Document:

Amendment No. 4 to Citigroup Loan and Security Agreement

 EXHIBIT 10.20(f) 
  
 AMENDMENT NUMBER FOUR 
 to the 
 Master Loan and Security Agreement 
 Dated as of July 22, 2003 
 between 
 AAMES CAPITAL CORPORATION 
 and 
 CITIGROUP GLOBAL MARKETS REALTY CORP. 
  
 This AMENDMENT NUMBER FOUR is made this 30th day of April, 2004, by and between AAMES CAPITAL CORPORATION, a California corporation (the “Borrower”) and CITIGROUP GLOBAL MARKETS REALTY CORP., a New
York corporation (the “Lender”), to the Master Loan and Security Agreement, dated as of July 22, 2003, by and between the Borrower and the Lender as amended (the “Loan Agreement”). Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement. 
  
 RECITALS 
  
 WHEREAS, the Borrower
has requested and the Lender has agreed to amend the Loan Agreement to increase the Maximum Credit thereunder from $200,000,000 to $300,000,000; 
  
 WHEREAS, the Borrower and the Lender wish to amend the Loan Agreement to permit the financing of Wet Loans thereunder in accordance with the terms hereof
and the Borrower and the Lender have agreed to make such additional modifications to the Loan Agreement as more expressly set forth below; and 
  
 WHEREAS, the Borrower and the Lender have agreed to amend the Loan Agreement as set forth herein. 
  
 NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows: 
  
 SECTION 1. Effective as of April 30, 2004, the definition of “Applicable Collateral Percentage” in Section 1 of the Loan Agreement is hereby to
read in its entirety as follows: 
  
 “Applicable
Collateral Percentage” shall mean, 
  
 (i) for the first
180 days following the date such Eligible Mortgage Loan first becomes subject to the terms of this Agreement, with respect to each Advance: 
  
 (a) which is secured by Standard Mortgage Loans or Previously Securitized and Called Mortgage Loans, 99%; 
  
 (b) which is secured by High LTV Mortgage Loans, 97%; and 

 (c) which is secured by Wet Loans, (1) for which all Required Documents have not been delivered for 0 to
7 days, 99%; and (2) for which all Required Documents have not been delivered for 8 days or more, 0%; and 
  
 (ii) thereafter, 0%. 
  
 SECTION 2. Effective as of April 30, 2004, the definition of “Applicable Margin” in Section 1 of the Loan Agreement is hereby amended to read in
its entirety as follows: 
  
 “Applicable Margin”
shall mean with respect to Advances that are Tranche A Advances, Tranche B Advances and Tranche C Advances, respectively, and which are secured by the Mortgage Loans, the applicable rate per annum set forth below for each day that such Advances
shall be so secured: 
  

			
	 Tranche A Advances
	  	0.95%
	 Tranche B Advances
	  	1.65%
	 Tranche C Advances
	  	1.65%

  
 SECTION 3. Effective
as of April 30, 2004, the definition of “Collateral Value” in Section 1 is hereby amended by a new subpart (12) following subpart (11) to read as follows: 
  

	 	(12)	which is a Wet Loan and the Collateral Value of such Wet Loan, when added to the Collateral Value of all other Wet Loans that secure Advances hereunder, exceeds (a) $90,000,000
during the period including the last three (3) Business Days of any calendar month through the first seven (7) calendar days of the following calendar month or (b) $50,000,000 at any other time during each calendar month. 

 
 SECTION 4. Effective as of April 30, 2004, the definition of
“Eligible Mortgage Loan” in Section 1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following: 
  
 “Eligible Mortgage Loan” shall mean a Mortgage Loan secured by a first or second mortgage lien (as reflected on the Mortgage Loan Data
Transmission) on residential real estate and as to which (i) the representations and warranties in Section 6.12 and 6.23 and Schedule 1 hereof are correct, (ii) was originated or acquired by the Borrower in accordance with the Borrower’s or
Lender approved third party’s Underwriting Guidelines and (iii) such other customary criteria for eligibility determined by the Lender shall have been satisfied. 
  
 SECTION 5. Effective as of April 30, 2004, the definition of “Maximum Committed Amount” in Section 1 of the Loan
Agreement is hereby deleted in its entirety and replaced with the following: 
  
 “Maximum Committed Amount” shall mean two hundred million dollars ($200,000,000). 
  

 -2- 

 SECTION 6. Effective as of April 30, 2004, the definition of “Maximum Credit” in Section 1 of
the Loan Agreement is hereby deleted in its entirety and replaced with the following: 
  
 “Maximum Credit” shall mean three hundred million dollars ($300,000,000). 
  
 SECTION 7. Effective as of April 30, 2004, the definition of “Tranche A Advances” in Section 1 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following: 
  
 “Tranche A
Advances” shall mean Advances so long as, and to the extent that, they are secured by Standard Mortgage Loans and Previously Securitized and Called Mortgage Loans which are not Wet Loans. 
  
 SECTION 8. Effective as of April 30, 2004, the definition of “Tranche B
Advances” in Section 1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following: 
  
 “Tranche B Advances” shall mean Advances so long as, and to the extent that, they are secured by High LTV Mortgage Loans which are not
Wet Loans. 
  
 SECTION 9. Effective as of April 30, 2004, Section
1 of the Loan Agreement is hereby amended to include the following definitions, each in the appropriate location in such Section 1 to reflect proper alphabetical order: 
  
 “Attorney Bailee Letter” shall have the meaning assigned to such term in the Custodial Agreement.

  
 “Disbursement Account” shall mean the account
established by the Lender pursuant to which funds shall be disbursed to fund any Wet Loan. 
  
 “Dry Loan” shall mean a first or second lien Mortgage Loan which is underwritten in accordance with the Underwriting Guidelines which Mortgage File contains all Required Documents. 
  
 “Escrow Agreement” shall have the meaning assigned to such
term in the Custodial Agreement. 
  
 “Insured Closing
Letter” shall have the meaning assigned to such term in the Custodial Agreement. 
  
 “Rescission” shall mean the right of a Mortgagor to rescind the related Mortgage Note and related documents pursuant to applicable law. 
  

 -3- 

 “Settlement Agent” shall have the meaning assigned to such term in the Custodial
Agreement. 
  
 “Tranche C Advances” shall mean
Advances so long as, and to the extent that, they are secured by Wet Loans. 
  
 “Wet Loan” shall mean a wet-funded first or second lien Mortgage Loan which is underwritten in accordance with the Underwriting Guidelines and does not contain all of the Required Documents in the
Mortgage File, which in order to be deemed to be an Eligible Mortgage Loan shall have the following additional characteristics: 
  
 (a) the proceeds thereof have been funded (or, on the date of the Advance supported by a Notice of Borrowing and Pledge are being funded)
by wire transfer or cashier’s check, or draft of other form of immediately available funds to the Settlement Agent for such Wet Loan; 
  
 (b) the Borrower expects such Wet Loan to close and become a valid lien securing actual indebtedness by funding to the order of the
Mortgagor thereunder; 
  
 (c) the proceeds
thereof have not been returned to the Lender from the Settlement Agent for such Wet Loan; 
  
 (d) the Borrower has not learned that such Wet Loan will not be closed and funded to the order of the Mortgagor; and 
  
 (e) upon recordation of the related Mortgage such Mortgage
Loan will constitute a first or second lien on the premises described therein. 
  
 SECTION 10. Effective as of April 30, 2004, Sections 2.03(a) and (b) of the Loan Agreement are hereby amended to read as follows: 
  
 2.03 Procedure for Borrowing. 
  
 (a) Borrowing Procedure for Requesting an Advance. The Borrower may request a borrowing to be secured by any Mortgage Loans
hereunder, on any Business Day during the period from and including the Effective Date to the Termination Date, by delivering to the Lender, with a copy to the Custodian, a Mortgage Loan Data Transmission and an irrevocable Notice of Borrowing and
Pledge substantially in the form of Exhibit D hereto (a “Notice of Borrowing and Pledge”), appropriately completed, which must be received no later than 5:00 p.m. (eastern time) the Business Day prior to the requested Funding Date. Such
Notice of Borrowing and Pledge shall clearly indicate those Mortgage Loans that are intended to be Wet Loans and Dry Loans and include a Mortgage Loan List in respect of the Eligible Mortgage Loans that the Borrower proposes to pledge to the Lender
and to be included in the Borrowing Base in connection with such borrowing; provided, however, that Borrower will notify Lender no later than 5:00 p.m. (eastern time) two Business Days prior to Borrower providing Lender with a Notice of Borrowing
and Pledge, of Borrower’s intent to request an Uncommitted 
  

 -4- 

 Advance, to which Lender, at its sole option, must notify Borrower of Lender’s election not to make such Uncommitted
Advance no later than 12:00 p.m. (eastern time) the following Business Day. The Borrower agrees to immediately report to the Custodian and the Lender by facsimile transmission within one Business Day of discovery that any Wet Loans that were
previously pledged to the Borrower do not close for any reason including, but not limited to, a Rescission. 
  
 (b) Pursuant to the Custodial Agreement, the Custodian shall review any Required Documents delivered prior to 4:30 p.m. (eastern time) on any Business Day
in time to include the related Mortgage Loans in such Borrowing Base determination on the same day. Not later than 5:30 p.m. (eastern time) on each Business Day, the Custodian shall deliver to the Lender, via electronic transmission acceptable to
the Lender, the Custodian Loan Transmission and an Exception Report showing the status of all Mortgage Loans then held by the Custodian, including but not limited to the Wet Loans and Dry Loans which are subject to document exceptions, and the time
the related Mortgage Loan Documents have been released pursuant to Section 5(a) or 5(b) of the Custodial Agreement. From time to time, the Lender shall calculate the Borrowing Base of all Mortgage Loans that are held by the Custodian and forward to
the Borrower by facsimile transmission a copy of the Borrowing Base Certificate in the form of Exhibit H. In addition, the Custodian shall deliver to the Lender no later than 4:00 p.m. (eastern time) by facsimile transmission on each Funding Date,
one or more Trust Receipts (as defined in the Custodial Agreement) relating to either Wet Loans or Dry Loans. The original copies of such Trust Receipts shall be delivered to Deutsche Bank Trust Company Americas at 1761 East St. Andrew Place, Santa
Ana, California 92705, Attention: AA030C for the account of Citigroup Global Markets Realty Corp. (telephone number (714) 247-6000), as agent for the Lender by overnight delivery using a nationally recognized insured overnight delivery service.

  
 SECTION 11. Effective as of April 30, 2004, the Loan Agreement
is hereby amended by adding the following new sections after Section 6.25: 
  
 6.26 Insured Closing Letter. As of the date hereof and as of the date of each delivery of a Wet Loan, the Settlement Agent has obtained an Insured Closing Letter, closing protection letter or similar
authorization letter from a nationally recognized title insurance company approved by the Lender, copies of which shall be delivered by the Borrower to the Custodian prior to the Funding Date. 
  
 6.27 Escrow Agreement. As of the date hereof and as of the date of
each delivery of a Wet Loan, the Settlement Agent has executed an escrow agreement or letter stating that in the event of a Rescission or any reason the Mortgage Loan fails to fund on a given day, the party conducting the closing is holding all
funds which would have been disbursed on behalf of the Mortgagor as agent for and for the benefit of Lender and such funds shall be redeposited in the Disbursement Account for the benefit of the Lender not later than one Business Day after the date
of Rescission or other failure of the Mortgage Loan to fund on a given day. 
  
 SECTION 12. (A) Effective as of April 30, 2004, representation and warranty (z) of Schedule 1 of the Loan Agreement is hereby amended to read in its entirety as follows: 
  
 (pp) Delivery of Mortgage Documents. If the Mortgage Loan is a Dry
Loan, all documents required to be delivered under the related Custodial Agreement pursuant to Section 2 thereof for each Mortgage Loan have been delivered to the Custodian. The Borrower or its agents is in possession of a complete, true and
materially accurate Mortgage File in compliance with the Custodial Agreement, except for such documents the originals of which have been delivered to the Custodian; 
  

 -5- 

 (B) Effective as of April 30, 2004, representation and warranty (yy) of Schedule 1 of the Loan Agreement
is hereby amended to read in its entirety as follows: 
  
 (yy)
HOEPA. No Mortgage Loan is subject to the provisions of the Homeownership and Equity Protection Act of 1994 as amended (“HOEPA”) or any comparable state or local statutes or regulations, or any other statute or regulation providing
assignee liability or heightened regulatory scrutiny to holders of such mortgage loans; 
  
 (C) Effective as of April 30, 2004, representation and warranty (aaa) of Schedule 1 of the Loan Agreement is hereby amended to read in its entirety as follows: 
  
 (aaa) Georgia Mortgage Loans. No Mortgage Loan is secured by real
property or secured by a manufactured home located in the state of Georgia unless (x) such Mortgage Loan was originated prior to October 1, 2002 or after March 6, 2003, or (y) the property securing the Mortgage Loan is not, nor will be, occupied by
the Mortgagor as the Mortgagor’s principal dwelling. No Mortgage Loan is a “High Cost Home Loan” as defined in the Georgia Fair Lending Act, as amended (the “Georgia Act”) or the New York Banking Law 6-1. Each Mortgage Loan
that is a “Home Loan” under the Georgia Act complies with all applicable provisions of the Georgia Act. No Mortgage Loan secured by owner occupied real property or an owner occupied manufactured home located in the State of Georgia was
originated (or modified) on or after October 1, 2002 through and including March 6, 2003; and 
  
 SECTION 13. Effective as of April 30, 2004, the Loan Agreement is hereby amended by replacing Exhibit A with Exhibit A in the form attached hereto as Annex 1. 
  
 SECTION 14. Effective as of April 30, 2004, the Loan Agreement is hereby
amended by replacing Exhibit D with Exhibit D in the form attached hereto as Annex 2. 
  
 SECTION 15. Defined Terms. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Loan Agreement. 
  
 SECTION 16. Limited Effect. Except as amended hereby, the Agreement
shall continue in full force and effect in accordance with its terms. Reference to this Amendment Number Four need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or
communication issued or made pursuant to, or with respect to, the Agreement, any reference in any of such items to the Agreement being sufficient to refer to the Agreement as amended hereby. 
  

 -6- 

 SECTION 17. Representations. In order to induce the Lender to execute and deliver this Amendment
Number Four, the Borrower hereby represents to the Lender that as of the date hereof, the Borrower is in full compliance with all of the terms and conditions of the Agreement and no Default or Event of Default has occurred and is continuing under
the Agreement. 
  
 SECTION 18. Governing Law. This
Amendment Number Four shall be construed in accordance with the laws of the State of New York and the obligations, rights, and remedies of the parties hereunder shall be determined in accordance with such laws without regard to conflict of laws
doctrine applied in such state (other than Section 5-1401 and 5- 1402 of the New York General Obligations Law). 
  
 SECTION 19. Counterparts. This Amendment Number Four may be executed by each of the parties hereto on any number of separate counterparts, each of
which shall be an original and all of which taken together shall constitute one and the same instrument. 
  
 [REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK] 
  

 -7- 

 IN WITNESS WHEREOF, the Borrower and the Lender have caused this Amendment Number Four to be executed and
delivered by their duly authorized officers as of the day and year first above written. 
  

			
	 AAMES CAPITAL CORPORATION
 (Borrower)

		
	By:	 	  

	Name:	 	 
	Title:	 	 
	
	CITIGROUP GLOBAL MARKETS REALTY CORP
	(Lender)	 	 
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  
 Acknowledged and agreed:

  

			
	AAMES FINANCIAL CORPORATION
	(Guarantor)
		
	By:	 	  

	Name:	 	 
	Title:	 	 

 Annex 1 
  
 EXHIBIT A 
  
 [FORM OF PROMISSORY NOTE] 
  

			
	$300,000,000	 	 
	April 30, 2004	 	 
	 	 	New York, New York

  
 FOR VALUE RECEIVED,
AAMES CAPITAL CORPORATION a California corporation (the “Borrower”), hereby promises to pay to the order of CITIGROUP GLOBAL MARKETS REALTY CORP. (the “Lender”), at the principal office of the Lender at 390
Greenwich Street, 4th Floor, New York, New York 10013, 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 Advances made by the Lender to the Borrower 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 Advance,
at such office, in like money and funds, for the period commencing on the date of such Advance until such Advance 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 Advance made by the Lender to the
Borrower, 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 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 Borrower to make a payment when due of any amount owing under the Loan Agreement or hereunder in respect of the
Advances made by the Lender. 
  
 This Note is the Note referred to
in the Master Loan and Security Agreement dated as of July 22, 2003 (as amended, supplemented or otherwise modified and in effect from time to time, the “Loan Agreement”) between the Borrower, and the Lender, and evidences Advances
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 Borrower agrees 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, the Borrower hereby acknowledges, admits and agrees that the Borrower’s obligations under this Note are
recourse obligations of the Borrower to which the Borrower pledges its full faith and credit. 

 The Borrower, and any indorsers 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 Borrower 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 the Borrower, even if the Borrower is not a party to such agreement; provided, however, that the Lender and the Borrower, by written
agreement between them, may affect the liability of the Borrower. 
  
 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. 
  
 Any enforcement
action relating to this Note may be brought by motion for summary judgment in lieu of a complaint pursuant to Section 3213 of the New York Civil Practice Law and Rules. The Borrower hereby submits to New York jurisdiction with respect to any action
brought with respect to this Note and waives any right with respect to the doctrine of forum non conveniens with respect to such transactions. 
  
 This Note shall be governed by and construed under the laws of the State of New York (without reference to choice of law doctrine but with reference to
Section 5-1401 and 5-1402 of the New York General Obligations Law, which by its terms applies to this Note) whose laws the Borrower expressly elects to apply to this Note. The 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:	 	 

 SCHEDULE OF LOANS 
  

This Note evidences Advances made under the within-described Loan Agreement to the Borrower, 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

	 	 Amount Paid
 or Prepaid

	  	Unpaid Principal
Amount

	  	 Notation
 Made by

 Annex 2 
  
 EXHIBIT D 
  
 FORM OF NOTICE OF BORROWING AND PLEDGE-ELIGIBLE  
 MORTGAGE LOANS

  
 [insert date] 

 
 Citigroup Global Markets Realty Corp. 
 390 Greenwich Street, 4th Floor 
 New York, New York 10013 
 Attention:
                                        
         
  

			
	 Notice of Borrowing and Pledge No.
	  	:                                      
                      
		
	 Name of Subservicer
	  	 :                                      
                      

		
	 Interest Period
	  	:                                      
                      

  
 Ladies/Gentlemen: 
  
 Reference is made to the Master
Loan and Security Agreement, dated as of July 22, 2003, as amended (the “Loan Agreement”), between Aames Capital Corporation (the “Borrower”) and Citigroup Global Markets Realty Corp. (the
“Lender”). Capitalized terms used but not otherwise defined herein shall have the meaning given them in the Loan Agreement. 
  
 In accordance with Section 2.03(a) of the Loan Agreement, the undersigned Borrower hereby requests that you, the Lender, make Advances to us in an
aggregate principal amount of $                             of which
$                             is secured by Wet Loans [ADD WITH RESPECT TO WET LOANS]
[insert requested Advance amount] (such amount representing [insert number of Mortgage Loans] loans on
                                        
[insert requested Funding Date, which in the case of Dry Loans must be at least two (2) Business Days following the date of the request], in connection with which we shall pledge to you as Collateral the Mortgage Loans set forth on the
Mortgage Loan Schedule attached hereto. 
  
 The Borrower hereby
certifies, as of such 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 Advance as a result of such Advance; 

 (b) each of the representations and warranties made by the Borrower 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 Eligible Mortgage Loans, solely with respect to Eligible Mortgage Loans being included the Borrowing Base on the
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) the Borrower is in compliance with all governmental licenses and
authorizations and is qualified to do business and is in good standing in all required jurisdictions. 
  
                           Very truly yours, 
  

			
	[BORROWER]
		
	By:	 	  

	Name:	 	 
	Title:	 	 

 Schedule I 
 to Notice of Borrowing and Pledge 
  
 [MORTGAGE LOANS PROPOSED TO BE PLEDGED 
 TO LENDER ON FUNDING DATE 
  
 [attach Mortgage Loan Schedule]Master Repurchase Agreement

 EXHIBIT 10.23 
  
 MASTER REPURCHASE AGREEMENT 
  

Dated as of August 5, 2004 
  
 Between: 
  
 BEAR STEARNS MORTGAGE CAPITAL CORPORATION 
  
 and 
  
 AAMES CAPITAL CORPORATION, 
  
 AAMES INVESTMENT CORPORATION, and 
  
 AAMES FUNDING CORPORATION 
  
 1. Applicability 
  
 From time to time the parties hereto may enter into transactions in which Aames Capital Corporation, Aames Investment
Corporation and Aames Funding Corporation (each, a “Seller”, and together, the “Sellers”) agree to transfer to Bear Stearns Mortgage Capital Corporation (“Buyer”) Mortgage Loans against the transfer of funds by Buyer,
with a simultaneous agreement by Buyer to transfer to the related Seller such Mortgage Loans at a date certain or on demand, against the transfer of funds by such Seller. Each such transaction shall be referred to herein as a “Transaction”
and shall be governed by this Agreement, as the same shall be amended from time to time. 
  
 2. Definitions 
  
 (a)
“Act of Insolvency”, with respect to either Buyer or a Seller, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law, or such party
seeking the appointment of a receiver, trustee, custodian or similar official for such party or any substantial part of its property, or (ii) the commencement of any such case or proceeding against such party, or another seeking such an appointment,
or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for
relief, such an appointment, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days, (iii) the making by a party of a general assignment for the benefit of creditors, or (iv)
the admission in writing by a party of such party’s inability to pay such party’s debts as they become due; 
  
 (b) “Additional Purchased Mortgage Loans”, Mortgage Loans provided by a Seller to Buyer pursuant to Paragraph 4(a) hereof; 

 (c) “Business Day”, any day other than a Saturday, Sunday and any day on which banks located in
the State of New York are authorized or required to close for business; 
  
 (d) “Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by application of a percentage, agreed to by Buyer and a Seller prior to entering into the Transaction and specified in the
related Request/Confirmation, to the Repurchase Price for such Transaction as of such date; 
  
 (e) “Closing Agent”, shall refer to a title company, closing attorney or other agent listed on Exhibit E hereto, that disburses funds on behalf of a Seller in connection with the origination of a Mortgage
Loan; each such title company, closing attorney or other agent must be acceptable to Buyer in its reasonable business judgment; 
  
 (f) “Committed Transaction”, a transaction involving Eligible Loans with respect to which the Repurchase Price is due and payable on the
earliest of (i) the related Repurchase Date and (ii) August 4, 2005. 
  
 (g) “Custodian”, the custodian named in the Custodial Agreement and any permitted successor thereto; 
  
 (h) “Custodial Agreement”, the Custodial Agreement among Buyer, each Seller and the Custodian providing for the custody of records relating to
the Purchased Mortgage Loans; 
  
 (i) “Disbursement
Account” shall have the meaning set forth in Section 7 of the Custodial Agreement; 
  
 (j) “Dry Mortgage Loans” shall refer to Mortgage Loans other than Wet Mortgage Loans; 
  
 (k) “FICO score”, the credit risk scoring model assessing likelihood of default developed by Fair, Isaac & Co, and used by major credit
bureaus such as Equifax, Experion and Trans Union; 
  
 (l)
“FNMA”, the Federal National Mortgage Association; 
  
 (m) “High-Cost Mortgage Loan”, (1) any Mortgage Loan with an interest rate sufficient to trigger the protections of HOEPA or (2) a “home loan”, “covered home loan” or “high-cost home loan” as defined
in the Georgia Fair Lending Act, as amended, “high cost home loan” under the New York Predatory Lending Law, codified as N.Y. Banking Law § 6-1, N.Y. Gen. Bus. Law § 771-a, and N.Y. Real Prop. Acts Law § 1302 or in New York
City Ordinance 67-A, “high cost home loan” under North Carolina General Statutes Section 24-1.1E et seq., “high cost home loan” under Kentucky Revised Statutes §360.100 et seq. or “high-cost home loan” under
Arkansas Code of 1987 Annotated §23-53-101 et seq.; 
  
 (n)
“HOEPA”, The Home Ownership and Equity Protection Act of 1994, as amended; 
  

 2 

 (o) “Income”, with respect to any Mortgage Loan at any time, any principal thereof then payable
and all payments of interest and principal together with other distributions thereon or proceeds thereof; 
  
 (p) “Loan Schedule”, a schedule of Mortgage Loans identifying each Mortgage Loan: (1) in the case of all Mortgage Loans, by each Seller’s
loan number, Mortgagor’s name and address (including the state and zip code) of the mortgaged property, whether such Mortgage Loan is a Dry Mortgage Loan or a Wet Mortgage Loan, whether such Mortgage Loan bears a fixed or adjustable interest
rate, the loan-to-value ratio, the outstanding principal amount as of a specified date, the initial interest rate borne by such Mortgage Loan, the original principal balance thereof, the current scheduled monthly payment of principal and interest,
the maturity of the related Note, the property type, the occupancy status, the appraised value, the original term to maturity; and (2) in the case of adjustable rate Mortgage Loans, the interest rate borne by such Mortgage Loan on the Purchase Date,
the index and applicable determination date for each adjustment period, the gross margin, the payment adjustment period (in months), months to next payment adjustment, periodic payment adjustment cap, lifetime payment adjustment cap, lifetime
payment cap, interest rate adjustment, periodic interest adjustment cap; lifetime interest rate adjustment cap; credit grade and FICO score; 
  
 (q) “Margin Deficit”, the meaning specified in Paragraph 4(a) hereof; 
  
 (r) “Market Value”, with respect to any Mortgage Loans as of any date, the fair market value of such Mortgage
Loans on such date as determined by Buyer in its reasonable business judgment from time to time and at such times as it may elect in its sole discretion; provided, however, that a Market Value of zero shall be assigned to (i) any
Mortgage Loan that has been delinquent for at least sixty (60) days, (ii) any Mortgage Loan that has been subject to this Agreement for more than one hundred and eighty (180) days in aggregate (provided, however, that twenty-five (25%)
percent by original principal balance of the Mortgage Loans may be subject to the Agreement for more than one hundred and eighty (180) days in aggregate, but in no case more than three hundred and sixty (360) days), (iii) any Mortgage Loan with
respect to which there is a breach of a representation or warranty made by a Seller in this Agreement or the Custodial Agreement that materially adversely affects Buyer’s interests hereunder or (iv) any Wet Mortgage Loan that is subject to this
Agreement or the Custodial Agreement for more than the aggregate number of days provided herein without having become a Dry Mortgage Loan; 
  
 (s) “Mortgage”, the mortgage, deed of trust or other instrument creating a first or second lien on an estate in fee simple interest in real
property securing a Note; 
  
 (t) “Mortgage Loan”, a
first and second lien mortgage loan on single family residential property consisting of a Note secured by a Mortgage; 
  
 (u) “Mortgagor”, the obligor on a Note; 
  
 (v) “Note”, the Note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan; 
  

 3 

 (w) “Price Differential”, with respect to any Transaction hereunder as of any date, the
aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase
Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by a Seller to Buyer with respect to such Transaction); 
  
 (x) “Pricing Rate”, the per annum percentage rate for determination
of the Price Differential, which rate shall be specified in the related Request/Confirmation; 
  
 (y) “Prime Rate”, the prime rate of U.S. money center commercial banks as published in The Wall Street Journal; 
  

(z) “Purchase Date”, the date with respect to each Transaction on which Purchased Mortgage Loans are sold by a Seller to Buyer hereunder;

  
 (aa) “Purchase Price”, (i) on the Purchase Date, the
price at which Purchased Mortgage Loans are sold by a Seller to Buyer hereunder, and (ii) thereafter, such price decreased by the amount of any cash transferred by a Seller to Buyer pursuant to Paragraph 4(a) hereof; 
  
 (bb) “Purchased Mortgage Loans”, the Mortgage Loans sold by a
Seller to Buyer in a Transaction hereunder, and any Mortgage Loans substituted therefor in accordance with Paragraph 9 hereof. The term “Purchased Mortgage Loans” with respect to any Transaction at any time also shall include Additional
Purchased Mortgage Loans delivered pursuant to Paragraph 4(a); 
  
 (cc) “Replacement Mortgage Loans”, the meaning specified in Paragraph 11(e)(ii) hereof; 
  
 (dd) “Repurchase Date”, the date on which a Seller is to repurchase the Purchased Mortgage Loans from Buyer, including any date determined by
application of the provisions of Paragraphs 3(e) or 11 hereof; 
  
 (ee) “Repurchase Price”, the price at which Purchased Mortgage Loans are to be resold by Buyer to a Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as
the sum of the Purchase Price and the Price Differential as of the date of such determination, increased by any amount determined by the application of the provisions of Paragraph 11 hereof; 
  
 (ff) “Request/Confirmation”, the request and confirmation
substantially in the form of Exhibit A hereto delivered pursuant to Paragraph 3 hereof; 
  
 (gg) “Request for Wire”, the request to Buyer substantially in the form of Exhibit B hereto delivered pursuant to Paragraph 3 hereof; 
  
 (hh) “Wet Mortgage Loans” shall have the meaning set forth in the Custodial Agreement. 
  

 4 

 3. Initiation; Request/Confirmation; Termination; Transactions Optional 
  
 (a) Any agreement to enter into a Transaction shall be made in writing at
the initiation of each Seller. In the event that a Seller desires to enter into a Transaction hereunder, such Seller shall give notice to Buyer via facsimile or telephone prior to 5:00 p.m., Eastern standard time, on the Business Day prior to the
proposed Purchase Date. In addition, in the event that a Seller is entering into a Transaction with respect to Wet Mortgage Loans, a Seller shall simultaneously deliver to Buyer a Request for Wire executed by an authorized representative of such
Seller. In the event that such Seller desires to enter into a second Transaction with respect to Wet Mortgage Loans on the same Purchase Date, such Seller shall deliver a subsequent Request for Wire to Buyer no later than 9:30 a.m. Pacific standard
time on the Purchase Date. 
  
 (b) Seller shall send Buyer a
Request/Confirmation indicating the final amount of the Transaction for such Purchase Date no later than 5:00 p.m. New York City time on such Purchase Date. The Request/Confirmation shall be complete in every respect except for the signature of an
authorized representative of Buyer. Buyer shall, upon its receipt and approval thereof, promptly execute and return the signed Request/Confirmation to such Seller. 
  
 (c) The Request/Confirmation shall describe the Purchased Mortgage Loans in a manner satisfactory to Buyer (which may be by
attaching a Loan Schedule thereto), identify Buyer and the related Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate or
Repurchase Price applicable to the Transaction, (v) whether the Mortgage Loan is a Wet Mortgage Loan or a Dry Mortgage Loan and (vi) any additional terms or conditions of the Transaction mutually agreeable to Buyer and such Seller. 
  
 (d) Each Request/Confirmation shall be binding upon the parties hereto unless
written notice of objection is given by the objecting party to the other party within one (1) Business Day after Buyer has delivered the completed Request/Confirmation to the related Seller. 
  
 (e) In the event of any conflict between the terms of a Request/Confirmation
and this Agreement, such Request/Confirmation shall prevail. 
  
 (f) In the case of Transactions terminable upon demand, such demand shall be made by Buyer or the related Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior to the
Business Day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by resale by Buyer
to the related Seller or its agent of the Purchased Mortgage Loans and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, the related Seller hereunder) against the
transfer of the Repurchase Price to an account of Buyer. 
  
 (g)
The adjustment mechanism and the index for any adjustable rate Mortgage Loan must be satisfactory to Buyer in its sole discretion. 
  
 (h) Buyer may, in its sole discretion, reject any Mortgage Loan from inclusion in a Transaction hereunder for any reason; if Buyer determines that a
Mortgage Loan is an Eligible 
  

 5 

 Loan, Seller has otherwise complied with this Agreement and no Event of Default has occurred and is continuing, Buyer
shall be obligated to purchase such Eligible Loan in a Committed Transaction. 
  
 4. Margin Maintenance 
  
 (a) If at any time the
aggregate Market Value of all Purchased Mortgage Loans subject to all Transactions hereunder is less than the aggregate Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by verbal notice to a Seller
(followed by written notice) require such Seller in such Transactions, at Buyer’s option, to transfer to Buyer cash or additional Mortgage Loans reasonably acceptable to Buyer (“Additional Purchased Mortgage Loans”), so that the cash
and aggregate Market Value of the Purchased Mortgage Loans, including any such Additional Purchased Mortgage Loans, will thereupon equal or exceed such aggregate Buyer’s Margin Amount; provided, however, that no Additional Purchased Mortgage
Loans may be Wet Mortgage Loans. The failure of Buyer to give written notice of a Margin Deficit shall not waive the effectiveness of verbal notice hereunder. 
  

(b) If the notice to be given by Buyer to a Seller under subparagraph (a) above is given at or prior to 10:00 a.m. New York city time on a Business
Day, the party receiving such notice shall transfer cash or Additional Purchased Mortgage Loans to Buyer prior to the close of business in New York City on the date of such notice, and if such notice is given after 10:00 a.m. New York City time, the
party receiving such notice shall transfer cash or Additional Purchased Mortgage Loans prior to the close of business in New York City on the Business Day following the date of such notice. 
  
 (c) Any cash transferred pursuant to this Paragraph shall be held by Buyer as
though it were Additional Purchased Mortgage Loans and, unless Buyer shall otherwise consent, shall not reduce the Repurchase Price of the related Transaction. 
  

5. Income Payments 
  
 Where a particular Transaction’s term extends over an Income payment date on the Mortgage Loans subject to that Transaction, all payments and
distributions, whether in cash or in kind, made on or with respect to the Purchased Mortgage Loans shall, unless otherwise mutually agreed by Buyer and a Seller and so long as an Event of Default on the part of such Seller shall not have occurred
and be continuing, be paid directly to a Seller by the related Mortgagor. Buyer shall not be obligated to take any action pursuant to the preceding sentence to the extent that such action would result in the creation of a Margin Deficit, unless
prior thereto or simultaneously therewith such Seller transfers to Buyer, at Buyer’s option, cash or Additional Purchased Mortgage Loans sufficient to eliminate such Margin Deficit. 
  
 6. Security Interest 
  
 Although the parties intend that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be
loans, each Seller shall be deemed to have pledged to Buyer as security for the performance by the Sellers of their obligations under each such Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased
Mortgage Loans with respect to all Transactions hereunder and all proceeds 
  

 6 

 thereof. The Sellers shall pay all fees and expenses associated with perfecting such security interest including, without
limitation, the cost of filing financing statements under the Uniform Commercial Code and recording assignments of mortgage as and when required by Buyer in its sole discretion. 
  
 7. Payment and Transfer 
  
 Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Mortgage Loans transferred by one party
hereto to the other party shall be transferred by notice to the Custodian to the effect that the Custodian is now holding for the benefit of the transferee the related documents and assignment forms delivered to it under the Custodial Agreement.

  
 8. Segregation of Documents Relating to Purchased Mortgage Loans

  
 All documents relating to Purchased Mortgage Loans in the
possession of a Seller shall be segregated from other documents and securities in its possession and shall be identified as being subject to this Agreement. Ownership of all Purchased Mortgage Loans shall pass to Buyer and nothing in this Agreement
shall preclude Buyer from engaging in repurchase transactions with the Purchased Mortgage Loans or otherwise pledging or hypothecating the Purchased Mortgage Loans, but no such transaction shall relieve Buyer of its obligations to resell and
transfer Purchased Mortgage Loans to a Seller pursuant to the terms hereof. 
  
 9.
Substitution 
  
 A Seller may, subject to agreement with,
acceptance by and upon notice to Buyer, substitute Mortgage Loans substantially similar to the Purchased Loans for any Purchased Loans. If a Seller gives notice to the Buyer at or prior to 10:00 a.m. New York City time on a Business Day, Buyer may
elect, by the close of business on the Business Day notice is received or by the close of the next Business Day if notice is given after 10:00 a.m. New York City time on such day, not to accept such substitution. In the event such substitution is
accepted by Buyer, such substitution shall be made by such Seller’s transfer to Buyer of such other Mortgage Loans and Buyer’s transfer to the Seller of such Purchased Loans, and after such substitution, the substituted Mortgage Loans
shall be deemed to be Purchased Loans. In the event Buyer elects not to accept such substitution, Buyer shall offer such Seller the right to terminate the Transaction. 
  
 In the event a Seller exercises its right to substitute or terminate under this Section 9, such Seller shall be obligated to
pay to Buyer, by the close of the Business Day of such substitution or termination, as the case may be, an amount equal to (A) Buyer’s actual cost (including all fees, expenses and commissions) of (i) entering into replacement transactions;
(ii) entering into or terminating hedge transactions; and/or (iii) terminating transactions or substituting securities in like transactions with third parties in connection with or as a result of such substitution or termination, and (B) to the
extent Buyer determines not to enter into replacement transactions, the loss incurred by Buyer directly arising or resulting from such substitution or termination. The foregoing amounts shall be solely determined and calculated by Buyer in good
faith. 
  

 7 

 10. Representations, Warranties and Covenants 
  
 (a) Buyer and each Seller each represents and warrants, and shall on and as of the Purchase Date of any Transaction be
deemed to represent and warrant, to the other that: 
  
 (i) it is duly authorized to execute and deliver this Agreement, to enter into the Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and
performance; 
  
 (ii) it will engage in such
Transactions as principal (or, if agreed in writing in advance of any Transaction by the other party hereto, as agent for a disclosed principal); 
  
 (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed
principal); 
  
 (iv) it has obtained all
authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder and such authorizations are in full force and effect; and 
  
 (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not
violate any law, ordinance, charter, by-law or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. 
  
 (b) The Sellers jointly and severally represent and warrant to Buyer, and shall on and as of the Purchase Date of any Transaction be deemed to represent
and warrant, as follows: 
  
 (i) The documents
disclosed by a Seller to Buyer pursuant to this Agreement are either original documents or genuine and true copies thereof; 
  
 (ii) Each Seller is a separate and independent corporate entity from the Custodian, each Seller does not own a controlling interest in the
Custodian either directly or through affiliates and no director or officer of such Seller is also a director or officer of the Custodian; 
  
 (iii) None of the Purchase Price for any Mortgage Loan will be used either directly or indirectly to acquire any security, as that term is
defined in Regulation T of the Regulations of the Board of Governors of the Federal Reserve System, and Seller has not taken any action that might cause any Transaction to violate any regulation of the Federal Reserve Board; 
  
 (iv) Each Mortgage Loan was underwritten in accordance with
the written underwriting standards of the Sellers furnished by Sellers to Buyer, and no change to such underwriting standards has occurred since the date of the last written revision to such standards was furnished to Buyer by Sellers; 

 

 8 

 (v) A Seller shall be at the time it transfers to Buyer any Mortgage Loans for any
Transaction the legal and beneficial owner of such Mortgage Loans, free of any lien, security interest, option or encumbrance; 
  
 (vi) Sellers used no selection procedures that identified the Mortgage Loans relating to a Transaction as being less desirable or valuable
than other comparable assets in Seller’s portfolio on the related Purchase Date; 
  
 (vii) Each Transaction involving Mortgage Loans is entered into in contemplation of liquidation, sale or other disposition, or the
issuance of asset backed securities; and 
  
 (c) Each Seller makes
the representations and warranties set forth at Exhibit C with respect to the Mortgage Loans as of the related Purchase Date. 
  
 (d) The Sellers jointly and severally covenant with Buyer, from and after the date hereof, as follows: 
  
 (i) The Sellers shall immediately notify Buyer if an Event
of Default shall have occurred; 
  
 (ii) Upon
request, each Seller shall deliver to Buyer a current Loan Schedule with respect to all Mortgage Loans subject to this Agreement with such frequency as Buyer may require but in no event less frequently than monthly; 
  
 (iii) No more than twenty-five (25%) percent by aggregate
outstanding principal balance of the Mortgage Loans shall be subject to this Agreement for more than one hundred eighty (180) days in aggregate, and in no event shall the Mortgage Loans be subject to this agreement for more than three hundred and
sixty (360) days; 
  
 (iv) The aggregate
outstanding principal amount of Mortgage Loans subject to the Agreement at any time that are Wet Mortgage Loans shall not exceed $150,000,000; 
  
 (v) The aggregate maximum Purchase Price for all Transactions (which are Committed Transactions) shall not exceed $500,000,000;

  
 (vi) The aggregate maximum Purchase Price for
Mortgage Loans that are second lien Mortgage Loans shall not exceed the greater of (i) ten (10%) percent of the aggregate Purchase Price of the Mortgage Loans or (ii) $30,000,000; 
  
 (vii) Each Seller will comply with all applicable provisions of the Custodial Agreement; 
  
 (viii) With respect to Wet Mortgage Loans subject to this
Agreement, the Sellers shall deliver the Mortgage Files for at least eighty (80%) percent by aggregate principal balance of the Wet Mortgage Loans no later than ten (10) calendar days after the related Purchase Date; 
  

 9 

 (ix) The Sellers shall deliver the Mortgage Files for all remaining Wet Mortgage Loans
not delivered pursuant to subparagraph (viii) above no later than fifteen (15) calendar days after the related Purchase Date; 
  
 (x) For each Mortgage Loan that is a Wet Mortgage Loan, a Seller has obtained an insured closing letter issued by a title insurance
company effective not later than the closing date for such Mortgage Loan; 
  
 (xi) In the event that Buyer purchases a Mortgage Loan that is a Wet Mortgage Loan and the Wet Mortgage Loan is not originated by a Seller for any reason, such Seller shall return the funds constituting the Purchase
Price for such Wet Mortgage Loan via wire transfer within twenty four (24) hours of such Seller’s failure to complete the Wet Mortgage Loan; 
  
 (xii) Notwithstanding any provision of this Agreement or the Custodial Agreement to the contrary, any funds distributed for the funding of
a Mortgage Loan through the Disbursement Account, shall constitute the Purchase Price for such Mortgage Loan; and 
  
 (xiii) The Sellers shall not directly or indirectly use any of the proceeds from the sale of Purchased Mortgage Loans for the purpose of
financing the activities of any person or entity that is subject to sanctions under any program administered by the Office of Foreign Assets Control of the United States Department of the Treasury. 
  
 11. Events of Default; Event of Termination 
  
 (a) The following events shall constitute events of default (each an
“Event of Default”) hereunder with respect to Buyer or a Seller, as applicable: 
  
 (i) A Seller fails to repurchase or Buyer fails to transfer Purchased Mortgage Loans upon the applicable Repurchase Date pursuant to the
terms hereof; 
  
 (ii) A Seller or Buyer fails,
after one (1) Business Day’s notice, to comply with Paragraph 4 hereof; 
  
 (iii) An Act of Insolvency occurs with respect to a Seller or Buyer or any controlling entity thereof; 
  
 (iv) Any representation or warranty made by a Seller or Buyer shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated; provided, however, that in the case of representations and warranties made with respect to the Purchased Mortgage Loans, such circumstance shall not constitute an Event of Default if,
after determining the Market Value of the Purchased Mortgage Loans without taking into account the Purchased Mortgage Loans with respect to which such circumstance has occurred, no other Event of Default shall have occurred and be continuing;

  

 10 

 (v) Any covenant shall have been breached in any material respect; provided,
however, that in the case of covenants made with respect to the Purchased Mortgage Loans, such circumstance shall not constitute an Event of Default if, after determining the Market Value of the Purchased Mortgage Loans without taking into
account the Purchased Mortgage Loans with respect to which such circumstance has occurred, no other Event of Default shall have occurred and be continuing; 
  
 (vi) Buyer shall have reasonably determined that a Seller is or will be unable to meet its commitments under this Agreement, shall have
notified such Seller of such determination and such Seller shall not have responded with appropriate information to the contrary to the satisfaction of Buyer within twenty-four (24) hours; 
  
 (vii) This Agreement shall for any reason cease to create a
valid, first priority security interest in any of the Purchased Mortgage Loans purported to be covered hereby; 
  
 (viii) A final judgment by any competent court in the United States of America for the payment of money in an amount of at least
$1,000,000 is rendered against a Seller, and the same remains undischarged for a period of sixty (60) days during which execution of such judgment is not effectively stayed; 
  
 (ix) Any event of default or any event which with notice, the passage of time or both shall constitute an
event of default shall occur and be continuing under any repurchase or other financing agreement for borrowed funds or indenture for borrowed funds by which a Seller is bound or affected shall occur and be continuing; 
  
 (x) In the judgment of Buyer a material adverse change shall
have occurred in the business, operations, properties, prospects or condition (financial or otherwise) of a Seller; 
  
 (xi) A Seller shall be in default with respect to any normal and customary covenants under any debt contract or agreement, any servicing
agreement or any lease to which it is a party, which default could materially adversely affect the financial condition of a Seller (which covenants include, but are not limited to, an Act of Insolvency of a Seller or the failure of a Seller to make
required payments under such contract or agreement as they become due); 
  
 (xii) A Seller shall fail to promptly notify Buyer of (i) the acceleration of any debt obligation or the termination of any credit facility of a Seller; (ii) the amount and maturity of any such debt assumed after the
date hereof; (iii) any adverse developments with respect to material pending or future litigation involving a Seller; and (iv) any other developments which might materially and adversely affect the financial condition of a Seller; or 
  
 (xiii) A Seller shall have failed to comply in any material
respect with its obligations under the Custodial Agreement. 
  
 (b) If an Event of Default shall have occurred and be continuing, then, at the option of the nondefaulting party, exercised by written notice to the defaulting party (which option shall 
  

 11 

 be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency),
the Repurchase Date for each Transaction hereunder shall be deemed immediately to occur. 
  
 (c) In all Transactions in which the defaulting party is a Seller, if Buyer is deemed to have exercised the option referred to in subparagraph (b) of this Paragraph, (i) each Seller’s obligations hereunder to
repurchase all Purchased Mortgage Loans in such Transactions shall thereupon become immediately due and payable, (ii) to the extent permitted by applicable law, the Repurchase Price with respect to each such Transaction shall be increased by the
aggregate amount obtained by daily application of (x) the greater of the Pricing Rate for such Transaction and the Prime Rate to (y) the Repurchase Price for such Transaction as of the Repurchase Date as determined pursuant to subparagraph (b) of
this Paragraph (decreased as of any day by (A) any amounts retained by Buyer with respect to such Repurchase Price pursuant to clause (iii) of this subparagraph, (B) any proceeds from the sale of Purchased Mortgage Loans pursuant to subparagraph
(e)(i) of this Paragraph, and (C) any amounts credited to the account of a Seller pursuant to subparagraph (f) of this Paragraph) on a 360 day per year basis for the actual number of days during the period from and including the date of the Event of
Default giving rise to such option to but excluding the date of payment of the Repurchase Price as so increased, (iii) all Income paid after such exercise or deemed exercise shall be payable to and retained by Buyer applied to the aggregate unpaid
Repurchase Prices owed by Seller, and (iv) the related Seller shall immediately deliver or cause the Custodian to deliver to Buyer any documents relating to Purchased Mortgage Loans subject to such Transactions then in such Seller’s possession.

  
 (d) In all Transactions in which the defaulting party is
Buyer, upon tender by the related Seller of payment of the aggregate Repurchase Prices for all such Transactions, Buyer’s right, title and interest in all Purchased Mortgage Loans subject to such Transactions shall be deemed transferred to
Seller, and Buyer shall deliver or cause the Custodian to deliver all documents relating to such Purchased Mortgage Loans to such Seller. 
  
 (e) After one (1) Business Day’s written notice to the defaulting party (which notice need not be given if an Act of Insolvency shall have occurred,
and which may be the notice given under subparagraph (b) of this Paragraph or the notice referred to in clause (ii) of the first sentence of subparagraph (a) of this Paragraph), the nondefaulting party may: 
  
 (i) as to Transactions in which the defaulting party is a
Seller, (A) immediately sell on a servicing released or servicing retained basis as Buyer deems desirable, in a recognized market at such price or prices as Buyer may in its sole discretion deem satisfactory, any or all Purchased Mortgage Loans
subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by such Seller hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased
Mortgage Loans, to give such Seller credit for such Purchased Mortgage Loans in an amount equal to the Market Value therefor on such date against the aggregate unpaid Repurchase Prices and any other amounts owing by such Seller hereunder; and

  
 (ii) as to Transactions in which the
defaulting party is Buyer, (A) purchase mortgage loans (“Replacement Mortgage Loans”) having substantially the same 
  

 12 

 outstanding principal amount, maturity and interest rate as any Purchased Mortgage Loans that are not
transferred by Buyer to the related Seller as required hereunder or (B) in its sole discretion elect, in lieu of purchasing Replacement Mortgage Loans, to be deemed to have purchased Replacement Mortgage Loans at the price therefor on such date,
calculated as the average of the prices obtained from three (3) nationally recognized registered broker/dealers that buy and sell comparable mortgage loans in the secondary market. 
  
 (f) As to Transactions in which the defaulting party is Buyer, Buyer shall be liable to the related Seller (i) with respect
to Purchased Mortgage Loans (other than Additional Purchased Mortgage Loans), for any excess of the price paid (or deemed paid) by such Seller for Replacement Mortgage Loans therefor over the Repurchase Price for such Purchased Mortgage Loans and
(ii) with respect to Additional Purchased Mortgage Loans, for the price paid (or deemed paid) by such Seller for the Replacement Mortgage Loans therefor. In addition, Buyer shall be liable to such Seller for interest on such remaining liability with
respect to each such purchase (or deemed purchase) of Replacement Mortgage Loans from the date of such purchase (or deemed purchase) until paid in full by Buyer. Such interest shall be at a rate equal to the greater of the Pricing Rate for such
Transaction or the Prime Rate. 
  
 (g) For purposes of this
Paragraph 11, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is Buyer shall not increase above the amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed
exercise by the related Seller of its option under subparagraph (b) of this Paragraph. 
  
 (h) The defaulting party shall be liable to the nondefaulting party for the amount of all reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a consequence of an Event of
Default, together with interest thereon at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate. Expenses incurred in connection with an Event of Default shall include without limitation those costs and
expenses incurred by the nondefaulting party as a result of the early termination of any repurchase agreement or reverse repurchase agreement entered into by the nondefaulting party in connection with the Transaction then in default. 
  
 (i) The nondefaulting party shall have, in addition to its rights hereunder,
any rights otherwise available to it under any other agreement or applicable law. 
  
 (j) At the option of Buyer, exercised by written notice to each Seller, the Repurchase Date for any or all Transactions shall be deemed to immediately occur in the event that the senior debt obligations or short-term
debt obligations of Bear Stearns & Co. Inc. shall be rated below the four highest generic grades (without regard to any pluses or minuses reflecting gradations within such generic grades) by any nationally recognized statistical rating
organization. 
  
 (k) The exercise by any party of remedies after
the occurrence of an Event of Default shall be conducted in a commercially reasonable manner. 
  

 13 

 12. Servicing of the Purchased Mortgage Loans 
  
 (a) The parties hereto agree and acknowledge that, notwithstanding the purchase and sale of the Purchased Mortgage Loans
contemplated hereby, the related Seller shall service the Purchased Mortgage Loans for the benefit of Buyer and, if Buyer shall exercise its rights to sell the Purchased Mortgage Loans pursuant to this Agreement prior to the related Repurchase Date,
Buyer’s assigns; provided, however, that the obligation of such Seller to service Purchased Mortgage Loans for the benefit of Buyer as aforesaid shall cease upon the payment to Buyer of the Repurchase Price therefor. 

 
 (b) The related Seller shall service and administer the Purchased Mortgage
Loans and shall have full power and authority, acting alone, to do any and all things in connection with such servicing which such Seller may deem necessary or desirable and consistent with the terms of this Agreement, and shall retain all principal
prepayments and Income received by Seller with respect to such Purchased Mortgage Loans pursuant to the terms hereof. A Seller, in administering and servicing the Purchased Mortgage Loans, shall employ procedures (including collection procedures)
and exercise the same care it customarily employs and exercises in servicing and administering mortgage loans for its own account, in accordance with accepted mortgage loan servicing practices of prudent lending institutions and giving due
consideration to Buyer’s reliance on such Seller. A Seller will provide Buyer with monthly reports, substantially identical in form to FNMA’s standard form of remittance report with respect to all Purchased Mortgage Loans then involved in
any Transaction hereunder. 
  
 (c) Buyer may, in its sole
discretion if an Event of Default shall have occurred and be continuing, without payment of any termination fee or any other amount to the related Seller, (i) sell the Mortgage Loans on a servicing released basis or (ii) terminate such Seller as the
servicer of the Purchased Mortgage Loans with or without cause. 
  
 13. Single
Agreement 
  
 The Buyer and the Sellers acknowledge that, and
have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of
each other. Accordingly, the Buyer and the Sellers agree (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all
Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that
payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the
obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. 
  
 14. Notices and Other Communications 
  
 Except as otherwise expressly provided herein, all such notices or communications shall be in writing (including, without limitation, telegraphic,
facsimile or telex communication) or confirmed in writing and such notices and other communications shall, when mailed, 
  

 14 

 telegraphed, communicated by facsimile transmission or telexed, be effective when received at the address for notices for
the party to whom such notice or communications is to be given as follows: 
  
 if to a Seller: 
 (c/o) Aames Financial Corporation 
 350 South Grand Avenue, Suite 4200 
 Los Angeles, CA 90071 
 Attn: Jon D. Van Deuren 
 Telephone: (323) 210-4855 
 Telecopy: (323) 210-5036 
  
 with a copy to: 
 (c/o) Aames Financial Corporation 
 350 South Grand Avenue, Suite 4300 
 Los Angeles, CA 90071 
 Attn: General Counsel 
  
 if to Buyer: 
  
 Bear Stearns Mortgage Capital Corporation 
 383 Madison Avenue 
 New York, New York 10179 
 Attention: Eileen Albus 
 Telephone: (212) 272-7502 
 Telecopy: (212) 272-2053 
  
 In the event that
notice is delivered to a Seller as set forth above, such delivery shall be deemed to be delivery of notice to each Seller. Notwithstanding the foregoing, however, that a facsimile transmission shall be deemed to be received when transmitted so long
as the transmitting machine has provided an electronic confirmation of such transmission, and provided further, however, that all financial statements delivered shall be hand-delivered [we periodically provide internal financial statements to other
counterparties via overnight mail] or sent by first-class mail. Either party may revise any information relating to it by notice in writing to the other party, which notice shall be effective on the third business day following receipt thereof.

  
 15. Payment of Expenses 
  
 The Sellers shall pay on demand all fees and expenses (including, without
limitation, the fees and expenses for legal services of any kind whatsoever, up to $50,000) incurred by Buyer or the Custodian in connection with this Agreement and the Custodial Agreement and the transactions contemplated hereby and thereby,
whether or not any Transactions are entered into hereunder, including, by way of illustration and not by way of limitation, the fees and expenses incurred in connection with (i) the preparation, reproduction and distribution of this Agreement and
the Custodial Agreement and any opinions of counsel, certificates of officers or other documents contemplated by the aforementioned agreements and (ii) any Transaction under this Agreement; provided, however, that the Sellers shall not
be required to pay the fees and expenses of Buyer incurred as a result of Buyer’s default under this Agreement. The obligation of the Sellers to pay such fees and expenses incurred prior to or in connection with the termination of this
Agreement shall survive the termination of this Agreement. 
  

 15 

 16. Opinions of Counsel 
  

The Sellers shall, on the Purchase Date of the first Transaction hereunder and, upon the request of Buyer, on the Purchase Date of any subsequent
Transaction, cause to be delivered to Buyer, with reliance thereon permitted as to any person or entity that purchases the Mortgage Loans from Buyer in a repurchase transaction, a favorable opinion of counsel with respect to the matters set forth in
Exhibit D hereto, in form and substance acceptable to Buyer and its counsel. 
  
 17. Further Assurances; Additional Information 
  
 (a) The Sellers shall promptly provide such further assurances or agreements as Buyer may request in order to effect the purposes of this Agreement. 
  
 (b) At any reasonable time, each Seller shall permit Buyer, its agents or attorneys, to inspect and copy any and all documents and data in its possession
pertaining to each Purchased Mortgage Loan that is the subject of such Transaction. Such inspection shall occur upon the request of Buyer at a mutually agreeable location during regular business hours and on a date not more than two (2) Business
Days after the date of such request. 
  
 (c) Each Seller agrees to
provide Buyer or its agents, from time to time, with such information concerning the Seller of a financial or operational nature as Buyer may reasonably request. 
  
 (d) Each Seller shall provide Buyer or its agents, with copies of all filings made by or on behalf of the Seller or any
entity that controls the Seller, with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, promptly upon making such filings. Seller may provide such filings to Buyer via the internet by providing
access to a Web address containing such filings; provided, however, that Seller shall give Buyer automatic electronic notice of any filings simultaneously with delivery to the Securities and Exchange Commission 
  
 (e) Seller shall notify Buyer if any filing made pursuant to subparagraph (d)
above is not submitted to the Securities and Exchange Commission by the date required for such filing pursuant to the Securities Exchange Act of 1934. 
  
 18. Buyer as Attorney-in-Fact 
  
 Buyer is hereby appointed the attorney-in-fact of the Sellers for the purpose of carrying out the provisions of this Agreement and taking any action and
executing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, Buyer shall
have the right and power during the occurrence and continuation of any Event of Default to receive, endorse and collect all checks made payable to the order of a Seller representing any payment on account of the principal of or interest on any of
the Purchased Mortgage Loans and to give full discharge for the same. 
  
 19.
Joint and Several Liability of Sellers 
  
 Each Seller
agrees to be jointly and severally liable for the obligations of each Seller hereunder and all representations, warranties, covenants and agreements made by or on behalf of 
  

 16 

 each Seller in the Agreement or in any exhibit hereto or any document, instrument or certificate delivered pursuant
hereto shall be deemed to have been made by each Seller, jointly and severally. Each Seller further agrees that, notwithstanding any right of Buyer to investigate fully the affairs of a Seller and notwithstanding any knowledge of facts determined or
determinable by Buyer, Buyer has the right to rely fully on the representations, warranties, covenants and agreements of each Seller contained in the Agreement and upon the accuracy of any document, instrument, certificate or exhibit given or
delivered hereunder. The joint and several obligation of each Seller hereunder is absolute, unconditional, irrevocable, present and continuing and, with respect to any payment to be made to Buyer, is a guaranty of payment (and not of collectability)
and is in no way conditional or contingent upon the continued existence of the other Sellers and is not and will not be subject to any setoffs. Any notice or other communication provided to a Seller pursuant hereto shall be deemed to have been given
each Seller and failures to be sent any notice or communication contemplated hereby shall not relieve a Seller from its joint and several liability for the obligations of each Seller hereunder. 
  
 20. Wire Instructions 
  
 (a) Any amounts to be transferred by Buyer to a Seller hereunder shall be sent by wire transfer in immediately available
funds to the account of such Seller at: 
  
 Bank
of the West, Los Angeles, CA 
 Acct.: Aames General Investment Account 
 Acct. No.: 751005844 
 ABA#: 1211-0078-2 
 Attn.: Elizabeth Anderson 
  
 (b) Any amounts to be transferred by a Seller to Buyer hereunder shall be sent by wire transfer in immediately available
funds to the account of Buyer at: 
  
 Bank One

 Acct.: Bear Stearns MBS 
 Acct. No.: 5801230 
 ABA No.: 071-000-013 
 Attn.: Eileen Albus 
  
 (c) Amounts received after 5:00 p.m., New York City time, on any Business Day shall be deemed to have been paid and received on the next succeeding
Business Day. 
  
 21. Entire Agreement; Severability 
  
 This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement. 
  

 17 

 22. Non-assignability; Termination 
  
 (a) The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either
party without the prior written consent of the other party. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. 
  
 (b) This Agreement and all Transactions outstanding hereunder shall terminate
automatically without any requirement for notice on the date occurring three hundred and sixty-four (364) days after the date as of which this Agreement is entered into; provided, however, that this Agreement and any Transaction outstanding
hereunder may be extended by mutual agreement of Buyer and the Sellers; and provided further, however, that no such party shall be obligated to agree to such an extension. 
  
 23. Counterparts 
  
 This Agreement may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument. 
  
 24. Governing Law

  
 This Agreement shall be governed by the laws of the State of
New York without giving effect to the conflict of law principles thereof. 
  

 18 

 25. No Waivers, Etc. 
  
 No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and
until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pursuant to subparagraph 4(a) hereof will not constitute a waiver of any right to do so at a
later date. 
  
 26. Use of Employee Plan Assets 
  
 (a) If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party
shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to
proceed. 
  
 (b) Subject to the last sentence of subparagraph (a)
of this Paragraph, any such Transaction shall proceed only if each Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial
condition. 
  
 (c) By entering into a Transaction pursuant to this
Paragraph, each Seller shall be deemed (i) to represent to Buyer that since the date of the Seller’s latest such financial statements, there has been no material adverse change in the Seller’s financial condition which the Seller has not
disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party. 
  
 27. Intent 
  
 (a) The parties intend and acknowledge that each Transaction is a “repurchase agreement” as that term is defined
in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Mortgage Loans subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a “securities
contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended. 
  
 (b) It is understood that either party’s right to liquidate Mortgage Loans delivered to it in connection with Transactions hereunder or to exercise
any other remedies pursuant to Paragraph 11 hereof, is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended. 
  

 19 

 28. Disclosure Relating to Certain Federal Protections 
  
 The parties acknowledge that they have been advised that: 
  
 (a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that the provisions
of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder; 
  
 (b) in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC
under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and 
  
 (c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction
hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable. 
  

 20 

									
	 BEAR STEARNS MORTGAGE CAPITAL CORPORATION
	  	 	  	 AAMES CAPITAL CORPORATION

					
	 By:
	 	 	  	 	  	 By:
	  	 
	 Title:
	 	 	  	 	  	 Title:
	  	 
	 Date:
	 	 	  	 	  	 Date:
	  	 
				
	 	 	 	  	 	  	 AAMES INVESTMENT CORPORATION

					
	 	 	 	  	 	  	 By:
	  	 
	 	 	 	  	 	  	 Title:
	  	 
	 	 	 	  	 	  	 Date:
	  	 
				
	 	 	 	  	 	  	 AAMES FUNDING CORPORATION

					
	 	 	 	  	 	  	 By:
	  	 
	 	 	 	  	 	  	 Title:
	  	 
	 	 	 	  	 	  	 Date:
	  	 

  

 21 

 EXHIBIT A 
  
 REQUEST/CONFIRMATION 
  

			
	 TO:
	 	 [SELLER]

		
	 FROM:
	 	 Bear Stearns Mortgage Capital Corporation

		
	 RE:
	 	 Request/Confirmation under Master Repurchase Agreement, dated as of August 5, 2004, between Bear Stearns Mortgage Capital Corporation and
[Seller]

  
 Bear Stearns Mortgage Capital
Corporation (“Buyer”) is pleased to confirm your sale and its purchase of the Mortgage Loans described below and listed on the attached Loan Schedule pursuant to the above-referenced Master Repurchase Agreement under the following terms
and conditions: 
  

					
	 	  	Additional	  	Aggregate
	 ORIG. PRINCIPAL AMOUNT OF MORTGAGE LOANS:
	  	 	  	 
	 	  	
	  	

	 CURRENT PRINCIPAL AMOUNT OF MORTGAGE LOANS:
	  	 	  	 
	 	  	
	  	

	 PURCHASE DATE:
	  	 	  	 
	 	  	
	  	

	 REPURCHASE DATE:
	  	 	  	 
	 	  	
	  	

	 PURCHASE PRICE:
	  	 	  	 
	 	  	
	  	

	 PRICING RATE:
	  	 	  	 
	 	  	
	  	

	 MINIMUM REQUIRED MARGIN PERCENTAGE:
	  	 	  	 
	 	  	
	  	

	 PRICE DIFFERENTIAL DUE DATE:
	  	 	  	 
	 	  	
	  	

	 PRINCIPAL AMOUNT OF WET MORTGAGE LOANS:
	  	 	  	 
	 	  	
	  	

  

 A-1 

 The Master Repurchase Agreement is incorporated by reference into this Request/Confirmation and made a part hereof as if
it were fully set forth herein. All capitalized terms used herein but not otherwise defined shall have the meanings specified in the Master Repurchase Agreement. 
  

					
	 BEAR STEARNS MORTGAGE CAPITAL CORPORATION

			
	By:	 	 	 	 
	 	 	 Name:
	 	 
	 	 	 Title:
	 	 

  

 A-2 

 EXHIBIT B 
  
 REQUEST FOR WIRE 
  

			
	 FROM:
	  	Bear Stearns Mortgage Capital Corporation
		
	 TO:
	  	[SELLER]
		
	 RE:
	  	Request for Wire under Master Repurchase Agreement, dated as of August 5, 2004, between Bear Stearns Mortgage Capital Corporation and [Seller]

  
 [Seller], as seller under the
above-referenced repurchase agreement (the “Seller”), hereby notifies Bear Stearns Mortgage Capital Corporation (the “Buyer”) that Seller intends to enter into a Transaction on [Purchase Date]. Accordingly, please deliver
[$            ] to [Custodian] via wire to the following account: 
  
 [account information to be supplied by Custodian] 
  
 Seller hereby agrees to deliver to Buyer an executed Request/Confirmation no later than 5:00 p.m. on the Purchase Date. The Master Repurchase Agreement is incorporated by
reference into this Request for Wire and made a part hereof as if it were fully set forth herein. All capitalized terms used herein but not otherwise defined shall have the meanings specified in the Master Repurchase Agreement. 
  

					
	[SELLER]
			
	By:	 	 	 	 
	 	 	 Name:
	 	 
	 	 	 Title:
	 	 

  

 B-1 

 EXHIBIT C 
  
 REPRESENTATIONS AND WARRANTIES 
 RELATING TO THE
PURCHASED MORTGAGE LOANS 
  
 (i) The information with respect to
each Mortgage Loan set forth in the related Loan Schedule is true and correct in all material respects; 
  
 (ii) All documentation required to be delivered to the Custodian under the Custodial Agreement has been so delivered; 
  
 (iii) Each Purchased Mortgage Loan is secured by a Mortgage; 
  
 (iv) Each mortgaged property is improved by a single (one-to-four) family
residential dwelling and no mortgaged property is improved by a mobile home; 
  
 (v) No more than (i) the greater of ten (10%) percent by original principal balance of the Mortgage Loans or (ii) $30.0 million by original principal balance of the Purchased Mortgage Loan have loan-to-value ratios in
excess of ninety (90%) percent; 
  
 (vi) No Purchased Mortgage
Loan has a loan-to-value ratio or combined loan-to-value ratio in excess of one hundred (100%) percent; 
  
 (vii) Each Purchased Mortgage Loan is being serviced by Seller in accordance with the terms of this Agreement; 
  
 (viii) The Note related to each Purchased Mortgage Loan bears a fixed or
adjustable interest rate; 
  
 (ix) Each Mortgage is a valid and
subsisting first or second lien of record (or is in the process of being recorded) on the mortgaged property subject in the case of any second-lien Mortgage Loan only to a single senior lien on such mortgaged property and subject in all cases to the
exceptions to title set forth in the title insurance policy or attorney’s opinion of title, with respect to the related Mortgage Loan, which exceptions are generally acceptable to banking institutions in connection with their regular mortgage
lending activities, and such other exceptions to which similar properties are commonly subject and which do not individually, or in the aggregate, materially and adversely affect the benefits of the security intended to be provided by such Mortgage;

  
 (x) Immediately prior to the transfer and assignment of the
Mortgage Loans by Seller to Buyer as contemplated by this Agreement, Seller held good and indefeasible title to, and was the sole owner of, each Mortgage Loan (including the related Note) conveyed by Seller subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in clause (ix) or other liens which will be released simultaneously with such transfer and assignment; and immediately upon the transfer of the Purchased Mortgage Loans as contemplated in this
Agreement, Buyer will be the sole owner of each Purchased Mortgage Loan subject to no liens, charges, mortgages, encumbrances or rights of others except as set forth in paragraph (ix) or other liens which will be released simultaneously with such
transfer; 
  

 C-1 

 (xi) No Purchased Mortgage Loan is thirty (30) days or more delinquent; 
  
 (xii) There is no delinquent tax or assessment lien on any mortgaged
property, and each mortgaged property is free of substantial damage and is in good repair; 
  
 (xiii) There is no valid and enforceable offset, defense or counterclaim to any Note or Mortgage, including the obligation of the related Mortgagor to pay the unpaid principal of or interest on such Note; 

 
 (xiv) There is no mechanics’ lien or claim for work, labor or
material affecting any mortgaged property which is or may be a lien prior to, or equal with, the lien of the related Mortgage except those which are insured against by any title insurance policy referred to in paragraph (xvi) below; 
  
 (xv) Each Purchased Mortgage Loan at the time it was made complied in all
material respects with applicable state and federal laws and regulations, including, without limitation, the federal Truth-in-Lending Act (including the Riegle Community Development Act of 1994) and other consumer protection laws, usury, equal
credit opportunity, disclosure and recording laws; 
  
 (xvi) With
respect to each Purchased Mortgage Loan either (a) an attorney’s opinion of title has been obtained but no title policy has been obtained or (b) a lender’s title insurance policy, issued in standard American Land Title Association form by
a title insurance company authorized to transact business in the state in which the related mortgaged property is situated, in an amount at least equal to the original balance of such Purchased Mortgage Loan together, in the case of a second-lien
Mortgage Loan, with the then-original principal amount of the mortgage note relating to the senior lien, insuring the mortgagee’s interest under the related Mortgage Loan as the holder of a valid first or second mortgage lien of record on the
real mortgaged property described in the related Mortgage, as the case may be, subject only to exceptions of the character referred to in paragraph (ix) above, was effective on the date of the origination of such Mortgage Loan, and such policy is
valid and thereafter such policy shall continue in full force and effect; 
  
 (xvii) The improvements upon each mortgaged property are covered by a valid and existing hazard insurance policy with a carrier generally acceptable to Seller that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance of the related Purchased Mortgage Loan (together, in the case of a second-lien Mortgage Loan, with the outstanding principal balance of the senior lien), (B) the minimum
amount required to compensate for damage or loss on a replacement cost basis or (C) the full insurable value of the mortgaged property; 
  
 (xviii) If any mortgaged property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the current guidelines of the Flood Insurance Administration is in effect with respect to such mortgaged property with a carrier generally acceptable to Seller in an amount
representing coverage not less than the least of (A) the outstanding principal balance of the related Purchased Mortgage Loan (together, in the case of a second-lien Mortgage Loan, with the outstanding principal balance of the senior lien), (B) the

  

 C-2 

 minimum amount required to compensate for damage or loss on a replacement cost basis or (C) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of 1973; 
  
 (xix) Each Mortgage and Note is the legal, valid and binding obligation of the maker thereof and is enforceable in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law), and all parties to each Purchased
Mortgage Loan had full legal capacity to execute all documents relating to such Mortgage Loan and convey the estate therein purported to be conveyed; 
  
 (xx) Seller has caused and will cause to be performed any and all acts required to be performed to preserve the rights and remedies of Buyer in any
insurance policies applicable to any Purchased Mortgage Loans transferred by Seller including, without limitation, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of co-insured, joint loss
payee and mortgagee rights in favor of Buyer; 
  
 (xxi) No more
than five (5%) percent of the aggregate original outstanding principal balance will be secured by mortgaged properties located within any single zip code area; 
  

(xxii) Each original Mortgage was recorded or is in the process of being recorded, and all subsequent assignments of the original Mortgage have been
delivered for recordation or have been recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of or purchasers from Seller or, if the Seller is registered with MERS, each
assignment of the Mortgage has been listed with MERS; 
  
 (xxiii)
The terms of each Note and each Mortgage have not been impaired, altered or modified in any respect, except by a written instrument which has been recorded, if necessary, to protect the interest of Buyer and which has been delivered to the
Custodian. The substance of any such alteration or modification is reflected on the related Loan Schedule; 
  
 (xxiv) The proceeds of each Purchased Mortgage Loan have been fully disbursed, and there is no obligation on the part of the mortgagee to make future
advances thereunder; any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds therefor have been complied with; all costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans were paid; 
  
 (xxv) The related
Note is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding Mortgage; 
  
 (xxvi) No Purchased Mortgage Loan has a shared appreciation feature, or other contingent interest feature; 
  
 (xxvii) Each mortgaged property is located in the state identified in the
respective Loan Schedule and consists of one or more parcels of real mortgaged property with a residential dwelling erected thereon; 
  

 C-3 

 (xxviii) Each Mortgage contains a provision for the acceleration of the payment of the unpaid principal
balance of the related Purchased Mortgage Loan in the event the related mortgaged property is sold without the prior consent of the mortgagee thereunder; 
  
 (xxix) Any advances made after the date of origination of a Purchased Mortgage Loan have been consolidated with the outstanding principal amount secured
by the related Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term reflected on the respective Loan Schedule; the consolidated principal amount does not exceed the original principal
amount of the related Purchased Mortgage Loan; no Note permits or obligates Seller to make future advances to the related Mortgagor at the option of the Mortgagor; 
  
 (xxx) There is no proceeding pending or threatened for the total or partial condemnation of any mortgaged property, nor is
such a proceeding currently occurring, and each mortgaged property is undamaged by waste, fire, water, flood, earthquake or earth movement; 
  
 (xxxi) All of the improvements which were included for the purposes of determining the appraised value of any mortgaged property lie wholly within the
boundaries and building restriction lines of such mortgaged property, and no improvements on adjoining properties encroach upon such mortgaged property, and are stated in the title insurance policy and affirmatively insured; 
  
 (xxxii) No improvement located on or being part of any mortgaged property is
in violation of any applicable zoning law or regulation; all inspections, licenses and certificates required to be made or issued with respect to all occupied portions of each 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 and such mortgaged property is lawfully occupied under the applicable law; 
  
 (xxxiii) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage, and no fees or expenses are or will become payable by the owner of the Mortgage Loan to the trustee
under the deed of trust, except in connection with a trustee’s sale after default by the related Mortgagor; 
  
 (xxxiv) Each Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate for the
realization against the related mortgaged property of the benefits of the security, including (A) in the case of a Mortgage designated as a deed of trust, by trustee’s sale and (B) otherwise by judicial foreclosure. There is no homestead or
other exemption other than any applicable Mortgagor redemption rights available to the related Mortgagor which would materially interfere with the right to sell the related mortgaged property at a trustee’s sale or the right to foreclose the
related Mortgage; 
  
 (xxxv) There is no default, breach,
violation or event of acceleration existing under any Mortgage or the related Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of
acceleration; and Seller has not waived any default, breach, violation or event of acceleration; 
  

 C-4 

 (xxxvi) No instrument of release or waiver has been executed in connection with any Purchased Mortgage
Loan, and no Mortgagor has been released, in whole or in part, except in connection with an assumption agreement which has been approved by the primary mortgage guaranty insurer, if any, and which has been delivered to the Custodian; 
  
 (xxxvii) Each Purchased Mortgage Loan was originated based upon a full
appraisal, which included an interior inspection of the subject mortgaged property; 
  
 (xxxviii) No more than ten (10%) percent of the aggregate original outstanding principal balance is secured by mortgaged properties that are non-owner occupied mortgaged properties (i.e., investor-owned and vacation);

  
 (xxxix) There do not exist any hazardous substances, hazard
wastes or solid wastes, as such terms are defined in the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act of 1976, or other federal, state or local environmental legislation on any
mortgaged property; 
  
 (xl) Seller was properly licensed or
otherwise authorized, to the extent required by applicable law, to originate or purchase each Purchased Mortgage Loan; and the consummation of the transactions herein contemplated, including, without limitation, the ownership of the Purchased
Mortgage Loans by Buyer will not involve the violation of such laws; 
  
 (xli) With respect to each mortgaged property subject to a ground lease (i) the current ground lessor has been identified and all ground rents which have previously become due and owing have been paid; (ii) the ground lease term extends, or
is automatically renewable, for at least five (5) years beyond the maturity date of the related Purchased Mortgage Loan; (iii) the ground lease has been duly executed and recorded; (iv) the amount of the ground rent and any increases therein are
clearly identified in the lease and are for predetermined amounts at predetermined times; (v) the ground rent payment is included in the mortgagor’s monthly payment as an expense item in determining the qualification of the mortgagor for such
Mortgage Loan; (vi) Buyer has the right to cure defaults on the ground lease; and (vii) the terms and conditions of the leasehold do not prevent the free and absolute marketability of the mortgaged property. The outstanding principal balance of
Purchased Mortgage Loans with related mortgaged properties subject to ground leases does not exceed five (5%) percent of the aggregate original outstanding principal balance; 
  
 (xlii) Seller has not received a notice of default of any first-lien Mortgage Loan secured by any mortgaged property which
has not been cured by a party other than Seller; 
  
 (xliii) No
Purchased Mortgage Loan is subject to sanctions under any program administered by the Office of Foreign Assets Control of the United States Department of the Treasury; 
  
 (xliv) No Purchased Mortgage Loan is subject to a temporary rate reduction pursuant to a buydown program; 
  
 (xlv) No Purchased Mortgage Loan is a High-Cost Mortgage Loan; 
  

 C-5 

 (xlvi) No more than forty (40%) percent of the aggregate original outstanding principal balance of the
Purchased Mortgage Loans was originated under Seller’s non-income verification program; 
  
 (xlvii) The interest rate on each Purchased Mortgage Loan is calculated on the basis of a year of 360 days with twelve 30-day months; 
  
 (xlviii) No Purchased Mortgage Loan has been modified; and 
  
 (xlix) No Purchased Mortgage Loan is a co-op loan. 
  

 C-6 

 EXHIBIT D 
  
 OPINION OF COUNSEL TO SELLER 
  
 1. Seller is duly organized and validly existing as a corporation in good standing under the laws of the State of
                     and has power and authority to enter into and perform its obligations under this Agreement and the Custodial Agreement.
Seller is duly qualified to do business and is in good standing in each jurisdiction in which the character of the business transacted by it requires such qualification and in which the failure so to qualify would have a material adverse effect on
the business, properties, assets or condition (financial or other) of Seller and its subsidiaries, considered as a whole. 
  
 2. This Agreement and the Custodial Agreement have each been duly authorized, executed and delivered by Seller, and each constitutes a valid and legally
binding obligation of Seller enforceable against Seller in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights
generally and to general equity principles. 
  
 3. No consent,
approval, authorization or order of any state or federal court or government agency or body is required to be obtained by Seller for the consummation of the transactions contemplated by this Agreement or the Custodial Agreement. 
  
 4. The consummation of any of the transactions contemplated by this Agreement
and the Custodial Agreement will not conflict with, result in a breach of, or constitute a default under the articles of incorporation or bylaws of Seller or the terms of any indenture or other agreement or instrument known to us to which Seller is
party or bound, or any order known to such counsel to be applicable to Seller or any regulations applicable to Seller, of any state or federal court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over
Seller. 
  
 5. Other than as disclosed in Aames Financial
Corporation or Aames Investment Corporation’s periodic reports filed with the U.S. Securities and Exchange Commission, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or
any arbitrator involving Seller or relating to the transaction contemplated by this Agreement or the Custodial Agreement which, if adversely determined, would have a material adverse effect on Buyer. 
  
 6. Seller is duly registered as a finance company in each state in which
Mortgage Loans were originated, to the extent such registration is required by applicable law. 
  
 7. Each Mortgage Loan will have been endorsed in a manner which satisfies any requirement of endorsement in order to transfer all right, title and interest in and to that Mortgage Loan from Seller to Buyer. Each
assignment of Mortgage related to each such Mortgage Loan is in recordable form and is sufficient under applicable law to validly and effectively transfer all right, title and interest of Seller to Buyer. This Agreement together with (a) the
delivery of such related Mortgage Loans to Custodian, (b) the endorsement of such Mortgage Loans to Buyer and (c) the delivery of the assignments of Mortgages related to the Mortgage Loans to the Custodian in recordable form assigning such Mortgages
to Buyer, creates a valid, perfected security interest in such Mortgage Loans in favor of Buyer. Such security interest will have the same priority and will be subject to the same security interests and liens as apply to such Mortgage Loans in the
hands of Seller. 
  

 D-1 

 EXHIBIT E 
  
 CLOSING AGENT 
  
 The list of Closing Agents is on file with Bear Stearns Mortgage Capital Corporation. 
  

 E-1

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