EXHIBIT 99.5
Execution Copy
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.
FORM OF WARRANT
To Purchase Common Stock of
AAMES FINANCIAL CORPORATION
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS.........................................................1
ARTICLE 2. EXERCISE OF WARRANT.................................................4
Section 2.1. Manner of Exercise.......................................4
Section 2.2. Payment of Taxes.........................................5
Section 2.3. Fractional Shares........................................6
ARTICLE 3. TRANSFER, DIVISION AND COMBINATION..................................6
Section 3.1. Transfer.................................................6
Section 3.2. Division and Combination.................................6
Section 3.3. Expenses.................................................7
Section 3.4. Maintenance of Books.....................................7
ARTICLE 4. ADJUSTMENTS.........................................................7
Section 4.1. Stock Dividends, Subdivisions, Combinations
and Reclassifications....................................7
Section 4.2. Issuance of Additional Shares of Common Stock
or Convertible Securities.................................8
Section 4.3. Certain Other Distributions...............................9
Section 4.4. Other Provisions Applicable to Adjustments
Under This Section.......................................10
Section 4.5. Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets...................12
Section 4.6. Notices..................................................12
Section 4.7. Certificates.............................................13
ARTICLE 5. NO IMPAIRMENT......................................................13
ARTICLE 6. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
AUTHORITY...................................................14
ARTICLE 7. STOCK AND WARRANT TRANSFER BOOKS...................................14
ARTICLE 8. RESTRICTIONS ON TRANSFERABILITY....................................14
Section 8.1. Restrictive Legend......................................14
Section 8.2. Transfers...............................................15
Section 8.3. Termination of Restrictions.............................16
ARTICLE 9. SUPPLYING INFORMATION..............................................16
ARTICLE 10. LOSS OR MUTILATION................................................16
ARTICLE 11. OFFICE OF THE COMPANY.............................................17
ARTICLE 12. REGISTRATION RIGHTS...............................................17
ARTICLE 13. LIMITATION OF LIABILITY...........................................17
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ARTICLE 14. REPRESENTATION OF HOLDER.........................................17
ARTICLE 15. MISCELLANEOUS....................................................17
Section 15.1. Nonwaiver and Expenses................................17
Section 15.2. No Rights As Stockholder..............................18
Section 15.3. Notice Generally......................................18
Section 15.4. Successors and Assigns................................18
Section 15.5. Amendment.............................................19
Section 15.6. Severability..........................................19
Section 15.7. Headings..............................................19
Section 15.8. Governing Law.........................................19
Section 15.9. Mutual Waiver of Jury Trial...........................19
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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 1,250,000 Shares of Common Stock of
AAMES FINANCIAL CORPORATION
THIS IS TO CERTIFY THAT Capital Z Management, Inc., or its
registered assigns, is entitled, at any time prior to December 31, 2004 (the
"Expiration Date"), to purchase from Aames Financial Corporation, a Delaware
corporation (the "Company"), 1,250,000 shares of common stock, par value $0.001
per share, of the Company (the "Common Stock"), subject to adjustment as
provided herein, in whole or in part, including fractional parts, at a purchase
price of $1.00 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. 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 Common Stock" shall mean all shares of
Common 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.
"Capital Z" shall have the meaning set forth in the first
paragraph hereof.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"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 Common Stock, either immediately or upon the occurrence of
a specified date or a specified event, other than the Senior Preferred Stock and
the Contingent Warrant issued under the Preferred Stock Purchase Agreement.
"Current Market Price" shall mean, when used with reference to
shares of Common Stock or other securities on any date, the closing price per
share of Common Stock or such other securities on such date and, when used with
reference to shares of Common Stock or other securities for any period shall
mean the average of the daily closing prices per share of Common Stock or such
other securities 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 or such other securities are 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 or such
other securities are 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 or such other
securities are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Common Stock or such other securities selected by the Board of Directors
of the Corporation. If the Common Stock or such other securities are 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 valuer 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.
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"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 December 23, between the Company and
Capital Z.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of the date hereof, between the Company and Capital
Z.
"Restricted Common Stock" shall mean shares of Common 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, par value $0.001 per share, to be issued pursuant to the
Preferred Stock Purchase Agreement.
"Series C Preferred Stock" shall mean the Series C Convertible
Preferred Stock, par value $0.001 per share, to be issued pursuant to the
Preferred Stock Purchase Agreement.
"Subsidiary" shall mean any corporation of which an aggregate of
more than 50% of the outstanding stock having
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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 Common Stock is listed or admitted to trading
is open for the transaction of business or, if the Common 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.
"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 Common 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 Common 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 Common
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, 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 Common 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
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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
Common 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 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 Common 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 C Preferred Stock, or any combination thereof. In the event of the
application shares of Series B Preferred Stock or Series C Preferred Stock to
the payment of the Warrant Price, the amount to be credited to the payment of
the Warrant Price shall be the Initial Stated Value per share, in the case of
any such application prior to the consummation of the Recapitalization, or the
Post-Recapitalization Stated Value per share, in the case of any such
application after the consummation of the Recapitalization, in each case, 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
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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 Common
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 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 Common 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 Common 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 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 Common 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 Common Stock in Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Common 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 Common Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after 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 Common 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.
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Section 4.2. Issuance of Additional Shares of Common Stock or
Convertible Securities. In the case the Corporation shall, after the Issue Date,
issue or sell:
(a) Additional Shares of Common 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 Common
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 Common Stock
determined by multiplying (A) the number of shares of Common 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 Common Stock outstanding on the date on which such shares or
Convertible Securities are issued and (2) the number of Additional Shares of
Common 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 Common
Stock outstanding on such date and (y) the number of shares of Common Stock
which the aggregate consideration receivable by the Company for the total number
of shares of Common Stock so issued, or the number of shares of Common 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 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 Common Stock (whether
treasury shares or newly issued shares) pursuant to a dividend or distribution
on, or subdivision, combination or
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reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the number of shares of Common 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 C Preferred
Stock and the Warrants) nor (B) the issuance of shares of Common Stock pursuant
thereto shall be deemed to constitute an issuance of Common 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 Common Stock issued were such shares of Common 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 4.3. Certain Other Distributions. In case the Company
shall at any time or from time to time after the Issue Date declare, order, pay
or make a dividend or other distribution (including, without limitation, any
distribution of stock or other securities or property or rights or warrants to
subscribe for securities of the Company or any of its Subsidiaries by way of
dividend or spin-off), on its Common Stock, other than:
(a) regular quarterly dividends payable in cash in an aggregate
amount not to exceed 15% of net income from continuing operations before
extraordinary items of the Company, determined in accordance with GAAP,
during the period (treated as one accounting period) commencing on July
1, 1998, and ending on the date such dividend is paid, or
(b) dividends or distributions of shares of Common Stock which
are referred to in Section 4.1,
then, and in each such case, the number of shares of Common Stock issuable upon
exercise of the Warrants evidenced hereby shall be adjusted so that the holder
of each share of each Warrant evidenced thereby shall be entitled to receive,
upon the exercise thereof, the number of shares of Common Stock determined by
multiplying (1) the number of shares of Common Stock issuable upon exercise of
the Warrants evidenced hereby on the day immediately prior to the record date
fixed for the determination of stockholders entitled to receive such dividend or
distribution by (2) a fraction, the numerator of which shall be the then
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Current Market Price per share of Common Stock for the period of 20 Trading Days
preceding such record date, and the denominator of which shall be the Current
Market Price per share of Common Stock for the period of 20 Trading Days
preceding such record date, less the Fair Market Value per share of Common Stock
(as determined in good faith by the Board of Directors of the Company, a
certified resolution with respect to which shall be mailed to the holder of the
Warrants evidenced hereby) of such dividend or distribution; provided, however,
that in the event of a distribution of shares of capital stock of a Subsidiary
of the Company (a "Spin-Off") made to holders of shares of Common Stock, the
numerator of such fraction shall be the sum of the Current Market Price per
share of Common Stock for the period of 20 Trading Days preceding the 35th
Trading Day after the effective date of such Spin-Off and the Current Market
Price of the number of shares (or the fraction of a share) of capital stock of
the Subsidiary which is distributed in such Spin-Off in respect of one share of
Common Stock for the period of 20 Trading Days preceding such 35th Trading Day
and the denominator of which shall be the Current Market Price per share of the
Common Stock for the period of 20 Trading Days proceeding such 35th Trading Day.
An adjustment made pursuant to this Section 4.3 shall be made upon the opening
of business on the next Business Day following the date on which any such
dividend or distribution is made and shall be effective retroactively
immediately after the close of business on the record date fixed for the
determination of stockholders entitled to receive such dividend or distribution;
provided, however, if the proviso to the preceding sentence applies, then such
adjustment shall be made and be effective as of such 35th Trading Day after the
effective date of such Spin-Off.
Section 4.4. 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
Common Stock at any time outstanding shall not include any shares of
Common 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 Common 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 Common
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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 Common Stock issuable upon exercise of
the Warrants evidenced hereby by at least one-hundredth of one share of
Common Stock, and when the cumulative net effect of more than one
adjustment so determined shall be to change the number of shares of
Common Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Common Stock, such change in the
number of shares of Common 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
Common Stock for the purpose of 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
Common 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
Common 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 Common Stock.
(h) Upon each adjustment to the number of shares of Common 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 Common 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
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product so obtained by the number of shares of Common Stock issuable
upon exercise of the Warrants immediately after such adjustment.
Section 4.5. Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets. In case of any reorganization or
reclassification of outstanding shares of Common 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 Common 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 Transaction by a holder of that number of shares of Common 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
Common Stock in any tender or exchange offer that is a step in the Transaction).
Section 4.6. 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 Common Stock, or
shall offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common 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 Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger,
- 12 -
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 4.7. Certificates. Upon any adjustment of the number of
shares of Common Stock issuable upon exercise of the Warrants evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrants and the Common 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 Common 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 Common 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 Common 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.
- 13 -
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON 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 Common
Stock as will be sufficient to permit the exercise in full of all outstanding
Warrants. All shares of Common 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 Common Stock.
Before taking any action which would result in an adjustment in
the number of shares of Common 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.
(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:
- 14 -
"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 January 4, 1998, 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 Common Stock, the holder of
such Warrants or Restricted Common 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 Common Stock may be
effected without registration under the Securities Act and applicable state
securities laws. After 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 Common Stock and such holder shall thereupon be
entitled to transfer such warrants or such Restricted Common Stock, in
accordance with the terms of the Transfer Notice. Each certificate, if any,
evidencing such shares of Restricted Common 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.
- 15 -
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
Common Stock (or Common 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 Common Stock (or Common Stock
issuable upon the exercise of the Warrants) (i) as to the Warrant Stock and
Restricted Common 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 Common
Stock, when the holder of the Warrant, Warrant Stock or Restricted Common 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 Common
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 Common 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 Common Stock in supplying such information as may be
reasonably requested by such holder or reasonably necessary for such holder to
complete 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 Common 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.
- 16 -
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 Common 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 Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
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.
- 17 -
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.
(b) If to the Company:
Aames Financial Corporation
2 California Plaza
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Troop Xxxxxxx Pasich Reddick & 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.
- 18 -
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 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.
- 19 -
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer on January 4, 1999.
AAMES FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
- 20 -
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 Common 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 Common 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 Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and date
for the balance of the shares of Common 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 Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common 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.
