-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IBGAm8IEPIyuuMCvCjTmWNb208YXylKUiljInKeTLM8F0ZX60dNXFnkv5/1wAm14 JQPxCV9MJiaSPRCyz5OBNw== 0001011438-99-000014.txt : 19990115 0001011438-99-000014.hdr.sgml : 19990115 ACCESSION NUMBER: 0001011438-99-000014 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990114 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AAMES FINANCIAL CORP/DE CENTRAL INDEX KEY: 0000879957 STANDARD INDUSTRIAL CLASSIFICATION: LOAN BROKERS [6163] IRS NUMBER: 954340340 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-42024 FILM NUMBER: 99505953 BUSINESS ADDRESS: STREET 1: 350 SOUTH GRAND AVE STREET 2: 52ND FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 2132105000 MAIL ADDRESS: STREET 1: 3731 WILSHIRE BLVD 10TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90010 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: THOMPSON CARY CENTRAL INDEX KEY: 0001025443 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 954340340 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O AAMES FINANCIAL CORP STREET 2: 350 SOUTH GRAND AVENUE CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 3232105000 MAIL ADDRESS: STREET 1: C/O AAMES FINANCIAL CORP STREET 2: 350 SOUTH GRAND AVENUE CITY: LOS ANGELES STATE: CA ZIP: 90071 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 Aames Financial Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $.001 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 00253A 10 1 - -------------------------------------------------------------------------------- (CUSIP Number) Barbara S. Polsky General Counsel Aames Financial Corporation 350 South Grand Avenue Los Angeles, California 90071 (323) 210-5000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 23, 1998 - -------------------------------------------------------------------------------- (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). SCHEDULE 13D - ------------------------- ------------------------------- CSUIP NO. 00253A 10 1 PAGE 2 OF 11 PAGES ----------- - -- - ------------------------- ------------------------------- - -------------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Cary H. Thompson ###-##-#### - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES -0- ------------------------------------------------------------- 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.) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,570,519 (See Response to Item 5.) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.7% (See Response to Item 5.) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *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 SCHEDULE 13D - -------------------------------------------------------------------------------- CSUIP NO. 00253A 10 1 PAGE 3 OF 11 PAGES ----------- - -- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Karen L. Heilman [ ###-##-#### ] - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES -0- ---------------------------------------------------- 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.) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,570,519 (See Response to Item 5.) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.7% (See Response to Item 5.) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *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 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 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 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 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 (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 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 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 ------------------------- Cary H. Thompson /s/ Karen L. Heilman ------------------------- 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 EXHIBIT INDEX EXHIBIT NO. TITLE - ----------- ----- 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 EX-99.2 2 MANAGEMENT VOTING AGREEMENT 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 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 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 Page 3 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. Page 4 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. Page 5 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. Page 6 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. Page 7 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 EX-99.3 3 MANAGEMENT INVESTMENT AGREEMENT 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 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. Page 2 (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 Page 3 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. Page 4 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 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. Page 6 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 -----END PRIVACY-ENHANCED MESSAGE-----