EXHIBIT 99.4
AMENDMENT NO. 3
TO
PREFERRED STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 3, effective as of July 16, 1999 (this "Amendment"), to
that certain Preferred Stock Purchase Agreement dated as of December 23, 1998,
as amended on February 10, 1999 and on June 9, 1999 (the "Stock Purchase
Agreement"), is made and entered into between Aames Financial Corporation, a
Delaware corporation (the "Company") and Specialty Finance Partners, as
successor to Capital Z Financial Services Fund II, L.P., a Bermuda limited
partnership ("Purchaser").
RECITALS
WHEREAS, the parties hereto have entered into the Stock Purchase Agreement
pursuant to which the Purchaser purchased from the Company, and the Company sold
to the Purchaser, on the Initial Closing Date, (i) 26,704 shares of the
Company's Series B Convertible Preferred Stock, par value $0.001 per share (the
"Series B Preferred Stock"), having the rights, preferences, privileges and
restrictions set forth in the Certificate of Designations as filed with the
Secretary of State of the State of Delaware (the "Series B Certificate of
Designations"), and (ii) 48,296 shares of the Company's Series C Convertible
Preferred Stock, par value $0.001 per share (the "Series C Preferred Stock," and
together with the Series B Preferred Stock, the "Senior Preferred Stock"),
having the rights, preferences, privileges and restrictions set forth in the
Certificate of Designations as filed with the Secretary of State of the State of
Delaware (the "Series C Certificate of Designations," and together with the
Series B Certificate of Designations, the "Certificates of Designations"); and
WHEREAS, pursuant to the Stock Purchase Agreement, the Company agreed to,
as promptly as practicable after the date thereof call a meeting of its
stockholders, at which the Company will submit to its stockholders proposals to
(among other things), (i) amend the certificate of incorporation of the Company
to increase the authorized number of shares of the Company's common stock, par
value $0.001 per share ("Common Stock"), and the Company's preferred stock, par
value $0.001 per share (the "Preferred Stock") as contemplated by the
Certificate of Designations; and (ii) cause the outstanding shares of Senior
Preferred Stock to be split on the basis of one thousand-for-one (the foregoing
increase in authorized shares and split of Senior Preferred Stock are referred
to collectively herein as the "Recapitalization"); and
WHEREAS, pursuant to the Stock Purchase Agreement, the Company agreed to
offer, subject to the completion of the Recapitalization, to the existing
holders of Common Stock non-transferable rights to purchase an aggregate of $25
million in stated value of Series C Preferred Stock and the Purchaser
agreed
to purchase on the Supplemental Closing Date an amount equal to the entire
unsubscribed portion of the Rights Offering (the "Standby Commitment"); and
WHEREAS, the parties desire to amend the Stock Purchase Agreement to
provide for the purchase by the Purchaser from the Company, and the sale by the
Company to the Purchaser, on the Additional Closing Date, 25,000 shares of
Series C Preferred Stock (the "Additional Investment"); and
WHEREAS, the parties desire to amend the Stock Purchase Agreement to
provide for an increase in the aggregate number of shares of Series C Preferred
Stock offered to existing holders of Common Stock pursuant to the Rights
Offering from $25 million in stated value to a number of shares equal to the
total number of shares of Common Stock outstanding as of the applicable record
date relating to the Rights Offering; and
WHEREAS, on the Additional Closing Date, the Company will issue to the
Purchaser (or its designee), as a fee for the Additional Investment, a warrant
(the "Additional Warrant") to purchase 1,250,000 shares of Common Stock, subject
to the availability of authorized Common Stock, at an exercise price of $1.00
per share, such Warrant to be in the form attached hereto as Exhibit A; and
WHEREAS, the Continuing Directors of the Board of Directors have approved
this Amendment; and
WHEREAS, the Company has obtained an opinion from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ as to the fairness, from a financial point of view, of the Additional
Purchase Price to be paid for the Additional Preferred Stock pursuant to this
Agreement. A copy of such fairness opinion has been provided to Purchaser prior
to the execution of this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. Capitalized terms used herein that are defined in
the Stock Purchase Agreement are used herein as so defined. Section 1.1 of the
Stock Purchase Agreement is hereby amended to include the following definitions:
"Additional Closing" means the closing of the sale and purchase of the
Additional Preferred Stock pursuant to Section 2.3.1 hereof.
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"Additional Closing Date" shall have the meaning set forth in Section
2.3.2.
"Additional Investment" shall have the meaning set forth in the Recitals of
Amendment No. 3 to Stock Purchase Agreement.
"Additional Preferred Stock" has the meaning set forth in Section 2.3.1.
"Additional Purchase Price" has the meaning set forth in Section 2.3.1.
"Additional Warrant" shall have the meaning set forth in the Recitals of
Amendment No. 3 to the Stock Purchase Agreement.
"Amendment No. 3 to Stock Purchase Agreement" shall mean that certain
Amendment No. 3 to Stock Purchase Agreement by and between the Company and the
Purchaser.
ARTICLE II.
AMENDMENTS
The Stock Purchase Agreement is hereby amended as follows:
(a) Article II is amended by adding the following Sections:
"Section 2.3.1. Issuance, Sale and Purchase of the Additional
Preferred Stock. Upon the terms and subject to the conditions set
forth in this Agreement, on the Additional Closing Date, the Company
will issue, sell and deliver to the Purchaser (including such
Affiliates of Purchaser as Purchaser may designate in writing to the
Company prior to the Additional Closing Date), and the Purchaser will
purchase from the Company on the Additional Closing Date, twenty-five
thousand (25,000) shares of Series C Preferred Stock (the "Additional
Preferred Stock"). The purchase price of the Additional Preferred
Stock shall be one thousand dollars ($1,000.00) per share (the
"Additional Purchase Price").
Section 2.3.2. Additional Closing. (a) The Additional Closing
shall take place at the offices of the Company, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., Los
Angeles time, as soon as practicable, or at such other time and place
as the parties may agree but not later than on the tenth Business Day,
following the execution of Amendment No. 3 to Stock Purchase
Agreement, or (the date on which the Additional Closing occurs, the
"Additional Closing Date").
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(b) At the Additional Closing, (i) the Company will deliver to
the Purchaser certificates representing the Additional Preferred Stock
to be purchased by, and sold to, the Purchaser pursuant to Section
2.3.1 hereof (registered in the name or names and in the denominations
designated by Purchaser at least two Business Days prior to the
Additional Closing Date), (ii) the Purchaser, in full payment for the
Additional Preferred Stock to be purchased by, and sold to, the
Purchaser pursuant to Section 2.3.1 hereof, will deliver to the
Company an amount per share equal to the Additional Purchase Price, in
immediately available funds by wire transfer to the account specified
by the Company to Purchaser, at least two Business Days prior to the
Additional Closing Date, or by such other means as may be agreed upon
by the parties hereto, and (iii) the Company will issue the Additional
Warrant to a designee of the Purchaser."
(b) Section 2.4 is deleted in its entirety and replaced by the following:
"Section 2.4. Issuance, Sale and Purchase of Series C Preferred
Stock Pursuant to the Standby Commitment. Upon the terms and subject
to the conditions set forth in this Agreement, including, without
limitation, the consummation of the Recapitalization, and in reliance
upon the representations and warranties hereinafter set forth, at the
Supplemental Closing, the Company will issue, sell and deliver to the
Purchaser (including such Affiliates of Capital Z as Capital Z may
designate in writing to the Company prior to the Supplemental Closing
Date and any Designated Purchasers), and the Purchaser will purchase
from the Company on the Supplemental Closing Date, any shares of
Series C Preferred Stock which were offered in, and which remain
unsubscribed after consummation of, the Rights Offering up to a
maximum of $25 million in stated value of Series C Preferred Stock.
The purchase price per share for the Series C Preferred Stock
purchased pursuant to the Standby Commitment shall be the amount
obtained by dividing (x) Purchase Price by (y) 1,000 (the "Standby
Purchase Price"). In the event that the Initial Closing occurs, and
the Supplemental Closing does not occur as result of a material breach
by the Purchaser of its obligation to consummate the purchase of the
Series C Preferred Stock to be purchased by the Purchaser at the
Supplemental Closing (and not any other breach or alleged breach by
the Purchaser hereunder), then Capital Z shall cause its designee
which received the Warrant to return the Warrant to the Company for
cancellation. The provisions of the immediately preceding sentence
shall be of no force or effect if this Agreement terminates for any
reason prior to the Initial Closing Date."
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(c) Section 4.9 is deleted in its entirety and replaced by the following:
"Section 4.9. As promptly as possible after obtaining the
Shareholder Approval, the Company shall take all necessary action to
effectuate and complete the Recapitalization, including, but not
limited to, (i) making all necessary filings with the NYSE (including
having the NYSE approve for listing on the NYSE the shares of Common
Stock into which the Senior Preferred Stock may be converted) and (ii)
filing an amended Certificate of Incorporation with the Secretary of
State of the State of Delaware. Following the completion of the
Recapitalization, the Company will offer to its existing holders of
Common Stock non-transferrable rights ("Purchase Rights") to purchase
one share of Series C Preferred Stock for each share of Common Stock
held by stockholders as of the applicable record date for the Standby
Purchase Price (the "Rights Offering"), which Purchase Rights shall
expire thirty (30) days after issuance. The Rights Offering shall be
subject to the conditions set forth on Exhibit K attached hereto. The
Purchaser shall be provided with copies of all documents relating to
the Recapitalization and the Rights Offering, and all such documents
shall be subject to the comments and prior approval of the Purchaser.
Without limiting any rights of the Purchaser hereunder or under the
Certificate of Designations, if the Shareholder Approval is not
obtained, the Company shall take all actions reasonably requested by
the Purchaser and consistent with the DGCL to effect the increase in
the authorized shares of capital stock of the Company contemplated by
the Recapitalization."
(d) Article III is hereby amended by adding the following Sections:
"Section 3.3. Representations and Warranties of the Company with
Respect to the Additional Investment. As of the date of Amendment No.
3 to Stock Purchase Agreement, the Company represents and warrants to
the Purchaser as follows:
Section 3.3.1. Organization. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and
has all requisite corporate or other organizational power and
authority under such laws to own or lease and operate its properties
and to carry on its business as now conducted. Each of the Company and
its Subsidiaries is duly qualified or licensed to do business as a
foreign corporation, in good standing in each jurisdiction in which
the nature of the business transacted by it or the character of the
properties owned or leased by it requires it to so qualify or be
licensed, except where the failure to be so licensed or qualified
would not, singly
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or in the aggregate, be reasonably likely to have a Material Adverse
Effect.
Section 3.3.2. Authorization; Enforceability. (a) (i) the Company
has all requisite corporate power and authority to perform, execute
and deliver its obligations necessary to consummate the Additional
Investment and issue the Additional Warrant; and (ii) all corporate
action on the part of the Company, its officers, directors and
stockholders necessary for the authorization, execution and delivery
of Amendment No. 3 to Stock Purchase Agreement and the Additional
Warrant, and the performance of all obligations of the Company
hereunder and thereunder, and the authorization, issuance, sale and
delivery of the Additional Preferred Stock, has been taken.
(b) Amendment No. 3 to Stock Purchase Agreement and the
Additional Warrant have been duly authorized, executed and delivered
by the Company and constitute the valid and legally binding
obligations of the Company, enforceable against the Company in
accordance with their respective 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).
Section 3.3.3. Consents; No Conflict. (a) Except (i) required
blue sky filings, if any, which will be effected in accordance with
applicable blue sky laws; (ii) filings required under the Securities
Act in connection with the Registration Rights Agreement, and (iii) as
would not be reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect, no consent, approval, order or
authorization of, or registration, qualification, designation,
declaration or filing with, any Governmental Authority or any other
Person on the part of the Company is required in connection with the
consummation of the Additional Investment and the issuance of the
Additional Warrant.
(b) The execution and delivery by the Company of Amendment No. 3
to Stock Purchase Agreement and the Additional Warrant, and the
performance by the Company of its obligations thereunder, will not (i)
violate any provision of the Certificate of Incorporation or Bylaws;
(ii) violate any provision of any law or any order of any court or
Governmental Authority; (iii) conflict with, result in a breach of or
constitute (with notice or lapse of time or both) a default under, or
allow any other party thereto a right to terminate or seek a payment
from the Company or any Subsidiary under the terms of, any indenture,
agreement or other instrument by which the Company or any of its
subsidiaries or any of their properties or assets is bound;
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or (iv) result in the creation or imposition of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries,
other than, in the case of clauses (ii), (iii) and (iv), as would not
be reasonably likely to have a Material Adverse Effect.
Section 3.3.4. Valid Issuance of Securities. (a) The Additional
Preferred Stock, the Additional Warrant and the Common Stock
underlying the Additional Preferred Stock and the Additional Warrant,
when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly authorized,
validly issued, fully paid and nonassessable.
(b) The outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and nonassessable.
(c) The issuance, sale and delivery of the Additional Preferred
Stock, the Additional Warrant and the Common Stock underlying the
Additional Preferred Stock and the Additional Warrant are not subject
to any preemptive right of stockholders of the Company arising under
law or the Certificate of Incorporation or Bylaws or to any
contractual right of first refusal or other contractual right in favor
of any Person.
Section 3.4. Representations and Warranties of the Purchaser with
Respect to the Additional Investment. As of the date of Amendment No.
3 to Stock Purchase Agreement, the Purchaser represents and warrants
to the Company as follows:
Section 3.4.1. Organization. The Purchaser is a limited
partnership duly organized and validly existing under the laws of
Bermuda.
Section 3.4.2. Authorization. The Purchaser has full power and
authority to enter into Amendment No. 3 to Stock Purchase Agreement.
Amendment No. 3 to Stock Purchase Agreement to which the Purchaser is
a party has been duly authorized, executed and delivered by the
Purchaser and constitutes the valid and legally binding obligation of
the Purchaser, enforceable against the Purchaser 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).
Section 3.4.3. Purchase for Investment. The Purchaser is an
accredited investor as defined under Rule 501(a) of the Securities
Act. The Additional Preferred Stock and the Additional Warrant will be
acquired for investment for the Purchaser's (or its Affiliates' or a
Designated Purchaser's)
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own account and not with a view to the resale or distribution of any
part thereof, except in compliance with the provisions of the
Securities Act or an exemption therefrom.
Section 3.4.4. Restricted Securities. The Purchaser understands
that the Additional Preferred Stock and the Additional Warrant are
characterized as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws
and applicable regulations such Additional Preferred Stock and
Additional Warrant may be resold without registration under the
Securities Act only in certain limited circumstances.
The Purchaser further agrees that each certificate representing
the Additional Preferred Stock or the Additional Warrant shall be
stamped or otherwise imprinted with a legend substantially in the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SECURITIES HAVE
BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE."
A certificate shall not bear such legend if the Purchaser shall have
delivered to the Company an opinion of counsel reasonably satisfactory
to the Company to the effect that the securities being sold may be
publicly sold without registration under the Securities Act. The
foregoing shall not be deemed to affect the obligations of the Company
under the Registration Rights Agreement.
Section 3.4.5. Consents; No Conflict. (a) No consent, approval,
order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority,
agency or body or any other person on the part of the Purchaser is
required in connection with the consummation of the Additional
Investment, except for (i) filings required under the Securities Act
or the Exchange Act; or (ii) such consents, approvals, orders,
authorizations, registrations, qualifications, designations,
declarations or filings, which if not obtained or made, as the case
may be, are not reasonably likely to impair in any material respect
the ability of the Purchaser to perform any of its obligations or
agreements or consummate the Additional Investment.
(b) Neither the execution and delivery of Amendment No. 3 to
Stock Purchase Agreement by Purchaser, nor the consummation of the
transactions contemplated hereby, nor the fulfillment of the terms and
compliance with the provisions hereof will conflict with or result in
a material
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breach of or a material default (or in an occurrence which with the
lapse of time or action by a third party, or both, could result in a
material default) with respect to any of the terms, conditions or
provisions of any applicable order, writ or decree of any court or of
any Governmental Authority, applicable to Purchaser, or of the
governing documents of Purchaser, or of any indenture, contract,
agreement, lease, or other instrument to which Purchaser is a party or
subject or by which Purchaser or any of its properties or assets are
bound, or of any applicable statute, rule, or regulation to which
Purchaser or its businesses is subject.
Section 3.4.6. Financing. The Purchaser has or will have at the
Additional Closing sufficient funds available to it to consummate the
purchase of the Additional Preferred Stock at the Additional Closing
as contemplated hereby."
(e) Article V is hereby amended by adding the following sections:
"Section 5.3. Conditions to Obligations of Purchaser with Respect
to the Additional Investment. The obligation of the Purchaser to
purchase the Additional Preferred Stock at the Additional Closing
shall be subject to the satisfaction or waiver of the following
conditions on or before the Additional Closing Date:
Section 5.3.1. Compliance with this Agreement. The Company shall
have executed and delivered the Additional Preferred Stock, the
Additional Warrant, documents and instruments required to be executed
and delivered on the Additional Closing Date and shall have performed
and complied in all material respects with all agreements and
covenants contained herein which are required to be performed or
complied with by it on or before the Additional Closing Date.
Section 5.3.2. Representations and Warranties Complete and
Correct. The representations and warranties of the Company contained
in Section 3.3 hereof which are qualified as to materiality or a
Material Adverse Effect shall have been true and correct when made and
shall be true and correct at and as of the Additional Closing Date, as
if made on and as of such date (except for representations and
warranties which speak as of a specific time or date, which shall be
true and correct as of such time and date). The representations and
warranties of the Company contained in Section 3.3 hereof which are
not qualified as to materiality or a Material Adverse Effect shall
have been true and correct in all material respects when made and
shall be true and correct in all material respects at and as of the
Additional Closing Date, as if made on and as of such date (except for
representations and warranties which speak as of
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a specific time or date, which shall be true and correct in all
material respects as of such time and date).
Section 5.3.3. Illegality, Etc. No statute, rule or regulation,
or order, decree or injunction enacted, entered, promulgated or
enforced by any Governmental Authority shall be in effect which
prohibits or restricts the consummation of the Additional Investment.
Section 5.4. Conditions to Obligations of the Company with
Respect to the Additional Investment. The Company's obligation to sell
the Additional Preferred Stock on the Additional Closing Date shall be
subject to the satisfaction or waiver by it of the following
conditions on or before the Additional Closing Date.
Section 5.4.1. Compliance with this Agreement. The Purchaser
shall have executed and delivered all documents required to be
executed and delivered on the Additional Closing Date and shall have
performed and complied in all material respects with all agreements
and covenants contained herein which are required to be performed or
complied with by it on or before the Additional Closing Date.
Section 5.4.2. Purchaser's Representations and Warranties
Complete and Correct. The Purchaser's representations and warranties
contained in Section 3.4 of this Agreement shall be true and correct
in all material respects when made and shall be true and correct in
all material respects at and as of the Additional Closing Date, as if
made on and as of such date.
Section 5.4.3. Illegality, Etc. No statute, rule or regulation,
or order, decree or injunction enacted, entered, promulgated or
enforced by any Governmental Authority shall be in effect which
prohibits or restricts the consummation of the transactions
contemplated hereby."
(f) Section 7.2 is deleted in its entirety and replaced by the following:
"Section 7.2. Survival of Representations and Warranties. The
representations and warranties (i) of the Company set forth in
Sections 3.1.1 through 3.1.7, inclusive, Sections 3.1.19, 3.1.21,
3.1.22 and Section 3.3.1 through 3.3.4, inclusive, hereof and (ii) of
the Purchaser set forth in Sections 3.2.1 through 3.2.7, inclusive,
and Sections 3.4.1 through 3.4.5, inclusive, shall survive the
Closing, indefinitely. None of the other representations or warranties
made in Article III of this Agreement shall survive the Initial
Closing Date."
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ARTICLE III.
MISCELLANEOUS PROVISIONS
Section 3.1. Counterparts. For the convenience of the parties, any number
of counterparts of this Amendment may be executed by any one or more of the
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which together shall constitute one and the same
instrument.
Section 3.2. Ratification. The Stock Purchase Agreement, as amended hereby,
is hereby ratified and confirmed.
Section 3.3. Governing Law. This Amendment 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.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
effective as of July 16, 1999 and executed on the 3rd day of August, 1999.
AAMES FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President,
General Counsel and Secretary
SPECIALTY FINANCE PARTNERS
By its General Partner
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/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
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