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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934 (Amendment No. )
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<S> <C>
File No. 001-13660
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14c-5(d)(2))
/X/ Definitive Information Statement
</TABLE>
<TABLE>
<S> <C>
AAMES FINANCIAL CORPORATION
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(Name of Registrant As Specified In Its Charter)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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</TABLE>
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AAMES FINANCIAL CORPORATION
----------------
INFORMATION STATEMENT
MAY 5, 2000
---------------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
------------------------
INTRODUCTION
This Information Statement is furnished in connection with the prior action
taken by the holders of a majority of shares of Series B Convertible Preferred
Stock, par value $0.001 (the "SERIES B PREFERRED STOCK") and the Series C
Convertible Preferred Stock, par value $0.001 (the "SERIES C PREFERRED STOCK"
and, together with the Series B Preferred Stock, the "PREFERRED STOCK"),
together as a single class, entitled to vote on certain corporate matters
relating to Aames Financial Corporation, a Delaware corporation (the "COMPANY").
This information statement is furnished in compliance with Section 14(c) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT").
As of April 28, 2000, there were 29,704,000 authorized shares of Series B
Preferred Stock of which 26,704,000 shares were issued and outstanding and there
were 107,122,664 authorized shares of Series C Preferred Stock of which
20,166,600 shares were issued and outstanding.
The Company has 86,956,064 shares of Series C Preferred Stock which have
been authorized, but have not yet been issued. The Company's Certificate of
Incorporation, as amended (the "CERTIFICATE OF INCORPORATION") requires the
Company to obtain the consent of the holders of the Preferred Stock, together as
a single class, to issue those authorized but unissued shares of Series C
Preferred Stock, or securities convertible into shares of Series C Preferred
Stock. The holders of the Preferred Stock have previously consented to the
issuance of up to 1 million shares of the 86,956,064 shares of issued, but
unauthorized, shares of Series C Preferred Stock.
The Board of Directors has proposed that the holders of the Preferred Stock,
together as a single class, consent to the future issuance of up to 40 million
additional shares of Series C Preferred Stock to enable the Company to raise
additional capital through the issuance of shares of Series C Preferred Stock in
the future without incurring the cost and delay associated with obtaining
stockholder consent for each particular issuance of Series C Preferred Stock
(the "PROPOSAL"). A more detailed description of the Proposal is included in
this Information Statement beginning on page 6.
On May 1, 2000 the holders of 26,704,000 shares (which represents 5,340,800
votes) of Series B Preferred Stock, or 100% of the total outstanding shares of
the Series B Preferred Stock, and 18,827,346 shares of Series C Preferred Stock,
or approximately 94.74% of the total outstanding shares of the Preferred Stock,
together as a single class (the "VOTING STOCKHOLDERS"), consented in writing to
the Proposal and such vote was therefore sufficient for approval of the
Proposal.
The Board of Directors of the Company (the "BOARD OF DIRECTORS") is not
soliciting any proxies or consents from any other stockholders in connection
with the Proposal. This Information Statement is being mailed on or about
May 5, 2000, to all holders of record as of May 1, 2000 of the Company's Common
Stock, par value $0.001 per share (the "COMMON STOCK") and of the Company's
Series C Preferred Stock who did not consent to the Proposal.
The principal executive offices of the Company are located at 350 S. Grand
Avenue, 52nd Floor, Los Angeles, California 90071 and its telephone number is
(323) 210-5000.
<PAGE>
DISSENTERS' RIGHTS OF APPRAISAL
No action was taken in connection with the Proposal by the Board of
Directors or the Voting Stockholders for which the DGCL, the Certificate of
Incorporation or the Bylaws provide a right of a stockholder to dissent and
obtain appraisal of or payment for such stockholder's shares.
INTEREST OF OFFICERS AND DIRECTORS IN MATTERS TO BE ACTED UPON
No officer or director of the Company has any substantial interest in the
Proposal, except insofar as such officers or directors may be stockholders, or
holders of derivative securities, of the Company, in which case the
implementation of the Proposal will affect them in the same manner as its affect
all other stockholders, or holders of derivative securities, of the Company.
However, as a result of the Proposal the Board of Directors will have the
discretion to issue shares of, or securities convertible into shares of,
Series C Preferred Stock including to officers and/or directors of the Company.
2
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PRINCIPAL STOCKHOLDERS
The following table sets forth, as of April 28, 2000, certain information
relating to the ownership of the Common Stock which includes shares of Common
Stock issuable upon the exercise of stock options and warrants and conversion of
Preferred Stock by (i) each person known by the Company to be the beneficial
owner of more than 5% of the outstanding shares of the Common Stock, (ii) each
of the Company's directors, (iii) each of the Company's Directors and certain of
its executive officers and (iv) all of the Company's executive officers and
directors as a group. Except as may be indicated in the footnotes to the table
and subject to applicable community property laws, each of such persons has sole
voting and investment power with respect to the shares beneficially owned.
Beneficial ownership has been determined in accordance with Rule 13d-3 under the
Exchange Act. Under Rule 13d-3, certain shares may be deemed to be beneficially
owned by more than one person (such as where persons share voting power or
investment power). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire the shares (for example, upon
exercise of an option) within 60 days of the date as of which the information is
provided; in computing the percentage ownership of any person, the amount of
shares outstanding is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these acquisition rights. As
a result, the percentage of outstanding shares of any person as shown in the
following table does not necessarily reflect the person's actual voting power at
any particular date.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
TITLE OF CLASS NAME AND ADDRESS SHARES OF CLASS
- -------------- ------------------------------------------------ ----------- --------
<S> <C> <C> <C>
Common Stock Specialty Finance Partners ..................... 24,418,146(1) 79.72%
54 Thompson Street
New York, New York 10012
Common Stock Neil B. Kornswiet(2)............................ 481,572(3) 7.61%
Common Stock David H. Elliott(4)............................. 1,000 *
Common Stock Steven M. Gluckstern(5) (6)..................... 36,830(7) *
Common Stock A. Jay Meyerson(4).............................. 22,500(8) *
Common Stock Adam M. Mizel(5)................................ 18,415(7) *
Common Stock Eric C. Rahe(5)................................. 3,735(7) *
Common Stock Mani A. Sadeghi(5).............................. 625(7) *
Common Stock David A. Spuria(5).............................. 2,490(7) *
Common Stock Georges C. St. Laurent, Jr.(4).................. 321,320(9) 4.93%
Common Stock Cary H. Thompson(4)............................. 384,184(10) 5.83%
Common Stock Joe Tomei(4).................................... 125(7) *
Common Stock All executive officers and directors as a group 791,099(11) 11.32%
(10 persons)..................................
Series B Specialty Finance Partners ..................... 26,704,000(14) 100.00%
Preferred 54 Thompson Street
Stock(12)(13) New York, New York 10012
Series C Specialty Finance Partners ..................... 18,827,346(15) 93.06%
Preferred Stock(12) 54 Thompson Street
New York, New York 10012
Series C Georges C. St. Laurent, Jr.(5).................. 310,000(16) 1.53%
Preferred Stock(12)
</TABLE>
3
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<TABLE>
<CAPTION>
NUMBER OF PERCENT
TITLE OF CLASS NAME AND ADDRESS SHARES OF CLASS
- -------------- ------------------------------------------------ ----------- --------
<S> <C> <C> <C>
Series C Cary H. Thompson(5)............................. 250,000(17) *
Preferred Stock(12)
Series C All executive officers, directors and nominees
Preferred Stock(12) as a group (10 persons)(18)................... 1,800,000(19) 1.78%
</TABLE>
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* Less than one percent.
(1) Includes shares of Common Stock issuable upon conversion of 26,704,000
shares of Series B Preferred Stock and 18,827,346 shares of Series C
Preferred Stock. In addition, Specialty Finance Partners, as a result of
the receipt of warrants to purchase 250,000 shares of Common Stock by
Capital Z Management, Inc., may be deemed to be the beneficial owner of
250,000 shares of Common Stock. Specialty Finance Partners is a Bermuda
general partnership, 99.6% of which is owned by Capital Z Financial
Services Fund II, L.P. and 0.4% of which is owned by Equifin Capital
Partners, LLC.
(2) Mr. Kornswiet's address is care of Belin Rawlings & Badal, 11601 Wilshire
Boluvard, Suite 2200, Los Angeles, California 90025-1758, ATTN: Douglas
Rawlings.
(3) Includes 119,000 shares of Common Stock underlying options which are
currently exercisable or which will become exercisable within 60 days of
April 28, 2000. Mr. Kornswiet's employment with the Company ended during
the first quarter of fiscal 2000. The Company is in discussions with Mr.
Kornswiet regarding terms and conditions of his departure which may affect
the number of exercisable options and the expiration date of such options.
(4) The address of each individual is in care of the Company at 350 S. Grand
Avenue, 52nd Floor, Los Angeles, California 90071.
(5) The address of each individual is in care of Capital Z Partners, 54
Thompson Street, New York, New York 10012.
(6) Mr. Gluckstern is a member of the Investment Committees of Capital Z
Partners, Ltd. and Capital Z Management, Inc. and, in such capacities has
the authority to approve the disposition of investments of Capital Z
Financial Services Fund II, L.P. and Capital Z Financial Services Private
Fund II, L.P. which are both general partners of Specialty Finance
Partners.
(7) Represents shares of Common Stock underlying warrants which are currently
exercisable. Each of Messrs. Gluckstern, Mizel, Rahe, Sadeghi, and Spuria
has disclaimed beneficial ownership of the Preferred Stock held by
Specialty Finance Partners.
(8) Represents shares of Common Stock underlying options which are currently
exercisable or which will become exercisable within 60 days of April 28,
2000. If the Fair Market Value of the Common Stock (as defined in the
Company's 1999 Stock Option Plan) reaches certain price targets, an
additional 67,500 options could vest within the next 60 days. Mr. Meyerson
was appointed as the Company's Chief Executive Officer on October 25, 1999
and as a member of the Board of Directors on November 1, 1999.
(9) Includes 1,320 shares of Common Stock underlying options which are
currently exercisable or which will become exercisable within 60 days of
April 28, 2000, and includes 310,000 shares of Common Stock issuable upon
conversion of Series C Preferred Stock.
(10) Includes 329,804 shares of Common Stock underlying options which are
currently exercisable or which will become exercisable within 60 days of
April 28, 2000 and includes 50,000 shares of Common Stock issuable upon
conversion of Series C Preferred Stock. If the Fair Market Value of the
Common Stock (as defined in the Company's 1999 Stock Option Plan) reaches
certain price targets, an additional 17,416 options could vest within the
next 60 days.
4
<PAGE>
(11) Includes 775,719 shares of Common Stock underlying options or warrants
which are currently exercisable or which will become exercisable within 60
days of April 28, 2000 and includes 360,000 shares of Common Stock
issuable upon conversion of Series C Preferred Stock.
(12) As the shares of Preferred Stock were, on April 28, 2000, convertible into
shares of Common Stock, they are included in the Common Stock shares and
percent of class figures.
(13) Specialty Finance Partners holds 100% of the issued and outstanding Series
B Preferred Stock. Non of the Directors or executive officers beneficially
hold any shares of Series B Preferred Stock.
(14) Convertible into 5,340,800 shares of Common Stock.
(15) Convertible into 18,827,346 shares of Common Stock.
(16) Convertible into 310,000 shares of Common Stock.
(17) Convertible into 50,000 shares of Common Stock.
(18) Other than in the case of Messrs. St. Laurent and Thompson, none of the
Directors or executive officers beneficially hold any shares of Series C
Preferred Stock.
(19) Convertible into 360,000 shares of Common Stock.
EXECUTIVE COMPENSATION
Information with respect to the executive compensation of the Company is
incorporated herein by this reference to the Company's definitive Proxy
Statement for the Company's 1999 Annual Meeting of Stockholders which was filed
with the Securities and Exchange Commission (the "SEC") on February 4, 2000 and
mailed to all of the holders of the Common Stock, Series B Preferred Stock and
Series C Preferred Stock.
FINANCIAL AND OTHER INFORMATION
The Company's financial statements are incorporated herein by this reference
to the Company's Annual Report of Form 10-K for the fiscal year ending June 30,
1999 (filed with the SEC on September 3, 1999, the Company's Form 10-K/A filed
with the SEC on August 6, 1999 and the Company's Quarterly Report of Form 10-Q
for the quarter ending September 30, 1999 (filed with the SEC on November 15,
1999) and the quarter ending December 31, 2000 (filed with the SEC on
February 14, 2000).
5
<PAGE>
THE PROPOSAL TO ISSUE SHARES OF SERIES C CONVERTIBLE PREFERRED STOCK
GENERAL
The Company has 86,956,064 shares of Series C Preferred Stock which have
been authorized, but have not yet been issued. The Company's Certificate of
Incorporation, as amended (the "CERTIFICATE OF INCORPORATION") requires the
Company to obtain the consent of the holders of the Preferred Stock, together as
a single class, to issue those authorized but unissued shares of Series C
Preferred Stock, or securities convertible into shares of Series C Preferred
Stock. The holders of the Preferred Stock have previously consented to the
issuance of up to 1 million shares of the 86,956,064 shares of issued, but
unauthorized, shares of Series C Preferred Stock.
The Board of Directors has proposed that the holders of the Preferred Stock,
together as a single class, consent to the future issuance of up to 40 million
additional shares of Series C Preferred Stock to enable the Company to raise
additional capital through the issuance of shares of Series C Preferred Stock in
the future without incurring the cost and delay associated with obtaining
stockholder consent for each particular issuance of Series C Preferred Stock.
EFFECT OF APPROVAL OF THE PROPOSAL
The Company intends to issue shares of, or securities convertible into
shares of, Series C Preferred Stock to investors from time to time. As of the
date 20 days after the date this Information Statement is mailed to stockholders
(the "NOTICE EFFECTIVE DATE"), the Board of Directors will have the authority to
issue up to 40 million shares of, or securities convertible into shares of,
Series C Preferred Stock in accordance with the Company's Certificate of
Incorporation, the Company's Bylaws and the General Corporation Law of the State
of Delaware.
The Board of Directors has, from time to time, made the determination that
it would be in the best interests of the Company to issue some of the authorized
but unissued shares of Series C Preferred Stock.
As of the date hereof, the Company has not entered into any contract or
arrangements for the use of any proceeds from any sale of Series C Preferred
Stock. The Board of Directors reserves the right to enter into arrangements for
the use of proceeds from any sale of Series C Preferred Stock for any valid and
legal corporate purpose.
The price per share for future issuances of shares of Series C Preferred
Stock has not yet been determined. The Board of Directors reserves the right to
accept any legally valid consideration for any future issuances of shares of
Series C Preferred Stock pursuant this Proposal.
Current holders of the Company's Series C Preferred Stock would be affected
by the proposal in that the total number of shares of Series C Preferred Stock
outstanding may increase by up to 40 million shares. There are currently
20,166,600 shares of Series C Preferred Stock issued and outstanding. In the
event that the Board of Directors authorized the issuance of all of the
40 million shares of Series C Preferred Stock pursuant to the Proposal, the
total number of shares of Series C Preferred Stock issued and outstanding would
rise to 60,166,600.
While the holders of Series C Preferred Stock may not vote in the elections
for the Company's directors, the holders of Series C Preferred Stock are
entitled to vote for all other matters together with the holders of the Common
Stock and Series B Preferred Stock (except where Delaware law requires a
separate class vote). See "Terms of the Series C Preferred Stock" below. In
addition to the 20, 166,600 shares of Series C Preferred Stock which are issued
and outstanding, there are 6,212,713 shares of Common Stock issued and
outstanding and 26,704,000 shares (representing 5,340,800 votes at 0.2 votes per
share) for a total voting power of 31,720,113 shares for matters other than the
election of directors. The issuance of all of the 40 million shares of Series C
Preferred Stock pursuant to the
6
<PAGE>
Proposal would represent 126% of the total voting power for all matters other
than the election of directors.
There are 107,122,664 shares of Series C Preferred Stock which have been
authorized. Of that amount 20,166,600 shares have been issued and outstanding
and 86,956,064 are authorized, but have not yet been issued. The issuance of all
of the 40 million shares of Series C Preferred Stock pursuant to the Proposal
would represent 37.3% of the total authorized number of shares of Series C
Preferred Stock.
The Series C Preferred Stock is convertible, at the discretion of the holder
thereof, into shares of Common Stock. See "Terms of the Series C Preferred
Stock" below. There are currently 6,212,713 shares of Common Stock which have
been issued and are outstanding. In the event of an issuance of all of the 40
million shares of Series C Preferred Stock pursuant to the Proposal followed by
the immediate conversion of all such shares to Common Stock, the total number of
shares of Common Stock would increase to 46,212,713 shares.
TERMS OF THE SERIES C PREFERRED STOCK.
The following is a summary of the material terms of the Series C Preferred
Stock:
- RANK. For dividends or distribution of assets upon liquidation,
dissolution or winding up of the Company, the Series C Preferred Stock and
the Series B Preferred Stock rank senior to each other class or series of
preferred stock and prior to the Common Stock and all subsequently issued
classes and series of capital stock. The Series C Preferred Stock ranks in
parity with the Series B Preferred Stock.
- LIQUIDATION. In the event of any liquidation, dissolution or winding up of
the Company, the holders of the Series C Preferred Stock will receive
$1.00 per share (subject to appropriate adjustment for the Reverse Stock
Split, as defined below) plus all accrued but unpaid dividends.
- DIVIDENDS. The holders of Series C Preferred Stock will receive cash
dividends at an annual rate of 6.5%, payable quarterly in cash. The
Company has the option to accrue and not pay dividends for the first two
years after issuance of the shares.
- RESTRICTIONS ON DIVIDENDS. So long as any shares of Series C Preferred
Stock and Series B Preferred Stock are outstanding, we may not pay any
dividends on or repurchase, redeem or retire any junior securities.
- VOTING RIGHTS. Each share of Series C Convertible Preferred Stock will be
entitled to one vote. The holders of the C Preferred Stock are entitled to
vote with the holders of the Common Stock and the holders of the Series B
Preferred Stock, as a single class, on all matters presented to the
holders of the Common Stock except that the holders of the Series C
Convertible Stock may not vote for the election of directors.
- RESTRICTIONS. Without the consent of the holders of the Series C Preferred
Stock and the Series B Preferred Stock, voting as a single class, we may
not take any of the following actions:
- authorize, create or issue, or increase the authorized amount of any
senior securities, parity securities or any security convertible into a
class or series of capital stock prior to the mandatory redemption date
of the Series B Preferred Stock;
- reorganize or reclassify outstanding shares of common stock, enter into
any consolidation or merger, or sell or convey all or substantially all
our property;
- amend, alter or repeal any provisions of our Certificate of
Incorporation or Bylaws to the extent that such action would have a
material adverse effect on the rights of the Series C Preferred Stock
or Series B Preferred Stock;
7
<PAGE>
- REDEMPTION. On February 10, 2009, we may redeem all outstanding shares of
Series C Preferred Stock and the Series B Preferred Stock by paying the
stated value per share ($5.00 per share) plus all accrued but unpaid
dividends in cash out of funds legally available for such purpose.
- CONVERSION. Each share of Series B and Series C Convertible Preferred
Stock will be convertible into one share of common stock.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the votes entitled to
be cast by holders of all outstanding shares of the Preferred Stock, voting
together as a single class.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
No security holder entitled to consent has submitted to the Company a
proposal which is accompanied by notice of such security holders' intention to
present the proposal for action at a future meeting of the stockholders of the
Company.
AAMES FINANCIAL CORPORATION
[SIGNATURE]
John F. Madden, Jr.
SECRETARY
May 5, 2000
8
