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                                                                EXHIBIT 10.12(b)
                             SECURED PROMISSORY NOTE

$50,000                                                       October 1, 1999
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         FOR VALUE RECEIVED, C. John Kohler(the "Maker"), hereby promises to
pay to the order of Aames Financial Corporation, a Delaware corporation
("Aames"), 2 California Plaza, 350 South Grand Avenue, Los Angeles, CA 90071
or such address as Aames shall have given to the Maker, the principal sum of
FIFTY THOUSAND DOLLARS and 00/100 ($50,000), plus interest, which shall
accrue from the date hereof, on the unpaid principal balance of this Note at
such address, at the rate of 6.5% per annum (computed on the basis of a
360-day year) until the principal amount hereof has been repaid in full, on
October 1, 2004.

         The Maker shall have the option to prepay the principal amount and
accrued interest on this Note, in whole or in part, at any time, without
payment of premium or penalty. During the period in which this Note is
outstanding, the Maker shall make an annual mandatory prepayment against the
outstanding principal balance of, and accrued interest on, this Note an
amount equal to 25% of the aggregate cash bonuses (if any) paid to Maker in
respect of the fiscal year ended immediately prior to such payment date, net
of income taxes payable thereon, such payments to be made within two business
days after receipt of the cash bonus paid at the end of such fiscal year and
to be applied FIRST, against any accrued and unpaid interest on this Note and
THEN, to the outstanding principal balance of this Note. In addition, upon
receipt by the Maker of any proceeds from the transfer of the securities
pledged under the Pledge Agreement (as defined below) or dividends, interest
payments or other distributions of cash in respect of such pledged
securities, the Maker shall make an immediate prepayment in respect of the
Note in an amount equal to the after tax amount of such proceeds, dividends,
payments or distributions, with such prepayments to be applied first to the
payment of all interest accrued on, and then to the payment of unpaid
principal of, this Note.

         Payments of principal and interest shall be made in such currency of
the United States as at the time of payment shall be legal tender for the
payment of public and private debts.

         Aames and the Maker have entered into a pledge agreement dated the
date hereof (the "PLEDGE AGREEMENT") providing, among other things, for the
securing of this Note by a pledge of the Pledged Collateral (as defined in
the Pledge Agreement). If any of the following events (each, an "EVENT OF
DEFAULT") shall occur:

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         (a) the Maker shall default in the payment of any part of the principal
     or interest on this Note when the same shall become due and payable,
     whether at maturity, by acceleration or otherwise and such default
     continues for more than 10 days after receipt of notice from Aames;

         (b) the Maker's employment with Aames shall have ceased for any reason
     whatsoever or for no reason, whether such cessation is voluntary or
     involuntary, and regardless of whether the Maker may claim such cessation
     of employment constitutes a wrongful termination of employment;

         (c) the Maker shall (i) become insolvent or be unable, or admit in
     writing his inability, to pay his debts as they mature; (ii) make a general
     assignment for the benefit of creditors; (iii) be adjudicated as bankrupt
     or insolvent or file a voluntary petition in bankruptcy; (iv) file a
     petition or an answer seeking an arrangement with creditors to take
     advantage of any insolvency law; or (v) file an answer admitting to the
     material obligations or consent to, or default in answering, or fail to
     have dismissed within 60 days after the filing thereof, a petition filed
     against him in any bankruptcy or insolvency proceeding; or

         (d) any breach of the Maker's obligations under the Pledge Agreement
     shall have occurred and be continuing or any representation or warranty
     made thereunder shall be false in any material respect,

         then, the holder of this Note may at any time by written notice to
the Maker, declare the entire unpaid principal of and the interest accrued on
this Note through the date of such Event of Default to be forthwith due and
payable, without other notices or demands of any kind, all of which are
hereby waived by the Maker.

         The Maker agrees to pay to the holder hereof all expenses incurred
by such holder, including reasonable attorneys' fees, in enforcing and
collecting this Note.

         The Maker hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, notice of dishonor of this Note and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note.

         This Note shall be paid without deduction by reason of any set-off,
defense or counterclaim of the Maker.

This Note shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to conflicts of law principles
thereof, shall be binding upon the

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heirs or legal representatives of the Maker and shall inure to the benefits
of the successors and assigns of Aames.




                                                     /s/ C. John Kohler
                                                     ---------------------------
                                                     C. John Kohler






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