Greenwich Master Loan And Security Agreement

MASTER LOAN AND SECURITY AGREEMENT


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DATED AS OF FEBRUARY 10, 1999


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AAMES CAPITAL CORPORATION
AS 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..................................................16 Section 2. Advances, Note and Prepayments...................................................16 2.01 Advances.............................................................................16 2.02 Notes................................................................................17 2.03 Procedure for Borrowing..............................................................18 2.04 Limitation on Types of Advances; Illegality..........................................18 2.05 Repayment of Advances; Interest......................................................18 2.06 Mandatory Prepayments or Pledge......................................................19 2.07 Optional Prepayments.................................................................20 Requirements of Law........................................................................20 2.09 Extension of Termination Date........................................................21 2.10 Purpose of Advances..................................................................21 Section 3. Payments; Computations; Taxes; Commitment Fee....................................22 3.01 Payments.............................................................................22 3.02 Computations.........................................................................22 3.03 Commitment Fee.......................................................................22 Section 4. Collateral Security..............................................................22 4.01 Collateral; Security Interest........................................................22 4.02 Further Documentation................................................................23 4.03 Changes in Locations, Name, etc......................................................24 4.04 Lender's Appointment as Attorney-in-Fact.............................................24 4.05 Performance by Lender of Borrower's Obligations......................................25 4.06 Proceeds.............................................................................25 4.07 Remedies.............................................................................26 4.08 Limitation on Duties Regarding Presentation of Collateral............................26 4.09 Powers Coupled with an Interest......................................................27 4.10 Release of Security Interest.........................................................27 Section 5. Conditions Precedent..............................................................27 5.01 Initial Advance......................................................................27 5.02 Initial and Subsequent Advances....................................................29 Section 6. Representations and Warranties...................................................31 6.01 Existence..........................................................................31 6.02 Financial Condition................................................................31 6.03 Litigation...........................................................................31 6.04 No Breach..........................................................................32 6.05 Action.............................................................................32 6.06 Approvals............................................................................32 6.07 Margin Regulations.................................................................32 6.08 Taxes..............................................................................32 6.09 Investment Company Act.............................................................32 6.10 No Legal Bar.......................................................................33 6.11 No Default.........................................................................33 6.12 Collateral; Collateral Security....................................................33 6.13 Chief Executive Office.............................................................33 6.14 Location of Books and Records......................................................34 6.15 True and Complete Disclosure.......................................................34


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6.16 Tangible Net Worth; Liquidity......................................................34 6.17 ERISA..............................................................................34 6.18 Licenses...........................................................................34 6.19 Relevant States....................................................................34 6.20 True Sales.........................................................................34 6.21 No Burdensome Restrictions.........................................................35 6.22 Subsidiaries.......................................................................35 6.23 Origination and Acquisition of Mortgage Loans......................................35 6.24 No Adverse Selection...............................................................35 6.25 Borrower Solvent; Fraudulent Conveyance............................................35 6.26 Year 2000 Compliance...............................................................35 Section 7. Covenants of the Borrower........................................................36 7.01 Financial Statements...............................................................36 7.02 Litigation.........................................................................38 7.03 Existence, Etc.....................................................................38 7.04 Prohibition of Fundamental Changes.................................................39 7.05 Borrowing Base Deficiency..........................................................39 7.06 Notices............................................................................39 7.07 Servicing............................................................................40 7.08 Intentionally Omitted..............................................................40 7.09 Underwriting Guidelines............................................................40 7.10 Lines of Business..................................................................40 7.11 Transactions with Affiliates.........................................................40 7.12 Use of Proceeds....................................................................40 7.13 Limitation on Liens................................................................40 7.14 Limitation on Sale of Assets.......................................................41 7.15 Limitation on Distributions........................................................41 7.16 Maintenance of Liquidity...........................................................41 7.17 Maintenance of Tangible Net Worth..................................................41 7.18 Committed Warehouse Facilities and Working Capital Line of the Borrower............41 7.19 Restricted Payments..................................................................41 7.20 Servicing Transmission.............................................................41 7.21 No Amendment or Waiver.............................................................41 7.22 Maintenance of Property; Insurance...................................................42 7.23 Further Identification of Collateral.................................................42 7.24 Mortgage Loan Determined to be Defective.............................................42 7.25 Interest Rate Protection Agreements..................................................42 7.26 Year 2000 Compliance.................................................................42 7.27 Certificate of a Responsible Officer of the Borrower.................................43 Section 8. Events of Default................................................................43 Section 9. Remedies Upon Default............................................................45 Section 10. No Duty on Lender's Part.........................................................46 Section 11. Miscellaneous....................................................................46 11.01 Waiver.............................................................................46 11.02 Notices............................................................................46 11.03 Indemnification and Expenses.......................................................46 11.04 Amendments.........................................................................47 11.05 Successors and Assigns.............................................................48 11.06 Survival...........................................................................48 11.07 Captions...........................................................................48 11.08 Counterparts.......................................................................48 11.09 Loan Agreement Constitutes Security Agreement; Governing Law.......................48


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11.10 SUBMISSION TO JURISDICTION; WAIVERS................................................48 11.11 WAIVER OF JURY TRIAL...............................................................49 11.12 Acknowledgments....................................................................49 11.13 Hypothecation or Pledge of Collateral..............................................49 11.14 Assignments; Participations........................................................50 11.15 Servicing..........................................................................50 11.16 Periodic Due Diligence Review......................................................52 11.17 Set-Off............................................................................52 11.18 Intent.............................................................................53


5 SCHEDULES


SCHEDULE 1 Representations and Warranties re: Mortgage Loans


SCHEDULE 2 Filing Jurisdictions and Offices


SCHEDULE 3 Relevant States


SCHEDULE 4 Subsidiaries


SCHEDULE 5 Disclosure of Guarantor re: Financial Condition


EXHIBITS


EXHIBIT A Form of Promissory Note


EXHIBIT B Form of Custodial Agreement


EXHIBIT C Form of Opinion of Counsel to the Borrower


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 Instruction Letter


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MASTER LOAN AND SECURITY AGREEMENT


MASTER LOAN AND SECURITY AGREEMENT, dated as of February 10, 1999, between AAMES CAPITAL CORPORATION, a California corporation (the "Borrower") and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation (the "Lender").


RECITALS


The Borrower wishes to obtain financing from time to time to provide interim funding for the origination and acquisition of certain Mortgage Loans (as defined herein), which Mortgage Loans are to be sold or contributed by the Borrower to one or more trusts or other entities to be sponsored by the Borrower or an Affiliate (as defined herein) thereof, as to which the Lender shall act as lead manager or co-manager (on an annual rotating basis), or to be sold to third-parties, and which Mortgage Loans shall secure Advances (as defined herein) to be made by the Lender hereunder.


The Lender has agreed, subject to the terms and conditions of this Loan Agreement (as defined herein), to provide such financing to the Borrower, with a portion of the proceeds of the sale of all mortgage-backed securities issued by any such trust or other entity, together with a portion of the proceeds of any permitted whole loan sales, together with other funds of the Borrower, if necessary, being used to repay any Advances made hereunder as more particularly described herein.


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 Loan Agreement in the singular to have the same meanings when used in the plural and vice versa):


"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 Borrower or Borrower's designee provides to mortgage loans which they own in their own portfolio.


"Advance" shall mean any Committed Advance or Uncommitted Advance, as applicable, and collectively "Advances" shall mean the sum of all Committed Advances and Uncommitted Advances.


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"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. 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 direct or 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 Agreement, with respect to each Advance:


(a) with respect to Mortgage Loans as to which scheduled
payments of principal and interest are not more than 29 days
past due, 95%; and


(b) with respect to Delinquent Mortgage Loans, 85%


(ii) thereafter, 0%.


"Applicable Margin" shall mean 1.50% per annum.


"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, 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" shall have the meaning provided in the heading hereof.


"Borrowing Base" shall mean the aggregate Collateral Value of all Eligible Mortgage Loans that have been, and remain 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.


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"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 Loan Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.


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


"Change of Control" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of outstanding shares of voting stock of the Borrower at any time if after giving effect to such acquisition (i) such Person or Persons owns twenty percent (20%) or more of such outstanding voting stock or (ii) the Guarantor does not own more than fifty (50%) of such outstanding shares of voting stock.


"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.


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"Collateral Value" shall mean (i) with respect to each Mortgage Loan originated by the Borrower or Aames Funding Corporation ("Aames Funding") which is not a Delinquent Mortgage Loan, the lesser of (a) the product of (x) the related Applicable Collateral Percentage times (y) the Market Value thereof and (b) the outstanding principal balance of such Mortgage Loan, (ii) with respect to each Mortgage Loan originated by One Stop Mortgage, Inc. ("One Stop") which is not a Delinquent Mortgage Loan, the lesser of (a) the product of (x) the related Applicable Collateral Percentage times (y) the Market Value thereof, and (b) the product of (x) 95% times (y) the outstanding principal balance of such Mortgage Loan, and (iii) with respect to each Delinquent Mortgage Loan, the product of (a) the related Applicable Collateral Percentage times (b) the lesser of (x) the Market Value thereof and (y) the outstanding principal balance of such Mortgage Loan; provided that, the percentage specified in clause (ii)(b)(x) above may, in the sole and absolute discretion of the Lender be increased based upon the Lender's review of One Stop's mortgage loan production, underwriting guidelines and the Lender's analysis of the feasibility of securitizations and/or whole loan sales with respect to mortgage loans originated by One Stop; provided, further that, the Collateral Value shall be deemed to be zero 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 and, to the extent the Lender
has elected to make Uncommitted Advances, 5% of the aggregate
amount of Uncommitted Advances made to the Borrower hereunder;


(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; or


(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.


"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 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.


"Committed Advance" shall have the meaning assigned to such term in Section 2.01(a) hereof.


"Commitment Fee" shall have the meaning assigned to such term in Section 3.03 hereof.


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


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


"Cooperative Loan" shall mean a Mortgage Loan that is secured by a first lien on and a perfected security interest in Cooperative Shares and the related Proprietary Lease granting


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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 certificates.


"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 the date hereof, among the Borrower, the Custodian and the Lender, substantially in the form of Exhibit B hereto, 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 ...