EXECUTION
AAMES INVESTMENT CORPORATION,
as SELLER
and
MORGAN STANLEY ABS CAPITAL I
INC.,
as PURCHASER
MORTGAGE LOAN PURCHASE AND ASSIGNMENT
AGREEMENT
Dated as of September 1, 2005
Aames Mortgage Investment Trust
2005-4
Mortgage Backed Notes, Series
2005-4
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
10
Section 13.
Entire Agreement
10
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
September 1, 2005, is executed on the Closing Date (as defined
below) by and between Morgan Stanley ABS Capital I Inc., a Delaware
corporation (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 and second 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 September 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 2005-4 (the “Issuer” or the
“Trust”).
4.
The Trust shall issue the Mortgage Backed
Notes, Series 2005-4, Class 1A1, Class 2A1, Class 2A2, Class 2A3SS,
Class 2A3MZ, 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 will be offered and sold by
Morgan Stanley & Co. Incorporated (“Morgan
Stanley”), Lehman Brothers Inc. (“LBI”), Bear,
Stearns & Co. Inc. (“Bear Stearns”), Greenwich
Capital Markets, Inc. (“Greenwich”), Citigroup Global
Markets Inc. (“Citigroup”), Countrywide Securities
Corporation (“Countrywide”) and Friedman, Billings,
Ramsey & Co., Inc. (“FBR,” and, together with
Morgan Stanley, LBI, Bear Stearns, Greenwich, Citigroup and
Countrywide, the “Underwriters”) pursuant to the terms
and conditions of an underwriting agreement among the Purchaser and
the Underwriters dated September 7, 2005 (the “Underwriting
Agreement”), through the use of a prospectus supplement dated
September 7, 2005 (the “Prospectus Supplement”), and
the related prospectus dated May 10, 2005 (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 September 12, 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, the Purchaser agrees on the Closing Date (i) to pay to the
Seller by transfer of immediately available funds, an amount equal
to $1,163,010,023.46, which is net of (A) an amount of
$3,050,187.18 representing the current Securities and Exchange
Commission registration statement fees for the amount of Notes
issued on the Closing Date and offered publicly pursuant to the
Prospectus and (B) the underwriting discount and (ii) 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 has filed 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 Subject to
Class Action Litigation and Investigations by Governmental
Agencies, the Unfavorable Outcome of which Could Adversely Affect
the Seller’s or the Servicer’s Business,” 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 June
30, 2005, 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 corporation 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 certificate of incorporation 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
certificate of incorporation 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 Defect or breach shall give prompt written notice to the
others. Within 90 days of the discovery of such Material
Defect or breach of any representation or warranty given by the
Seller to the Purchaser, the Seller shall either (a) cure such
Material Defect or such breach in all material respects, (b)
repurchase such Mortgage Loan or any property acquired in respect
thereof from the Purchaser for the Purchase Price (as defined in
the Transfer and Servicing Agreement) or (c) within the two year
period following the Closing Date, substitute a Qualifying
Substitute Mortgage Loan for the affected Mortgage Loan, in
accordance with Sections 2.02 and 3.02 of the T
