EXHIBIT 99.11
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT
To Purchase Series D Convertible Preferred Stock of
AAMES FINANCIAL CORPORATION
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS.........................................................1
ARTICLE 2. EXERCISE OF WARRANT.................................................5
Section 2.1. Manner of Exercise..........................................5
Section 2.2. Payment of Taxes............................................6
Section 2.3. Fractional Shares...........................................7
ARTICLE 3. TRANSFER, DIVISION AND COMBINATION..................................7
Section 3.1. Transfer....................................................7
Section 3.2. Division and Combination....................................7
Section 3.3. Expenses....................................................8
Section 3.4. Maintenance of Books........................................8
ARTICLE 4. ADJUSTMENTS.........................................................8
Section 4.1. Stock Dividends, Subdivisions,
Combinations and Reclassifications..........................8
Section 4.2. Issuance of Additional Shares of Common
Stock or Convertible Securities.............................9
Section 4.3. Other Provisions Applicable to Adjustments
Under This Section.........................................11
Section 4.4. Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets.....................12
Section 4.5. Notices....................................................13
Section 4.6. Certificates...............................................14
ARTICLE 5. NO IMPAIRMENT......................................................14
ARTICLE 6. RESERVATION AND AUTHORIZATION OF SERIES D
PREFERRED STOCK; REGISTRATION WITH OR APPROVAL
OF ANY GOVERNMENTAL AUTHORITY......................................15
ARTICLE 7. STOCK AND WARRANT TRANSFER BOOKS...................................15
ARTICLE 8. RESTRICTIONS ON TRANSFERABILITY....................................16
Section 8.1. Restrictive Legend.........................................16
Section 8.2. Transfers..................................................17
Section 8.3. Termination of Restrictions................................17
ARTICLE 9. SUPPLYING INFORMATION..............................................18
ARTICLE 10. LOSS OR MUTILATION................................................18
ARTICLE 11. OFFICE OF THE COMPANY.............................................18
ARTICLE 12. REGISTRATION RIGHTS...............................................19
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ARTICLE 13. LIMITATION OF LIABILITY...........................................19
ARTICLE 14. REPRESENTATION OF HOLDER..........................................19
ARTICLE 15. MISCELLANEOUS.....................................................19
Section 15.1. Nonwaiver and Expenses.....................................19
Section 15.2. No Rights As Stockholder...................................19
Section 15.3. Notice Generally...........................................20
Section 15.4. Successors and Assigns.....................................21
Section 15.5. Amendment..................................................21
Section 15.6. Severability...............................................21
Section 15.7. Headings...................................................21
Section 15.8. Governing Law..............................................21
Section 15.10. Mutual Waiver of Jury Trial..............................21
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT
To Purchase 5,000,000 Shares of
Series D Convertible Preferred Stock of
AAMES FINANCIAL CORPORATION
THIS IS TO CERTIFY THAT Specialty Finance Partners, a Bermuda general
partnership ("SFP") or its registered assigns, is entitled, at any time prior to
July 7, 2005 (the "Expiration Date"), to purchase from Aames Financial
Corporation, a Delaware corporation (the "Company"), 5,000,000 shares of Series
D Convertible Preferred Stock, par value $0.001 per share, of the Company (the
"Series D Preferred Stock"), subject to adjustment as provided herein, in whole
or in part, including fractional parts, at a purchase price of $0.85 per share
(the "Exercise Price"), subject to adjustment as set forth herein, all on the
terms and conditions and pursuant to the provisions hereinafter set forth.
Notwithstanding anything to the contrary set forth in this Warrant, this Warrant
shall not be exercisable by the holder hereof until the day on which the Company
files a Certificate of Designations relating to the Series D Preferred Stock
with the Secretary of State of the State of Delaware. Capitalized terms not
otherwise defined herein are used as defined in the Preferred Stock Purchase
Agreement.
ARTICLE 1.
DEFINITIONS
-----------
As used in this Warrant, the following terms have the respective meanings
set forth below:
"Additional Shares of Series D Preferred Stock" shall mean all shares of
Series D Preferred Stock issued by the Company after the Issue Date, other than
Warrant Stock.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
"SFP" shall have the meaning set forth in the first paragraph hereof.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall mean the Common Stock of the Company, par value $0.001
per share.
"Company" shall have the meaning set forth in the first paragraph hereof.
"Conversion Price" shall have the meaning set forth in Section 4.2 hereof.
"Convertible Securities" shall mean evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable, with or
without payment of additional consideration in cash or property, for Additional
Shares of Series D Preferred Stock, either immediately or upon the occurrence of
a specified date or a specified event.
"Current Market Price" shall mean, when used with reference to shares of
Series D Preferred Stock, the closing price per share of Common Stock on such
date and, when used with reference to shares of Series D Preferred Stock for any
period shall mean the average of the daily closing prices per share of Common
Stock for such period. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Stock is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if the Common
Stock is not listed or admitted to trading on any national securities exchange,
the last quoted sale price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. National Market System is not quoted by
any such organization, the
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average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Corporation. If the Common Stock is not publicly held or so
listed or publicly traded, "Current Market Price" shall mean the Fair Market
Value per share of Common Stock or of such other securities as determined in
good faith by the Board of Directors of the Corporation based on an opinion of
an independent investment banking firm with an established national reputation
as a value of securities, which opinion may be based on such assumption as such
firm shall deem to be necessary and appropriate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first paragraph
hereof.
"Expiration Date" shall have the meaning set forth in the first paragraph
hereof.
"Fair Market Value" shall mean the amount which a willing buyer would pay a
willing seller in an arm's-length transaction.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as from time to time in effect.
"holder" shall mean, as the context requires, the Person in whose name this
Warrant is registered on the books of the Company maintained for such purpose
and/or the Person holding any Warrant Stock.
"Issue Date" shall mean the date on which this Warrant is issued.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, corporation or other entity and shall include any successor (by
merger or otherwise) of such entity.
"Preferred Stock Purchase Agreement" shall mean the Preferred Stock
Purchase Agreement, dated as of May 21, 2000 between the Company and SFP, as
amended.
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"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of December 23, 1999, between the Company and Capital Z
Financial Services Fund II, L.P., as amended.
"Restricted Series D Preferred Stock" shall mean shares of Series D
Preferred Stock which are, or which upon their issuance on the exercise of this
Warrant would be, evidenced by a certificate bearing the restrictive legend set
forth in Section 8.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Series B Preferred Stock" shall mean the Series B Convertible Preferred
Stock of the Company, par value $0.001 per share.
"Series D Preferred Stock" shall mean the Series D Convertible Preferred
Stock of the Company, par value $0.001 per share.
"Subsidiary" shall mean any corporation of which an aggregate of more than
50% of the outstanding stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether, at the
time, stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned legally or beneficially by the Company
and/or one or more Subsidiaries of the Company.
"Trading Day" means a day on which the principal national securities
exchange on which the Series D Preferred Stock is listed or admitted to trading
is open for the transaction of business or, if the Series D Preferred Stock is
not listed or admitted to trading on any national securities exchange, a
Business Day.
"Transaction" shall have the meaning set forth in Section 4.5 hereof.
"transfer" shall mean any transfer, sale, encumbrance, hypothecation or
other disposition of this Warrant or any Warrant Stock or of any interest in
either thereof.
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"Transfer Notice" shall have the meaning set forth in Section 8.2.
"Warrant Price" shall mean an amount equal to (i) the number of shares of
Series D Preferred Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Series D Preferred Stock purchased
by the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
-------------------
Section 2.1. Manner of Exercise. From and after the date hereof and until
5:00 P.M., New York time, on the Expiration Date, the holder may exercise this
Warrant for all or any part of the number of shares of Series D Preferred Stock
purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder shall
deliver to the Company at its office at 2 California Plaza, 000 Xxxxx Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at the office or agency
designated by the Company pursuant to Section 11, (i) a written notice of the
holder's election to exercise this Warrant, which notice shall specify the
number of shares of Series D Preferred Stock to be purchased, (ii) payment of
the Warrant Price in the manner provided below, and (iii) this Warrant. Such
notice shall be substantially in the form of the subscription form appearing at
the end of this Warrant as Exhibit A, duly executed by or on behalf of the
holder. Upon receipt thereof, the Company shall, as promptly as practicable, and
in any event within five (5) Business Days thereafter, execute or cause to be
executed and deliver or cause to be delivered to the holder a certificate or
certificates representing the aggregate number of full shares of Series D
Preferred Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be, to the extent possible, in such denomination
or denominations as such holder shall request in the notice and shall be
registered in the name of the holder or, subject to Section 8, such other name
as shall be designated in the notice. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued, and the holder or any other Person so designated to be named
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therein shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the notice, together with the cash, check or checks
and/or securities, if any, and this Warrant, are received by the Company as
described above and all taxes required to be paid by the holder, if any,
pursuant to Section 2.2 prior to the issuance of such shares have been paid. If
this Warrant shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant Stock,
deliver to the holder a new Warrant evidencing the rights of the holder to
purchase the unpurchased shares of Series D Preferred Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of the holder, appropriate notation may be made on
this Warrant and the same returned to the holder.
Payment of the Warrant Price shall be made at the option of the holder by
cash, wire transfer to an account in a bank located in the United States
designated for such purpose by the Company, or certified or official bank check,
or by transfer to the Company of shares of Series B Preferred Stock or Series D
Preferred Stock, or any combination thereof. In the event of the application
shares of Series B Preferred Stock or Series D Preferred Stock to the payment of
the Warrant Price, the amount to be credited to the payment of the Warrant Price
shall be stated value per share (as described in the Company's Certificate of
Incorporation, as amended) plus an amount per share equal to all accrued and
unpaid dividends thereon, whether or not declared, to the date of such exercise,
provided that no such credit shall be made with respect to any such dividends if
the holder of such shares held such shares on the record date therefor.
Section 2.2. Payment of Taxes. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of the Warrant Shares, unless
such tax or charge is imposed by law upon the holder, in which case such taxes
or charges shall be paid by the holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Series D Preferred Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the
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satisfaction of the Company that no such tax or other charge is due.
Section 2.3. Fractional Shares. The Company shall not be required to issue
a fractional share of Series D Preferred Stock upon exercise of this Warrant. As
to any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
Current Market Price per share of Common Stock on the date of exercise.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
----------------------------------
Section 3.1. Transfer. Subject to compliance with Section 8, transfer of
this Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of the Company referred to in Section 2.1
or the office or agency designated by the Company pursuant to Section 11,
together with a written assignment of this Warrant substantially in the form of
Exhibit B hereto duly executed by the holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to Section 8, execute and deliver a new Warrant or Warrants in the name(s) of
the assignee or assignees and in the denomination(s) specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be canceled. A Warrant, if properly assigned in compliance with Section
8, may be exercised by a new holder for the purchase of shares of Series D
Preferred Stock without having a new Warrant issued.
Section 3.2. Division and Combination. Subject to Section 8, this Warrant
may be divided or combined with other Warrants for the purchase of Series D
Preferred Stock upon presentation hereof at the aforesaid office or agency of
the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the holder or
its agent or attorney. Subject to compliance with Section 3.1 and with Section
8, as to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.
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Section 3.3. Expenses. The Company shall prepare, issue and deliver at its
own expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
Section 3.4. Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
-----------
The number of shares of Series D Preferred Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at the time of
such event.
Section 4.1. Stock Dividends, Subdivisions, Combinations and
Reclassifications. If the Company shall at any time or from time to time after
the Issue Date:
(a) pay a dividend or make a distribution, on the outstanding shares
of Series D Preferred Stock in Additional Shares of Series D Preferred
Stock,
(b) subdivide its outstanding shares of Series D Preferred Stock into
a larger number of shares of Series D Preferred Stock,
(c) combine its outstanding shares of Series D Preferred Stock into a
smaller number of shares of Series D Preferred Stock, or
(d) issue by reclassification of its shares of Series D Preferred
Stock any shares of capital stock of the Company,
then, and in each such case, the number of shares of Series D Preferred Stock
issuable upon exercise of the Warrants evidenced hereby immediately prior to
such event or the record date therefor, whichever is earlier, shall be adjusted
so that the holder of any Warrant evidenced hereby thereafter exercised shall be
entitled to receive the number of shares of Series D Preferred Stock or other
securities of the Company which such holder would have owned or have been
entitled to receive after
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the happening of any of the events described above, had such Warrant been
exercised immediately prior to the happening of such event or the record date
therefor, whichever is earlier. An adjustment made pursuant to this Section 4.1
shall become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Series D Preferred Stock entitled to receive such
dividend or distribution, or (y) in the case of any such subdivision,
reclassification or combination, at the close of business on the day upon which
such corporate action becomes effective.
Section 4.2. Issuance of Additional Shares of Series D Preferred Stock or
Convertible Securities. In the case the Corporation shall, after the Issue Date,
issue or sell:
(a) Additional Shares of Series D Preferred Stock at a price per
share, or
(b) Convertible Securities having a Conversion Price per share,
less than the Current Market Price (for a period of 15 consecutive Trading Days
prior to such date), then, and in each such case, the number of shares of Series
D Preferred Stock issuable upon exercise of the Warrants evidenced hereby shall
be adjusted so that the holder of each Warrant evidenced hereby shall be
entitled to receive, upon the exercise thereof, the number of shares of Series D
Preferred Stock determined by multiplying (A) the number of shares of Series D
Preferred Stock issuable upon exercise of the Warrants evidenced hereby on the
day immediately prior to such date by (B) a fraction, the numerator of which
shall be the sum of (1) the number of shares of Series D Preferred Stock
outstanding on the date on which such shares or Convertible Securities are
issued and (2) the number of Additional Shares of Series D Preferred Stock
issued, or into which the Convertible Securities may convert, and the
denominator of which shall be the sum of (x) the number of shares of Series D
Preferred Stock outstanding on such date and (y) the number of shares of Series
D Preferred Stock which the aggregate consideration receivable by the Company
for the total number of shares of Series D Preferred Stock so issued, or the
number of shares of Series D Preferred Stock which the aggregate of the
Conversion Price of such Convertible Securities so issued, would purchase at the
Current Market Price on such date.
An adjustment made pursuant to this Section 4.2 shall be made on the next
Business Day following the date on which any
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such issuance is made and shall be effective retroactively immediately after the
close of business on such date. For purposes of this Section 4.2, the aggregate
consideration receivable by the Company in connection with the issuance of any
securities shall be deemed to be the sum of the aggregate offering price to the
public (before deduction of underwriting discounts or commissions and expenses
payable to third parties), and the "Conversion Price" of any Convertible
Securities is the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities (before
deduction of underwriting discounts or commissions and expenses payable to third
parties) plus the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion, exchange or exercise of any such
Convertible Securities.
Neither (A) the issuance of any shares of Series D Preferred Stock (whether
treasury shares or newly issued shares) pursuant to a dividend or distribution
on, or subdivision, combination or reclassification of, the outstanding shares
of Series D Preferred Stock requiring an adjustment in the number of shares of
Series D Preferred Stock issuable upon exercise of the Warrants evidenced hereby
pursuant to Section 4.1, or pursuant to any employee benefit plan or program of
the Company or pursuant to any option, warrant, right, or Convertible Security
outstanding as of the date hereof (including, but not limited to, the Rights,
the Series B Preferred Stock, the Series D Preferred Stock and the Warrants) nor
(B) the issuance of shares of Series D Preferred Stock pursuant thereto shall be
deemed to constitute an issuance of Series D Preferred Stock or Convertible
Securities by the Company to which this Section 4.2 applies.
Upon expiration of any Convertible Securities which shall not have been
exercised or converted and for which an adjustment shall have been made pursuant
to this Section 4.2, the Conversion Price computed upon the original issue
thereof shall upon expiration be recomputed as if the only additional shares of
Series D Preferred Stock issued were such shares of Series D Preferred Stock (if
any) actually issued upon exercise or conversion of such Convertible Securities
and the consideration received therefor was the consideration actually received
by the Corporation for the issue of such Convertible Securities (whether or not
exercised or converted) plus the consideration actually received by the
Corporation upon such exercise of conversion.
Section 4.2. [Reserved]
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Section 4.3. Other Provisions Applicable to Adjustments Under This Section.
The following provisions shall be applicable to the making of adjustments
provided for in this Section 4:
(a) For purposes of this Section 4, the number of shares of Series D
Preferred Stock at any time outstanding shall not include any shares of
Series D Preferred Stock then owned or held by or for the account of the
Company.
(b) The term "dividend", as used in this Section 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant to
the Rights Agreement. Notwithstanding anything in this Section 4 to the
contrary, the number of shares of Series D Preferred Stock issuable upon
exercise of the Warrants evidenced hereby shall not be adjusted as a result
of any dividend, distribution or issuance of securities of the Company
pursuant to the Rights Agreement.
(c) Notwithstanding anything in this Section 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Series D Preferred Stock issuable upon exercise of the
Warrants evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of Series
D Preferred Stock issuable upon exercise of the Warrants evidenced hereby
by at least one-hundredth of one share of Series D Preferred Stock, and
when the cumulative net effect of more than one adjustment so determined
shall be to change the number of shares of Series D Preferred Stock
issuable upon exercise of the Warrants evidenced hereby by at least
one-hundredth of one share of Series D Preferred Stock, such change in the
number of shares of Series D Preferred Stock issuable upon exercise of the
Warrants evidenced hereby shall thereupon be given effect.
(d) The certificate of any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company
(which may be the firm of independent public accountants regularly employed
by the Company) shall be presumptively correct for any computation made
under this Section 4.
(e) If the Company shall take a record of the holders of its Series D
Preferred Stock for the purpose of
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entitling them to receive a dividend or other distribution, and shall
thereafter and before the distribution to stockholders thereof legally
abandon its plan to pay or deliver such dividend or distribution, then, no
adjustment in the number of shares of Series D Preferred Stock issuable
upon exercise of the Warrants evidenced hereby shall be required by reason
of the taking of such record.
(f) There shall be no adjustment of the number of shares of Series D
Preferred Stock issuable upon exercise of the Warrants evidenced hereby in
case of the issuance of any stock of the Company in a merger,
reorganization, acquisition or other similar transaction except as set
forth in Sections 4.1, 4.2 and 4.5.
(g) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction which, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value per
share of Series D Preferred Stock.
(h) Upon each adjustment to the number of shares of Series D Preferred
Stock issuable upon exercise of the Warrants pursuant to Sections 4.1, 4.2
or 4.3, the Exercise Price effective immediately prior to the making of
such adjustment shall thereafter be adjusted to be the amount obtained by
(i) multiplying (A) the applicable number of shares of Series D Preferred
Stock issuable upon exercise of the Warrants immediately prior to such
adjustment by (B) the Exercise Price in effect immediately prior to such
adjustment and (ii) dividing the product so obtained by the number of
shares of Series D Preferred Stock issuable upon exercise of the Warrants
immediately after such adjustment.
Section 4.4. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case of any reorganization or reclassification of
outstanding shares of Series D Preferred Stock (other than a reclassification
covered by Section 4.1), or in case of any consolidation or merger of the
Company with or into another corporation, or in the case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety (each of the foregoing being referred to as a
"Transaction"), each such Warrant then outstanding shall thereafter be
exercisable for, in lieu of the Series D Preferred Stock issuable upon such
exercise prior to consummation of the Transaction, the kind and amount of shares
of stock and other securities and property receivable (including cash) upon the
consummation of the
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Transaction by a holder of that number of shares of Series D Preferred Stock
issuable upon exercise of such Warrant immediately prior to the Transaction
(including, on a pro rata basis, the cash, securities or property received by
holders of Series D Preferred Stock in any tender or exchange offer that is a
step in the Transaction).
Section 4.5. Notices to Warrantholders. In case at any time or from time to
time, prior to the Expiration Date, the Company shall pay any dividend or make
any other distribution to the holders of its Series D Preferred Stock, or shall
offer for subscription pro rata to the holders of its Series D Preferred Stock
any additional shares of stock of any class or any other right, or there shall
be any capital reorganization or reclassification of the Series D Preferred
Stock of the Company or consolidation or merger of the Company with or into
another corporation, or any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, or there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company, then, in any one or more of said cases the Company shall give at
least 20 days' prior written notice (the time of mailing of such notice shall be
deemed to be the time of giving thereof) to the registered holder of the
Warrants evidenced hereby at its address as shown on the books of the Company
maintained by the Transfer Agent thereof of the date on which (i) the books of
the Company shall close or a record shall be taken for such stock dividend,
distribution or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be, provided that in
the case of any Transaction to which Section 4.5 applies the Company shall give
at least 30 days' prior written notice as aforesaid. Such notice shall also
specify the date as of which the holders of the Series D Preferred Stock of
record shall participate in said dividend, distribution or subscription rights
or shall be entitled to exchange their Series D Preferred Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale or conveyance or participate in such dissolution,
liquidation or winding up, as the case may be. Failure to give such notice shall
not invalidate any action so taken.
Section 4.6. Certificates. Upon any adjustment of the number of shares of
Series D Preferred Stock issuable upon exercise of the Warrants evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly
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deliver to the holders of the Warrants and the Series D Preferred Stock, a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the increased or
decreased number of shares of Series D Preferred Stock issuable upon exercise of
the Warrants evidenced hereby and the Exercise Price then in effect following
such adjustment.
ARTICLE 5.
NO IMPAIRMENT
-------------
The Company shall not by any action including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of the holder of the Warrant
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Series D Preferred
Stock receivable upon the exercise of this Warrant above the Exercise Price
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Series D Preferred Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to the holder of this Warrant, the continuing validity of this
Warrant and the obligations of the Company hereunder.
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ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
SERIES D PREFERRED STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
--------------------------------------
The Company covenants and agrees that, until the Expiration Date, the
Company shall at all times reserve and keep available for issue upon the
exercise of Warrants such number of its authorized but unissued shares of Series
D Preferred Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants. All shares of Series D Preferred Stock which shall be so
issuable, when issued upon exercise of Warrants and payment therefor in
accordance with the terms of such Warrant, shall be duly and validly issued,
fully paid and nonassessable and free and clear of any liens, claims and
restrictions (other than as provided herein). No stockholder of the Company has
or shall have any preemptive rights to subscribe for such shares of Series D
Preferred Stock.
Before taking any action which would result in an adjustment in the number
of shares of Series D Preferred Stock for which this Warrant is exercisable or
in the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
STOCK AND WARRANT TRANSFER BOOKS
--------------------------------
The Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of any
Warrant.
ARTICLE 8.
RESTRICTIONS ON TRANSFERABILITY
-------------------------------
The Warrants and the Warrant Stock shall not be transferred before
satisfaction of the conditions specified in this Section 8, which conditions are
intended to ensure compliance with the provisions of the Securities Act and
state securities laws with respect to the Transfer of any Warrant or any Warrant
Stock. The holder, by acceptance of this Warrant, agrees to be bound by the
provisions of this Section 8.
Section 8.1. Restrictive Legend.
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(a) Except as otherwise provided in this Section 8, each certificate
for Warrant Stock initially issued upon the exercise of this Warrant, and
each certificate for Warrant Stock issued to any subsequent transferee of
any such certificate, shall be stamped or otherwise imprinted with a legend
in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a certain
Warrant dated July 12 2000, originally issued by Aames Financial
Corporation. The shares represented by this certificate may not be
transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of the
form of said Warrant is on file with the Secretary of Aames Financial
Corporation. The holder of this certificate, by acceptance of this
certificate, agrees to be bound by the provisions of such Warrant."
(b) Except as otherwise provided in this Section 8, each Warrant shall
be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under such Act and under any such applicable state laws, or
in violation of the provisions of this Warrant."
Section 8.2. Transfers. Prior to any transfer or attempted transfer of any
Warrants or any shares of Restricted Series D Preferred Stock, the holder of
such Warrants or Restricted Series D Preferred Stock shall give notice (a
"Transfer Notice") to the Company of such holder's intention to effect such
transfer, describing the manner and circumstances of the proposed transfer, and
obtain from counsel a written opinion addressed and reasonably satisfactory to
the Company that the proposed transfer of such Warrants or such Restricted
Series D Preferred Stock may be effected without registration under the
Securities Act and applicable state securities laws. After
16
receipt of the Transfer Notice and written opinion, the Company shall, within
two Business Days thereof, so notify the holder of such Warrants or such
Restricted Series D Preferred Stock and such holder shall thereupon be entitled
to transfer such warrants or such Restricted Series D Preferred Stock, in
accordance with the terms of the Transfer Notice. Each certificate, if any,
evidencing such shares of Restricted Series D Preferred Stock issued upon such
transfer shall bear the restrictive legend set forth in Section 8.1(a), and each
Warrant issued upon such transfer shall bear the restrictive legend set forth in
Section 8.1(b), unless in the written opinion of counsel addressed to the
Company such legend is not required in order to ensure compliance with the
Securities Act.
Section 8.3. Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 8, the restrictions imposed by this Section 8 upon the
transferability of the Warrants, the Warrant Stock and the Restricted Series D
Preferred Stock (or Series D Preferred Stock issuable upon the exercise of the
Warrants) and the legend requirements of Section 8.1 shall terminate as to any
particular Warrant or share of Warrant Stock or Restricted Series D Preferred
Stock (or Series D Preferred Stock issuable upon the exercise of the Warrants)
(i) as to the Warrant Stock and Restricted Series D Preferred Stock, when and so
long as the resale of such security shall have been effectively registered under
the Securities Act and disposed of pursuant thereto, or (ii) as to the Warrant,
Warrant Stock and Restricted Series D Preferred Stock, when the holder of the
Warrant, Warrant Stock or Restricted Series D Preferred Stock shall have
delivered to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Section shall terminate as to any share of Restricted Series D Preferred
Stock, as hereinabove provided, the holder thereof shall be entitled to receive
from the Company, at the Company's expense (except for any transfer taxes), a
new certificate representing such Series D Preferred Stock not bearing the
restrictive legend set forth in Section 8.1(a).
ARTICLE 9.
SUPPLYING INFORMATION
---------------------
The Company shall cooperate with the holder of the Warrant and the holder
of Restricted Series D Preferred Stock in supplying such information as may be
reasonably requested by such holder or reasonably necessary for such holder to
complete
17
and file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any Warrant or Restricted Series D Preferred
Stock.
ARTICLE 10.
LOSS OR MUTILATION
------------------
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder;
provided, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.
ARTICLE 11.
OFFICE OF THE COMPANY
---------------------
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.
ARTICLE 12.
REGISTRATION RIGHTS
-------------------
The Warrant Stock issuable upon exercise of this Warrant are entitled to
the benefits of the Registration Rights Agreement. The Company shall keep a copy
of the Registration Rights Agreement, and any amendments thereto, at the office
or agency designated by the Company pursuant to Section 11 and shall furnish
copies thereof to the holder upon request.
ARTICLE 13.
LIMITATION OF LIABILITY
-----------------------
No provision hereof, in the absence of affirmative action by the holder to
purchase shares of Series D Preferred Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Series D Preferred Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
18
ARTICLE 14.
REPRESENTATION OF HOLDER
------------------------
The holder represents that it is acquiring the Warrant and the Warrant
Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; provided, that the disposition of holder's
property shall at all times be and remain within its control.
ARTICLE 15.
MISCELLANEOUS
-------------
Section 15.1. Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies. If the Company fails to comply with any provision of this Warrant, the
Company shall pay to the holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees
incurred by the holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.
Section 15.2. No Rights As Stockholder. The Person in whose name this
Warrant is registered shall be deemed the owner hereof and of the Warrants
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the books
of the Company maintained for such purpose.
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(b) If to the Company:
Aames Financial Corporation
2 California Plaza
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
Fax No.: (000) 000-0000
with a copy to:
Troop Xxxxxxx Xxxxxx Xxxxxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: C. N. Xxxxxxxx Xxxxxxx, Esq.
Fax No.: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three (3) Business Days after the same
shall have been deposited in the United States mail.
Section 15.4. Successors and Assigns. Subject to the provisions of Sections
3.1 and 8, (i) this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and assigns of the holder, and (ii) the provisions of this Warrant are intended
to be for the benefit of all holders from time to time of this Warrant, and
shall be enforceable by any such holders.
Section 15.5. Amendment. The Warrants may be modified or amended or the
provisions thereof waived with the written consent of the Company and the
holders of the majority of the portion of this Warrant then outstanding.
Section 15.6. Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating
20
the remainder of such provision or the remaining provisions of this Warrant.
Section 15.7. Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
Section 15.8. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to conflicts of law principles thereof.
Section 15.10. Mutual Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS WARRANT.
21
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer on July 12, 2000.
AAMES FINANCIAL CORPORATION
By: /s/ A. Xxx Xxxxxxxx
------------------------------
Name: A. Xxx Xxxxxxxx
Title: Chief Executive Officer
22
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for the purchase of _____ Shares of Series D Preferred Stock of AAMES
FINANCIAL CORPORATION and herewith makes payment therefor, all at the price and
on the terms and conditions specified in this Warrant and requests that
certificates for the shares of Series D Preferred Stock hereby purchased (and
any securities or other property issuable upon such exercise) be issued in the
name of and delivered to __________________ whose address is
____________________ and, if such shares of Series D Preferred Stock shall not
include all of the shares of Series D Preferred Stock issuable as provided in
this Warrant, that a new Warrant of like tenor and date for the balance of the
shares of Series D Preferred Stock issuable hereunder be delivered to the
undersigned.
______________________ (Name of Registered Owner)
______________________ (Signature of Registered owner)
______________________ (Street Address)
______________________ (City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
Series D Preferred Stock set forth below:
Name and Address of Assignee No. of Shares of Series D Preferred Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of AAMES FINANCIAL CORPORATION maintained
for the purpose, with full power of substitution in the premises.
Dated:_______________________________________________
Name:________________________________________________
Signature:___________________________________________
Witness:_____________________________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
