EXHIBIT 99.8
X. Xxx Xxxxxxxx
Chief Executive Officer
Aames Financial Corporation
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Re: Investment in Preferred Stock
Gentlemen:
Pursuant to the Preferred Stock Purchase Agreement, by and between Aames
Financial Corporation (the "Company") and Specialty Finance Partners ("SFP")
dated as of May 19, 2000 (the "Stock Purchase Agreement") SFP agreed to purchase
from the Company shares of the Company's Series C Convertible Preferred Stock,
par value $0.001 per share (the "Series C Preferred Stock") for a price per
share (the "Price") equal to the lower of $0.90 or the average of the closing
price of Company's Common Stock, par value $0.001 per share (the "Common Stock")
for five trading days prior to the "Initial Closing" (as that term is defined in
the Stock Purchase Agreement) and the Company will also issue to SFP warrants to
purchase another 5 million shares of Series C Preferred Stock at the Price (the
"SFP Transaction").
This letter is intended to amend the Stock Purchase Agreement to the extent
inconsistent with the provisions herein and to provide for certain other
agreements between the parties with respect to the SFP Transaction. All
capitalized terms used herein, and not otherwise defined, shall have their
respective meanings as set forth in the Stock Purchase Agreement.
Purchase of Series D Convertible Preferred Stock
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The Stock Purchase Agreement is hereby amended as follows:
(a) At the Initial Closing, SFP shall purchase and the Company shall
sell to SFP, 40,800,000 shares of Series C Preferred Stock for $0.85 per
share (the "Initial Shares").
(b) At the Initial Closing, the Company shall issue a warrant,
substantially in the form attached hereto as Exhibit A, to SFP (the "Series
C Warrant") for the purchase of 5 million shares of Series C Convertible
Preferred Stock. The Series C Warrant will expire at the Additional Closing
and, upon exercise of the Series C Warrant, the issuance of the Series C
Preferred Stock thereunder will be subject to the receipt by the Company of
appropriate consents of holders of Series B Preferred Stock and Series C
Preferred Stock to issue such shares upon conversion as well as the filing,
and the expiration of any waiting period, pursuant to Regulation 14(c)
under the Securities Exchange Act of 1934.
(c) At the Additional Closing, the Company shall issue a warrant,
substantially in the form attached hereto as Exhibit B, to SFP (the "Series
D Warrant") for the purchase of 5 million shares of Series D Convertible
Preferred
Stock, par value $0.001 per share (the "Series D Preferred Stock"),
provided, however that the number of shares subject to the Series D Warrant
shall be reduced by the number of shares of Series C Preferred Stock
acquired through the exercise of the Series C Warrant, if any.
(d) At the Additional Closing, SFP shall exchange each of the Initial
Shares, and each share of Series C Preferred Stock acquired through the
exercise of the Series C Warrant, if any, for one share of Series D
Preferred Stock, subject to adjustment as provided for in the Certificate
of Designations for the Series D Preferred Stock which shall be filed with
the Delaware Secretary of State immediately prior to the Additional
Closing, in substantially the same form as attached hereto as Exhibit C.
(e) At the Additional Closing, SFP shall purchase, and the Company
shall sell to SFP, an aggregate of 18,023,529 shares of Series D Preferred
Stock for $0.85 per share, subject to the terms and conditions of the Stock
Purchase Agreement.
(f) The Series D Preferred Stock shall be subject to all of the
limitations, covenants, representations and warranties or other agreements
between the parties which are applicable to the Series C Preferred Stock
and which are contained in the Stock Purchase Agreement.
(g) On or prior to the Additional Closing, the Company and SFP will
execute an amendment to that certain Registration Rights Agreement, dated
as of December 23, 1998, between the Company and Capital Z Financial
Services Fund II, L.P. (the "Registration Rights Agreement"), such that the
Series D Preferred Stock issued at the Additional Closing will be subject
to the terms and conditions of the Registration Rights Agreement.
(h) The Stock Purchase Agreement, as amended hereby, is hereby
ratified and confirmed.
Waiver of Conversion Ratio
--------------------------
SFP understands that, pursuant to the Certificate of Incorporation, the SFP
Transaction may cause the automatic adjustment of the "conversion ratio" (as
that term is used in the Certificate of Incorporation with respect to the Series
C Stock and the Company's Series B Convertible Preferred Stock, par value $0.001
per share (the "Series B Preferred Stock")) to be adjusted.
SFP hereby covenants and agrees that it will support, and vote in favor of,
any proposal presented to the stockholders of Aames to eliminate as an
adjustment to the "conversion ratio" in effect on the date immediately preceding
the Initial Closing, any adjustment arising from the issuance of the Series C
Preferred Stock to be issued under the Stock Purchase Agreement (the
"Certificate Amendment").
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SFP further covenants and agrees that, if SFP converts any shares of its
Series B Preferred Stock or Series C Preferred Stock into shares of Common Stock
between the date of the Initial Closing and the date that the Certificate
Amendment is filed, the Company shall apply the "conversion ratio" in effect on
the date immediately preceding the Initial Closing in calculating the number of
shares of Common Stock to be issued upon such conversion.
Waiver of Stated Value
----------------------
SFP understands that, pursuant to the Certificate of Incorporation, the
"Post Recapitalization Stated Value" (as that terms is defined in the
Certificate of Designations with respect to the Series C Preferred Stock) of the
Series C Preferred Stock is $5.00 per share.
SFP further covenants and agrees that the "Post Recapitalization Stated
Value" (as that terms is defined in the Certificate of Designations with respect
to the Series C Preferred Stock) for the Initial Shares, and any shares of
Series C Preferred Stock acquired by SFP as a result of the exercise of the
Series C Warrant, shall be equal to the Purchase Price per share.
[SIGNATURES FOLLOW]
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Very truly yours,
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:________________________
Name:______________________
Title:_____________________
ACCEPTED AND AGREED:
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AAMES FINANCIAL CORPORATION
---------------------------
By:________________________________
Name:______________________________
Title:_____________________________
Dated as of May 25, 2000.
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cc: Xxxx Xxxxxxxxx
Managing Director
Xxxxxxxxx, Xxxxxx & Jenrettee Securities Corporation
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
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EXHIBIT A
Form of Series C Warrant
EXHIBIT B
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Form of Series D Warrant
EXHIBIT C
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Form of Certificate of Designations for the Series D Preferred Stock
