SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AAMES FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
95-4340340
(I.R.S. Employer Identification No.)
350 SOUTH GRAND AVENUE, 52ND FLOOR
LOS ANGELES, CALIFORNIA 90071
(Address of Principal Executive Offices)
AAMES FINANCIAL CORPORATION 1999 STOCK OPTION PLAN
(Full Title of the Plan)
DAVID A. SKLAR
CHIEF FINANCIAL OFFICER
AAMES FINANCIAL CORPORATION
350 SOUTH GRAND AVENUE, 52ND FLOOR
LOS ANGELES, CALIFORNIA 90071
(Name and Address of Agent for Service)(Zip Code)
(323) 210-5000
(Telephone Number, Including Area Code, of Agent for Service)
Copies to:
C.N. FRANKLIN REDDICK, III, ESQ.
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
2029 CENTURY PARK EAST, 24TH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 728-3000
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
================== ================ =============== ================ ================
Title of Amount to be Proposed Proposed Amount of
Securities to be Registered Maximum Maximum Registration
Registered Offering Aggregate Fee
Price Per Offering Price
Share
- ------------------ ---------------- --------------- ---------------- ----------------
Common Stock, 14,612,008 $6,875(1) $10,045,756(1) $2,652
$0.001 par value
================== ================ =============== ================ ================
<FN>
(1) Estimated in accordance with Rule 457(h) solely for the purpose of computing
the amount of the registration fee based on the closing sale price of the
Company's Common Stock as reported on the New York Stock Exchange on January 25,
2000.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS
The documents containing the information specified in this Part I will be
sent or given to participants as specified by Rule 428(b)(1). Those documents
and the documents incorporated by reference in the registration statement
pursuant to Item 3 of Part II of this form, taken together, constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act of
1933, as amended (the "Securities Act").
PART II
ITEM 2. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed by Aames Financial Corporation
(the "Company" or "Registrant") with the Securities and Exchange Commission (the
"Commission") are hereby incorporated by reference in this Registration
Statement:
o Our Annual Report on Form 10-K for the year ended June 30, 1999.
o Our Quarterly Report on Form 10-Q for the quarter ended September 30,
1999.
o Our Proxy Statement on Schedule 14A dated August 6, 1999.
o Description of our common stock contained in our Registration Statement
on Form 8-A filed with the SEC on October 22, 1991.
o Description of our Series C Convertible Preferred Stock contained in our
Registration Statement on Form 8-A filed with the SEC on September 3, 1999.
o Description of our preferred stock purchase rights contained in our
Registration Statement on Form 8-A filed with the SEC on July 12, 1996.
All documents hereafter filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents.
ITEM 3. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 4. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
This response is incorporated by reference to Item 15 of Part II to the
Company's Amendment No. 1 to Registration Statement on Form S-3 filed September
3, 1999.
ITEM 6. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
<PAGE>
ITEM 7. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
<S> <C>
4.1 Certificate of Incorporation of the Registrant as
amended.(1)
4.2 Amended and Restated Bylaws of the Registrant.(2)
4.3 1999 Stock Option Plan of the Registrant.
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey, LLP
23.1 Consent of Troop Steuber Pasich Reddick & Tobey, LLP
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney (included on the signature page hereof).
<FN>
(1) Incorporated by reference to exhibits to the Registrant's Quarterly Report
on Form 10-Q for the quarter-ended September 30, 1999. (2) Incorporated by
reference to exhibits to the Registrant's Annual Report on Form 10-K for the
year ended June 30, 1999.
</FN>
</TABLE>
ITEM 8. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to the appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Page 2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on this 31st day of
January, 2000.
AAMES FINANCIAL CORPORATION
By: /S/ DAVID A. SKLAR
-----------------------------------
David A. Sklar
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints David A.
Sklar as his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and his name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/S/ STEVEN M. GLUCKSTERN Chairman of the Board January 31, 2000
------------------------------------
Steven M. Gluckstern
Chief Executive
/S/ A. JAY MEYERSON Officer and Director January 31, 2000
------------------------------------
A. Jay Meyerson
Chief Financial
Officer
(Principal Financial
and Accounting
/S/ DAVID A. SKLAR Officer) January 31, 2000
------------------------------------
David A. Sklar
/S/ DAVID H. ELLIOTT Director January 31, 2000
------------------------------------
David H. Elliott
/S/ ADAM M. MIZEL Director January 31, 2000
------------------------------------
Adam M. Mizel
/S/ ERIC C. RAHE Director January 31, 2000
------------------------------------
Eric C. Rahe
Page 3
<PAGE>
/S/ MANI A. SADEGHI Director January 31, 2000
------------------------------------
Mani A. Sadeghi
/S/ DAVID A. SPURIA Director January 31, 2000
------------------------------------
David A. Spuria
/S/ GEORGES C. ST. LAURENT Director January 31, 2000
------------------------------------
Georges C. St. Laurent
/S/ CARY H. THOMPSON Director January 31, 2000
------------------------------------
Cary H. Thompson
</TABLE>
Page 4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
<S> <C>
4.1 Certificate of Incorporation of the Registrant as amended.(1)
4.2 Amended and Restated Bylaws of the Registrant.(2)
4.3 1999 Stock Option Plan of the Registrant.
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey, LLP regarding
validity
23.1 Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included
in
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney (included on the signature page hereof).
- ---------------
<FN>
(1) Incorporated by reference to exhibits to the Registrant's Quarterly Report
on Form 10-Q for the quarter-ended September 30, 1999.
(2) Incorporated by reference to exhibits to the Registrant's Annual Report on
Form 10-K for the year ended June 30, 1999.
</FN>
</TABLE>
Page 5
EXHIBIT 4.3
AAMES FINANCIAL CORPORATION
1999 STOCK OPTION PLAN
ARTICLE I.
PURPOSE
This Stock Option Plan (the "Plan") is intended as an incentive and to
encourage stock ownership by officers and certain other key employees of Aames
Financial Corporation (the "Company") in order to increase their proprietary
interest in the Company's success and to encourage them to remain in the employ
of the Company.
The term "Company," when used in the Plan with reference to eligibility and
employment, shall include the Company and its subsidiaries. The word
"subsidiary," when used in the Plan, shall mean any subsidiary of the Company
within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as
amended (the "Code").
It is intended that certain options granted under this Plan will qualify as
"incentive stock options" under Section 422 of the Code. All grants under the
Plan shall be subject to obtaining the approvals required to be obtained under
Article XVIII by September 30, 1999. If either of such approvals is not obtained
on a timely basis, all grants under the Plan shall be void AB INITIO, and the
Plan shall be of no further force or effect.
ARTICLE II.
ADMINISTRATION
The Plan shall be administered by the Compensation Committee (the
"Compensation Committee") of the Board of Directors of the Company (the "Board")
appointed by the Board which shall consist of not less than three members, two
of whom shall be appointed by Capital Z Financial Services Fund II, L.P.
("Capital Z") during any period that Capital Z and/or its designated purchasers
under the Preferred Stock Purchase Agreement by and among the Company and
Capital Z, dated as of the 23rd day of December, 1998 (the "Purchase Agreement")
own at least 25% of the outstanding voting securities of the Company (the
"Minimum Stock Ownership Threshold"). However, notwithstanding anything to the
contrary in this Section, only the Stock Option Committee (the "Stock Option
Committee") shall have the authority to grant stock options, to the Chief
Executive Officer and to the four highest compensated officers other than the
Chief Executive Officer and all such grants shall be effective only upon
ratification by the Compensation Committee. Each of the members of the Stock
Option Committee should be an "outside director" within the meaning of Section
162(m) of the Code. Subject to the provisions of the Plan, the Compensation
Committee shall have sole authority, in its absolute discretion: (a) to
determine which of the eligible employees of the Company shall be granted
options; (b) to authorize the granting of both incentive stock options and
nonqualified options; (c) to determine the times when options shall be granted
and the number of shares to be optioned; (d) to determine the option price of
the shares subject to each option, which price shall be not less than the
minimum specified in ARTICLE V; (e) to determine the time or times when each
option becomes exercisable, the duration of the exercise period and any other
restrictions on the exercise of options issued hereunder; (f) to prescribe the
form or forms of the option agreements under the Plan (which forms shall be
consistent with the terms of the Plan but need not be identical); (g) to adopt,
amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan; and (h) to construe and interpret
the Plan, the rules and regulations and the option agreements under the Plan and
to make all other determinations deemed necessary or advisable for the
administration of the Plan. All decisions, determinations and interpretations of
the Compensation Committee shall be final and binding on all optionees.
ARTICLE III.
STOCK
The stock to be optioned under the Plan shall be shares of authorized but
unissued Common Stock of the Company, par value $.001 per share, or previously
issued shares of Common Stock reacquired by the Company (the "Stock"). Under the
Plan, the total number of shares of Stock which may be purchased pursuant to
options granted hereunder shall not exceed, in the aggregate, 14,612,008 shares,
except as such number of shares shall be adjusted in accordance with the
provisions of ARTICLE X hereof.
<PAGE>
The number of shares of Stock available for grant of options under the Plan
shall be decreased by the sum of the number of shares with respect to which
options have been issued and are then outstanding and the number of shares
issued upon exercise of options. In the event that any outstanding option under
the Plan for any reason expires, is terminated or is canceled prior to the end
of the period during which options may be granted, the shares of Stock called
for by the unexercised portion of such option may again be subject to an option
under the Plan.
ARTICLE IV.
ELIGIBILITY OF PARTICIPANTS
Subject to ARTICLE VII in the case of incentive stock options, officers and
other key employees of the Company (excluding any person who is a member of the
Committee) shall be eligible to receive options under the Plan. In addition,
options which are not incentive stock options may be granted to consultants or
other key persons (excluding any person who is a member of the Committee) who
the Committee determines shall receive options under the Plan. No person may
receive options for more than 7,306,004 shares of Outstanding Stock during the
term of the Plan.
ARTICLE V.
OPTION EXERCISE PRICE
Subject to ARTICLE VII in the case of incentive stock options, except as
otherwise provided by the Committee in the option agreement, the option exercise
price of each option granted under the Plan shall not be less than the Fair
Market Value of stock at the time the option is granted. Fair Market Value shall
in all cases be based on trading days occurring after the "Initial Closing Date"
as such term is defined in the Purchase Agreement. For purposes of the Plan, the
Fair Market Value on a given date means (i) if the Stock is listed on a national
securities exchange, the average of the closing sale prices reported as having
occurred on the primary exchange with which the Stock is listed and traded
during the twenty (20) trading days occurring immediately prior to such date;
(ii) if the Stock is not listed on any national securities exchange but is
quoted in the National Market System of the National Association of Securities
Dealers Automated Quotation System on a last sale basis, the average between the
high bid price and low ask price reported during the twenty (20) trading days
occurring immediately prior to such date; or (iii) if the Stock is not listed on
a national securities exchange nor quoted in the National Market System of the
National Association of Securities Dealers Automated Quotation System on a last
sale basis, the amount determined by the Committee to be the fair market value
based upon a good faith attempt to value the Stock accurately and computed in
accordance with applicable regulations of the Internal Revenue Service.
ARTICLE VI.
EXERCISE AND TERMS OF OPTIONS
Subject to this ARTICLE VI, the Committee shall determine the dates after
which options may be exercised, in whole or in part. If an option is exercisable
in installments, installments or portions thereof which are exercisable and not
exercised shall remain exercisable.
Unless otherwise provided in the option agreement or agreed to by the
Committee at the time of exercise, each optionee shall enter into a binding
agreement with the Company at the time of grant pursuant to which such optionee
agrees (i) not to sell, assign or otherwise transfer more than 25% of the Stock
purchased pursuant to an Option in any given year and (ii) in aggregate not to
sell, assign or otherwise transfer more than 25% of the Stock purchased pursuant
to an Option over a five year period beginning on the effective date of this
Plan. Appropriate legends shall be placed on the stock certificates evidencing
shares issued upon exercise of options to reflect such transfer restrictions.
Any other provision of the Plan to the contrary notwithstanding, but
subject to ARTICLE VII in the case of incentive stock options, no option shall
be exercised after the date ten years from the date of grant of such option (the
"Termination Date").
EX 43.2 - 2
<PAGE>
If prior to the Termination Date, an optionee shall cease to be employed by
the Company by reason of a disability, as defined in Section 22(e)(3) of the
Code, or by reason of retirement on or after age 65 ("Retirement") the option
shall remain exercisable until the earlier of the Termination Date or one year
after the date of cessation of employment to the extent the option was
exercisable at the time of cessation of employment.
In the event of the death of an optionee prior to the Termination Date and
while employed by the Company, or while entitled to exercise an option pursuant
to the preceding paragraph or the next to last sentence of the subsequent
paragraph, the option shall remain exercisable until the earlier of the
Termination Date or one year after the date of death, by the person or person to
whom the optionee's rights under the option pass by will or the applicable laws
of descent and distribution, to the extent that the optionee was entitled to
exercise it on the date of death.
Unless otherwise provided in the option agreement, if an optionee
voluntarily terminates employment with the Company for reasons other than (i)
death, (ii) disability, (iii) Retirement, or (iv) Good Reason (as hereinafter
defined), or if an optionee's employment with the Company is terminated for
Cause (as hereinafter defined), all options previously granted to such optionee
which have not been exercised prior to such termination shall lapse and be
canceled. If the Company terminates an optionee's employment without Cause, or
if an optionee terminates his employment for Good Reason, all options previously
granted to such optionee which were vested and satisfied all conditions to
exercisability immediately prior to such termination shall continue to be vested
and exercisable for a period not extending beyond the earlier of the Termination
Date or one year after the date of such termination. In addition, if a Change in
Control (as defined in Article XI hereof) occurs within six months from the date
of termination of employment of an optionee referred to in the preceding
sentence, unvested options shall become vested and exercisable to the same
extent as if the Change in Control had occurred on the date of his termination
of employment, and any such options shall continue to be exercisable until the
earlier of the Termination Date or the first anniversary of optionee's
termination of employment.
In the case of any optionee who has an employment agreement with the
Company, it shall be a condition to exercise of an option that the optionee not
have engaged in any material and knowing or intentional breach of his employment
agreement. After the expiration of the exercise period described in any of the
preceding four paragraphs hereof, options shall terminate together with all of
the optionee's rights thereunder, to the extent not previously exercised.
For purposes of the Plan, the Company shall have "Cause" to terminate an
optionee's employment if the Company has cause to terminate the optionee's
employment under any existing employment agreement between the optionee and the
Company or, in the absence of an employment agreement between the optionee and
the Company, if the Company terminates the optionee after the Company reasonably
determines that the optionee: (1) shall have been determined by a court of law
to have committed any felony including, but not limited to, a felony involving
fraud, theft, misappropriation, dishonesty, embezzlement, or any other crime
involving moral turpitude, or if the optionee shall have been arrested or
indicted for violation of any criminal statute constituting a felony, provided
the Company reasonably determines that the continuation of the optionee's
employment after such event would have an adverse impact on the operation or
reputation of the Company or its affiliates (subsequent references to the
"Company" in this paragraph shall be deemed to refer to the Company or its
affiliates); (2) shall have committed one or more acts or gross negligence or
willful misconduct that, in the good faith opinion of the Company, materially
impair the goodwill or business of the Company or cause material damage to its
property, goodwill, or business, or would, if known, subject the Company to
public ridicule; (3) shall have refused or failed to a material degree to
perform his duties hereunder (continuing without cure for ten (10) days after
receipt of written notice of need to cure); (4) shall have violated any material
written Company policy provided to the Executive during or prior to the Term
(continuing without cure for ten (10) days after receipt of written notice of
need to cure) and that has caused material harm to the Company; or (5) knew, or
should have known, that the Company materially, and knowingly or intentionally
breached any representation, warranty, or covenant under the Purchase Agreement
or, if the optionee has an employment agreement with the Company, the optionee
shall have materially and intentionally or knowingly breached any provision of
such employment agreement.
For purposes of the Plan, in the case of an optionee who is not an employee
of the Company, references to employment herein shall be deemed to refer to such
person's relationship to the Company.
Upon any merger or reorganization or other business combination in which
the Company shall not be the surviving corporation, or a dissolution or
liquidation of the Company, or a sale of all or substantially all of the
Company's assets, all outstanding options shall terminate; PROVIDED, HOWEVER,
that the Company shall cause either (i) the optionees to be paid an amount equal
to the difference between (A) the aggregate fair market value (determined
EX 43.2 - 3
<PAGE>
in accordance with ARTICLE V of the Plan) of the Stock subject to options held
by the optionees at the time of such transaction that have become vested and
exercisable by the terms of the Plan and the applicable option agreements
(either as a result of or prior to such transaction) and (B) the aggregate
exercise price of such options, or (ii) the surviving or resulting corporation
to grant the optionees substitute options to purchase its shares on such terms
and conditions, both as to the number of shares and otherwise, which the
Committee shall deem appropriate.
Notwithstanding the foregoing provisions of this ARTICLE VI or the terms of
any option agreement, the Committee may in its sole discretion accelerate the
exercisability of any option granted hereunder. Any such acceleration shall not
affect the terms and conditions of any such option other than with respect to
exercisability.
ARTICLE VII.
SPECIAL PROVISIONS APPLICABLE
TO INCENTIVE STOCK OPTIONS ONLY
To the extent the aggregate fair market value (determined as of the time
the option is granted) of the Stock with respect to which any options granted
hereunder which are intended to be incentive stock options may be exercisable
for the first time by the optionee in any calendar year (under this Plan or any
other stock option plan of the Company or any parent or subsidiary thereof)
exceeds $100,000, such options shall not be considered incentive stock options.
No incentive stock option may be granted to an individual who, at the time
the option is granted, owns directly, or indirectly within the meaning of
Section 424(d) of the Code, stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or of any parent or
subsidiary thereof, unless such option (i) has an option price of at least 110
percent of the fair market value of the Stock on the date of the grant of such
option; and (ii) cannot be exercised more than five years after the date it is
granted.
Each optionee who receives an incentive stock option must agree to notify
the Company in writing immediately after the optionee makes a disqualifying
disposition of any Stock acquired pursuant to the exercise of an incentive stock
option. A disqualifying disposition is any disposition (including any sale) of
such Stock before the later of (a) two years after the date the optionee was
granted the incentive stock option or (b) one year after the date the optionee
acquired Stock by exercising the incentive stock option.
ARTICLE VIII.
PAYMENT FOR SHARES
Payment for shares of Stock purchased under an option granted hereunder
shall be made in full upon exercise of the option, by certified or bank
cashier's check payable to the order of the Company or by any other means
acceptable to the Company. The Stock purchased shall thereupon be promptly
delivered; PROVIDED, HOWEVER, that the Company may, in its discretion, require
that an optionee pay to the Company, at the time of exercise, such amount as the
Company deems necessary to satisfy its obligation to withhold Federal, state or
local income or other taxes incurred by reason of the exercise or the transfer
of shares thereupon.
ARTICLE IX.
NON-TRANSFERABILITY OF OPTION RIGHTS
No option shall be transferable except by will or the laws of descent and
distribution. During the lifetime of the optionee, the option shall be
exercisable only by him. The Committee may, however, in its sole discretion,
allow for transfer of options which are not incentive stock options to other
persons or entities, subject to such conditions or limitations as it may
establish.
ARTICLE X.
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
The aggregate number of shares of Stock which may be purchased pursuant to
options granted hereunder, the maximum number of shares for which options may be
granted to any one person the number of shares of
EX 43.2 - 4
<PAGE>
Stock covered by each outstanding option and the price per share thereof in each
such option shall be appropriately adjusted for any increase or decrease in the
number of outstanding shares of stock resulting from a stock split or other
subdivision or consolidation of shares of Stock or for other capital adjustments
or payments of stock dividends or distributions or other increases or decreases
in the outstanding shares of Stock without receipt of consideration by the
Company. Any adjustment shall be conclusively determined by the Committee.
In the event of any change in the outstanding shares of Stock by reason of
any recapitalization, merger, consolidation, spin-off, combination or exchange
of shares or other corporate change, or any distributions to common shareholders
other than cash dividends, the Committee shall make such substitution or
adjustment, if any, as it deems to be equitable, as to the number or kind of
shares of Stock or other securities issued or reserved for issuance pursuant to
the Plan, and the number or kind of shares of Stock or other securities covered
by outstanding options, and the option price thereof. In instances where another
corporation or other business entity is being acquired by the Company, and the
Company has assumed outstanding employee option grants and/or the obligation to
make future or potential grants under a prior existing plan of the acquired
entity, similar adjustments are permitted at the discretion of the Committee.
The Committee shall notify optionees of any intended sale of all or
substantially all of the Company's assets within a reasonable time prior to such
sale.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined by the Committee in its sole discretion. Any such
adjustment may provide for the elimination of any fractional share which might
otherwise become subject to an option.
ARTICLE XI.
EFFECT OF CHANGE IN CONTROL
(a) Except to the extent otherwise provided in a particular option
agreement or in paragraph (c) below, in the event of a "Change in Control,"
notwithstanding any unsatisfied service requirement established in the
option agreement, such option shall become immediately exercisable with
respect to 100 percent of the shares subject to such option.
(b) For purposes of the Plan, a Change in Control shall, subject to
subsection (c) below, be deemed to occur if, after the date the conditions
of Article XVIII have been satisfied (i) any "person" (as that term is used
in Sections 13 and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than Capital Z or any of its
affiliates, is or becomes the beneficial owner (as that term is used in
Section 13(d) of the Exchange Act), directly or indirectly, of 50% or more
of either the outstanding shares of Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally, (ii) the Company is merged, consolidated or reorganized into or
with another corporation or another legal entity and, as a result of such
merger, consolidation or reorganization, less than 50% of the combined
voting power of the then-outstanding securities of such corporation or
entity immediately after such transaction is held in the aggregate by the
holders of the combined voting power of the securities of the Company
entitled to generally in the election of directors of the Company
immediately prior to such transaction, (iii) individuals who constitute the
Board at the beginning of such period cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director was approved by
a vote of at least three-quarters of the directors then still in office who
were directors at the beginning of the period or (iv) the Company undergoes
a liquidation or dissolution or a sale of all or substantially all of the
assets of the Company. No merger, consolidation or corporate reorganization
in which the owners of the combined voting power of the Company's then
outstanding voting securities entitled to vote generally prior to said
combination, own 50% or more of the resulting entity's outstanding voting
securities shall, by itself, be considered a Change in Control.
(c) Notwithstanding any other provision of this Plan, unless (i) an
optionee terminates his employment for Good Reason, or (ii) is terminated
by the Company without Cause, in either case within one year after a Change
in Control (as defined in subsection (b) above), no event shall be treated
as a Change in Control unless all equity securities of the Company then
held by Capital Z are contemporaneously exchanged for cash or other liquid
assets, which Capital Z is free to sell on a basis reasonably likely to
result in receipt of cash proceeds equal to or greater than the price
payable to shareholders upon a Change in Control (such event is referred to
as a "Capital Z Realization Event" and such price is referred to as the
"Change in Control Price"). If an optionee's employment is terminated by
EX 43.2 - 5
<PAGE>
the Company without Cause or by the optionee for Good Reason within one
year after a Change in Control (as defined in subsection (b) above), the
event shall be treated as both a Change in Control and a Capital Z
Realization Event with respect to such optionee and acceleration of vesting
shall occur to the extent the performance conditions established in the
option agreement were satisfied as of the date of the Change in Control.
ARTICLE XII.
NO OBLIGATION TO EXERCISE OPTION
Granting of an option shall impose no obligation on the recipient to
exercise such option.
ARTICLE XIII.
USE OF PROCEEDS
The proceeds received from the sale of Stock pursuant to the Plan shall be
used for general corporate purposes.
ARTICLE XIV.
RIGHTS AS A STOCKHOLDER
An optionee or a transferee of an option shall have no rights as a
stockholder with respect to any share covered by his option until he shall have
become the holder of record of such share, and he shall not be entitled to any
dividends or distributions or other rights in respect of such share for which
the record date is prior to the date on which he shall have become the holder of
record thereof.
Notwithstanding anything herein to the contrary, the Committee, in its sole
discretion, may restrict the transferability of all or any number of shares
issued under the Plan upon the exercise of an option by legending the stock
certificate as it deems appropriate.
ARTICLE XV.
EMPLOYMENT RIGHTS
Nothing in the Plan or in any option granted hereunder shall confer on any
optionee any right to continue in the employ of the Company or any of its
subsidiaries, or to interfere in any way with the right of the Company or any of
its subsidiaries to terminate the optionee's employment at any time for any
reason, whether or not for Cause.
ARTICLE XVI.
COMPLIANCE WITH LAW
The Company is relieved from any liability for the nonissuance or
non-transfer or any delay in issuance or transfer of any shares of Stock subject
to options under the Plan which results from the inability of the Company to
obtain or in any delay in obtaining from any regulatory body having
jurisdiction, all requisite authority to issue or transfer shares of Stock of
the Company either upon exercise of the options under the Plan or shares of
Stock issued as a result of such exercise if counsel for the Company deems such
authority necessary for lawful issuance or transfer of any such shares,
Appropriate legends may be placed on the stock certificates evidencing shares
issued upon exercise of options to reflect such transfer restrictions.
Each option granted under the Plan is subject to the requirement that if at
any time the Committee determines, in its discretion, that the listing,
registration or qualification of shares of Stock issuable upon exercise of
options is required by any securities exchange or under any state or Federal
law, or that the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the grant of
options or the issuance of shares of Stock, no shares of Stock shall be issued,
in whole or in part, unless such listing, registration,
EX 43.2 - 6
<PAGE>
qualification, consent or approval has been effected or obtained free of any
conditions or with such conditions as are acceptable to the Committee.
ARTICLE XVII.
CANCELLATION OF OPTIONS
The Committee, in its discretion, may, with the consent of any optionee,
cancel any outstanding option hereunder.
ARTICLE XVIII.
EFFECTIVE DATE AND EXPIRATION DATE OF PLAN
The Plan is effective as of the Initial Closing Date, subject to (i)
approval by the stockholders of the Company in a manner which complies with
Section 162(m) and Section 422(b)(1) of the Code and the Treasury Regulations
thereunder, such approval to occur at the next meeting of stockholders of the
Company, and (ii) the consummation, on or prior to September 30, 1999, of the
"Recapitalization," as such term is defined in the Purchase Agreement. The
expiration date of the Plan, after which no option may be granted hereunder,
shall be December 31, 2008.
ARTICLE XIX.
AMENDMENT OR DISCONTINUANCE OF PLAN
The Board may, without the consent of the Company's stockholders or
optionees under the Plan, at any time terminate the Plan entirely and at any
time or from time to time amend or modify the Plan, provided that no such action
shall adversely affect options theretofore granted hereunder without the
optionee's consent, and provided further that no such action by the Board,
without approval of the stockholders, may (a) increase the total number of
shares of Stock which may be purchased pursuant to options granted under the
Plan, except as contemplated in ARTICLE X, or (b) expand the class of employees
eligible to receive options under the Plan.
ARTICLE XX.
MISCELLANEOUS
(a) Options shall be evidenced by option agreements (which need not be
identical) in such forms as the Committee may from time to time approve.
Such agreements shall conform to the terms and conditions of the Plan and
may provide that the grant of any option under the Plan and Stock acquired
pursuant to the Plan shall also be subject to such other conditions
(whether or not applicable to the option or Stock received by any other
optionee) as the Committee determines appropriate, including, without
limitation, provisions to assist the optionee in financing the purchase of
Stock through the exercise of options, provisions for the forfeiture of, or
restrictions on, resale or other disposition of shares under the Plan, and
provisions to comply with Federal and state securities laws and Federal and
state income tax withholding requirements.
(b) If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his affairs because of illness
or accident, or is a minor, or has died, then any payment due to such
person or his estate (unless a prior claim therefor has been made by a duly
appointed legal representative) may, if the Committee so directs the
Company, be paid to his spouse, child, relative, an institution maintaining
or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise
entitled to payment. Any such payment shall be a complete discharge of the
liability of the Committee and the Company therefor.
(c) No member of the Committee shall be personally liable by reason of
any contract or other instrument executed by such member or on his behalf
in his capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Company shall indemnify and hold
harmless each member of the Committee and each other employee, officer or
director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of
EX 43.2 - 7
<PAGE>
any act or omission to act in connection with the Plan unless arising out
of such person's own fraud or bad faith; PROVIDED, -------- HOWEVER, that
approval of the Company's Board of Directors shall be required ------- for
the payment of any amount in settlement of a claim against any such person.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
(d) The Plan shall be governed by and construed in accordance with the
internal laws of the State of Delaware without reference to the principles
of conflicts of law thereof.
(e) No provision of the Plan shall require the Company, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made
or otherwise to segregate any assets, nor shall the Company maintain
separate bank accounts, books, records or other evidence of the existence
of a segregated or separately maintained or administered fund for such
purposes. optionees shall have no rights under the Plan other than as
unsecured general creditors of the Company, except that insofar as they may
have become entitled to payment of additional compensation by performance
of services, they shall have the same rights as other employees under
general law.
(f) Each member of the Committee and each member of the Company's
Board of Directors shall be fully justified in relaying, acting or failing
to act, and shall not be liable for having so relied, acted or failed to
act in good faith, upon any report made by the independent public
accountant of the Company and upon any other information furnished in
connection with the Plan by any person or persons other than such member.
(g) References to "Good Reason" as used herein shall relate only to
optionees who have employment agreements with the Company, and in such
cases, shall have the same meaning as set forth in such employment
agreement. If the optionee does not have an employment agreement with the
Company, or has an employment agreement that does not use the term Good
Reason, then provisions relating to such term shall not apply.
(h) Except as otherwise specifically provided in the relevant plan
document, no payment under the Plan shall be taken into account in
determining any benefits under any pension, retirement, profit-sharing,
group insurance or other benefit plan of the Company.
(i) The expenses of administering the Plan shall be borne by the
Company.
Masculine pronouns and other words of masculine gender shall refer to both
men and women.
* * *
As adopted by the Board of Directors of
Aames Financial Corporation as of June 9, 1999
EXHIBIT 5.1
[Letterhead of Troop Steuber Pasich Reddick & Tobey, LLP]
January 31, 2000
Aames Financial Corporation
350 South Grand Avenue, 52nd Floor
Los Angeles, California 90071
Ladies/Gentlemen:
At your request, we have examined the Registration Statement on Form S-8 to
which this letter is attached as exhibit 5.1 (the "Registration Statement"),
filed by Aames Financial Corporation, a Delaware corporation (the "Company"),
with respect to the registration under the Securities Act of 1933, as amended
(the "Act") of 14,612,008 shares of the Company's Common Stock, par value $0.001
per share (the "Shares") issuable pursuant to the Company's 1999 Stock Option
Plan (the "Plan").
We are of the opinion, as of the date hereof, that the Shares have been duly
authorized and, upon issuance and sale in conformity with and pursuant to the
Plan, will be validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to use of our name in the Prospectus constituting a part thereof.
Respectfully submitted,
/s/ TROOP STEUBER PASICH REDDICK & TOBEY, LLP
Troop Steuber Pasich Reddick & Tobey, LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Aames Financial Corporation 1999 Stock Option Plan of
our report dated August 26, 1999, with respect to the consolidated financial
statements of Aames Financial Corporation included in the Annual Report (Form
10-K) for the year ended June 30, 1999.
/S/ ERNST & YOUNG LLP
Ernst & Young LLP
Los Angeles, California
January 25, 2000
