Related Party Transactions and Outside Related Director Information

Aames Investment Corporation (AIC)

4/1/2005 Proxy Information

Mani A. Sadeghi served as interim Chief Executive Officer of Aames Financial Corporation (the predecessor of AAMES Investment Corporation) from May 1999 until October 1999.

In connection with our REIT reorganization, Specialty Finance Partners and its affiliates received 13,986,556 shares of our common stock, 61,486 restricted stock units and $118,885,755 in cash in exchange for its ownership interest in Aames Financial. Two of our directors, Mr. Sadeghi and Mr. Spass are affiliated with Specialty Finance Partners. In addition, we entered into a registration rights and governance agreement with Specialty Finance Partners and Capital Z Management. This agreement provides Specialty Finance Partners and Capital Z Management with certain rights in connection with future registration of our common stock that they hold. In addition, Specialty Finance Partners and Capital Z Management, collectively, have the right to designate two nominees to the Board, and we have agreed to support their nomination for election and to use our best efforts to cause them to be elected, for so long as Specialty Finance Partners own at least 12.5% of our outstanding shares. If Specialty Finance Partners and Capital Z Management, collectively, own less than 12.5%, but at least 5%, of our outstanding shares, they will have the right to nominate one member to the Board.

Prior to our REIT reorganization, Aames Financial was party to a Management Advisory Services Agreement with Equifin Capital Management, an affiliate of Specialty Finance Partners, of which Mr. Sadeghi is the founder and chief executive officer. Under this agreement, Aames Financial was obligated to pay Equifin Capital Management a quarterly management advisory fee of $250,000 through June 2008. This agreement was terminated immediately prior to our REIT reorganization upon a payment of $978,274, which represented the present value of one yearŐs worth of payments.

Concurrently with our initial public offering, an affiliate of Friedman, Billings, Ramsey & Co., Inc., our sole book-running manager, purchased 5,000,000 shares of our common stock at $8.50 per share, less the underwriting discount. In connection with that private placement, we entered into a registration rights agreement under which the purchaser has the right to require us to register its shares of common stock.