EXECUTION
AAMES INVESTMENT CORPORATION,
as SELLER
and
BEAR STEARNS ASSET BACKED SECURITIES I LLC,
as PURCHASER
MORTGAGE LOAN PURCHASE AND ASSIGNMENT
AGREEMENT
Dated as of February 1, 2005
Aames Mortgage Investment Trust 2005-1
Mortgage Backed Notes, Series 2005-1
TABLE OF CONTENTS
MORTGAGE LOAN PURCHASE AND ASSIGNMENT
AGREEMENT
Page
RECITALS
1
AGREEMENT
2
Section 1.
Purchase and Sale of Mortgage Loans
2
Section 2.
Representations and Warranties
4
Section 3.
Survival of Representations
7
Section 4.
Repurchase, Purchase or Substitution of Mortgage Loans
8
Section 5.
Covenants
8
Section 6.
Successors and Assigns, Additional Information
9
Section 7.
Indemnification
9
Section 8.
Notices
10
Section 9.
Representations and Indemnities to Survive
10
Section 10.
Miscellaneous
10
Section 11.
Severability of Provisions
10
Section 12.
Binding Nature of Agreement; Assignment
11
Section 13.
Entire Agreement
11
Section 14.
Benefits of Agreement
11
SCHEDULE I – MORTGAGE LOAN SCHEDULE
I-1
SCHEDULE II –MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES
II-1
MORTGAGE LOAN PURCHASE AND ASSIGNMENT
AGREEMENT
This Mortgage Loan Purchase and Assignment Agreement (the
“Agreement”) dated as of February 1, 2005, is executed
on the Closing Date (as defined below) by and between Bear Stearns
Asset Backed Securities I LLC, a Delaware limited liability company
(such entity, and its successors and assigns, being referred to
herein as the “Purchaser”) and Aames Investment
Corporation, a Maryland corporation organized as a real estate
investment trust, as seller (the “Seller” or the
“Company”).
The Purchaser and the Seller hereby recite and agree as
follows:
RECITALS
1.
Schedule I attached hereto and made a part hereof lists
certain conventional, fixed and adjustable rate, first lien
residential mortgage loans (collectively, the “Mortgage
Loans”) owned by the Seller that the Seller desires to sell,
without recourse, to the Purchaser.
2.
The Seller desires to sell, without recourse, all of its right,
title and interest in and to the Mortgage Loans (other than its
rights as owner of the servicing rights under the Transfer and
Servicing Agreement) to the Purchaser, and to transfer all of its
obligations thereunder to the Purchaser pursuant to this
Agreement.
3.
The Purchaser desires to purchase such Mortgage Loans, and the
Purchaser intends immediately thereafter to transfer all of its
right, title and interest in and to the Mortgage Loans pursuant to
the terms of a transfer and servicing agreement dated as of
February 1, 2005 (the “Transfer and Servicing
Agreement”), by and among the Seller, as seller, the
Purchaser, as depositor, Wells Fargo Bank, N.A., as trust
administrator and master servicer (in such capacity, the
“Master Servicer”), Deutsche Bank National Trust
Company, as indenture trustee (the “Indenture
Trustee”), Aames Capital Corporation, as servicer, and Aames
Mortgage Investment Trust 2005-1 (the “Issuer” or the
“Trust”).
4.
The Trust shall issue the Mortgage Backed Notes, Series 2005-1,
Class 1A1, Class 1A2, Class 1A3, Class 2A1, Class 2A2, Class M1,
Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class
M8, Class M9, Class B1, Class B2 and Class B3 Notes (collectively,
the “Notes”).
5.
The Notes (other than the Class B3 Notes) will be offered and sold
by Bear, Stearns & Co. Inc. (“Bear Stearns”),
Greenwich Capital Markets, Inc. (“Greenwich”),
Citigroup Global Markets Inc. (“Citigroup”), Credit
Suisse First Boston LLC (“CSFB”), Countrywide
Securities Corporation (“Countrywide”), Friedman,
Billings, Ramsey & Co., Inc. (“FBR”), Lehman
Brothers Inc. (“LBI”) and Morgan Stanley & Co.
Incorporated (“Morgan Stanley,” and, together with Bear
Stearns, Greenwich, Citigroup, CSFB, Countrywide, FBR and LBI, the
“Underwriters”) pursuant to the terms and conditions of
an underwriting agreement among the Purchaser and the Underwriters
dated February 17, 2005 (the “Underwriting Agreement”),
through the use of a prospectus supplement dated February 17, 2005
(the “Prospectus Supplement”), and the related
prospectus dated April 26, 2004 (the “Base Prospectus”
and, together with the Prospectus Supplement, the
“Prospectus”).
6.
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Transfer and Servicing
Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises herein made
and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1.
Purchase and Sale of Mortgage Loans .
(a)
Concurrently with the execution and delivery hereof on February 24,
2005 (the “Closing Date”), the Seller hereby sells,
assigns, transfers and otherwise conveys to the Purchaser, without
recourse, all of its right, title and interest (other than any
servicing rights relating to the Mortgage Loans) in and to the
Mortgage Loans, including all interest and principal received on or
with respect to the Mortgage Loans on or after the Cut-off Date
(other than any such payments that were due on or prior to such
date) and all payments due after such date but received prior to
such date and intended by the related Mortgagors to be applied
after such date, together with all of the Seller’s right,
title and interest in and to any related escrow account and all
amounts from time to time credited to and the proceeds of such
account, the Seller’s rights under any insurance policies
related to the Mortgage Loans and the proceeds thereof and the
Seller’s security interest in any collateral pledged to
secure the Mortgage Loans, including the Mortgaged Properties.
(b)
The Seller further agrees, at its own expense, on or prior to the
Closing Date, (i) to indicate in its books and records that the
Mortgage Loans have been sold to the Issuer, as assignee of the
Purchaser and (ii) to deliver to the Purchaser a data file in the
form of Schedule I containing a true and complete list of all such
Mortgage Loans (the “Mortgage Loan Schedule”).
The Mortgage Loan Schedule shall conform to the requirements
set forth in this Agreement and to the definition of
“Mortgage Loan Schedule” in the Transfer and Servicing
Agreement. In connection with such transfer and assignment of
the Mortgage Loans hereunder, the Seller does hereby deliver, or
cause to be delivered, to the Purchaser (or its designee) each
Mortgage File relating to the Mortgage Loans in the manner set
forth in Section 2.01 of the Transfer and Servicing Agreement.
In the case of Mortgage Loans (if any) that have been prepaid
in full after the Cut-off Date and prior to the execution of this
Agreement, the Seller, in lieu of delivering the related Mortgage
Files, shall herewith deliver to the Purchaser an Officer’s
Certificate which shall include a statement to the effect that all
amounts received in connection with such prepayment that are
required to be deposited in the Collection Account have been so
deposited. The Seller hereby covenants not to take any action
inconsistent with the ownership interest of the Purchaser or its
assignee and any subsequent assignee or pledgee in the Mortgage
Files.
(c)
The Purchaser and the Seller intend that on the Closing Date the
conveyance by the Seller to the Purchaser of all its right, title
and interest in and to the Mortgage Loans pursuant to this
Agreement shall be, and be construed as, a sale of the Mortgage
Loans, without recourse. It is, further, not intended that
such conveyance be deemed to be a pledge of the Mortgage Loans by
the Seller to the Purchaser to secure a debt or other obligation of
the Seller. However, in the event that the Mortgage Loans are
held to be property of the Seller, or if this Agreement is held or
deemed to create a security interest in the Mortgage Loans, then it
is intended that (i) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the
New York Uniform Commercial Code and the Uniform Commercial Code of
any other applicable jurisdiction; (ii) the conveyances provided
for in this Section 1 shall be deemed to be a grant by the Seller
to the Purchaser, to secure payment in full of the Secured
Obligations (as defined below), of a security interest in all of
the Seller’s right (including the power to convey title
thereto), title and interest, whether now owned or hereafter
acquired, in and to the Mortgage Loans, including without
limitation the Mortgage Notes, the Mortgages, any related insurance
policies, the Seller’s security interest in any collateral
pledged to secure the Mortgage Loans with respect to the Mortgage
Loans and all other documents in the related Mortgage Files, and
all accounts, general intangibles, chattel paper, instruments,
documents, money, deposit accounts, certificates of deposit, goods,
letters of credit, advices of credit and investment property
constituting part of the assets of the Trust, arising from or
relating to (A) the Mortgage Loans (other than any servicing rights
relating to the Mortgage Loans), including with respect to each
Mortgage Loan, the Mortgage Note and related Mortgage, and all
other documents in the related Mortgage Files, and including any
Qualifying Substitute Mortgage Loans; (B) pool insurance policies,
hazard insurance policies and any bankruptcy bond relating to the
foregoing, if applicable; (C) all amounts payable on or after the
Cut-off Date (other than any such payments that were due on or
prior to such date) to the holders of the Mortgage Loans in
accordance with the terms thereof; (D) all income, payments,
proceeds and products of the conversion, voluntary or involuntary,
of the foregoing into cash, instruments, securities or other
property; and (E) all cash and non-cash proceeds of any of the
foregoing; (iii) the possession or control by the Indenture Trustee
or any agent of the Indenture Trustee of Mortgage Notes or such
other items of property as constitute instruments, money,
documents, advices of credit, letters of credit, goods,
certificated securities or chattel paper shall be deemed to be
possession or control by the secured party, or possession or
control by the Purchaser, for purposes of perfecting the security
interest pursuant to the Uniform Commercial Code (including,
without limitation, Sections 9-312 or 9-313 thereof); and (iv)
notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or
acknowledgements, receipts or confirmations from, securities
intermediaries, bailees or agents of, or persons holding for, the
Indenture Trustee, as applicable, for the purpose of perfecting
such security interest under applicable law. “Secured
Obligations” means the rights of the Purchaser under this
Agreement. The Seller shall, to the extent consistent with
this Agreement, take such reasonable actions as may be necessary to
ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans and the other property described
above, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and would
be maintained as such throughout the term of this Agreement.
Without limiting the generality of the foregoing, the Seller
shall prepare and deliver to the Purchaser at least two months
prior to any filing date, and the Purchaser shall file, or shall
cause to be filed, at the expense of the Seller, all filings
necessary to maintain the effectiveness of any original filings
necessary under the Uniform Commercial Code as in effect in any
jurisdiction to perfect the Purchaser’s security interest in
or lien on the Mortgage Loans.
Notwithstanding the foregoing provisions of this Section 1, (i) the
Seller, as a servicer of the Mortgage Loans, shall retain the
servicing rights (including, without limitation, primary servicing)
with respect to the Mortgage Loans, and rights to receive servicing
fees, servicing income, reimbursement for advances made in respect
of such Mortgage Loans and other payments made as compensation for
such servicing subject to the Transfer and Servicing Agreement
pursuant to the terms and conditions set forth therein
(collectively, the “Servicing Rights”) and (ii) the
Servicing Rights are not included in the collateral in which the
Seller grants a security interest in favor of the Purchaser
pursuant to the immediately preceding paragraph, nor are the
Servicing Rights included in the assets being sold pursuant to this
Agreement.
(d)
In consideration of the sale of the Mortgage Loans from the Seller
to the Purchaser on the Closing Date, and in consideration of the
deposit of the Initial Deposit (as defined in the Transfer and
Servicing Agreement) made by the Seller as provided in the Transfer
and Servicing Agreement, the Purchaser agrees on the Closing Date
(i) to pay to the Seller by transfer of immediately available
funds, an amount equal to $1,165,463,316.96 , which is net
of (A) an amount of $139,121.40 representing the current Securities
and Exchange Commission registration statement fees for the amount
of registered securities issued on the Closing Date and (B) the
underwriting discount, (ii) to deliver to the Seller the Class B3
Notes and (iii) to transfer to the Seller or one of its Affiliates
on the Closing Date the Ownership Certificate (together, the
“Purchase Price”). The Seller shall pay, and be
billed directly for, all expenses incurred by the Purchaser in
connection with the issuance of the Notes, including, without
limitation, printing fees incurred in connection with the
prospectus relating to the Notes, blue sky registration fees and
expenses, fees and expenses of McKee Nelson LLP, fees of the rating
agencies requested to rate the Notes, accountant’s fees and
expenses, Custodian fees, loan level due diligence fees, the fees
and expenses of the Indenture Trustee and the Owner Trustee, the
fees (other than any fees to which the Master Servicer is entitled
pursuant to the Transfer and Servicing Agreement) and expenses of
the Master Servicer and Trust Administrator and other out-of-pocket
costs, if any.
2.
Representations and Warranties
(a)
The Seller hereby represents and warrants to the Purchaser that, as
of the date of this Agreement:
(i)
The Company is a Maryland corporation, duly organized validly
existing and in good standing under the laws of the State of
Maryland, and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The
Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the character
of the business transacted by it or any properties owned or leased
by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the
Company;
(ii)
The Company has the corporate power and authority to make, execute,
deliver and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered,
this Agreement will constitute the legal, valid and binding
obligation of the Company enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of
creditors’ rights generally and by the availability of
equitable remedies;
(iii)
The Company has been organized in conformity with the requirements
for qualification as a REIT; the Company will file with its federal
income tax return for its taxable year ended December 31, 2004, an
election to be treated as a REIT for federal income tax purposes;
and the Company currently qualifies as, and it proposes to operate
in a manner that will enable it to continue to qualify as, a
REIT;
(iv)
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, and the
transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Company pursuant to this Agreement are not subject
to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(v)
Neither the execution and delivery of this Agreement, the sale of
the Mortgage Loans to the Purchaser or the transactions
contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement will conflict with or result
in a breach of any of the terms, articles of incorporation or
by-laws, or constitute a default or result in the violation of any
law, rule, regulation, order, judgment or decree to which the
Company or its property is subject, or constitute a default under
or result in the acceleration of payment under any material
agreement, indenture or loan or credit agreement or other material
instrument to which the Company or its property are subject;
(vi)
The Company does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant
contained in this Agreement. The Company is solvent and the
sale of the Mortgage Loans will not cause the Company to become
insolvent. The sale of the Mortgage Loans is not undertaken
to hinder, delay or defraud any of the Company’s
creditors;
(vii)
Other than those matters which are disclosed in the Prospectus
Supplement under the caption “Risk Factors—Aames
Financial Corporation is the Subject of Current Investigations by
Governmental Agencies and Consumer Groups Which Could Adversely
Affect the Seller’s or the Servicer’s Business and
Attract Class Action Litigation Against Them,” there is no
action, suit, proceeding or investigation pending or, to the
knowledge of the Seller, threatened against the Company which,
either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial
condition, properties or assets of the Company, or in any material
impairment of the right or ability of the Company to carry on its
business substantially as now conducted, or in any material
liability on the part of the Company, or which would draw into
question the validity of this Agreement or the Mortgage Loans or of
any action taken or to be contemplated herein, or which would be
likely to impair materially the ability of the Company to perform
under the terms of this Agreement;
(viii)
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by
the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to
the Closing Date;
(ix)
The selection of the Mortgage Loans was not made in a manner so as
to affect adversely the interests of the Purchaser;
(x)
Neither this Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any
untrue statement of fact;
(xi)
There has been no change in the business, operations, financial
condition or assets of the Company since December 31, 2004, that
would have a material adverse effect on its ability to perform its
obligations under this Agreement or the Transfer and Servicing
Agreement;
(xii)
The Company has not dealt with any broker, investment banker, agent
or other Person (other than the Underwriters) that may be entitled
to any commission or compensation in the connection with the sale
of the Mortgage Loans;
(xiii)
The consideration received by the Company upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration
and reasonably equivalent value of the Mortgage Loans; and
(xiv)
The Company has complied with all applicable anti-money laundering
laws and regulations (the “Anti-Money Laundering Laws”)
and has established an anti-money laundering compliance program as
required by the Anti-Money Laundering Laws.
(b)
The Seller hereby makes the representations and warranties set
forth in Schedule II hereto with respect to each Mortgage Loan and
by this reference incorporated herein, to the Purchaser and the
Indenture Trustee, as of the Closing Date or, if applicable, such
other date as may be specified therein. With respect to any
of the representations and warranties made in Schedule II that are
made to the best of the Seller’s knowledge or as to which the
Seller has no knowledge, if it is discovered by the Purchaser, the
Seller, the Issuer or the Indenture Trustee that the substance of
such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage
Loan or the interest therein of the Noteholders then,
notwithstanding the Seller’s lack of knowledge with respect
to the substance of such representation and warranty being
inaccurate at the time the representation or warranty was made,
such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
(c)
The Purchaser hereby represents and warrants to the Seller that, as
of the date of this Agreement:
(i)
it is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has full power and authority to enter into and perform its
obligations under this Agreement and the Transfer and Servicing
Agreement;
(ii)
this Agreement and the Transfer and Servicing Agreement have been
duly authorized, executed and delivered by the Purchaser and
constitute the legal, valid and binding agreements of the Purchaser
enforceable against the Purchaser in accordance with their
respective terms, subject to (A) bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium or other
similar laws affecting creditors’ rights generally, (B)
general principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law, and (C) public policy
considerations limiting the enforceability of provisions of this
Agreement and the Transfer and Servicing Agreement which purport to
provide indemnification from penalties under applicable securities
laws;
(iii)
neither the execution and delivery by the Purchaser of this
Agreement, nor the performance by the Purchaser of the provisions
hereof, will (A) conflict with or result in a breach of, or
constitute a default under, any of the provisions of the limited
liability company agreement or bylaws of the Purchaser or any law,
governmental rule or regulation or any judgment, decree or order
binding on the Purchaser or any of its properties, or any of the
provisions of any indenture, mortgage, deed of trust, contract or
other instrument to which the Purchaser is a party or by which it
is bound, or (B) result in the creation of any lien, charge,
or encumbrance upon any of its properties pursuant to the terms of
any such indenture, mortgage, deed of trust, contract or other
instrument, which, in the case of either (A) or (B), would have a
material adverse effect on its ability to perform its obligations
hereunder or on the financial condition of the Purchaser;
(iv)
there are no actions, suits or proceedings against the Purchaser
pending or, to the knowledge of the Purchaser, threatened, or, to
the knowledge of the Purchaser, investigations pending, before any
court, administrative agency or other tribunal (A) asserting the
invalidity of this Agreement, (B) seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement or (C) which might materially and adversely affect the
performance by the Purchaser of its obligations under, or the
validity or enforceability of, this Agreement;
(v)
the Purchaser is not in violation of its limited liability company
agreement or bylaws or in default under any agreement, indenture or
instrument the effect of which default would have a material
adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement or on the financial condition of
the Purchaser;
(vi)
the Purchaser is not a party to, bound by or in breach or violation
of any indenture or other agreement or order or regulation of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it that materially and adversely affects
the (A) ability of the Purchaser to perform its obligations under
this Agreement or (B) the business, operations, financial
condition, properties or assets of the Purchaser; and
(vii)
no consent, approval, authorization or order of any federal or
state court or governmental agency or body is required for the
consummation by the Purchaser of the transactions contemplated by
the terms of this Agreement.
3.
Survival of Representations . Each of the
representations and warranties of the Seller and the Purchaser
contained herein shall survive the purchase and sale of the
Mortgage Loans pursuant hereto and shall continue in full force and
effect, notwithstanding any restrictive or qualified endorsement on
the Mortgage Notes and notwithstanding subsequent termination of
this Agreement. The representations and warranties shall not
be impaired by any review and examination of documents to be
delivered or held by the Seller in respect of each Mortgage Loan or
other documents evidencing or relating to the Mortgage Loans or any
failure on the part of the Purchaser or any successor or assignee
thereof to review or examine such documents.
4.
Repurchase, Purchase or Substitution of Mortgage Loans
(a)
Upon discovery by the Purchaser, the Seller, the Master Servicer or
any assignee, transferee or designee of the Purchaser of a Material
Defect with respect to a Mortgage Loan or a breach of any of the
representations and warranties of the Seller contained in Section 2
of this Agreement that materially and adversely affects the value
of any Mortgage Loan or the interest therein of the Purchaser or
the Purchaser’s assignee, transferee or designee, the party
discovering the Material
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