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FIRST AMENDMENT TO SECOND AMENDED AND RESTATED MASTER
REPURCHASE AGREEMENT GOVERNING
PURCHASES AND SALES OF MORTGAGE LOANS
This First Amendment, dated as of June 1, 2000 (the "FIRST AMENDMENT"), to the
Second Amended and Restated Master Repurchase Agreement Governing Purchases and
Sales of Mortgage Loans dated as of April 28, 2000 (the "AGREEMENT"), is made by
and between LEHMAN COMMERCIAL PAPER INC. ("BUYER") and AAMES CAPITAL CORPORATION
("SELLER" and, together with the Buyer, the "Parties").
RECITALS
WHEREAS, the Seller and the Buyer are parties to the Agreement,
pursuant to which the Buyer has agreed, subject to the terms and conditions set
forth in the Agreement, to purchase certain mortgage loans owned by the Seller,
including, without limitation, all rights of Seller to service and administer
such mortgage loans. Terms used but not defined herein shall have the respective
meanings ascribed to such terms in the Agreement, as amended hereby.
WHEREAS, the Parties wish to amend the Agreement to modify certain of
the terms and conditions governing the purchase and sale of the mortgage loans.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
SECTION 1. AMENDMENTS.
Effective as of March 31, 2000 the following Sections of the Agreement
are hereby amended as follows:
1.1 Section 13(a)(xii) of the Agreement is hereby deleted in its entirety
and replaced with the following:
"either Net Worth or Tangible Net Worth of the Guarantor shall
be less than (a) prior to and on June 30, 2000, $35,000,000,
(b) after June 30, 2000 and prior to and on July 31, 2000,
$60,000,000 and (c) after July 31, 2000, $75,000,000;"
1.2 Section 13(a)(xiii) of the Agreement is hereby deleted in its entirety
and replaced with the following:
"Tangible Net Worth of the Seller at any time shall be less
than the sum of (a) $315,000,000, plus (b) an amount equal to
75% of the aggregate positive Net Income (without deduction
for quarterly losses) of the Seller plus (iii) 80% of the net
proceeds from the issuance of any equity
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securities of the Seller or the making of any capital
contributions to the Seller, in either case after July 31,
2000;"
1.3 Section 13(a)(xiv) of the Agreement is hereby deleted in its entirety
and replaced with the following:
"the Interest Coverage Ratio of the Guarantor shall exceed
1.05 to 1.0 on the last Business Day of any calendar quarter
beginning with the fiscal quarter ending September 2000;"
1.4 Section 13(a)(xv) of the Agreement is hereby deleted in its entirety
and replaced with the following:
"the Leverage Ratio of the Guarantor shall exceed (a) prior to
and on June 30, 2000, 13.0 to 1.0, (b) after June 30, 2000 and
prior to and on July 31, 2000, 12.0 to 1.0 and (c) after July
31, 2000, 10.0 to1.0;"
1.5 Section 13(a)(xvi) of the Agreement is hereby deleted in its entirety
and replaced with the following:
"the Adjusted Leverage Ratio of the Guarantor shall exceed (a)
prior to and on June 30, 2000, 7.0 to 1.0, (b) after June 30,
2000 and prior to and on July 31, 2000, 6.0 to 1.0 and (c)
after July 31, 2000, 5.0 to1.0;"
1.6 Section 13(a)(xviii) of the Agreement is hereby deleted in its entirety
and replaced with the following:
"the aggregate amount of the Guarantor's cash, cash
equivalents and available borrowing capacity on unencumbered
assets that could be drawn against (taking into account
required haircuts) under committed warehouse or working
capital facilities, on a consolidated basis and on any given
day, shall be less than (a) prior to and on June 15, 2000,
$5,000,000 and (b) after June 15, 2000, $15,000,000;"
1.7 Section 13(a)(xxi) of the Agreement is hereby deleted in its entirety
and replaced with the following:
"for any fiscal quarter of the Guarantor, beginning with the
fiscal quarter ending September 30, 2000, the Guarantor and
its subsidiaries shall incur a net loss on a consolidated
basis in accordance with GAAP; or"
SECTION 2. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE
PARTIES.
2.1 Except as expressly amended by Section 1 hereof, the Agreement remains
unaltered and in full force and effect. Each of the Parties hereby
reaffirms all terms and covenants made in the Agreement as amended
hereby.
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2.2 Each of the Parties hereby represents and warrants to the other that
(a) this First Amendment constitutes the legal, valid and binding
obligation of such Party, enforceable against such Party in accordance
with its terms, and (b) the execution and delivery by such Party of
this First Amendment has been duly authorized by all requisite
corporate action on the part of such Party and will not violate any
provision of the organizational documents of such Party.
SECTION 3. EFFECT UPON THE AGREEMENT.
3.1 Except as specifically set forth herein, the Agreement shall remain in
full force and effect and is hereby ratified and confirmed. All
references to the "Agreement" in the Second Amended and Restated Master
Repurchase Agreement Governing Purchases and Sales of Mortgage Loans
shall mean and refer to the Second Amended and Restated Master
Repurchase Agreement Governing Purchases and Sales of Mortgage Loans as
modified and amended hereby.
3.2 The execution, delivery and effectiveness of this First Amendment shall
not operate as a waiver of any right, power or remedy of any Party
under the Agreement, or any other document, instrument or agreement
executed and/or delivered in connection therewith.
SECTION 4. EQUITY INVESTMENT.
The Seller shall arrange for an equity investment from Capital Z into
Aames Financial Corporation in the aggregate amount of not less than
FIFTY MILLION DOLLARS ($50,000,000), gross of expenses, which
investment shall be in form and substance satisfactory to the Buyer
(the "EQUITY INVESTMENT"). The failure to (a) consummate at least
$25,000,000 of the Equity Investment on or prior to June 30, 2000 or
(b) consummate the entire Equity Investment on or prior to July 31,
2000, shall constitute an Event of Default under the Agreement.
SECTION 5. GOVERNING LAW.
THIS FIRST AMENDMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED BY
THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAWS PRINCIPLES THEREOF.
SECTION 6. COUNTERPARTS.
This First Amendment may be executed in any number of counterparts, and
all such counterparts shall together constitute the same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment
to be executed as of the day and year first above written.
SELLER:
AAMES CAPITAL CORPORATION, as Seller
By: /s/ John Kohler
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Name: John Kohler
Title: Executive Vice President
BUYER:
LEHMAN COMMERCIAL PAPER INC., as Buyer
By: /s/ Fred C. Madonna
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Name: Fred C. Madonna
Title: Authorized Signatory
