned to
                                         
                                and that no modification,
adjustment, revision or cancellation of the Lease or amendments thereto shall be
effective unless written consent of
                                         
                                is obtained, and that until further notice, payments under
the Lease may continue as heretofore. 

        7.    The
amount of Monthly Basic Rent is $                  . 

        8.    The
amount of Tenant's security deposit (if any) is $                  . No other security deposits have been made except as follows:

        9.    Tenant
is paying the full lease rental which has been paid in full as of the date hereof. No rent or other charges under the Lease have been paid for more than thirty
(30) days in advance of its due date except as follows:

        10.  To
Tenant's actual knowledge, all work required to be performed by Landlord under the Lease has been completed except as follows:

 

        11.  To
Tenant's actual knowledge, there are no defaults on the part of the Landlord or Tenant under the Lease except as follows:

        12.  To
Tenant's actual knowledge, neither Landlord nor Tenant has any defense as to its obligations under the Lease and claims no set-off or counterclaim against
the other party except as follows:

        13.  Tenant
has no right to any concession (rental or otherwise) or similar compensation in connection with renting the space it occupies other than as provided in the Lease
except as follows:

All
provisions of the Lease and the amendments thereto (if any) referred to above are hereby ratified. 

The
foregoing certification is made with the knowledge that
                                         
                                is about to fund a loan to Landlord or
                                         
                                is about to
purchase the Project (or part thereof) from Landlord and that
                                         
                                is relying upon the representations herein made in funding
such loan or in purchasing the
Project (or part thereof). 

        IN
WITNESS WHEREOF, this certificate has been duly executed and delivered by the authorized officers of the undersigned as of
                                         
                               ,
20    . 

	LANDLORD:	 
	

WINTHROP CALIFORNIA MANAGEMENT LIMITED PARTNERSHIP

as authorized agent for JAMBOREE LLC
	

By:	

WINTHROP WEST COAST REALTY SERVICES, INC.

  
	

 	

By:	

 	

 
	 	 	
 Janine R. Padia
 Its Vice President and Secretary	 

	

TENANT:	

 
	

AAMES FINANCIAL CORPORATION,

a Delaware corporation

  
	

By:	

 	

 	

 
	 	
	 
	 	Print Name:	 	 
	 	 	
	 
	 	Title:	 	 
	 	 	
	 

2

 
 

EXHIBIT H    
    
    RULES AND REGULATIONS    
  

        A.    General
Rules and Regulations. The following rules and regulations govern the use of the Facility, including the Building, each tenant's premises and all Common Area.
Each tenant shall be bound by such rules and regulations and shall be responsible for the observance of these rules and regulations by its employees, subtenants, assignees, contractors, suppliers,
customers, invitees and guests. 

        1.    Sidewalks,
halls, passages, exits, entrances, elevators, escalators and stairways of the Facility shall not be obstructed by tenants or used by them for any purpose other
than for ingress to and egress from their respective premises. The halls, passages, exits, entrances, elevators, stairways, balconies and roof are not for the use of the general public and Landlord
shall in all cases retain the right to control and prevent access thereto by all persons whose presence in the judgment of Landlord shall be prejudicial to the safety, character, reputation and
interests of the Facility and its tenants, provided that nothing herein contained shall be construed to prevent such access to persons with whom any tenant normally deals in the ordinary course of
such tenant's business unless such persons are engaged in illegal activity. No tenant and no employee or invitee of and tenant shall go upon the roof of the Tower or any other building in the
Facility, except as authorized by Landlord. 

        2.    No
sign, placard, picture, name, advertisement or notice, visible from the exterior of the premises shall be inscribed, painted, affixed, installed or otherwise displayed
by any tenant either on its premises or any part of the Facility without the prior written consent of Landlord. Landlord shall have the right to remove any such sign, placard, picture, name,
advertisement or notice without notice to and at the expense of the tenant. If Landlord shall have given such consent to any tenant at any time, whether before or after the execution of the Lease,
such consent shall in no way operate as a waiver or release of any of the provisions hereof or of such Lease and shall be deemed to relate only to the particular sign, placard, picture, name,
advertisement or notice so consented to by Landlord and shall not be construed as dispensing with the necessity of obtaining the specific written consent of Landlord with respect to any other such
sign, placard, picture, name, advertisement or notice. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of the tenant by a person
approved by Landlord. 

        3.    All
bulletin boards or directories or other name identifications, if any, will be provided exclusively for the display of the name and location of tenants only and
Landlord reserves the right to exclude any other names therefrom. 

        4.    No
curtains, draperies, blinds, shutters, shades, screens or other coverings, awnings, hangings or decorations shall be attached to, hung or placed in, or used in
connection with, any window or door on any premises without the prior written consent of Landlord. In any event, with the prior written consent of Landlord, all such items shall be installed inboard
of Landlord's standard window covering and shall in no way be visible from the exterior of the Facility. No articles shall be placed or kept on the window sills so as to be visible from the exterior
of the Facility. No articles shall be placed against glass partitions or doors or any window or wall which might appear unsightly from outside tenant's premises. 

        5.    Landlord
reserves the right to exclude from the Facility between the hours of 6:00 p.m. and 8:00 a.m. and after 2:00 p.m. on Saturdays and at all
hours on Sundays and holidays all persons who are not tenants or their accompanied guests in the Facility. Landlord, at its option, may require all persons admitted to or leaving the Facility or
certain portions of the Facility during such hours to register. Landlord shall not be responsible for error with regard to the admission to or exclusion from the Facility of any person. During the
continuance of any invasion, mob, riot, public excitement or other circumstance rendering such action advisable in Landlord's opinion, Landlord reserves the right to prevent access to the Facility by
closing the doors, or otherwise, for the safety of tenants and protection of the Facility and property in the Facility. Subject to 

 

Landlord's prior reasonable approval, tenant shall not permit the visit to the premises of persons in such numbers or under such conditions as will interfere with the use and enjoyment of the Common
Area by others or with the use and enjoyment of the premises leased to other tenants in the Facility. 

        6.    No
tenant shall employ any person or persons other than the janitor of Landlord for the purpose of cleaning its premises unless otherwise agreed to by Landlord in
writing. Except with the written consent of Landlord no person or persons other than those approved by Landlord shall be permitted to enter the Facility for the purpose of cleaning the same. No tenant
shall cause any unnecessary labor by reason of such tenant's carelessness or indifference in the preservation of good order and cleanliness of the premises. Janitorial services shall be provided to
Landlord by independent contractors who are bonded. 

        7.    No
tenant shall obtain for use upon its premises food, beverage, or other similar services except through facilities provided by Landlord (and maintained by tenant) and
under regulations fixed by Landlord, or accept barbering or bootblacking services in its premises except from persons authorized
by Landlord at such reasonable hours and under such reasonable regulations as may be fixed by Landlord. Landlord expressly reserves the right to absolutely prohibit solicitation, canvassing, sales and
displays of products, goods and wares in all portions of the Facility except for such activities as may be expressly requested by a tenant and conducted solely within such requesting tenant's
premises. Landlord reserves the right to restrict and regulate the use of the Common Area of the Facility and the Building by invitees of tenants providing services to tenants on a periodic or daily
basis including food and beverage vendors. Such restrictions may include limitations on time, place, manner and duration of access to a tenant's premises for such purposes. Without limiting the
foregoing, Landlord may require that such parties use service elevators, halls, passageways and stairways for such purposes to preserve access within the Building for tenants and the general public.
No tenant shall install, maintain operate upon the premises any vending machine without the written consent of Landlord, except for machines which dispense candy, ice water, soft drinks and
cigarettes. Microwave ovens for preparation of food for the convenience of a tenant's employees, guests and invitees are permitted, as provided in Paragraph 15 of these rules and regulations. 

        8.    Each
tenant shall see that all doors of its premises are closed and securely locked and must observe strict care and caution that all water faucets or water apparatus are
entirely shut off before the tenant or its employees leave such premises, and that all utilities shall likewise be carefully and for any default or carelessness the tenant shall make good all injuries
sustained by other tenants or occupants of the Facility or Landlord. On multiple-tenancy floors, all tenants shall keep the door or doors to the Facility corridors closed at all times except for
ingress or egress. 

        9.    Tenant
shall use its reasonable efforts to not waste electricity, water or air-conditioning and agrees to cooperate fully with Landlord to assure the most
effective operation of the Facility's heating and air-conditioning, and shall refrain from attempting to adjust any controls other than room thermostats installed for tenant's use. 

        10.  No
tenant shall alter any lock or access device or install any new additional locks or access devices or any bolts on any door of its premises without the prior written
consent of Landlord. If Landlord shall give its consent, the tenant shall in each case furnish Landlord with a key for any such lock, bolt or device. Landlord agrees to cooperate with tenant in
coordinating security access and control systems for the premises and the facility. In no event shall tenant install or operate such security systems which are in conflict with systems installed or
operated by Landlord. 

        11.  No
tenant shall make or have made additional copies of any keys or access provided by Landlord. Each tenant, upon the termination of the tenancy, shall deliver to
Landlord all the keys 

2

 

or access devices for the Facility, offices, rooms and toilet rooms which shall have been furnished the tenant or which the tenant shall have had made. In the event of the loss of any keys or access
devices so furnished by Landlord, tenant shall pay Landlord therefor. 

        12.  The
toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein, and the expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenant who, or whose
employees or invitees, shall have caused it. 

        13.  No
tenant shall use or keep in premises or otherwise on the Facility any kerosene, gasoline or inflammable or combustible fluid or material other than limited quantities
necessary for the operation or maintenance of office or office equipment. Any permitted corrosion, flammable or other special wastes shall be handled for disposal as-conditioning other
than that supplied by Landlord. 

        14.  No
tenant shall use, keep or permit to be used or kept in its premises any foul or noxious gas or substance or permit or suffer such premises to be occupied or used in a
manner offensive or objectionable to Landlord or other occupants of the Facility by reason of noise, odors and/or vibrations or interfere in any way with other tenants or those having business
therein, nor shall any animals or birds be brought or kept in or about any premises of the Facility. 

        15.  Except
as otherwise permitted by Landlord, no cooking shall be done or permitted by any tenant on its premises (except that use by tenant of Underwriters' Laboratory
approved equipment for the preparation of beverages and food for tenants and their employees, guests and invitees shall be permitted, provided that such equipment and use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and regulations), nor shall premises be used for washing clothes or lodging. 

        16.  Except
with the prior written consent of Landlord, no tenant shall sell, or permit the sale, at retail, of newspapers, magazines, periodicals, theater tickets or any
other goods or merchandise in or on any premises, nor shall tenant carry on, or permit or allow any employee or other person to carry on, the business of stenography, typewriting or any similar
business in or from any premises for the service or accommodation of occupants of any other Facility, nor shall the premises of any tenant be used for the storage of merchandise or for manufacturing
of any kind, or the business of a public barber shop, beauty parlor, nor shall the premises of any tenant be used for any improper, immoral or objectionable purpose, or any business or activity other
than that specifically provided for in such tenant's lease. 

        17.  If
Tenant requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain, and comply with Landlord's instructions in their installation. 

        18.  Landlord
will direct electricians as to where and how telephone telegraph and electrical wires are to be introduced or installed. No boring or cutting for wires will be
allowed without the prior written consent of Landlord. The location of burglar alarms, telephones, call boxes and other equipment affixed to all premises shall be subject to the written approval of
Landlord. 

        19.  No
tenant without Landlord's prior approval shall install any radio or television antenna, loudspeaker or any other device on the exterior walls or the roof of the
Facility. No tenant shall interfere with radio or television broadcasting or reception from or in the Facility or elsewhere. 

        20.  No
tenant shall lay linoleum, tile, carpet or any other floor covering so that the same shall be affixed to the floor of its premises in any manner except as approved in
writing by Landlord. The expense of repairing any damage resulting from a violation of this rule or the removal of any floor covering shall be borne by the tenant of whom, or by whose contractors, 

3

 

employees or invitees, the damage shall have been caused. No tenant shall place floormats or other objects outside the boundaries of its premises. 

        21.  No
furniture, freight, equipment, materials, supplies, packages, merchandise or other property will be received in the Facility except between such hours and at such
locations designated by Landlord. Such items shall be carried up and down only in such elevators as shall be designated by Landlord. Tenant shall be responsible for receiving, checking, inspecting and
paying for deliveries of such merchandise, supplies, goods, materials, equipment and products addressed to tenant and shall be responsible for moving these items to its premises. Landlord will not
accept deliveries for tenants. 

        22.  Landlord
shall have the right to prescribe the weight, size and position of all safes, furniture or other heavy equipment brought into the Facility. Safes or other heavy
objects shall, if considered necessary by Landlord, stand on wood strips of such thickness as determined by Landlord to be necessary to distribute properly the weight thereof. Landlord shall not be
responsible for loss of or damage to any such safe, equipment or property from any cause, and all damage done to the Facility by moving or maintaining any such safe, equipment or other property shall
be repaired at the expense of the tenant. 

        23.  No
tenant shall place a load upon any floor of the premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. No
tenant shall mark, or drive nails, screw or drill into, the partitions, woodwork or plaster or in any way deface such premises or any part thereof, except as may be reasonably necessary in minor
decoration of the premises. No tenant shall mark or defile escalators, elevators, water closets, toilet room walls, windows, doors, or any other part of the Facility or the Common Area. 

        24.  There
shall not be used in any space, or in the public areas of the Common Area, either by any tenant or others, any hand trucks except those equipped with rubber tires
and side guards or such other material-handling equipment as Landlord may approve. No other vehicles of any kind (except a wheelchair for an individual) shall be brought by any tenant into or kept in
or about the premises. 

        25.  Each
tenant shall store all its trash and garbage within the interior of its premises or within receptacles provided by Landlord. No material shall be placed in the
trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the city without
violation of any law or ordinance governing such disposal. All trash, garbage and refuse disposal shall be made only through entryways and elevators provided for such purposes and at such time as
Landlord shall designate. 

        26.  Canvassing,
soliciting, distribution of handbills or any other written material, and peddling in the Facility are prohibited and each tenant shall cooperate to prevent
the same. No tenant shall make room-to-room solicitation of business from other tenants in the Facility. 

        27.  Landlord
may in the exterior of the Facility designate and use or authorize the use of areas for shows, festivals or other events, both public and private. Any fees
collected from individuals or organizations for the use of such areas may be used by Landlord for any purpose Landlord desires. 

        28.  Tenant
shall: (a) not effect or execute any agreement or other instrument whereby its premises or any part thereof is restricted on the basis of age, religion,
sex or national origin in the sale, lease or occupancy thereof; (b) not discriminate in the use or occupancy of any or all of its premises against any person because of age, race, color, sex,
religion or national origin, not shall any person be deprived of the right to use its premises or any of the facilities therein by reason of race, color, sex, religion, national origin, or, except
where required by law, age: and (c) comply 

4

 

with all federal, state and local laws, ordinances, rules and regulations, in effect from time to time, prohibiting discrimination or segregation by reason of race, religion, color, sex, national
origin, or except where dictated by law, age. 

        29.  Landlord
shall have the right, exercisable upon reasonable advance notice and without liability to any tenant, to change the name and address of the Facility and the
arrangement and/or location of the Common Area and to install and maintain a sign or signs on the exterior of any building or in any corridor and passageway. 

        30.  Landlord
reserves and shall have the right voluntarily or pursuant to government requirements, at Landlord's expense, to make repairs, alterations or improvements in or
to the Facility or any part thereof, and such repair, alteration or improvement work to temporarily block or close entrances, doors, windows, corridors, elevators, or other Common Area, provided that
such temporary Facility and take any and all measures, including inspections, repairs, alterations, additions and improvements to the Premises or the Facility as may be necessary or desirable for the
safety, protection or preservation of the Premises or Facility, the Landlord's interest therein, or as may be necessary or desirable in the operation of the Facility. 

        31.  Landlord
reserves the right to grant any tenant the exclusive right to conduct any particular business or undertaking in the Facility provided that same shall not
prevent Tenant from using the Premises for the Permitted Use. 

        32.  Landlord
reserves the right to exclude or expel from the Facility any person who, in Landlord's judgment is intoxicated or under the influence of liquor or drugs or who
is in violation of any of the Rules and Regulations of the Facility. 

        33.  Without
the prior written consent of Landlord, no tenant shall use the name of the Facility in connection with or in promoting or advertising the business of tenant
except as such tenant's address. Landlord may prohibit any advertisement identifying the Facility, the Building or the address of either or including any picture or rendering thereof of by any tenant,
which in Landlord's opinion, tends to impair the reputation or desirability of the Facility. Upon receipt of written notice from Landlord objecting to such advertising, tenant shall cease and refrain
from such advertising. 

        34.  Tenant
shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency. 

        35.  Tenant
assumes any and all responsibility for protecting its premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to
its premises closed. 

        36.  Tenants
authorized to sell or serve food shall not employ persons who do not have and keep a neat, clean appearance or who are sloppy and careless in their food handling
work habits. 

        37.  The
requirements of tenants will be attended to only upon application at the office of the Facility by an authorized individual. Employees of Landlord shall not perform
any work or do anything outside of their regular duties unless under special instructions from Landlord, and no employees will admit any person (tenant or otherwise) to any office without specific
instructions from Landlord. 

        38.  Landlord
may waive any one or more of these Rules and regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed
as a waiver of such Rules and Regulations against any or all tenants of the Facility. 

        39.  Landlord
reserves the right to make such other and reasonable rules and regulations as in its judgment may from time to time be needed for safety and security, for care
and cleanliness of 

5

 

the Facility and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations which are adopted. 

        40.  The
Rules and Regulations are in addition to, and shall not be construed to in any way modify, alter or amend, in whole or in part, the terms, covenants, agreements and
conditions of any lease of any Premises in the Facility. Whenever in these Rules and Regulations the word "tenant" is used it shall apply to and include the tenant under the lease and its agents,
employees, customer and vendors. Similarly, the word "Landlord" shall include the Landlord, its agents, employees, contractors and vendors. 

        B.    Parking
Rules and Regulations. The following rules and regulations govern the use of the Parking Facilities which serve the Facility. Tenant will be bound by such rules
and regulations and agrees to cause its employees, subtenants, assignees, contractors, suppliers, customers and invitees to observe the same: 

        1.    Tenant
will not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant's employees, subtenants, customers or invitees to be loaded, unloaded or
parked in areas other than those designated by Landlord for such activities. No vehicles are to be left in the parking areas overnight and no vehicles are to be parked in the parking areas other than
normally sized passenger automobiles, motorcycles and pick-up trucks. No extended term storage of vehicles is permitted. 

        2.    Vehicles
must be parked entirely within painted stall lines of a single parking stall. 

        3.    All
directional signs and arrows must be observed. 

        4.    The
speed limit within all parking areas shall be five (5) miles per hour. 

        5.    Parking
is prohibited: 

        (a)  in
areas not striped for parking; 

        (b)  in
aisles or on ramps, if any; 

        (c)  where
"no parking" signs are posted; 

        (d)  in
cross-hatched areas; and 

        (e)  in
such other areas as may be designated from time to time by Landlord or Landlord's parking operator. 

        6.    Landlord
reserves the right, without cost or liability to Landlord, to tow any vehicle if such vehicle's audio theft alarm system remains engaged for an unreasonable
period of time. 

        7.    Washing,
waxing, cleaning or servicing of any vehicle in any area not specifically reserved for such purpose is prohibited. 

        8.    Landlord
may refuse to permit any person to park in the parking facilities who violates these rules with unreasonable frequency, and any violation of these rules shall
subject the violator's car to removal, at such car owner's expense. Tenant agrees to use its best efforts to acquaint its employees, subtenants, assignees, contractors, suppliers, customers and
invitees with these parking provisions, rules and regulations. 

        9.    Parking
stickers, access cards, or any other device or form of identification supplied by Landlord as a condition of use of the parking facilities shall remain the
property of Landlord. Parking identification devices, if utilized by Landlord, must be displayed as requested and may not be mutilated in any manner. The serial number of the parking identification
device may not be obliterated. Parking identification devices, if any, are not transferable and any device in the possession of an unauthorized holder will be void. Landlord reserves the right to
refuse the sale of 

6

 

monthly stickers or other parking identification devices to Tenant or any of its agents, employees or representatives who willfully refuse to comply with these rules and regulations and all unposted
city, state or federal ordinances, laws or agreements. 

        10.  Loss
or theft of parking identification devices or access cards must be reported to the management office in the Facility immediately, and a lost or stolen report must
be filed by that does not have a parking identification device or valid access card. Any parking identification device or access card which is reported lost or stolen and which is subsequently found
in the possession of an unauthorized person will be confiscated and the illegal holder will be subject to prosecution. 

        11.  All
damage or loss claimed to be the responsibility of Landlord must be reported, itemized in writing and delivered to the management office located within the Facility
within ten (10) business days
after any claimed damage or loss occurs. Any claim not so made is waived. Landlord is not responsible for damage by water or fire, or for the acts or omissions of others, or for articles left in
vehicles. In any event, the total liability of Landlord, if any, is limited to Two Hundred Fifty Dollars ($250.00) for all damages or loss to any car. Landlord is not responsible for loss of use. 

        12.  The
parking operators, managers or attendants are not authorized to make or allow any exceptions to these rules and regulations, without the express written consent of
Landlord. Any exceptions to these rules and regulations made by the parking operators, managers or attendants without the express written consent of Landlord will not be deemed to have been approved
by Landlord. 

        13.  Landlord
reserves the right, without cost or liability to Landlord, to tow any vehicles which are used or parked in violation of these rules and regulations. 

        14.  Landlord
reserves the right from time to time to modify and/or adopt such other reasonable and non-discriminatory rules and regulations for the Parking
Facilities as it deems reasonably necessary for the operation of the Parking Facilities. 

7

 
 

EXHIBIT I    
    
    [PARKING LOCATION]    
    
    TABLE OF CONTENTS    
  

	ARTICLE
 
	 	 
	 	Page

	R E C I T A L S	 	1
	ARTICLE I—DEFINITIONS	 	1
	ARTICLE II—PREMISES	 	1
	2.01	 	Lease of Premises	 	1
	2.02	 	Calculations of Areas	 	1
	2.03	 	Common Area	 	1
	2.04	 	Access	 	2
	ARTICLE III—TERM AND POSSESSION	 	2
	3.01	 	Term Commencement	 	2
	3.02	 	Intentionally Deleted	 	2
	3.03	 	Condition of Premises	 	2
	ARTICLE IV—RENT	 	3
	4.01	 	Basic Rent	 	3
	4.02	 	Operating Expenses	 	3
	4.03	 	Security Deposit	 	3
	4.04	 	Payment; Late Charges	 	4
	4.05	 	All Payments as Rent	 	5
	ARTICLE V—RESTRICTIONS ON USE/COMPLIANCE WITH LAWS	 	5
	5.01	 	Use	 	5
	ARTICLE VI—ALTERATIONS	 	6
	6.01	 	Tenant Alterations	 	6
	6.02	 	Installation of Alterations	 	6
	6.03	 	Removal of Alterations	 	8
	6.04	 	Intentionally Deleted.	 	8
	6.05	 	Removal of Personal Property	 	8
	6.06	 	Failure to Remove Items	 	8
	ARTICLE VII—REPAIRS	 	8
	7.01	 	Landlord's Obligations	 	8
	7.02	 	Tenant's Obligations	 	9
	7.03	 	Tenant's Failure to Repair	 	9
	ARTICLE VIII—LIENS	 	9
	ARTICLE IX—ASSIGNMENT AND SUBLETTING	 	10
	9.01	 	Right to Assign, Sublease and Encumber	 	10
	9.02	 	Proposed Transfer Notice	 	10
	9.03	 	Notice of Transfer; Landlord's Options	 	11
	9.04	 	Reasonable Disapproval	 	11
	9.05	 	Additional Conditions	 	11
	9.06	 	Excess Rent	 	12
	9.07	 	Effect of Recapture	 	12
	9.08	 	No Release	 	13
	9.09	 	Administrative and Attorneys' Fees	 	13
	9.10	 	Effectiveness Conditioned Upon Assumption	 	13
	9.11	 	Liability of Tenant	 	13
	9.12	 	Related Corporation	 	14
	9.13	 	Desk Space Occupancy	 	14

 

	ARTICLE X—INSURANCE AND INDEMNIFICATION	 	14
	10.01	 	Limitation on Landlord's Liability	 	14
	10.02	 	Indemnification of Landlord	 	15
	10.04	 	Survival of Indemnities	 	16
	10.05	 	Tenant's Insurance	 	16
	10.06	 	Waiver of Subrogation	 	17
	ARTICLE XI—SERVICES AND UTILITIES	 	18
	11.01	 	Maintenance by Landlord	 	18
	11.02	 	Delivery of Services and Utilities	 	18
	11.03	 	Equipment Requiring Excessive Utilities	 	18
	11.04	 	Right to Curtail Services and Utilities	 	19
	11.05	 	After Hours and Additional Services	 	19
	ARTICLE XII—ESTOPPEL CERTIFICATE	 	20
	ARTICLE XIII—EXTENSION OF TERM	 	20
	13.01	 	Option to Extend Term	 	20
	13.02	 	Fair Market Rental Value	 	21
	13.03	 	Appraisal.	 	21
	ARTICLE XIV—AUDITORIUM/CONFERENCE ROOMS	 	22
	ARTICLE XV—SURRENDER OF PREMISES; HOLDING OVER	 	23
	15.01	 	Surrender of Premises	 	23
	15.02	 	No Merger	 	23
	15.03	 	Holding Over	 	23
	ARTICLE XVI—SUBORDINATION AND QUIET ENJOYMENT	 	23
	16.01	 	Subordination	 	23
	16.02	 	Quiet Enjoyment	 	24
	ARTICLE XVII—RULES AND REGULATIONS	 	24
	ARTICLE XVIII—ENTRY	 	24
	ARTICLE XIX—DEFAULT BY TENANT	 	25
	19.01	 	Events of Default	 	25
	19.02	 	Remedies Upon Default or Termination	 	26
	19.03	 	Damages Upon Termination	 	26
	19.04	 	Operating Expenses	 	27
	19.05	 	Performance by Landlord	 	27
	19.06	 	Remedies Cumulative	 	27
	ARTICLE XX—DAMAGE BY FIRE OR OTHER CASUALTY	 	28
	20.01	 	Notice of Loss	 	28
	20.02	 	Substantial or Total Damage	 	28
	20.03	 	Intentionally Deleted	 	28
	20.04	 	Destruction During Final Year	 	28
	20.05	 	Destruction of Tenant's Personal Property, Tenant's Extra Improvements or Property of Tenant's Employees	 	29
	20.06	 	Exclusive Remedy	 	29
	20.07	 	Delays	 	29
	20.08	 	Property Damage	 	29
	ARTICLE XXI—EMINENT DOMAIN	 	30
	21.01	 	Total or Substantial Taking	 	30
	21.02	 	Partial Taking	 	30
	21.03	 	Temporary Taking	 	30

ii

 

	ARTICLE XXII—SALE BY LANDLORD	 	31
	ARTICLE XXIII—WAIVER	 	31
	ARTICLE XXIV—NOTICES	 	31
	ARTICLE XXV—OPERATING EXPENSES	 	32
	25.01	 	General	 	32
	25.02	 	Payment Of Operating Expenses	 	32
	25.03	 	Computation Of Operating Expenses Adjustment	 	32
	25.04	 	Audit Rights	 	33
	25.05	 	Minimum Rent	 	34
	ARTICLE XXVI—TAXES PAYABLE BY TENANT	 	34
	26.01	 	Personalty	 	34
	26.02	 	Taxes as Rent	 	34
	26.03	 	Other Property Taxes	 	34
	ARTICLE XXVII—LANDLORD'S DEFAULT	 	34
	27.01	 	Notice	 	34
	27.02	 	Landlord's Default	 	34
	27.03	 	Remedy for Breach	 	35
	ARTICLE XXVIII—FORCE MAJEURE	 	35
	ARTICLE XXIX—LANDLORD'S MORTGAGEES AND LESSORS	 	35
	29.01	 	Modifications	 	35
	29.02	 	Cure Rights	 	36
	ARTICLE XXX—RIGHT OF FIRST OFFER	 	36
	30.01	 	Exercise of Right	 	36
	30.02	 	Effect of Exercise	 	36
	ARTICLE XXXI—FINANCIAL STATEMENTS	 	37
	ARTICLE XXXII—Intentionally Deleted	 	37
	ARTICLE XXXIII—PARKING	 	37
	33.01	 	Spaces	 	37
	33.02	 	Control	 	38
	33.03	 	General Provisions	 	38
	33.04	 	Cooperation with Traffic Mitigation Measures	 	39
	33.05	 	Parking Rules and Regulations	 	39
	ARTICLE XXXIV—SIGNAGE	 	39
	ARTICLE XXXV—MISCELLANEOUS	 	40
	35.01	 	Successors and Assigns	 	40
	35.02	 	Attorneys' Fees	 	40
	35.03	 	Light and Air	 	41
	35.04	 	Public Transportation	 	41
	35.05	 	Headings	 	41
	35.06	 	Use of Pronouns	 	41
	35.07	 	Time of the Essence	 	41
	35.09	 	Brokers	 	41
	35.10	 	Modifications	 	41
	35.11	 	Unenforceable Provisions	 	41
	35.12	 	Covenants and Conditions	 	41
	35.13	 	Incorporation	 	41
	35.14	 	Recordation of Memorandum; Quitclaim and Release Agreement	 	41
	35.15	 	Additional Instruments	 	42
	35.16	 	Entire Lease Between Parties	 	42

iii

 

	35.17	 	Nondisclosure of Lease Terms	 	42
	35.18	 	Joint and Several Obligations	 	42
	35.19	 	Tenant as Corporation or Partnership	 	42
	35.20	 	Examination of Lease	 	43
	35.21	 	Intentionally Deleted	 	43
	35.22	 	Satellite Antenna	 	43
	35.23	 	Landlord's Authority	 	43
	35.24	 	Counterparts	 	43

EXHIBITS  

EXHIBIT
A—LEGAL DESCRIPTION OF LAND COMPRISING THE FACILITY

EXHIBIT A-1—SITE PLAN OF THE FACILITY AND THE PROJECT

EXHIBIT B-1—FLOOR PLAN OF THE SUITE 300 PREMISES

EXHIBIT B-2—FLOOR PLAN OF THE SUITE 100 PREMISES

EXHIBIT C—DEFINITIONS

EXHIBIT D—COMMENCEMENT MEMORANDUM

EXHIBIT E—TENANT IMPROVEMENT AGREEMENT

EXHIBIT F—CLEANING SPECIFICATIONS

EXHIBIT G—FORM OF ESTOPPEL CERTIFICATE

EXHIBIT H—RULES AND REGULATIONS

EXHIBIT I—PARKING LOCATION 

iv

QuickLinks

BASIC LEASE INFORMATION PARK PLACE LEASE

PARK PLACE OFFICE LEASE

R E C I T A L S

ARTICLE I—DEFINITIONS

ARTICLE II—PREMISES

ARTICLE III—TERM AND POSSESSION

ARTICLE IV—RENT

ARTICLE V—RESTRICTIONS ON USE/COMPLIANCE WITH LAWS

ARTICLE VI—ALTERATIONS

ARTICLE VII—REPAIRS

ARTICLE VIII—LIENS

ARTICLE IX—ASSIGNMENT AND SUBLETTING

ARTICLE X—INSURANCE AND INDEMNIFICATION

ARTICLE XI—SERVICES AND UTILITIES

ARTICLE XII—ESTOPPEL CERTIFICATE

ARTICLE XIII—EXTENSION OF TERM

ARTICLE XIV—AUDITORIUM/CONFERENCE ROOMS

ARTICLE XV—SURRENDER OF PREMISES; HOLDING OVER

ARTICLE XVI—SUBORDINATION AND QUIET ENJOYMENT

ARTICLE XVII—RULES AND REGULATIONS

ARTICLE XVIII—ENTRY

ARTICLE XIX—DEFAULT BY TENANT

ARTICLE XX—DAMAGE BY FIRE OR OTHER CASUALTY

ARTICLE XXI—EMINENT DOMAIN

ARTICLE XXII—SALE BY LANDLORD

ARTICLE XXIII—WAIVER

ARTICLE XXIV—NOTICES

ARTICLE XXV—OPERATING EXPENSES

ARTICLE XXVI—TAXES PAYABLE BY TENANT

ARTICLE XXVII—LANDLORD'S DEFAULT

ARTICLE XXVIII—FORCE MAJEURE

ARTICLE XXIX—LANDLORD'S MORTGAGEES AND LESSORS

ARTICLE XXX—RIGHT OF FIRST OFFER

ARTICLE XXXI—FINANCIAL STATEMENTS

ARTICLE XXXII—Intentionally Deleted

ARTICLE XXXIII—PARKING

ARTICLE XXXIV—SIGNAGE

ARTICLE XXXV—MISCELLANEOUS

EXHIBIT A LEGAL DESCRIPTION OF LAND COMPRISING THE FACILITY

EXHIBIT A-1 SITE PLAN OF THE FACILITY AND THE PROJECT

EXHIBIT B-1 FLOOR PLAN OF THE SUITE 300 PREMISES

EXHIBIT B-2 FLOOR PLAN OF THE SUITE 100 PREMISES

EXHIBIT C DEFINITIONS

EXHIBIT D COMMENCEMENT MEMORANDUM

EXHIBIT E TENANT IMPROVEMENT AGREEMENT

R E C I T A L S

EXHIBIT F CLEANING SPECIFICATIONS

EXHIBIT G FORM OF ESTOPPEL CERTIFICATE

EXHIBIT H RULES AND REGULATIONS

EXHIBIT I [PARKING LOCATION] TABLE OF CONTENTSQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.31(a)    
  

        
AMENDED AND RESTATED

MASTER LOAN AND SECURITY AGREEMENT 

Dated
as of November 16, 2001 

AAMES
CAPITAL CORPORATION

as a Borrower 

AAMES
FUNDING CORPORATION

as a Borrower 

and 

MORGAN
STANLEY DEAN WITTER MORTGAGE CAPITAL INC.

as Lender 

 
 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	Page

	SECTION 1.	 	DEFINITIONS AND ACCOUNTING MATTERS	 	1
	1.01	 	Certain Defined Terms	 	1
	1.02	 	Accounting Terms and Determinations	 	11
	

SECTION 2.	
 	

LOANS, NOTE AND PREPAYMENTS.	
 	

11
	2.01	 	Loans	 	11
	2.02	 	Notes	 	11
	2.03	 	Procedure for Borrowing	 	12
	2.04	 	Limitation on Types of Loans; Illegality	 	12
	2.05	 	Repayment of Loans; Interest	 	13
	2.06	 	Mandatory Prepayments or Pledge	 	13
	2.07	 	Extension of Termination Date	 	14
	

SECTION 3.	
 	

PAYMENTS; COMPUTATIONS; ETC.	
 	

14
	3.01	 	Payments	 	14
	3.02	 	Computations	 	14
	3.03	 	Requirements of Law	 	14
	3.04	 	Amendment Fee	 	15
	

SECTION 4.	
 	

COLLATERAL SECURITY	
 	

15
	4.01	 	Collateral; Security Interest	 	15
	4.02	 	Further Documentation	 	16
	4.03	 	Changes in Locations, Name, etc	 	16
	4.04	 	Lender's Appointment as Attorney-in-Fact	 	16
	4.05	 	Performance by Lender of Borrowers' Obligations	 	17
	4.06	 	Proceeds	 	17
	4.07	 	Remedies	 	18
	4.08	 	Limitation on Duties Regarding Preservation of Collateral	 	18
	4.09	 	Powers Coupled with an Interest	 	19
	4.10	 	Release of Security Interest	 	19
	4.11	 	Interest Rate Protection Agreements	 	19
	

SECTION 5.	
 	

CONDITIONS PRECEDENT	
 	

19
	5.01	 	Initial Loan	 	19
	5.02	 	Initial and Subsequent Loans	 	19
	

SECTION 6.	
 	

REPRESENTATIONS AND WARRANTIES	
 	

21
	6.01	 	Legal Name	 	21
	6.02	 	Existence	 	21
	6.03	 	Financial Condition	 	22
	6.04	 	Litigation	 	22
	6.05	 	No Breach	 	22
	6.06	 	Action	 	22
	6.07	 	Approvals	 	22
	6.08	 	Margin Regulations	 	22
	6.09	 	Taxes	 	23
	6.10	 	Investment Company Act	 	23
	6.11	 	Collateral; Collateral Security	 	23
	6.12	 	Chief Executive Office/Jurisdiction of Organization	 	23
	6.13	 	Location of Books and Records	 	23
	6.14	 	True and Complete Disclosure	 	23
	6.15	 	Tangible Net Worth	 	24

ii

 

	6.16	 	ERISA	 	24
	6.17	 	Capitalization	 	24
	6.18	 	Hedges	 	24
	

SECTION 7.	
 	

COVENANTS OF THE BORROWERS	
 	

24
	7.01	 	Financial Statements	 	24
	7.02	 	Litigation	 	26
	7.03	 	Existence, etc.	 	26
	7.04	 	Prohibition of Fundamental Changes	 	27
	7.05	 	Borrowing Base Deficiency	 	27
	7.06	 	Notices	 	27
	7.07	 	Hedging	 	27
	7.08	 	Reports	 	28
	7.09	 	Underwriting Guidelines	 	28
	7.10	 	Transactions with Affiliates	 	28
	7.11	 	Limitation on Liens	 	28
	7.12	 	Limitation on Guarantees	 	28
	7.13	 	Limitation on Distributions	 	28
	7.14	 	Maintenance of Tangible Net Worth	 	28
	7.15	 	Maintenance of Ratio of Total Indebtedness to Tangible Net Worth	 	28
	7.16	 	Servicer; Servicing Tape	 	29
	7.17	 	Committed Warehouse Facilities	 	29
	7.18	 	Required Filings	 	29
	7.19	 	No Adverse Selection	 	29
	7.20	 	Remittance of Prepayments	 	29
	

SECTION 8.	
 	

EVENTS OF DEFAULT	
 	

29
	

SECTION 9.	
 	

REMEDIES UPON DEFAULT	
 	

31
	

SECTION 10.	
 	

NO DUTY OF LENDER	
 	

31
	

SECTION 11.	
 	

MISCELLANEOUS	
 	

32
	11.01	 	Waiver	 	32
	11.02	 	Notices	 	32
	11.03	 	Indemnification and Expenses	 	32
	11.04	 	Amendments	 	33
	11.05	 	Successors and Assigns	 	33
	11.06	 	Survival	 	33
	11.07	 	Captions	 	33
	11.08	 	Counterparts	 	33
	11.09	 	Loan Agreement Constitutes Security Agreement; Governing Law	 	33
	11.10	 	Submission To Jurisdiction; Waivers	 	34
	11.11	 	WAIVER OF JURY TRIAL	 	34
	11.12	 	Acknowledgments	 	34
	11.13	 	Hypothecation or Pledge of Loans	 	34
	11.14	 	Servicing	 	34
	11.15	 	Periodic Due Diligence Review	 	35
	11.16	 	Set-Off	 	36
	11.17	 	Intent	 	36
	11.18	 	Joint and Several Liability	 	36

iii

 

	SCHEDULES	 	 
	 	SCHEDULE 1	 	Representations and Warranties re: Mortgage Loans
	 	SCHEDULE 2	 	Filing Jurisdictions and Offices
	 	SCHEDULE 3	 	Capitalization
	 	SCHEDULE 4	 	Servicing Fields
	 	SCHEDULE 5	 	Trade Names
	EXHIBITS	 	 
	 	EXHIBIT A	 	Form of Promissory Note
	 	EXHIBIT B	 	Custodial Agreement
	 	EXHIBIT C	 	Form of Opinion of Counsel to Borrowers
	 	EXHIBIT D	 	Form of Request for Borrowing
	 	EXHIBIT E-1	 	Form of Borrower's Release Letter
	 	EXHIBIT E-2	 	Form of Warehouse Lender's Release Letter
	 	EXHIBIT F	 	Underwriting Guidelines
	 	EXHIBIT G	 	Form of Servicer Notice

iv

 
 

AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT    
  

        AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT, dated as of November 16, 2001, between AAMES CAPITAL CORPORATION, a California corporation
("Aames Capital"), AAMES FUNDING CORPORATION, a California corporation ("Aames Funding" and together
with Aames Capital, each a "Borrower", collectively the "Borrowers")and MORGAN STANLEY DEAN WITTER
MORTGAGE CAPITAL INC., a New York corporation (the "Lender"). 

RECITALS  

        Aames Capital and the Lender are parties to that certain Master Loan and Security Agreement, dated as of October 29, 1999 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Existing Loan Agreement"). The Borrowers and the Lender hereby agree, in consideration of the mutual premises
and mutual obligations set forth herein, that the Existing Loan Agreement is hereby amended and restated as follows by this Amended and Restated Master Loan and Security Agreement (together with the
Existing Loan Agreement, the "Loan Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the
Existing Loan Agreement. 

        The
Borrowers have requested that the Lender from time to time continue to make revolving credit loans to it to finance certain residential mortgage loans owned by the Borrowers,
including certain defaulted residential mortgage loans, and the Lender is prepared to make or continue, as applicable, such revolving credit loans upon the terms and conditions hereof. Accordingly,
the Existing Loan Agreement is hereby amended and restated in its entirety to provide terms and conditions under which the Lender is prepared to make further loans to the Borrowers from and after the
date hereof. 

        Section
1.    Definitions and Accounting Matters.    

        1.01    Certain Defined Terms.    As used herein, the following terms shall have the following meanings (all terms
defined in this Section 1.01 or in other provisions of this Loan Agreement in the singular to have the same meanings when used in the plural and vice
versa): 

        "Aames Capital" shall have the meaning provided in the heading hereto. 

        "Affiliate" shall mean with respect to any Person, any "affiliate" of such Person, as such term is defined in the Bankruptcy Code. 

 

        "Applicable Collateral Percentage" shall mean, with respect to each Eligible Mortgage Loan, the applicable collateral percentage set forth
in the chart below opposite the applicable product type: 

	Product Type
	 	Applicable Collateral

Percentage
	 
	First Lien Loan that is a Performing Loan and has been included in the Borrowing Base for 120 days or less	 	97	%
	

First Lien Loan that is a Performing Loan and has been included in the Borrowing Base for longer than 120 days but less than 270 days	
 	

85	
%
	

Second Lien Loan that is a Performing Loan and has been included in the Borrowing Base for 120 days or less	
 	

97	
%
	

Second Lien Loan that is a Performing Loan and has been included in the Borrowing Base for longer than 120 days but less than 270 days	
 	

85	
%
	

First Lien Loan or Second Lien Loan that is a Class A Defaulted Loan and has been included in the Borrowing Base for 120 days or less	
 	

80	
%
	

First Lien Loan or Second Lien Loan that is a Class B Defaulted Loan and has been included in the Borrowing Base for 120 days or less	
 	

75	
%
	

First Lien Loan or Second Lien Loan that is a Class C Defaulted Loan, prior to receipt by the Lender of a BPO for such Class C Defaulted Loan and has been included in the Borrowing Base for 364 days or less	
 	

50	
%
	

First Lien Loan or Second Lien Loan that is a Class C Defaulted Loan, after receipt by the Lender of a BPO for such Class C Defaulted Loan and has been included in the Borrowing Base for 364 days or less	
 	

65	
%
	

First Lien Loan or Second Lien Loan that is a Class A Defaulted Loan or a Class B Defaulted Loan and has been included in the Borrowing Base for longer than 120 days but less than 270 days	
 	

50	
%

        "Applicable Margin" shall mean the sum of the weighted average of the applicable rates per annum for each product type of Eligible
Mortgage Loan for each day that Loans shall be secured by such Eligible Mortgage Loans, determined by multiplying (a) for each product type set forth in the table below, a fraction equal to the
Collateral Value of all Eligible Mortgage Loans of such product type 

2

 

divided by the Collateral Value of all Eligible Mortgage Loans, times (b) for each product type set forth in the following table below, the percentage
set forth below opposite such product type: 

	Product Type
	 	Applicable Margin
	 
	First Lien Loan that is a Performing Loan and has been included in the Borrowing Base for 120 days or less	 	0.90	%
	

First Lien Loan that is a Performing Loan and has been included in the Borrowing Base for longer than 120 days but less than 270 days	
 	

1.10	
%
	

Second Lien Loan that is a Performing Loan and has been included in the Borrowing Base for 120 days or less	
 	

0.90	
%
	

Second Lien Loan that is a Performing Loan and has been included in the Borrowing Base for longer than 120 days but less than 270 days	
 	

1.10	
%
	

First Lien Loan or Second Lien Loan that is a Class A Defaulted Loan and has been included in the Borrowing Base for 120 days or less	
 	

1.20	
%
	

First Lien Loan or Second Lien Loan that is a Class B Defaulted Loan and has been included in the Borrowing Base for 120 days or less	
 	

1.20	
%
	

First Lien Loan or Second Lien Loan that is a Class C Defaulted Loan and has been included in the Borrowing Base for 364 days or less	
 	

1.50	
%

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

        "Borrower and Borrowers" shall have the meaning provided in the heading hereof. 

        "Borrowing Base" shall mean the aggregate Collateral Value of all Eligible Mortgage Loans;  provided, that the following limitations shall apply: 

          (i)  the
aggregate Collateral Value included in the Borrowing Base at any time of First Lien Loans that are Performing Loans and which have been included in the Borrowing
Base for greater than 180 days but less than 270 days shall not exceed $10,000,000; 

        (ii)  the
aggregate Collateral Value included in the Borrowing Base at any time of Second Lien Loans that are Performing Loans shall not exceed $25,000,000; 

        (iii)  the
aggregate Collateral Value included in the Borrowing Base at any time of First Lien Loans or Second Lien Loans that are Class A Defaulted Loans shall not exceed
$10,000,000; 

        (iv)  the
aggregate Collateral Value included in the Borrowing Base at any time of First Lien Loans or Second Lien Loans that are Class B Defaulted Loans shall not exceed
$10,000,000; 

        (v)  the
aggregate Collateral Value included in the Borrowing Base at any time of First Lien Loans or Second Lien Loans that are Class C Defaulted Loans shall not exceed
$15,000,000; 

        (vi)  the
aggregate Collateral Value included in the Borrowing Base at any time of Mortgage Loans which have an LTV greater than 90% shall not exceed 10% of the outstanding
principal balance of the Loan; and 

      (vii)  the
Collateral Value shall be deemed to be zero with respect to each Mortgage Loan: 

        (1)  in
respect of which there is a breach of a representation and warranty set forth on Schedule 1 (assuming each representation and warranty is made as of the date the
Borrowing Base is determined); 

3

 

        (2)  other
than any Class C Defaulted Loan, which remains pledged to the Lender hereunder later than 270 days after the date on which it is first included in the Collateral; 

        (3)  which
is a Class C Defaulted Loan and which remains pledged to the Lender hereunder later than 364 days after the date on which it is first included in the Collateral; 

        (4)  which
has been released from the possession of the Custodian under the Custodial Agreement to a Borrower for a period in excess of 14 days; 

        (5)  which
exceed the limitations on Collateral Value set forth in (i) through (vi) above; or 

        (6)  which
is a Class C Defaulted Loan for which a BPO is unable to be obtained following reasonable efforts to obtain the same, determined in the sole discretion of the
Lender. 

        "Borrowing Base Deficiency" shall have the meaning provided in Section 2.06 hereof. 

        "BPO" shall mean a broker's price opinion relating to the Mortgaged Property securing an Eligible Mortgage Loan, in form and substance
satisfactory to the Lender in its sole discretion from a broker chosen by the Lender. 

        "Business Day" shall mean any day other than (i) a Saturday or Sunday or (ii) a day on which the New York Stock Exchange, the Federal
Reserve Bank of New York or the Custodian is authorized or obligated by law or executive order to be closed. 

        "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 Loan 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, surplus and retained earnings in excess of $750,000,000, (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 S&P or P-1 or the equivalent thereof by 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 or (h) available capacity under committed revolving facilities, other than the Lender's revolving facility. 

        "Class" shall mean, as to any Defaulted Loan, its status as a Class A Defaulted, Loan, Class B Defaulted Loan or a Class C Defaulted Loan. 

4

 

        "Class A Defaulted Loan" shall mean an Eligible Mortgage Loan for which the related Mortgagor is 30 to 59 days delinquent in scheduled
payments of principal and interest as at the end of the preceding calendar month. 

        "Class B Defaulted Loan" shall mean an Eligible Mortgage Loan for which the related Mortgagor is 60 to 89 days delinquent in scheduled
payments of principal and interest as at the end of the preceding calendar month. 

        "Class C Defaulted Loan" shall mean an Eligible Mortgage Loan for which the related Mortgagor is 90 days or more delinquent in scheduled
payments of principal and interest or which is subject to foreclosure proceedings as at the end of the preceding calendar month. 

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

        "Collateral" shall have the meaning provided in Section 4.01(b) hereof. 

        "Collateral Value" shall mean, with respect to each Eligible Mortgage Loan, the lesser of (a) the Applicable Collateral Percentage of the
Market Value of such Eligible Mortgage Loan, except in the case of any Class C Defaulted Loan prior to the receipt by the Lender of a BPO relating thereto, in which case the Applicable Collateral
Percentage of the outstanding principal balance of such Eligible Mortgage Loan, and (b) 100% of the outstanding principal balance of such Eligible Mortgage Loan. 

        "Custodial Agreement" shall mean the Custodial Agreement, dated as of October 29, 1999, among Aames Capital, the Custodian and the Lender,
attached as Exhibit B hereto, as the same shall be modified and supplemented and in effect from time to time. 

        "Custodial Joinder Agreement" shall mean the Custodial Joinder Agreement, dated as of November 16, 2001, among the Borrowers, the
Custodian and the Lender, as the same shall be modified and supplemented and in effect from time to time. 

        "Custodian" shall mean Bankers Trust Company, as custodian under the Custodial Agreement, and its successors and permitted assigns
thereunder. 

        "Default" shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default. 

        "Defaulted Loan" shall mean a Class A Defaulted Loan, a Class B Defaulted Loan or a Class C Defaulted Loan. 

        "Dollars" and "$" shall mean lawful money of the United States of America. 

        "Due Diligence Review" shall mean the performance by the Lender of any or all of the reviews permitted under Section 11.15 hereof with
respect to any or all of the Mortgage Loans, as desired by the Lender from time to time. 

        "Effective Date" shall mean the date upon which the conditions precedent set forth in Section 5.01 shall have been satisfied. 

        "Eligible Mortgage Loan" shall mean a Mortgage Loan secured by a first mortgage lien or a second mortgage lien on a one-to-four family
residential property, as to which the representations and warranties in Section 6.10 and Part I of Schedule 1 hereof are correct; provided that, in no
event shall any Eligible Mortgage Loan be a security for purposes of any securities or blue-sky laws. 

        "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 Borrower is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 

5

 

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 Borrower is a member. 

        "Eurodollar Rate" shall mean, with respect to each day during any calendar month a Loan is outstanding, the rate per annum equal to the
rate appearing at page 5 of the Telerate Screen as one-month LIBOR as of the Remittance Date occurring in such calendar month; provided, that (x) if
such date is not a Business Day, the Eurodollar Rate for such calendar month shall be the Eurodollar Rate in effect on the Business Day immediately preceding such date and (y) if the Funding Date for
any Loan shall occur on any date other than the Remittance Date, the initial Eurodollar Rate for such Loan until the first Remittance Date to occur after the related Funding Date shall be determined
as of the related Funding Date for such Loan; provided, further, that if such rate shall not be so quoted, the Eurodollar Rate shall mean the rate per
annum at which the Lender is offered Dollar deposits at or about 10:00 A.M., New York City time, as of the Remittance Date occurring in such calendar month by prime banks in the interbank eurodollar
market where the eurodollar and foreign currency exchange operations in respect of its Loans are then being conducted for delivery on such day for a period of 30 days and in an amount comparable to
the amount of the Loans to be outstanding on such day. 

        "Event of Default" shall have the meaning provided in Section 8 hereof. 

        "Federal Funds Rate" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such transactions received by the Lender from three federal funds brokers of recognized standing selected by it. 

        "Fee Letter" shall mean the letter dated the date hereof between the Aames Capital and the Lender setting forth the amendment fee. 

        "First Lien Loan" shall mean an Eligible Mortgage Loan for which the related Mortgage constitutes a first priority lien on the related
Mortgaged Property. 

        "Funding Date" shall mean the date on which a Loan is made hereunder. 

        "GAAP" shall mean generally accepted accounting principles as in effect from time to time in the United States. 

        "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over any Borrower, any of its Subsidiaries or
any of its properties. 

        "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 Lender. 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. 

        "Guarantor" shall mean Aames Financial Corporation. 

6

 

        "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, sale/buy-back 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; and (i) Indebtedness of general partnerships of which such
Person is a general partner. 

        "Interest Rate Protection Agreement" shall mean, with respect to any or all of the Mortgage Loans, any short sale of US Treasury
Securities, or futures contract, or mortgage related security, or Eurodollar futures contract, or options related contract, or interest rate swap, cap or collar agreement or similar arrangement
providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by any Borrower and an
Affiliate of the Lender, and acceptable to the Lender. 

        "Lender" shall have the meaning provided in the heading hereto. 

        "Leverage Ratio" means, at any time, the ratio of (i) the aggregate principal amount of all Indebtedness of Guarantor and its respective
Subsidiaries at such time which on a consolidated basis, in accordance with GAAP, would be required to be reflected on a consolidated balance sheet of Guarantor and its respective Subsidiaries as a
liability to (ii) the sum of (1) the Tangible Net Worth of Guarantor and its respective Subsidiaries plus (2) with respect to Guarantor and its Subsidiaries only, accrued but unpaid dividends on
preferred stock at such time. 

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

        "Loan" shall have the meaning provided in Section 2.01(a) hereof. 

        "Loan Agreement" shall mean this Master Loan and Security Agreement, as the same may be amended, supplemented or otherwise modified from
time to time. 

        "Loan Documents" shall mean, collectively, this Loan Agreement, the Note, the Custodial Agreement and the Custodial Joinder Agreement. 

        "Market Value" shall mean, (a) with respect to any Eligible Mortgage Loan other than a Class C Defaulted Loan, as of any date in respect
of such Eligible Mortgage Loan, the price at which such Eligible Mortgage Loan could readily be sold, as determined in good faith by the Lender in its sole discretion, which price may be determined to
be zero, and (b) with respect to any Eligible Mortgage Loan that is a Class C Defaulted Loan, the market value thereof determined as follows (the Lender's determination of Market Value shall, with
respect to both clause (a) and (b), in all cases be conclusive upon the parties absent manifest error on the part of the Lender). Promptly following the inclusion of an Eligible Mortgage Loan in the
Borrowing Base as a Class C Defaulted Loan, the Lender shall seek to obtain a BPO for the related Mortgaged Property at the expense of the Borrowers. The Lender shall also seek to obtain a new BPO for
the related Mortgaged Property at the expense of the Borrowers promptly after such Class C Defaulted Loan shall have been pledged to the Lender and included in the Borrowing Base for more than 180
days. The Lender shall determine the market value of such Class C Defaulted Loan based upon the net proceeds that the Lender, in its sole discretion exercised in good 

7

 

faith, determines are reasonably likely to be obtained upon a sale of such Mortgaged Property in light of the results of the most recently obtained related BPO and the Lender's determination of all
ancillary and related costs to be paid prior to or in connection with the maintenance and disposition of such Mortgaged Property. 

        "Material Adverse Effect" shall mean a material adverse effect on (a) the Property, business, operations, financial condition or prospects
of any Borrower, (b) the ability of any Borrower to perform its obligations under any of the Loan Documents to which it is a party, (c) the validity or enforceability of any of the Loan Documents, (d)
the rights and remedies of the Lender under any of the Loan Documents, (e) the timely payment of the principal of or interest on the Loans or other amounts payable in connection therewith or (f) the
Collateral. 

        "Maximum Credit" shall mean $300,000,000. 

        "Moody's" shall mean Moody's Investors Service, Inc. 

        "Mortgage" shall mean the mortgage, deed of trust or other instrument securing a Mortgage Note, which creates a first or second lien on
the fee in real property securing the Mortgage Note. 

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

        "Mortgage Loan" shall mean a mortgage loan which the Custodian has been instructed to hold for the Lender pursuant to the Custodial
Agreement, and which Mortgage Loan includes, without limitation, a Mortgage Note and related Mortgage. 

8

   
        "Mortgage Loan Documents" shall mean, with respect to a Mortgage Loan, the documents comprising the Mortgage File for such Mortgage Loan. 

        "Mortgage Loan Schedule" shall have the meaning assigned thereto in the Custodial Agreement. 

        "Mortgage Loan Schedule and Exception Report" shall mean the mortgage loan schedule and exception report prepared by the Custodian
pursuant to the Custodial Agreement. 

        "Mortgage Loan Tape" shall mean a computer-readable file containing information with respect to each Mortgage Loan, to be delivered by the
Borrowers to the Lender pursuant to Section 2.03(a) hereof which tape fields are identified on Annex I to the Custodial Agreement. 

        "Mortgage Note" shall mean the original executed promissory note or other evidence of the indebtedness of a mortgagor/borrower with
respect to a Mortgage Loan. 

        "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 Mortgage Note. 

        "Mortgagor" shall mean the obligor on a Mortgage Note. 

        "MS & Co." shall mean Morgan Stanley & Co. Incorporated, a registered broker-dealer. 

        "MS Indebtedness" shall mean any indebtedness of the Borrowers hereunder and under any other arrangement between any Borrower on the one
hand and the Lender or an Affiliate of the Lender on the other hand. 

        "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 Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA. 

        "Net Income" shall mean, for any period, the net income of Aames Capital for such period as determined in accordance with GAAP. 

        "1934 Act" shall mean the Securities and Exchange Act of 1934, as amended. 

        "Note" shall have the meaning provided in Section 2.02(a) hereof. 

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

        "Performing Loan" shall mean an Eligible Mortgage Loan for which the related Mortgagor is current or fewer than 30 days delinquent in
scheduled payments of principal and interest as at the end of the preceding calendar month. 

        "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 any Borrower or any ERISA Affiliate and covered by Title
IV of ERISA, other than a Multiemployer Plan. 

        "Post-Default Rate" shall mean, in respect of any principal of any Loan or any other amount under this Loan Agreement, the Note or any
other Loan Document that is not paid when due to the Lender (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise, but not including by optional prepayment), 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 4% per annum plus the
Prime Rate. 

9

 

        "Prime Rate" shall mean the prime rate announced to be in effect from time to time, as published as the average rate in  The Wall Street Journal. 

        "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. 

        "Regulations T, U and X" shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as
the same may be modified and supplemented and in effect from time to time. 

        "Remittance Date" shall have the meaning provided in Section 2.05(b) hereof. 

        "Responsible Officer" shall mean, as to any Person, the chief executive officer, the chief financial officer or Senior Vice President of
Finance of such Person. 

        "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. 

        "S&P" shall mean Standard and Poor's Ratings Services. 

        "Second Lien Loan" shall mean an Eligible Mortgage Loan for which the related Mortgage constitutes a second priority lien on the related
Mortgaged Property. 

        "Secured Obligations" shall have the meaning provided in Section 4.01(c) hereof. 

        "Servicer" shall have the meaning provided in Section 11.14(c) hereof. 

        "Servicer Notice" shall have the meaning provided in Section 11.14(c) hereof. 

        "Servicing Agreement" shall have the meaning provided in Section 11.14(c) hereof. 

        "Servicing Records" shall have the meaning provided in Section 11.14(b) 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. 

        "System" shall mean all hardware or software, or any system consisting of one or more thereof, including, without limitation, any and all
enhancements, upgrades, customizations, modifications, maintenance and the like utilized by any Person for the benefit of such Person to perform its obligations and to administer and track, store,
process, provide, and where appropriate, insert, true and accurate dates and calculations for dates and spans with respect to the Mortgage Loans. 

        "Tangible Net Worth" shall mean, with respect to any Person, as of any date of determination, the amounts which would be included under
equity on a consolidated balance sheet of such Person and its Subsidiaries at such date in accordance with GAAP, less the consolidated net book value of all assets of such person and its Subsidiaries
(to the extent reflected as an asset in the balance sheet of such Person or any Subsidiary at such date) which will be treated as intangibles under GAAP; provided, that residual securities issued by
such person or its Subsidiaries shall not be treated as intangibles for purposes of this definition. 

10

 

        "Termination Date" shall mean November 16, 2002 or such earlier date on which this Loan Agreement shall terminate in accordance with the
provisions hereof or by operation of law. 

        "Test Period" shall have the meaning provided in Section 7.16 hereof. 

        "Total Indebtedness" shall mean, for any period, the aggregate Indebtedness of Aames Capital or the Guarantor, as applicable, during such
period. 

        "Underwriting Guidelines" shall mean the relevant Borrower's underwriting guidelines attached as Exhibit F hereto, as modified from time
to time in accordance with Section 7.09. 

        "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect from time to time 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 Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other 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. 

        1.02    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 Lender hereunder shall be prepared, in accordance
with GAAP. 

        Section
2.    Loans, Note and Prepayments.    

        2.01    Loans.    

        (a)  The
Lender agrees to make or continue, as applicable, on the terms and conditions of this Loan Agreement, loans (individually, a
"Loan" and, collectively, the "Loans") to the Borrowers in Dollars, from and including the Effective
Date to and including the Termination Date in an aggregate principal amount at any one time outstanding up to but not exceeding the lesser of (i) the Maximum Credit and (ii) the Borrowing Base as in
effect from time to time. 

        (b)  Subject
to the terms and conditions of this Loan Agreement, during such period the Borrowers may borrow, repay and reborrow hereunder;  provided, that, notwithstanding the foregoing, the Lender shall have no
obligation to make Loans to the Borrowers in excess of the Maximum Credit and,
in the event the obligation of the Lender to make Loans to the Borrowers is terminated as permitted hereunder, the Lender shall have no further obligation to make additional Loans hereunder. 

        (c)  In
no event shall a Loan be made when any Default or Event of Default has occurred and is continuing. 

        2.02    Notes.    

        (a)  The
Loans made by the Lender shall be evidenced by a single promissory note of the Borrowers substantially in the form of Exhibit
A hereto (the "Note"), dated the date hereof, payable to the Lender in a principal amount equal to the amount of the Maximum
Credit as originally in effect and otherwise duly completed. The Lender shall have the right to have its Note subdivided, by exchange for promissory notes of lesser denominations or otherwise. 

        (b)  The
date, amount and interest rate of each Loan made by the Lender to the Borrowers, and each payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of the Note, endorsed by the Lender on the schedule attached to the Note or any continuation thereof;  provided, that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Borrowers to make a payment
when due of any amount owing hereunder or under the Note in respect of the Loans. 

11

 

        2.03    Procedure for Borrowing.    

        (a)  The
Borrowers may request a borrowing hereunder, on any Business Day during the period from and including the Effective Date to and including the Termination Date, by
delivering to the Lender, with a copy to the Custodian, a written request for borrowing, substantially in the form of Exhibit D attached hereto, which
request must be received by the Lender prior to 4:00 p.m., New York City time, one (l) Business Day prior to the requested Funding Date. Such request for borrowing shall (i) attach a schedule
identifying the Eligible Mortgage Loans that the Borrowers propose to pledge to the Lender and to be included in the Borrowing Base in connection with such borrowing, (ii) specify the requested
Funding Date, (iii) be accompanied by a Mortgage Loan Tape containing information with respect to the Eligible Mortgage Loans that the Borrowers propose to pledge to the Lender and to be included in
the Borrowing Base in connection with such borrowing, and (iv) attach an officer's certificate signed by a Responsible Officer of each Borrower as required by Section 5.02(b) hereof. 

        (b)  The
Borrowers shall release to the Custodian no later than 4:00 p.m., New York City time, two (2) Business Days prior to the requested Funding Date, the Mortgage File
pertaining to each Eligible Mortgage Loan to be pledged to the Lender and included in the Borrowing Base on such requested Funding Date, in accordance with the terms and conditions of the Custodial
Agreement. 

        (c)  Pursuant
to the Custodial Agreement, the Custodian shall deliver to the Lender and the Borrowers, no later than 12:00 noon, New York City time, on a Funding Date, a
Trust Receipt (as defined in the Custodial Agreement) in respect of all Mortgage Loans pledged to the Lender on such Funding Date, and a Mortgage Loan Schedule and Exception Report. 

        (d)  Upon
the Borrowers' request for a borrowing pursuant to Section 2.03(a), and upon satisfaction of all conditions precedent set forth in Section 5.01 and 5.02 with
respect thereto, subject to Section 2.03(f) below, the Lender shall make a Loan to the Borrowers on the requested Funding Date, in the amount so requested. 

        (e)  Subject
to Section 5 hereof, such borrowing will then be made available to the Borrowers by the Lender transferring, via wire transfer, to the following account of the
Borrowers: United California Bank, for the A/C of Aames Capital Corporation, ABA# 122-003-516, Attn: Aames Capital Corporation, in the aggregate amount of such borrowing in funds immediately available
to the Borrowers, or such other account as the Borrowers may direct in writing to the Lender. 

        (f)    In
the case of any Loan made with respect to any Class C Defaulted Loan for which a BPO has not been delivered to the Lender on or prior to the related Funding Date or
with respect to any Mortgage Loan that at any time becomes a Class C Defaulted Loan, the Lender shall transmit an invoice to the Borrowers on a monthly basis in the amount of $100 for each such Class
C Defaulted Loan to be applied to the cost of obtaining a BPO for each such Class C Defaulted Loan (any excess remaining after payment of the cost of such BPO to be remitted to the Borrowers, and any
shortfall towards payment of the BPO to be paid by the Borrowers to the Lender promptly following demand therefor). Any amounts so invoiced by the Lender to the Borrowers shall be payable promptly
(and in any event no later than 10 Business Days following receipt thereof). 

        2.04    Limitation on Types of Loans; Illegality.    Anything herein to the contrary notwithstanding, if, on or prior
to the determination of any Eurodollar Rate: 

        (a)  the
Lender determines in good faith, which determination shall be conclusive, that quotations of interest rates for the relevant deposits referred to in the definition
of "Eurodollar Rate" in Section 1.01 hereof are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for Loans as provided herein; or 

        (b)  the
Lender determines, which determination shall be conclusive, that the relevant rate of interest referred to in the definition of "Eurodollar Rate" in Section 1.01
hereof upon the basis of 

12

 

which the rate of interest for Loans is to be determined is not likely adequately to cover the cost to the Lender of making or maintaining Loans; or 

        (c)  it
becomes unlawful for the Lender to honor its obligation to make or maintain Loans hereunder using a Eurodollar Rate; 

then
the Lender shall give the Borrowers prompt notice thereof and, so long as such condition remains in effect, the Lender shall be under no obligation to make additional Loans, and the Borrowers
shall, either prepay all such Loans as may be outstanding or pay interest on such Loans at a rate per annum equal to the Federal Funds Rate plus 0.50% plus the Applicable Margin. 

        2.05    Repayment of Loans; Interest.    

        (a)  The
Borrowers hereby promise, jointly and severally, to repay in full on the Termination Date the then aggregate outstanding principal amount of the Loans. 

        (b)  The
Borrowers hereby promise, jointly and severally, to pay to the Lender interest on the unpaid principal amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan shall be paid in full, at a rate per annum equal to the Eurodollar Rate plus the Applicable Margin.
Notwithstanding the foregoing, the Borrowers hereby promise, jointly and severally, to pay to the Lender interest at the applicable Post-Default Rate on any principal of any Loan and on any other
amount payable by the Borrowers hereunder or under the Note that shall not be paid in full when due (whether at stated maturity, by acceleration or by mandatory prepayment or otherwise) for the period
from and including the due date thereof to but excluding the date the same is paid in full. Accrued interest on each Loan shall be payable monthly on the fifth Business Day of each month and for the
last month of the Loan Agreement on the fifth Business Day of such last month and on the Termination Date (each a "Remittance Date"); provided, that,
the Lender may, in its sole discretion, require accrued interest to be paid simultaneously with any prepayment of principal made by the Borrowers on account of any of the Loans outstanding. Interest
payable at the Post-Default Rate shall accrue daily and shall be payable upon such accrual. 

        (c)  It
is understood and agreed that, unless and until a Default or Event of Default shall have occurred and be continuing, the Borrowers shall be entitled to the proceeds
of the Mortgage Loans pledged to the Lender hereunder. At any time while a Default has occurred and is continuing, upon notice from the Lender, the Borrowers shall promptly deliver all proceeds of the
Mortgage Loans pledged to the Lender hereunder to the Lender. At any time while an Event of Default has occurred and is continuing the Borrowers shall promptly deliver all proceeds of the Mortgage
Loans pledged to the Lender hereunder to the Lender 

        2.06    Mandatory Prepayments or Pledge.    

        (a)  If
at any time the aggregate outstanding principal amount of Loans exceeds the Borrowing Base (a "Borrowing Base
Deficiency"), as determined by the Lender and notified to the Borrowers on any Business Day, the Borrowers shall no later than one Business Day after receipt of such notice,
either prepay the Loans in part or in whole or pledge additional Eligible Mortgage Loans (which Collateral shall be in all respects acceptable to the Lender) to the Lender, such that after giving
effect to such
prepayment or pledge the aggregate outstanding principal amount of the Loans does not exceed the Borrowing Base. 

        (b)  The
Borrowers shall prepay the Loans in the amounts of prepayments remitted to the Lender in accordance with Section 7.21 hereof. 

        (c)  If
at any time MS & Co.'s corporate bond rating has been lowered or downgraded to a rating below A- by S&P or A3 by Moody's and the Borrowers shall repay all amounts
owing to the Lender under this Agreement, the Note and the other Loan Documents within 90 days following such downgrade. 

13

 

        2.07    Extension of Termination Date.    At the request of the Borrowers made at least thirty (30) days, but in no
event earlier than ninety (90) days, prior to the then current Termination Date, the Lender may in its sole discretion extend the Termination Date for a period to be determined by Lender in its sole
discretion by giving written notice of such extension to the Borrowers no later than twenty (20) days, but in no event earlier than thirty (30) days, prior to the then current Termination Date. Any
failure by the Lender to deliver such notice of extension shall be deemed to be the Lender's determination not to extend the then current Termination Date. 

        Section
3.    Payments; Computations; Etc.    

        3.01    Payments.    

        (a)  Except
to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Borrowers under this Loan Agreement and the Note,
shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Lender at the following account maintained by the Lender: Account No. 40615114, for the
account of MSMCI, Citibank, N.A., ABA No. 021000089, Attn: Whole Loan Operations, not later than 5:00 p.m., New York City time, on the date on which such payment shall become due (and each such
payment made after such time on such due date shall be deemed to have been made on the next succeeding Business Day). Each Borrower acknowledges that it has no rights of withdrawal from the foregoing
account. 

        (b)  Except
to the extent otherwise expressly provided herein, if the due date of any payment under this Loan Agreement or the Note would otherwise fall on a day that is not
a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension. 

        3.02    Computations.    Interest on the Loans 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. 

        3.03    Requirements of Law.    

        (a)  If
any Requirement of Law (other than with respect to any amendment made to the Lender'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 Lender 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 Lender to any tax of any kind whatsoever with respect to this Loan Agreement, the Note or any Loan made by it (excluding net income taxes) or change
the basis of taxation of payments to the Lender in respect thereof; 

        (ii)  shall
impose, modify or hold applicable any reserve, special deposit, compulsory Loan or similar requirement against assets held by, deposits or other liabilities in or
for the account of, advances, Loans or other extensions of credit by, or any other acquisition of funds by, any office of the Lender which is not otherwise included in the determination of the
Eurodollar Rate hereunder; 

        (iii)  shall
impose on the Lender any other condition; 

and
the result of any of the foregoing is to increase the cost to the Lender, by an amount which the Lender deems to be material, of making, participation in continuing or maintaining any Loan or to
reduce any amount due or owing hereunder in respect thereof, then, in any such case, the Borrowers shall promptly pay the Lender such additional amount or amounts as will compensate the Lender for
such increased cost or reduced amount receivable. 

14

 

        (b)  If
the Lender 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 Lender'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 Lender or any
corporation controlling the Lender 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 Lender's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which the Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration the Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by the Lender to be material, then from time to time, the Borrowers, jointly and severally, shall promptly pay to the
Lender such additional amount or amounts as will compensate the Lender for such reduction. 

        (c)  If
the Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Borrowers of the event by reason of which it has
become so entitled. A certificate as to any additional amounts payable pursuant to this Section submitted by the Lender to the Borrowers shall be conclusive in the absence of manifest error. 

        3.04    Amendment Fee.    The Borrowers agree to pay to the Lender on or prior to the Effective Date an amendment fee
as set forth in the Fee Letter. 

        Section
4.    Collateral Security.    

        4.01    Collateral; Security Interest.    

        (a)  Pursuant
to the Custodial Agreement, the Custodian shall hold the Mortgage Loan Documents as exclusive bailee and agent for the benefit of the Lender pursuant to terms
of the Custodial Agreement and shall deliver to the Lender Trust Receipts (as defined in the Custodial Agreement) each to the effect that it has reviewed such Mortgage Loan Documents in the manner and
to the extent required by the Custodial Agreement and identifying any deficiencies in such Mortgage Loan Documents as so reviewed. 

        (b)  All
of each Borrower's right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located, is hereinafter referred to as the "Collateral": 

          (i)  all
Mortgage Loans; 

        (ii)  all
Mortgage Loan Documents, including without limitation all promissory notes, and all Servicing Records, servicing agreements and any other collateral pledged or
otherwise relating to such Mortgage Loans, together with all files, documents, instruments, surveys, certificates, correspondence, appraisals, computer programs, computer storage media, 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 Mortgage Loan and all claims and payments thereunder; 

        (iv)  all
other insurance policies and insurance proceeds relating to any Mortgage Loan or the related Mortgaged Property; 

        (v)  all
Interest Rate Protection Agreements, relating to or constituting any and all of the foregoing; 

        (vi)  all
collateral, however defined, under any other agreement between any Borrower or any of its Affiliates on the one hand and the Lender or any of its Affiliates on the
other hand; 

15

  

      (vii)  all
"general intangibles", "accounts", "instruments", "investment property", "deposit accounts" and "chattel paper" as defined in the Uniform Commercial Code relating
to or constituting any and all of the foregoing; and 

      (viii)  any
and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing. 

        (c)  Each
Borrower hereby assigns, pledges and grants a security interest in all of its right, title and interest in, to and under the Collateral to the Lender to secure the
MS Indebtedness including without limitation the repayment of principal of and interest on all Loans and all other amounts owing to the Lender hereunder, under the Note and under the other Loan
Documents (collectively, the "Secured Obligations"). Each Borrower agrees to mark its accounting computer records and tapes to evidence the interests
granted to the Lender hereunder. 

        4.02    Further Documentation.    At any time and from time to time, upon the written request of the Lender, and at
the sole expense of the Borrowers, the Borrowers 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 Lender may reasonably request for the purpose of obtaining or preserving the full benefits of this Loan 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 Liens created hereby. The Borrowers also hereby
authorize the Lender to file any such financing or continuation statement without the signatures of the Borrowers to the extent permitted by applicable law. A carbon, photographic or other
reproduction of this Loan Agreement shall be sufficient as a financing statement for filing in any jurisdiction. 

        4.03    Changes in Locations, Name, etc.    No Borrower shall (i) change the location of its chief executive
office/chief place of business from that specified in Section 6 hereof or (ii) change its name, identity or corporate structure (or the equivalent) or (iii) change the location where it maintains its
records with respect to the Collateral or (iv) reincorporate or reorganize under the laws of another jurisdiction unless it shall have given the Lender at least 30 days prior written notice thereof
and shall have delivered to the Lender all Uniform Commercial Code financing statements and amendments thereto as the Lender shall request and taken all other actions deemed necessary by the Lender to
continue its perfected status in the Collateral with the same or better priority. 

        4.04    Lender's Appointment as Attorney-in-Fact.    

        (a)  Each
Borrower hereby irrevocably constitutes and appoints the Lender 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 Borrower and in the name of such Borrower or in its own name, from time to time in the Lender's discretion,
for the purpose of carrying out the terms of this Loan Agreement, 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 Loan Agreement, and, without limiting the generality of the foregoing, each Borrower hereby gives the Lender the power and right, on behalf of such Borrower, without
assent by, but with notice to, such Borrower, if an Event of Default shall have occurred and be continuing, to do the following: 

          (i)  in
the name of each Borrower or 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 under any mortgage insurance or with respect to any other Collateral 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 the Lender for the purpose of collecting any and all such moneys due under any such mortgage insurance or with respect to any other Collateral whenever payable; 

16

 

        (ii)  to
pay or discharge taxes and Liens levied or placed on or threatened against the Collateral; and 

        (iii)  (A)
to direct any party liable for any payment under any Collateral to make payment of any and all moneys due or to become due thereunder directly to the Lender or as
the Lender 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 Collateral; (C) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (E) to
defend any suit, action or proceeding brought against any Borrower with respect to any Collateral; (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 the Lender may deem appropriate; and (G) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Lender were the absolute owner thereof for all purposes, and to do, at the Lender's option and the Borrowers' expense, at any time, and
from time to time, all acts and things which the Lender deems necessary to protect, preserve or realize upon the Collateral and the Lender's Liens thereon and to effect the intent of this Loan
Agreement, all as fully and effectively as the Borrowers might do. 

Each
Borrower 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. 

        (b)  Each
Borrower also authorizes the Lender, at any time and from time to time, to execute, in connection with any sale provided for in Section 4.07 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral and to file any initial financing statement, amendments thereto and continuation statements with
or without the signature of any Borrower as authorized by applicable law, as applicable to all or any part of the Collateral. 

        (c)  The
powers conferred on the Lender are solely to protect the Lender's interests in the Collateral and shall not impose any duty upon the Lender to exercise any such
powers. The Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither the Lender nor any of its officers, directors, or employees
shall be responsible to the Borrowers for any act or failure to act hereunder, except for its own gross negligence or willful misconduct. 

        4.05    Performance by Lender of Borrowers' Obligations.    If any Borrower fails to perform or comply with any of its
agreements contained in the Loan Documents and the Lender itself performs or complies, or otherwise causes performance or compliance, with such agreement, the expenses of the Lender 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 Borrowers to the Lender on demand and shall
constitute Secured Obligations. 

        4.06    Proceeds.    If an Event of Default shall occur and be continuing, (a) all proceeds of Collateral received by
the Borrowers consisting of cash, checks and other near-cash items shall be held by the Borrowers in trust for the Lender, segregated from other funds of the Borrowers, and shall forthwith upon
receipt by any Borrower be turned over to the Lender in the exact form received by such Borrower (duly endorsed by such Borrower to the Lender, if required) and (b) any and all such proceeds received
by the Lender (whether from a Borrower or otherwise) may, in the sole discretion of the Lender, be held by the Lender as collateral security for, and/or then or at any time thereafter may be applied
by the Lender against, the Secured Obligations (whether matured or unmatured), such application to be in such order as the Lender shall elect. Any balance of such proceeds remaining after the Secured
Obligations shall have been paid in full and this Loan Agreement shall have been 

17

 

terminated shall be paid over to the Borrowers or to whomsoever may be lawfully entitled to receive the same. For purposes hereof, proceeds shall include, but not be limited to, all principal and
interest payments, all prepayments and payoffs, insurance claims, condemnation awards, sale proceeds, real estate owned rents and any other income and all other amounts received with respect to the
Collateral. 

        4.07    Remedies.    If an Event of Default shall occur and be continuing, the Lender may, at its option, enter into
one or more Interest Rate Protection Agreements covering all or a portion of the Mortgage Loans pledged to the Lender hereunder, and the Borrowers shall be responsible for all damages, judgments,
costs and expenses of any kind which may be imposed on, incurred by or asserted against the Lender
relating to or arising out of such Interest Rate Protection Agreements; including without limitation any losses resulting from such Interest Rate Protection Agreements. If an Event of Default shall
occur and be continuing, the Lender may exercise, in addition to all other rights and remedies granted to it in this Loan Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party under the Uniform Commercial Code. Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Borrowers or any other Person (each and all
of which demands, presentments, protests, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing),
in one or more parcels or as an entirety at public or private sale or sales, at any exchange, broker's board or office of the Lender or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Borrower,
which right or equity is hereby waived or released. The Borrowers further agree, at the Lender's request, to assemble the Collateral and make it available to the Lender at places which the Lender
shall reasonably select, whether at the Borrowers' premises or elsewhere. The Lender shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of
the Lender hereunder, including without limitation reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Secured Obligations, in such order as the Lender may elect,
and only after such application and after the payment by the Lender of any other amount required or permitted by any provision of law, including without limitation Section 9-615(a)(3) of the Uniform
Commercial Code, need the Lender account for the surplus, if any, to the Borrowers. To the extent permitted by applicable law, each Borrower waives all claims, damages and demands it may acquire
against the Lender arising out of the exercise by the Lender of any of its rights hereunder, other than those claims, damages and demands arising from the gross negligence or willful misconduct of the
Lender. If any notice of a proposed sale or other disposition of Collateral 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. The Borrowers shall remain liable for any deficiency (plus accrued interest thereon as contemplated pursuant to Section 2.05(b) hereof) if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations and the fees and disbursements of any attorneys employed by the Lender to collect such deficiency. 

        4.08    Limitation on Duties Regarding Preservation of Collateral.    The Lender's duty with respect to the custody,
safekeeping and physical preservation of the Collateral 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 Lender
deals with similar property for its own account. Neither the Lender nor any of its directors, 

18

 

officers or employees shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Borrowers or otherwise. 

        4.09    Powers Coupled with an Interest.    All authorizations and agencies herein contained with respect to the
Collateral are irrevocable and powers coupled with an interest. 

        4.10    Release of Security Interest.    Upon termination of this Loan Agreement and repayment to the Lender of all
Secured Obligations and the performance of all obligations under the Loan Documents the Lender shall release its security interest in any remaining Collateral. 

        4.11    Interest Rate Protection Agreements.    In the event that any Person (other than the Lender) shall have a Lien
on any Interest Rate Protection Agreement that any Borrower has entered into with respect to both Mortgage Loans pledged to the Lender hereunder and other loans which are not pledged to the Lender
hereunder, the Lender agrees that in the event that the Lender shall receive any proceeds, recoveries or other amounts in respect of such Interest Rate Protection Agreement following the exercise of
remedies hereunder after an Event of Default, the Lender shall remit to any such Person, as to which the Lender has received notice of such Person's Lien on such Interest Rate Protection Agreement,
any excess proceeds of such Interest Rate Protection Agreement following repayment of all obligations owing to the Lender hereunder. 

        Section
5.    Conditions Precedent.    

        5.01    Initial Loan.    The obligation of the Lender to make its initial Loan hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan, of the condition precedent that the Lender shall have received all of the following items, each of which shall be
satisfactory to the Lender and its counsel in form and substance: 

        (a)    Loan Documents.    

        (i)    Loan Agreement.    The Loan Agreement, duly executed and delivered by the Borrowers; 

        (ii)    Note.    The Note, duly executed and delivered by the Borrowers; 

        (b)    Custodial Joinder Agreement.    The Custodial Joinder Agreement duly executed and delivered by the Borrowers
and the Custodian; 

        (c)    Organizational Documents.    A good standing certificate and certified copies of the charter and by-laws (or
equivalent documents) of each Borrower and of all corporate or other authority for each Borrower with respect to the execution, delivery and performance of the Loan Documents and each other
document to be delivered by such Borrower from time to time in connection herewith (and the Lender may conclusively rely on such certificate until it receives notice in writing from such Borrower to
the contrary); 

        (d)    Legal Opinion.    A legal opinion of the in-house counsel, with respect to corporate matters, and outside
counsel to the Borrowers, with respect to enforceability and certain other matters, substantially in the form attached hereto as Exhibit C; 

        (e)    Servicing Agreement(s).    Any Servicing Agreement, certified as a true, correct and complete copy of the
original, together with a fully executed Servicer Notice, and, if the Servicer is a Borrower or an Affiliate of a Borrower, the letter of the applicable Servicer consenting to termination of such
Servicing Agreement upon the occurrence of an Event of Default; 

        (f)    Filings, Registrations, Recordings.    Any documents (including, without limitation, financing statements)
required to be filed, registered or recorded in order to create, in favor of the Lender, a perfected, first-priority security interest in the Collateral, subject to no Liens other than those created 

19

 

hereunder, shall have been properly prepared and executed for filing (including the applicable county(ies) if the Lender determines such filings are necessary in its sole 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; provided, that assignments of the
Mortgages securing or related to the Mortgage Loans shall not be required to be recorded prior to the occurrence of an Event of Default; 

        (g)    Amendment Fee.    The amendment fee as contemplated by Section 3.04; 

        (h)    Financial Statements.    The financial statements referenced in Section 6.02; 

        (i)    Underwriting Guidelines.    A certified copy of the Underwriting Guidelines related to each Borrower, which
shall be in form and substance satisfactory to the Lender; 

        (j)    Consents, Licenses, Approvals, etc.    Copies certified by each Borrower of all consents, licenses and
approvals, if any, required in connection with the execution, delivery and performance by such Borrower of, and the validity and enforceability of, the Loan Documents, which consents, licenses and
approvals shall be in full force and effect; and 

        (k)    Other Documents.    Such other documents as the Lender may reasonably request. 

        5.02    Initial and Subsequent Loans.    The making of each Loan to the Borrowers (including the initial Loan) on any
Business Day is subject to the satisfaction of the following further conditions precedent, both immediately prior to the making of such Loan and also after giving effect thereto and to the intended
use thereof: 

        (a)    No Default.    No Default or Event of Default shall have occurred and be continuing; 

        (b)    Representations and Warranties.    Both immediately prior to the making of such Loan and also after giving
effect thereto and to the intended use thereof, the representations and warranties made by the Borrowers in Section 6 and Schedule 1 hereof, and elsewhere in each of the Loan Documents, shall be true,
correct and complete on and as of the date of the making of such Loan in all material respects (in the case of the representations and warranties in Section 6.10 and Schedule 1, solely with respect to
Mortgage Loans included in the Borrowing Base) 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); and the Lender shall have received an officer's certificate signed by a Responsible Officer of each Borrower certifying as to the truth, accuracy and
completeness of the above, which certificate shall specifically include a statement that such Borrower is in compliance with all governmental licenses and authorizations and is qualified to do
business and in good standing in all required jurisdictions. 

        (c)    Borrowing Base.    The aggregate outstanding principal amount of the Loans shall not exceed the Borrowing Base; 

        (d)    Due Diligence.    Subject to the Lender's right to perform one or more Due Diligence Reviews pursuant to
Section 11.15 hereof, the Lender shall have completed its due diligence review of the Mortgage Loan Documents for each Loan and such other documents, records, agreements, instruments, mortgaged
properties or information relating to such Mortgage Loans as the Lender in its sole discretion deems appropriate to review and such review shall be satisfactory to the Lender in its sole discretion; 

        (e)    Trust Receipt and Mortgage Loan Schedule and Exception Report.    The Lender shall have received a Trust
Receipt, substantially in the form of Annex 2 to the Custodial Agreement, dated the Funding Date, from the Custodian, duly completed, with a Mortgage
Loan Schedule and Exception Report attached thereto including only such exceptions as are acceptable to the Lender in its sole discretion in respect of Eligible Mortgage Loans to be pledged hereunder
on such Business Day; 

20

 

        (f)    Release Letter.    The Lender shall have received from each Borrower a Warehouse Lender's Release Letter
substantially in the form of Exhibit E-2 hereto (or such other form acceptable to the Lender) or a Borrower's Release Letter substantially in the form
of Exhibit E-1 hereto (or such other form acceptable to the Lender) covering each Mortgage Loan to be pledged to the Lender which was previously pledged
to another lender; 

        (g)    Fees and Expenses.    The Lender shall have received all fees and expenses of counsel to the Lender as
contemplated by Section 11.03(b), which amount, at the Lender's option, may be netted from any Loan advanced under this Agreement; 

        (h)    No Market Events.    None of the following shall have occurred and/or be continuing: 

          (i)  an
event or events shall have occurred resulting in the effective absence of a "repo market" or comparable "lending market" for financing debt obligations secured by
mortgage loans or securities or an event or events shall have occurred resulting in the Lender not being able to finance any Mortgage Loans through the "repo market" or "lending market" with
traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; 

        (ii)  an
event or events shall have occurred resulting in the effective absence of a "securities market" for securities backed by mortgage loans or an event or events shall
have occurred resulting in the Lender not being able to sell securities backed by mortgage loans at prices which would have been reasonable prior to such event or events; or 

        (iii)  there
shall have occurred a material adverse change in the financial condition of the Lender which affects (or can reasonably be expected to affect) materially and
adversely the ability of the Lender to fund its obligations under this Loan Agreement; and 

        (i)    No Morgan Stanley Downgrade.    Morgan Stanley Dean Witter & Co.'s corporate bond rating as calculated by S&P
or Moody's has not been lowered or downgraded to a rating below A- as indicated by S&P or below A3 as indicated by Moody's. 

        (j)    Maintenance of Tangible Net Worth.    The Tangible Net Worth of the Guarantor on a consolidated basis on any
given day, shall not be less than (A) $37,000,000 prior to January 1, 2002, and (B) $34,000,000, thereafter. 

        Each
request for a borrowing by the Borrowers hereunder shall constitute a certification by the Borrowers that all the conditions set forth in this Section 5 (other than Section 5.02(h)
and (i)) have been satisfied (both as of the date of such notice, request or confirmation and as of the date of such borrowing). 

        Section
6.    Representations and Warranties.    Each Borrower represents and warrants to the Lender that throughout
the term of this Loan Agreement: 

        6.01    Legal Name.    On the Effective Date the exact legal name of each Borrower is and during the four months
immediately preceding July 1, 2001, such name has been, respectively Aames Capital Corporation, and Aames Funding Corporation and no Borrower has used any previous names, assumed names or trade names
except as set forth on Schedule 5 attached hereto. 

        6.02    Existence.    Each Borrower (a) 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; and (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 

21

 

failure so to qualify would not be reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect. 

        6.03    Financial Condition.    Aames Capital has heretofore furnished to the Lender a copy of its consolidated
balance sheet and the consolidated balance sheets of its consolidated Subsidiaries for the fiscal year of Aames Capital ended June 30, 2001 and the related consolidated statements of income and
retained earnings and of cash flows for Aames Capital and its consolidated Subsidiaries for such fiscal year, with the opinion thereon of Ernst & Young, LLP. All such financial statements are complete
and correct and fairly present, in all material respects, the consolidated financial condition of Aames Capital and its Subsidiaries and the consolidated results of their operations as at such dates
and for such fiscal periods, all in accordance with GAAP applied on a consistent basis. Since June 30, 2001 there has been no material adverse change in the consolidated business, operations or
financial condition of Aames Capital and its consolidated Subsidiaries taken as a whole from that set forth in said financial statements. 

        6.04    Litigation.    There are no actions, suits, arbitrations, investigations (including, without limitation, any
of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting any Borrower or any of its Subsidiaries or affecting any of the Property of any of them before any
Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Loan Documents or any action to be taken in connection with the transactions contemplated hereby,
or (ii) except as otherwise disclosed in the Annual Report on Form 10-K for the fiscal year ended June
30, 2001 of Aames Financial Corporation (a) makes a claim or claims in an aggregate amount greater than $3,000,000, (b) which, individually or in the aggregate, if adversely determined, could
reasonably be likely to have a Material Adverse Effect, or (c) requires filing with the Securities and Exchange Commission in accordance with the 1934 Act or any rules thereunder. 

        6.05    No Breach.    Neither (a) the execution and delivery of the Loan Documents nor (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 any Borrower, or any applicable law, rule or
regulation, or any order, writ, injunction or decree of any Governmental Authority, or any Servicing Agreement or other material agreement or instrument to which any Borrower 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 is subject, or constitute a default under any such material agreement or instrument or result
in the creation or imposition of any Lien (except for the Liens created pursuant to this Loan Agreement) upon any Property of any Borrower or any of its Subsidiaries pursuant to the terms of any such
agreement or instrument. 

        6.06    Action.    Each Borrower has all necessary corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Loan Documents; the execution, delivery and performance by each Borrower of each of the Loan Documents have been duly authorized by all necessary
corporate or other action on its part; and each Loan Document has been duly and validly executed and delivered by each Borrower and constitutes a legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with its terms. 

        6.07    Approvals.    No authorizations, approvals or consents of, and no filings or registrations with, any
Governmental Authority or any securities exchange are necessary for the execution, delivery or performance by each Borrower of the Loan Documents or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens created pursuant to this Loan Agreement. 

        6.08    Margin Regulations.    Neither the making of any Loan hereunder, nor the use of the proceeds thereof, will
violate or be inconsistent with the provisions of Regulations T, U or X. 

22

 

        6.09    Taxes.    Each Borrower and each of its Subsidiaries has 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 as 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 each Borrower and each of its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of such Borrower, adequate. 

        6.10    Investment Company Act.    No Borrower nor any of their Subsidiaries is an "investment company", or a company
"controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. 

        6.11    Collateral; Collateral Security.    

        (a)  No
Borrower has assigned, pledged, or otherwise conveyed or encumbered any Mortgage Loan or other Collateral to any other Person, and immediately prior to the pledge of
such Mortgage Loan or any other Collateral to the Lender, each Borrower was the sole owner of the Collateral in which a security interest has been granted by it and had good and marketable title
thereto, free and clear of all Liens, in each case except for Liens to be released simultaneously with the Liens granted in favor of the Lender hereunder. No Mortgage Loan or other Collateral pledged
to the Lender hereunder was acquired (by purchase or otherwise) by any Borrower from an Affiliate of any Borrower other than another Borrower. 

        (b)  The
provisions of this Loan Agreement are effective to create in favor of the Lender a valid security interest in all right, title and interest of the Borrowers in, to
and under the Collateral. 

        (c)  Upon
receipt by the Custodian of each Mortgage Note, endorsed in blank by a duly authorized officer of the relevant Borrower and (ii) the issuance by the Custodian of a
Trust Receipt therefor, the Lender shall have a fully perfected first priority security interest therein, in the Mortgage Loan evidenced thereby and in the Borrowers' interest in the related Mortgaged
Property. 

        (d)  Upon
the filing of financing statements on Form UCC-1 naming the Lender as "Secured Party" and the Borrowers as "Debtors", and describing the Collateral, in the
jurisdictions and recording offices listed on Schedule 2 attached hereto, the security interests granted hereunder in the Collateral will constitute fully perfected first priority security interests
under the Uniform Commercial Code in all right, title and interest of the Borrowers in, to and under such Collateral which can be perfected by filing under the Uniform Commercial Code. 

        6.12    Chief Executive Office/Jurisdiction of Organization.    On the Effective Date, each Borrower's chief executive
office is located at 350 South Grand Avenue, 43rd Floor, Los Angeles, California 90071. On the Effective Date, each Borrower's jurisdiction of organization is California. 

        6.13    Location of Books and Records.    The location where each Borrower keeps its books and records, including all
computer tapes and records relating to the Collateral is its chief executive office. 

        6.14    True and Complete Disclosure.    The information, reports, financial statements, exhibits and schedules
furnished in writing by or on behalf of the Borrowers to the Lender in connection with the negotiation, preparation or delivery of this Loan Agreement and the other Loan 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 Borrowers to the Lender in
connection with this Loan Agreement and the other Loan 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 

23

 

stated or certified. There is no fact known to a Responsible Officer of any Borrower, after due inquiry, that could reasonably be expected to have a Material Adverse Effect that has not been
disclosed herein, in the other Loan Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Lender for use in connection with the
transactions contemplated hereby or thereby. 

        6.15    Tangible Net Worth.    On the Effective Date, Aames Capital's Tangible Net Worth is not less than
$360,000,000. 

        6.16    ERISA.    Each Plan to which any Borrower or its Subsidiaries make direct contributions, and, to the knowledge
of such Borrower, 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 any Borrower would be under an obligation to furnish a report to the
Lender under Section 7.01(d) hereof. 

        6.17    Capitalization.    Schedule 3 hereto contains a true, complete and correct list of all issued and outstanding
shares of capital stock of all Subsidiaries of Aames Financial Corporation and the record owner thereof. 

        6.18    Hedges.    As of the Effective Date, the Borrowers have not assigned, pledged, granted a security interest in
or lien on or otherwise encumbered any of its rights, title or interest in and to any Interest Rate Protection Agreement, other than in favor of the Lender. 

        Section
7.    Covenants of the Borrowers.    Each Borrower covenants and agrees with the Lender that, so long as any
Loan is outstanding and until payment in full of all Secured Obligations: 

        7.01    Financial Statements.    Aames Capital shall deliver to the Lender: 

        (a)  as
soon as available and in any event within 30 days after the end of each calendar month other than the last month of any fiscal quarter, and within 45 days after the
end of each of the first three quarterly fiscal periods of each fiscal year, the unaudited consolidated balance sheets of the Aames Capital and its consolidated Subsidiaries and the Guarantor and its
consolidated Subsidiaries, as at the end of such month and the related unaudited consolidated statements of income and retained earnings and of cash flows for the Aames Capital and its consolidated
Subsidiaries and the Guarantor and its consolidated Subsidiaries, for such month and the portion of the fiscal year through the end of such month, setting forth in each case in comparative form the
figures for the previous year, accompanied by a certificate of a Responsible Officer of each of Aames Capital and the Guarantor, which certificate shall state that said consolidated financial
statements fairly present the consolidated financial condition and results of operations of Aames Capital and its consolidated Subsidiaries or the Guarantor and its consolidated Subsidiaries, as
applicable, in accordance with GAAP, consistently applied, as at the end of, and for, such month (subject to normal year-end audit adjustments); 

        (b)  as
soon as available and in any event within 90 days after the end of each fiscal year of Aames Capital and the Guarantor, the consolidated balance sheets of Aames
Capital and its consolidated Subsidiaries and the Guarantor 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 Aames Capital and its consolidated Subsidiaries and the Guarantor and its 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 Aames Capital and its consolidated Subsidiaries or
the Guarantor and its consolidated Subsidiaries, as applicable, as at the end of, and for, such fiscal year in accordance with GAAP, and a 

24

 

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; 

        (c)  from
time to time such other information regarding the financial condition, operations, or business of the Borrowers or the Guarantor as the Lender may reasonably
request; and 

        (d)  as
soon as reasonably possible, and in any event within thirty (30) days after a Responsible Officer of any Borrower or the Guarantor knows, or with respect to any Plan
or Multiemployer Plan to which any Borrower or any of its Subsidiaries or the Guarantor or any of its Subsidiaries 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 Borrowers or the Guarantor, as applicable,
setting forth details respecting such event or condition and the action, if any, that the Borrowers or any ERISA Affiliate or the Guarantor 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 Borrowers or an ERISA Affiliate or the Guarantor or an ERISA Affiliate with respect to such event or condition): 

          (i)  any
reportable event, as defined in Section 4043(c) of ERISA and the regulations issued thereunder, with respect to a Plan, as to which PBGC has not by regulation
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; 

        (ii)  the
distribution under Section 4041(c) of ERISA of a notice of intent to terminate any Plan or any action taken by any Borrower or an ERISA Affiliate or by the
Guarantor or an ERISA Affiliate to terminate any Plan; 

        (iii)  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
any Borrower or any ERISA Affiliate or the Guarantor 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; 

25

  

        (iv)  the
complete or partial withdrawal from a Multiemployer Plan by any Borrower or any ERISA Affiliate or the Guarantor 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 any Borrower or any ERISA Affiliate or the Guarantor
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; 

        (v)  the
institution of a proceeding by a fiduciary of any Multiemployer Plan against any Borrower or any ERISA Affiliate or the Guarantor or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days; and 

        (vi)  the
adoption of an amendment to any Plan that would result in the loss of tax-exempt status of the Plan and trust of which such Plan is a part if any Borrower or an
ERISA Affiliate or the Guarantor or any ERISA Affiliate fails to provide timely security to such Plan if and as required by the provisions of Section 401(a)(29) of the Code or Section 307 of ERISA. 

The
Borrowers and the Guarantor will furnish to the Lender, at the time it furnishes each set of financial statements pursuant to paragraphs (a) and (b) above, a certificate of a Responsible Officer
of each Borrower or the Guarantor, as applicable, (i) stating that, to the best of such Responsible Officer's knowledge, such Borrower or the Guarantor, as applicable, during such fiscal period or
year has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Loan Agreement and the other Loan 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 such Borrower or the Guarantor, as applicable, has taken or proposes to take with respect thereto) and
(ii) showing in detail the calculations supporting such Responsible Officer's certification of such Borrower's or the Guarantor's, as applicable, compliance with the requirements of Sections 7.14,
7.15, and 7.17 financial covenants. 

        7.02    Litigation.    Each Borrower will promptly, and in any event within 10 days after service of process on any of
the following, give to the Lender notice of all litigation, actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other
legal or arbitrable proceedings affecting any Borrowers or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority that (i) questions or challenges
the validity or enforceability of any of the Loan Documents or any action to be taken in connection with the
transactions contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater than $3,000,000, (iii) which, individually or in the aggregate, if adversely determined, could be
reasonably likely to have a Material Adverse Effect, or (iii) requires filing with the Securities and Exchange Commission in accordance with the 1934 Act and any rules thereunder. 

        7.03    Existence, etc.    Each Borrower will: 

        (a)  preserve
and maintain its legal existence and all of its material rights, privileges, licenses and franchises (provided that nothing in this Section 7.03(a) shall
prohibit any transaction expressly permitted under Section 7.04 hereof); 

        (b)  comply
with the requirements of all applicable laws, rules, regulations and orders of Governmental Authorities (including, without limitation, all environmental laws,
all laws with respect to unfair and deceptive lending practices and predatory lending practices) if failure to comply with such requirements would be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect; 

26

 

        (c)  keep
adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied; 

        (d)  not
move its chief executive office from the address referred to in Section 6.11 or change its jurisdiction of organization from the jurisdiction referred to in Section
6.11 unless it shall have provided the Lender 30 days' prior written notice of such change; 

        (e)  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 

        (f)    permit
representatives of the Lender, during normal business hours, 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 Lender. 

        7.04    Prohibition of Fundamental Changes.    No Borrower shall 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; provided, that a Borrower may merge or consolidate with (a) any wholly owned
subsidiary of such Borrower, or (b) any other Person if such Borrower is the surviving corporation; and provided further, that if after giving effect
thereto, no Default would exist hereunder. 

        7.05    Borrowing Base Deficiency.    If at any time there exists a Borrowing Base Deficiency the Borrowers shall cure
same in accordance with Section 2.06 hereof. 

        7.06    Notices.    The Borrowers shall give notice to the Lender: 

        (a)  promptly
upon receipt of notice or knowledge of the occurrence of any Default or Event of Default; 

        (b)  with
respect to any Mortgage Loan pledged to the Lender hereunder, a weekly report delivered on each date on which prepayments are to be remitted to the Lender pursuant
to Section 7.21 hereof, with respect to the preceding week, detailing any principal prepayments in full of any pledged Mortgage Loans received during such preceding week; 

        (c)  with
respect to any Mortgage Loan pledged to the Lender hereunder, promptly upon receipt of notice or knowledge that the underlying Mortgaged Property 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 Collateral Value of such pledged Mortgage
Loan; and 

        (d)  promptly
upon receipt of notice or knowledge of (i) any default (other than a payment default) related to any Collateral, (ii) any Lien or security interest (other than
security interests created hereby or by the other Loan Documents) on, or claim asserted against, any of the Collateral or (iii) any event or change in circumstances which could reasonably be expected
to have a Material Adverse Effect. 

        (e)  promptly
upon any material and adverse change in the market value of all of the Borrowers' assets taken as a whole. 

Each
notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of each Borrower setting forth details of the occurrence referred to therein and stating what action
such Borrower has taken or proposes to take with respect thereto. 

        7.07    Hedging.    Each Borrower shall deliver to the Lender monthly a written summary of the notional amount of all
outstanding Interest Rate Protection Agreements. 

27

 

        7.08    Reports.    The Borrowers shall provide the Lender with a quarterly report, which report shall include, among
other items, a summary of the Borrowers' delinquency and loss experience with respect to mortgage loans serviced by such Borrower, any Servicer or any designee of either, plus any such additional
reports as the Lender may reasonably request with respect to the Borrowers' or any Servicer's servicing portfolio or pending originations of mortgage loans. 

        7.09    Underwriting Guidelines.    (a) Each Borrower shall provide to the Lender a copy of any material changes to
the Underwriting Guidelines prior to the effectiveness of any such change. The Lender shall use commercially reasonable efforts to notify the Borrowers within seven (7) Business Days following the
Lender's receipt of such changes if such changes are acceptable. If such changes are not acceptable to the Lender, in its sole discretion, any Mortgage Loan which is originated in accordance with the
Underwriting Guidelines as so changed shall not constitute an Eligible Mortgage Loan. 

        (b)  Each
Borrower shall originate Mortgage Loans in a manner which is consistent with sound underwriting and appraisal practices, and in compliance with applicable federal
and state consumer protection laws including, without limitation, all laws with respect to unfair or deceptive practices and all laws relating to predatory lending practices. 

        7.10    Transactions with Affiliates.    No Borrower will 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) otherwise permitted under this Loan Agreement, (b) in the ordinary
course of such Borrower's business and (c) upon fair and reasonable terms no less favorable to such Borrower than it would obtain in a comparable arm's length transaction with a Person which is not an
Affiliate, or make a payment that is not otherwise permitted by this Section 7.10 to any Affiliate. In no event shall any Borrower pledge to the Lender hereunder any Mortgage Loan acquired by such
Borrower from an Affiliate of such Borrower other than a party to this Agreement. 

        7.11    Limitation on Liens.    The Borrowers will defend the Collateral against, and will take such other action as
is necessary to remove, any Lien, security interest or claim on or to the Collateral, other than the security interests created under this Loan Agreement, and the Borrowers will defend the right,
title and interest of the Lenders in and to any of the Collateral against the claims and demands of all persons whomsoever. 

        7.12    Limitation on Guarantees.    No Borrower shall create, incur, assume or suffer to exist any additional
Guarantee at any time when, after giving effect to such Guarantee, such Borrower shall have defaulted in any of its obligations under Section 7.14 through 7.16 hereof. 

        7.13    Limitation on Distributions.    After the occurrence and during the continuation of any Default, no Borrower
shall 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 equity or partnership
interest of such Borrower, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of such Borrower, either
directly or indirectly, whether in cash or property or in obligations of such Borrower or any of such Borrower's consolidated Subsidiaries. 

        7.14    Maintenance of Tangible Net Worth.    Aames Capital shall not permit Tangible Net Worth at any time to be less
than the sum of (i) $315,000,000 plus (ii) an amount equal to 75% of the aggregate positive Net Income (without deduction for losses) plus (iii) 80% of net proceeds from the issuance of any equity
securities of Aames Capital or the making of any capital contributions to Aames Capital. 

        7.15    Maintenance of Ratio of Total Indebtedness to Tangible Net Worth.    Aames Capital shall not permit the ratio
of Total Indebtedness to Tangible Net Worth at any time to be greater than 3.00 to 1.00. 

28

 

        7.16    Servicer; Servicing Tape.    The Borrowers shall provide to the Lender on the fifth Business Day of each month
a computer readable file containing servicing information as of the end of the preceding calendar month, including without limitation those fields listed on Schedule 4 hereto or otherwise specified by
the Lender from time to time, on a loan-by-loan basis and in the aggregate, with respect to the Mortgage Loans serviced hereunder by the Borrowers or any Servicer;  provided, that in the case of any
fields requested by the Lender other than those listed on Schedule 4 hereto, the Borrowers shall use reasonable
efforts to deliver such data in computer readable form. The Borrowers shall not cause the Mortgage Loans to be serviced by any servicer other than Aames Funding Corporation or another servicer
expressly approved in writing by the Lender. 

        7.17    Committed Warehouse Facilities.    Aames Capital shall at all times maintain committed revolving facilities,
other than Lender's committed revolving facility, greater than or equal to $200,000,000. 

        7.18    Required Filings.    Each Borrower shall promptly make available to the Lender copies of all documents which
such Borrower or any Affiliate of such Borrower is required to file with the Securities and Exchange Commission in accordance with the 1934 Act or any rules thereunder. 

        7.19    No Adverse Selection.    No Borrower has selected the Collateral in a manner so as to adversely affect the
Lender's interests. 

        7.20    Remittance of Prepayments.    The Borrowers shall remit, with sufficient detail to enable the Lender to
appropriately identify the Mortgage Loan to which any amount remitted applies, to the Lender on each Thursday (or the next Business Day if such Thursday is not a Business Day) all principal
prepayments in full (but not in part) that the Borrowers have received during the previous week that are not paid directly to the Lender. All principal amounts so remitted shall be applied to the
prepayment of the Loans pursuant to Section 2.06(b) hereof. 

        Section
8.    Events of Default.    Each of the following events shall constitute an event of default (an
"Event of Default") hereunder: 

        (a)  the
Borrowers shall default in the payment of any principal of or interest on any Loan when due (whether at stated maturity, upon acceleration or at mandatory
prepayment); or 

        (b)  the
Borrowers shall default in the payment of any other amount payable by it hereunder or under any other Loan Document after notification by the Lender of such default,
and such default shall have continued unremedied for five Business Days; or 

        (c)  any
representation, warranty or certification made or deemed made herein or in any other Loan Document by any Borrower or any certificate furnished to the Lender
pursuant to the provisions hereof or 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 Collateral Value of the Mortgage Loans; unless (i) such Borrower 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 Lender in its sole discretion to be
materially false or misleading on a regular basis); or 

        (d)  any
Borrower shall fail to comply with the requirements of Section 7.03(a), Section 7.04, Section 7.05, Section 7.06(a), or Sections 7.09 through 7.20 hereof (excluding
Section 7.15 hereof); or any Borrower shall otherwise fail to comply with the requirements of Section 7.15 hereof and such default shall continue unremedied for a period of one Business Day; or any
Borrower shall otherwise fail to comply with the requirements of Section 7.03 hereof and such default shall continue unremedied for a period of five Business Days; or any Borrower or the Guarantor
shall fail to observe or perform any other covenant or agreement contained in this Loan Agreement or any other Loan Document and 

29

 

such failure to observe or perform shall continue unremedied for a period of seven (7) Business Days; or 

        (e)  a
final judgment or judgments for the payment of money in excess of $1,000,000 in the aggregate shall be rendered against any Borrower or any of its Affiliates by one or
more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 30 days from the date of entry thereof, and no Borrower or any such Affiliate shall, within said period of 30 days, or such longer period during which
execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal; or 

        (f)    any
Borrower shall admit in writing its inability to pay its debts as such debts become due; or 

        (g)  any
Borrower or any of its Affiliates shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or
liquidator or the like of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy
Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or (vi)
take any corporate or other action for the purpose of effecting any of the foregoing; or 

        (h)  a
proceeding or case shall be commenced, without the application or consent of any Borrower or any of its Affiliates, in any court of competent jurisdiction, seeking (i)
its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner, liquidator or the like of any Borrower or any such Affiliate or of all or any substantial part of its property, or (iii) similar relief in respect of any Borrower or any
such Affiliate under any law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 30 or more days; or an
order for relief against any Borrower or any such Affiliate shall be entered in an involuntary case under the Bankruptcy Code; or 

        (i)    the
Custodial Agreement (without provisions for a replacement custodial agreement acceptable to the Lender) or any Loan Document shall for whatever reason be terminated
or cease to be in full force and effect, or the enforceability thereof shall be contested by any Borrower; or 

        (j)    any
Borrower shall grant, or suffer to exist, any Lien on any Collateral except the Liens contemplated hereby; or the Liens contemplated hereby shall cease to be first
priority perfected Liens on the Collateral in favor of the Lender or shall be Liens in favor of any Person other than the Lender; or 

        (k)  any
Borrower or any of such Borrower's Affiliates shall be in default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which
it is a party, including, without limitation, any MS Indebtedness, which has an aggregate face or principal amount of $1,000,000 or more, which default (i) involves the failure to pay a matured
obligation, or (ii) permits the acceleration of the maturity of obligations by any other party to or beneficiary of such note, indenture, loan agreement, guaranty, swap agreement or other contract; or 

        (l)    any
materially adverse change in the Property, business, financial condition or prospects of any Borrower or any of its Affiliates shall occur, in each case as
determined by the Lender in its sole discretion, or any other condition shall exist which, in the Lender's sole discretion, constitutes a 

30

 

material impairment of any Borrower's ability to perform its obligations under this Loan Agreement, the Note or any other Loan Document; or 

        (m)  Aames
Financial Corporation's senior unsecured rating has been lowered or downgraded to a rating below CCC- by S&P or Caa3 by Moody's; or 

        (n)  the
discovery by the Lender of a condition or event which existed at or prior to the execution hereof and which the Lender, in its sole discretion, determines materially
and adversely affects: (i) the condition (financial or otherwise) of any Borrower, its Subsidiaries or Affiliates; or (ii) the ability of any Borrower to fulfill its respective obligations under this
Loan Agreement; 

        (o)  (i)
The Guarantor shall permit Tangible Net Worth on a consolidated basis on any given day to be less than (A) $37,000,000 prior to January 1, 2002, and (B) $34,000,000,
thereafter; 

        (ii)  The
Guarantor shall permit the Leverage Ratio at any time to be greater than 12:00 to 1:00; 

        (iii)  The
Guarantor shall permit Net Income before tax, generated over a period of two consecutive fiscal quarters, measured on the last day of each fiscal quarter,
commencing with the two fiscal quarters ending September 30, 2001 and December 31, 2001, to be less than $1.00; and 

        (iv)  The
Guarantor shall, as of the end of any calendar month, have unencumbered Cash Equivalents, cash and available borrowing capacity on unencumbered assets that could be
drawn against (taking into account required haircuts) under committed warehouse or working capital facilities, on a consolidated basis in an amount less than $17,500,000. 

        Section
9.    Remedies Upon Default.    

        (a)  An
Event of Default shall be deemed to be continuing unless expressly waived by the Lender in writing. Upon the occurrence of one or more Events of Default hereunder,
the Lender's obligation to make additional Loans to the Borrowers shall automatically terminate without further action by any Person. Upon the occurrence of one or more Events of Default other than
those referred to in Section 8(g) or (h), the Lender may immediately declare the principal amount of the Loans then outstanding under the Note to be immediately due and payable, together with all
interest thereon and fees and expenses accruing under this Loan Agreement. Upon the occurrence of an Event of Default referred to in Sections 8(g) or (h), such amounts shall immediately and
automatically become due and payable without any further action by any Person. Upon such declaration or such automatic acceleration, the balance then outstanding on the Note shall become immediately
due and payable, without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Borrowers. 

        (b)  Upon
the occurrence of one or more Events of Default, the Lender shall have the right to obtain physical possession of the Servicing Records and all other files of the
Borrower relating to the Collateral and all documents relating to the Collateral which are then or may thereafter come in to the possession of the Borrowers or any third party acting for the Borrowers
and the Borrowers shall deliver to the Lender such assignments as the Lender shall request. The Lender shall be entitled to specific performance of all agreements of the Borrowers contained in this
Loan Agreement. 

        Section
10.    No Duty of Lender.    The powers conferred on the Lender hereunder are solely to protect the Lender's
interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Lender 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 the Borrowers for any act or failure to act hereunder, except for its or their own gross
negligence or willful misconduct. 

31

 

        Section
11.    Miscellaneous.    

        11.01    Waiver.    No failure on the part of the Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any
Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies
provided by law. 

        11.02    Notices.    Except as otherwise expressly permitted by this Loan 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 Loan 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 thereof);
or, as to any party, at such other address as shall be designated by such party in a written notice to each other party provided, that a copy of all notices given under Section 7.01 shall
simultaneously be delivered to Credit Department, Morgan Stanley Dean Witter, 1221 Avenue of the Americas, 35th Floor, New York, New York 10036; Attention: Christine Egan. Except as
otherwise provided in this Loan Agreement and except for notices given under Section 2 (which shall be effective only on receipt), all such communications shall be deemed to have been duly given when
transmitted by telex or telecopy or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. 

        11.03    Indemnification and Expenses.    

        (a)  Each
Borrower agrees to hold the Lender, and its Affiliates and their officers, directors, employees, agents and advisors (each an "Indemnified
Party") harmless from and indemnify any 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 Loan Agreement, the Note, any other Loan
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 Loan Agreement, the Note, any other
Loan 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 Borrowers agree to hold any Indemnified Party harmless from and indemnify such Indemnified Party against all Costs with respect to all Mortgage 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 Mortgage Loan for any sum owing thereunder, or to enforce any
provisions of any Mortgage Loan, each Borrower 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 or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by any Borrower 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 any Borrower. Each Borrower also agrees 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 Loan Agreement, the Note, any other Loan Document or any transaction contemplated hereby or thereby, including without limitation the reasonable fees and disbursements of its
counsel. Each Borrower hereby acknowledges 

32

 

that, notwithstanding the fact that the Note is secured by the Collateral, the obligation of the Borrowers under the Note is a recourse obligation of the Borrowers. 

        (b)  The
Borrowers agree, jointly and severally, to pay as and when billed by the Lender all of the out-of-pocket costs and expenses incurred by the Lender in connection with
the development, preparation and execution of, and any amendment, supplement or modification to, this Loan Agreement, the Note, any other Loan Document or any other documents prepared in connection
herewith or therewith. The Borrowers agree, jointly and severally, to pay as and when billed by the Lender 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 Lender (ii) all the due
diligence, inspection, testing and review costs and expenses incurred by the Lender with respect to Collateral under this Loan Agreement, including, but not limited to, those costs and expenses
incurred by the Lender pursuant to Sections 11.03(a), 11.14 and 11.15 hereof and (iii) all reasonable costs and expenses incurred by the Lender in connection with the underwriting or re-underwriting
of any Mortgage Loan from time to time. 

        11.04    Amendments.    Except as otherwise expressly provided in this Loan Agreement, any provision of this Loan
Agreement may be modified or supplemented only by an instrument in writing signed by the Borrowers and the Lender and any provision of this Loan Agreement may be waived by the Lender. 

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

        11.06    Survival.    The obligations of the Borrowers under Sections 3.03 and 11.03 hereof shall survive the
repayment of the Loans and the termination of this Loan Agreement. In addition, each representation and warranty made or deemed to be made by a request for a borrowing, herein or pursuant hereto shall
survive the making of such representation and warranty, and the Lender shall not be deemed to have waived, by reason of making any Loan, any Default that may arise because any such representation or
warranty shall have proved to be false or misleading, notwithstanding that the Lender may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading
at the time such Loan was made. 

        11.07    Captions.    The table of contents and captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of any provision of this Loan Agreement. 

        11.08    Counterparts.    This Loan 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 Loan Agreement by signing any such counterpart. 

        11.09    Loan Agreement Constitutes Security Agreement; Governing Law.    This Loan Agreement shall be governed by New
York law without reference to choice of law doctrine, and shall constitute a security agreement within the meaning of the Uniform Commercial Code. 

33

   
        11.10    Submission To Jurisdiction; Waivers.    Each Borrower hereby irrevocably and unconditionally: 

        (A)  SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, 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 LENDER 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. 

        11.11    WAIVER OF JURY TRIAL.    EACH BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE, 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 LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

        11.12    Acknowledgments.    Each Borrower hereby acknowledges that: 

        (a)  it
has been advised by counsel in the negotiation, execution and delivery of this Loan Agreement, the Note and the other Loan Documents; 

        (b)  the
Lender has no fiduciary relationship to any Borrower, and the relationship between each Borrower and the Lender is solely that of debtor and creditor; and 

        (c)  no
joint venture exists between the Lender and any Borrower. 

        11.13    Hypothecation or Pledge of Loans.    The Lender shall have free and unrestricted use of all Collateral and
nothing in this Loan Agreement shall preclude the Lender from engaging in repurchase transactions with the Collateral or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating
the Collateral, on terms, and subject to conditions, within the Lender's absolute discretion. Nothing contained in this Loan Agreement shall obligate the Lender to segregate any Collateral delivered
to the Lender by the Borrowers. 

        11.14    Servicing.    

        (a)  Each
Borrower covenants to maintain or cause the servicing of the Mortgage Loans to be maintained in conformity with accepted and prudent servicing practices in the
industry for the same type of mortgage loans as the Mortgage Loans and in a manner at least equal in quality to the servicing each Borrower provides for mortgage loans which it owns. In the event that
the preceding 

34

 

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, (ii) the date on
which all the Secured Obligations have been paid in full or (iii) the transfer of servicing approved by the Borrowers. 

        (b)  If
the Mortgage Loans are serviced by a Borrower, (i) such Borrower agrees that the Lender is the collateral assignee 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 Mortgage Loans (the "Servicing Records"), and
(ii) such Borrower grants the Lender a security interest in all servicing fees and rights relating to the Mortgage Loans and all Servicing Records to secure the obligation of each Borrower or its
designee to service in conformity with this Section and any other obligation of the Borrowers to the Lender. The
Borrowers covenants to safeguard such Servicing Records and to deliver them promptly to the Lender or its designee (including the Custodian) at the Lender's request. 

        (c)  If
the Mortgage Loans are serviced by a third party servicer other than Aames Funding Corporation (such third party servicer, the
"Servicer"), the Borrowers (i) shall provide a copy of the servicing agreement to the Lender, which shall be in form and substance acceptable to the
Lender (the "Servicing Agreement"), and (ii) shall provide a Servicer Notice to the Servicer substantially in the form of  Exhibit G hereto (a "Servicer Notice") and shall cause the Servicer to acknowledge and agree to the
same, and (iii) hereby irrevocably assigns to the Lender and the Lender's successors and assigns all right, title, interest of the Borrowers in, to and under, and the benefits of, any Servicing
Agreement with respect to the Mortgage Loans. Any successor to the Master Servicer shall be approved in writing by the Lender and shall acknowledge and agree to a Servicer Notice prior to such
successor's assumption of servicing obligations with respect to the Mortgage Loans. 

        (d)  If
the servicer of the Mortgage Loans is a Borrower or the Servicer is an Affiliate of a Borrower, such Borrower shall provide to the Lender a letter from the Borrowers
or the Servicer, as the case may be, to the effect that upon the occurrence of an Event of Default, the Lender may terminate any Servicing Agreement and in any event transfer servicing to the Lender's
designee, at no cost or expense to the Lender, it being agreed that the Borrowers will pay any and all fees required to terminate the Servicing Agreement and to effectuate the transfer of servicing to
the designee of the Lender. 

        (e)  After
the Funding Date, until the pledge of any Mortgage Loan is relinquished by the Custodian, the Borrowers will have no right to modify or alter the terms of such
Mortgage Loan and the Borrowers will have no obligation or right to repossess such Mortgage Loan or substitute another Mortgage Loan, except as provided in the Custodial Agreement. 

        (f)    In
the event a Borrower or its Affiliate is servicing the Mortgage Loans, such Borrower shall permit the Lender to inspect such Borrower's or its Affiliate's servicing
facilities, as the case may be, for the purpose of satisfying the Lender that such Borrower or its Affiliate, as the case may be, has the ability to service the Mortgage Loans as provided in this Loan
Agreement. 

        11.15    Periodic Due Diligence Review.    Each Borrower acknowledges that the Lender has the right to perform
continuing due diligence reviews with respect to the Mortgage Loans and the manner in which they were originated, for purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and each Borrower agrees that upon reasonable (but no less than one (1) Business Day's) prior notice to the Borrowers, the Lender or its authorized
representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Mortgage Files and any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession or under the control of the Borrowers and/or the Custodian. The Borrowers also shall make available to the Lender a knowledgeable
financial or accounting officer for the purpose of answering questions respecting the Mortgage Files and the 

35

 

Mortgage Loans. Without limiting the generality of the foregoing, the Borrowers acknowledge that the Lender may make Loans to the Borrowers based solely upon the information provided by the Borrowers
to the Lender in the Mortgage Loan Tape and the representations, warranties and covenants contained herein, and that the Lender, at its option, has the right at any time to conduct a partial or
complete due diligence review on some or all of the Mortgage Loans securing such Loan, including without limitation ordering new credit reports and new appraisals on the related Mortgaged Properties
and otherwise re-generating the information used to originate such Mortgage Loan. The Lender may underwrite such Mortgage Loans itself or engage a mutually agreed upon third party underwriter to
perform such underwriting. It is understood that, in the case of Class C Defaulted Loans, such underwriting is expected to occur quarterly with respect to 10-20% of the Class C Defaulted Loans then
included in the Borrowing Base. The Borrowers agree to cooperate with the Lender and any third party underwriter in connection with such underwriting, including, but not limited to, providing the
Lender and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Mortgage Loans in the possession, or under the control, of
the Borrowers. 

        11.16    Set-Off.    In addition to any rights and remedies of the Lender provided by this Loan Agreement and by law,
the Lender shall have the right, without prior notice to the Borrowers, any such notice being expressly waived by the Borrowers to the extent permitted by applicable law, upon any amount becoming due
and payable by the Borrowers hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all 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 Lender or any Affiliate thereof to or for the credit or the account of the Borrowers. The Lender agrees promptly to notify the Borrowers after any such
set-off and application made by the Lender; provided, that the failure to give such notice shall not affect the validity of such set-off and
application. 

        11.17    Intent.    The parties recognize that each Loan is a "securities contract" as that term is defined in Section
741 of Title 11 of the United States Code, as amended. 

        11.18    Joint and Several Liability.    Each Borrower hereby acknowledges and agrees that such Borrower shall be
jointly and severally liable to the Lender to the maximum extent permitted by the applicable law for all representations, warranties, covenants, obligations and indemnities of the Borrowers hereunder. 

[SIGNATURE
PAGE FOLLOWS] 

36

 

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

	 	 	BORROWERS
	 	 	 	 
	 	 	AAMES CAPITAL CORPORATION
	 	 	 	 
	 	 	By:	
 Name:

Title:
	 	 	 	 
	 	 	Address for Notices:

350 South Grand Avenue

43rd Floor

Los Angeles, California 90071

Attention: Jon Van Deuren

Chief Accounting Officer

Telecopier No.: 323-210-5036

Telephone No: 323-210-4855
 With a copy to:

General Counsel
	 	 	 	 
	 	 	AAMES FUNDING CORPORATION
	 	 	 	 
	 	 	By:	
 Name:

Title:
	 	 	 	 
	 	 	Address for Notices:

350 South Grand Avenue

43rd Floor

Los Angeles, California 90071

Attention: Jon Van Deuren

Chief Accounting Officer

Telecopier No.: 323-210-5036

Telephone No: 323-210-4855
 With a copy to:

General Counsel
	 	 	 	 
	 	 	LENDER
	 	 	 	 
	 	 	MORGAN STANLEY DEAN WITTER MORTGAGE CAPITAL INC.
	 	 	 	 
	 	 	By:	
 Name:

Title:
	 	 	 	 
	 	 	Address for Notices:

1585 Broadway

New York, New York 10036

Attention: Andy Neuberger

Telecopier No.: 212-761-0093

Telephone No.: 212-761-4242

37

   Schedule 1

REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS  

        Part
1.    Eligible Residential Mortgage Loans    

        As
to each residential Mortgage Loan included in the Borrowing Base on a Funding Date (and the related Mortgage, Mortgage Note, Assignment of Mortgage and Mortgaged Property), each
Borrower shall be deemed to make the following representations and warranties to the Lender as of such date and as of each date the Borrowing Base is determined (certain defined terms used herein and
not otherwise defined in the Loan Agreement appearing in Part II to this Schedule 1): 

        (a)    Mortgage Loans as Described.    The information set forth in the Mortgage Loan Schedule with respect to the
Mortgage Loan is complete, true and correct in all material respects. 

        (b)    Payments Current.    Except in the case of a Defaulted Loan and to the extent contemplated by the definition of
the applicable Class of Defaulted Loan, not more than one payment required under the Mortgage Loan is delinquent. Except in the case of a Defaulted Loan, the first Monthly Payment shall be made, or
shall have been made, with respect to the Mortgage Loan on its Due Date or within the grace period, all in accordance with the terms of the related Mortgage Note. 

        (c)    No Outstanding Charges.    Except in the case of a Defaulted Loan, there are no defaults in complying with the
terms of the Mortgage securing the Mortgage 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 any Borrower nor the originator from which such Borrower acquired the Mortgage 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 Mortgage Loan, except for interest accruing from the date of the Mortgage Note or
date of disbursement of the proceeds of the Mortgage Loan, whichever is earlier, 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 Mortgage Note and Mortgage have not been impaired, waived,
altered or modified in any respect, from the date of origination; except by a written instrument which has been recorded, if necessary to protect the interests of the Lender, and which has been
delivered to the Custodian and the terms of which are reflected in the Mortgage Loan Schedule. The substance of any such waiver, alteration or modification has been approved by the title insurer, to
the extent required, and its terms are reflected on the Mortgage Loan Schedule. No Mortgagor in respect of the Mortgage 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 Mortgage Loan Schedule. 

        (e)    No Defenses.    The Mortgage Loan is not subject to any right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable and, except as permitted by the Underwriting Guidelines, no Mortgagor in respect of the Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency
proceeding at the time the Mortgage Loan was originated. No Borrower has any knowledge nor has any Borrower received any notice that any Mortgagor in respect of the Mortgage Loan is a debtor in any
state or federal bankruptcy or insolvency proceeding. 

Schedule 1-1

 

        (f)    Hazard Insurance.    The Mortgaged Property is insured by a fire and extended perils insurance policy, issued
by a generally acceptable insurance carrier, and such other hazards as are customary in the area where the Mortgaged Property is located, and to the extent required by the Borrowers 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) the outstanding principal balance of the Mortgage Loan, or (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. 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 Emergency Management Agency 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 Mortgage Loan, (2) the full insurable value of the Mortgaged Property, and (3) the maximum amount of insurance
available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974. All such insurance policies (collectively, the "hazard insurance policy") contain a
standard mortgagee clause naming the relevant Borrower, its successors and assigns (including without limitation, subsequent owners of the Mortgage 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 any Borrower. All premiums 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. No Borrower has engaged in, and no Borrower has any 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 any Borrower. 

        (g)    Compliance with Applicable Laws.    Any and all material requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations, and each Borrower shall maintain or shall cause its agent
to maintain in its possession, available for the inspection of the Lender, and shall deliver to the Lender, upon demand, evidence of compliance with all such requirements. 

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

Schedule 1-2

 

        (i)    Location and Type of Mortgaged Property.    The Mortgaged Property 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 of not more than four stories or such greater
number of stories as shall be common for condominium projects in the location of such Mortgaged Property, 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. 

        (j)    Valid First or Second Lien.    The Mortgage is a valid, subsisting, enforceable and perfected first lien, in
the case of a First Lien Loan, or second lien, in the case of a Second Lien Loan, 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. 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 Mortgage Loan and (a) referred to or otherwise considered in the
appraisal made for the originator of the Mortgage Loan or (b) which do not adversely affect the Appraised Value of the Mortgaged Property set forth in such appraisal; 

        (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 

        (4)  in
the case of any Second Lien Loan, the lien of the related primary mortgage. 

Any
security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, subsisting and enforceable first lien and
first priority security interest on the property described therein and the relevant Borrower has full right to pledge and assign the same to the Lender. 

        (k)    Validity of Mortgage Documents.    The Mortgage Note and the Mortgage and any other agreement executed and
delivered by a Mortgagor or guarantor, if applicable, in connection with a Mortgage Loan are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance
with its terms. All parties to the Mortgage Note, the Mortgage and any other such related agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note, the
Mortgage and any such agreement, and the Mortgage Note, the Mortgage and any other such related agreement have been duly and properly executed by such related parties. No fraud, error, omission,
misrepresentation, negligence or similar occurrence with respect to a Mortgage Loan has taken place on the part of any Person, including, without limitation, the Mortgagor, any appraiser, any builder
or developer, or any other party involved in the origination of the Mortgage Loan. Each Borrower 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.    All costs, fees and expenses incurred in making or closing the Mortgage Loan
and the recording of the Mortgage were paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note or Mortgage. 

        (m)    Ownership.    The relevant Borrower is the sole owner and holder of the Mortgage Loan. The Mortgage Loan is not
assigned or pledged, and the relevant Borrower has good, indefeasible and 

Schedule 1-3

 

marketable title thereto, and has full right to transfer, pledge and assign the Mortgage Loan to the Lender 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 Mortgage Loan pursuant
to this Loan Agreement and following the pledge of each Mortgage Loan, the Lender will hold such Mortgage 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 Loan Agreement. 

        (n)    Doing Business.    All parties which have had any interest in the Mortgage Loan, whether as Mortgagee,
assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (i) in compliance with any and all applicable licensing requirements of the laws of
the state wherein the Mortgaged Property is located, and (ii) either (A) organized under the laws of such state, (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.    No Mortgage Loan which is a First Lien Loan has an LTV greater than 100%. No Mortgage Loan which is a
Second Lien Loan has an LTV greater than 100% (determined by taking the sum of the first mortgage loan on the related Mortgaged Property and the unpaid principal balance of the Second Lien Loan and
treating such amount as the amount of the Mortgage Loan). 

        (p)    Title Insurance.    The Mortgage 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 relevant Borrower, its successors and assigns, as to the first priority
lien of the Mortgage in the original principal amount of the Mortgage Loan (or to the extent a Mortgage 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) and (3) of paragraph (j) of this Part I of Schedule 1, and in the case of adjustable rate Mortgage Loans,
against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required mortgage title insurance. Additionally, such lender's title insurance
policy affirmatively insures ingress and egress and against encroachments by or upon the Mortgaged Property or any interest therein. The title policy does not contain any special exceptions (other
than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading. The relevant
Borrower, 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 Loan Agreement. No claims have been made under such lender's title
insurance policy, and no prior holder or servicer of the related Mortgage, including any Borrower, 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 realized by any Borrower. 

        (q)    No Defaults.    Other than payment delinquencies, there is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage 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 

Schedule 1-4

 

constitute a default, breach, violation or event of acceleration, and no Borrower nor its predecessors have waived any such default, breach, violation or event of acceleration. 

        (r)    No Mechanics' Liens.    There are no mechanics' or similar liens or claims which have been filed for work,
labor or material (and no rights are outstanding that under 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 Mortgage Interest Rate is adjusted, with respect to adjustable rate Mortgage
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 and Mortgage Interest Rate
Floor. The Mortgage Note is payable monthly in equal monthly installments of principal and interest (other than in the case of balloon loans), which installments of interest, with respect to
adjustable rate Mortgage Loans, are subject to change due to the adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date, with interest calculated and payable in arrears,
sufficient to amortize the Mortgage Loan fully by the stated maturity date, over an original term of not more than 30 years from commencement of amortization. 

        (u)    Customary Provisions.    The Mortgage 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 Mortgage Loan and foreclosure
on, or trustee's sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage Loan will be able to deliver good and merchantable title to the Mortgaged Property. There
is no homestead or other exemption available to a Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage. 

        (v)    Conformance with Underwriting Guidelines and Agency Standards.    The Mortgage Loan was underwritten in
accordance with the Underwriting Guidelines. The Mortgage Note and Mortgage are on forms similar to those used by Freddie Mac or Fannie Mae, except with respect to prepayment penalties, and no
Borrower has made any representations to a Mortgagor that are inconsistent with the mortgage instruments used. 

        (w)    Occupancy of the Mortgaged Property.    As of the Funding Date the Mortgaged Property is lawfully occupied
under applicable law. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities. No Borrower has received
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. No Borrower has received notice of any violation or failure to conform with any such law, ordinance, regulation, standard,
license or certificate. 

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

Schedule 1-5

 

        (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 Lender 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.    The Mortgage Note, the Mortgage, the Assignment of Mortgage and any other
documents required to be delivered under the Custodial Agreement for each Mortgage Loan have been delivered to the Custodian. A Borrower or its agent is in possession of a complete, true and 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 Mortgage 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 Mortgage 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 Mortgage Loan does not contain
provisions pursuant to which Monthly Payments are paid or partially paid with funds deposited in any separate account established by any Borrower, the Mortgagor, or anyone on behalf of the Mortgagor,
or paid by any source other than the Mortgagor nor does it contain any other similar provisions which may constitute a "buydown" provision. The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other contingent interest feature. 

        (dd)    Consolidation of Future Advances.    Any future advances made to the Mortgagor prior to the Funding Date have
been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. The lien of
the Mortgage securing the consolidated principal amount is expressly insured as having first lien priority, in the case of a first Mortgage, or second lien priority, in the case of a second mortgage,
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 Mortgage Loan. 

        (ee)    Mortgaged Property Undamaged.    The Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any condemnation proceedings with respect to the Mortgaged Property and no Borrower has any 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 Mortgage Loan and the relevant Borrower with respect to the Mortgage Loan have been in all respects in compliance with Accepted Servicing Practices,
applicable laws and regulations, and have been in all respects legal and proper. With respect to escrow deposits and Escrow Payments, all such payments are in the possession of, or under the control
of, the Borrowers 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 material
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 Borrowers have been capitalized under the Mortgage or the 

Schedule 1-6

 

Mortgage Note. All Mortgage Interest Rate adjustments have been made in compliance with state and federal law and the terms of the related Mortgage 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 Mortgage Loans, the Mortgage Loan is not
convertible to a fixed interest rate Mortgage 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 any Borrower or by any officer,
director, or employee of any Borrower or any designee of any Borrower or any corporation in which any Borrower or any officer, director, or employee had a financial interest at the time of placement
of such insurance. 

        (ii)    Soldiers' and Sailors' Civil Relief Act.    The Mortgagor has not notified any Borrower, and no Borrower has
no knowledge, of any relief requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940. 

        (jj)    Appraisal.    The Mortgage File contains an appraisal of the related Mortgaged Property signed prior to the
approval of the Mortgage Loan application by a qualified appraiser, duly appointed by the Borrowers, who had no interest, direct or indirect in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy the requirements of 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 Mortgage Loan was
originated. 

        (kk)    Disclosure Materials.    The Mortgagor has received all disclosure materials required by applicable law with
respect to the making of adjustable rate mortgage loans, and the relevant Borrower maintains such statement in the Mortgage File. 

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

        (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 Funding Date (whether or not known to any Borrower 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 any Borrower, 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 Mortgage Note does not by its terms provide for the capitalization or
forbearance of interest. 

        (oo)    No Equity Participation.    No document relating to the Mortgage Loan provides for any contingent or
additional interest in the form of participation in the cash flow of the Mortgaged 

Schedule 1-7

 

Property or a sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property
or the Mortgagor and no Borrower has financed nor does it own directly or indirectly, any equity of any form in the Mortgaged Property or the Mortgagor. 

        (pp)    Withdrawn Mortgage Loans.    If the Mortgage Loan has been released to any Borrower pursuant to a Request for
Release as permitted under Section 5 of the Custodial Agreement, then the promissory note relating to the Mortgage 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)    Origination Date.    The Origination Date is no earlier than twelve months prior to the date the Mortgage Loan
is first included in the Borrowing Base. 

        (rr)    No Exception.    The Custodian has not noted any material exceptions on an Exception Report (as defined in the
Custodial Agreement) with respect to the Mortgage Loan which would materially adversely affect the Mortgage Loan or the Lender's security interest, granted by the Borrowers, in the Mortgage Loan. 

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

        (tt)    Riegle Act.    The Mortgage Loans is not classified as a "high cost" loan under the Home Ownership and Equity
Protection Act of 1994 and is not subject to the provisions of Section 226.32 of the Federal Reserve Board Regulation Z. 

        (uu)    Origination.    Each Mortgage Loan was originated by or purchased by a Borrower. 

        Part
2.    Defined Terms    

        In
addition to terms defined elsewhere in the Loan Agreement, the following terms shall have the following meanings when used in this Schedule 1: 

        "Acceptable State" shall mean any state notified by the Borrowers to the Lender from time to time and approved in writing by the Lender,
which approval has not been revoked by the Lender in their sole discretion, any such notice of revocation to be given no later than 10 Business Days prior to its intended effective date. 

        "Accepted Servicing Practices" shall mean, with respect to any Mortgage Loan, those mortgage servicing practices of prudent mortgage
lending institutions which service mortgage loans of the same type as such Mortgage Loans in the jurisdiction where the related Mortgaged Property is located. 

        "ALTA" means the American Land Title Association. 

        "Appraised Value" shall mean the value set forth in an appraisal made in connection with the origination of the related Mortgage Loan as
the value of the Mortgaged Property. 

        "Best's" means Best's Key Rating Guide, as the same shall be amended from time to time. 

        "Due Date" means the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace. 

        "Escrow Payments" means with respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, 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 Mortgage or any other document. 

        "Fannie Mae" means the Federal National Mortgage Association, or any successor thereto. 

Schedule 1-8

 

        "Freddie Mac" means the Federal Home Loan Mortgage Corporation, or any successor thereto. 

        "Gross Margin" means with respect to each adjustable rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage
Note. 

        "Index" means with respect to each adjustable rate Mortgage Loan, the index set forth in the related Mortgage Note for the purpose of
calculating the interest rate thereon. 

        "Insurance Proceeds" means with respect to each Mortgage Loan, proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property. 

        "Interest Rate Adjustment Date" means with respect to each adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note
and the Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted. 

        "Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage Loan, the ratio of the
original outstanding principal amount of the Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at origination or (b) in the case of a purchase money mortgage loan, the
purchase price of the Mortgaged Property. 

        "Monthly Payment" means the scheduled monthly payment of principal and interest on a Mortgage Loan as adjusted in accordance with changes
in the Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an adjustable rate Mortgage Loan. 

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

        "Mortgage Interest Rate Cap" means with respect to an adjustable rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment
as set forth in the related Mortgage Note. 

        "Mortgagee" means the relevant Borrower or any subsequent holder of a Mortgage Loan. 

        "Origination Date" shall mean, with respect to each Mortgage Loan, the date of the Mortgage Note relating to such Mortgage Loan, unless
such information is not provided by the relevant Borrower with respect to such Mortgage Loan, in which case the Origination Date shall be deemed to be the date that is 40 days prior to the date of the
first payment under the Mortgage Note relating to such Mortgage Loan. 

        "PMI Policy" or "Primary Insurance Policy" means a policy of primary mortgage guaranty
insurance issued by a Qualified Insurer. 

        "Qualified Insurer" means an insurance company duly qualified as such under the laws of the states in which the Mortgaged Property is
located, duly authorized and licensed in such states to transact the applicable insurance business and to write the insurance provided, 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. 

        "Servicing File" means with respect to each Mortgage Loan, the file retained by the Borrowers consisting of originals of all documents in
the Mortgage File which are not delivered to a Custodian and copies of the Mortgage Loan Documents set forth in Section 2 of the Custodial Agreement. 

Schedule 1-9

  

 
 

Schedule 2
  FILING JURISDICTIONS AND OFFICES
  Secretary of State, California    
  

Schedule 2-1

  

 
 

Schedule 3
  CAPITALIZATION    
  

Schedule 3-1

  

 
 

Schedule 4
  SERVICING FIELDS    
  

	•
	Loan
ID

	•
	Name

	•
	Paid
To Date

	•
	Current
Balance

	•
	P&I

	•
	Rate 

Schedule 4-1

  

 
 

Schedule 5
  Trade Names    
  

	Aames Capital Corporation:	 	Aames Home Loan
	 	 	 
	Aames Funding Corporation:	 	The Center for Loan Servicing

Wilshire Reconveyance, Inc.

Aames Mortgage, Inc.

Schedule 5-1

  

 
 

EXHIBIT A
  FORM OF AMENDED AND RESTATED PROMISSORY NOTE    
  

	$300,000,000	 	November 16, 2001

New York, New York

        FOR
VALUE RECEIVED, AAMES CAPITAL CORPORATION, a California corporation ("Aames Capital") and AAMES FUNDING CORPORATION, a California
corporation ("Aames Funding", and together with Aames Capital, each a "Borrower", collectively the
"Borrowers"), hereby promise to pay, jointly and severally, to the order of MORGAN STANLEY DEAN WITTER MORTGAGE CAPITAL INC. (the
"Lender"), at the principal office of the Lender at 1585 Broadway, New York, New York, 10036, in lawful money of the United States, and in immediately
available funds, the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000) (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to the
Borrowers under the Loan Agreement), on the dates and in the principal amounts provided in the Loan Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Loan Agreement. 

        The
date, amount and interest rate of each Loan made by the Lender to the Borrowers, nd each payment made on account of the principal thereof, shall be recorded by the Lender on its
books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof; provided, that the
failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrowers to make a payment when due of any amount owing under the Loan Agreement or hereunder in respect of the Loans made by the Lender. 

        This
Note is the Note referred to in the Master Loan and Security Agreement, dated as of November 15, 2001 (as amended, supplemented or otherwise modified and in effect from time to
time, the "Loan Agreement") among the Borrowers and the Lender, and evidences Loans made by the Lender thereunder. Terms used but not defined in this
Note have the respective meanings assigned to them in the Loan Agreement. 

        The
Borrowers agree, jointly and severally, to pay all the Lender's costs of collection and enforcement (including reasonable attorneys' fees and disbursements of Lender's counsel) in
respect of this Note when incurred, including, without limitation, reasonable attorneys' fees through appellate proceedings. 

        Notwithstanding
the pledge of the Collateral, each Borrower hereby acknowledges, admits and agrees that the Borrowers' obligations under this Note are recourse obligations of the
Borrowers to which each Borrower pledges its full faith and credit. 

        Each
Borrower, and any endorsers or guarantors hereof, (a) severally waive diligence, presentment, protest and demand and also notice of protest, demand, dishonor and nonpayments of this
Note, (b) expressly agree that this Note, or any payment hereunder, may be extended from time to time, and consent to the acceptance of further Collateral, the release of any Collateral for this Note,
the release of any party primarily or secondarily liable hereon, and (c) expressly agree that it will not be necessary for the Lender, in order to enforce payment of this Note, to first institute or
exhaust the Lender's remedies against the Borrowers or any other party liable hereon or against any Collateral for this Note. No extension of time for the payment of this Note, or any installment
hereof, made by agreement by the Lender with any person now or hereafter liable for the payment of this Note, shall affect the liability under this Note of any Borrower, even if such Borrower is not a
party to such agreement; provided, however, that the Lender and each Borrower, by written agreement between them, may affect the liability of such
Borrower. 

A-1

 

        This
Amended and Restated Promissory Note amends and restates in its entirety the Promissory Note dated October 29, 1999 (the "Existing Promissory
Note") and is given as a continuation, rearrangement and extension, and not a novation, release or satisfaction, of the Existing Promissory Note. Aames Capital hereby
acknowledges and agrees that simultaneously with the Borrowers' execution and delivery of this Amended and Restated Promissory Note to the Lender, the Lender has delivered to Aames Capital the
Existing Promissory Note. 

        Any
reference herein to the Lender shall be deemed to include and apply to every subsequent holder of this Note. Reference is made to the Loan Agreement for provisions concerning
optional and mandatory prepayments, Collateral, acceleration and other material terms affecting this Note. 

        Each
Borrower hereby acknowledges and agrees that such Borrower shall be jointly and severally liable to the maximum extent permitted by applicable law for all representations,
warranties, covenants, obligations and indemnities of the Borrowers under the Loan Documents. 

        This Note shall be governed by and construed under the laws of the State of New York (without reference to choice of law doctrine) whose laws each Borrower
expressly elects to apply to this Note. Each Borrower agrees that any action or proceeding brought to enforce or arising out of this Note may be commenced in the Supreme Court of the State of New
York, Borough of Manhattan, or in the District Court of the United States for the Southern District of New York.

	 	 	AAMES CAPITAL CORPORATION
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Name:

Title:
	 	 	 	 	 
	 	 	AAMES FUNDING CORPORATION
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Name:

Title:

A-2

 
 
 

SCHEDULE OF LOANS    
  

        This Note evidences Loans made under the within-described Loan Agreement to the Borrowers, on the dates, in the principal amounts and bearing interest at the
rates set forth below, and subject to the payments and prepayments of principal set forth below: 

	Date Made
 
	 	Principal Amount

of Loan
	 	Interest

Rate
	 	Amount Paid

or Prepaid
	 	Unpaid Principal

Amount
	 	Notation

Made by

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

A-3

  

 
 

EXHIBIT B
  CUSTODIAL AGREEMENT    
  

[STORED
AS A SEPARATE DOCUMENT] 

B-1

  

 
 

EXHIBIT C
  FORM OF OPINION OF COUNSEL TO BORROWERS
  (date)    
  

Morgan
Stanley Dean Witter Mortgage Capital Inc.

1585 Broadway

New York, New York 10036 

Dear
Sirs and Mesdames: 

        You
have requested our opinion, as counsel to Aames Capital Corporation, a California corporation (the "Borrower"), with respect to
certain matters in connection with that certain Amended and Restated Master Loan and Security Agreement, dated November 16, 2001 (the "Loan and Security
Agreement"), by and between the Borrower and Morgan Stanley Dean Witter Mortgage Capital Inc. (the "Lender"), being executed
contemporaneously with an Amended and Restated Promissory Note, dated November 16, 2001, from the Borrower to the Lender (the "Note"), a Custodial
Agreement, dated as of October 29, 1999 (the "Custodial Agreement"), by and among the Borrower, Bankers Trust Company (the
"Custodian"), and the Lender. Capitalized terms not otherwise defined herein have the meanings set forth in the Loan and Security Agreement. 

        We
have examined the following documents: 

	1.
	the
Loan and Security Agreement;

	2.
	the
Note;

	3.
	the
Custodial Agreement;

	4.
	such
other documents, records and papers as we have deemed necessary and relevant as a basis for this opinion. 

        To
the extent we have deemed necessary and proper, we have relied upon the representations and warranties of the Borrower contained in the Loan and Security Agreement. We have assumed
the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents submitted
to us as originals. 

        Based
upon the foregoing, it is our opinion that: 

        1.    The
Borrower is a California corporation duly organized, validly existing and in good standing under the laws of California and is qualified to transact business in, and
is in good standing under, the laws of the California. 

        2.    The
Borrower has the corporate power to engage in the transactions contemplated by the Loan and Security Agreement, the Note, and the Custodial Agreement and all
requisite corporate power, authority and legal right to execute and deliver the Loan and Security Agreement, the Note, and the Custodial Agreement and observe the terms and conditions of such
instruments. The Borrower has all requisite corporate power to borrow under the Loan and Security Agreement and to grant a security interest in the Collateral under the Loan and Security Agreement. 

        3.    The
execution, delivery and performance by the Borrower of the Loan and Security Agreement, the Note, and the Custodial Agreement, and the borrowings by the Borrower and
the pledge of the Collateral under the Loan and Security Agreement have been duly authorized by all necessary corporate action on the part of the Borrower. Each of the Loan and Security Agreement, the
Note and the Custodial Agreement have been executed and delivered by the Borrower and are legal, valid and binding agreements enforceable in accordance with their respective terms against the
Borrower, 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 

C-1

 

of specific performance, none of which will materially interfere with the realization of the benefits provided thereunder or with the Lender's security interest in the Collateral. 

        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 the
Borrower for the execution, delivery or performance by the Borrower of the Loan and Security Agreement, the Note and the Custodial Agreement or for the borrowings by the Borrower under the Loan and
Security Agreement
or the granting of a security interest to the Lender in the Collateral, under the Loan and Security Agreement. 

        5.    The
execution, delivery and performance by the Borrower of, and the consummation of the transactions contemplated by, the Loan and Security Agreement, the Note and the
Custodial Agreement do not and will not (a) violate any provision of the Borrower'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 Borrower 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 we have knowledge
(after due inquiry) to which the Borrower is a party or by which it is bound or to which it is subject, or (except for the Liens created pursuant to the Loan and Security Agreement) result in the
creation or imposition of any Lien upon any Property of the Borrower pursuant to the terms of any such agreement or instrument. 

        6.    There
is no action, suit, proceeding or investigation pending or, to the best of our knowledge, threatened against the Borrower which, in our 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 Borrower or in any material
impairment of the right or ability of the Borrower to carry on its business substantially as now conducted or in any material liability on the part of the Borrower or which would draw into question
the validity of the Loan and Security Agreement, the Note, the Custodial Agreement or the Mortgage 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 Borrower to perform under the terms of the Loan and Security Agreement, the Note, the Custodial Agreement or the Mortgage
Loans. 

        7.    The
Loan and Security Agreement is effective to create, in favor of the Lender, a valid security interest under the Uniform Commercial Code in all of the right, title and
interest of the Borrower in, to and under the Collateral (and in any security interest, mortgage or other lien that secures the Collateral) as collateral security for the payment of the Secured
Obligations (as defined in the Loan and Security Agreement), except that (a) such security interests will continue in Collateral after its sale, exchange or other disposition only to the extent
provided in Section 9-315 of the Uniform Commercial Code, and (b) the security interests in Collateral in which the Borrower acquires rights after the commencement of a case under the Bankruptcy Code
in respect of the Borrower may be limited by Section 552 of the Bankruptcy Code. 

        8.    When
(i) the Mortgage Notes are delivered to the Custodian, endorsed in blank by a duly authorized officer of the Borrower, and (ii) the Custodian has issued a Trust
Receipt therefor, the security interest referred to in paragraph 7 above in the Mortgage Notes (and in any security interest, mortgage or other lien that secures the Collateral) will constitute a
fully perfected first priority security interest in all right, title and interest of the Borrower therein, in the Mortgage Loan evidenced thereby and in the Borrower's interest in the related
Mortgaged Property. 

        9.    Based
upon the filing of the financing statement on Form UCC-1 naming the Lender as "Secured Party" and the Borrower as "Debtor", and describing the Collateral,
previously filed in the jurisdiction and recording office listed on Schedule 1 attached hereto the security interests referred to in paragraph 7 above continue to constitute fully perfected security
interests under the Uniform 

C-2

 

Commercial Code in all right, title and interest of the Borrower in, to and under such Collateral, which can be perfected by filing under the Uniform Commercial Code. 

        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.  The
Borrower is not an "investment company", or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. 

	 	 	Very truly yours,

C-3

  

 
 

EXHIBIT D
  FORM OF REQUEST FOR BORROWING    
  

        Amended and Restated Master Loan and Security Agreement, dated as of November 16, 2001 (the "Loan and Security
Agreement"), by and between the Borrowers and Morgan Stanley Dean Witter Mortgage Capital Inc. (the "Lender"), 

	Lender:	 	Morgan Stanley Dean Witter Mortgage Capital Inc.
	 	 	 
	Borrowers:	 	Aames Capital Corporation

Aames Funding Corporation

Requested
Funding Date:    _____ 

Transmission
Date:    _____ 

Transmission
Time: 

Number
of Mortgage

Loans to be Pledged: 

UPB:
$_____ 

Requested
Wire Amount: $_____ 

Wire
Instructions: 

The
Borrowers hereby certify, as of the requested Funding Date, that: 

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

        b)    each
of the representations and warranties made by the Borrowers in or pursuant to the Loan 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 Mortgage Loans, solely with respect to Mortgage Loans being included the Borrowing Base on such Funding 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); and 

        c)    each
Borrower is in compliance with all governmental licenses and authorizations and is qualified to do business and in good standing in all required jurisdictions. 

	Requested and Certified by:

AAMES CAPITAL CORPORATION	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	 	
 Name:

Title:	 	 
	 	 	 	 	 
	AAMES FUNDING CORPORATION	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	 	
 Name:

Title:	 	 

D-1

  

 
 
 

EXHIBIT E-1
  FORM OF BORROWER'S RELEASE LETTER
  (Date)    
  

Morgan
Stanley Dean Witter Mortgage Capital Inc.

1585 Broadway

New York, New York 10036 

Attention:  __________

Facsimile:  __________

	Re:	 	Amended and Restated Master Loan and Security Agreement, dated as of November 16, 2001 (the "Loan and Security Agreement"), by and between Aames Capital Corporation ("Aames Capital"), Aames Funding Corporation "Aames
Funding" and together with Aames Capital, each a "Borrower", collectively, the "Borrowers") and Morgan Stanley Dean Witter Mortgage Capital Inc. (the "Lender")

Ladies
and Gentlemen: 

        With
respect to the mortgage loans described in the attached Schedule A (the "Mortgage Loans") we hereby certify to you that the Mortgage
Loans are not subject to a lien of any third party and (b) we hereby release all right, interest or claim of any kind with respect to such Mortgage Loans, such release to be effective automatically
without further action by any party upon payment from Morgan Stanley Dean Witter Mortgage Capital Inc., of the amount of the Loan contemplated under the Loan and Security Agreement (calculated in
accordance with the terms thereof) in accordance with the wiring instructions set forth in the Loan and Security Agreement. 

	 	 	Very truly yours,
	 	 	 	 	 
	 	 	AAMES CAPITAL CORPORATION
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Name:

Title:
	 	 	 	 	 
	 	 	AAMES FUNDING CORPORATION
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Name:

Title:

E-1-1

  

 
 
 

EXHIBIT E-2
  FORM OF WAREHOUSE LENDER'S RELEASE LETTER
  (Date)    
  

Morgan
Stanley Dean Witter Mortgage Capital Inc.

1585 Broadway

New York, New York 10036 

Attention:  __________

Facsimile:  __________

	Re:	 	Certain Mortgage Loans Identified on Schedule A hereto and owned by Aames Capital Corporation

        The
undersigned hereby releases all right, interest, lien or claim of any kind with respect to the mortgage loan(s) described in the attached Schedule
A, such release to be effective automatically without any further action by any party upon payment in one or more installments, in immediately available funds of
$                  , in accordance with the following wire instructions: 

	 	 	Very truly yours,
	 	 	 	 	 
	 	 	[WAREHOUSE LENDER]
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Name:

Title:

E-2-1

  

 
 

EXHIBIT F
  UNDERWRITING GUIDELINES

[ATTACHED
AS A SEPARATE TAB] 

F-1

  

 
 

EXHIBIT G
  FORM OF SERVICER NOTICE    
  

________
___, 200___

[SERVICER], as Servicer

[ADDRESS] 

Attention:
__________ 

	Re:	 	Amended and Restated Master Loan and Security Agreement, dated as of November 16, 2001 (the "Loan and Security Agreement"), by and between Aames Capital Corporation ("Aames Capital"), Aames Funding Corporation ("Aames
Funding" and together with Aames Capital, each a "Borrower", collectively the "Borrowers") and Morgan Stanley Dean Witter Mortgage Capital Inc. (the "Lender").

Ladies
and Gentlemen: 

        [SERVICER]
(the "Servicer") is servicing certain mortgage loans for the Borrowers pursuant to certain Servicing
Agreements between the Servicer and the Borrowers. Pursuant to the Loan Agreement between the Lender and the Borrowers, the Servicer is hereby notified that the Borrowers have granted a security
interest to the Lender in certain mortgage loans which are serviced by Servicer. 

        Upon
receipt of a Notice of Event of Default from the Lender in which the Lender shall identify the mortgage loans which are then pledged to the Lender under the Loan Agreement (the
"Mortgage Loans"), the Servicer shall segregate all amounts collected on account of such Mortgage Loans, hold them in trust for the sole and exclusive
benefit of the Lender, and remit such collections in accordance with the Lender's written instructions. Following such Notice of Event of Default, Servicer shall follow the instructions of Lender with
respect to the Mortgage Loans, and shall deliver to Lender any information with respect to the Mortgage Loans reasonably requested by Lender. 

        Notwithstanding
any contrary information or direction which may be delivered to the Servicer by the Borrowers, the Servicer may conclusively rely on any information, direction or notice
of an Event of Default delivered by the Lender, and the Borrowers shall indemnify and hold the Servicer harmless for any and all claims asserted against the Servicer for any actions taken in good
faith by the Servicer in connection with the delivery of such information or Notice of Event of Default. 

        No
provision of this letter may be amended, countermanded or modified without the prior written consent of the Lender. The Lender is an intended third party beneficiary of this letter. 

        Please
acknowledge receipt and your agreement to the terms of this instruction letter by signing in the signature block below and forwarding an executed copy to the Lender promptly upon
receipt. Any notices to the Lender should be delivered to the following address: 1585 Broadway, New York, New 

G-1

 

York 10036; Attention: Mr. Andrew Neuberger, with a copy to Mr. Greg Walker; Telephone: (212) 761-2144; Facsimile: (212) 761-0747. 

	 	 	Very truly yours,
	 	 	 	 	 
	 	 	AAMES CAPITAL CORPORATION
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Name:

Title:
	 	 	 	 	 
	 	 	AAMES FUNDING CORPORATION
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Name:

Title:

	ACKNOWLEDGED:	 	 
	 	 	 	 
	as Servicer	 	 
	 	 	 	 
	By:	 	 	 
	 	
 Title:

Telephone:

Facsimile:	 	 

G-2

QuickLinks

Exhibit 10.31(a)

TABLE OF CONTENTS

AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT

Schedule 2 FILING JURISDICTIONS AND OFFICES Secretary of State, California

Schedule 3 CAPITALIZATION

Schedule 4 SERVICING FIELDS

Schedule 5 Trade Names

EXHIBIT A FORM OF AMENDED AND RESTATED PROMISSORY NOTE

SCHEDULE OF LOANS

EXHIBIT B CUSTODIAL AGREEMENT

EXHIBIT C FORM OF OPINION OF COUNSEL TO BORROWERS (date)

EXHIBIT D FORM OF REQUEST FOR BORROWING

EXHIBIT E–1 FORM OF BORROWER'S RELEASE LETTER

EXHIBIT E–2 FORM OF WAREHOUSE LENDER'S RELEASE LETTER

EXHIBIT F UNDERWRITING GUIDELINES

EXHIBIT G FORM OF SERVICER NOTICE

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