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                                                                EXHIBIT 10.12(a)
                         MANAGEMENT INVESTMENT AGREEMENT

                  MANAGEMENT INVESTMENT AGREEMENT (this "AGREEMENT") dated as
of October 1, 1999, between Aames Financial Corporation, a Delaware
corporation (the "COMPANY"), and C. John Kohler, an individual residing at
[XXXADDRESS DELETED FOR PRIVACYXXX] (the "MANAGEMENT INVESTOR").

                  WHEREAS, the Management Investor is a senior management
employee of the Company; and

                  WHEREAS, the Management Investor desires to purchase from
the Company, and the Company desires to sell to the Management Investor,
shares of the Company's Series C Convertible Preferred Stock, par value
$0.001 per share ("SERIES C PREFERRED STOCK)," under the terms and conditions
set forth in this Agreement.

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:

                  SECTION 1.  SALE AND DELIVERY.

                  (a) Upon the terms and subject to the conditions set forth
herein, and in reliance upon the representations and warranties of the
Management Investor hereinafter set forth, the Company shall issue, sell and
deliver to the Management Investor, and the Management Investor shall
purchase from the Company, 100,000 shares of Series C Preferred Stock (such
shares of Series C Preferred Stock are referred to collectively herein as the
"SHARES") at the price per share equal to $1.00.

                  (b) The purchase price for the Shares being purchased by
the Management Investor shall be paid by delivery by the Management Investor
to the Company of (i) $50,000 (the "Closing Payment") and (ii)a 6.5% recourse
promissory note having an original principal amount equal to the total
purchase price of the Shares minus the Closing Payment (the "NOTE"), which
Note is attached hereto as EXHIBIT A.

                  (c) The purchase and sale of Shares shall occur at the time
and place specified by the Company for such closing, which shall be not more
than 60 days after the date hereof (the "CLOSING DATE"), and at the closing
of such purchase and sale of Shares:

                  (i) the Company shall deliver to the Management Investor
         certificates representing the Shares (the

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         "Certificates"), duly endorsed for transfer, transferring to the
         Management Investor good and marketable title to such Shares, free
         and clear of all liens and encumbrances; and

                  (ii)     the Management Investor shall deliver to the Company:

                           (A) the Closing Payment;

                           (B) the Note; and

                           (C) a pledge agreement (the "PLEDGE AGREEMENT")
                  attached hereto as EXHIBIT B, pursuant to which Pledge
                  Agreement, among other things, the Management Investor's
                  obligations under the Note shall be secured by the following:
                  (i) a pledge of (a) the Shares, (b) the shares of Common Stock
                  that may be acquired upon conversion of the Shares (the
                  "UNDERLYING COMMON SHARES"), and (c) certain other collateral
                  described therein; and (ii) delivery of the Certificates.

                   SECTION 2.  REPRESENTATIONS  AND WARRANTIES OF THE
MANAGEMENT INVESTOR.  The Management Investor hereby represents and warrants
to the Company as follows:

                  (a) The Shares (and the Underlying Common Shares) to be
purchased by such Management Investor will be acquired for investment for the
Management Investor's 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 of 1933, as amended (the "SECURITIES ACT"), or an
exemption therefrom, and in compliance with the terms of this Agreement. The
Management Investor is a senior management employee of the Company and is
fully familiar with the business of the Company and with the risks associated
with the purchase of the Shares pursuant to this Agreement. The Management
Investor is an accredited investor as defined under Rule 501(a) under the
Securities Act.

                  (b) The Management Investor understands that the Shares and
the Underlying Common Shares 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 Shares (and the Underlying Common
Shares) may be resold without registration under the Securities Act only in
certain limited circumstances.

                  (c) The Management Investor further agrees that each
certificate representing the Shares (and the Underlying Common Shares) shall
be stamped or otherwise imprinted with a legend substantially in the
following form:

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                  "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 ACT OR AN EXEMPTION FROM
                  REGISTRATION IS AVAILABLE.

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
                  RESTRICTIONS ON TRANSFER AND TO THE OTHER TERMS SET FORTH IN
                  THAT CERTAIN MANAGEMENT INVESTMENT AGREEMENT, DATED AS OF
                  OCTOBER 1, 1999, AND BY A CERTAIN RELATED PLEDGE AGREEMENT,
                  BETWEEN THE COMPANY AND C. John Kohler, A COPY OF WHICH
                  AGREEMENTS HAVE BEEN FILED WITH THE SECRETARY OF THE COMPANY
                  AND ARE AVAILABLE UPON REQUEST."

                  SECTION 3. RESTRICTIONS ON TRANSFER OF SHARES. For a period
commencing on the Closing Date and ending on the fifth anniversary of the
Closing Date, the Management Investor may not sell, transfer, assign, pledge,
hypothecate or otherwise dispose of (each, a "TRANSFER") any of the Shares
(or the Underlying Common Shares), without the prior express written consent
of the Company, PROVIDED, HOWEVER, that the foregoing restriction on transfer
shall not apply (i) if Capital Z Financial Services Fund II. L.P. ("CAPITAL
Z") Beneficially Owns (as defined in the Purchase Agreement referred to
below) less than (A) fifty percent (50%) of the number of shares of Senior
Preferred Stock (as defined in the Purchase Agreement referred to below)
purchased by Capital Z on the Initial Closing Date (as defined in the
Purchase Agreement referred to below) (the "ORIGINAL PREFERRED SHARES") or
(B) if any Original Preferred Shares shall thereafter have been converted
into Common Stock, fifty percent (50%) of the sum of (x) the aggregate number
of shares Common Stock owned by Capital Z as a result of such conversion(s)
plus (y) the aggregate number of shares Common Stock into which any remaining
Original Preferred Shares owned by Capital Z may be converted (determined
without regard to any limitations on conversion of such shares prior to the
Recapitalization (as defined in the Purchase Agreement referred to below)),
in each case subject to adjustment for splits, combinations,
reclassifications and similar events; (ii) if the Management Investor dies,
retires, is terminated by the Company, or terminates his employment with the
Company, subject to the provisions of Section 4 hereof; or (iii) a Change of
Control (as defined in the New Option Plan (as such term is defined in the
Purchase Agreement referred to below)) has occurred, but only if a Capital Z
Realization Event (as defined in the New Option Plan) has also occurred on or
prior to such Change of Control, and PROVIDED, FURTHER, that notwithstanding
the foregoing

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restriction on transfer, the Management Investor may transfer, during the
twelve-month period ending on the first anniversary of the Closing Date and
during each succeeding twelve-month period, up to 25% of the total number of
Underlying Common Shares (whether structured as a transfer of Shares,
Underlying Shares or a combination thereof) acquired hereunder (subject to
adjustment for splits, combinations, reclassifications and similar events),
it being further agreed that the Management Investor may request the
Company's Board of Directors to allow the Management Investor to transfer
Shares (or Underlying Common Shares) in excess of the 25% limitation
described in this proviso if extraordinary liquidity needs have arisen with
respect to the Management Investor, and, in such event, the Company (through
its Board of Directors) will consider such request in good faith and will not
unreasonably withhold its consent to a waiver of such limitation. The
"Purchase Agreement" referred to herein shall mean the Preferred Stock
Purchase Agreement by and between the Company and Capital Z, dated as of
December 23, 1998, as the same may be amended or modified.

                  SECTION 4.  COMPANY'S OPTION TO PURCHASE SHARES.

                  (a) In the event of the death or retirement from, or
termination of employment for any reason with, the Company of the Management
Investor (a "TERMINATION DATE"), the Company shall have the option, but not
the obligation, to purchase all, or any portion, of the Shares (and any
Underlying Common Shares that may have been acquired upon conversion of the
Shares) then owned by the Management Investor at the Fair Market Value (as
hereinafter defined) per Share and/or Underlying Common Share on the Business
Day immediately prior to the date on which the Company exercises its option
to purchase in accordance with the this Section 4. The Company may exercise
the foregoing option at any time within 30 days after the Termination Date,
by written notice to the Management Investor, or his legal representative in
the case of death, stating a date and time for consummation of the purchase
no less than 10 nor more than 30 days after giving of such notice. "Fair
Market Value" per Share or per Underlying Common Share, as of any particular
date, shall mean (a) in the case of a Share, the product obtained by
multiplying (I) the Formula Number (as defined in the Certificate of
Designations for the Series C Preferred Stock) in effect as of such date by
(II) the Current Market Price (as defined in the Certificate of Designations
for the Series C Preferred Stock) for the period of 15 consecutive Trading
Days (as defined in the Certificate of Designations for the Series C

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Preferred Stock) prior to such date, or (b) in the case of an Underlying
Share, the Current Market Price for the period of 15 consecutive Trading Days
prior to such date.

                  (b) At the closing of the purchase of Shares (and any
Underlying Common Shares) by the Company pursuant to Section 4(a), the
Management Investor will deliver the Shares (and any Underlying Common
Shares) to the Company against payment by the Company to the Management
Investor of the purchase price for such Shares (and any Underlying Common
Shares). Such purchase price shall be paid in cash, PROVIDED that if any
principal or accrued but unpaid interest is then outstanding under the Note,
the cash portion of the purchase price shall be reduced by the amount of such
outstanding principal and accrued interest on the Note (with such reduction
being applied first to any accrued interest and then to principal), and, if
no principal or accrued interest is then remaining on the Note, the Note
shall be canceled.

                  SECTION 5. FURTHER ASSURANCES. The Management Investor
shall, upon request of the Company, execute and deliver any additional
documents and take such further actions as may reasonably be deemed by the
Company to be necessary or desirable to carry out the provisions hereof.

                  SECTION 6. NOTICES. All notices, requests, claims, demands
and other communications under this Agreement shall be sufficiently given if
sent by registered or certified mail, postage prepaid, or overnight air
courier service, or telecopy or facsimile transmission (with hard copy to
follow) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to the Company, to
Aames Financial Corporation, 2 California Plaza, 350 South Grand Avenue, Los
Angeles, California 90071, Attention: General Counsel, telecopy number (323)
210-5026; and (ii) if to the Management Investor, to the address set forth
for the Management Investor in the preamble to this Agreement or by telecopy
to __________________.

                   SECTION 7. HEADINGS. The headings contained in this
Agreement are for  reference  purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

                  SECTION 8. COUNTERPARTS; EFFECTIVENESS. This Agreement may
be executed in two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or more
counterparts have been signed

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by each of the Company and the Management Investor and delivered to the
Company and the Management Investor.

                  SECTION 9. ENTIRE AGREEMENT. This Agreement (including the
documents and instruments referred to herein) constitutes the entire
agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.

                   SECTION 10.  GOVERNING LAW. This Agreement  shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to any applicable conflicts of law principles of
such State.

                  SECTION 11. SUCCESSORS AND ASSIGNS. Neither this Agreement
nor any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise, by any of
the parties without the prior written consent of the other parties. Any
assignment in violation of the foregoing shall be void.

                  SECTION 12. ENFORCEMENT. Each party agrees that irreparable
damage would occur and that the other party hereto would not have any
adequate remedy at law in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be
entitled to an injunction or injunctions to prevent breaches by the other
party hereto of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Delaware or in Delaware State court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware State court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (iii) agrees that such party will
not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the
State of Delaware of in Delaware State court.

                  SECTION 13. SEVERABILITY. If any term or provision hereof,
or the application thereof to any circumstance, shall, to any extent, be held
by a court of competent jurisdiction to

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be invalid or unenforceable with respect to such jurisdiction, and only to
such extent, and the remainder of the terms and provisions hereof, and the
application thereof to any other circumstance, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall
be enforced to the fullest extent permitted by law, and the parties hereto
shall reasonably negotiate in good faith a substitute term or provision that
comes as close as possible to the invalidated or unenforceable term or
provision, and that puts each party in a position as nearly comparable as
possible to the position each such party would have been in but for the
finding of invalidity or unenforceability, while remaining valid and
enforceable.

                  SECTION 14. AMENDMENT; MODIFICATION; WAIVER. No amendment,
modification or waiver in respect of this Agreement shall be effective
against any party unless it shall be in writing and signed by such party.

                  SECTION 15. EXPENSES. The Company and the Management
Investor shall each bear their own legal fees and other costs and expenses
with respect to the negotiation, execution and delivery of this Agreement and
consummation of the transactions contemplated hereby.

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                  IN WITNESS WHEREOF, the Company and the Management Investor
have caused this Agreement to be duly executed and delivered as of the date
first written above.

                                           AAMES FINANCIAL CORPORATION



                                           By:      /s/ David A. Sklar
                                                ----------------------------
                                           Name:  David A. Sklar
                                           Title: Executive Vice President


                                           MANAGEMENT INVESTOR:

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