UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Aames Financial Corporation
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(Name of Issuer)
Common Stock, par value $.001 per share
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(Title of Class of Securities)
00253A 10 1
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(CUSIP Number)
Barbara S. Polsky
General Counsel
Aames Financial Corporation
350 South Grand Avenue
Los Angeles, California 90071
(323) 210-5000
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 23, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13D to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [].
Check the following box if a fee is being paid with this statement []. (A fee is
not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see Notes).
<PAGE>
SCHEDULE 13D
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CSUIP NO. 00253A 10 1 PAGE 2 OF 11 PAGES
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1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cary H. Thompson ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) []
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS* N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
[]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
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8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 4,570,519 (See Response to Item 5.)
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9 SOLE DISPOSITIVE POWER
EACH
REPORTING -0-
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10 SHARED DISPOSITIVE POWER
PERSON
WITH 4,570,519 (See Response to Item 5.)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,570,519 (See Response to Item 5.)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.7% (See Response to Item 5.)
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
Page 2 of 11
<PAGE>
SCHEDULE 13D
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CSUIP NO. 00253A 10 1 PAGE 3 OF 11 PAGES
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1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Karen L. Heilman [ ###-##-#### ]
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) []
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS* N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
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8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 4,570,519 (See Response to Item 5.)
----------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
REPORTING -0-
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON
WITH 4,570,519 (See Response to Item 5.)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,570,519 (See Response to Item 5.)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.7% (See Response to Item 5.)
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
Page 3 of 11
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to the common stock, par value
$0.001 per share (the "Common Stock"), of Aames Financial Corporation, a
Delaware corporation (the "Company"), and is being filed pursuant to Rule 13d-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The address of the principal executive offices of the Company is 2
California Plaza, 350 South Grand Avenue, Los Angeles, California 90071.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This Statement is hereby filed by Cary H. Thompson and Karen L.
Heilman, Mr. Thompson's spouse (collectively, the "Reporting Persons").
(b) The business address of the Reporting Persons is c/o Aames
Financial Corporation, 2 California Plaza, 350 South Grand Avenue, Los Angeles,
California 90071.
(c) Mr. Thompson is the Chief Executive Officer and a Director
of the Company, a financial services company, located at 2 California Plaza, 350
South Grand Avenue, Los Angeles, California 90071.
(d) Neither of the Reporting Persons have, during the last five years,
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) Neither of the Reporting Persons have, during the last five years,
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding been subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) The Reporting Persons are citizens of the United States of
America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Reporting Persons gave no funds or other consideration in the
transactions described in this Schedule 13D.
ITEM 4. PURPOSE OF THE TRANSACTION.
Mr. Thompson entered into that certain Management Voting Agreement, by
and among Mr. Thompson, Capital Z Financial Services Fund II, L.P., a Bermuda
limited partnership ("Capital Z"), and Neil B. Kornswiet, dated December 23,
1998 (the "Voting Agreement") for the purpose of inducing Capital Z to enter
into that certain Preferred Stock Purchase Agreement by and between the
Page 4 of 11
<PAGE>
Company and Capital Z dated December 23, 1998 (the "Agreement"). Pursuant to the
Agreement Capital Z will make an equity investment in the Company of up to $100
million at a price equal to $ 1.00 per share. The Agreement provides, among
other things, for (i) the investment of $75 million through the purchase by
Capital Z of Series B Convertible Preferred Stock of the Company (the "Series B
Stock") and Series C Convertible Preferred Stock of the Company (the "Series C
Stock" and together with the Series B Stock, the "Preferred Stock") in a private
placement transaction (the "Initial Closing"); and (ii) after the Initial
Closing and completion of a recapitalization described below, an offering (the
"Rights Offering") to the Company's stockholders of non-transferable rights to
purchase up to $25 million of Series C Stock for which Capital Z would act as a
standby underwriter (the "Standby Commitment").
Under the Agreement, Capital Z will, on the Initial Closing, purchase
shares of Preferred Stock for an aggregate purchase price of $75 million.
Following the completion of the initial investment and subject to the receipt of
stockholder approval of a recapitalization to increase the Company's authorized
common and preferred stock (together with a split to be effected with respect to
the Preferred Stock, the "Recapitalization"), the stockholders of the Company
will have the opportunity to purchase shares of Series C Stock for an aggregate
purchase price of $25 million. Capital Z will act as standby underwriter with
respect to the Rights Offering and will purchase all shares of Series C Stock
that are not purchased by the Company's stockholders at the same per share
purchase price offered to the stockholders. On January 4, 1998, Capital Z
Management, Inc., a Bermuda corporation ("Cap Z Management") received, as a
standby commitment fee, a warrant (the "Cap Z Warrant") to purchase 1.25 million
shares of the Company's Common Stock at an exercise price of $1.00 per share. At
the Initial Closing, the Company will pay Capital Z (or its designee) a $1
million transaction fee in connection with the transactions under the Agreement
and Capital Z (or its designee) will receive an additional warrant to purchase
up to 3,000,000 shares of Common Stock at an exercise price of $ 1.00 per share,
which will be exercisable if the Recapitalization is not completed by June 30,
1999.
The Series B Stock will vote in all matters on which the common
stockholders vote, and the Series C Stock will vote in all such matters except
the election of directors. The Series B Stock will be convertible at the
direction of the holders of a majority of the outstanding shares of Series B
Stock. The Series C Stock will be convertible at the direction of the holder or
the holders of a majority of the outstanding shares of Series C Stock. All other
terms of the Series B Stock and the Series C Stock will be identical. Following
the Recapitalization, each share of Preferred Stock will be convertible into one
share of Common Stock based on a stated value of $1.00 per share and will have
an annual dividend rate of 6.5%, which the Company has the option of accruing
for the first two years. The Preferred Stock will be redeemable by the Company
at its option on the tenth anniversary of its issuance. If the Company does not
complete the Recapitalization prior to June 30, 1999 then (i) the dividend rate
on the Preferred Stock will increase to 15% per annum; and (ii) the Preferred
Stock will become mandatorily redeemable on the sixth anniversary of its
issuance. Prior to the Recapitalization, in addition to its regular dividend
rights and rights in liquidation based on its stated value per share, the
Preferred Stock will participate in dividends and rights in liquidation with
holders of the common stock in any remaining assets of the Company.
Page 5 of 11
<PAGE>
The Initial Closing is subject to conditions including the receipt by
the Company of all consents necessary to consummate the transactions
contemplated by the Agreement, including waivers from certain bondholders of the
Company, the expiration or termination of the waiting period under the
Hart-Scott-Rodino Act, certain regulatory approvals, the absence of any material
adverse change in the business or operations of the Company, the receipt of a
waiver from the New York Stock Exchange of the stockholder approval requirements
with respect to the issuance and sale of the Preferred Stock, the issuance of a
legal opinion by the Company's legal counsel, commitments from lenders for
warehouse facilities in the total amount of at least $600 million with terms of
at least 6-12 months, the reconstitution of the Board of Directors of the
Company as set forth in the Agreement and other customary closing conditions
including the truth and accuracy of all representations and warranties, full
compliance with the terms of the Agreement, delivery of certain officers'
certificates and other supporting documents, compliance with all of the
provisions of the ancillary documents to the Agreement, the absence of any rule
or order in effect which prohibits the consummation of the transactions
contemplated by the Agreement, and the absence of certain litigation challenging
the transactions contemplated by the Agreement or seeking material damages
relating thereto.
The Company also has agreed to pay Capital Z certain fees in connection
with the transaction, including fees payable if an alternative strategic
transaction is consummated or, in certain circumstances, agreed to by the
Company. In the event a superior alternative transaction is proposed, Capital Z
also will have certain matching rights.
Following the completion of the transactions contemplated by the
Agreement, Capital Z would hold Preferred Stock representing 57.2% of the
combined voting power of the Company if all shares offered in the Rights
Offering are purchased by common stockholders and 76.3% of the combined voting
power of the Company if none of the shares offered in the Rights Offering are
purchased by the common stockholders. At the Initial Closing and subject to
completion of the Recapitalization and receipt of stockholder approval, the
Company will adopt a new stock option plan covering approximately 14,000,000
shares of Common Stock.
In addition to the execution of the Agreement, on December 23, 1998,
the Company and ChaseMellon Shareholder Services, LLC, as successor Rights Agent
to Wells Fargo Bank (the "Rights Agent"), entered into an Amendment to Rights
Agreement (the "Amendment") which serves to amend the Company's Rights Agreement
dated June 21, 1996, as amended on April 27, 1998 (the "Rights Agreement"). The
Amendment provides that Capital Z and each Designated Purchaser, as defined in
the Agreement (and their respective affiliates, associates and transferees), is
an Exempt Person, as defined in the Rights Agreement. The Amendment also
provides that in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage and that any
liability of the Rights Agent under the Rights Agreement will be limited to the
amount of fees paid by the Company to the Rights Agent. Except as specifically
amended by the Amendment, the Rights Agreement remains in full force and effect
in accordance with its terms.
Page 6 of 11
<PAGE>
Mr. Thompson is a party to the Voting Agreement and that certain
Management Investment Agreement, by and between Mr. Thompson and the Company,
dated December 23, 1998 (the "Investment Agreement"), each as more fully
described in Item 6 below, which govern certain voting and purchase obligations
and transfer restrictions of Mr. Thompson as the same relate to the Company's
securities and the transactions described in this Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of January 11, 1999 the Reporting Persons are the beneficial
owners of 922,659 shares of the Common Stock, or approximately 3.0% of the
Common Stock based on a total of 31,015,893 shares of the Common Stock
outstanding as of November 4, 1998 (as reported in the Company's Form 10-Q for
the period ended September 30, 1998) (the "Outstanding Shares"). Such ownership
includes the right to acquire up to 900,588 shares of Common Stock pursuant to
the exercise of outstanding options. To the best knowledge of the Reporting
Persons, Mr. Neil B. Kornswiet and Ms. Debra Kornswiet are the beneficial owners
of 2,397,860 shares of Common Stock, or approximately 7.7% of the Outstanding
Shares. To the best knowledge of the Reporting Persons, Cap Z Management, an
affiliate of Cap Z, is the beneficial owner of 1,250,000 shares of Common Stock
pursuant to its ownership of the Cap Z Warrant, or approximately 4.0% of the
Outstanding Shares.
By virtue of the Voting Agreement, the Reporting Persons, Mr. and Mrs.
Kornswiet and Cap Z may be deemed to constitute a "group" (within the meaning of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")). If so,
the Reporting Persons, Mr. and Mrs. Kornswiet and Cap Z would be deemed part of
a group beneficially owning 4,570,519 shares of the Common Stock, or
approximately 14.7% of the Outstanding Shares. The Reporting Persons, for the
purposes of Section 13(d) of the Exchange Act, expressly disclaim any beneficial
ownership of all shares of Common Stock which may be deemed to be beneficially
owned by them as a result of membership in a group with Mr. and Mrs. Kornswiet
and/or Cap Z.
(b) The Reporting Persons have shared power to vote or direct the vote
and dispose or direct the disposition of 922,659 shares of the Common Stock. By
virtue of the Voting Agreement, the Reporting Persons may be deemed to have
shared voting power over (i) an additional 2,397,860 shares of Common Stock,
which shares are, to the best knowledge of the Reporting Persons, beneficially
owned by Mr. and Mrs. Kornswiet, and (ii) an additional 1,250,000 shares of
Common Stock, which shares are, to the best knowledge of the Reporting Persons,
beneficially owned by Cap Z Management, an affiliate of Cap Z. The Reporting
Persons, for the purposes of Section 13(d) of the Exchange Act, expressly
disclaim any shared voting power over such additional shares.
(c) Neither of the Reporting Persons has engaged in any transactions in
the Common Stock during the past 60 days. Except as set forth herein, to the
best knowledge of the Reporting Persons, neither Cap Z, Cap Z Management nor Mr.
and Mrs. Kornswiet have engaged in any transactions in the Common Stock during
the past 60 days.
(d) Not applicable.
Page 7 of 11
<PAGE>
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Pursuant to the Voting Agreement, Mr. Thompson agrees that (a) under
any circumstances upon which a vote, consent or other approval will be held or
solicited with respect to the Recapitalization, Mr. Thompson shall vote (or
cause to be voted) or shall consent, execute a consent or cause to be executed a
consent with respect to his shares of Common Stock (the "Shares") in favor of
the Recapitalization; (b) at any meeting of shareholders of the Company or at
any adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought while the Purchase Agreement remains in
effect, Mr. Thompson shall vote (or cause to be voted) the Shares against (i)
any action which is a component of any inquiry or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any acquisition or
purchase of all or a significant portion of the assets or business of the
Company or its subsidiaries (determined on a consolidated basis), or an equity
interest in the Company or any of its subsidiaries, or any merger,
consolidation, business combination or similar transaction involving the Company
or any of its subsidiaries or any other similar transaction (each, an
"Alternative Transaction") or would be a component of an Alternative Transaction
if it were contained in a proposal, or (ii) any other matter submitted to the
shareholders of the Company, including, without limitation, any amendment of the
Company's Certificate of Incorporation or By-Laws, which matter would in any
manner partially or wholly prevent or materially impede, interfere with or delay
any of the transactions contemplated by the Purchase Agreement, as determined in
good faith by Capital Z and with respect to which Capital Z provides written
notice to Mr. Thompson; and (c) in the event that the Recapitalization is not
consummated prior to June 30, 1999, Mr. Thompson agrees to vote the Shares, or
grant a consent for approval in respect of the Shares in any manner permitted by
the Delaware General Corporations Law, as Mr. Thompson is directed by the board
of directors of the Company, on any matters submitted to the shareholders of the
Company, other than the election of directors. Furthermore, Mr. Thompson agrees
not to transfer any Shares which he owned prior to the consummation of the
transactions contemplated by the Agreement.
In connection with the Agreement, Mr. Thompson also has entered into
the Investment Agreement. Pursuant to the Investment Agreement, Mr. Thompson has
agreed to purchase shares of Series C Stock from the Company for an aggregate
purchase price of $250,000. Mr. Thompson's obligation to purchase such shares is
conditioned on the consummation of the Initial Closing under the Agreement. The
per share purchase price will be equal to the per share price for Series C Stock
to be paid by Capital Z pursuant to the Agreement. The proposed rights,
preferences and privileges of the Series C Stock are set forth in Exhibit B to
the Purchase Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
99.1 Preferred Stock Purchase Agreement, dated December 23, 1998, by and
between Aames Financial Corporation and Capital Z Financial Services
Fund II, L.P. Incorporated herein by reference to the Company's Current
Report on Form 8-K filed December 31, 1998.
Page 8 of 11
<PAGE>
99.2 Management Voting Agreement, dated December 23, 1998, by and among
Capital Z Financial Services Fund II, L.P., Cary Thompson and Neil
Kornswiet.
99.3 Management Investment Agreement, dated December 23, 1998, by and
between Cary Thompson and Aames Financial Corporation.
Page 9 of 11
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: January 12, 1999
/s/ Cary H. Thompson
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Cary H. Thompson
/s/ Karen L. Heilman
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Karen L. Heilman
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative (other than an
executive officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statements, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001)
Page 10 of 11
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TITLE
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99.1 Preferred Stock Purchase Agreement, dated December 23, 1998, by and
between Aames Financial Corporation and Capital Z Financial Services
Fund II, L.P. Incorporated herein by reference to the Company's Current
Report on Form 8-K filed December 31, 1998.
99.2 Management Voting Agreement, dated December 23, 1998, by and among
Capital Z Financial Services Fund II, L.P., Cary Thompson and Neil
Kornswiet.
99.3 Management Investment Agreement, dated December 23, 1998, by and
between Cary Thompson and Aames Financial Corporation.
Page 11 of 11
Exhibit 99.2
MANAGEMENT VOTING AGREEMENT
MANAGEMENT VOTING AGREEMENT dated as of December 23, 1998,
among Capital Z Financial Services Fund II, L.P., a Bermuda limited partnership
("CAPITAL Z"), and Cary Thompson and Neil Kornswiet (collectively, the
"SHAREHOLDERS").
WHEREAS, the Shareholders desire that the Aames Financial
Corporation, a Delaware corporation (the "COMPANY"), and Capital Z enter into a
Preferred Stock Purchase Agreement dated as of the date hereof (as the same may
be amended from time to time, the "PURCHASE AGREEMENT"), which provides, among
other things, that Capital Z, together with certain Capital Z affiliates and
co-investors as provided therein, will purchase shares of the Company's Series B
Convertible Preferred Stock, par value $0.001 per share ("SERIES B PREFERRED
STOCK") and Series C Convertible Preferred Stock, par value $0.001 per share
("SERIES C PREFERRED STOCK," and, together with the Series B Preferred Stock,
"SENIOR PREFERRED STOCK"), in the amounts and subject to the conditions set
forth in the Purchase Agreement; and
WHEREAS, the Shareholders are executing this Agreement as an
inducement to the Company and Capital Z to execute and deliver the Purchase
Agreement.
NOW THEREFORE, in consideration of the execution and delivery
by the Company and Capital Z of the Purchase Agreement and the mutual covenants,
conditions and agreements contained therein and herein, the parties hereto agree
as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. Each of the
Shareholders severally and not jointly represents and warrants to the Company
and Capital Z as to himself (and not as to any other Shareholder) as follows:
(a) Such Shareholder is the record and beneficial owner of the
number of shares of the Company's common stock, par value $0.001 per share
("COMMON STOCK") (together with any shares of Common Stock or other voting
securities of the Company, including, without limitation, Senior Preferred
Stock, with respect to which the Shareholder obtains voting power after the date
hereof, the "SHARES"), as set forth on Exhibit A hereto (which Exhibit shall be
amended after the date hereof to include any voting securities of the Company
with respect to which the Shareholder obtains voting power after the date
hereof). Except for such number of Shares and except for Shares, if any, (i)
issuable in connection with options outstanding as of the date hereof or (ii)
which such Shareholder has agreed to purchase in connection with the
transactions contemplated by the Purchase
<PAGE>
Agreement, such Shareholder is not the record or beneficial owner of any shares
of Common Stock.
(b) Such Shareholder has the authority to execute, deliver and
perform this Agreement without the necessity of obtaining any third party
consent, approval, authorization or waiver, or giving of any notice or
otherwise, except for such consents as have been obtained, are unconditional and
are in full force and effect.
(c) This Agreement has been duly executed and delivered by
such Shareholder and, assuming due execution and delivery thereof by the Company
and Capital Z, constitutes the legal, valid, and binding obligation of such
Shareholder enforceable against the Shareholder in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
enforcement is sought by proceedings in equity or at law).
(d) The execution, delivery, and performance of this Agreement
by such Shareholder will not (i) result in the breach of or constitute a default
under any contract to which such Shareholder is subject, (ii) constitute a
violation of any Law applicable or relating to such Shareholder or (iii) result
in the creation of any Lien.
(e) Except for this Agreement, there are no voting trusts or
other agreements or understandings, including, without limitation, any proxies,
in effect governing the voting of the Shares.
(f) Such Shareholder does not hold, and has not issued, any
proxies, or securities convertible into or exchangeable for or any options,
warrants, or other rights to purchase or subscribe for any shares of Common
Stock.
(g) The Shares and the certificates representing such Shares
are now and until the earlier to occur of June 30, 1999 and consummation of the
Recapitalization will be held by such Shareholder, or by a nominee or custodian
for the benefit of such Shareholder, free and clear of all Liens, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever other than as created by this Agreement.
(h) Such Shareholder understands and acknowledges that the
Company and Capital Z are entering into the Purchase Agreement in reliance upon
such Shareholder's execution and delivery of this Agreement.
(i) There are no undertakings, agreements, arrangements or
understandings of the type required to be disclosed by the Company pursuant to
Item 404 of Regulation S-K
Page 2
<PAGE>
under the Securities Act in filings by the Company with the Securities and
Exchange Commission in effect between such Shareholder, or any of his or her
affiliates, on the one hand, and the Company or any of its subsidiaries, on the
other hand, which have not been fully and completely disclosed, in writing, to
Capital Z.
SECTION 2. VOTING AGREEMENT. Each Shareholder agrees with,
and covenants to, Capital Z as follows:
(a) At the Shareholders' Meeting or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other approval will
be held or solicited with respect to the increase of the authorized capital
stock of the Company as contemplated by the Purchase Agreement (the "CHARTER
AMENDMENT), such Shareholder shall vote (or cause to be voted) or shall
consent, execute a consent or cause to be executed a consent in respect of the
Shares in favor of the Charter Amendment and the Stock Split.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote, consent
or other approval is sought while the Purchase Agreement remains in effect, such
Shareholder shall vote (or cause to be voted) the Shares against (i) any
Alternative Transaction or any action which is a component of any Alternative
Transaction or would be a component of an Alternative Transaction if it were
contained in a proposal, or (ii) any other matter submitted to the shareholders
of the Company, including, without limitation, any amendment of the Company's
Certificate of Incorporation or By-Laws, which matter would in any manner
partially or wholly prevent or materially impede, interfere with or delay any of
the transactions contemplated by the Purchase Agreement, as determined in good
faith by Purchaser and with respect to which Purchaser provides written notice
to the Shareholder.
(c) In the event that the Recapitalization (as defined in the
Purchase Agreement) is not consummated prior to June 30, 1999, each Shareholder
agrees to vote all Shares for which he has or shares the power to vote, or grant
a consent for approval in respect of such Shares in any manner permitted by the
DGCL, as such Shareholder is directed by the board of directors of the Company,
on any matters submitted to the shareholders of the Company, other than the
election of directors. The foregoing agreement shall terminate automatically
upon the termination of this Agreement with respect to any Shares owned by such
person upon transfer of such Shares pursuant to Section 7. The Company shall be
a third party beneficiary of this Agreement for the purposes of this Section
2(c).
(d) Each Shareholder represents and warrants to the Company
and Capital Z that any proxies heretofore given in respect of the Shares are not
irrevocable, and that any such
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proxies are hereby revoked, to the extent in conflict with Section 2(c) hereof.
(e) Each Shareholder hereby affirms that the irrevocable proxy
set forth in this Section 2 is given in connection with the execution of the
Purchase Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of such Shareholder under this Agreement. Each
Shareholder hereby further affirms that the irrevocable proxy is coupled with an
interest and may under no circumstances be revoked. Each Shareholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy is executed and intended to
be irrevocable in accordance with the provisions of Section 212(e) of the DGCL.
SECTION 3. COVENANTS OF THE SHAREHOLDER. Each Shareholder
agrees with, and covenants to, Capital Z that such Shareholder shall not on or
prior to the earlier to occur of June 30, 1999 or the consummation of the
Recapitalization, (i) transfer (which term shall include, without limitation,
for the purposes of this Agreement, any sale, gift, pledge, encumbrance (other
than an unforeclosed pledge or encumbrance for financing purposes where the
Shareholder retains sole voting power with respect to all pledged securities),
or other disposition), or consent to any transfer of, any or all the Shares or
any interest therein, unless the transferee(s) of such Shares agrees in writing
to be bound by the provisions of this Agreement applicable to such Shareholder,
(ii) grant any proxy, power-of-attorney or other authorization in or with
respect to such Shares, except under or in accordance or not in conflict with
this Agreement, or (iii) deposit such Shares into a voting trust, enter into a
voting agreement or arrangement with respect to such Shares or otherwise limit
such Shareholder's power to vote his or her Shares in a manner that conflicts
with this Agreement.
SECTION 4. CERTAIN EVENTS. In the event of any stock split,
stock dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock, or the acquisition
of additional shares of Common Stock or other voting securities of the Company
by such Shareholder, the number of Shares set forth in Section 1(a) hereof shall
be adjusted appropriately and this Agreement and the obligations hereunder shall
attach to any additional shares of Common Stock or other voting securities of
the Company issued to or acquired by such Shareholder.
SECTION 5. SHAREHOLDER CAPACITY. No person executing this
Agreement who is or becomes a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. Each Shareholder
signs solely in such Shareholder's capacity as the record and beneficial owner
of the Shares.
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SECTION 6. FURTHER ASSURANCES. Each Shareholder shall, upon
request of Capital Z, execute and deliver any additional documents and take such
further actions as may reasonably be deemed by Capital Z to be necessary or
desirable to carry out the provisions hereof.
SECTION 7. TERMINATION. This Agreement, and all rights and
obligations of the parties hereunder, shall terminate upon the date upon which
the Recapitalization has been consummated and the Shareholder Approval has been
obtained or the Purchase Agreement is earlier terminated in accordance with its
terms, except that no Shareholder shall be relieved of any liability for breach
of this Agreement by such Shareholder prior to such termination. Further, this
Agreement shall terminate with respect to any Shares which are transferred as
permitted by Section 3 hereof.
SECTION 8. DEFINED TERMS. Capitalized terms used and not
otherwise defined in this Agreement shall have the respective meanings assigned
to them in the Purchase Agreement.
SECTION 9. NOTICES. All notices, requests, claims, demands
and other communications under this Agreement shall be sufficiently given if
sent by registered or certified mail, postage prepaid, or overnight air courier
service, or telecopy or facsimile transmission (with hard copy to follow) to
the parties at the following addresses (or at such other address for a party
as shall be specified by like notice): (i) if to Capital Z, to the address set
forth in Section 7.3 of the Purchase Agreement; and (ii) if to any Shareholder,
to the address set forth opposite such Shareholder's name on Exhibit A hereto.
SECTION 10. HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 11. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective as to any Shareholder when one or
more counterparts have been signed by Capital Z and such Shareholder and
delivered to Capital Z and such Shareholder.
SECTION 12. ENTIRE AGREEMENT. This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
SECTION 13. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to any applicable conflicts of law principles of such State.
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SECTION 14. SUCCESSORS AND ASSIGNS. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise, by any of the
parties without the prior written consent of the other parties, except as
expressly contemplated by Section 3(a), and except that Capital Z may assign its
rights under this Agreement to any transferee of any of the Company's securities
acquired by it under the Purchase Agreement (and any such transferee may
similarly assign its rights in connection with any further transfer of such
securities, in whole or in part). Any assignment in violation of the foregoing
shall be void.
SECTION 15. ENFORCEMENT. Each party agrees that irreparable
damage would occur and that the other party hereto would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that each party shall be entitled to an injunction or
injunctions to prevent breaches by the other party hereto of this Agreement and
to enforce specifically the terms and provisions of this Agreement in any court
of the United States located in the State of Delaware or in Delaware State
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (i) consents to submit
such party to the personal jurisdiction of any Federal court located in the
State of Delaware or any Delaware State court in the event any dispute arises
out of this Agreement or any of the transactions contemplated hereby, (ii)
agrees that such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iii)
agrees that such party will not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a Federal
court sitting in the State of Delaware or a Delaware State court.
SECTION 16. SEVERABILITY. If any term or provision hereof, or
the application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid or unenforceable with respect to
such jurisdiction, and only to such extent, and the remainder of the terms and
provisions hereof, and the application thereof to any other circumstance, shall
remain in full force and effect, shall not in any way be affected, impaired or
invalidated, and shall be enforced to the fullest extent permitted by law, and
the parties hereto shall reasonably negotiate in good faith a substitute term or
provision that comes as close as possible to the invalidated or unenforceable
term or provision, and that puts each party in a position as nearly comparable
as possible to the position each such party would have been in but for the
finding of invalidity or unenforceability, while remaining valid and
enforceable.
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SECTION 17. AMENDMENT; MODIFICATION; WAIVER. No amendment,
modification or waiver in respect of this Agreement shall be effective against
any party unless it shall be in writing and signed by such party.
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IN WITNESS WHEREOF, Capital Z and the Shareholders have caused
this Agreement to be duly executed and delivered as of the date first written
above.
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.,
By its General Partner
CAPITAL Z PARTNERS, L.P.,
By its General
Partner CAPITAL Z
PARTNERS, LTD.
By: /s/ ADAM M. MIZEL
-----------------
Name: Adam M. Mizel
Title: Partner
SHAREHOLDERS:
/S/ CARY H. THOMPSON
----------------------
Cary Thompson
/S/ NEIL B. KORNSWIET
----------------------
Neil Kornswiet
Exhibit 99.3
MANAGEMENT INVESTMENT AGREEMENT
(CARY THOMPSON)
MANAGEMENT INVESTMENT AGREEMENT (this "AGREEMENT") dated as of
December 23, 1998, between Aames Financial Corporation, a Delaware corporation
(the "COMPANY"), and Cary Thompson, an individual residing at 1944 Fairburn
Avenue, Los Angeles, California, 09925 (the "MANAGEMENT INVESTOR").
WHEREAS, on the date hereof, the Company and Capital Z
Financial Services Fund II, L.P., a Bermuda limited partnership ("CAPITAL Z"),
are entering into a Preferred Stock Purchase Agreement (the "PURCHASE
AGREEMENT"), pursuant to which Capital Z has agreed to purchase, together with
Capital Z Affiliates and co-investors as designated by Capital Z, shares of the
Company's Series B Convertible Preferred Stock, par value $0.001 per share
("SERIES B PREFERRED STOCK") and Series C Convertible Preferred Stock, par value
$0.001 per share ("SERIES C PREFERRED STOCK," and, together with the Series B
Preferred Stock, "SENIOR PREFERRED STOCK"), in the amounts and subject to the
conditions set forth in the Purchase Agreement; and
WHEREAS, the Management Investor is a senior management
employee of the Company and, as a condition precedent to the closing of the
transactions contemplated by the Purchase Agreement, certain senior management
employees of the Company, including the Management Investor, are required to
purchase Series C Preferred Stock from the Company; and
WHEREAS, the Management Investor desires to purchase from the
Company, and the Company desires to sell to the Management Investor, Series C
Preferred Stock under the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used and not
otherwise defined in this Agreement shall have the respective meanings assigned
to them in the Purchase Agreement.
SECTION 2. SALE AND DELIVERY.
(a) Upon the terms and subject to the conditions set
forth herein, and conditioned upon the consummation of the Initial Closing, in
reliance upon the representations and warranties of the Management Investor
hereinafter set forth, and for the purchase price described in Section 2(b), at
the Initial Closing, the Company shall issue, sell and deliver to the
<PAGE>
Management Investor, and the Management Investor shall purchase from the
Company, two hundred and fifty (250) shares of Series C Preferred Stock (such
shares of Series C Preferred Stock are referred to collectively herein as the
"SHARES"). The number "250" in the preceding sentence shall be two hundred and
fifty thousand (250,000) if the Recapitalization has been consummated prior to
the Initial Closing Date).
(b) The purchase price per share of Series C Preferred
Stock shall be equal to the Purchase Price (as such term is defined in the
Purchase Agreement) (as used herein, the "PURCHASE PRICE") and shall be paid in
cash at the Initial Closing.
(c) The purchase and sale of Shares shall occur on the
Initial Closing Date and, at the Initial Closing:
(i) the Company shall deliver to the Management
Investor certificates representing the Shares, duly endorsed for
transfer, transferring to the Management Investor good and marketable
title to such Shares, free and clear of all liens and encumbrances; and
(ii) the Management Investor shall deliver to the
Company the Purchase Price, in immediately available funds to the
account specified by the Company at least two Business Days prior to
the Initial Closing Date;
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT
INVESTOR. The Management Investor hereby represents and warrants to the Company
as follows:
(a) The Shares (and the Underlying Common Shares) to be
purchased by such Management Investor will be acquired for investment for the
Management Investor's own account and not with a view to the resale or
distribution of any part thereof, except in compliance with the provisions of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), or an exemption
therefrom, and in compliance with the terms of this Agreement. The Management
Investor is a senior management employee of the Company and is fully familiar
with the business of the Company and with the risks associated with the purchase
of the Shares pursuant to this Agreement. The Management Investor is an
accredited investor as defined under Rule 501(a) under the Securities Act.
(b) The Management Investor understands that the Shares
and the Underlying Common Shares are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such Shares (and the Underlying Common Shares)
may be resold without registration under the Securities Act only in certain
limited circumstances.
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(c) The Management Investor further agrees that each
certificate representing the Shares (and the Underlying Common Shares) shall be
stamped or otherwise imprinted with a legend substantially in the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SECURITIES
HAVE BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND TO THE OTHER TERMS SET FORTH IN
THAT CERTAIN MANAGEMENT INVESTMENT AGREEMENT, DATED AS OF
DECEMBER 23, 1998, A COPY OF WHICH AGREEMENT HAS BEEN FILED
WITH THE SECRETARY OF THE COMPANY AND ARE AVAILABLE UPON
REQUEST."
SECTION 4. RESTRICTIONS ON TRANSFER OF SHARES. For a period
commencing on the Initial Closing Date and ending on the fifth anniversary of
the Initial Closing Date, the Management Investor may not sell, transfer,
assign, pledge, hypothecate or otherwise dispose of (each, a "TRANSFER") any of
the Shares (or the Underlying Common Shares), without the prior express written
consent of the Company, PROVIDED, HOWEVER, that the foregoing restriction on
transfer shall not apply (i) if Capital Z Beneficially Owns less than (A) fifty
percent (50%) of the number of shares of Senior Preferred Stock purchased by
Capital Z on the Initial Closing Date (the "ORIGINAL PREFERRED SHARES") or (B)
if any Original Preferred Shares shall thereafter have been converted into
Common Stock, fifty percent (50%) of the sum of (x) the aggregate number of
shares Common Stock owned by Capital Z as a result of such conversion(s) plus
(y) the aggregate number of shares Common Stock into which any remaining
Original Preferred Shares owned by Capital Z may be converted (determined
without regard to any limitations on conversion of such shares prior to the
Recapitalization), in each case subject to adjustment for splits, combinations,
reclassifications and similar events; (ii) if the Management Employee dies,
retires, is terminated by the Company, or terminates his employment with the
Company, subject to the provisions of Section 5 hereof; or (iii) a Change of
Control (as defined in the New Option Plan) has occurred, but only if a Capital
Z Realization Event (as defined in the New Option Plan) has also occurred on or
prior to such Change of Control, and PROVIDED, FURTHER, that notwithstanding the
foregoing restriction on transfer, the Management Investor may transfer, during
the twelve-month period ending on the first anniversary of the Initial Closing
Date and during each succeeding twelve-month period, up to 25% of the total
number of Underlying Common Shares (whether structured as a transfer of Shares,
Underlying Shares or a combination thereof) acquired hereunder (subject to
adjustment for splits, combinations, reclassifications and similar events), it
being further agreed that the Management Investor may request the Company's
Board of
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Directors to allow the Management Investor to transfer Shares (or
Underlying Common Shares) in excess of the 25% limitation described in this
proviso if extraordinary liquidity needs have arisen with respect to the
Management Investor, and, in such event, the Company (through its Board of
Directors) will consider such request in good faith and will not unreasonably
withhold its consent to a waiver of such limitation.
SECTION 5. COMPANY'S OPTION TO PURCHASE SHARES.
(a) In the event of the death or retirement from, or
termination of employment for any reason with, the Company of the Management
Investor (a "Termination Date"), the Company shall have the option, but not the
obligation, to purchase all, or any portion, of the Shares (and any Underlying
Common Shares that may have been acquired upon conversion of the Shares) then
owned by the Management Investor at the Fair Market Value (as hereinafter
defined) per Share and/or Underlying Common Share on the Business Day
immediately prior to the date on which the Company exercises its option to
purchase in accordance with the this Section 5. The Company may exercise the
foregoing option at any time within 30 days after the Termination Date, by
written notice to the Management Investor, or his legal representative in the
case of death, stating a date and time for consummation of the purchase no less
than 10 nor more than 30 days after giving of such notice. "Fair Market Value"
per Share or per Underlying Common Share, as of any particular date, shall mean
(a) in the case of a Share, the product obtained by multiplying (I) the Formula
Number (as defined in the Certificate of Designations for the Senior Preferred
Stock) in effect as of such date by (II) the Current Market Price (as defined in
the Certificate of Designations for the Senior Preferred Stock) for the period
of 15 consecutive Trading Days (as defined in the Certificate of Designations
for the Senior Preferred Stock) prior to such date, or (b) in the case of an
Underlying Share, the Current Market Price for the period of 15 consecutive
Trading Days prior to such date.
(b) At the closing of the purchase of Shares (and any
Underlying Common Shares) by the Company pursuant to Section 4(a), the
Management Investor will deliver the Shares (and any Underlying Common Shares)
to the Company against payment by the Company to the Management Investor of the
purchase price for such Shares (and any Underlying Common Shares). Such purchase
price shall be paid in cash.
SECTION 5. TERMINATION. All rights and obligations of the
parties hereunder shall terminate upon the date upon which the Purchase
Agreement is terminated in accordance with its terms, provided, that any such
termination that results from the breach by a party of his or its obligations
hereunder shall not relieve such party from any liability for breach of this
Agreement.
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SECTION 6. FURTHER ASSURANCES. The Management Investor shall,
upon request of the Company, execute and deliver any additional documents and
take such further actions as may reasonably be deemed by the Company to be
necessary or desirable to carry out the provisions hereof.
SECTION 7. NOTICES. All notices, requests, claims, demands
and other communications under this Agreement shall be sufficiently given if
sent by registered or certified mail, postage prepaid, or overnight air courier
service, or telecopy or facsimile transmission (with hard copy to follow) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice): (i) if to the Company, to the address set
forth in Section 7.3 of the Purchase Agreement; and (ii) if to the Management
Investor, to the address set forth for the Management Investor in the preamble
to this Agreement or by telecopy to (323) 210-5253.
SECTION 8. HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the Company and the Management Investor and delivered to
the Company and the Management Investor.
SECTION 10. ENTIRE AGREEMENT. This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
SECTION 11. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to any applicable conflicts of law principles of such State.
SECTION 12. SUCCESSORS AND ASSIGNS. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise, by any of the
parties without the prior written consent of the other parties. Any assignment
in violation of the foregoing shall be void.
SECTION 13. ENFORCEMENT. Each party agrees that irreparable
damage would occur and that the other party hereto would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that each party shall be entitled to an injunction or
injunctions to prevent breaches by the other party
Page 5
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hereto of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Delaware or in Delaware State court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware State court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware of in Delaware State court.
SECTION 14. SEVERABILITY. If any term or provision hereof, or
the application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid or unenforceable with respect to
such jurisdiction, and only to such extent, and the remainder of the terms and
provisions hereof, and the application thereof to any other circumstance, shall
remain in full force and effect, shall not in any way be affected, impaired or
invalidated, and shall be enforced to the fullest extent permitted by law, and
the parties hereto shall reasonably negotiate in good faith a substitute term or
provision that comes as close as possible to the invalidated or unenforceable
term or provision, and that puts each party in a position as nearly comparable
as possible to the position each such party would have been in but for the
finding of invalidity or unenforceability, while remaining valid and
enforceable.
SECTION 15. AMENDMENT; MODIFICATION; WAIVER. No amendment,
modification or waiver in respect of this Agreement shall be effective against
any party unless it shall be in writing and signed by such party.
SECTION 16. EXPENSES. The Company and the Management Investor
shall each bear their own legal fees and other costs and expenses with respect
to the negotiation, execution and delivery of this Agreement and consummation of
the transactions contemplated hereby.
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IN WITNESS WHEREOF, the Company and the Management Investor
have caused this Agreement to be duly executed and delivered as of the date
first written above.
AAMES FINANCIAL CORPORATION
By: /S/ BARBARA S. POLSKY
-----------------------
Name: Barbara Polsky
Title: Executive Vice President
MANAGEMENT INVESTOR:
/S/ CARY H. THOMPSON
----------------------------
Cary Thompson
