Execution Copy
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 Xxxx Xxxxxxxx and Xxxx Xxxxxxxxx (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 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
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
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.
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.
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.
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.
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/ Xxxx X. Xxxxx
-----------------------------
Name: Xxxx X. Xxxxx
Title: Partner
SHAREHOLDERS:
/s/ Xxxx X. Xxxxxxxx
---------------------------------
Xxxx Xxxxxxxx
/s/ Xxxx X. Xxxxxxxxx
---------------------------------
Xxxx Xxxxxxxxx
EXHIBIT A
Shareholder Shares of Options All Other
Common Stock Exercisable Options Owned
Owned within 60
days from
12/23/98
----------- ------------- ----------- -------------
Xxxx X. Xxxxxxxx 21,900 900,759 719,541
0000 Xxxxxxxx Xxx.
Xxx Xxxxxxx, XX 00000
Xxxx X. Kornsweit 1,822,860 575,000 80,000
00000 Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000
