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THIRD AMENDMENT
TO THE MASTER LOAN AND SECURITY AGREEMENT
Third Amendment, dated as of June 6, 2000 (this "AMENDMENT"),
to the Master Loan and Security Agreement, dated as of October 29, 1999 (as
previously amended, supplemented or otherwise modified, the "EXISTING LOAN
AGREEMENT", and as amended hereby, the "LOAN AGREEMENT"), between AAMES CAPITAL
CORPORATION (the "Borrower"), and MORGAN STANLEY DEAN WITTER MORTGAGE CAPITAL
INC., formerly MORGAN STANLEY MORTGAGE CAPITAL INC., (the "LENDER").
RECITALS
The Borrower and the Lender are parties to the Existing Loan
Agreement. Capitalized terms used but not otherwise defined herein shall have
the meanings given to them in the Existing Loan Agreement.
The Borrower and the Lender have agreed, subject to the terms
and conditions of this Amendment, that the Existing Loan Agreement be amended as
set forth herein. Furthermore, the Lender, subject to the terms and conditions
of this Amendment, has agreed to waive an existing Default as set forth herein.
Accordingly, the Borrower and the Lender hereby agree, in
consideration of the mutual premises and mutual obligations set forth herein,
that the Existing Loan Agreement is hereby amended effective as of March 31,
2000 as follows:
SECTION 1. AMENDMENTS.
(a) Section 5.02(j) of the Existing Loan Agreement is
hereby amended by deleting such Section in its entirety and
substituting in lieu thereof the following new Section:
"(j) TANGIBLE NET WORTH. Tangible Net Worth shall not
be less than the sum of (i) $330,000,000 plus (ii) an
amount equal to 75% of the aggregate positive Net
Income (without deduction for quarterly losses) plus
(iii) 80% of net proceeds from the issuance of any
equity securities of the Borrower or the making of
any capital contributions to the Borrower, in either
case after July 31, 2000."
(b) Section 7.14 of the Existing Loan Agreement is
hereby amended by deleting such Section in its entirety and
substituting in lieu thereof the following new Section:
"7.14 MAINTENANCE OF TANGIBLE NET WORTH. The Borrower
shall not permit Tangible Net Worth at any time to be
less than the sum of (i) $315,000,000 plus (ii) an
amount equal to 75% of the aggregate positive Net
Income (without deduction for quarterly losses) plus
(iii) 80% of net proceeds from the issuance of any
equity securities of the Borrower or the
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making of any capital contributions to the Borrower,
in either case after July 31, 2000."
(c) Section 7.16 of the Existing Loan Agreement is
hereby amended by deleting such Section in its entirety and
substituting in lieu thereof the following new Section:
"7.16 MAINTENANCE OF PROFITABILITY. The Borrower
shall not permit for any period of two consecutive fiscal
quarters (each such period, a "TEST PERIOD"), commencing with
the two consecutive fiscal quarters ending September 30, 2000,
Net Income for such Test Period, before income taxes for such
Test Period and distributions made during such Test Period, to
be less than $1.00."
(d) Section 8(m) of the Existing Loan Agreement is
hereby amended by deleting such Section in its entirety and
substituting in lieu thereof the following new Section:
"(m) Aames Financial Corporation's corporate bond
rating has been lowered or downgraded to a rating below
CCC- by S&P or Caa3 by Moody's; or"
SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become
effective on the date (the "AMENDMENT EFFECTIVE DATE") on which the following
conditions precedent shall have been satisfied:
2.1 DELIVERED DOCUMENTS. On the Amendment Effective Date, the
Lender shall have received the following documents, each of which shall be
satisfactory to the Lender in form and substance:
(a) AMENDMENT. This Amendment, executed and
delivered by a duly authorized officer of the Borrower and the Lender;
(b) OTHER WAIVERS OR AMENDMENTS. A copy of a
fully-executed amendment or waiver addressing any existing defaults
under financial covenants with respect to each credit facility of the
Borrower other than the Loan Agreement, in each case in form and
substance satisfactory to the Lender; and
(c) OTHER DOCUMENTS. Such other documents as the
Lender or counsel to the Lender may reasonably request.
2.2 NO DEFAULT. On the Amendment Effective Date, after giving
effect to this Amendment, (i) the Borrower shall be in compliance with all the
terms and provisions set forth in the Loan Agreement on its part to be observed
or performed, (ii) the representations and warranties made and restated by the
Borrower pursuant to Section 3 of this Amendment shall be true and complete on
and as of such date with the same force and effect as if made on and as of such
date and (iii) no Default shall have occurred and be continuing on such date.
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SECTION 3. REPRESENTATIONS AND WARRANTIES.
3.1 The Borrower hereby represents and warrants to the Lender
that, after giving effect to this Amendment, it is in compliance with all the
terms and provisions set forth in the Loan Documents on its part to be observed
or performed, and that no Default has occurred or is continuing, and hereby
confirms and reaffirms the representations and warranties contained in Section 6
of the Loan Agreement.
3.2 The Borrower hereby represents and warrants to the Lender
that (a) attached as Exhibit A to this Amendment is a complete list of all other
credit facilities to which the Borrower is a party and (b) after giving effect
to the waivers or amendments referred to in Section 2.1(b) of this Amendment,
all of which are in full force and effect, no "default" or "event of default"
(however defined) exists under any such credit facility.
SECTION 4. EQUITY INVESTMENT. The Borrower 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
Lender (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 Loan Agreement.
SECTION 5. LIMITED EFFECT. Except as expressly amended, waived
and modified by this Amendment, the Existing Loan Agreement shall continue to
be, and shall remain, in full force and effect in accordance with its terms;
PROVIDED, HOWEVER, that reference therein and herein to the "Loan Documents"
shall be deemed to include, in any event, (i) the Existing Loan Agreement, (ii)
this Amendment, (iii) the Note and (iv) the Custodial Agreement. Each reference
to the Loan Agreement in any of the Loan Documents shall be deemed to be a
reference to the Loan Agreement as amended hereby.
SECTION 6. COUNTERPARTS. This Amendment may be executed by
each of the parties hereto on any number of separate counterparts, each of which
shall be an original and all of which taken together shall constitute one and
the same instrument.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.
BORROWER
AAMES CAPITAL CORPORATION
By: /s/ Jon D. Van Deuren
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Name: Jon D. Van Deuren
Title: Senior Vice President
LENDER
MORGAN STANLEY DEAN WITTER
MORTGAGE CAPITAL INC.(FORMERLY
MORGAN STANLEY MORTGAGE
CAPITAL INC.)
By: /s/ Andrew B. Neuberger
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Name: Andrew Neuberger
Title: Vice President
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EXHIBIT A
TO AMENDMENT
CREDIT FACILITIES OF THE BORROWER
1. Warehouse Loan and Security Agreement, dated as of February 10, 2000,
between Aames Capital Corporation and Greenwich Capital Financial Products,
Inc.
2. Second Amended and Restated Master Repurchase Agreement Governing Purchases
and Sales of Mortgage Loans dated as of April 28, 2000, by and between Lehman
Commercial Paper Inc. and Aames Capital Corporation.
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