Exhibit 10.19


 


THIS AMENDMENT, made and entered into as of July 1, 2005, by and
among A. Jay Meyerson (the “Executive”), Aames Investment Corporation (the “Parent
Company”), and Aames Financial Corporation (the “Employer”), hereby amends the
employment agreement, dated November 3, 2004, by and among the Executive,
the Parent Company and the Employer (the “Employment Agreement”).


 


WHEREAS, pursuant to the terms of the Employment Agreement, the
Executive currently serves as President and Chief Executive Officer of the
Parent Company,


 


WHEREAS, the Parent
Company and the Employer recognize the Executive’s substantial contribution to
the growth and success of the Parent Company and the Employer, desire to make
certain changes in the Executive’s employment arrangement with the Parent
Company and the Employer, which the Parent Company’s Board of Directors and the
Employer’s Board of Directors has determined will reinforce and encourage the
continued attention and dedication to the Parent Company and the Employer of
the Executive in the best interests of the Company and its shareholders;


 


NOW, THEREFORE, IT IS HEREBY AGREED AS
FOLLOWS:


 


1.                                       The
Employment Agreement is hereby amended to add a new Section 7, to read in
its entirety as follows:


 


7. Certain Additional Payments by the
Employer.


 


(a)                                  Gross-Up.
Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Employer
(or any of its affiliated entities) or any entity which effectuates a Change in
Control (as defined in the Amended & Restated Aames Investment
Corporation 2004 Equity Incentive Plan) (or any of its affiliated entities) to
or for the benefit of the Executive (whether pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional
payments required under this Section 7 (the “Payments”)
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”),
then the Parent Employer shall pay to the Executive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by
the Executive of all taxes (including, without limitation, any income taxes and
any interest and penalties imposed with respect thereto, and any excise tax)
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the
Payments and (y) the product of any deductions disallowed because of the
inclusion of the Gross-Up Payment in the 


 

















 


Executive’s adjusted gross income and the highest applicable marginal
rate of federal income taxation for the calendar year in which the Gross-Up
Payment is to be made. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to (i) pay federal income taxes at
the highest marginal rates of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made and (ii) pay applicable state and
local income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state
and local taxes.


 


(b)                                 Determination.
Subject to the provisions of Section 7(a), all determinations required to
be made under this Section 7, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Employer as of the date immediately
prior to the Change in Control (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Employer and
the Executive within fifteen (15) business days of the receipt of notice from
the Employer or the Executive that there has been a Payment, or such earlier
time as is requested by the Employer (collectively, the “Determination”).
Notwithstanding the foregoing, in the event (i) the Board shall determine
prior to the Change in Control that the Accounting Firm is precluded from
performing such services under applicable auditor independence rules, (ii) the
Audit Committee of the Board determines that it does not want the Accounting
Firm to perform such services because of auditor independence concerns or (iii) the
Accounting Firm is serving as accountant or auditor for the person(s) effecting
the Change in Control, the Board shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Employer
and the Employer shall enter into any agreement requested by the Accounting
Firm in connection with the performance of the services hereunder. The Gross-Up
Payment under this Section 7 with respect to any Payments shall be made no
later than thirty (30) days following such Payment. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion to such effect, and to the effect that failure
to report the Excise Tax, if any, on the Executive’s applicable federal income
tax return will not result in the imposition of a negligence or similar penalty.
The Determination by the Accounting Firm shall be binding upon the Employer and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the Determination, it is possible that Gross-Up
Payments which will not have been made by the Employer should have been made (“Underpayment”) or Gross-Up Payments are made by the Employer
which should not have been made (“Overpayment”),
consistent with the calculations required to be made hereunder. In the event
the amount of the Gross-Up Payment is less than the amount necessary to
reimburse the Executive for his Excise Tax,
the Accounting Firm shall determine the amount of the 


 

















 


Underpayment that has occurred and any such Underpayment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code)
shall be promptly paid by the Employer to or for the benefit of the Executive. In
the event the amount of the Gross-Up Payment exceeds the amount necessary to
reimburse the Executive for his Excise Tax,
the Accounting Firm shall determine the amount of the Overpayment that has been
made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of
the Code) shall be promptly paid by the Executive (to the extent he has
received a refund if the applicable Excise Tax has been paid to the Internal
Revenue Service) to or for the benefit of the Employer. The Executive shall
cooperate, to the extent his expenses are
reimbursed by the Employer, with any reasonable requests by the Employer in
connection with any contests or disputes with the Internal Revenue Service in
connection with the Excise Tax.


 


IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Parent Company and the Employer have caused these presents to be executed in
their names, all as of the Signing Date.


 


 


	
   

  	
   

  
	
   

  	
  Executive

  
	
   

  	
   

  
	
   

  	
  /s/ A. Jay Meyerson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Aames Investment Corporation

  
	
   

  	
   

  
	
   

  	
  /s/ Pat Gonyea

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Aames Financial Corporation

  
	
   

  	
   

  
	
   

  	
  /s/ Pat Gonyea