AAMES INVESTMENT CORP
AMEND. NO. 1 DATED AS OF OCTOBER 28, 2004 TO THE MASTER LOAN AND SECURITY AGMT.
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<TYPE>EX-10.8(B)
<SEQUENCE>3
<FILENAME>dex108b.htm
<DESCRIPTION>AMEND. NO. 1 DATED AS OF OCTOBER 28, 2004 TO THE MASTER LOAN AND SECURITY AGMT.
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<TITLE>Amend. No. 1 dated as of October 28, 2004 to the Master Loan and Security Agmt.</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 10.8(b) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>AMENDMENT NO. 1 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2"><B>TO THE </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>MASTER LOAN AND SECURITY AGREEMENT </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">AMENDMENT NO. 1, dated as of October 28, 2004 (this &#147;<U>Amendment</U>&#148;), to the Master Loan and Security
Agreement, dated as of October 21, 2004 (as previously amended, supplemented or otherwise modified, the &#147;<U>Existing Loan Agreement</U>&#148;; as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect
from time to time, the &#147;<U>Loan Agreement</U>&#148;), among AAMES CAPITAL CORPORATION (&#147;<U>Aames Capital</U>&#148;), AAMES FUNDING CORPORATION (&#147;<U>Aames Funding</U>&#148;, together with Aames Capital, each a
&#147;<U>Borrower</U>&#148;, collectively, the &#147;<U>Borrowers</U>&#148;) and MORGAN STANLEY BANK (the &#147;<U>Lender</U>&#148;). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Loan
Agreement. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>RECITALS </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">The Borrowers and the Lender are parties to the Existing Loan Agreement.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">Aames Financial Corporation, Aames Investment Corporation,
Aames Newco, Inc., and Aames TRS, Inc. have entered into that certain Plan and Agreement of Merger, dated as of July 21, 2004 (the &#147;<U>Merger Agreement</U>&#148;). The Borrowers and the Lender have agreed, subject to the terms and conditions of
this Amendment, that the Existing Loan Agreement shall be amended to provide for certain changes resulting from the consummation of the First Merger (as defined in the Merger Agreement). </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">Accordingly, the Borrowers and the Lender hereby agree, in consideration of the mutual premises and mutual obligations set
forth herein, the receipt and sufficiency of which is hereby acknowledged, that the Existing Loan Agreement is hereby amended as follows: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 1. </B><U>Amendments</U>. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">1.1 Immediately prior to the consummation of the First Merger, Section 1.01 of the Existing Loan Agreement shall be amended by deleting the definition of
&#147;Parent&#148; in its entirety and substituting in lieu thereof the following new definition: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">&#147;&#145;<U>Parent</U>&#146; shall mean Aames Investment Corporation.&#148; </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">1.2 Immediately prior to the consummation of the First Merger, the Existing
Loan Agreement shall be amended by deleting Section 6.17 in its entirety and substituting in lieu thereof the following: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">&#147;6.17 <U>Capitalization</U>. <U>Schedule 3</U> hereto contains a true, complete and correct list of all issued and outstanding shares
of capital stock of all Subsidiaries of Aames Investment Corporation and the record owner thereof.&#148; </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 2. </B><U>Conditions Precedent</U>. This Amendment shall be effective immediately prior to the
consummation of the First Merger (the &#147;<U>Amendment Effective Date</U>&#148;), <U>provided</U> that each of the following conditions precedent shall have been satisfied: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">2.1 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: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">(a)
<U>Amendment</U>. This Amendment, executed and delivered by a duly authorized officer of each Borrower and the Lender. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">(b) <U>Other Documents</U>. Such other documents as the Lender or counsel to the Lender may reasonably request. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">2.2 <U>No Default</U>. On the Amendment Effective Date, (i) each Borrower
shall be in compliance with all the terms and provisions set forth in the Existing Loan Agreement on its part to be observed or performed, (ii) the representations and warranties made and restated by the Borrowers 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 or Event of Default shall have occurred and be continuing on such date. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 3. </B><U>Representations and Warranties</U>. Each Borrower hereby
represents and warrants to the Lender that 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 or Event of Default has occurred or is continuing, and
hereby confirms and reaffirms the representations and warranties contained in Section 6 of the Loan Agreement. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 4. </B><U>Covenant</U>. Each Borrower hereby covenants and agrees with the Lender that, no later than one Business Day following the date of
effectiveness of the First Merger, the Borrowers shall notify the Lender that the First Merger has been consummated. Any failure to provide such notice within the period specified shall be an Event of Default under the Loan Agreement. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 5. </B><U>Limited Effect</U>. Except as expressly amended 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; <U>provided</U>, <U>however</U>, that all references therein and herein to the &#147;Loan
Documents&#148; shall be deemed to include, in any event, this Amendment and each reference to the Loan Agreement in any of the Loan Documents shall be deemed to be a reference to the Existing Loan Agreement as amended hereby. The execution of this
Amendment by the Lender shall not operate as a waiver of any of its rights, powers or privileges under the Loan Agreement or under any of the other Loan Documents, except as expressly set forth herein. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 6. </B><U>Counterparts</U>. 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. Delivery of an executed counterpart of a signature page to this Amendment
in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 7. </B><U>GOVERNING LAW</U>. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">-2- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">[SIGNATURES FOLLOW] </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2">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. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><DIV ALIGN="right">
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<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><U>BORROWERS</U></FONT></P></TD></TR>
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2"><B>AAMES CAPITAL CORPORATION</B></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">By</FONT></P></TD>
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<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
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<TD VALIGN="bottom"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Name: Jon D. Van Deuren</FONT></P></TD></TR>
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<TD VALIGN="bottom"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Title: Senior Vice President</FONT></P></TD></TR>
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<TD HEIGHT="16" COLSPAN="3"></TD></TR>
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2"><B>AAMES FUNDING CORPORATION</B></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">By</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
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<TD VALIGN="bottom"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Name: Jon D. Van Deuren</FONT></P></TD></TR>
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<TD VALIGN="bottom"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Title: Senior Vice President</FONT></P></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">A<SMALL>MENDMENT</SMALL> N<SMALL>O</SMALL>. 1 </FONT></P>


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<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><U>LENDER</U></FONT></P></TD></TR>
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2"><B>MORGAN STANLEY BANK</B></FONT></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">A<SMALL>MENDMENT</SMALL> N<SMALL>O</SMALL>. 1 </FONT></P>

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