Restated Mortgage Loan Warehousing Agreement

SECOND AMENDED AND RESTATED MORTGAGE LOAN WAREHOUSING AGREEMENT


THIS SECOND AMENDED AND RESTATED MORTGAGE LOAN WAREHOUSING AGREEMENT (the "Agreement") made and dated as of the 10th day of April, 1998, by and among AAMES CAPITAL CORPORATION, a California corporation (the "Company"); AAMES FINANCIAL CORPORATION, a Delaware corporation and the sole shareholder of the Company (the "Parent"); the lenders from time to time party hereto, together with their respective successors and assigns (each a "Lender and, collectively, the "Lenders"); and NATIONSBANK OF TEXAS, N.A., a national banking association ("NationsBank"), as administrative agent for the Lenders (in such capacity, the "Administrative Agent").


RECITALS


A. Pursuant to that certain Amended and Restated Mortgage Loan Warehousing Agreement dated as of January 15, 1997 by and among the Company, the Administrative Agent, and the Lenders party thereto (as amended to date, the "Existing Credit Agreement"), such Lenders extended credit to the Company on the terms and subject to the conditions set forth therein.


B. The Company, the Administrative Agent and the Lenders party to the Existing Credit Agreement desire to amend the Existing Credit Agreement and the documents, instruments and agreements relating thereto in certain respects and, for convenience of reference, to restate the Existing Credit Agreement in its entirety herein.


NOW, THEREFORE, in consideration of the above Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:


AGREEMENT


1. Tranche A Credit Facility (Standard Warehouse Loans).


1(a) Tranche A Lending Limit. On the terms and subject to the conditions set forth herein, the Lenders severally agree that they shall from time to time to and including the Maturity Date (as such term and capitalized terms not otherwise defined herein are defined in Paragraph 17 below) make loans (the "Tranche A Committed Loans" or a "Tranche A Committed Loan"), pro rata in accordance with their respective Percentage Shares, to the Company in amounts not to exceed, in the aggregate at any one time outstanding, the lesser of:


(1) The Aggregate Committed Credit Limit
minus the sum of:


(i) The aggregate dollar amount of
Tranche B Loans and Tranche C Loans outstanding (including all
Tranche B Loans and Tranche C Loans to be funded on the
proposed date of funding of the requested Tranche A Committed
Loans but excluding Tranche C Loans which will be repaid with
proceeds of the requested Tranche A Committed Loans);

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(ii) The aggregate dollar amount of
Tranche A Bid Loans outstanding (excluding Tranche A Bid Loans
which will be repaid with the proceeds of the requested
Tranche A Committed Loans); and


(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date; and


(2) The Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral held by
the Administrative Agent, minus the sum of:


(i) The aggregate dollar amount of
all Tranche C Loans outstanding (excluding Tranche C Loans
which will be repaid with proceeds of the requested Tranche A
Committed Loans);


(ii) The aggregate dollar amount of
all Bid Loans outstanding (excluding Bid Loans which will be
repaid with the proceeds of the requested Tranche A Committed
Loans); and


(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date.


1(b) Calculation and Payment of Interest. Tranche A Committed Loans shall bear interest from the date disbursed to but not including the date of payment calculated on the principal amount of Tranche A Committed Loans outstanding from time to time hereunder at a per annum rate equal to, at the option of and as selected by the Company from time to time (subject to the provisions of Paragraphs (6(c), 6(d) and 6(e) below), the Applicable Eurodollar Rate for the applicable Interest Period or the daily average Applicable Effective Fed Funds Rate during the applicable interest computation period, said interest to be payable as provided more particularly in Paragraph 6(b) below.


1(c) Payment of Principal. Subject to the prepayment requirements of Paragraph 7(f) below and the conversion and continuation provisions of Paragraph 6(c) below, the Company shall pay the principal amount of each Tranche A Committed Loan being maintained as a Eurodollar Loan on the last day of the applicable Interest Period and shall pay the principal amount of each Tranche A Committed Loan being maintained as an Effective Fed Funds Rate Loan on the Maturity Date.


2. Letter of Credit Facility.


2(a) Letter of Credit. On the terms and subject to the conditions set forth in the Existing Credit Agreement, NationsBank has issued its letter of credit (as amended, extended and replaced from time to time, including, without limitation, pursuant to this Agreement, the "Letter of Credit") for the account of the Company in favor of Pacific Thrift and Loan Company, a California corporation, in the amount of $2,500,000.00. Effective as of the Effective Date and subject to the conditions set forth herein, NationsBank shall amend the Letter of Credit to extend the stated expiration date to a date no later than the regularly scheduled Maturity Date hereunder; provided, however, that the L/C Available Amount of the Letter of Credit as so amended and extended shall not exceed the least of:


(1) $2,500,000.00;


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(2) The Aggregate Committed Credit Limit
minus the aggregate dollar amount of Tranche A Loans, Tranche B Loans
and Tranche C Loans outstanding and unrepaid L/C Drawings (including
all Loans outstanding plus all Loans to be funded on the Effective
Date but excluding all such Loans which will be repaid by Loans
requested to be funded on the Effective Date); and


(3) The Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral held by
the Administrative Agent, minus the sum of:


(i) The aggregate dollar amount of
all Tranche A Committed Loans and Tranche C Loans outstanding
(including all Loans outstanding plus all Loans to be funded
on the Effective Date but excluding all such Loans which will
be repaid by Loans requested to be funded on the Effective
Date); and


(ii) The aggregate dollar amount of
all Bid Loans outstanding or to be funded on the Effective
Date (excluding all Bid Loans which will be repaid by Loans
requested to be funded on the Effective Date).


As a condition to the amendment and extension of the Letter of Credit, the Company shall execute and deliver to NationsBank not less than four (4) Business Days prior to the Effective Date a duly executed Letter of Credit Application, accompanied by all other documents, instruments and agreements as NationsBank may require (such Letter of Credit Application and other documents, instruments and agreements, together with all documents, instruments and agreements delivered to NationsBank at the time of the original issuance of the Letter of Credit under the Existing Credit Agreement, being referred to herein as the "L/C Documents"). Following the Effective Date, the Letter of Credit may not be extended to a date beyond the then current regularly scheduled Maturity Date hereunder without the prior written consent of one hundred percent (100%) of the Lenders.


2(b) Purchase of Participation Interests. Upon the Effective Date the Lenders shall be automatically deemed to have purchased an undivided participation interest in the Letter of Credit and in all rights and obligations relating thereto pro rata in accordance with their respective Percentage Shares.


2(c) Repayment of L/C Drawings. Any drawing under the Letter of Credit (a "L/C Drawing") shall be payable in full by the Company: (1) prior to the occurrence of an Event of Default and acceleration of the Obligations, on the date NationsBank notifies the Administrative Agent and the Company (which notice may be telephonic) of such L/C Drawing if such notice is given prior to 11:30 a.m. (Los Angeles time), or on the next succeeding Business Day if given after 11:30 a.m. (Los Angeles time), or (2) following the occurrence of an Event of Default and acceleration of the Obligations, without demand upon or notice to the Company, on the date of such L/C Drawing. Any L/C Drawing not paid on the date when due shall accrue interest as provided in Paragraph 6(k) below, from and including such date to but not including the date paid in full. The Lenders hereby absolutely and unconditionally (including, without limitation, following the occurrence of an Event of Default) agree to purchase and sell among themselves the dollar amount of any L/C Drawing which is not paid on the date when due by the Company, so that each unrepaid L/C Drawing shall be held and participated in by the Lenders pro rata in accordance with their respective Percentage Shares.


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2(d) Absolute Obligation to Repay. The Company's obligation to repay L/C Drawings shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and irrespective of any set-off, counterclaim or defense to payment which the Company may have or have had, against NationsBank, the Administrative Agent, any Lender or any other Person, including, without limitation, any set-off, counterclaim or defense based upon or arising out of:


(1) Any lack of validity or
enforceability of this Agreement or any of the other Loan Documents;


(2) Any amendment or waiver of or any
consent to departure from the terms of the Letter of Credit;


(3) The existence of any claim, setoff,
defense or other right which the Company or any other Person may have
at any time against any beneficiary or any transferee of the Letter of
Credit (or any Person for whom any such beneficiary or any such
transferee may be acting);


(4) Any allegation that any demand,
statement or any other document presented under the Letter of Credit
is forged, fraudulent, invalid or insufficient in any respect, or that
any statement therein is untrue or inaccurate in any respect
whatsoever or that variations in punctuation, capitalization, spelling
or format were contained in the drafts or any statements presented in
connection with any L/C Drawing;


(5) Any payment by NationsBank under the
Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of the Letter of Credit, or
any payment made by NationsBank under the Letter of Credit to any
Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of
the Letter of Credit, including any arising in connection with any
insolvency proceeding;


(6) Any exchange, release or
non-perfection of any Collateral; or


(7) Any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company.


Nothing contained herein shall constitute a waiver of any rights of the Company against NationsBank arising out of the gross negligence or willful misconduct of NationsBank in connection with the Letter of Credit.


2(e) Uniform Customs and Practice. The Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce most recently at the time of issuance of the Letter of Credit shall (unless otherwise expressly provided in the Letter of Credit) apply to the Letter of Credit.


2(f) Relationship to Letter of Credit Application. In the event of any inconsistency between the terms and provisions of this Agreement and the terms and provisions of the L/C Documents, the terms and provisions of this Agreement shall supersede and govern.


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3. Tranche B Credit Facility (Working Capital Loans).


3(a) Tranche B Lending Limit. On the terms and subject to the conditions set forth herein, the Lenders severally agree that they shall from time to time to and including the Maturity Date make loans (the "Tranche B Loans" or a "Tranche B Loan"), pro rata in accordance with their respective Percentage Shares, to the Company in amounts not to exceed, in the aggregate at any one time outstanding, the least of:


(1) The Tranche B Credit Limit; and


(2) The Collateral Value of the Working
Capital Borrowing Base; and


(3) The Aggregate Committed Credit Limit
minus the sum of:


(i) The aggregate dollar amount of
Tranche A Committed Loans and Tranche C Loans outstanding
(including all Tranche A Committed Loans and Tranche C Loans
to be funded on the proposed date of funding of the requested
Tranche B Loan but excluding Tranche C Loans which will be
repaid with proceeds of a requested Tranche A Committed Loan
on such date);


(ii) The aggregate dollar amount of
Tranche A Bid Loans outstanding (excluding Tranche A Bid Loans
which will be repaid with the proceeds of a requested Tranche
A Committed Loan on such date); and


(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date.


3(b) Calculation and Payment of Interest. Tranche B Loans shall bear interest from the date disbursed to but not including the date of payment calculated at a per annum rate equal to, at the option of and as selected by the Company from time to time (subject to the provisions of Paragraphs 6(c), 6(d) and 6(e) below), the Applicable Eurodollar Rate for the applicable Interest Period or the daily average Applicable Effective Fed Funds Rate during the applicable interest computation period, said interest to be payable as provided more particularly in Paragraph 6(b) below.


3(c) Payment of Principal. Subject to the prepayment requirements of Paragraph 7(f) below and the conversion and continuation provisions of Paragraph 6(c) below, the Company shall pay the principal amount of each Tranche B Loan being maintained as a Eurodollar Loan on the last day of the applicable Interest Period and shall pay the principal amount of each Tranche B Loan being maintained as an Effective Fed Funds Rate Loan on the Maturity Date.


4. Tranche C Credit Facility (Swing Loans).


4(a) Tranche C Lending Limit. On the terms and subject to the conditions set forth herein, NationsBank agrees that it shall from time to time to but not including the Maturity Date make loans (the "Tranche C Loans" or a "Tranche C Loan") to the Company in amounts not to exceed, in the aggregate at any one time outstanding, the least of:


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(1) The Tranche C Credit Limit; and


(2) The Aggregate Committed Credit Limit
minus the sum of:


(i) The aggregate dollar amount of
Tranche A Committed Loans and Tranche B Loans outstanding
(including all Tranche A Committed Loans and Tranche B Loans
to be funded on the proposed date of funding of the requested
Tranche C Loan);


(ii) The aggregate dollar amount of
Tranche A Bid Loans outstanding; and


(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date; and


(3) The Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral held by
the Administrative Agent, minus the sum of:


(i) The aggregate dollar amount of
all Tranche A Committed Loans outstanding (including all
Tranche A Committed Loans to be funded on the proposed date of
funding of the requested Tranche C Loan);


(ii) The aggregate dollar amount of
all Bid Loans outstanding; and


(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date.


4(b) Funding of Tranche C Loans. Upon receipt by NationsBank, acting in its capacity as Administrative Agent hereunder, of a Loan And/Or Interest Rate Election Request for a Tranche C Loan, NationsBank, acting in its capacity as the Tranche C Lender hereunder, shall advance the amount of the Tranche C Loan or Loans requested for the purpose of funding the Company's operations on a daily basis without requiring daily fundings from the applicable Lenders.


4(c) Refunding of Tranche C Loans by Lenders. Tranche C Loans shall be refunded by the Lenders to NationsBank upon demand of NationsBank through the Administrative Agent, which demand will be made no more frequently than once each Business Day and no less frequently than weekly (and, in any event, on each Wednesday or, if any Wednesday is not a Business Day, the immediately preceding Business Day); provided, however, that NationsBank shall not be required to request refundings of Tranche C Loans hereunder in aggregate amounts of less than $5,000,000.00. All Tranche C Loans shall be automatically designated as Tranche A Committed Loans on and as of such refunding date. Such refundings shall be made by the Lenders (including NationsBank) in accordance with their respective Percentage Shares and shall, thereafter, be reflected as Tranche A Committed Loans of the Lenders on the books and records of the Administrative Agent. Subject to Paragraph 4(f) below, the Administrative Agent shall, upon the occurrence of an Event of Default and acceleration of the Obligations, request a refunding hereunder of all Tranche C Loans outstanding as of such date.


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4(d) Calculation and Payment of Interest. Tranche C Loans shall bear interest from the date disbursed to but not including the refunding date or the date of payment calculated on the principal amount of Tranche C Loans outstanding from time to time hereunder during the applicable interest calculation period at the daily average Applicable Effective Fed Funds Rate, said interest to be payable as provided more particularly in Paragraph 6(b) below.


4(e) Payment of Principal. Subject to the prepayment requirements of Paragraph 7(f) and earlier refunding pursuant to Paragraph 4(c) above, the Company shall pay the principal amount of each Tranche C Loan on the Maturity Date.


4(f) Absolute Obligation to Refund. It is expressly acknowledged and agreed by the Lenders and the Company that the obligation of the Lenders to refund Tranche C Loans shall be absolute and unconditional and shall be effected by the Lenders upon telephonic request of the Administrative Agent regardless of whether at the proposed refunding date there shall exist an Event of Default or Potential Default hereunder; provided, however, that the obligation of the Lenders to refund Tranche C Loans made by NationsBank on any date on which NationsBank personnel responsible for administering the credit facility hereunder had actual knowledge of the existence of an Event of Default, shall be limited to those Tranche C Loans made on such date with the consent (which may be telephonic) of one hundred percent (100%) of the Lenders. In the event for any reason the Lenders shall be prohibited from refunding their respective ratable portion of Tranche C Loans as Tranche A Committed Loans as provided herein, then instead of refunding Tranche C Loans as Tranche A Committed Loans, upon request of NationsBank and subject to the proviso of the immediately preceding sentence, each Lender (other than NationsBank) shall purchase and take from NationsBank an individual participation interest in all Tranche C Loans outstanding hereunder in the amount of such Lender's Percentage Share thereof.


5. Bid Loans.


5(a) Bid Loan Credit Limit. The Company may from time to time, on the terms and subject to the conditions set forth herein, request the Lenders to quote fixed rates at which they would, individually, be prepared to fund advances to the Company hereunder in a stated dollar amount and for a stated Bid Loan Interest Period ("Bid Loans"); provided, however, that in no event shall:


(1) The aggregate dollar amount of Bid
Loans outstanding at any date exceed the least of:


(i) The Bid Loan Credit Limit;


(ii) The Maximum Aggregate Credit
Limit minus the sum of the aggregate dollar amount of Tranche
A Committed Loans, Tranche B Loans and Tranche C Loans
outstanding, the L/C Available Amount and any unrepaid L/C
Drawings; and


(iii) The Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral
held by the Administrative Agent, minus the sum of the
aggregate dollar amount of all Tranche A Committed Loans and


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Tranche C Loans outstanding, the L/C Available Amount and any
unrepaid L/C Drawings; or


(2) The aggregate dollar amount of
Tranche A Bid Loans outstanding at any date exceed $50,000,000.00.


5(b) Procedures for Request for Bid Loans. In the event the Company desires to request the advance of Bid Loans, it shall deliver to the Administrative Agent (which delivery may be by facsimile transmission) a duly executed Bid Loan Request on the third Business Day prior to the proposed funding date, which Bid Loan Request shall specify:


(1) Whether or not the requested Bid
Loans are Tranche A Bid Loans;


(2) The proposed funding date;


(3) The aggregate principal amount of all
Bid Loans requested to be funded on such date, which amount
shall be not less than $5,000,000.00 or increments of
$1,000,000.00 in excess thereof; and


(4) The Bid Loan Interest Period(s) for
such Bid Loans. d The Administrative Agent shall promptly notify each Lender of the contents of each Bid Loan Request received by it hereunder. In no event shall the Company deliver a Bid Loan Request to the Administrative Agent within five Business Days after delivering any other Bid Loan Request.


5(c) Offer Procedures. Upon receipt from the Administrative Agent of the contents of a Bid Loan Request, any Lender may, in its sole discretion, elect to offer, on the terms and subject to the conditions set forth in this Agreement, to make one or more of the requested Bid Loans at such fixed rates of interest as may be quoted by such Lender in it sole discretion. Any such offer shall be made by delivery to the Administrative Agent no later than 9:00 a.m. (Los Angeles time) on the proposed funding date of a duly executed Bid Loan Offer. Each Bid Loan Offer shall specify:


(1) The maximum dollar amount of Bid
Loans which such Lender is prepared to fund for the requested
Bid Loan Interest Periods, with the amount of each Bid Loan to
be $5,000,000.00 or increments of $1,000,000.00 in excess
thereof (except in the case following the submission of Bid
Loan Offers a lesser amount shall be allocated pro rata among
Lenders as provided in Paragraph 5(d) below); and


(2) The rate or rates of interest at
which such Lender is prepared to make the offered Bid Loans.


The Administrative Agent shall notify the Company no later than 10:00 a.m. (Los Angeles time) on the proposed funding date of the contents of each Bid Loan Offer received by it.


5(d) Response Procedures. No later than 10:30 a.m. (Los Angeles time) on the proposed funding date the Company shall, in its sole discretion, either:


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(1) Cancel the subject Bid Loan Request
by giving the Administrative Agent telephonic notice to such
effect, which notice the Administrative Agent will promptly
provide to the Lenders; or


(2) Accept one or more of the Bid Loan
Offers by delivery to the Administrative Agent by facsimile
transmission of a duly executed Bid Loan Confirmation setting
forth the amount of the Bid Loans to be made by the Lenders
(such amount not to exceed for any Lend ...