Exhibit 10.27
EXECUTION COPY
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WAREHOUSE LOAN AND SECURITY AGREEMENT
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Dated as of February 10, 2000
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AAMES CAPITAL CORPORATION
as a Borrower
and
AAMES FUNDING CORPORATION
as a Borrower
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
as Lender
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TABLE OF CONTENTS
Page
Section 1. Definitions and Accounting Matters...............................1
1.01 Certain Defined Terms..........................................1
1.02 Accounting Terms and Determinations...........................19
Section 2. Advances, Note and Prepayments..................................19
2.01 Advances......................................................19
2.02 Notes.........................................................20
2.03 Procedure for Borrowing.......................................21
2.04 Limitation on Types of Advances; Illegality...................22
2.05 Repayment of Advances; Interest. ............................22
2.06 Mandatory Prepayments or Pledge; Request for Release..........23
2.07 Optional Prepayments. .......................................23
2.08 Requirements of Law...........................................24
2.09 Renewal of Termination Date...................................25
Section 3. Payments; Computations; Taxes...................................25
3.01 Payments......................................................25
3.02 Computations..................................................26
3.03 [Intentionally Omitted].......................................26
3.04 Release Fee...................................................26
3.05 Application of Collections....................................26
3.06 Reamortization of Tranche B...................................27
Section 4. Collateral Security.............................................27
4.01 Collateral; Security Interest.................................27
4.02 Further Documentation.........................................29
4.03 Changes in Locations, Name, etc...............................29
4.04 Lender's Appointment as Attorney-in-Fact......................30
4.05 Performance by Lender of either Borrower's Obligations........31
4.06 Proceeds......................................................31
4.07 Remedies......................................................31
4.08 Limitation on Duties Regarding Presentation of Collateral.....32
4.09 Powers Coupled with an Interest...............................33
4.10 Release of Security Interest..................................33
Section 5. Conditions Precedent............................................33
5.01 Initial Advance...............................................33
5.02 Initial and Subsequent Advances...............................35
Section 6. Representations and Warranties..................................37
6.01 Existence.....................................................37
6.02 Financial Condition...........................................37
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6.03 Litigation....................................................37
6.04 No Breach.....................................................37
6.05 Action........................................................38
6.06 Approvals.....................................................38
6.07 Margin Regulations............................................38
6.08 Taxes.........................................................38
6.09 Investment Company Act........................................38
6.10 No Legal Bar..................................................38
6.11 No Default....................................................38
6.12 Collateral; Collateral Security. ............................39
6.13 Chief Executive Office; Chief Operating Office................39
6.14 Location of Books and Records.................................39
6.15 Ownership by Aames Capital of the Pledged Securities..........39
6.16 True and Complete Disclosure..................................39
6.17 Tangible Net Worth; Liquidity.................................40
6.18 ERISA.........................................................40
6.19 Licenses......................................................40
6.20 Relevant States...............................................40
6.21 True Sales....................................................40
6.22 No Burdensome Restrictions....................................40
6.23 Subsidiaries..................................................40
6.24 Origination and Acquisition of Mortgage Loans.................41
6.25 No Adverse Selection..........................................41
6.26 Borrowers Solvent; Fraudulent Conveyance......................41
6.27 Representations as to each Pooling and Servicing Agreement....41
Section 7. Covenants of the Borrowers......................................41
7.01 Financial Statements..........................................41
7.02 Litigation....................................................43
7.03 Existence, Etc................................................44
7.04 Prohibition of Fundamental Changes............................44
7.05 Borrowing Base Deficiency.....................................44
7.06 Notices.......................................................44
7.07 Servicing.....................................................45
7.08 Underwriting Guidelines.......................................45
7.09 Lines of Business.............................................45
7.10 Transactions with Affiliates..................................45
7.11 Application of Funding........................................46
7.12 Limitation on Liens...........................................46
7.13 Limitation on Sale of Assets. ...............................46
7.14 Limitation on Distributions...................................46
7.15 Maintenance of Liquidity......................................46
7.16 Maintenance of Tangible Net Worth.............................46
7.17 Committed Warehouse Facilities................................46
7.18 [Intentionally Omitted].......................................46
7.19 Servicing Transmission........................................47
7.20 No Amendment or Waiver........................................47
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7.21 Maintenance of Property; Insurance............................47
7.22 Further Identification of Collateral..........................47
7.23 Mortgage Loan Determined to be Defective......................47
7.24 Interest Rate Protection Agreements...........................47
7.25 Covenants of the Borrowers with respect to the Collateral.....47
7.26 Computer Systems..............................................48
7.27 Certificate of a Responsible Officer of each Borrower.........48
7.28 Deposit of Collections........................................49
7.29 Fees..........................................................49
7.30 Servicing Rights; Call Rights.................................49
Section 8. Events of Default...............................................49
8.02 Remedies Upon Default.........................................52
Section 9. No Duty on Lender's Part........................................53
Section 10. Miscellaneous...................................................53
10.01 Waiver........................................................53
10.02 Notices.......................................................53
10.03 Indemnification and Expenses..................................54
10.04 Amendments....................................................55
10.05 Successors and Assigns........................................55
10.06 Survival......................................................55
10.07 Captions......................................................55
10.08 Counterparts..................................................55
10.09 Warehouse Agreement Constitutes Security Agreement;
Governing Law...................................................55
10.10 SUBMISSION TO JURISDICTION; WAIVERS...........................55
10.11 WAIVER OF JURY TRIAL..........................................56
10.12 Acknowledgments...............................................56
10.13 Hypothecation or Pledge of Collateral.........................56
10.14 Assignments; Participations...................................56
10.15 Servicing. ..................................................57
10.16 Periodic Due Diligence Review.................................59
10.17 Effect of Payment Under Guarantee.............................59
10.18 Set-Off.......................................................59
10.19 Intent........................................................60
10.20 Joint and Several Liability...................................60
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SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2-A Initial Scheduled Amortization Balance
SCHEDULE 2-B June 30, 2000 Future Residual Failure Event Scheduled
Amortization Balance
SCHEDULE 2-C June 30, 2000 and September 30, 2000 Future Residual
Failure Event Scheduled Amortization Balance
SCHEDULE 2-D September 30, 2000 Future Residual Failure Event
Scheduled Amortization Balance
SCHEDULE 3 Filing Jurisdictions and Offices
SCHEDULE 4 Relevant States
SCHEDULE 5 Subsidiaries
SCHEDULE 6 [Intentionally Omitted]
SCHEDULE 7 Pledged Securities
SCHEDULE 8 Governing Agreements
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B [Intentionally Omitted]
EXHIBIT C Form of Opinion of Counsel to the Borrowers
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Required Fields for Servicing Transmission
EXHIBIT G Required Fields for Mortgage Loan Data Transmission
EXHIBIT H Form of Borrowing Base Certificate
EXHIBIT I Form of Confidentiality Agreement
EXHIBIT J Form of Subservicer Instruction Letter
EXHIBIT K Form of Trustee Instruction Letter
EXHIBIT L Form of Power of Attorney
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WAREHOUSE LOAN AND SECURITY AGREEMENT
WAREHOUSE LOAN AND SECURITY AGREEMENT, dated as of February 10,
2000, between AAMES CAPITAL CORPORATION, a California corporation, as a
Borrower, AAMES FUNDING CORPORATION, a California corporation, as a Borrower
(each a "Borrower", collectively, the "Borrowers") and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC., a Delaware corporation (the "Lender").
RECITALS
The Borrowers wish to obtain financing from time to time to provide
interim funding for the origination and acquisition of certain Mortgage Loans
(as defined herein).
The Lender has agreed, subject to the terms and conditions of this
Warehouse Agreement (as defined herein), to provide such financing to the
Borrowers.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Warehouse Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Aames Capital" shall mean Aames Capital Corporation and any
permitted successors and assigns.
"Aames Funding" shall mean Aames Funding Corporation and any
permitted successors and assigns.
"Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, accepted and prudent mortgage servicing practices of prudent
mortgage lending institutions which service mortgage loans of the same type as
such Mortgage Loans in the jurisdiction where the related Mortgaged Property is
located and in a manner at least equal in quality to the servicing the Borrowers
or Borrowers' designees provide to mortgage loans which they own in their own
portfolio.
"Actual Amortization Amount" shall mean with respect to Tranche B
Advances and the Tranche B Collections for any Payment Date: the greater of
(i)(a) to the extent the Tranche B Collections in respect of Initial Securities
for such Payment Date do not exceed the Expected Monthly Collections for such
Payment Date by more than 120%, an amount equal to the Scheduled Monthly
Amortization Amount for such Payment Date, or (b) to the extent the Tranche B
Collections in respect of Initial Securities for such Payment Date exceed the
Expected Monthly Collections for such Payment Date by more than 120%, an amount
equal to 50% of the
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Tranche B Collections in respect of the Initial Securities received by the
Borrower or Lender for such Payment Date after deducting interest due hereunder
on such Payment Date on outstanding Tranche B Advances and (ii) such amount as
will reduce the outstanding Tranche B Advances to the Scheduled Amortization
Balance for such Payment Date.
"Advance" shall have the meaning provided in Section 2.01 hereof.
"Affiliate" means, with respect to any Person, any other Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person, excluding any Person which would otherwise meet the
definition of Affiliate with respect to the Guarantor unless such Person
directly owns at least 70% of the capital stock of the Guarantor as of the
Effective Date. For purposes of this definition, "control" (together with the
correlative meanings of "controlled by" and "under common control with") means
possession, directly or indirectly, of the power (a) to vote 10% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
directors or managing general partners (or their equivalent) or such Person, or
(b) to directly or indirectly cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by contract,
or otherwise.
"ALTA" means the American Land Title Association.
"Applicable Collateral Percentage" shall mean, (i) for the first 120
days following the date such Eligible Mortgage Loan first becomes subject to the
terms of this Warehouse Agreement, with respect to each Advance:
(a) with respect to Eligible Mortgage Loans as to which scheduled
payments of principal and interest are not more than 29 days
past due, 95%;
(b) with respect to Delinquent Mortgage Loans, 85%; and
(ii) thereafter, 0%.
"Applicable Margin" shall mean, with respect to Advances that are
Tranche A Advances, Tranche B Advances and Tranche C Advances the applicable
rate per annum set forth below:
Tranche A Advances: 1.50%
Tranche B Advances: 3.75%
Tranche C Advances: 1.50%
"Appraised Value" shall mean the value set forth in an appraisal
made in connection with the origination of the related Mortgage Loan as the
value of the Mortgaged Property.
"Assignment of Mortgage" shall mean, with respect to any Mortgage,
an assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form,
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sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the assignment and pledge of the Mortgage.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of
1978, as amended from time to time.
"Best's" means Best's Key Rating Guide, as the same shall be amended
from time to time.
"Borrower" or "Borrowers" shall have the meaning provided in the
heading hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of all
Collateral that has been, and remains pledged to the Lender hereunder.
"Borrowing Base Certificate" shall mean the certificate prepared by
the Lender substantially in the form of Exhibit H, attached hereto.
"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.06 hereof.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday, or (ii) a day in which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or executive
order to be closed.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Warehouse Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"Capital Z" shall mean Capital Z Financial Services Fund II, L.P.
and any permitted successors and assigns.
"Cash Equivalents" shall mean (a) securities with maturities of 90
days or less from the date of acquisition issued or fully guaranteed or insured
by the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of 90 days or less from the
date of acquisition and overnight bank deposits of any commercial bank having
capital and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent thereof by
▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") and in either case maturing within
90 days after the day of acquisition, (e) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth
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or territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of 90 days or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" shall have the meaning assigned to such term in Section
4.01(b) hereof.
"Collateral Value" shall mean (a) with respect to each Mortgage Loan
the lesser of (i) the product of the related Applicable Collateral Percentage
times the Market Value thereof and (ii) 100% (or such other percentage as agreed
upon by the Borrower and the Lender from time to time) of the outstanding
principal balance of such Mortgage Loan; provided, further that, the Collateral
Value as calculated above shall be deemed to be zero in either case, with
respect to each Mortgage Loan:
(1) in respect of which there is a material breach of a
representation and warranty set forth on Schedule 1 (assuming each
representation and warranty is made as of the date Collateral Value
is determined) or a Material Exception which was not otherwise
waived by the Lender;
(2) which the Lender determines, in its reasonable discretion that
such Mortgage Loan is not eligible for sale in the secondary market
or for securitization without unreasonable credit enhancement;
(3) which has been released from the possession of the Custodian
under Section 5(a) of the Custodial Agreement to the Borrower or its
bailee for a period in excess of the period specified in the
Custodial Agreement;
(4) which has been released from the possession of the Custodian
under Section 5(b) of the Custodial Agreement under any Transmittal
Letter in excess of the time period stated in such Transmittal
Letter for release;
(5) in respect of which (a) the related Mortgaged Property is the
subject of a foreclosure proceeding or (b) the related Mortgage Note
has been extinguished under relevant state law in connection with a
judgment of foreclosure or foreclosure sale or otherwise;
(6) in respect of which the related Mortgagor is the subject of a
bankruptcy proceeding;
(7) if the Mortgagor has not made its first payment on the related
Mortgage Loan within forty-five days of its related Due Date;
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(8) if such Mortgage Loan is a Delinquent Mortgage Loan and the
Collateral Value of such Mortgage Loan when added to the aggregate
Collateral Value of all other Delinquent Mortgage Loans exceeds, at
any time, $5,000,000;
(9) if, with respect to such Mortgage Loan, the Borrower has
provided the Lender with a lost note affidavit and the Collateral
Value of such Mortgage Loan when added to the aggregate Collateral
Value of all other Mortgage Loans for which a lost note affidavit
was provided to the Lender exceeds $1,000,000 at any time;
(10) if the Borrower has delivered a lost note affidavit to the
Lender and such Mortgage Loan is either (i) more than 29 days
delinquent with respect to scheduled payments of principal and
interest or (ii) remains pledged to the Lender hereunder more than
90 days after the date on which it is first included in the
Collateral;
(11) if such Mortgage Loan is delinquent with respect to scheduled
payments of principal and interest for sixty (60) or more days; or
(12) if the Borrower has delivered a lost note affidavit to the
Lender or the Custodian for Mortgage Loans securing any Advances
which have not been repaid on a date which is not more than 90 days
from the related Funding Date.
(b) with respect to the Initial Haircut Collateral, the Collateral
Value shall be deemed to be $35,000,000 on the Effective Date. After the
Effective Date, such Collateral Value for the Initial Haircut Collateral shall
be deemed to be $35,000,000, minus any amounts applied to reduce the principal
balance of the Tranche B Advances, and plus any additional Tranche B Advances
made pursuant to Section 2.01(a)(ii); and
(c) with respect to all Collateral other than Mortgage Loans and the
Initial Haircut Collateral, the Collateral Value shall be deemed to be zero
unless otherwise agreed by the Lender in its sole discretion.
"Collections" shall mean the collective reference to Tranche A
Collections, Tranche B Collections and Tranche C Collections.
"Combined LTV or CLTV" means with respect to any Mortgage Loan, the
ratio of (i) the original outstanding principal amount of the Mortgage Loan and
any other mortgage loan which is secured by a lien on the related Mortgaged
Property at the time of the applicable Borrower's funding of such Mortgage Loan
(ii) the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 6 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with either Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes either
Borrower and which is treated as a single employer under Section 414 of the
Code.
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"Contractual Obligation" shall mean as to any Person, any material
provision of any agreement, instrument or other undertaking to which such Person
is a party or by which it or any of its property is bound or any material
provision of any security issued by such Person.
"Cooperative Corporation" shall mean with respect to any Cooperative
Loan, the cooperative apartment corporation that holds legal title to the
related Cooperative Project and grants occupancy rights to units therein to
stockholders through Proprietary Leases or similar arrangements.
"Cooperative Loan" shall mean a Mortgage Loan that is secured by a
first lien on and a perfected security interest in Cooperative Shares and the
related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.
"Cooperative Project" shall mean with respect to any Cooperative
Loan, all real property and improvements thereto and rights therein and thereto
owned by a Cooperative Corporation including without limitation the land,
separate dwelling units and all common elements.
"Cooperative Shares" shall mean with respect to any Cooperative
Loan, the shares of stock issued by a Cooperative Corporation and allocated to a
Cooperative Unit and represented by a stock certificate.
"Cooperative Unit" shall mean with respect to any Cooperative Loan,
a specific unit in a Cooperative Project.
"Custodial Agreement" shall mean the Custodial Agreement, dated as
of February 10, 1999, among Aames Capital Corporation, the Custodian and the
Lender, as the same shall be modified and supplemented and in effect from time
to time.
"Custodian" shall mean Bankers Trust Company of California, N.A.,
its successors and permitted assigns.
"Custodian Loan Transmission" shall have the meaning provided in the
Custodial Agreement.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Delinquent Mortgage Loan" means an Eligible Mortgage Loan which is
30-59 days delinquent with respect to scheduled payments of principal and
interest.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Due Date" means the day of the month on which the Monthly Payment
is due on a Mortgage Loan, exclusive of any days of grace.
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"Due Diligence Review" shall mean the performance by the Lender of
any or all of the reviews permitted under Section 10.16 hereof with respect to
any or all of the Mortgage Loans or the Borrowers or related parties, as desired
by the Lender from time to time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Mortgage Loan" shall mean a Mortgage Loan which is made
to a subprime credit Mortgagor secured by a first or second mortgage lien (as
reflected on the Mortgage Loan Data Transmission) on a one-to-four family
residential property and as to which (i) the representations and warranties in
Section 6.12 and 6.24 and Schedule 1 hereof are correct, (ii) was originated or
acquired by the Borrowers in accordance with the applicable Borrower's or Lender
approved third party's Underwriting Guidelines not more than 60 days prior to
the related Funding Date, (iii) contains all required Mortgage Loan Documents
without any Material Exception and (iv) such other customary criteria for
eligibility determined by the Lender shall have been satisfied.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which either Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which such Borrower is a member.
"Escrow Payments" means with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"Event of Default" shall have the meaning provided in Section 8
hereof.
"Exception Report" shall mean the exception report prepared by the
Custodian pursuant to the Custodial Agreement.
"Expected Monthly Collections" shall mean with respect to Tranche B
Collections in respect of Initial Securities for any Payment Date, the amount
set forth for the corresponding Payment Date under the heading "Expected Monthly
Collections" on Schedule 2-A, 2-B, 2-C and 2-D attached hereto, as applicable.
"Federal Funds Rate" shall mean, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business
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Day, the average of the quotations for the day of such transactions received by
the Lender from three primary dealers (other than an affiliate of the Lender).
"Fee Agreement" shall mean that certain Fee Agreement, dated as of
the date hereof, between Aames Capital and the Lender setting forth certain fees
required to be paid by the Borrowers to the Lender as contemplated herein.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
"First Lien" shall mean with respect to each Mortgaged Property, the
lien of the mortgage, deed of trust or other instrument securing a mortgage note
which creates a first lien on the Mortgaged Property.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"Funding Date" shall mean the date on which an Advance is made
hereunder.
"Future Pledged Securities" shall mean those certain residual
securities to be delivered to the Lender and which are to be issued pursuant to
the first two securitizations completed by Aames Capital after the Effective
Date unless and until all amounts due the Lender under this Warehouse Agreement
with respect to Tranche B Advances are paid in full prior to such
securitization.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governing Agreement" shall mean the agreement or agreements listed
on Schedule 8 attached hereto as such agreements shall be amended or
supplemented from time to time and such other agreements governing the issuance
and payment of any Pledged Securities or Servicing Advance Receivables pledged
to the Lender after the Effective Date.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over either
Borrower, any of its Subsidiaries or any of its properties.
"Gross Margin" means with respect to each adjustable rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage Note.
"Guarantee" shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay, by swap
agreement or other credit derivatives, or otherwise), provided that the term
"Guarantee" shall not include (i) endorsements for collection or deposit in the
ordinary course of business, or (ii) obligations to
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make servicing advances for delinquent taxes and insurance, or other obligations
in respect of a Mortgaged Property, to the extent required by the Lender. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings.
"Guarantor" shall mean Aames Financial Corporation.
"Guaranty" shall mean the guaranty, dated February 10, 2000,
executed by the Guarantor in favor of the Lender which evidences the guarantee
by the Guarantor of the obligations of the Borrowers under this Warehouse
Agreement and the Note.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
obligations of such Person under repurchase agreements or like arrangements; (g)
Indebtedness of others Guaranteed by such Person; (h) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets
by such Person; (i) Indebtedness of general partnerships of which such Person is
a general partner; and (j) any other indebtedness of such Person by a note,
bond, debenture or similar instrument.
"Index" means with respect to each adjustable rate Mortgage Loan,
the index set forth in the related Mortgage Note for the purpose of calculating
the interest rate thereon.
"Initial Haircut Collateral" shall mean all Pledged Securities, the
Limited Partnership Interest and Servicing Advance Receivables delivered to the
Lender as collateral hereunder as of the Effective Date plus the Future Pledged
Securities delivered to the Lender as Collateral thereafter.
"Initial Securities" shall mean Pledged Securities that are
Initial Haircut Collateral.
"Instruction Letter" shall mean a letter agreement between the
Borrowers and each Subservicer substantially in the form of Exhibit J attached
hereto, in which such Persons acknowledge the Lender's security interest in the
Mortgage Loans, and agree to remit any
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collections with respect to the Mortgage Loans as the Lender may so direct from
time to time, which Instruction Letter may be delivered by Lender to such
Subservicer in its sole discretion.
"Insurance Proceeds" means with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement, dated as of the date hereof, among the Lender, Capital Z, the
Guarantor and Aames Capital.
"Interest Period" shall mean, with respect to any Advance, (i)
initially, the period commencing on the Funding Date with respect to such
Advance and ending on the calendar day prior to the Payment Date of the next
succeeding month, and (ii) thereafter, each period commencing on the Payment
Date of a month and ending on the calendar day prior to the Payment Date of the
next succeeding month. Notwithstanding the foregoing, no Interest Period may end
after the Termination Date.
"Interest Rate Adjustment Date" means with respect to each
adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note
and the Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Interest Rate Protection Agreement" shall mean with respect to any
or all of the Mortgage Loans and/or Advances, any interest rate swap, cap or
collar agreement or any other applicable hedging arrangements providing for
protection against fluctuations in interest rates or the exchange of nominal
interest obligations, either generally or under specific contingencies entered
into by either Borrower and reasonably acceptable to the Lender.
"Lender" shall have the meaning assigned thereto in the heading
hereto.
"LIBO Base Rate" shall mean with respect to each day an Advance is
outstanding (or if such day is not a Business Day, the next succeeding Business
Day), the rate per annum equal to the rate published by Bloomberg or if such
rate is not available, the rate appearing at page 3750 of the Telerate Screen as
one-month LIBOR on such date, and if such rate shall not be so quoted, the rate
per annum at which the Lender is offered Dollar deposits at or about 11:00 A.M.,
eastern time, on such date by prime banks in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in respect of
its Advances are then being conducted for delivery on such day for a period of
one month and in an amount comparable to the amount of the Advances to be
outstanding on such day.
"LIBO Rate" shall mean with respect to each Interest Period
pertaining to an Advance, a rate per annum determined by the Lender in its sole
discretion in accordance with the following formula (rounded upwards to the
nearest l/100th of one percent), which rate as determined by the Lender shall be
conclusive absent manifest error by the Lender:
LIBO Base Rate
--------------------------------
1.00 - LIBO Reserve Requirements
The LIBO Rate shall be calculated each Funding Date and Payment Date
commencing with the first Funding Date.
-10-
"LIBO Reserve Requirements" shall mean for any Interest Period for
any Advance, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements applicable to the Lender in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction with
respect thereto), dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) maintained by a member bank of such Governmental Authority. As of
the Effective Date, the LIBO Reserve Requirements shall be deemed to be zero.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Limited Partnership Interest" shall mean the ownership interest of
Aames Capital as provided in the Limited Partnership Agreement of Steamboat
Financial Partnership I, L.P., dated as of June 10, 1999 as further amended or
modified from time to time.
"Loan Documents" shall mean collectively, this Warehouse Agreement,
the Guaranty, the Note and the Custodial Agreement and any other document
executed in connection therewith.
"Loan Party" shall mean collectively, the Borrowers and the
Guarantor.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage
Loan, the ratio of the original outstanding principal amount of the Mortgage
Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 6 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
"Market Value" shall mean the value, determined by the Lender in its
sole reasonable discretion, of the Mortgage Loans if sold in its entirety to a
single third-party purchaser. In determining Market Value, the Lender may take
into account (a) customary factors, including, but not limited to current market
conditions and the fact that the Mortgage Loans may be sold under circumstances
in which the Borrowers, as originators of the Mortgage Loans, is in default
under the Warehouse Agreement, and (b) firm take-out commitments from investment
grade purchasers in favor of the Borrowers covering the Mortgage Loans or
mortgage loans substantially similar to the Mortgage Loans to the extent
recently obtained and during similar market conditions. The Lender's
determination of Market Value shall be conclusive upon the parties, absent
manifest error on the part of the Lender. The Lender shall have the right to
▇▇▇▇ to market the Mortgage Loans on a daily basis which Market Value may be
determined to be zero. The Borrowers acknowledge that the Lender's determination
of Market Value is for the limited purpose of determining Collateral Value for
lending purposes hereunder without the ability to perform customary purchaser's
due diligence and is not necessarily equivalent to a determination of the fair
market value of the Collateral achieved by obtaining competing bids in an
orderly market in which the originator/servicer is not in default under a
revolving debt facility and the bidders have adequate opportunity to perform
customary loan and servicing due diligence.
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"Material Adverse Effect" shall mean a material adverse effect on
(a) the property, business, operations, financial condition or prospects of the
either Borrower or the Guarantor, (b) the ability of either Borrower or the
Guarantor to perform in all material respects its obligations under any of the
Loan Documents to which it is a party, (c) the validity or enforceability in all
material respects of any of the Loan Documents, (d) the rights and remedies of
the Lender under any of the Loan Documents, (e) the Collateral other than the
Initial Haircut Collateral (except for changes in Market Value due to market
conditions).
"Material Exception" shall have the meaning assigned thereto in the
Custodial Agreement.
"Maximum Credit" shall mean two hundred million Dollars.
"Minimum Scheduled Amortization Shortfall Payment" shall mean with
respect to any Payment Date the lesser of (a) the amount, if any, by which the
outstanding principal balance of Tranche B Advances exceeds the Scheduled
Amortization Balance for such Payment Date plus $500,000, and (b) 10 basis
points multiplied by the Release Balance for such Payment Date, but not to
exceed $75,000 for any such Payment Date.
"Monthly Payment" means the scheduled monthly payment of principal
and interest on a Mortgage Loan as adjusted in accordance with changes in the
Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an
adjustable rate Mortgage Loan.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument, which creates a first lien or second lien (as indicated on the
Mortgage Loan Data Transmission) on either (i) with respect to a Mortgage Loan
other than a Cooperative Loan, the fee simple or leasehold estate in such real
property or (ii) with respect to a Cooperative Loan, the Proprietary Lease and
related Cooperative Shares, which in either case secures the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the
Custodial Agreement.
"Mortgage Interest Rate" means the annual rate of interest borne on
a Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an adjustable
rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set
forth in the related Mortgage Note.
"Mortgage Loan" shall mean a mortgage loan or Cooperative Loan which
the Custodian has been instructed to hold for the Lender pursuant to the
Custodial Agreement, and which Mortgage Loan includes, without limitation, (i) a
Mortgage Note, the related Mortgage and all other Mortgage Loan Documents and
(ii) all right, title and interest of the applicable Borrower in and to the
Mortgaged Property covered by such Mortgage.
"Mortgage Loan Data Transmission" shall mean a computer-readable
magnetic or other electronic format incorporating the fields identified on
Exhibit G.
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"Mortgage Loan Documents" shall mean, with respect to a Mortgage
Loan, the documents comprising the Mortgage File for such Mortgage Loan.
"Mortgage Loan List" shall mean the hard copy report provided by the
Borrowers which shall include with respect to each Mortgage Loan to be included
as Collateral: (i) the Mortgage Loan number, (ii) the Mortgagor's name, (iii)
the original principal amount of the Mortgage Loan and (iv) the current
principal balance of the Mortgage Loan.
"Mortgage Note" shall mean the original executed promissory note or
other evidence of the indebtedness of a mortgagor/borrower with respect to a
Mortgage Loan.
"Mortgaged Property" means the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagee" means either Borrower or any subsequent holder of a
Mortgage Loan.
"Mortgagor" means the obligor on a Mortgage Note.
"Multiemployer Plan" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been or are required to be
made by either Borrower or any ERISA Affiliate and that is covered by Title IV
of ERISA.
"Net Income" shall mean, for any period, the net income of the
applicable Borrower for such period as determined in accordance with GAAP.
"Net Worth" shall mean, with respect to any Person, the excess of
total assets of such Person, over total liabilities of such Person, determined
in accordance with GAAP.
"Note" shall mean the promissory note provided for by Section
2.02(a) hereof for Advances and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Notice of Borrowing and Pledge" shall have the meaning assigned to
such term in Section 2.03(a).
"Payment and Reimbursement Agreement" shall mean that certain
Payment and Reimbursement Agreement, dated as of the date hereof, by Capital Z
in favor of the Lender.
"Payment Date" shall mean the second Business Day following the 15th
day of each month. The first Payment Date under this Warehouse Agreement shall
be March 17, 2000.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
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"Permitted Exceptions" shall mean the exceptions to lien priority
including but not limited to: (i) the lien of current real property taxes and
assessments not yet due and payable; (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording acceptable to mortgage lending institutions generally
and specifically referred to in the lender's title insurance policy delivered to
the originator of the Mortgage Loan and (A) referred to or otherwise considered
in the appraisal (if any) made for the originator of the Mortgage Loan or (B)
which do not adversely affect the appraised value of the Mortgaged Property set
forth in such appraisal; (iii) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property; and (iv) in the case of a
Second Lien Mortgage Loan, a First Lien on the Mortgaged Property.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by either Borrower or any ERISA Affiliate and that is covered by
Title IV of ERISA, other than a Multiemployer Plan.
"Pledged Securities" shall mean those certain Class C and Class R
or subordinated securities pledged or delivered to the Lender and identified on
Schedule 7, any Future Pledged Securities and any other securities pledged or
delivered to the Lender from time to time and held as Collateral hereunder.
"Pledged Securities Value" shall mean the value, determined by
Lender in its sole reasonable good faith discretion, of the Pledged Securities
using the same methodology that an issuer of such securities would use for GAAP
valuation purposes. In determining Pledged Securities Value, the Lender may take
into account customary factors, including, but not limited to current market
conditions and recent performance of the Mortgage Loans underlying the Pledged
Securities. Lender's determination of Pledged Securities Value shall be
conclusive upon the parties, absent manifest error on the part of Lender. The
Borrowers acknowledge that Lender's determination of Pledged Securities Value is
for lending purposes hereunder and is not necessarily equivalent to a
determination of the fair market value of the Pledged Securities achieved by
obtaining competing bids in an orderly market.
"PMI Policy" or "Primary Insurance Policy" means a policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.
"Pooling and Servicing Agreement" shall mean any pooling and
servicing agreement, trust agreement or other agreement listed on Schedule 8
pursuant to which the mortgage loans underlying any of the Pledged Securities
are serviced and administered or the Pledged Securities are issued or exchanged
and all Pooling and Servicing Supplements.
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"Pooling and Servicing Supplements" shall mean the supplements
listed on Schedule 8 and any other supplements hereafter entered into pursuant
to which the Lender or its Affiliates have agreed or will agree to act as
supplemental servicer.
"Post-Default Rate" shall mean, in respect of any principal of any
Advance or any other amount under this Warehouse Agreement, the Note or any
other Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to 2% per annum, plus (a) the
interest rate otherwise applicable to such Advance or other amount, or (b) if no
interest rate is otherwise applicable, the LIBO Rate plus the Applicable Margin.
Proceeds: All "proceeds" as such term is defined in Section 9-306(1)
of the Uniform Commercial Code in effect in the State of New York on the date
hereof from the Collateral which, in any event, shall include, without
limitation, all dividends or other income from the Collateral, collections
thereon or distributions with respect thereto.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Proprietary Lease" shall mean the lease on a Cooperative Unit
evidencing the possessory interest of the owner of the Cooperative Shares in
such Cooperative Unit.
"Qualified Insurer" means an insurance company duly qualified as
such under the laws of the states in which the Mortgaged Property is located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by FNMA
and FHLMC and whose claims paying ability is rated in the two highest rating
categories by any of the rating agencies with respect to primary mortgage
insurance and in the two highest rating categories by Best's with respect to
hazard and flood insurance.
"Qualified Originator" shall mean (a) either Borrower, or (b) any
other mutually agreed upon originator of Mortgage Loans; provided, however, that
no correspondent of either Borrower shall be a Qualified Originator for the
purposes of this Warehouse Agreement.
"Regulations T, U and X" shall mean Regulations T, U and X of the
Board of Governors of the Federal Reserve System (or any successor), as the same
may be modified and supplemented and in effect from time to time.
"Release Balance" shall mean for any Payment Date, an amount equal
to the outstanding principal balance of Tranche A Advances and Tranche C
Advances repaid by the Borrowers during the preceding calendar month in order to
obtain a release of the Lender's Lien on the related Collateral. For purposes
hereof, if a Mortgage Loan is released from the Lender's Lien on account of any
Tranche A Advance or a Tranche C Advance, such Tranche A Advance or Tranche C
Advance as the case may be, shall be deemed repaid, regardless of whether one or
more Mortgage Loans are substituted as Collateral for such released Mortgage
Loan.
"Release Fee" shall mean the "Release Fee" set forth in the Fee
Agreement.
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"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
ss. 2615.
"Required Documents" shall mean those documents identified in
Section 2(I) of the Custodial Agreement.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person; provided, that in the event any such officer is
unavailable at any time he or she is required to take any action hereunder,
Responsible Officer shall mean any officer authorized to act on such officer's
behalf as demonstrated by a certificate of corporate resolution.
"Restricted Payments" shall mean with respect to any Person,
collectively, all dividends or other distributions of any nature (cash,
securities, assets or otherwise), and all payments, by virtue of redemption or
otherwise, on any class of equity securities (including, without limitation,
warrants, options or rights therefor) issued by such Person, whether such
securities are now or may hereafter be authorized or outstanding and any
distribution in respect of any of the foregoing, whether directly or indirectly.
"Scheduled Amortization Balance" shall mean, for any Payment Date,
the amount set forth under the heading "Targeted Tranche B Amortization Balance"
on Schedule 2-A attached hereto, provided that, on or before each of June 30,
2000 and September 30, 2000, in the event Aames Capital has failed to pledge to
the Lender an additional Future Residual Security, each with a GAAP value of at
least $10,000,000 as of such date of delivery, or such lesser value as may be
acceptable to the Lender in its sole discretion, a "Future Residual Failure
Event" shall be deemed to have occurred. Upon the occurrence of a June 30, 2000
Future Residual Failure Event, the Scheduled Amortization Balance shall be as
set forth on Schedule 2-B and upon the occurrence of a September 30, 2000 Future
Residual Failure Event, the Scheduled Amortization Balance shall be as set forth
on Schedule 2-C. Upon the occurrence of a September 30, 2000 Future Residual
Failure Event where no June 30, 2000 Future Residual Failure Event has occurred,
the Scheduled Amortization Balance shall be as set forth on Schedule 2-D.
"Scheduled Amortization Deviation" shall occur if at any time the
outstanding Tranche B Advances owed to the Lender shall be in excess of the
Scheduled Amortization Balance applicable at such time by $12,000,000 or more.
"Scheduled Monthly Amortization Amount" means with respect to
Tranche B Advances and any Payment Date, the amount corresponding to such
Payment Date set forth under the heading "Scheduled Monthly Amortization Amount"
on Schedules 2-A, 2-B, 2-C and 2-D attached hereto, as applicable.
-▇▇-
"▇▇▇▇▇▇ ▇▇▇▇" shall mean with respect to each Mortgaged Property,
the lien of the mortgage, deed of trust or other instrument securing a mortgage
note which creates a second lien on the Mortgaged Property.
"Second Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
secured by the lien on the Mortgaged Property, subject to one prior lien on such
Mortgaged Property securing financing obtained by the related Mortgagor and to
Permitted Exceptions.
"Secured Obligations" shall have the meaning assigned thereto in
Section 4.01(c) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities File" shall mean all documents related to a Pledged
Security including without limitation all original certificates, and any other
collateral pledged or otherwise relating to such Pledged Security.
"Securitization Agreement" shall mean that certain agreement by and
among the Borrowers and the Lender, dated the date hereof, outlining, among
other things, rights and obligations with respect to subsequent securitizations
of mortgage loans from time to time.
"Senior Note Indenture" shall mean that certain Indenture of Trust,
dated as of February 1, 1995, and that certain Supplemental Indenture of Trust,
dated as of April 25, 1995, each between Aames Financial Corporation and Bankers
Trust Company of California, N.A. providing for the issuance of 10.5% Senior
Notes due 2002.
"Servicer" shall mean Aames Capital in its capacity as servicer or
master servicer of the Mortgage Loans.
"Servicing Advance Receivables" shall mean Aames Capital's right to
recover monthly advances and servicing advances, or such comparable advances, in
its capacity as servicer under the Pooling and Servicing Agreements listed on
Schedule 8 attached hereto, and such other Governing Agreements identified by
the Borrower to the Lender in writing from time to time, from whichever source
of cash as is set forth in the Governing Agreements.
"Servicing File" means with respect to each Mortgage Loan, the file
retained by the applicable Borrower consisting of originals of all material
documents in the Mortgage File which are not delivered to a Custodian and copies
of the Mortgage Loan Documents set forth in Section 2 of the Custodial
Agreement.
"Servicing Records" shall have the meaning assigned thereto in
Section 10.15(b) hereof.
"Servicing Transmission" shall mean a computer-readable magnetic or
other electronic format acceptable to the parties containing the information
identified on Exhibit F.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
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"Subservicer" shall have the meaning provided in Section 10.15(c)
hereof.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
"System" shall mean all hardware or software, or any system
consisting of one or more thereof, including, without limitation, any and all
enhancements, upgrades, customizations, modifications, maintenance and the like
utilized by any Person for the benefit of such Person to perform its obligations
and to administer and track, store, process, provide, and where appropriate,
insert, true and accurate dates and calculations for dates and spans with
respect to the Mortgage Loans.
"Tangible Net Worth" shall mean, with respect to any Person, as of
any date of determination, the consolidated Net Worth of such Person and its
Subsidiaries, less the consolidated net book value of all assets of such Person
and its Subsidiaries (to the extent reflected as an asset in the balance sheet
of such Person or any Subsidiary at such date) which will be treated as
intangibles under GAAP, including, without limitation, such items as deferred
financing expenses, net leasehold improvements, good will, trademarks, trade
names, service marks, copyrights, patents, licenses and unamortized debt
discount and expense; provided, that residual securities issued by such Person
or its Subsidiaries shall not be treated as intangibles for purposes of this
definition.
"Termination Date" shall mean January 31, 2001, or such earlier date
on which this Warehouse Agreement shall terminate in accordance with the
provisions hereof or by operation of law or as same may be renewed pursuant to
Section 2.09.
"Total Indebtedness" shall mean with respect to any Person, for any
period, the aggregate Indebtedness of such Person and its Subsidiaries during
such period (excluding any warehouse debt), less the amount of any nonspecific
consolidated balance sheet reserves maintained in accordance with GAAP.
"Tranche A Advances" shall mean all Advances made pursuant to
Section 2.01(a)(i).
"Tranche A Collections" shall mean all cash collections and other
cash proceeds of any Mortgage Loans other than Mortgage Loans pledged to the
Lender by Aames Funding.
"Tranche B Advances" shall mean all Advances made pursuant to
Section 2.01(a)(ii).
-18-
"Tranche B Collections" shall mean all cash collections and other
cash proceeds of any Initial Haircut Collateral to the Lender.
"Tranche C Advances" shall mean Advances made by the Lender to Aames
Funding pursuant to Section 2.01(a)(iii).
"Tranche C Collections" shall mean all cash collections and other
cash proceeds of any Collateral pledged to the Lender by Aames Funding.
"Trust Agreement" means any deposit trust agreement or indenture
governing the administration and issuance of the Pledged Securities.
"Trustee" shall mean any trustee under a Governing Agreement.
"Underwriting Guidelines" shall mean collectively, the underwriting
guidelines applicable to the Mortgage Loans which shall be subject to the prior
written approval of the Lender and may be amended from time to time in
accordance with Section 7.08.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as
in effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Warehouse Agreement" shall mean this Warehouse Loan and Security
Agreement, as may be amended, supplemented or otherwise modified from time to
time as mutually agreed by the parties in writing.
"Year 2000 Compliant" shall mean the ability of a System to
continue its normal functions including and following January 1, 2000 and the
ability of such System to support its continued normal usage such that neither
the performance nor the correct functioning of such System will be affected by
the year 2000.
1.02 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
Section 2. Advances, Note and Prepayments.
2.01 Advances. (a) Subject to fulfillment of the conditions
precedent set forth in Sections 5.01 and 5.02 hereof, and provided that no
Default shall have occurred and be continuing hereunder, the Lender agrees from
time to time, on the terms and conditions of this Warehouse Agreement, to make
loans (individually an "Advance"; collectively, the "Advances") to the Borrowers
in Dollars as follows:
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(i) to Aames Capital, with respect to Tranche A Advances, on any
Business Day from and including the Effective Date to but excluding the
Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the lesser of (A) the Maximum Credit
less the outstanding principal balance of Tranche B Advances and Tranche C
Advances (and further subject to the limitations in the definition of
Collateral Value), and (B) the Borrowing Base as in effect from time to
time. Subject to the terms and conditions of this Warehouse Agreement,
during such period the Borrower may borrow, repay and reborrow Tranche A
Advances hereunder; provided that, the Borrower shall not request more
than one Tranche A Advance in any one week period;
(ii) to Aames Capital, with respect to Tranche B Advances, on the
initial Funding Date, in the amount of $35,000,000, provided, however,
that, subject to Section 2.03(e) hereof, the Borrower may repay and
reborrow Tranche B Advances on any Business Day after the Effective Date
if all other conditions of borrowing hereunder have been satisfied,
provided, however, that Tranche B Advances which are reborrowings shall be
on an uncommitted basis and, provided that, in any event the Borrower may
not reborrow (x) after month twenty-four, (y) after the occurrence of a
Scheduled Amortization Deviation, and (z) without the consent of Capital Z
(which consent shall not be required with respect to the initial Tranche B
Advance made hereunder);
(iii) to Aames Funding, with respect to Tranche C Advances, on any
Business Day from and including the Effective Date to but excluding the
Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding $1,000,000 (and further subject to the
limitations in the definition of Collateral Value); provided that the
Tranche C Advances shall at all times be secured by both (a) Mortgage
Loans with a Market Value equal to the aggregate outstanding principal
balance of such Tranche C Advances and by (b) Cash Equivalents with a face
amount equal to the aggregate outstanding principal balance of such
Tranche C Advances. Subject to the terms and conditions of this Warehouse
Agreement, during such period Aames Funding may borrow, repay and reborrow
Tranche C Advances hereunder; provided that, Aames Funding shall not
request more than one Tranche C Advance in any one week period.
(b) In no event shall an Advance be made when any Default or Event
of Default has occurred and is continuing.
2.02 Notes. (a) The Advances made by the Lender shall be evidenced
by a single promissory note of the Borrowers substantially in the form of
Exhibit A hereto (the "Note"), dated the date hereof, payable to the Lender in a
principal amount equal to the amount of the Maximum Credit as originally in
effect and otherwise duly completed. The Lender shall, with the consent of the
Borrowers, have the right to have its Note subdivided, by exchange for
promissory notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Advance made by the
Lender to each 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 the Note, noted by the Lender on the grid attached to the Note or any
continuation thereof; provided, that the failure of the Lender to make
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any such recordation or notation shall not affect the obligations of the
Borrowers to make a payment when due of any amount owing hereunder or under the
Note in respect of the Advances.
2.03 Procedure for Borrowing. (a) Borrowing Procedure for Requesting
a Tranche A Advance. Aames Capital may request a Tranche A Advance 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 a 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 2:00
p.m. (eastern time) two Business Days prior to the requested Funding Date. Such
Notice of Borrowing and Pledge shall include a Mortgage Loan List in respect of
the Eligible Mortgage Loans, if applicable, that Aames Capital proposes to
pledge to the Lender and to be included in the Borrowing Base in connection with
such borrowing, if applicable.
(b) Borrowing Procedure for Requesting a Tranche C Advance Aames
Funding may request a Tranche C Advance 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
a Notice of Borrowing and Pledge appropriately completed, which must be received
no later than 2:00 p.m. (eastern time) two Business Days prior to the requested
Funding Date. Such Notice of Borrowing and Pledge shall include a Mortgage Loan
List in respect of the Eligible Mortgage Loans, and a list of Cash Equivalents
that Aames Funding proposes to pledge to the Lender and to be included in the
Borrowing Base in connection with such borrowing.
(c) Upon the applicable Borrower's request for a borrowing pursuant
to Section 2.03(a) or 2.03(b) above, the Lender shall, assuming all conditions
precedent set forth in this Section 2.03 and in Section 5.01 and 5.02 have been
met, and provided no Default shall have occurred and be continuing (in
accordance with Section 2.01), not later than 2:00 p.m. (eastern time) on the
requested Funding Date make an Advance (determined by the Lender) in an amount
which would not cause the aggregate amount of Advances then outstanding to
exceed the lesser of (i) the Maximum Credit or (ii) the Borrowing Base shown on
the latest Borrowing Base Certificate of the Lender. Subject to the foregoing,
such borrowing will be made available to the applicable Borrower by the Lender
transferring, via wire transfer (pursuant to wire transfer instructions provided
by such Borrower on or prior to such Funding Date), in the aggregate amount of
such borrowing in funds immediately available to such Borrower.
(d) Borrowing Procedure for Requesting a Tranche B Advance. Aames
Capital may request a Tranche B Advance on any Business Day during the period
from and including the Effective Date to the Termination Date, by delivering to
the Lender the related Collateral and a Notice of Borrowing and Pledge
substantially in the form of Exhibit D.
(e) Upon Aames Capital's request for a borrowing pursuant to Section
2.01(a)(ii) and 2.03(d) above, the Lender may, in its sole discretion, assuming
all conditions precedent set forth in this Section 2.03 and in Section 5.01 and
5.02 have been met, and subject to any additional conditions precedent imposed
by the Lender upon Aames Capital from time to time, and provided further that no
Default shall have occurred and be continuing (in accordance with Section 2.01),
not later than 2:00 p.m. (eastern time) on the requested Funding Date make a
-▇▇-
▇▇▇▇▇▇▇ ▇ Advance. Subject to the foregoing, such borrowing will be made
available to Aames Capital by the Lender transferring, via wire transfer
(pursuant to wire transfer instructions provided by Aames Capital on or prior to
such Funding Date), in the aggregate amount of such borrowing in funds
immediately available to Aames Capital. Notwithstanding the foregoing, upon
satisfaction of the conditions set forth in Section 5.01 hereof the Lender shall
make a Tranche B Advance of $35,000,000 on the Effective Date.
2.04 Limitation on Types of Advances; Illegality. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any LIBO
Base Rate:
(a) the Lender determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred to in the
definition of "LIBO Base Rate" in Section 1.01 hereof are not being provided in
the relevant amounts or for the relevant maturities for purposes of determining
rates of interest for Advances as provided herein; or
(b) it becomes unlawful for the Lender to honor its obligation to
make or maintain Advances hereunder using a LIBO Rate;
then the Lender shall give the Borrowers prompt notice thereof and, so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Advances.
2.05 Repayment of Advances; Interest. (a) The Borrowers shall repay
in full on the Termination Date the then aggregate outstanding principal amount
of the Advances (as evidenced by the Note).
(b) No later than two (2) Business Days prior to each Payment Date,
the Lender shall provide to the Borrowers a report which shall state the
interest amount due for the current interest period on the Advance (including
the amount of interest which will accrue on such Advance on the Business Day
immediately preceding the related Payment Date) setting forth the amount of
interest accrued for such period for the Tranche A Advances, the Tranche B
Advances and the Tranche C Advances separately. The calculation on such report
shall be based upon information provided in the Servicing Transmission and the
report provided pursuant to Section 7.19.
(c) The Borrowers shall pay to the Lender interest on the unpaid
principal amount of each Advance for the period from and including the date of
such Advance to but excluding the date such Tranche A Advance, Tranche B Advance
and Tranche C Advance shall be paid in full, at a rate per annum equal to the
LIBO Rate plus the Applicable Margin related to the Tranche A Advance, the
Tranche B Advance and the Tranche C Advance, as applicable. Notwithstanding the
foregoing, the Borrowers shall pay to the Lender interest at the applicable
Post-Default Rate on any principal of any Advance and on any other amount
payable by the Borrowers hereunder or under the Note, that shall not be paid in
full when due (whether at stated maturity, by acceleration or by mandatory
prepayment or otherwise), for the period from and including the due date thereof
to but excluding the date the same is paid in full. Accrued interest on each
Advance as calculated in Section 2.05(b) above shall be payable monthly on each
Payment Date and on the Termination Date, except that interest payable at the
Post-Default Rate shall accrue daily and shall be payable promptly upon receipt
of invoice. Promptly after the determination of
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any interest rate provided for herein or any change therein, the Lender shall
give written notice thereof to the Borrowers.
2.06 Mandatory Prepayments or Pledge; Request for Release. (a) If at
any time the aggregate Collateral Value of all Collateral securing the Advances
is less than the outstanding Advances at such time (such deficit a "Borrowing
Base Deficiency"), as determined by the Lender and notified to the Borrowers on
any Business Day, the Borrowers shall no later than one Business Day after
receipt of such written notice, either prepay the Advances in part or in whole
or pledge additional Mortgage Loans or such other Collateral as may be
acceptable to the Lender in its sole discretion (which Collateral shall be in
all respects acceptable to the Lender) to the Lender, such that after giving
effect to such prepayment or pledge the aggregate outstanding principal amount
of the Advances does not exceed the Borrowing Base. If at any time the aggregate
Collateral Value of all Collateral exceeds the outstanding Advances at such time
(such excess a "Borrowing Base Excess"), then the Borrowers may by written
notice to the Lender, accompanied by a certificate of a Responsible Officer on
the date of such request certifying that no Default shall have occurred and be
continuing, request the Lender to transfer Mortgage Loans to the Borrowers, so
that the Collateral Value of the Collateral, after deduction of any Collateral
so transferred, will thereupon not exceed, but in no event be less than, the
outstanding Advances. Notwithstanding the foregoing, except as provided in
Section 4.10(a), the Lender shall have no obligation to release any Initial
Securities to Aames Capital until (i) all outstanding Tranche B Advances are
repaid in full and (ii) no Event of Default has occurred and is continuing.
(b) On the date of each Advance or other date on which there is a
change in the Mortgage Loans held by the Custodian, the Custodian shall deliver
to the Lender and the Borrowers the Custodian Loan Transmission. The Lender
shall deliver to the Borrowers a Borrowing Base Certificate in the form attached
hereto as Exhibit H, the calculation in such certificate to be based on the
delinquency status and principal balance of the Eligible Mortgage Loans as of
the later of the Funding Date balance or such date when more recent information
is available). Such information shall be ascertained from the Servicing
Transmission which shall be delivered or caused to be delivered by the Borrowers
in accordance with Section 7.19 and shall include all Mortgage Loans which were
funded on or prior to the last calendar day of the previous month.
2.07 Optional Prepayments. (a) The Advances are prepayable without
premium or penalty, in whole or in part on each Payment Date after providing not
less than five (5) Business Days prior notice. The Advances are prepayable at
any other time, in whole or in part, in accordance herewith and subject to
clause (b) below. Any amounts prepaid shall be applied to repay the outstanding
principal amount of any Advances (together with interest thereon) until paid in
full. Amounts repaid may be reborrowed in accordance with the terms of this
Warehouse Agreement. If the either Borrower intends to prepay an Advance in
whole or in part from any source, such Borrower shall give five (5) Business
Days' prior written notice thereof to the Lender. If such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount prepaid.
Partial prepayments shall be in an aggregate principal amount of at least
$100,000.
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(b) If either Borrower makes a prepayment of the Advances other than
as provided in Section 2.07(a) above, the Borrowers shall indemnify the Lender
and hold the Lender harmless from any actual loss or expense which the Lender
may sustain or incur arising from (a) the deployment of funds obtained by the
Lender to maintain the Advances hereunder or from (b) fees payable to terminate
the deposits from which such funds were obtained, in either case, which actual
loss or expense shall be equal to an amount equal to the excess, as reasonably
determined by the Lender, of (i) its cost of obtaining funds for such Advances
for the period from the date of such payment through the following Payment Date
over (ii) the amount of interest likely to be realized by such Lender in
redeploying the funds not utilized by reason of such payment for such period.
This Section 2.07 shall survive termination of this Warehouse Agreement and
payment of the Note.
2.08 Requirements of Law. (a) If any Requirement of Law (other than
with respect to any amendment made to the Lender's certificate of incorporation
and by-laws or other organizational or governing documents) or any change in the
interpretation or application thereof or compliance by the Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Warehouse Agreement, the Note or any Advance made by it
(excluding net income taxes) or change the basis of taxation of payments
to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory Advance or similar requirement against assets held by
deposits or other liabilities in or for the account of advances. Advances
or other extensions of credit by, or any other acquisition of funds by any
office of the Lender which is not otherwise included in the determination
of the LIBO Base Rate hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Advance made after the Effective Date or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrowers
shall promptly pay the Lender such additional amount or amounts as will
compensate the Lender for such increased cost or reduced amount receivable
thereafter incurred or shall prepay the aggregate amount of outstanding
Advances. Any prepayment made by the Borrowers as a result of the application of
this Section 2.08(a) shall not be subject to the provisions of Section 2.07(b).
(b) If the Lender shall have determined that the adoption of or any
change in any Requirement of Law (other than with respect to any amendment made
to the Lender's certificate of incorporation and by-laws or other organizational
or governing documents) regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any corporation controlling
the Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which
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the Lender or such corporation (taking into consideration the Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
the Lender to be material, then from time to time, the Borrowers shall promptly
pay to the Lender such additional amount or amounts as will thereafter
compensate the Lender for such reduction or shall prepay the aggregate amount of
outstanding Advances. Any prepayment made by the Borrowers as a result of the
application of this Section 2.08(b) shall not be subject to the provisions of
Section 2.07(b).
(c) If the Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrowers of the event
by reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this subsection submitted by the Lender to the
Borrowers shall be conclusive in the absence of manifest error.
2.09 Renewal of Termination Date. (a) At the request of Borrowers,
at least thirty (30) days prior to the then Termination Date, the Lender may in
its sole discretion renew this Warehouse Agreement with a new Termination Date
for the Tranche A Advances and Tranche C Advances for a period of 364 days by
giving written notice of such renewal to the Borrowers no later than twenty (20)
days, but in no event more than thirty (30) days, prior to the Termination Date.
(b) Provided that (i) no Default or Event of Default has occurred
and is continuing, and (ii) no Scheduled Amortization Deviation has occurred,
this Warehouse Agreement shall be automatically renewed for the Tranche B
Advances for a period of 364 days (the "Automatic Renewal Period"). After the
expiration of the Automatic Renewal Period, this Warehouse Agreement shall be
further renewed for the Tranche B Advances on a month to month basis for a
period of up to six (6) months, provided that, as of the Payment Date for each
such month no Scheduled Amortization Deviation has occurred, (x) no Default or
Event of Default has occurred and is continuing, and (y) the unpaid principal
balance of the Tranche B Advances, including the Release Fee, if any, plus
interest accrued thereon as of the Payment Date in the next succeeding month
(the "Projected Balance") does not exceed $12,000,000, and (z) the Projected
Balance does not exceed 35% of the Pledged Securities Value of the Initial
Securities.
Section 3. Payments; Computations; Taxes.
3.01 Payments. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrowers
under this Warehouse Agreement and the Note, shall be made in Dollars, in
immediately available funds, without deduction, set-off or counterclaim, to the
Lender at the following account maintained by the Lender at The Chase Manhattan
Bank: Account Number 140095961, For the A/C of Greenwich Capital Financial
Products, Inc., ABA# ▇▇▇▇▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇, not later than 2:00 p.m.,
eastern time, on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day) or such other account as a Responsible Officer
of the Lender may direct through written notice to the Borrowers. The Borrowers
acknowledge that they have no rights of withdrawal from the foregoing account.
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3.02 Computations. Interest on the Advances shall be computed on the
basis of a 360-day year for the actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
3.03 [Intentionally Omitted]
3.04 Release Fee. In the event Aames Capital fails to appoint
Greenwich Capital Markets, Inc. as lead manager in accordance with the
Securitization Agreement, the Borrowers shall owe a Release Fee which Release
Fee shall constitute a Secured Obligation hereunder. Notwithstanding the
foregoing, the Release Fee shall be added to the Scheduled Amortization Balance
at the earlier of the date of such failure and the second (2nd) anniversary of
the Effective Date.
3.05 Application of Collections. (a) Aames Capital shall remit the
Tranche B Collections received by it or its Affiliates in accordance with this
Section 3.05(a) on each Payment Date, provided that no Event of Default shall
have occurred and be continuing. In the event that an Event of Default shall
have occurred and is continuing the Tranche B Collections shall promptly be
remitted by Aames Capital to the Lender in accordance with Section 4.06. With
respect to Tranche B Collections, on each Payment Date, until an Event of
Default shall have occurred and is continuing, and subject to the provisions of
Section 4.10(b), the Lender shall cause the Tranche B Collections to be applied
in the following order of priority:
(i) FIRST, to any costs and expenses due under any of the Loan
Documents attributable to the Tranche B Advances;
(ii) SECOND, to the Lender, in an amount equal to all accrued and
unpaid interest on the Tranche B Advances through such Payment Date;
(iii) THIRD, to the Lender, for payment of the outstanding principal
balance of the Tranche B Advances, (A) in an amount equal to the Actual
Amortization Amount for such month, or (B) if a Scheduled Amortization
Deviation has occurred, until such outstanding principal balance of the
Tranche B Advances equals zero;
(iv) FOURTH, to the Lender, any costs and expenses due under the
Loan Documents;
(v) FIFTH, to the Lender, in an amount equal to all accrued and
unpaid interest on the Tranche A Advances and Tranche C Advances through
such Payment Date;
(vi) SIXTH, to the Lender, any Borrowing Base Deficiency to the
extent not paid pursuant to Section 2.06;
(vii) SEVENTH, the excess, if any, to Aames Capital.
(b) To the extent not paid by Tranche B Collections as described in
Section 3.05(a) above, on each Payment Date, until an Event of Default shall
have occurred and is continuing, the Borrowers shall make payments to the Lender
as follows:
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(i) FIRST, any costs and expenses due under any of the Loan
Documents;
(ii) SECOND, in an amount equal to all accrued and unpaid interest
on the Advances through such Payment Date;
(iii) THIRD, any Borrowing Base Deficiency to the extent not paid
pursuant to Section 2.06; and
(iv) FOURTH, the Minimum Scheduled Amortization Shortfall Payment,
if any, which shall be applied to the reduction of Tranche B Advances.
3.06 Reamortization of Tranche B. If on any Payment Date, (a) the
unpaid principal balance of the Tranche B Advances is 85% or less of the
Scheduled Amoritization Balance for such Payment Date, (b) no Default or Event
of Default exists, and (c) no Scheduled Amortization Deviation has occurred, the
Lender and the Borrower shall negotiate in good faith a reamortization of the
outstanding Tranche B Advances taking into account the performance of the
Initial Securities and the expected cash flow of the Initial Securities over the
remaining amortization period.
Section 4. Collateral Security.
4.01 Collateral; Security Interest. (a) Pursuant to the Custodial
Agreement, the Custodian shall hold the Mortgage Loan Documents as exclusive
bailee and agent for the Lender pursuant to the terms of the Custodial Agreement
and shall deliver to the Lender Trust Receipts with Exception Reports (as such
terms are defined in the Custodial Agreement) to the effect that it has reviewed
such Mortgage Loan Documents in the manner required by the Custodial Agreement
and identifying any deficiencies in such Mortgage Loan Documents as so reviewed.
(b) Each of the following items or types of property, whether now
owned or hereafter acquired, now existing or hereafter created and wherever
located, is hereinafter referred to as the "Collateral":
(i) all Mortgage Loans identified on a Notice of Borrowing and
Pledge delivered by the Borrowers to the Lender and the Custodian from
time to time;
(ii) all other Property delivered by the Borrowers to the Lender or
the Custodian from time to time to be held as "collateral" hereunder;
(iii) all Mortgage Loan Documents, including without limitation all
promissory notes, and all Servicing Records (as defined in Section
10.15(b) below), and any other collateral pledged or otherwise relating to
such Mortgage Loans, together with all files, material documents,
instruments, surveys (if available), certificates, correspondence,
appraisals, computer records, computer storage media, Mortgage Loan
accounting records and other books and records relating thereto;
(iv) the Borrowers' interest in all mortgage guaranties and
insurance (issued by governmental agencies or otherwise) and any mortgage
insurance certificate or other
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document evidencing such mortgage guaranties or insurance relating to any
Mortgage Loans and all claims and payments thereunder;
(v) the Borrowers' interest in all other insurance policies and
insurance proceeds relating to any Mortgage Loans or the related Mortgaged
Property;
(vi) all Interest Rate Protection Agreements relating to any or all
of the foregoing;
(vii) any Governing Agreements, purchase agreements or other similar
agreements constituting any or all of the foregoing;
(viii) all purchase or take-out commitments relating to or
constituting any or all of the foregoing;
(ix) all Pledged Securities identified herein;
(x) all "securities accounts" (as defined in Section 8-501(a) of the
Uniform Commercial Code) to which any or all of the Pledged Securities are
or may be credited;
(xi) the Limited Partnership Interest;
(xii) all of Aames Capital's rights to reimbursement of Servicing
Advance Receivables;
(xiii) all "supporting obligations" within the meaning of the
Uniform Commercial Code as in effect from time to time;
(xiv) all "investment property", "accounts", "chattel paper" and
"general intangibles" as defined in the Uniform Commercial Code relating
to or constituting any or all of the foregoing; and
(xv) any and all replacements, substitutions, distributions on or
proceeds of any or all of the foregoing.
(c) Each Borrower hereby assigns, pledges and grants a security
interest to the Lender in all of its right, title and interest in, to and under
all the Collateral, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located, to secure the repayment of principal of
and interest on all Advances and all other amounts owing to the Lender
hereunder, under the Note and under the Warehouse Agreement (collectively, the
"Secured Obligations"). The Borrowers agree to ▇▇▇▇ their computer records and
tapes to evidence the security interests granted to the Lender hereunder.
(d) The Lender as "entitlement holder" (as defined in Section
8-102(a) of the Uniform Commercial Code) with respect to the Pledged Securities,
shall be entitled to receive all cash dividends and distributions paid in
respect thereof and shall apply same in accordance with Section 3.05(a) hereof.
Aames Capital and the Lender agree that Aames Capital shall direct the Trustee
to make all payments with respect to any Pledged Securities directly to the
Lender.
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Unless an Event of Default shall have occurred and be continuing, Aames
Capital shall be entitled to exercise all voting and corporate rights with
respect to the Pledged Securities, and Lender shall exercise such rights on
Aames Capital's behalf during the time in which Lender is the registered holder
of such Pledged Securities, provided, however, that no vote shall be cast or
other action taken which, in Lender's judgment, would impair the Pledged
Securities or which would be inconsistent with or result in any violation of any
provision of this Warehouse Agreement.
(e) Aames Capital shall deliver to the Lender Pledged Securities
with all necessary documents to re-register such Pledged Securities in the name
of the Lender on or prior to the date on which such Borrower pledges such
Pledged Securities to the Lender. The Lender or its other designee shall have
the rights of conversion, exchange, subscription and any other rights,
privileges and options pertaining to such Pledged Securities with any committee,
depository transfer, agent, register or other designated agency upon such terms
and conditions as the Lender may determine.
(f) Notification to Trustee. Concurrently with the delivery to
Lender of each certificate representing one or more of the Pledged Securities,
(A) Aames Capital shall have (1) notified the Trustee in connection with the
related securitization transaction of the pledge of the related Pledged
Securities hereunder, and (2) instructed the Trustee to pay all amounts payable
to the holders of the Pledged Securities to an account specified by the Lender,
in the form of the instruction letter attached hereto as Exhibit K (the "Trustee
Instruction Letter") and (B) the Trustee shall have acknowledged in writing the
instructions set forth in clause (A) above, and a copy of the fully executed
Trustee Instruction Letter shall be delivered to the Lender.
4.02 Further Documentation. At any time and from time to time, upon
the written request of the Lender, and at the sole expense of the Borrowers, the
Borrowers will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered, such further instruments and documents and take such
further action as the Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Warehouse Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby. The Borrowers also
hereby authorize the Lender to file any such financing or continuation statement
without the signature of either Borrower to the extent permitted by applicable
law. A carbon, photographic or other reproduction of this Warehouse Agreement
shall be sufficient as a financing statement for filing in any jurisdiction.
4.03 Changes in Locations, Name, etc. Neither Borrower shall (i)
change the location of its chief executive office/chief place of business from
that specified in Section 6 hereof or (ii) change its name, identity or
corporate structure (or the equivalent) or change the location where it
maintains its records with respect to the Collateral unless it shall have given
the Lender at least 30 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed reasonably necessary by the Lender to continue its perfected status in
the Collateral with the same or better priority.
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4.04 Lender's Appointment as Attorney-in-Fact. (a) Each Borrower
hereby irrevocably constitutes and appoints the Lender and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Borrower and in the name of such Borrower or in its own name, from
time to time in the Lender's discretion, for the purpose of carrying out the
terms of this Warehouse Agreement, in the form of Exhibit L attached hereto, to
take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Warehouse Agreement, and, without limiting the generality of the foregoing,
such Borrower hereby gives the Lender the power and right, on behalf of such
Borrower, without assent by, but with notice to, such Borrower, if an Event of
Default shall have occurred and be continuing, to do the following:
(i) in the name of the applicable Borrower or its own name, or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys
due under any mortgage insurance or with respect to any other Collateral
and to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Lender for
the purpose of collecting any and all such moneys due under any such
mortgage insurance or with respect to any other Collateral whenever
payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against either Borrower with respect to
any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Lender may deem appropriate; and
(G) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner thereof for all
purposes, and to do, at the Lender's option and the Borrowers' expense, at
any time, or from time to time, all acts and things which the Lender deems
necessary to protect, preserve or realize upon the Collateral and the
Lender's Liens thereon and to effect the intent of this Warehouse
Agreement, all as fully and effectively as the Borrowers might do.
The Borrowers hereby ratify all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
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(b) The Borrowers also authorize the Lender, at any time and from
time to time, to execute, in connection with the sale provided for in Section
4.07 hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrowers for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.05 Performance by Lender of either Borrower's Obligations. If
either Borrower fails to perform or comply with any of its material agreements
contained in the Loan Documents and the Lender may itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the reasonable
out-of-pocket expenses of the Lender incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
equal to the Post-Default Rate, shall be payable by the Borrowers to the Lender
on demand and shall constitute Secured Obligations.
4.06 Proceeds. If an Event of Default shall occur and be continuing,
(a) all proceeds of Collateral received by the Borrowers consisting of cash,
checks and other near-cash items shall be held by the Borrowers in trust for the
Lender, segregated from other funds of the Borrowers, and shall forthwith upon
receipt by the Borrowers be turned over to the Lender in the exact form received
by the Borrowers (duly endorsed by the Borrowers to the Lender, if required) and
(b) any and all such proceeds received by the Lender will be applied by the
Lender against, the Secured Obligations. Any balance of such proceeds remaining
after the Secured Obligations shall have been paid in full and this Warehouse
Agreement shall have been terminated shall be promptly paid over to the
Borrowers or to whomsoever may be contractually entitled to receive the same.
For purposes hereof, proceeds shall include, but not be limited to, all
principal and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
4.07 Remedies. (a) If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Warehouse Agreement and in any other instrument
or agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrowers or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels or as
an entirety at public or private sale or sales, at any exchange, broker's board
or office of the Lender or elsewhere upon such terms and conditions and at
prices that are consistent with the prevailing market for similar collateral as
it may deem
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advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The Lender shall act in
good faith to seek to obtain the best execution possible under prevailing market
conditions. The Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Borrowers, which right or equity is hereby waived or
released. The Lender may, on one or more occasions, postpone or adjourn any such
sale by public announcement at the time of such sale. The Lender shall give the
Borrowers prior or concurrent notice of any such postponement or adjournment.
The Borrowers further agree, at the Lender's request, to assemble the Collateral
and make it available to the Lender at places which the Lender shall reasonably
select, whether at either Borrower's premises or elsewhere. The Lender shall
apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Lender may elect, and only after such application and after
the payment by the Lender of any other amount required or permitted by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Uniform Commercial Code, need the Lender account for the surplus, if any, to the
Borrowers. To the extent permitted by applicable law, the Borrowers all claims,
damages and demands they may acquire against the Lender arising out of the
exercise by the Lender of any of its rights hereunder, other than those claims,
damages and demands arising from the gross negligence or willful misconduct of
the Lender. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Borrowers
shall remain liable for any deficiency (plus accrued interest thereon as
contemplated pursuant to Section 2.05(c) hereof) if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Secured
Obligations and the reasonable fees and disbursements of any attorneys employed
by the Lender to collect such deficiency.
(b) The Borrowers recognize that Lender may be unable to effect a
public sale of any or all of the Pledged Securities, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Borrowers acknowledge and agree that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. Lender shall be
under no obligation to delay a sale of any of the Pledged Securities for the
period of time necessary to permit any issuer of such Pledged Securities to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if any such issuer would agree to do so.
4.08 Limitation on Duties Regarding Presentation of Collateral. The
Lender's duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the Uniform
Commercial Code or otherwise, shall be to deal with it in the same manner as the
Lender deals with similar property for its own account. Neither
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the Lender nor any of its directors, officers or employees shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Borrowers or otherwise.
4.09 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
4.10 Release of Security Interest. (a) Except as may otherwise be
provided by any other agreement executed by the Borrowers and the Lender, upon
termination of this Warehouse Agreement and repayment to the Lender of all
Secured Obligations and the performance of all obligations under the Loan
Documents the Lender shall release its security interest in any remaining
Collateral; provided that if any payment, or any part thereof, of any of the
Secured Obligations is rescinded or must otherwise be restored or returned by
the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of either Borrower, or upon or as a result of the appointment of
a receiver, intervenor or conservator of, or a trustee or similar officer for
such Borrower or any substantial part of its Property, or otherwise, this
Warehouse Agreement, all rights hereunder and the Liens created hereby shall
continue to be effective, or be reinstated, until such payments have been made.
Upon the request of Aames Capital after the twelfth (12th) Payment Date, the
Lender shall release its security interest on a Future Residual Security pledged
to the Lender, as selected by the Lender, provided that (i) the unpaid principal
balance of the Tranche B Advances following such twelfth (12th) Payment Date is
less than or equal to the Scheduled Amortization Balance as of such month, (ii)
no Default or Event of Default exists under the Warehouse Agreement; and (iii)
and sufficient documentation, in the Lender's sole discretion, has been executed
by a third-party lender or purchaser in connection with the purchase or
financing of such Future Residual Security.
(b) Upon the repayment in full of the outstanding Tranche B
Advances, the Lender shall release all Initial Haircut Collateral to Aames
Capital or such other Person as Aames Capital may direct in writing, provided,
that, no Event of Default has occurred and is continuing.
Section 5. Conditions Precedent.
5.01 Initial Advance. The obligation of the Lender to make its
initial Advance hereunder is subject to the satisfaction, immediately prior to
or concurrently with the making of such Advance, of the following conditions
precedent:
(a) Warehouse Agreement. The Lender shall have received this
Warehouse Agreement, executed and delivered by a duly authorized officer of the
Borrowers.
(b) Loan Documents. The Lender shall have received the following
documents, each of which shall be satisfactory to the Lender in form and
substance:
(i) Note. The Note, duly completed and executed;
(ii) Custodial Agreement. The Custodial Agreement, duly executed and
delivered by the Borrowers and the Custodian. In addition, the Borrowers
shall have filed
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all Uniform Commercial Code and related filings and performed under the
Custodial Agreement and taken such other action as the Lender shall have
requested in order to perfect the security interests created pursuant to
the Warehouse Agreement; and
(iii) Guaranty. The Guaranty, duly executed and delivered by the
Guarantor;
(iv) Payment and Reimbursement Agreement. The Payment and
Reimbursement Agreement duly executed and delivered by Capital Z;
(v) Fee Agreement. The Fee Agreement duly executed and delivered by
Aames Capital.
(c) Organizational Documents. A good standing certificate and
certified copies of the charter and by-laws (or equivalent documents) of each
Loan Party and of all corporate or other authority for such Loan Party with
respect to the execution, delivery and performance of the Loan Documents and
each other document to be delivered by such Loan Party from time to time in
connection herewith (and the Lender may conclusively rely on such certificate
until it receives notice in writing from the applicable Loan Party to the
contrary).
(d) Legal Opinion. A legal opinion of counsel to the Borrowers,
substantially in the form attached hereto as Exhibit C.
(e) Securitization Agreement. The Lender shall have received the
Securitization Agreement, in form and substance satisfactory to the Lender and
executed by a duly authorized officer of the Borrowers.
(f) Filings, Registrations, Recordings. Any documents (including,
without limitation, financing statements) required to be filed, registered or
recorded in order to create, in favor of the Lender, a perfected, first-priority
security interest in the Collateral, subject to no Liens other than those
created hereunder, shall have been properly prepared and executed for filing
(including the applicable county(ies) if the Lender determines such filings are
necessary in its reasonable discretion), registration or recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required to perfect such first-priority security interest.
(g) Financial Statements. The Lender shall have received the
available quarterly financial statements referenced in Section 7.01(a).
(h) Underwriting Guidelines. The Lender and the Borrowers shall have
agreed upon the Qualified Originators' current Underwriting Guidelines for the
Mortgage Loans and the Lender shall have received a copy thereof.
(i) Consents, Licenses, Approvals, etc. The Lender shall have
received copies certified by the Borrowers of all consents, licenses and
approvals, if any, required in connection with the execution, delivery and
performance by the Borrowers of, and the validity and enforceability of, the
Loan Documents, which consents, licenses and approvals shall be in full force
and effect.
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(j) Insurance. The Lender shall have received evidence in form and
substance satisfactory to the Lender showing compliance by the Borrowers as of
such initial Funding Date with Section 7.21 hereof.
(k) Trustee Instruction Letter. The Lender shall have received a
Trustee Instruction Letter in the form attached hereto as Exhibit K executed by
Aames Capital.
(l) Instruction Letter. The Lender shall have received Instruction
Letters in the form attached hereto as Exhibit J executed by the Borrowers.
(m) Other Documents. The Lender shall have received such other
documents as the Lender or its counsel may reasonably request.
5.02 Initial and Subsequent Advances. The making of each Advance to
the Borrowers (including the initial Advance) on any Business Day is subject to
the following further conditions precedent, both immediately prior to the making
of such Advance and also after giving effect thereto and to the intended use
thereof:
(a) no Default or Event of Default shall have occurred and be
continuing or would be created by the making of such Advance;
(b) both immediately prior to the making of such Advance and also
after giving effect thereto and to the intended use thereof, the representations
and warranties made by the Borrowers in Section 6 hereof, and in each of the
other Loan Documents, shall be true and complete on and as of the date of the
making of such Advance in all material respects (in the case of the
representations and warranties in Section 6.24 and Schedule 1, solely with
respect to Mortgage Loans included in the Borrowing Base) with the same force
and effect as if made on and as of such date (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, as of such
specific date). At the request of the Lender, the Lender shall have received an
officer's certificate signed by a Responsible Officer of the applicable Borrower
certifying as to the truth and accuracy of the above, which certificate shall
specifically include a statement that such Borrower is in compliance with all
governmental licenses and authorizations and is qualified to do business and in
good standing in all required jurisdictions;
(c) The Pledged Securities shall have been delivered to Lender or
its agent and registered in the name of the Lender or with all necessary
documents to re-register such Pledged Securities in the name of the Lender;
(d) the aggregate outstanding principal amount of the Advances shall
not exceed the Borrowing Base;
(e) subject to the Lender's right to perform one or more Due
Diligence Reviews pursuant to Section 10.16 hereof, the Lender shall have
completed its due diligence view of the Mortgage Loan Documents for each Advance
and such other documents, records, agreements, instruments, mortgaged properties
or information relating to such Advances and the Borrowers as the Lender in its
reasonable discretion deems appropriate to review and such review shall be
satisfactory to the Lender in its reasonable discretion;
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(f) the Lender shall have received a Notice of Borrowing and Pledge,
Loan List and Mortgage Loan Data Transmission and all other documents required
under Section 2.03;
(g) the Lender shall have received from the Custodian a Custodian
Loan Transmission and one or more Trust Receipts in respect of Mortgage Loans to
be pledged hereunder on such Business Day and an Exception Report, in each case
dated such Business Day and duly completed;
(h) if any Mortgage Loans to be pledged hereunder were acquired by
the Borrowers, such Mortgage Loans shall conform to the Underwriting Guidelines
or the Lender shall have received Underwriting Guidelines for such Mortgage
Loans acceptable to the Lender in its reasonable discretion;
(i) the Lender shall have received all information requested from
the Borrowers relating to Interest Rate Protection Agreements pursuant to
Section 7.24, and the Lender shall have reasonably determined that such Interest
Rate Protection Agreements adequately protect the Borrowers from interest rate
fluctuations;
(j) the Lender shall have received, no later than 10:00 a.m. three
(3) days prior to the requested Funding Date, an Instruction Letter, executed by
the applicable Borrower, with the related Servicing Agreement (as defined in
Section 10.15(c)) attached thereto, which such Servicing Agreement shall be in
form and substance acceptable to Lender;
(k) the following documents shall have been delivered to the Lender
with respect to the Pledged Securities: (i) the original documents described in
Sections 4.01(e) and (f) hereof, (ii) a copy of the executed Pooling and
Servicing Agreement governing the Pledged Securities and/or any supplements
thereto, each certified by Aames Capital or the Trustee or master servicer under
such Pooling and Servicing Agreement as a true, correct and complete copy of the
original, and all ancillary documents required to be delivered to the
certificateholders under such Pooling and Servicing Agreement, and (iii) copies
of distribution statements delivered by the Trustee for two months prior to the
month in which the related Request for Borrowing is made, if any, certified by
the applicable servicer or master servicer as true and correct; and
(l) with respect to making any Tranche A Advances or Tranche C
Advances, if at any time after the Effective Date, either Borrower shall have
materially amended or modified its Underwriting Guidelines, such Borrower shall
have delivered to the Lender a complete copy of such amended or modified
Underwriting Guidelines and the Lender shall have consented in writing to such
material amendment or modification.
Each request for a borrowing by either Borrower hereunder shall constitute a
certification by such Borrower to the effect set forth in this Section (both as
of the date of such notice, request or confirmation and as of the date of such
borrowing).
Notwithstanding any other terms and conditions of this Warehouse
Agreement, Aames Funding shall not be required to satisfy any conditions
precedent other than those provided in Section 5.01(a), 5.01(b)(i) and
5.01(b)(ii) until such date as Aames Funding shall request an Advance hereunder,
at which time it shall be a condition precedent to the Lender making such
Advance that Aames Funding shall have satisfied all conditions provided herein.
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Section 6. Representations and Warranties. The Borrowers represent
and warrant to the Lender that throughout the term of this Warehouse Agreement:
6.01 Existence. The Borrowers (a) are corporations duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) have all requisite corporate or other power, and have all
governmental licenses, authorizations, consents and approvals, necessary to own
their assets and carry on their business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a material adverse effect on
their property, business or financial condition, or prospects; and (c) are
qualified to do business and are in good standing in all other jurisdictions in
which the nature of the business conducted by either Borrower makes such
qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a material
adverse effect on its property, business or financial condition, or prospects
and (d) are in compliance in all material respect with all Requirements of Law.
6.02 Financial Condition. The Guarantor has heretofore furnished to
the Lender a copy of its Annual Report on Form 10-K which includes audited
consolidated financial statements at and for the fiscal year ended June 30, 1999
with the opinion thereon of Ernst & Young LLP. All such financial statements are
materially complete and correct and fairly present the consolidated financial
condition of the Guarantor and its Subsidiaries and the consolidated results of
their operations for the fiscal year ended on said date, all in accordance with
GAAP applied on a consistent basis. The Guarantor has heretofore furnished to
the Lender a copy of its Quarterly Report on Form 10-Q which includes unaudited
consolidated financial statements at and for the fiscal quarter ended September
30, 1999. All such financial statements are materially complete and correct and
fairly present the consolidated financial condition of the Guarantor and its
Subsidiaries and the consolidated results of their operations for the fiscal
quarter ended on said date, all in accordance with GAAP applied on a consistent
basis.
6.03 Litigation. There are no actions, suits, arbitrations,
investigations or proceedings pending or, to its knowledge, threatened against
either Borrower or any of its Subsidiaries or affecting any of the property
thereof before any Governmental Authority, (i) as to which individually or in
the aggregate there is a reasonable likelihood of an adverse decision which
would be reasonably likely to have a material adverse effect on the property,
business or financial condition, or prospects of such Borrower or (ii) which
questions the validity or enforceability of any of the Loan Documents or any
action to be taken in connection with the transactions contemplated hereby and
there is a reasonable likelihood of a materially adverse effect or decision.
6.04 No Breach. Neither (a) the execution and delivery of the Loan
Documents or (b) the consummation of the transactions therein contemplated in
compliance with the terms and provisions thereof will conflict with or result in
a breach of the charter or by-laws of the either Borrower, or any applicable
law, rule or regulation, or any order, writ, injunction or decree of any
Governmental Authority, or other material agreement or instrument to which such
Borrower, or any of its Subsidiaries, is a party or by which any of them or any
of their property is bound or to which any of them is subject, or constitute a
default under any such material agreement or instrument, or (except for the
Liens created pursuant to this Warehouse Agreement)
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result in the creation or imposition of any Lien upon any property of either
Borrower or any of its Subsidiaries, pursuant to the terms of any such agreement
or instrument.
6.05 Action. Each Borrower has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents to which it is a party; the execution, delivery
and performance by such Borrower of each of the Loan Documents to which it is a
party has been duly authorized by all necessary corporate or other action on its
part; and each Loan Document has been duly and validly executed and delivered by
such Borrower and constitutes a legal, valid and binding obligation such the
Borrower, enforceable against such Borrower in accordance with its terms.
6.06 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority, or any other Person,
are necessary for the execution, delivery or performance by either Borrower of
the Loan Documents to which it is a party or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to this Warehouse Agreement.
6.07 Margin Regulations. Neither the making of any Advance
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation T, U or X.
6.08 Taxes. Each Borrower and its Subsidiaries have filed all
Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes,
if any, that are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of each
Borrower and its Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of such Borrower, adequate.
6.09 Investment Company Act. Neither Borrower nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. Neither Borrowers is subject to any Federal or state statute or
regulation which limits its ability to incur indebtedness.
6.10 No Legal Bar. The execution, delivery and performance of this
Warehouse Agreement and the Note, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of either Borrower or of any of its Subsidiaries and will not result
in, or require, the creation or imposition of any Lien (other than the Liens
created hereunder) on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
6.11 No Default. Neither Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which should reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
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6.12 Collateral; Collateral Security. (a) Neither Borrower has
assigned, pledged, nor otherwise conveyed or encumbered any Collateral to any
other Person, and immediately prior to the pledge of any such Collateral, such
Borrower was the sole owner of such Collateral and had good and marketable title
thereto, free and clear of all Liens, in each case except for Liens to be
released simultaneously with the Liens granted in favor of the Lender hereunder
and no Person other than such Borrower has any Lien on any Collateral.
(b) All of the Pledged Securities have been validly issued, and are
fully paid and non-assessable, and the Pledged Securities have been offered,
issued and sold in compliance with all applicable laws. There are no outstanding
rights, options, warrants or agreements for the purchase from, or sale or
issuance, in connection with the Pledged Securities; there are no agreements on
the part of Aames Capital to issue, sell or distribute the Pledged Securities;
and Aames Capital has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any securities or any interest therein or to pay any
dividend or make any distribution in respect of the Pledged Securities. Aames
Capital has not executed any call rights with respect to the Pledged Securities.
(c) The provisions of this Warehouse Agreement are effective to
create in favor of the Lender a valid security interest in all right, title and
interest of the Borrowers in, to and under the Collateral.
(d) Upon receipt by the Custodian of each Mortgage Note, endorsed in
blank by a duly authorized officer of the applicable Borrower, the Lender shall
have a fully perfected first priority security interest therein, in the Mortgage
Loan evidenced thereby and in such Borrower's interest in the related Mortgaged
Property.
(e) Upon the filing of financing statements on Form UCC-1 naming the
Lender as "Secured Party" and the applicable Borrower as "Debtor", and
describing the Collateral, in the jurisdictions and recording offices listed on
Schedule 3 attached hereto, the security interests granted hereunder in the
Collateral will constitute fully perfected first priority security interests
under the Uniform Commercial Code in all right, title and interest of such
Borrower in, to and under such Collateral, which can be perfected by filing
under the Uniform Commercial Code.
6.13 Chief Executive Office; Chief Operating Office. The Borrowers'
chief executive office and chief operating office on the Effective Date is
located, and for the four months immediately preceding the date hereof has been
located, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
6.14 Location of Books and Records. The location where the Borrowers
keeps their books and records including all computer tapes and records relating
to the Collateral is their chief executive office or chief operating office or
the offices of the Custodian.
6.15 Ownership by Aames Capital of the Pledged Securities. Aames
Capital owns beneficially and of record all of the Pledged Securities.
6.16 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules, other than interim financial
statements, furnished in writing by or on behalf of the Borrowers to the Lender
in connection with the negotiation, preparation or
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delivery of this Warehouse Agreement and the other Loan Documents or included
herein or therein or delivered pursuant hereto or thereto, when taken as a
whole, do not, contain any untrue statement of material fact or omit to state
any material fact necessary to make the statements herein or therein, in light
of the circumstances under which they were made, not misleading. The September
30, 1999 Form 10-Q and financial statements contained therein do not, as of the
date of their filing, contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of the Borrowers to
the Lender in connection with this Warehouse Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified.
6.17 Tangible Net Worth; Liquidity. Aames Capital's Tangible Net
Worth is not less than $365,000,000 and Aames Capital has cash, Cash Equivalents
and unused borrowing capacity on unencumbered assets that could be drawn against
(taking into account required haircuts) under committed warehouse facilities in
an amount not less than $1,000,000.
6.18 ERISA. Each Plan to which the each Borrower or its Subsidiaries
make direct contributions, and, to the knowledge of such Borrower, each other
Plan and each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Federal or State law. No
event or condition has occurred and is continuing as to which such Borrower
would be under an obligation to furnish a report to the Lender under Section
7.01(d) hereof.
6.19 Licenses. The Lender will not be required solely as a result of
financing or taking a pledge of the Collateral to be licensed, registered or
approved or to obtain permits or otherwise qualify (i) to do business in any
state in which it is not currently so required or (ii) under any state consumer
lending, fair debt collection or other applicable state statute or regulation.
6.20 Relevant States. Schedule 4 sets forth all of the states or
other jurisdictions (the "Relevant States") in which the Qualified Originators
originate Mortgage Loans in their own names or through brokers on the date of
this Warehouse Agreement.
6.21 True Sales. Any and all interest of a Qualified Originator in,
to and under any Mortgage funded in the name of or acquired by such Qualified
Originator has been sold, transferred, conveyed and assigned to the applicable
Borrower pursuant to a legal sale and such Qualified Originator retains no
interest in such Mortgage Loan.
6.22 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of either Borrower or any of its Subsidiaries has a
Material Adverse Effect.
6.23 Subsidiaries. All of the Subsidiaries of the Guarantor at the
date hereof are listed on Schedule 5 to this Warehouse Agreement.
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6.24 Origination and Acquisition of Mortgage Loans. The Mortgage
Loans were originated or acquired by the Borrowers, and the origination and
collection practices used by the Borrowers or Qualified Originator, as
applicable, with respect to the Mortgage Loans have been, in all material
respects legal, proper, prudent and customary in the residential mortgage loan
servicing business, and in accordance with the Underwriting Guidelines. With
respect to Mortgage Loans acquired by the Borrowers, all such Mortgage Loans are
in conformity with the Underwriting Guidelines. Each of the Mortgage Loans
complies with the representations and warranties listed in Schedule 1 hereto.
6.25 No Adverse Selection. The Borrowers used no selection
procedures that identified the Mortgage Loans as being less desirable or
valuable than other comparable Mortgage Loans owned by the Borrowers.
6.26 Borrowers Solvent; Fraudulent Conveyance. As of the date hereof
and immediately after giving effect to each Advance, the fair value of the
assets of each Borrower is greater than the fair value of the liability
(including, without limitation, contingent liabilities if and to the extent
required to be recorded as a liability on the financial statements of such
Borrower in accordance with GAAP) of such Borrower and such Borrower is and will
be solvent, is and will be able to pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. Each Borrower does not intend to incur, or
believe that it has incurred, debt beyond its ability to pay such debts as they
mature. Neither Borrower is contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
such Borrower or any of its assets. Neither Borrower is transferring any
Collateral with any intent to hinder, delay or defraud any of its creditors.
6.27 Representations as to each Pooling and Servicing Agreement.
Other than any servicer termination events, no event of default has occurred and
is continuing under any Governing Agreement. There has been no notice from the
Trustee of any intent to terminate the Aames Capital's servicing rights.
Section 7. Covenants of the Borrowers. The Borrowers covenant and
agree with the Lender that, so long as any Advance is outstanding and until
payment in full of all Secured Obligations:
7.01 Financial Statements. The Borrowers shall, and shall cause the
Guarantor to, deliver to the Lender:
(a) (1) within 30 days after the end of each month, the consolidated
balance sheets of such Loan Party as at the end of such month and the related
unaudited consolidated statements of income and retained earnings and of cash
flows for such Loan Party and its consolidated Subsidiaries for such month and
the portion of the fiscal year through the end of such month, setting forth in
each case in comparative form the figures for the previous year, accompanied by
a certificate of a Responsible Officer of the applicable Loan Party, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of such
Loan Party and its Subsidiaries in
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accordance with GAAP, consistently applied, as at the end of, and for, such
month (subject to normal year-end audit adjustments);
(ii) within 45 days after the end of each of the first three
quarterly fiscal periods of each fiscal year of such Loan Party, the
consolidated balance sheets of such Loan Party as at the end of such
period and the related unaudited consolidated statements of income and
retained earnings and of cash flows for such Loan Party and its
consolidated Subsidiaries for such period and the portion of the fiscal
year through the end of such period, setting forth in each case in
comparative form the figures for the previous year, accompanied by a
certificate of a Responsible Officer of such Loan Party, which certificate
shall state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of such Loan
Party and its Subsidiaries in accordance with GAAP, consistently applied,
as at the end of, and for, such period (subject to normal year-end audit
adjustments);
(b) within 90 days after the end of each fiscal year of such Loan
Party, the consolidated balance sheets of such Loan Party and its consolidated
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows for such Loan Party
and its consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of such
Loan Party and its consolidated Subsidiaries at the end of, and for, such fiscal
year in accordance with GAAP, and a certificate of such accountants stating
that, in making the examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Default or Event of Default;
(c) from time to time such other information regarding the financial
condition, operations, or business of such Loan Party as the Lender may
reasonably request; and
(d) as soon as reasonably possible, and in any event within thirty
(30) days after a Responsible Officer knows, or with respect to any Plan or
Multiemployer Plan to which each Borrower or any of its Subsidiaries makes
direct contributions, has reason to believe, that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan has
occurred or exists, a statement signed by a senior financial officer of such
Borrower setting forth details respecting such event or condition and the
action, if any, that such Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by such Borrower or an ERISA Affiliate with respect to such event
or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which
PBGC has not by regulation or otherwise waived the requirement of Section
4043(a) of ERISA that it be notified within thirty (30) days of the
occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA,
including, without limitation, the failure to make on or before its due
date a
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required installment under Section 412(m) of the Code or Section 302(e) of
ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code); and any request
for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a notice of
intent to terminate any Plan or any action taken by such Borrower or an
ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by such Borrower or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan by
such Borrower or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt by
such Borrower or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against such Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
and
(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in
the loss of tax-exempt status of the trust of which such Plan is a part if
such Borrower or an ERISA Affiliate fails to timely provide security to
such Plan in accordance with the provisions of said Sections.
Each Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of such Borrower to the effect that, to the best of such
Responsible Officer's knowledge, such Borrower during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Warehouse Agreement and
the other Loan Documents to be observed, performed or satisfied by it, and that
such Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate (and, if any Default or Event of
Default has occurred and is continuing, describing the same in reasonable detail
and describing the action such Borrower has taken or proposes to take with
respect thereto).
7.02 Litigation. Each Borrower will promptly, and in any event
within 7 days after service process on any of the following, give to the Lender
notice of all legal or arbitrable proceedings affecting such Borrower or any of
its Subsidiaries that questions or challenges the
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validity or enforceability of any of the Loan Documents or as to which there is
a reasonable likelihood of adverse determination which would result in a
Material Adverse Effect.
7.03 Existence, Etc. Each of the Borrowers, their Subsidiaries and
the Qualified Originators will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (other than Subsidiaries
which are not material to the business of the Borrowers);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, truth in lending, real estate settlement procedures and all
environmental laws) if failure to comply with such requirements would be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect;
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office or chief operating office
from the addresses referred to in Section 6.13 unless it shall have provided the
Lender 30 days prior written notice of such change (other than Subsidiaries
which are not material to the business of the Borrowers);
(e) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained; and
(f) permit representatives of the Lender, during normal business
hours upon three (3) Business Days' prior written notice at a mutually desirable
time, to examine, copy and make extracts from its books and records, to inspect
any of its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by the Lender.
7.04 Prohibition of Fundamental Changes. Neither Borrower shall
enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that such
Borrower may merge or consolidate with (a) any wholly owned subsidiary of such
Borrower, or (b) any other Person if such Borrower is the surviving corporation;
and provided further, that if after giving effect thereto, no Default would
exist hereunder.
7.05 Borrowing Base Deficiency. If at any time there exists a
Borrowing Base Deficiency the Borrowers shall cure same in accordance with
Section 2.06 hereof.
7.06 Notices. The Borrowers shall give notice to the Lender
promptly:
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(a) upon either Borrower becoming aware of, and in any event within
one (1) Business Day after, the occurrence of any Default or Event of Default or
any material event of default or default under any other material agreement of
such Borrower which has not been waived or cured;
(b) upon, and in any event within three (3) Business Days after,
service of process on either Borrower or any of its Subsidiaries, or any agent
thereof for service of process, in respect of any legal or arbitrable
proceedings affecting such Borrower or any of its Subsidiaries (i) that
questions or challenges the validity or enforceability of any of the Loan
Documents or (ii) in which the amount in controversy exceeds $1,000,000;
(c) upon either Borrower becoming aware of any default related to
any Collateral which would reasonably be expected to have a Material Adverse
Effect and any event or change in circumstances which should reasonably be
expected to have a Material Adverse Effect;
(d) upon either Borrower becoming aware during the normal course of
its business that the Mortgaged Property in respect of any Mortgage Loan or
Mortgage Loans with an aggregate unpaid principal balance of at least $1,000,000
has been damaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, or otherwise damaged so as to materially and
adversely affect the Collateral Value of such Mortgage Loan;
(e) upon the entry of a judgment or decree in an amount in excess of
$1,000,000;
(f) upon either Borrower becoming aware of any event or circumstance
which, with notice or the passage of time, could result in a Material Adverse
Effect.
Each notice pursuant to this Section 7.06 (other than 7.06(e)) shall be
accompanied by a statement of a Responsible Officer of the applicable Borrower
setting forth details of the occurrence referred to therein and stating what
action such Borrower has taken or proposes to take with respect thereto.
7.07 Servicing. Except as provided in Section 10.15(c), the
Borrowers shall not permit any Person other than the Borrowers to service
Mortgage Loans without the prior written consent of the Lender, which consent
shall not be unreasonably withheld.
7.08 Underwriting Guidelines. In the event that either Borrower
makes any amendment or modification to the Underwriting Guidelines, such
Borrower shall promptly deliver to the Lender a complete copy of the amended or
modified Underwriting Guidelines.
7.09 Lines of Business. Neither Borrower will engage to any
substantial extent in any line or lines of business activity other than the
businesses generally carried on by it as of the Effective Date.
7.10 Transactions with Affiliates. Neither Borrower will enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (i) pursuant to such Borrower's executive loan program as
approved from time to time by its Board of Directors or (ii)(a) otherwise
permitted under this Warehouse Agreement, (b) in the ordinary course of such
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Borrower's business and (c) upon fair and reasonable terms no less favorable to
such Borrower than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate, or make a payment that is not otherwise
permitted by this Section 7.10 to any Affiliate.
7.11 Application of Funding. The Borrowers will use the funding
hereunder solely to originate, fund, and purchase Mortgage Loans for the purpose
of (a) pooling such Mortgage Loans prior to securitization, or (b) sale, in each
case in the ordinary course of business.
7.12 Limitation on Liens. Neither Borrower will, nor will it permit
or allow others to, create, incur or permit to exist any Lien, security interest
or claim on or to any of the Collateral. The Borrowers will defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien, security interest or claim on or to the Collateral, other than the
security interests created under this Warehouse Agreement, and the Borrowers
will defend the right, title and interest of the Lender in and to any of the
Collateral against the claims and demands of all persons whomsoever.
7.13 Limitation on Sale of Assets. The Borrowers shall not convey,
sell, lease, assign, transfer or otherwise dispose of (collectively,
"Transfer"), all or substantially all of its Property, business or assets
(including, without limitation, receivables and leasehold interests) whether now
owned or hereafter acquired or allow any Subsidiary to Transfer substantially
all of its assets to any Person; provided, that either Borrower may after prior
written notice to the Lender allow such action with respect to any Subsidiary
which is not a material part of the Borrower's overall business operations.
7.14 Limitation on Distributions. Except as required by the Senior
Note Indenture, without the Lender's consent, Aames Capital shall not make any
payment on account of, or set apart assets for a sinking or other analogous fund
for the purchase, redemption, defeasance, retirement or other acquisition of,
any stock or senior or subordinate debt of Aames Capital, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of Aames
Capital, provided, however, nothing herein shall restrict the ability of Aames
Capital to pay dividends to the Guarantor.
7.15 Maintenance of Liquidity. Aames Capital has cash, Cash
Equivalents and available borrowing capacity under committed warehouse
facilities equal to $1,000,000.
7.16 Maintenance of Tangible Net Worth. The Tangible Net Worth of
Aames Capital shall be $365,000,000 at all times during the term of this
Warehouse Agreement.
7.17 Committed Warehouse Facilities. Aames Capital at all times has
(a) available capacity under committed revolving facilities, other than the
Lender's committed revolving facility, greater than or equal to $100,000,000,
and (b) committed wet funding revolving facilities that provide funding in the
aggregate of at least $35,000,000.
7.18 [Intentionally Omitted]
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7.19 Servicing Transmission. The Borrowers shall provide to the
Lender no later than 11:00 a.m. eastern time two Business Days prior to each
Payment Date (or such other day requested by Lender) (i) the Servicing
Transmission, on a loan-by-loan basis and in the aggregate, with respect to the
Mortgage Loans serviced hereunder by Aames Capital which were funded prior to
the first day of the current month, summarizing Aames Capital's delinquency and
loss experience with respect to Mortgage Loans serviced by Aames Capital
(including, in the case of the Mortgage Loans, the following categories:
current, 30-59, 60-89 and 90+) and (ii) any other information reasonably
requested by the Lender with respect to the Mortgage Loans.
7.20 No Amendment or Waiver. Neither Borrower will, nor will it
permit or allow others to amend, modify, terminate or waive any provision of any
Mortgage Loan to which such Borrower is a party in any manner which shall
reasonably be expected to materially and adversely affect the value of such
Mortgage Loan as Collateral.
7.21 Maintenance of Property; Insurance. The Borrowers shall (a)
keep all property useful and necessary in its business in good working order and
condition; and
(b) maintain errors and omissions insurance and/or mortgage
impairment insurance and blanket bond coverage in such amounts as are in effect
on the Effective Date (as disclosed to Lender in writing) and shall not reduce
such coverage without the written consent of the Lender, and shall also maintain
such other insurance with financially sound and reputable insurance companies,
and with respect to property and risks of a character usually maintained by
entities engaged in the same or similar business similarly situated, against
loss, damage and liability of the kinds and in the amounts customarily
maintained by such entities.
7.22 Further Identification of Collateral. The Borrowers will
furnish to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender or any Lender may reasonably request, all in
reasonable detail.
7.23 Mortgage Loan Determined to be Defective. Upon discovery by the
Borrowers or the Lender of any breach of any representation or warranty listed
on Schedule 1 hereto applicable to any Mortgage Loan, the party discovering such
breach shall promptly give notice of such discovery to the other.
7.24 Interest Rate Protection Agreements. Upon the Lender's request,
the Borrowers shall deliver to the Lender any and all information relating to
Interest Rate Protection Agreements.
7.25 Covenants of the Borrowers with respect to the Collateral. (a)
Unless the Trustee is directly providing the Lender with reports issued pursuant
to the Governing Agreement, Aames Capital shall promptly deliver to the Lender
(i) any report received by such Borrower pursuant to the Governing Agreement
including, without limitation, any trustee's report and any reports delivered to
a holder of Pledged Securities; (ii) any notice of transfer of servicing; (iii)
all reports sent by Aames Capital to each Trustee under a Governing Agreement,
and (iv) any other such document or information as the Lender may reasonably
request from time to time with respect to the Pledged Securities.
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(b) The Borrowers shall permit the Lender to inspect its books and
records relating to any of the Collateral and other matters relating to the
transactions contemplated hereby, upon reasonable prior notice and during normal
business hours.
(c) If the Borrowers shall, as a result of its ownership of the
Collateral (other than Mortgage Loans), become entitled to receive or shall
receive any rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for the Collateral (other than Mortgage Loans), or otherwise
in respect thereof, the Borrowers shall accept the same as the Lender's agent,
hold the same in trust for the Lender and deliver the same forthwith to the
Lender in the exact form received, duly indorsed by the applicable Borrower to
the Lender, if required, together with an undated bond power covering such
certificate duly executed in blank and with, if the Lender so requests,
signature guaranteed, to be held by the Lender hereunder as additional
collateral security for the Obligations. If any sums of money or property so
paid or distributed in respect of the Collateral (other than Mortgage Loans)
shall be received by either Borrower, such Borrower shall, until such money or
property is paid or delivered to the Lender as required hereunder, hold such
money or property in trust for the Lender, segregated from other funds of such
Borrower, as additional collateral security for the Obligations.
(d) At any time and from time to time, upon the written request of
Lender, and at the sole expense of the Borrowers, the Borrowers will promptly
and duly execute and deliver such further instruments and documents and take
such further actions as Lender may reasonably request for the purposes of
obtaining or preserving the full benefits of this Warehouse Agreement and of the
rights and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any instrument
(including any certificated security or promissory note) or chattel paper (in
each case as defined in the Uniform Commercial Code), such instrument or chattel
paper shall be immediately delivered to Lender, duly endorsed in a manner
satisfactory to Lender, to be held as Collateral pursuant to this Warehouse
Agreement. Prior to such delivery, the Borrowers shall hold all such instruments
or chattel paper in trust for Lender, and shall not commingle any of the
foregoing with any assets of the Borrowers.
(e) The Borrowers shall pay, and save Lender harmless from, any and
all liabilities with respect to, or resulting from any delay in paying, any and
all stamp, excise, sales or other similar taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Warehouse Agreement.
7.26 Computer Systems. Each Borrower shall maintain its System in a
manner that permits the Borrower to be Year 2000 Compliant.
7.27 Certificate of a Responsible Officer of each Borrower. At the
time that each Borrower delivered financial statements to the Lender in
accordance with Section 7.01 hereof, such Borrower shall, and shall cause the
Guarantor to, forward to the Lender a certificate of a Responsible Officer of
such Borrower which demonstrates that such Borrower or the Guarantor, as
applicable, is in compliance with the covenants set forth in Sections 7.15, 7.16
and 7.17.
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7.28 Deposit of Collections. Upon the request of the Lender, after
the occurrence of a Default, the Borrowers shall deposit all Collections
received on account of the Collateral into one or more segregated accounts
holding exclusively proceeds received with respect to the Collateral for the
sole benefit of the Lender. The Borrowers shall remit all Collections received
by the Borrowers to the Lender no later than the next Payment Date, accompanied
by a report with sufficient detail to enable the Lender to appropriately
identify the Collateral to which any amount remitted applies. The Lender shall
apply all amounts so remitted in accordance with the provisions set forth in
Section 3.05 hereof.
7.29 Fees. Aames Capital shall pay the Lender such fees are set
forth in the Fee Agreement within two (2) Business Days of the Effective Date.
7.30 Servicing Rights; Call Rights. Aames Capital shall not (a)
other than as a result of a servicer termination event under the related
Governing Agreement, transfer, convey, pledge, assign, mortgage or otherwise
permit a Lien to exist on any servicing rights under any of the Governing
Agreements relating to the Pledged Securities, nor (b) exercise any of its call
rights pursuant to such Governing Agreements relating to the Pledged Securities,
in either case of clause (a) or (b), without the consent of the Lender.
Section 8. Events of Default. Each of the following events shall
constitute an event of default (an "Event of Default") hereunder:
(a) either Borrower shall default in the payment of any principal of
or interest on any Advance (whether at stated maturity, upon acceleration or at
mandatory prepayment) or the Guarantor shall default in the payment of any
amount required to be paid by it under the Guaranty; or
(b) any Loan Party shall default in the payment of any other amount
payable by it hereunder or under any other Loan Document after notification by
the Lender of such default, and such default shall have continued unremedied for
three Business Days; or
(c) any representation, warranty or certification made or deemed
made herein or in any other Loan Document by either Borrower or the Guarantor or
any certificate furnished to the Lender pursuant to the provisions thereof,
shall prove to have been false or misleading in any material respect as of the
time made or furnished (other than the representations and warranties set forth
in Schedule 1 which shall be considered solely for the purpose of determining
the Collateral Value of the Mortgage Loans; unless such Borrower shall have made
any such representations and warranties with knowledge that they were materially
false or misleading at the time made); or
(d) Aames Capital shall (or, if there are any outstanding Tranche C
Advances outstanding, Aames Funding shall) fail to comply with the requirements
of any of Sections 7.03, 7.04, 7.05, 7.06, 7.09, 7.10, 7.11, 7.12, 7.13, 7.14,
7.15, 7.16, 7.17, 7.22, 7.25 or 7.30 hereof or the Guarantor shall fail to
comply with the requirements of Section 3(b) of the Guaranty; or either Borrower
shall otherwise fail to observe or perform any other agreement contained in this
Warehouse Agreement or any other Loan Document and such failure to observe or
perform shall continue unremedied for a period of five (5) Business Days; or
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(e) a final judgment or judgments for the payment of money in excess
of $2,000,000 in the aggregate (to the extent that it is, in the reasonable
determination of the Lender, uninsured and provided that any insurance or other
credit posted in connection with an appeal shall not be deemed insurance for
these purposes) shall be rendered against either Borrower or any of its
Subsidiaries by one or more courts, administrative tribunals or other bodies
having jurisdiction over them and the same shall not be discharged (or provision
shall not be made for such discharge) or bonded, or a stay of execution thereof
shall not be procured, within 60 days from the date of entry thereof and such
Borrower or any such Subsidiary shall not, within said period of 60 days, or
such longer period during which execution of the same shall have been stayed or
bonded, appeal therefrom and cause the execution thereof to be stayed during
such appeal; or
(f) any Loan Party or any of its Affiliates shall admit in writing
its inability to pay its debts as such debts become due; or
(g) any Loan Party or any of its Affiliates shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator of itself or of all or a substantial
part of its property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv) file
a petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement or winding-up,
or composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code or (vi) take any corporate or
other action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the application
or consent of any Loan Party or any of its Affiliates, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a receiver, custodian, trustee, examiner, liquidator or the
like of such Loan Party or any such Affiliate or of all or any substantial part
of its property, or (iii) similar relief in respect of such Loan Party or any
such Affiliate under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief against such
Loan Party or any such Affiliate shall be entered in an involuntary case under
the Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall for whatever
reason (including an event of default thereunder) be terminated or the lien on
the Collateral created by this Warehouse Agreement or either Borrower's material
obligations hereunder shall cease to be in full force and effect, or the
enforceability thereof shall be contested by either Borrower; or
(j) any material adverse change in the Properties, business or
financial condition, or prospects of any Loan Party or any of its Affiliates or
any Qualified Originator, in each case as determined by the Lender in its sole
discretion, or the existence of any other condition which, in the Lender's sole
discretion, constitutes a material impairment of either Borrower's ability to
perform its obligations under this Warehouse Agreement, the Note or any other
Loan Document
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or the ability of any Affiliate of such Borrower to perform its obligations
under any agreement between such Affiliate and the Lender or an Affiliate of the
Lender; or
(k) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of either Borrower or
any Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) either
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Lenders is likely to, incur any liability in connection with a withdrawal
from, or the insolvency or reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could reasonably be expected
to have a Material Adverse Effect; or
(l) the Guarantor shall own less than 100% of the outstanding
capital stock of the Borrowers; or
(m) either Borrower shall grant, or suffer to exist, any Lien on any
Collateral except the Liens contemplated hereby; or the Liens contemplated
hereby shall cease to be first priority perfected Liens on the Collateral in
favor of the Lender or shall be Liens in favor of any Person other than the
Lender; or
(n) either Borrower or any of its Affiliates shall default under, or
fail to perform as requested under, or shall otherwise materially breach the
terms of any instrument, agreement or contract between such Borrower or any of
such Borrower's Affiliates, on the one hand, and Lender or any of Lender's
Affiliates, on the other hand; or
(o) any Loan Party or its Affiliates shall default under or be
subject to any acceleration provision of any material agreement to which the
such Loan Party or Affiliate is a party and, as a consequence of such default,
such Loan Party's or Affiliates' monetary obligations thereunder which shall
equal $5,000,000 or more shall have been accelerated; or
(p) the Lender shall reasonably request, specifying the reasons for
such request, information, and/or written responses to such requests, regarding
the financial well-being of any Loan Party and such information and/or responses
shall not have been provided within three Business Days of such request; or
(q) there shall have occurred a Scheduled Amortization Deviation
which shall have not been cured within 15 Business Days following the occurrence
thereof; or
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(r) at any time after the occurrence of a Scheduled Amortization
Deviation the outstanding Tranche B Advances shall exceed the Scheduled
Amortization Balance required at such time; or
(s) The discovery by the Lender after the date hereof of a condition
or event which existed at or prior to the execution hereof which has not been
previously publicly disclosed by Aames Capital or the Guarantor or of which the
Lender did not have actual knowledge on the date hereof and which the Lender, in
its sole reasonable discretion, determines materially and adversely affects: (i)
the condition (financial or otherwise) of either Borrower, its Subsidiaries or
Affiliates; or (ii) the ability of either Borrower to fulfill its respective
obligations under this Agreement.
8.02 Remedies Upon Default. (a) If an Event of Default shall have
occurred and be continuing, at any time at the Lender's election, the Lender may
apply all or any part of the Proceeds of the Collateral (other than Initial
Haircut Collateral), including any Tranche A Collections and Tranche C
Collections, in the payment of the Secured Obligations in the following order of
priority:
(i) FIRST, to the payment of all reasonable costs and expenses
incurred by the Lender in connection with this Warehouse Agreement, the
Note, any other Loan Document or any of the Obligations, including,
without limitation, all court costs and the reasonable costs or expenses
incurred in connection with the exercise by the Lender of any right or
remedy under this Warehouse Agreement, the Note or any other Loan
Document;
(ii) SECOND, to the satisfaction of all other Secured Obligations;
and
(iii) THIRD, any excess to the Borrower or any other Person as
directed by the Borrower in writing.
(b) If an Event of Default shall have occurred and be continuing, at
any time at the Lender's election, the Lender may apply all or any part of the
Proceeds of Initial Haircut Collateral, including any Tranche B Collections, in
the payment of the Secured Obligations in the following order of priority:
(i) FIRST, to the payment of all reasonable costs and expenses
incurred by the Lender in connection with this Warehouse Agreement, the
Note, any other Loan Document or any of the Obligations, including,
without limitation, all court costs and the reasonable costs or expenses
incurred in connection with the exercise by the Lender of any right or
remedy under this Warehouse Agreement, the Note or any other Loan
Document;
(ii) SECOND, to the satisfaction of all other Secured Obligations
with respect to the Tranche B Advances; and
(iii) THIRD, to the reimbursement of amounts paid by a guarantor to
the Lender (other than the Guarantor) on any Guarantee with respect to
this Warehouse Agreement;
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(iv) FOURTH, to the satisfaction of any unpaid Secured Obligations;
and
(v) FIFTH, any excess to the Borrowers or any other Person as
directed by the Borrower in writing.
(c) Upon the occurrence of one or more Events of Default (subject to
the expiration of the applicable cure period contained therein) other than those
referred to in Section 8(g) or (h), the Lender may immediately declare the
principal amount of the Advances then outstanding under the Note to be
immediately due and payable, together with all interest thereon and reasonable
fees and out-of-pocket expenses accruing under this Warehouse Agreement;
provided that upon the occurrence of an Event of Default referred to in Sections
8(g) or (h), such amounts shall immediately and automatically become due and
payable without any further action by any Person. Upon such declaration or such
automatic acceleration, the balance then outstanding on the Note shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrowers and may thereupon exercise any remedies available to it at law and
pursuant to the Loan Documents. An Event of Default shall be deemed to be
continuing unless expressly waived by the Lender in writing.
(d) Upon the occurrence of one or more Events of Default, the Lender
shall have the right to obtain physical possession of the Servicing Records and
all other files of the Borrowers relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of the Borrowers or any third party acting for the Borrowers and the
Borrowers shall deliver to the Lender such assignments as the Lender shall
request. The Lender shall be entitled to specific performance of all agreements
of the Borrowers contained in this Warehouse Agreement and to become Servicer
under the applicable Governing Agreement.
Section 9. No Duty on Lender's Part. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrowers for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
Section 10. Miscellaneous.
10.01 Waiver. No failure on the part of the Lender to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
10.02 Notices. Except as otherwise expressly permitted by this
Warehouse Agreement, all notices, requests and other communications provided for
herein and under the Custodial Agreement (including, without limitation, any
modifications of, or waivers, requests or
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consents under, this Warehouse Agreement) shall be given or made in writing
(including, without limitation, by telex or telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name on the signature
pages hereof); or, as to any party, at such other address as shall be designated
by such party in a written notice to each other party. Except as otherwise
provided in this Warehouse Agreement and except for notices given under Section
2 (which shall be effective only on receipt), all such communications shall be
deemed to have been duly given when transmitted by telex or telecopier or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
10.03 Indemnification and Expenses. (a) The Borrowers and the
Guarantor agree to hold the Lender harmless from and indemnify the Lender
against all liabilities, losses, damages, judgments, costs and expenses of any
kind which may be imposed on, incurred by, or asserted against the Lender,
relating to or arising out of, this Warehouse Agreement, the Note, any other
Loan Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Warehouse Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby, that, in each case, results from
anything other than the Lender's gross negligence or willful misconduct. In any
suit, proceeding or action brought by the Lender in connection with any Mortgage
Loan for any sum owing thereunder, or to enforce any provisions of any Mortgage
Loan, the Borrowers will save, indemnify and hold the Lender harmless from and
against all expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by the Borrowers of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Borrowers. The Borrowers also agree to reimburse the
Lender as and when billed by the Lender for all the Lender's reasonable
out-of-pocket costs and expenses incurred in connection with the enforcement or
the preservation of the Lender's rights under this Warehouse Agreement, the
Note, any other Loan Document or any transaction contemplated hereby or thereby,
including without limitation the reasonable fees and disbursements of its
counsel. The Borrowers hereby acknowledge that, notwithstanding the fact that
the Note is secured by the Collateral, the obligation of the Borrowers under the
Note is a recourse obligation of the Borrowers.
(b) The Borrowers agree to pay as and when billed by the Lender all
of the out-of pocket costs and expenses incurred by the Lender in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Warehouse Agreement, the Note, any other
Loan Document or any other documents prepared in connection herewith or
therewith. The Borrowers agree to pay as and when billed by the Lender all of
the out-of-pocket costs and expenses incurred in connection with the
consummation and administration of the transactions contemplated hereby and
thereby including, without limitation, (i) all the reasonable fees,
disbursements and expenses of counsel to the Lender in connection with the
execution of this Warehouse Agreement, (ii) all the due diligence, inspection,
testing and review costs and expenses incurred by the Lender with respect to
Collateral under this Warehouse Agreement, including, but not limited to, those
costs and expenses incurred by the Lender pursuant to Sections 10.03(a), 10.14
and 10.16 hereof other than any costs and expenses incurred in connection with
the Lender's rehypothication of the Mortgage Loans prior to an
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Event of Default and (iii) initial and ongoing fees and expenses incurred by the
Custodian in connection with the performance of its duties under the Custodial
Agreement.
10.04 Amendments. Except as otherwise expressly provided in this
Warehouse Agreement, any provision of this Warehouse Agreement may be modified
or supplemented only by an instrument in writing signed by the Borrowers and the
Lender and any provision of this Warehouse Agreement may be waived by the
Lender.
10.05 Successors and Assigns. This Warehouse Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
10.06 Survival. The obligations of the Borrowers under Sections 3.03
and 10.03 hereof shall survive the repayment of the Advances and the termination
of this Warehouse Agreement. In addition, each representation and warranty made,
or deemed to be made by a request for a borrowing, herein or pursuant hereto
shall survive the making of such representation and warranty, and the Lender
shall not be deemed to have waived, by reason of making any Advance, any Default
that may arise by reason of such representation or warranty proving to have been
false or misleading, notwithstanding that the Lender may have had notice or
knowledge or reason to believe that such representation or warranty was false or
misleading at the time such Advance was made.
10.07 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Warehouse
Agreement.
10.08 Counterparts. This Warehouse Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Warehouse
Agreement by signing any such counterpart.
10.09 Warehouse Agreement Constitutes Security Agreement; Governing
Law. This Warehouse Agreement shall be governed by New York law without
reference to choice of law doctrine (but with reference to Section 5-1401 of the
New York General Obligations Law, which by its terms applies to this Warehouse
Agreement), and shall constitute a security agreement within the meaning of the
Uniform Commercial Code.
10.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH LOAN PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS WAREHOUSE AGREEMENT, THE NOTE AND THE OTHER
LOAN DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NONEXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF;
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(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF
WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION.
10.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND THE LENDER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS WAREHOUSE AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.12 Acknowledgments. Each Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Warehouse Agreement, the Note and the other Loan Documents to
which it is a party;
(b) the Lender has no fiduciary relationship to such Borrower, and
the relationship between such Borrower and the Lender is solely that of debtor
and creditor; and
(c) no joint venture exists among or between the Lender and such
Borrower.
10.13 Hypothecation or Pledge of Collateral. The Lender shall have
free and unrestricted use of all Collateral and nothing in this Warehouse
Agreement shall preclude the Lender from engaging in repurchase transactions
with the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Collateral. Nothing contained in this
Warehouse Agreement shall obligate the Lender to segregate any Collateral
delivered to the Lender by the Borrowers.
10.14 Assignments; Participations. (a) Each Borrower may assign any
of its rights or obligations hereunder or under the Note with the prior written
consent of the Lender which consent shall not be unreasonably withheld. The
Lender may assign or transfer to any bank or other financial institution that
makes or invests in loans or any Affiliate of the Lender all
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or any of its rights or obligations under this Warehouse Agreement and the other
Loan Documents.
(b) The Lender may, in accordance with applicable law, at any time
sell to one or more lenders or other entities ("Participants") participating
interests in any Advance, the Note, its commitment to make Advances, or any
other interest of the Lender hereunder and under the other Loan Documents. In
the event of any such sale by the Lender of participating interests to a
Participant, the Lender's obligations under this Warehouse Agreement to the
Borrowers shall remain unchanged, the Lender shall remain solely responsible for
the performance thereof, the Lender shall remain the holder of the Note for all
purposes under this Warehouse Agreement and the other Loan Documents, and the
Borrowers and the Lender shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations under this
Warehouse Agreement and the other Loan Documents. The Borrowers agree that if
amounts outstanding under this Warehouse Agreement and the Note are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Warehouse Agreement and the Note to the same extent as if the amount
of its participating interest were owing directly to it as a Lender under this
Warehouse Agreement or the Note; provided, that such Participant shall only be
entitled to such right of set-off if it shall have agreed in the agreement
pursuant to which it shall have acquired its participating interest to share
with the Lender the proceeds thereof. The Lender also agrees that each
Participant shall be entitled to the benefits of Sections 2.07 and 10.03 with
respect to its participation in the Advances outstanding from time to time;
provided, that the Lender and all Participants shall be entitled to receive no
greater amount in the aggregate pursuant to such Sections than the Lender would
have been entitled to receive had no such transfer occurred.
(c) The Lender may furnish any information concerning the Borrowers
or any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants)
only after notifying the Borrowers in writing and securing signed
confidentiality statements (a form of which is attached hereto as Exhibit I) and
only for the sole purpose of evaluating participations and for no other purpose.
(d) The Borrowers agree to cooperate with the Lender in connection
with any such assignment and/or participation, to execute and deliver such
replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Warehouse Agreement and the other
Loan Documents in order to give effect to such assignment and/or participation.
Each Borrower further agrees to furnish to any Participant identified by the
Lender to the Borrower copies of all reports and certificates to be delivered by
such Borrower to the Lender hereunder, as and when delivered to the Lender.
10.15 Servicing. (a) The Borrowers covenant to maintain or cause the
servicing of the Mortgage Loans to be maintained in conformity with Accepted
Servicing Practices. In the event that the preceding language is interpreted as
constituting one or more servicing contracts, each such servicing contract shall
terminate automatically upon the earliest of (i) an Event of Default, or (ii)
the date on which all the Secured Obligations have been paid in full, or (iii)
the transfer of servicing to any entity approved by the Lender.
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(b) During the period the each Borrower is servicing the Mortgage
Loans, (i) such Borrower agrees that Lender has a first priority perfected
security interest in all servicing records, including but not limited to any and
all servicing agreements, files, documents, records, data bases, computer tapes,
copies of computer tapes, proof of insurance coverage, insurance policies,
appraisals, other closing documentation, payment history records, and any other
records or rights relating to or evidencing the servicing of such Mortgage Loans
(the "Servicing Records"), and (ii) such Borrower grants the Lender a security
interest in all servicing fees and rights relating to the Mortgage Loans and all
Servicing Records to secure the obligation of such Borrower or its designee to
service in conformity with this Section and any other obligation of such
Borrower to the Lender. The Borrowers covenant to safeguard such Servicing
Records and to deliver them promptly to the Lender or its designee (including
the Custodian) at the Lender's request. It is understood and agreed by the
parties that prior to an Event of Default, the Borrowers shall retain the
servicing fees with respect to the Mortgage Loans.
(c) If the Mortgage Loans are serviced by any other third party
servicer (such third party servicer, the "Subservicer"), the applicable Borrower
shall provide a copy of the related servicing agreement with a properly executed
Instruction Letter to the Lender at least three (3) Business Days prior to the
applicable Funding Date or the date on which the Subservicer shall begin
subservicing the Mortgage Loans, which shall be in the form and substance
acceptable to Lender (the "Servicing Agreement") and shall have obtained the
written consent of the Lender for such Subservicer to subservice the Mortgage
Loans. Initially, the Subservicer shall be Aames Funding.
(d) The Borrowers agree that upon the occurrence of an Event of
Default, the Lender may terminate the Borrowers in their capacity as servicer
and terminate any Servicing Agreement and transfer such servicing to the Lender
or its designee, at no cost or expense to the Lender. In addition, each Borrower
shall provide to the Lender an Instruction Letter from such Borrower to the
effect that upon the occurrence of an Event of Default, the Lender may terminate
any Subservicer or Servicing Agreement and direct that collections with respect
to the Mortgage Loans be remitted in accordance with the Lender's instructions.
The Borrowers agree to cooperate with the Lender in connection with the transfer
of servicing.
(e) After the Funding Date, until the pledge of any Mortgage Loan is
relinquished by the Custodian, the Borrowers will have no right to modify or
alter the terms of the Mortgage Loan or consent to the modification or
alteration of the terms of any Mortgage Loan, and the Borrowers will have no
obligation or right to repossess any Mortgage Loan or substitute another
Mortgage Loan, except as provided in any Custodial Agreement.
(f) The Borrowers shall permit the Lender to inspect upon reasonable
prior written notice (which shall be no more than five (5) Business Days prior
to such date) at a mutually convenient time, the Borrowers' or their Affiliate's
servicing facilities, as the case may be, for the purpose of satisfying the
Lender that the Borrowers or their Affiliate, as the case may be, has the
ability to service the Mortgage Loans as provided in this Warehouse Agreement.
In addition, with respect to any Subservicer which is not an Affiliate of either
Borrower, the applicable Borrower shall use its best efforts to enable the
Lender to inspect the servicing facilities of such Subservicer.
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10.16 Periodic Due Diligence Review. The Borrowers acknowledge that
the Lender has the right to perform continuing due diligence reviews with
respect to the Mortgage Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
each Borrower agrees that upon reasonable (but no less than one (1) Business
Day's) prior notice to such Borrower, the Lender or its authorized
representatives will be permitted during normal business hours to examine,
inspect, make copies of, and make extracts of, the Mortgage Files and any and
all documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession, or under the control, of such Borrower and/or
the Custodian. The Borrowers also shall make available to the Lender a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting the Mortgage Files and the Mortgage Loans. Without limiting
the generality of the foregoing, the each Borrower acknowledges that the Lender
shall make Advances to the Borrowers based solely upon the information provided
by the Borrowers to the Lender in the Mortgage Loan Data Transmission and the
representations, warranties and covenants contained herein, and that the Lender,
at its option, has the right, at any time to conduct a partial or complete due
diligence review on some or all of the Mortgage Loans securing such Advance,
including, without limitation, ordering new credit reports, new appraisals on
the related Mortgaged Properties and otherwise re-generating the information
used to originate such Mortgage Loan. The Lender may underwrite such Mortgage
Loans itself or engage a mutually agreed upon third party underwriter to perform
such underwriting. Each Borrower agrees to cooperate with the Lender and any
third party underwriter in connection with such underwriting, including, but not
limited to, providing the Lender and any third party underwriter with access to
any and all documents, records, agreements, instruments or information relating
to such Mortgage Loans in the possession, or under the control, of such
Borrower. In addition, the Lender has the right to perform continuing Due
Diligence Reviews of each Borrower and its Affiliates, directors, officers,
employees and significant shareholders. The Borrowers and Lender further agree
that all out-of-pocket costs and expenses incurred by the Lender in connection
with the Lender's activities pursuant to this Section 10.16 shall be paid for as
agreed by such parties.
10.17 Effect of Payment Under Guarantee. To the extent the Lender
receives a payment under a Guarantee related to this Warehouse Agreement, the
Lender shall use the amount of such payment solely for purposes determining the
existence of an Event of Default by applying such payment against the
outstanding principal balance of the Tranche B Advances and the Scheduled
Amortization Balance. The parties agree that the foregoing is for purposes of
calculation only and shall not constitute payment, release discharge or
satisfaction of the Aames Capital's obligations under this Warehouse Agreement.
10.18 Set-Off. In addition to any rights and remedies of the Lender
provided by this Warehouse Agreement and by law, the Lender shall have the
right, without prior notice to the Borrowers, any such notice being expressly
waived by the Borrowers to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrowers hereunder (whether at the
stated maturity, by acceleration or otherwise) to set-off and appropriate and
apply against such amount any and all Property and deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Lender or any Affiliate thereof to or for the credit or the account
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of the Borrowers. The Lender agrees promptly to notify the Borrowers after any
such set-off and application made by the Lender; provided that the failure to
give such notice shall not affect the validity of such set-off and application.
10.19 Intent. The parties recognize that each Advance is a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
10.20 Joint and Several Liability. Each Borrower hereby acknowledges
and agrees that such Borrower shall be jointly and severally liable for all
representations, warrants, covenants, obligations and indemnities of the
Borrowers hereunder.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Warehouse
Agreement to be duly executed and delivered as of the day and year first above
written.
BORROWER
AAMES CAPITAL CORPORATION
By:_________________________________
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Attention: Vice President/Treasury
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
BORROWER
AAMES FUNDING CORPORATION
By:_________________________________
Name:
Title:
Address for Notices:
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▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Attention: Vice President/Treasury
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
LENDER
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:_________________________________
Name:
Title:
Address for Notices:
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Schedule 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Eligible Mortgage Loans
As to each Mortgage Loan that forms part of the Collateral hereunder
(and the related Mortgage, Mortgage Note, Assignment of Mortgage and Mortgaged
Property), each Borrower shall be deemed to make the following representations
and warranties to the Lender as of such date and as of each date Collateral
Value is determined:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Data Transmission with respect to the Mortgage Loan is complete,
true and correct in all material respects.
(b) Payments Current. The Mortgagor has made its first Monthly
Payment within forty-five days of the related Due Date.
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage securing the Mortgage Loan, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither the Borrower nor the Qualified
Originator from which the Borrower acquired the Mortgage Loan has advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the proceeds of the
Mortgage Loan, whichever is more recent, to the day which precedes by one month
the Due Date of the first installment of principal and interest thereunder.
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination; except by a written instrument which has been
recorded, if necessary to protect the interests of the Lender, and which has
been delivered to the Custodian and the terms of which are reflected in the
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the title insurance policy, and its terms are reflected on the Mortgage Loan
Schedule. No Mortgagor in respect of the Mortgage Loan has been released, in
whole or in part, except in connection with an assumption agreement approved by
the title insurer, to the extent required by such policy, and which assumption
agreement is part of the Mortgage File delivered to the Custodian and the terms
of which are reflected in the Mortgage Loan Schedule.
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, setoff, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable, in
whole or in part and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto, and no Mortgagor in respect of
the Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency
proceeding at the time the Mortgage Loan was originated.
(f) Hazard Insurance. The Mortgaged Property is insured by a fire
and extended perils insurance policy, issued by a Qualified Insurer, and such
other hazards as are customary in the area where the Mortgaged Property is
located, and to the extent required by the Borrower as of the date of
origination consistent with the Underwriting Guidelines, against earthquake and
other risks insured against by Persons operating like properties in the locality
of the Mortgaged Property, in an amount not less than the greatest of (i) 100%
of the replacement cost of all improvements to the Mortgaged Property, (ii)
either (A) the outstanding principal balance of the Mortgage Loan with respect
to each First Lien Mortgage Loan or (B) with respect to each Second Lien
Mortgage Loan, the sum of the outstanding principal balance of the First Lien
Mortgage Loan and the outstanding principal balance of the Second Lien Mortgage
Loan, (iii) the amount necessary to avoid the operation of any co-insurance
provisions with respect to the Mortgaged Property, and consistent with the
amount that would have been required as of the date of origination in accordance
with the Underwriting Guidelines or (iv) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis. If any portion of the Mortgaged Property
is in an area identified by any federal Governmental Authority as having special
flood hazards, and flood insurance is available, a flood insurance policy
meeting the current guidelines of the Federal Insurance Administration is in
effect with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (1) the outstanding principal balance of the
Mortgage Loan, (2) the full insurable value of the Mortgaged Property, and (3)
the maximum amount of insurance available under the Flood Disaster Protection
Act of 1973, as amended. All such insurance policies (collectively, the "hazard
insurance policy") contain a standard mortgagee clause naming the Borrower, its
successors and assigns (including without limitation, subsequent owners of the
Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled
without 30 days' prior written notice to the mortgagee. No such notice has been
received by the Borrower. All premiums due and owing on such insurance policy
have been paid. The related Mortgage obligates the Mortgagor to maintain all
such insurance and, at such Mortgagor's failure to do so, authorizes the
mortgagee to maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from such Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier of
the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer
and is in full force and effect. The Borrower has not engaged in, and has no
knowledge of the Mortgagor's having engaged in, any act or omission which would
impair the coverage of any such policy, the benefits of the endorsement provided
for herein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by the Borrower.
-2-
(g) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations, and the Borrower
shall maintain or shall cause its agent to maintain in its possession, available
for the inspection of the Lender, and shall deliver to the Lender, upon two
Business Days' request, evidence of compliance with all such requirements.
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in
whole-or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission other than in the case
of a release of a portion of the land comprising a Mortgaged Property or a
release of a blanket Mortgage which release will not cause the Mortgage Loan to
fail to satisfy the Underwriting Guidelines. The Borrower has not waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Borrower waived any default resulting from any action or inaction by the
Mortgagor.
(i) Location and Type of Mortgaged Property. The Mortgaged Property
is located in the state identified in the Mortgage Loan Schedule and consists of
a single parcel of real property with a detached single family residence erected
thereon, or a two- to four-family dwelling, or an individual condominium unit in
a condominium project, or an individual unit in a planned unit development or a
de minimis planned unit development, provided, however, that any condominium
unit or planned unit development shall conform with the applicable FNMA and
FHLMC requirements regarding such dwellings, that a de minimus percentage of the
Mortgage Loans may be Cooperative Loans subject to a land trust and that no
residence or dwelling is a mobile home or a manufactured dwelling. No portion of
the Mortgaged Property is used for commercial purposes.
(j) Valid Lien. The Mortgage is a valid, subsisting, enforceable and
perfected (A) first lien and first priority security interest with respect to
each Mortgage Loan which is indicated by the Borrower to be a First Lien (as
reflected on the Mortgage Loan Data Transmission), or (B) second lien and second
priority security interest with respect to each Mortgage Loan which is indicated
by the Borrower to be a Second Lien (as reflected on the Mortgage Loan Data
Transmission), in either case, on the real property included in the Mortgaged
Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems located in or annexed to such buildings, and all additions, alterations
and replacements made at any time with respect to the foregoing and with respect
to Cooperative Loans, including the Proprietary Lease and the Cooperative
Shares. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not
yet due and payable;
(2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording
acceptable to prudent mortgage
-3-
lending institutions generally and specifically referred to in the
Lender's title insurance policy delivered to the originator of the
Mortgage Loan and (a) referred to or otherwise considered in the appraisal
made for the originator of the Mortgage Loan or (b) which do not adversely
affect the Appraised Value of the Mortgaged Property set forth in such
appraisal;
(3) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property; and
(4) with respect to each Mortgage Loan which is indicated by the
Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage
Loan Data Transmission) a First Lien on the Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, subsisting and enforceable (A) first lien and first priority
security interest with respect to each Mortgage Loan which is indicated by the
Borrower to be a First Lien (as reflected on the Mortgage Loan Data
Transmission), or (B) second lien and second priority security interest with
respect to each Mortgage Loan which is indicated by the Borrower to be a Second
Lien Mortgage Loan (as reflected on the Mortgage Loan Data Transmission), in
either case, on the property described therein and the Borrower has full right
to pledge and assign the same to the Lender. The Mortgaged Property was not, as
of the date of origination of the Mortgage Loan, subject to a mortgage, deed of
trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage.
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken placed on the part of any Person,
including, without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage Loan.
The Borrower has reviewed all of the documents constituting the Servicing File
and has made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein.
(l) Full Disbursement of Proceeds. The proceeds of the Mortgage Loan
have been fully disbursed and there is no further requirement for future
advances thereunder, and any and all requirements as to completion of any
on-site or off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred in
making or closing the Mortgage Loan and the recording of the Mortgage
-4-
were paid, and the Mortgagor is not entitled to any refund of any amounts paid
or due under the Mortgage Note or Mortgage.
(m) Ownership. The Borrower is the sole owner and holder of the
Mortgage Loan. All Mortgage Loans acquired by the Borrower from third parties
(including affiliates) were acquired in a true and legal sale pursuant to which
such third party sold, transferred, conveyed and assigned to the Borrower all of
its right, title and interest in, to and under such Mortgage Loan and retained
no interest in such Mortgage Loan. In connection with such sale, such third
party received reasonably equivalent value and fair consideration and, in
accordance with GAAP and for federal income tax purposes, reported the sale of
such Mortgage Loan to the Borrower as a sale of its interests in such Mortgage
Loan. The Mortgage Loan is not assigned or pledged, and the Borrower has good,
indefeasible and marketable title thereto, and has full right to transfer,
pledge and assign the Mortgage Loan to the Lender free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to assign, transfer and
pledge each Mortgage Loan pursuant to this Warehouse Agreement and following the
pledge of each Mortgage Loan, the Lender will hold such Mortgage Loan free and
clear of any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest except any such security interest created pursuant to
the terms of this Warehouse Agreement.
(n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) either (A) organized
under the laws of such state, (B) qualified to do business in such state, (C) a
federal savings and loan association, a savings bank or a national bank having a
principal office in such state or (D) not doing business in such state.
(o) LTV. As of the date of origination of the Mortgage Loan, the LTV
or CLTV (if applicable) are as identified on the Mortgage Loan Data
Transmission.
(p) Title Insurance. The Mortgage Loan is covered by either (i) an
attorney's opinion of title and abstract of title, the form and substance of
which is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an ALTA
Lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC and each such title insurance policy is
issued by a title insurer acceptable to FNMA or FHLMC and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
the Borrower, its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan (or to the extent
a Mortgage Note provides for negative amortization, the maximum amount of
negative amortization in accordance with the Mortgage), subject only to the
exceptions contained in clauses (1), (2), (3) and, with respect to each Mortgage
Loan which is indicated by the Borrower to be a Second Lien Mortgage Loan (as
reflected on the Mortgage Loan Data Transmission) clause (4) of paragraph (j) of
this Part I of Schedule 1, and in the case of adjustable rate Mortgage Loans,
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for
-5-
adjustment to the Mortgage Interest Rate and Monthly Payment. Where required by
state law or regulation, the Mortgagor has been given the opportunity to choose
the carrier of the required mortgage title insurance. Additionally, such
Lender's title insurance policy affirmatively insures ingress and egress and
against encroachments by or upon the Mortgaged Property or any interest therein.
The title policy does not contain any special exceptions (other than the
standard exclusions) for zoning and uses and has been marked to delete the
standard survey exception or to replace the standard survey exception with a
specific survey reading. The Borrower, its successors and assigns, are the sole
insureds of such Lender's title insurance policy, and such Lender's title
insurance policy is valid and remains in full force and effect and will be in
force and effect upon the consummation of the transactions contemplated by this
Warehouse Agreement. No claims have been made under such Lender's title
insurance policy, and no prior holder or servicer of the related Mortgage,
including the Borrower, has done, by act or omission, anything which would
impair the coverage of such Lender's title insurance policy, including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by the Borrower.
(q) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event has
occurred which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach, violation or event
of acceleration, and neither the Borrower nor its predecessors have waived any
default, breach, violation or event of acceleration. With respect to each
Mortgage Loan which is indicated by the Borrower to be a Second Lien Mortgage
Loan (as reflected on the Mortgage Loan Data Transmission) (i) the First Lien is
in full force and effect, (ii) there is no default, breach, violation or event
of acceleration existing under such First Lien mortgage or the related mortgage
note, (iii) no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration thereunder, and either (A) the First Lien
mortgage contains a provision which allows or (B) applicable law requires, the
mortgagee under the second lien Mortgage Loan to receive notice of, and affords
such mortgagee an opportunity to cure any default by payment in full or
otherwise under the First Lien mortgage.
(r) No Mechanics' Liens. At origination, there were no mechanics' or
similar liens or claims which have been filed for work, labor or material (and
no rights are outstanding that under the law could give rise to such liens)
affecting the Mortgaged Property which are or may be liens prior to, or equal or
coordinate with the lien of the Mortgage.
(s) Location of Improvements: No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning and building law, ordinance or
regulation.
(t) Origination: Payment Terms. Principal payments on the Mortgage
Loan commenced no more than sixty (60) days after funds were disbursed in
connection with the Mortgage Loan. The Mortgage Interest Rate is adjusted, with
respect to adjustable rate Mortgage
-6-
Loans, on each Interest Rate Adjustment Date to equal the Index plus the Gross
Margin (rounded up or down to the nearest .125 %), subject to the Mortgage
Interest Rate Cap. The Mortgage Note is payable on the day set forth in the
Mortgage Note in equal monthly installments of principal and interest, which
installments of interest, with respect to adjustable rate Mortgage Loans, are
subject to change due to the adjustments to the Mortgage Interest Rate on each
Interest Rate Adjustment Date, with interest calculated and payable in arrears,
sufficient to amortize the Mortgage Loan fully by the stated maturity date, over
an original term of not more than 30 years from commencement of amortization.
The Due Date of the first payment under the Mortgage Note is no more than 60
days from the date of the Mortgage Note.
(u) Customary Provisions. The Mortgage Note has a stated maturity.
The Mortgage contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. Upon default by a
Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to a Mortgagor
which would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage.
(v) Conformance with Underwriting Guidelines and Agency Standards.
The Mortgage Loan was underwritten in accordance with the applicable
Underwriting Guidelines. The Mortgage Note and Mortgage are on forms similar to
those used by FHLMC or FNMA, or, on such forms, copies of which have been
delivered to the Lender, which are customary in the mortgage origination and
servicing industry and the Borrower has not made any representations to a
Mortgagor that are inconsistent with the mortgage instruments used.
(w) Occupancy of the Mortgaged Property. As of the Funding Date the
Mortgaged Property is either vacant or lawfully occupied under applicable law.
All inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities. The Borrower has not received written notification
from any governmental authority that the Mortgaged Property is in material
non-compliance with such laws or regulations, is being used, operated or
occupied unlawfully or has failed to have or obtain such inspection, licenses or
certificates, as the case may be. The Borrower has not received notice of any
violation or failure to conform with any such law, ordinance, regulation,
standard, license or certificate. Except as otherwise set forth in the Mortgage
Loan Data Transmission, the Mortgagor represented at the time of origination of
the Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence.
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above.
-7-
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Custodian or
the Lender to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor.
(z) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage,
the Assignment of Mortgage and any other documents required to be delivered
under the Custodial Agreement for each Mortgage Loan have been delivered to the
Custodian. The Borrower or its agent is in possession of a complete, true and
materially accurate Mortgage File in compliance with the Custodial Agreement,
except for such documents the originals of which have been delivered to the
Custodian.
(aa) Transfer of Mortgage Loans. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
(bb) Due-On-Sale. The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder.
(cc) No Buydown Provisions: No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Borrower, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.
(dd) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the origination of the Mortgage Loan have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term. The lien of the Mortgage securing the consolidated
principal amount is expressly insured as having (A) first lien priority with
respect to each Mortgage Loan which is indicated by the Borrower to be a First
Lien (as reflected on the Mortgage Loan Data Transmission), or (B) second lien
priority with respect to each Mortgage Loan which is indicated by the Borrower
to be a Second Lien Mortgage Loan (as reflected on the Mortgage Loan Data
Transmission), in either case, by a title insurance policy, an endorsement to
the policy insuring the mortgagee's consolidated interest or by other title
evidence acceptable to FNMA and FHLMC. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan.
(ee) Mortgaged Property Undamaged. The Mortgaged Property (and with
respect to any Cooperative Loan, the Cooperative Unit) is undamaged by waste,
fire, earthquake or earth movement, windstorm, flood, tornado or other casualty
so as to affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the
-8-
premises were intended and each Mortgaged Property is in good repair. There have
not been any condemnation proceedings with respect to the Mortgaged Property and
the Borrower has no knowledge of any such proceedings.
(ff) Collection Practices: Escrow Deposits: Interest Rate
Adjustments. The origination and collection practices used by the originator,
each servicer of the Mortgage Loan and the Borrower with respect to the Mortgage
Loan have been in all material respects in compliance with Accepted Servicing
Practices, applicable laws and regulations, and have been in all respects legal
and proper. With respect to escrow deposits and Escrow Payments (other than with
respect to each Mortgage Loan which is indicated by the Borrower to be a Second
Lien Mortgage Loan and for which the mortgagee under the First Lien is
collecting Escrow Payments (as reflected on the Mortgage Loan Data
Transmission), all such payments are in the possession of, or under the control
of, the Borrower and there exist no deficiencies in connection therewith for
which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and federal
law. An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due the Borrower have been
capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage Note. Any interest required to be paid
pursuant to state, federal and local law has been properly paid and credited.
(gg) Conversion to Fixed Interest Rate. With respect to adjustable
rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed interest
rate Mortgage Loan.
(hh) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Borrower or by any officer, director, or
employee of the Borrower or any designee of the Borrower or any corporation in
which the Borrower or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
(ii) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not
notified the Borrower, and the Borrower has no knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940.
(jj) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Borrower or the
Qualified Originator, who had no interest, direct or indirect in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and the
appraisal and appraiser both satisfy the requirements of FNMA or FHLMC and Title
XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 as
amended and the
-9-
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
(kk) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by
applicable law with respect to the making of adjustable rate mortgage loans, and
the Borrower maintains such statement in the Mortgage File.
(ll) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property.
(mm) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Funding Date (whether or not known to the Borrower on
or prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence, or fraud of the Borrower, the
related Mortgagor or any party involved in the application for such coverage,
including the appraisal, plans and specifications and other exhibits or
documents submitted therewith to the insurer under such insurance policy, or for
any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay.
(nn) Capitalization of Interest. The Mortgage Note does not by its
terms provide for the capitalization or forbearance of interest.
(oo) No Equity Participation. No document relating to the Mortgage
Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgagor and the Borrower has not financed nor does
it own directly or indirectly, any equity of any form in the Mortgaged Property
or the Mortgagor.
(pp) Withdrawn Mortgage Loans. If the Mortgage Loan has been
released to the Borrower pursuant to a Request for Release as permitted under
Section 5 of the Custodial Agreement, then the promissory note relating to the
Mortgage Loan was returned to the Custodian within 10 days (or if such tenth day
was not a Business Day, the next succeeding Business Day).
(qq) No Exception. Other than as noted by the Custodian on the
Exception Report; no Material Exception exists (as defined in the Custodial
Agreement) with respect to the Mortgage Loan which would materially adversely
affect the Mortgage Loan or the Lender's security interest, granted by the
Borrower, in the Mortgage Loan as determined by the Lender in its sole
discretion.
-10-
(rr) Qualified Originator. The Mortgage Loan has been originated by,
and, if applicable, purchased by the Borrower from, a Qualified Originator. No
Mortgage Loan was originated by First Alliance.
(ss) Mortgage Submitted for Recordation. The Mortgage has been
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.
(tt) First Lien Consent. With respect to each Mortgage Loan which is
a Second Lien, (i) if the related first lien provides for negative amortization,
the LTV was calculated at the maximum principal balance of such first lien that
could result upon application of such negative amortization feature, and (ii)
either no consent for the Mortgage Loan is required by the holder of the first
lien or such consent has been obtained and is contained in the Mortgage File.
(uu) Acceptable Investment. No specific circumstances or conditions
exist with respect to the Mortgage, the Mortgaged Property or the Mortgagor,
other than the Mortgagor's credit standing, that should reasonably be expected
to (i) cause private institutional investors which invest in Mortgage Loans
similar to the Mortgage Loan to regard the Mortgage Loan as an unacceptable
investment, (ii) cause the Mortgage Loan to be more likely to become past due in
comparison to similar Mortgage Loans, or (iii) adversely affect the value or
marketability of the Mortgage Loan in comparison to similar Mortgage Loans;
(vv) Environmental Matters. The Mortgaged Property is free from any
and all toxic or hazardous substances and there exists no violation of any
local, state or federal environmental law, rule or regulation;
(ww) Ground Leases. With respect to each ground lease to which the
Mortgaged Property is subject (a "Ground Lease"): (i) the Mortgagor is the owner
of a valid and subsisting interest as tenant under the Ground Lease; (ii) the
Ground Lease is in full force and effect, unmodified and not supplemented by any
writing or otherwise; (iii) all rent, additional rent and other charges reserved
therein have been paid to the extent they are payable to the date hereof; (iv)
the Mortgagor enjoys the quiet and peaceful possession of the estate demised
thereby, subject to any sublease; (v) the Mortgagor is not in default under any
of the terms thereof and there are no circumstances which, with the passage of
time or the giving of notice or both, would constitute an event of default
thereunder; (vii) the lessor under the Ground Lease is not in default under any
of the terms or provisions thereof on the part of the lessor to be observed or
performed; (vii) the lessor under the Ground Lease has satisfied all of its
repair or construction obligations, if any, to date pursuant to the terms of the
Ground Lease; and (ix) the execution, delivery and performance of the Mortgage
do not require the consent (other than those consents which have been obtained
and are in full force and effect) under, and will not contravene any provision
of or cause a default under, the Ground Lease.
(xx) Value of Mortgage Property. The Borrower has no knowledge of
any circumstances existing, other than the Mortgagor's credit standing, that
should reasonably be expected to adversely affect the value or the marketability
of the Mortgaged Property or the Mortgage Loan or to cause the Mortgage Loan to
prepay during any period materially faster or slower than the Mortgage Loans
originated by the Borrower generally; and
-11-
(yy) Section 32 Mortgages; Overages. The Borrower has provided the
related Mortgagor with all disclosure materials required by Section 226.32 of
the Federal Reserve Board Regulation Z with respect to any Mortgage Loans
subject to such Section of the Federal Reserve Board Regulation Z. The Borrower
has not made or caused to be made any payment in the nature of an "overage" or
"yield spread premium" to a mortgage broker or like Person which has not been
fully disclosed to the Mortgagor.
(zz) Cooperative Loans. With respect to each Cooperative Loan, each
original Uniform Commercial Code financing statement, continuation statement or
other governmental filing or recordation necessary to create or preserve the
perfection and priority of the first priority lien and security interest in the
Cooperative Shares and Proprietary Lease has been timely and properly made. Any
security agreement, chattel mortgage or equivalent document related to the
Cooperative Loan and delivered to the Borrower or its designee establishes in
the Borrower a valid and subsisting perfected first lien on and security
interest in the Mortgaged Property described therein, and the Borrower has full
right to sell and assign the same
-12-
Schedule 2-A
INITIAL SCHEDULED AMORTIZATION BALANCE
Scheduled Targeted
Monthly Tranche B
Expected Amortization Amortization
Payment Monthly Amount Balance
Period Date Collections 2A 2A
-------------------------------------------------------------------------------------------------------
35,000,000
-------------------------------------------------------------------------------------------------------
1 March 17, 2000 1,805,360 1,066,667 33,933,333
-------------------------------------------------------------------------------------------------------
2 April 17, 2000 1,750,887 1,066,667 32,866,667
-------------------------------------------------------------------------------------------------------
3 May 17, 2000 1,669,232 1,016,667 31,850,000
-------------------------------------------------------------------------------------------------------
4 June 17, 2000 1,590,399 750,000 31,100,000
-------------------------------------------------------------------------------------------------------
5 July 17, 2000 6,798,387 2,000,000 29,100,000
-------------------------------------------------------------------------------------------------------
6 August 17, 2000 2,140,468 811,171 28,288,829
-------------------------------------------------------------------------------------------------------
7 September 17, 2000 2,137,610 812,703 27,476,126
-------------------------------------------------------------------------------------------------------
8 October 17, 2000 2,985,423 1,175,775 26,300,351
-------------------------------------------------------------------------------------------------------
9 November 17, 2000 2,752,102 1,080,595 25,219,756
-------------------------------------------------------------------------------------------------------
10 December 17, 2000 2,756,036 1,085,925 24,133,831
-------------------------------------------------------------------------------------------------------
11 January 17, 2001 2,760,348 1,091,435 23,042,396
-------------------------------------------------------------------------------------------------------
12 February 17, 2001 2,746,288 1,025,087 22,017,309
-------------------------------------------------------------------------------------------------------
13 March 17, 2001 2,757,982 1,033,031 20,984,278
-------------------------------------------------------------------------------------------------------
14 April 17, 2001 2,771,605 1,041,772 19,942,506
-------------------------------------------------------------------------------------------------------
15 May 17, 2001 2,751,403 1,037,011 18,905,495
-------------------------------------------------------------------------------------------------------
16 June 17, 2001 2,730,292 1,031,871 17,873,623
-------------------------------------------------------------------------------------------------------
17 July 17, 2001 2,707,797 1,026,162 16,847,461
-------------------------------------------------------------------------------------------------------
18 August 17, 2001 2,683,991 1,019,909 15,827,552
-------------------------------------------------------------------------------------------------------
19 September 17, 2001 2,658,943 1,013,140 14,814,412
-------------------------------------------------------------------------------------------------------
20 October 17, 2001 2,650,752 1,013,092 13,801,320
-------------------------------------------------------------------------------------------------------
21 November 17, 2001 2,622,795 1,005,138 12,796,182
-------------------------------------------------------------------------------------------------------
22 December 17, 2001 2,593,987 996,818 11,799,364
-------------------------------------------------------------------------------------------------------
23 January 17, 2002 2,563,197 987,678 10,811,686
-------------------------------------------------------------------------------------------------------
24 February 17, 2002 2,531,624 978,196 9,833,490
-------------------------------------------------------------------------------------------------------
25 ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇ ▇▇ ▇
-------------------------------------------------------------------------------------------------------
Schedule 2-B
JUNE 30, 2000 FUTURE RESIDUAL FAILURE EVENT
Scheduled Amortization Balance
Scheduled Targeted
Monthly Tranche B
Expected Amortization Amortization
Payment Monthly Amount Balance
Period Date Collections 2B 2B
---------------------------------------------------------------------------------------------------------
35,000,000
---------------------------------------------------------------------------------------------------------
1 March 17, 2000 1,805,360 1,066,667 33,933,333
---------------------------------------------------------------------------------------------------------
2 April 17, 2000 1,750,887 1,066,667 32,866,667
---------------------------------------------------------------------------------------------------------
3 May 17, 2000 1,669,232 1,016,667 31,850,000
---------------------------------------------------------------------------------------------------------
4 June 17, 2000 1,590,399 750,000 31,100,000
---------------------------------------------------------------------------------------------------------
5 July 17, 2000 6,798,387 2,085,701 29,014,299
---------------------------------------------------------------------------------------------------------
6 August 17, 2000 2,140,468 896,872 28,117,428
---------------------------------------------------------------------------------------------------------
7 September 17, 2000 2,137,610 898,404 27,219,024
---------------------------------------------------------------------------------------------------------
8 October 17, 2000 2,985,423 1,261,476 25,957,548
---------------------------------------------------------------------------------------------------------
9 November 17, 2000 2,752,102 1,166,295 24,791,253
---------------------------------------------------------------------------------------------------------
10 December 17, 2000 2,756,036 1,171,626 23,619,627
---------------------------------------------------------------------------------------------------------
11 January 17, 2001 2,760,348 1,177,136 22,442,492
---------------------------------------------------------------------------------------------------------
12 February 17, 2001 2,746,288 1,110,787 21,331,705
---------------------------------------------------------------------------------------------------------
13 March 17, 2001 2,757,982 1,118,732 20,212,973
---------------------------------------------------------------------------------------------------------
14 April 17, 2001 2,771,605 1,127,473 19,085,500
---------------------------------------------------------------------------------------------------------
15 May 17, 2001 2,751,403 1,122,712 17,962,788
---------------------------------------------------------------------------------------------------------
16 June 17, 2001 2,730,292 1,117,572 16,845,216
---------------------------------------------------------------------------------------------------------
17 July 17, 2001 2,707,797 1,111,862 15,733,354
---------------------------------------------------------------------------------------------------------
18 August 17, 2001 2,683,991 1,105,610 14,627,745
---------------------------------------------------------------------------------------------------------
19 September 17, 2001 2,658,943 1,098,840 13,528,904
---------------------------------------------------------------------------------------------------------
20 October 17, 2001 2,650,752 1,098,793 12,430,111
---------------------------------------------------------------------------------------------------------
21 November 17, 2001 2,622,795 1,090,838 11,339,273
---------------------------------------------------------------------------------------------------------
22 December 17, 2001 2,593,987 1,082,518 10,256,755
---------------------------------------------------------------------------------------------------------
23 January 17, 2002 2,563,197 1,073,379 9,183,376
---------------------------------------------------------------------------------------------------------
24 February 17, 2002 2,531,624 1,063,897 8,119,479
---------------------------------------------------------------------------------------------------------
25 March 17, 2002 NA NA 0
---------------------------------------------------------------------------------------------------------
Schedule 2-C
JUNE 30, 2000 AND SEPTEMBER 30, 2000 FUTURE RESIDUAL FAILURE EVENT
Scheduled Amortization Balance
Scheduled Targeted
Monthly Tranche B
Expected Amortization Amortization
Payment Monthly Amount Balance
Period Date Collections 2C 2C
---------------------------------------------------------------------------------------------------------
35,000,000
---------------------------------------------------------------------------------------------------------
1 March 17, 2000 1,805,360 1,066,667 33,933,333
---------------------------------------------------------------------------------------------------------
2 April 17, 2000 1,750,887 1,066,667 32,866,667
---------------------------------------------------------------------------------------------------------
3 May 17, 2000 1,669,232 1,016,667 31,850,000
---------------------------------------------------------------------------------------------------------
4 June 17, 2000 1,590,399 750,000 31,100,000
---------------------------------------------------------------------------------------------------------
5 July 17, 2000 6,798,387 2,085,701 29,014,299
---------------------------------------------------------------------------------------------------------
6 August 17, 2000 2,140,468 896,872 28,117,428
---------------------------------------------------------------------------------------------------------
7 September 17, 2000 2,137,610 898,404 27,219,024
---------------------------------------------------------------------------------------------------------
8 October 17, 2000 2,985,423 1,395,181 25,823,844
---------------------------------------------------------------------------------------------------------
9 November 17, 2000 2,752,102 1,300,000 24,523,843
---------------------------------------------------------------------------------------------------------
10 December 17, 2000 2,756,036 1,305,331 23,218,513
---------------------------------------------------------------------------------------------------------
11 January 17, 2001 2,760,348 1,310,840 21,907,672
---------------------------------------------------------------------------------------------------------
12 February 17, 2001 2,746,288 1,244,492 20,663,180
---------------------------------------------------------------------------------------------------------
13 March 17, 2001 2,757,982 1,252,436 19,410,744
---------------------------------------------------------------------------------------------------------
14 April 17, 2001 2,771,605 1,261,178 18,149,566
---------------------------------------------------------------------------------------------------------
15 May 17, 2001 2,751,403 1,256,417 16,893,149
---------------------------------------------------------------------------------------------------------
16 June 17, 2001 2,730,292 1,251,277 15,641,873
---------------------------------------------------------------------------------------------------------
17 July 17, 2001 2,707,797 1,245,567 14,396,305
---------------------------------------------------------------------------------------------------------
18 August 17, 2001 2,683,991 1,239,315 13,156,991
---------------------------------------------------------------------------------------------------------
19 September 17, 2001 2,658,943 1,232,545 11,924,445
---------------------------------------------------------------------------------------------------------
20 October 17, 2001 2,650,752 1,232,498 10,691,948
---------------------------------------------------------------------------------------------------------
21 November 17, 2001 2,622,795 1,224,543 9,467,404
---------------------------------------------------------------------------------------------------------
22 December 17, 2001 2,593,987 1,216,223 8,251,181
---------------------------------------------------------------------------------------------------------
23 January 17, 2002 2,563,197 1,207,084 7,044,098
---------------------------------------------------------------------------------------------------------
24 February 17, 2002 2,531,624 1,197,602 5,846,496
---------------------------------------------------------------------------------------------------------
25 NA NA 0
---------------------------------------------------------------------------------------------------------
Schedule 2-D
SEPTEMBER 30, 2000 FUTURE RESIDUAL FAILURE EVENT
Scheduled Amortization Balance
Scheduled Targeted
Monthly Tranche B
Expected Amortization Amortization
Payment Monthly Amount Balance
Period Date Collections 2D 2D
-----------------------------------------------------------------------------------------------------------
35,000,000
-----------------------------------------------------------------------------------------------------------
1 March 17, 2000 1,805,360 1,066,667 33,933,333
-----------------------------------------------------------------------------------------------------------
2 April 17, 2000 1,750,887 1,066,667 32,866,667
-----------------------------------------------------------------------------------------------------------
3 May 17, 2000 1,669,232 1,016,667 31,850,000
-----------------------------------------------------------------------------------------------------------
4 June 17, 2000 1,590,399 750,000 31,100,000
-----------------------------------------------------------------------------------------------------------
5 July 17, 2000 6,798,387 2,000,000 29,100,000
-----------------------------------------------------------------------------------------------------------
6 August 17, 2000 2,140,468 811,171 28,288,829
-----------------------------------------------------------------------------------------------------------
7 September 17, 2000 2,137,610 812,703 27,476,126
-----------------------------------------------------------------------------------------------------------
8 October 17, 2000 2,985,423 1,271,760 26,204,366
-----------------------------------------------------------------------------------------------------------
9 November 17, 2000 2,752,102 1,176,579 25,027,787
-----------------------------------------------------------------------------------------------------------
10 December 17, 2000 2,756,036 1,181,910 23,845,877
-----------------------------------------------------------------------------------------------------------
11 January 17, 2001 2,760,348 1,187,420 22,658,457
-----------------------------------------------------------------------------------------------------------
12 February 17, 2001 2,746,288 1,121,071 21,537,386
-----------------------------------------------------------------------------------------------------------
13 March 17, 2001 2,757,982 1,129,016 20,408,370
-----------------------------------------------------------------------------------------------------------
14 April 17, 2001 2,771,605 1,137,757 19,270,613
-----------------------------------------------------------------------------------------------------------
15 May 17, 2001 2,751,403 1,132,996 18,137,618
-----------------------------------------------------------------------------------------------------------
16 June 17, 2001 2,730,292 1,127,856 17,009,762
-----------------------------------------------------------------------------------------------------------
17 July 17, 2001 2,707,797 1,122,146 15,887,615
-----------------------------------------------------------------------------------------------------------
18 August 17, 2001 2,683,991 1,115,894 14,771,721
-----------------------------------------------------------------------------------------------------------
19 September 17, 2001 2,658,943 1,109,125 13,662,597
-----------------------------------------------------------------------------------------------------------
20 October 17, 2001 2,650,752 1,109,077 12,553,520
-----------------------------------------------------------------------------------------------------------
21 November 17, 2001 2,622,795 1,101,123 11,452,397
-----------------------------------------------------------------------------------------------------------
22 December 17, 2001 2,593,987 1,092,802 10,359,595
-----------------------------------------------------------------------------------------------------------
23 January 17, 2002 2,563,197 1,083,663 9,275,932
-----------------------------------------------------------------------------------------------------------
24 February 17, 2002 2,531,624 1,074,181 8,201,751
-----------------------------------------------------------------------------------------------------------
25 NA NA 0
-----------------------------------------------------------------------------------------------------------
Schedule 3
FILING JURISDICTIONS
--------------------
Aames Capital Corporation
-------------------------
State of California
Aames Funding Corporation
-------------------------
State of California
State of New York
New York County
Schedule 4
RELEVANT STATES
------------------------------------------------------------------------------
POSTAL CODE STATE
==============================================================================
AK ARKANSAS
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AR ARKANSAS
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AZ ARIZONA
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CA CALIFORNIA
------------------------------------------------------------------------------
CO COLORADO
------------------------------------------------------------------------------
CT CONNECTICUT
------------------------------------------------------------------------------
DC DISTRICT OF COLUMBIA
------------------------------------------------------------------------------
DE DELAWARE
------------------------------------------------------------------------------
FL FLORIDA
------------------------------------------------------------------------------
GA GEORGIA
------------------------------------------------------------------------------
HI HAWAII
------------------------------------------------------------------------------
IA IOWA
------------------------------------------------------------------------------
ID IDAHO
------------------------------------------------------------------------------
IL ILLINOIS
------------------------------------------------------------------------------
IN INDIANA
------------------------------------------------------------------------------
KS KANSAS
------------------------------------------------------------------------------
KY KENTUCKY
------------------------------------------------------------------------------
LA LOUISIANA
------------------------------------------------------------------------------
MA MASSACHUSETTS
------------------------------------------------------------------------------
MD MARYLAND
------------------------------------------------------------------------------
ME MAINE
------------------------------------------------------------------------------
MI MICHIGAN
------------------------------------------------------------------------------
MN MINNESOTA
------------------------------------------------------------------------------
MO MISSOURI
------------------------------------------------------------------------------
MS MISSISSIPPI
------------------------------------------------------------------------------
MT MONTANA
------------------------------------------------------------------------------
NC NORTH CAROLINA
------------------------------------------------------------------------------
ND NORTH DAKOTA
------------------------------------------------------------------------------
NE NEBRASKA
------------------------------------------------------------------------------
NH NEW HAMPSHIRE
------------------------------------------------------------------------------
NJ NEW JERSEY
------------------------------------------------------------------------------
NM NEW MEXICO
------------------------------------------------------------------------------
NV NEVADA
------------------------------------------------------------------------------
NY NEW YORK
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OH OHIO
------------------------------------------------------------------------------
OK OKLAHOMA
------------------------------------------------------------------------------
OR OREGON
------------------------------------------------------------------------------
PA PENNSYLVANIA
------------------------------------------------------------------------------
RI RHODE ISLAND
------------------------------------------------------------------------------
SC SOUTH CAROLINA
------------------------------------------------------------------------------
SD SOUTH DAKOTA
------------------------------------------------------------------------------
TN TENNESSEE
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TX TEXAS
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UT UTAH
------------------------------------------------------------------------------
VA VIRGINIA
------------------------------------------------------------------------------
VT VERMONT
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WA WASHINGTON
------------------------------------------------------------------------------
WI WISCONSIN
------------------------------------------------------------------------------
WV WEST VIRGINIA
------------------------------------------------------------------------------
WY WYOMING
------------------------------------------------------------------------------
-2-
Schedule 5
SUBSIDIARIES OF AAMES FINANCIAL CORPORATION
------------------------------------------------------------------------------
Name of Subsidiary Jurisdiction of Incorporation
------------------------------------------------------------------------------
Aames Capital Acceptance Corp. Delaware
------------------------------------------------------------------------------
Aames Capital Corporation California
------------------------------------------------------------------------------
Aames Funding Corporation California
------------------------------------------------------------------------------
One Stop Mortgage, Inc. Wyoming
------------------------------------------------------------------------------
Oxford Aviation Corporation, Inc. California
------------------------------------------------------------------------------
Rossmore Financial Insurance Services, Inc. California
------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Insurance Services Nevada
------------------------------------------------------------------------------
Windsor Management Co.
------------------------------------------------------------------------------
Schedule 6
[INTENTIONALLY OMITTED]
Schedule 7
PLEDGED SECURITIES
(1) Aames Mortgage Trust 1995-A, Mortgage Pass-Through Certificate, Series
1995-A, Class R
(2) Aames Mortgage Trust 1995-B, Mortgage Pass-Through Certificate Series
1995-B, Class R
(3) Aames Mortgage Trust 1995-C, Mortgage Pass-Through Certificate Series
1995-C, Class R
(4) Aames Mortgage Trust 1995-D, Mortgage Pass-Through Certificate Series
1995-D, Class R
(5) Aames Mortgage Trust 1996-A, Mortgage Pass-Through Certificate Series
1996-A, Class R
(6) Aames Mortgage Trust 1996-B, Mortgage Pass-Through Certificate Series
1996-B, Class R
(7) Aames Mortgage Trust 1996-C, Mortgage Pass-Through Certificate Series
1996-C, Class R
(8) Aames Mortgage Trust 1997-B, Mortgage Pass-Through Certificate Series
1997-B, Class C
(9) Aames Mortgage Trust 1997-B, Mortgage Pass-Through Certificate Series
1997-B, Class R-IA
(10) Aames Mortgage Trust 1997-B, Mortgage Pass-Through Certificate Series
1997-B, Class R-IF
(11) Aames Mortgage Trust 1997-B, Mortgage Pass-Through Certificate Series
1997-B, Class R-II
(12) Aames Mortgage Trust 1997-B, Mortgage Pass-Through Certificate Series
1997-B, Class R-III
(13) Aames Mortgage Trust 1997-C, Mortgage Pass-Through Certificate Series
1997-C, Class C
(14) Aames Mortgage Trust 1997-C, Mortgage Pass-Through Certificate Series
1997-C, Class R-IA
(15) Aames Mortgage Trust 1997-C, Mortgage Pass-Through Certificate Series
1997-C, Class R-IF
(16) Aames Mortgage Trust 1997-C, Mortgage Pass-Through Certificate Series
1997-C, Class R-II
(17) Aames Mortgage Trust 1997-C, Mortgage Pass-Through Certificate Series
1997-C, Class R-III
-2-
Schedule 8
GOVERNING AGREEMENTS
(1) Aames Home Loan, Pooling and Servicing Agreement, Series 1992-2, December
10, 1992
(2) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1993-A,
December 1, 1993
(3) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1994-A,
March 1, 1994
(4) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1994-B,
June 1, 1994
(5) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1994-C,
September 1, 1994
(6) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1994-D,
December 1, 1994
(7) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1995-A,
March 1, 1995
(8) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1995-B,
May 12, 1995
(9) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1995-C,
September 1, 1995
(10) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1995-D,
December 1, 1995
(11) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1996-A,
March 1, 1996
(12) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1996-B,
June 1, 1996
(13) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1996-C,
September 1, 1996
(14) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1997-A,
March 1, 1997
(15) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1997-B,
June 1, 1997
(16) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1997-C,
September 1, 1997
(17) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1997-D,
December 1, 1997
(18) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1998-A,
March 1, 1998
(19) Aames Capital Acceptance Corp., Pooling and Servicing Agreement, Series
1998-B, June 1, 1998
(20) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1998-C,
September 1, 1998
(21) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1999-1,
July 1, 1999
(22) Aames Capital Corporation, Pooling and Servicing Agreement, Series 1999-2,
November 1, 1999
-2-
PROMISSORY NOTE
$200,000,000
February 10, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, AAMES CAPITAL CORPORATION, a California
corporation and AAMES FUNDING CORPORATION, a California corporation (each a
"Borrower", collectively, the "Borrowers"), hereby promise to pay to the order
of GREENWICH CAPITAL FINANCIAL PRODUCTS, INC. (the "Lender"), at the principal
office of the Lender at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in
lawful money of the United States, and in immediately available funds, the
principal sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Advances made
by the Lender to the Borrowers under the Warehouse Agreement), on the dates and
in the principal amounts provided in the Warehouse 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 Warehouse Agreement.
The date, amount and interest rate of each Advance made by the
Lender to the Borrowers, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of this Note, endorsed by the Lender on the schedule attached hereto or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrowers to
make a payment when due of any amount owing under the Warehouse Agreement or
hereunder in respect of the Advances made by the Lender.
This Note is the Note referred to in the Warehouse Loan and Security
Agreement dated as of February 10, 2000 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Warehouse Agreement") between the
Borrowers, 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 Warehouse Agreement.
The Borrowers agree 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 Borrowers hereby
acknowledge, admit and agree that the Borrowers' obligations under this Note are
recourse obligations of the Borrowers to which the Borrowers pledge their full
faith and credit.
The Borrowers, 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 Borrowers or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrowers, even if the Borrowers are not a party to such
agreement; provided, however, that the Lender and the Borrowers, by written
agreement between them, may affect the liability of the Borrowers.
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
Warehouse 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 Borrowers hereby submit 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.
Each Borrower hereby acknowledges and agrees that such Borrower
shall be jointly and severally liable for all obligations and indemnities of the
Borrowers hereunder.
-2-
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 of the New York General Obligations Law, which by
its terms applies to this Note) whose laws the Borrowers expressly elect to
apply to this Note. The Borrowers agree that any action or proceeding brought to
enforce or arising out of this Note may be commenced in the Supreme Court of the
State of New York, Borough of Manhattan, or in the District Court of the United
States for the Southern District of New York.
AAMES CAPITAL CORPORATION
By: ___________________________________________
Name:
Title:
AAMES FUNDING CORPORATION
By: ___________________________________________
Name:
Title:
-3-
SCHEDULE OF LOANS
This Note evidences Advances made under the within-described
Warehouse Agreement to the Borrowers, on the dates, in the principal amounts and
bearing interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
-------------------------------------------------------------------------------
Principal Amount Paid Unpaid Notation
Date Made Amount of Loan or Prepaid Principal Amount Made by
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EXHIBIT B
[INTENTIONALLY OMITTED]
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO THE BORROWERS]
(date)
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to Aames Capital
Corporation, a California corporation, and Aames Funding Corporation, a
California corporation (each a "Borrower", collectively, the "Borrowers"), with
respect to certain matters in connection with that certain Warehouse Loan and
Security Agreement, dated as of February 10, 2000 (the "Loan and Security
Agreement"), by and between the Borrowers and Greenwich Capital Financial
Products, Inc. (the "Lender"), being executed contemporaneously with a
Promissory Note dated February 10, 2000 from the Borrowers to the Lender (the
"Note"), an Custodial Agreement, dated as of February 10, 2000 (the "Custodial
Agreement"), by and among the Borrowers, Bankers Trust Company (the
"Custodian"), and the Lender. Capitalized terms not otherwise defined herein
have the meanings set forth in the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Loan and Security Agreement;
2. the Note;
3. the Custodial Agreement;
4. the Guaranty executed by Aames Financial Corporation;
6. unfiled copies of the financing statements listed on Schedule 1
(collectively, the "Financing Statements") naming each Borrower as
Debtor and the Lender as Secured Party and describing the
Collateral (as defined in the Loan and Security Agreement) as to
which security interests may be perfected by filing under the
Uniform Commercial Code of the States listed on Schedule 1 (the
"Filing Collateral"), which I understand will be filed in the
filing offices listed on Schedule 1 (the "Filing Offices");
7. the reports listed on Schedule 2 as to Uniform Commercial Code
financing statements (collectively, the "UCC Search Report"); and
8. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Borrowers contained
in the Loan and Security Agreement. [We] [I] have assumed the authenticity of
all documents submitted to me as originals, the genuineness of all signatures,
the legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is [our] [my] opinion that:
1. Each Borrower and the Guarantor are each corporations duly
organized, validly existing and in good standing under the laws of
the state of its organization and is qualified to transact business
in, duly licensed and in the case of each Borrower is in good
standing under, the laws of each state in which any Mortgaged
Property is located to the extent necessary to ensure the
enforceability of each Mortgage Loan and the servicing of each
Mortgage Loan pursuant to the Loan and Security Agreement.
2. The Borrowers and the Guarantor each have the corporate power to
engage in the transactions contemplated by the Loan and Security
Agreement, the Note, the Guaranty and the Custodial Agreement and
all requisite corporate power, authority and legal right to execute
and deliver the Loan and Security Agreement, the Note, the Guaranty
and the Custodial Agreement and observe the terms and conditions of
such instruments. The Borrowers have all requisite corporate power
to borrow under the Loan and Security Agreement and to grant a
security interest in the Collateral pursuant to the Loan and
Security Agreement.
3. The execution, delivery and performance by the Borrowers of the Loan
and Security Agreement, the Note, and the Custodial Agreement, and
the borrowings by the Borrowers and the pledge of the Collateral
under the Loan and Security Agreement and the execution of the
Guaranty by the Guarantor have been duly authorized by all necessary
corporate action on the part of the Borrowers. Each of the Loan and
Security Agreement, the Note, the Guaranty and the Custodial
Agreement have been executed and delivered by the Borrowers or the
Guarantor, as the case may be, and are legal, valid and binding
agreements enforceable in accordance with their respective terms
against the Borrowers or the Guarantor, subject to bankruptcy laws
and other similar laws of general application affecting rights of
creditors and subject to the application of the rules of equity,
including those respecting the availability of specific performance,
none of which will materially interfere with the realization of the
benefits provided thereunder or with the Lender's security interest
in the Mortgage Loans.
4. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory
body is required on the part of the Borrowers for the execution,
delivery or performance by the Borrowers of the Loan and Security
Agreement, the Note and the Custodial Agreement or for the
borrowings by the Borrowers under the Loan and Security Agreement or
the granting of a security interest to the Lender in the Collateral,
pursuant to the Loan and Security Agreement.
-2-
5. The execution, delivery and performance by each Borrower or the
Guarantor of, and the consummation of the transactions contemplated
by, the Loan and Security Agreement, the Note, the Guaranty and the
Custodial Agreement do not and will not (a) violate any provision of
such Borrower's or the Guarantor's charter or by-laws, (b) violate
any applicable law, rule or regulation, (c) violate any order, writ,
injunction or decree of any court or governmental authority or
agency or any arbitral award applicable to such Borrower or the
Guarantor of which I have knowledge (after due inquiry) or (d)
result in a breach of, constitute a default under, require any
consent under, or result in the acceleration or required prepayment
of any indebtedness pursuant to the terms of, any agreement or
instrument of which I have knowledge (after due inquiry) to which
such Borrower or the Guarantor is a party or by which it is bound or
to which it is subject, or (except for the Liens created pursuant to
the Loan and Security Agreement) result in the creation or
imposition of any Lien upon any Property of such Borrower pursuant
to the terms of any such agreement or instrument.
6. There is no action, suit, proceeding or investigation pending or, to
the best of [our] [my] knowledge, threatened against any Loan Party
which, in [our] [my] judgment, either in any one instance or in the
aggregate, would be reasonably likely to result in any material
adverse change in the properties, business or financial condition,
or prospects of the Borrowers or the Guarantor or in any material
impairment of the right or ability of such Loan Party to carry on
its business substantially as now conducted or in any material
liability on the part of the Borrowers or which would draw into
question the validity of the Loan and Security Agreement, the Note,
the Guaranty, the Custodial Agreement or the Mortgage Loans or of
any action taken or to be taken in connection with the transactions
contemplated thereby, or which would be reasonably likely to impair
materially the ability of such Loan Party to perform under the terms
of the Loan and Security Agreement, the Note, the Guaranty, the
Custodial Agreement or the Mortgage Loans.
7. The Loan and Security Agreement is effective to create, in favor of
the Lender, a valid security interest under the Uniform Commercial
Code in all of the right, title and interest of the Borrowers in, to
and under the Collateral as collateral security for the payment of
the Secured Obligations (as defined in the Loan and Security
Agreement), except that (a) such security interests will continue in
Collateral after its sale, exchange or other disposition only to the
extent provided in Section 9-306 of the Uniform Commercial Code, (b)
the security interests in Collateral in which the Borrowers acquires
rights after the commencement of a case under the Bankruptcy Code in
respect of the Borrowers may be limited by Section 552 of the
Bankruptcy Code.
8. When the Mortgage Notes are delivered to the Custodian, endorsed in
blank by a duly authorized officer of the applicable Borrower, the
security interest referred to in paragraph 7 above in the Mortgage
Notes will constitute a fully perfected first priority security
interest in all right, title and interest of such Borrower therein,
in
-3-
the Mortgage Loan evidenced thereby and in such Borrower's interest
in the related Mortgaged Property.
9. (a) Upon the filing of financing statements on Form UCC-1 naming the
Lender as "Secured Party" and each Borrower as "Debtor", and
describing the Collateral, in the jurisdictions and recording
offices listed on Schedule 1 attached hereto, the security interests
referred to in paragraph 8 above will constitute fully perfected
security interests under the Uniform Commercial Code in all right,
title and interest of such Borrower in, to and under such
Collateral, which can be perfected by filing under the Uniform
Commercial Code.
(b) The UCC Search Report sets forth the proper filing offices and
the proper debtors necessary to identify those Persons who have on
file in the jurisdictions listed on Schedule 1 financing statements
covering the Filing Collateral as of the dates and times specified
on Schedule 2. Except for the matters listed on Schedule 2, the UCC
Search Report identifies no Person who has filed in any Filing
Office a financing statement describing the Filing Collateral prior
to the effective dates of the UCC Search Report.
10. The Assignments of Mortgage are in recordable form, except for the
insertion of the name of the assignee, and upon the name of the
assignee being inserted, are acceptable for recording under the laws
of the state where each related Mortgaged Property is located.
11. Each Borrower is duly registered as a [____________] in each state
in which Mortgage Loans were originated to the extent such
registration is required by applicable law, and has obtained all
other licenses and governmental approvals in each jurisdiction to
the extent that the failure to obtain such licenses and approvals
would render any Mortgage Loan unenforceable or would materially and
adversely affect the ability of the Borrowers to perform any of its
obligations under, or the enforceability of, the Loan Documents.
12. Assuming that all other elements necessary to render a Mortgage Loan
legal, valid, binding and enforceable were present in connection
with the execution, delivery and performance of each Mortgage Loan
(including completion of the entire Mortgage Loan fully, accurately
and in compliance with all applicable laws, rules and regulations)
and assuming further that no action was taken in connection with the
execution, delivery and performance of each Mortgage Loan (including
in connection with the sale of the related Mortgaged Property) that
would give rise to a defense to the legality, validity, binding
effect and enforceability of such Mortgage Loan, nothing in the
forms of such Mortgage Loans, as attached hereto as Exhibit A, would
render such Mortgage Loans other than legal, valid, binding and
enforceable.
13. Assuming their validity, binding effect and enforceability in all
other respects (including completion of the entire Mortgage Loan
fully, accurately and in compliance with all applicable laws, rules
and regulations), the forms of
-4-
Mortgage Loans attached hereto as Exhibit A are in sufficient
compliance with ________ law and Federal consumer protection laws so
as not to be rendered void or voidable at the election of the
Mortgagor thereunder.
Very truly yours,
-5-
EXHIBIT D
FORM OF NOTICE OF BORROWING AND PLEDGE
[insert date]
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇
Notice of Borrowing and Pledge No.:_____________________
Ladies/Gentlemen:
Reference is made to the Warehouse Loan and Security Agreement,
dated as of February 10, 2000 (the "Warehouse Agreement"; capitalized terms used
but not otherwise defined herein shall have the meaning given them in the
Warehouse Agreement), between Aames Capital Corporation, as a Borrower, Aames
Funding Corporation, as a Borrower (each a the "Borrower") and Greenwich Capital
Financial Products, Inc. (the "Lender").
In accordance with Section 2.03(a), 2.03(b) or 2.03(d) of the
Warehouse Agreement, the undersigned Borrower hereby requests that you, the
Lender, make Advances to us in connection with our delivery of [Mortgage Loans]
[Pledged Securities] [insert requested Funding Date, which 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 (along with all
previous pledges defined as Eligible Mortgage Loans for such date) set forth on
the Mortgage Loan Schedule attached hereto] [Pledged Securities 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 Mortgage Loans, solely with respect to 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);
(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; and
(d) the Borrower has satisfied all conditions precedent in Section
5.02 of the Warehouse Agreement and all other requirements of the
Warehouse Agreement.
[The undersigned duly authorized officer of Borrower further
represents and warrants that (1) the documents constituting the Custodial File
(as defined in the Custodial Agreement) with respect to the Mortgage Loans that
are the subject of the Advance requested herein and more specifically identified
on the mortgage loan schedule or computer readable magnetic transmission
delivered to both the Lender and the Custodian in connection herewith (the
"Receipted Mortgage Loans") have been or are hereby submitted to Custodian and
such Required Documents are to be held by the Custodian subject to Lender's
first priority security interest thereon, (2) all other documents related to
such Receipted Mortgage Loans (including, but not limited to, mortgages,
insurance policies, loan applications and appraisals) have been or will be
created and held by Borrower in trust for Lender, (3) all documents related to
such Receipted Mortgage Loans withdrawn from Custodian shall be held in trust by
Borrower for Lender, and Borrower will not attempt to pledge, hypothecate or
otherwise transfer such Receipted Mortgage Loans to any other party until the
Advance to which such Receipted Mortgage Loans are related has been paid in full
by Borrower and (4) Borrower has granted a first priority perfected security
interest in and lien on the Receipted Mortgage Loans.
Borrower hereby represents and warrants that (x) the Receipted Mortgage Loans
have an unpaid principal balance as of the date hereof of $__________ and (y)
the number of Receipted Mortgage Loans is ______.]
Very truly yours,
By:_______________________
Authorized Officer
-2-
[Schedule I
to Notice of Borrowing and Pledge
[COLLATERAL PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[attach Mortgage Loan Schedule]]
EXHIBIT E
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY BORROWERS]
EXHIBIT F
REQUIRED FIELDS FOR SERVICING TRANSMISSION
[TO BE PROVIDED BY LENDER]
EXHIBIT G
REQUIRED FIELDS FOR MORTGAGE LOAN DATA TRANSMISSION
[TO BE PROVIDED BY LENDER]
EXHIBIT H
FORM OF BORROWING BASE CERTIFICATE
[TO BE PROVIDED BY LENDER ]
EXHIBIT I
FORM OF CONFIDENTIALITY
AGREEMENT
In connection with your consideration of a possible or actual
acquisition of a participating interest (the "Transaction") in an advance, note
or commitment of Greenwich Capital Financial Products, Inc. ("Greenwich")
pursuant to an Warehouse Loan and Security Agreement between Greenwich and Aames
Capital Corporation (the "Borrower"") dated February 10, 2000, you have
requested the right to review certain non-public information regarding the
Borrower that is in the possession of Greenwich. In consideration of, and as a
condition to, furnishing you with such information and any other information
(whether communicated in writing or communicated orally) delivered to you by
Greenwich or its affiliates, directors, officers, employees, advisors, agents or
"controlling persons" (within the meaning of the Securities Exchange Act of
1934, as amended (the "1934 Act")) (such affiliates and other persons being
herein referred to collectively as Greenwich "Representatives") in connection
with the consideration of a Transaction (such information being herein referred
to as "Evaluation Material"), Greenwich hereby requests your agreement as
follows:
11. The Evaluation Material will be used solely for the purpose of
evaluating a possible Transaction with Greenwich involving you or
your affiliates, and unless and until you have completed such
Transaction pursuant to a definitive agreement between you or any
such affiliate and Greenwich, such Evaluation Material will be kept
strictly confidential by you and your affiliates, directors,
officers, employees, advisors, agents or controlling persons (such
affiliates and other persons being herein referred to collectively
as "your Representatives"), except that the Evaluation Material or
portions thereof may be disclosed to those of your Representatives
who need to know such information for the purpose of evaluating a
possible Transaction with Greenwich (it being understood that prior
to such disclosure your Representatives will be informed of the
confidential nature of the Evaluation Material and shall agree to be
bound by this Agreement). You agree to be responsible for any breach
of this Agreement by your Representatives.
12. The term "Evaluation Material" does not include any information
which (i) at the time of disclosure or thereafter is generally known
by the public (other than as a result of its disclosure by you or
your Representatives) or (ii) was or becomes available to you on a
nonconfidential basis from a person not otherwise bound by a
confidential agreement with Greenwich or its Representatives or is
not otherwise prohibited from transmitting the information to you.
As used in this Agreement, the term "person" shall be broadly
interpreted to include, without limitation, any corporation,
company, joint venture, partnership or individual.
13. In the event that you receive a request to disclose all or any part
of the information contained in the Evaluation Material under the
terms of a valid and effective subpoena or order issued by a court
of competent jurisdiction, you agree to (i) immediately notify
Greenwich and the Borrower of the existence, terms and
circumstances surrounding such a request, (ii) consult with the
Borrower on the advisability of taking legally available steps to
resist or narrow such request, and (iii) if disclosure of such
information is required, exercise your best efforts to obtain an
order or other reliable assurance that confidential treatment will
be accorded to such information.
14. Unless otherwise required by law in the opinion of your counsel,
neither you nor your Representative will, without our prior written
consent, disclose to any person the fact that the Evaluation
Material has been made available to you.
15. You agree not to initiate or maintain contact (except for those
contacts made in the ordinary course of business) with any officer,
director or employee of the Borrower regarding the business,
operations, prospects or finances of the Borrower or the employment
of such officer, director or employee, except with the express
written permission of the Borrower.
16. You understand and acknowledge that the Borrower is not making any
representation or warranty, express or implied, as to the accuracy
or completeness of the Evaluation Material or any other information
provided to you by Greenwich. The Borrower, its respective
affiliates or Representatives, nor any of its respective officers,
directors, employees, agents or controlling persons (within the
meaning of the ▇▇▇▇ ▇▇▇) shall have any liability to you or any
other person (including, without limitation, any of your
Representatives) resulting from your use of the Evaluation Material.
17. You agree that neither Greenwich or the Borrower has not granted you
any license, copyright, or similar right with respect to any of the
Evaluation Material or any other information provided to you by
Greenwich.
18. If you determine that you do not wish to proceed with the
Transaction, you will promptly deliver to Greenwich all of the
Evaluation Material, including all copies and reproductions thereof
in your possession or in the possession of any of your
Representatives.
19. Without prejudice to the rights and remedies otherwise available to
the Borrower, the Borrower shall be entitled to equitable relief by
way of injunction if you or any of your Representatives breach or
threaten to breach any of the provisions of this Agreement. You
agree to waive, and to cause your Representatives to waive, any
requirement for the securing or posting of any bond in connection
with such remedy.
20. The validity and interpretation of this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the
State of New York applicable to agreements made and to be fully
performed therein (excluding the conflicts of law rules). You submit
to the jurisdiction of any court of the State of New York or the
United States District Court for the Southern District of the State
-2-
of New York for the purpose of any suit, action, or other proceeding
arising out of this Agreement.
21. The benefits of this Agreement shall inure to the respective
successors and assigns of the parties hereto, and the obligations
and liabilities assumed in this Agreement by the parties hereto
shall be binding upon the respective successors and assigns.
22. If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) that any term or
provision hereof is invalid or unenforceable, (i) the remaining
terms and provisions hereof shall be unimpaired and shall remain in
full force and effect and (ii) the invalid or unenforceable
provision or term shall be replaced by a term or provision that is
valid and enforceable and that comes closest to expressing the
intention of such invalid or unenforceable term or provision.
23. This Agreement embodies the entire agreement and understanding of
the parties hereto and supersedes any and all prior agreements,
arrangements and understandings relating to the matters provided for
herein. No alteration, waiver, amendments, or change or supplement
hereto shall be binding or effective unless the same is set forth in
writing by a duly authorized representative of each party and may be
modified or waived only by a separate letter executed by the
Borrower and you expressly so modifying or waiving such Agreement.
24. For the convenience of the parties, any number of counterparts of
this Agreement may be executed by the parties hereto. Each such
counterpart shall be, and shall be deemed to be, an original
instrument, but all such counterparts taken together shall
constitute one and the same Agreement.
-3-
Kindly execute and return one copy of this letter which will
constitute our Agreement with respect to the subject matter of this letter.
By:____________________________________
Greenwich Capital Financial
Products, Inc.
Confirmed and agreed to this _____ day of _____________, 199_.
By:_____________________
Name
Title:
-4-
EXHIBIT J
FORM OF SUBSERVICER INSTRUCTION LETTER
__________ __, 2000
___________________, as [Subservicer]
___________________
___________________
Attention: _______________
Re: Warehouse Loan and Security Agreement, dated as of
February 10, 2000, by and between Greenwich Capital
Financial Products, Inc., ("Lender"), Aames Capital
Corporation, as a Borrower, and Aames Funding
Corporation, as a Borrower (each a "Borrower")
Ladies and Gentlemen:
Pursuant to the Warehouse Loan and Security Agreement, dated as of
February 10, 2000 (the "Loan and Security Agreement"), between the Lender and
the Borrowers, you are hereby notified that: (i) the undersigned Borrower has
pledged to the Lender the assets described on Schedule 1 hereto (the "Eligible
Assets"), (ii) each of the Eligible Assets is subject to a security interest in
favor of the Lender, and (iii) effective as of the delivery of this letter to
the Subservicer, unless otherwise notified by the Lender in writing, any
payments or distributions made with respect to such Eligible Assets shall be
remitted immediately by the [Subservicer] in accordance with the Lender's wiring
instructions provided below:
Account No.: [____________________]
ABA No.: [____________________]
[____________________]
Reference: [____________________]
The Subservicer also acknowledges its consent to terminate such
Servicing Agreement upon notification by the Lender of an occurrence of an Event
of Default.
Please acknowledge receipt of this instruction letter by signing in the
signature block below and forwarding an executed copy to the Lender promptly
upon receipt. Any notices to the Lender should be delivered to the following
address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇
▇▇▇▇▇▇▇▇▇▇, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
Very truly yours,
[BORROWER]
By:____________________________________
Name:
Title:
ACKNOWLEDGED:
_______________________________, as [Subservicer]
By:____________________________
Name:
Title:
Telephone:
Facsimile:
-2-
EXHIBIT K
FORM OF TRUSTEE INSTRUCTION LETTER
__________ __, 2000
[_______________], as Trustee
_________________
_________________
Attention: _______________
Re: Warehouse Loan and Security Agreement, dated as of
February __, 2000, by and between Greenwich Capital
Financial Products, Inc., as Lender (the "Lender"),
Aames Capital Corporation, as Borrower, and Aames
Funding Corporation, as Borrower, (each a "Borrower",
collectively, the "Borrowers")
Ladies and Gentlemen:
Pursuant to Section 4.01(c) of the Warehouse Loan and Security
Agreement, dated as of February __, 2000 (the "Agreement"), between the Lender
and the Borrowers (you are hereby notified that: (i) the undersigned Borrower
has pledged to the Lender the Pledged Securities described on Schedule 1 hereto
(the "Pledged Securities"), (ii) each of the Pledged Securities is subject to a
security interest in favor of the Lender and (iii) unless otherwise notified by
the Lender in writing, any payments or distributions made with respect to such
Pledged Securities should be remitted immediately by the Trustee directly to the
Lender, in accordance with the following wire instructions:
Chase Manhattan Bank
ABA #▇▇▇▇▇▇▇▇▇
Acct Name: Greenwich Capital Financial Products, Inc.
A/C #: 140095961
Attn: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇
All remittance reports, statements and notices shall be sent to the
attention of:
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇
D-1
Please acknowledge receipt of this instruction letter by signing in
the signature block below and forwarding an executed copy to the Lender promptly
upon receipt.
Very truly yours,
AAMES CAPITAL CORPORATION
By:
Name:
Title:
ACKNOWLEDGED:
------------
_____________________________, as Trustee
By:
Name:
Title:
EXHIBIT L
FORM OF POWER OF ATTORNEY
The Borrowers hereby irrevocably constitute and appoint the Lender
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of the Borrowers and in the name of each Borrower or in its own
name, from time to time in the Lender's discretion, for the purpose of carrying
out the terms of that certain Warehouse Loan and Security Agreement, dated
February 10, 2000, among Aames Capital Corporation, as a Borrower, Aames Funding
Corporation, as a Borrower (collectively the "Borrowers"), and Greenwich Capital
Financial Products, Inc. (the "Lender") (the "Warehouse Agreement"), to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this Warehouse
Agreement, and, without limiting the generality of the foregoing, the Borrowers
hereby give the Lender the power and right, on behalf of the Borrowers, without
assent by, but with notice to, the Borrowers, if an Event of Default shall have
occurred and be continuing, to do the following:
(ii) in the name of the any Borrower or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys
due under any mortgage insurance or with respect to any other
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purpose of collecting any and all
such moneys due under any such mortgage insurance or with respect to
any other Collateral whenever payable;
(iii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
(iv) (A) to direct any party liable for any payment under any Collateral
to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B)
to ask or demand for, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (C) to sign
and endorse any invoices, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect
of any Collateral; (E) to defend any suit, action or proceeding
brought against either Borrower with respect to any Collateral; (F)
to settle, compromise or adjust any suit, action or proceeding
described in clause (E) above and, in connection therewith, to give
such discharges or releases as the Lender may deem appropriate; and
(G) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner thereof for
all purposes, and to do, at the Lender's option and the Borrowers'
expense, at any time, or from time to time, all acts and things
which the Lender deems necessary to protect, preserve or realize
upon the Collateral and
the Lender's Liens thereon and to effect the intent of this
Warehouse Agreement, all as fully and effectively as the Borrowers
might do.
The Borrowers hereby ratify all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
The Borrowers also authorize the Lender, at any time and from time
to time, to execute, in connection with the sale provided for in Section 4.07 of
the Warehouse Agreement and, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral.
The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrowers for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
AAMES CAPITAL CORPORATION
By:
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Name:
Title:
AAMES FUNDING CORPORATION
By:
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Name:
Title:
Accepted and Acknowledged,
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By:
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Name:
Title:
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