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Exhibit 16(d)-3
LOAN AGREEMENT
DATED AS OF JANUARY 11, 2001
BETWEEN
UGLY DUCKLING CORPORATION
AND
VERDE INVESTMENTS, INC.
$7,000,000 SENIOR SUBORDINATED LOAN
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................1
1.1 Defined Terms........................................................1
1.2 Other Interpretive Provisions........................................4
ARTICLE II THE LOAN.........................................................6
2.1 Amount and Notes.....................................................6
2.2 Interest.............................................................6
2.3 Optional Prepayments.................................................7
2.4 Computation of Fees and Interest.....................................7
2.5 Payments by the Company..............................................7
2.6 Priority of Payments; Subordination..................................7
ARTICLE III ADDITIONAL AGREEMENTS............................................7
3.1 Junior Lien..........................................................7
3.2 Release of Real Estate Purchase Options..............................8
3.3 Option to Purchase Property..........................................8
ARTICLE IV CONDITIONS PRECEDENT.............................................8
4.1 Conditions of Loans to the Company...................................8
ARTICLE V REPRESENTATIONS AND WARRANTIES...................................9
5.1 Organization.........................................................9
5.2 Financial Statements.................................................9
5.3 Actions Pending......................................................9
5.4 Outstanding Obligations.............................................10
5.5 Taxes...............................................................10
5.6 Conflicting Agreements and Other Matters............................10
5.7 ERISA...............................................................10
5.8 Governmental Consent................................................10
5.9 Disclosure..........................................................11
5.10 Possession of Franchises, Licenses, etc.............................11
ARTICLE VI AFFIRMATIVE COVENANTS...........................................11
6.1 Financial Statements................................................11
6.2 Certificates; Other Information.....................................11
6.3 Default Disclosure..................................................12
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ARTICLE VII NEGATIVE COVENANTS..............................................12
7.1 Debt to Tangible Equity Ratio.......................................12
7.2 Terms of Subordinated Debt..........................................12
ARTICLE VIII EVENTS OF DEFAULT...............................................12
8.1 Event of Default....................................................12
8.2 Other Remedies......................................................14
ARTICLE IX MISCELLANEOUS...................................................14
9.1 Amendments and Waivers..............................................14
9.2 Notices.............................................................14
9.3 No Waiver: Cumulative Remedies......................................14
9.4 Costs and Expenses..................................................14
9.5 Successors and Assigns..............................................15
9.6 Assignment, Participations, etc.....................................15
9.7 Counterparts........................................................15
9.8 Severability........................................................16
9.9 No Third Parties Benefited..........................................16
9.10 Time................................................................16
9.11 Governing Law.......................................................16
9.12 Waiver of Jury Trial................................................16
9.13 Entire Agreement....................................................16
9.14 Interpretation......................................................17
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EXHIBITS
Exhibit A Form of Promissory Note
Exhibit B Form of Warrant Agreement
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SCHEDULES
Schedule 3.2 Leases
Schedule 3.3 Company Properties
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LOAN AGREEMENT
This LOAN AGREEMENT is dated as of January 11, 2001, between UGLY
DUCKLING CORPORATION, a Delaware corporation (the "Company"); and Verde
Investments, Inc., an Arizona corporation ("Lender").
WHEREAS, Lender has agreed to make a loan to the Company in the amount
of its Commitment (as defined herein) upon the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"Advance" means an advance by Lender to Company hereunder.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Loan Agreement, as amended,
supplemented or modified from time to time in accordance with the terms
hereof.
"Assignee" has the meaning specified in Section 9.6(a).
"Attorney Costs" means and includes all fees and disbursements
of any other external or in-house counsel.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in Phoenix, Arizona, New York,
Chicago or Los Angeles are authorized or required by law to close.
"Capital Lease" has the meaning specified in the definition of
"Capital Lease Obligations".
"Capital Lease Obligations" means any rental obligation which,
in accordance with GAAP, is or will be required to be capitalized on
the books of the Company (a "Capital Lease"), taken at the amount
thereof accounted for as indebtedness (net of interest expense) in
accordance with GAAP.
"Closing Date" means the date on which all conditions
precedent set forth in Section 4.1 are satisfied or waived by all
Lenders, which is expected to be on or prior to January 11, 2001.
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"Code" means the Internal Revenue Code of 1986 and any
regulations promulgated thereunder.
"Commitment" means the amount of Seven Million Dollars
($7,000,000).
"Debt" means any Obligation for borrowed money, including the
indebtedness portion of any Capitalized Lease Obligations.
"Debt to Tangible Net Worth Ratio" means the debt-to-equity
ratio of the Company, calculated in accordance with GAAP by comparing
total Debt to Tangible Net Worth.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied) constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and regulations promulgated
thereunder.
"Event of Default" means any of the events or circumstances
specified in Section 8.1.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or
in such other statements by such other entity as may be in general use
by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Insolvency Proceeding" means, with respect to any Person, (a)
any case, action or proceeding before any court or other Governmental
Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors.
"Interest Accrual Period" shall mean the three-month period
from and including a Payment Date to the close of business on the day
preceding the next Payment Date, except that the first Interest Accrual
Period shall commence on the Closing Date and end at the close of
business on the day preceding the Payment Date.
"Lender" has the meaning specified in the introductory clause
hereto.
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"LIBOR" means the rate per annum equal to the rate appearing
on Reuters Screen FRBD as of 11:00 a.m. (London time) two LIBOR
Business Days prior to the beginning of such Interest Accrual Period,
for the three-month term corresponding to such Interest Accrual Period,
or if such rate shall not be so quoted then the applicable rate
appearing on Bloomberg on the day two LIBOR Business Days prior to the
beginning of such Interest Accrual Period, or if neither such rate
shall be so quoted, the "London Interbank Offered Rates (LIBOR)" (three
month) published in the "Money Rates" section of the Wall Street
Journal two LIBOR Business Days prior to the beginning of such Interest
Accrual Period.
"LIBOR Business Day" means any day which is a Business Day and
which is also a day on which dealings in U.S. Dollars are carried on in
the London interbank market.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preference, priority or other security
interest or preferential arrangement of any kind or nature whatsoever
(including those created by, arising under, or evidenced by any
conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the UCC or any comparable law)
and any contingent or other agreement to provide any of the foregoing,
but not including the interest of a lessor under an Operating Lease.
"Loan" means an individual term loan made by Lender in the
amount of Lender's Commitment pursuant to Article II.
"Loan Documents" means this Agreement, the Note, the Warrant
Agreement, the Warrant, and all other documents delivered to the Lender
in connection therewith.
"Material Adverse Effect" means a material adverse change in,
or a material adverse effect upon, any of (a) the operations, business,
properties, condition (financial or otherwise) or prospects of the
Company taken as a whole, (b) the ability of the Company to perform
under any Loan Document and avoid any Event of Default, or (c) the
legality, validity, binding effect or enforceability of any Loan
Document.
"Maturity Date" means the earlier to occur of (a) December 31,
2003, or (b) the date the Loan is repaid in full.
"Note" shall mean a promissory note, dated as of the Closing
Date, substantially in the form of Exhibit A annexed hereto, issued by
the Company to the order of the Lender evidencing the obligation of the
Company to repay the Loan.
"Obligations" mean all Loans and other Debt, advances, debts,
liabilities, obligations, covenants and duties owing by the Company to
any Person, of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, arising under this
Agreement or under any other loan document, or out of any other
agreement or understanding, whether or not for the payment of money,
whether arising by reason of an extension of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however
acquired.
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"Operating Lease" means, as applied to any Person, any lease
of property which is not a Capital Lease.
"Ordinary Course of Business" means, in respect of any
transaction involving the Company, the ordinary course of the Company's
business, substantially as conducted by the Company prior to or as of
the Closing Date, and undertaken by the Company in good faith and not
for purposes of evading any covenant or restriction in any Loan
Document.
"Payment Date" means March 31, June 30, September 30, and
December 31 of each year during the term of this Agreement.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture or governmental authority.
"Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially the
same authority and responsibility or, with respect to financial
matters, the chief financial officer or the treasurer of the Company,
or any other officer having substantially the same authority and
responsibility.
"SEC" means the Securities and Exchange Commission, or any
successor thereto.
"Subordinated Debt" means any unsecured Obligation which by
its express terms is subordinated in right of payment to any other
unsecured Obligation of the Company.
"Tangible Net Worth" means the total of the Company's
shareholders' equity (including capital stock, additional paid-in
capital, and retained earnings), less (i) the total amount of loans and
debts due from Affiliates, shareholders, officers, or employees of the
Company, and (ii) the total amount of any intangible assets, including
without limitation unamortized discounts, deferred charges, and
goodwill as determined in accordance with GAAP.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"Warrant" means the warrant issued to the Lender pursuant to
the Warrant Agreement substantially in the form of Exhibit B to this
Agreement.
"Warrant Agreement" means the Warrant Agreement dated as of
July 25, 2001 among the Company and the Lender providing for the
issuance of warrants to the Lender to acquire up to 1,500,000 shares of
the Company's Common Stock, exercisable at a price per share equal to
the last sales price of the Company's Common Stock on the date hereof,
for a period of ten years.
1.2 Other Interpretive Provisions.
Defined Terms. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto. The meaning of
defined terms shall be equally applicable to the singular and plural forms of
the defined terms. Terms (including uncapitalized terms) not otherwise defined
herein and that are defined in the UCC shall have the meanings therein
described.
(a) The Agreement. The words "hereof", "herein", "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to
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any particular provision of this Agreement; and section, schedule and exhibit
references are to this Agreement unless otherwise specified.
(b) Certain Common Terms.
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation".
(iii) The term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or".
(c) Performance; Time. Whenever any performance obligation hereunder
(other than a payment obligation) shall be stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day. In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including". If any provision of this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such
action.
(d) Contracts. Unless otherwise expressly provided herein, references
to agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document.
(e) Laws. References to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(f) Captions. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(g) Independence of Provisions. The parties acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
(h) Accounting Principles.
(i) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(ii) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
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ARTICLE II
THE LOAN
2.1 Amount and Notes.
The Lender shall make the Loan to the Company in a single or multiple
advances of not less than $1,000,000. The Company has authorized the issuance of
the Note or Notes in the aggregate principal amount of Seven Million Dollars
($7,000,000). On the Closing Date, the Lender shall issue and deliver to Lender
a Note in the principal amount of $7,000,000, payable to the order of Lender.
All Notes shall be substantially in the form of Exhibit A to this Agreement. The
outstanding Notes together will evidence the outstanding principal amount of the
Loan, together with interest accrued but unpaid thereon. The Loan is a
non-revolving loan and principal paid prior to the Maturity Date may not be
re-borrowed.
2.2 Interest.
(a) Interest shall accrue on the outstanding principal amount of the
Loan during each Interest Accrual Period at a rate per annum equal to LIBOR for
such Interest Accrual Period plus six hundred (600) basis points. Upon
determining LIBOR for each Interest Accrual Period, the Lender shall notify the
Company of such LIBOR determination and the rate thereof.
(b) Accrued interest shall be paid quarterly in arrears on (i) March
31, June 30, September 30 and December 31 of each year; and (ii) on the Maturity
Date. Accrued and unpaid interest shall also be paid on the date of any
prepayment of the Loan pursuant to Section 2.3 for the portion of the Loan so
prepaid and upon prepayment in full thereof.
(c) While any Event of Default exists and is continuing or after
acceleration, the Company shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of the
Loan then unpaid, at a rate per annum equal to LIBOR plus 1200 basis points.
(d) The Company agrees to pay an effective contracted for rate of
interest equal to the rate of interest resulting from all interest payable as
provided herein, plus all other fees, charges and costs that may be deemed or
determined to be interest. Anything herein to the contrary notwithstanding, the
obligations of the Company hereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by the Lender would be contrary to the provisions of
any law applicable to Lender limiting the highest rate of interest which may be
lawfully contracted for, charged or received by such Lender, and in such event
the Company shall pay Lender interest at the highest rate permitted by
applicable law.
2.3 Optional Prepayments. The Company may, at any time or from time to
time, upon at least 10 Business Days notice to the Lender, prepay the Loan in
whole or in part, without penalty or premium. Such notice of prepayment shall
specify the date and amount of such prepayment. If such notice is given by the
Company, the payment amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to each such date on
the amount prepaid.
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2.4 Computation of Fees and Interest. All computations of fees and interest
under this Agreement shall be made on the basis of a 365-day year.
2.5 Payments by the Company.
(a) All payments (including prepayments) to be made by the Company on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off, deduction, recoupment or counterclaim and shall, except
as otherwise expressly provided herein, be made to Lender at each of the
Lender's office as set forth on the signature page hereof, in U.S. dollars and
in immediately available funds, no later than 1:30 p.m. Phoenix, Arizona time on
the date specified herein. Any payment which is received by the applicable
Lender later than 1:30 p.m. (Phoenix, Arizona time) shall be deemed to have been
received on the immediately succeeding Business Day and any applicable interest
or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
2.6 Priority of Payments; Subordination. The payment of principal and
interest under this Agreement on the Loan shall be pari passu with: (i) the
$17,478,680 of 12% Subordinated Debentures due 2003 issued under that certain
Indenture dated as of October 15, 1998 (as amended the "Indenture"), (ii) the
$11,939,565 of 11% Subordinated Debentures due 2007 issued under the Indenture,
and (iii) the $15,000,000 12% Senior Subordinated Loan between the Company and
Xxxxx Xxxxxxxx Investment Management, Inc., dated as of February 12, 1998, as
amended. Except for the preceding sentence, and notwithstanding anything else in
this Agreement to the contrary, the payment of principal and interest under this
Agreement on the Loan is expressly subordinated for all purposes to any secured
Obligations now in existence or later incurred by the Company other than
Subordinated Debt; and the Lender will, upon request of any institution or
Person that is an obligee of any Obligation now in existence or incurred by the
Company in the future, execute and deliver an agreement of subordination in form
mutually satisfactory to the Lender and such institution or Person, the tenor of
which shall be to effectuate the terms of this Section.
ARTICLE III
ADDITIONAL AGREEMENTS
3.1 Junior Lien. The Company will use commercially-reasonable efforts to
grant to Lender a lien on the Pledged Shares as referenced in that Stock Pledge
Agreement of even date herewith by and among the Company, Ugly Duckling Car
Sales and Finance Corporation, and BNY Midwest Trust Company, which lien shall
be junior to the lien granted under such agreement.
3.2 Release of Real Estate Purchase Options. The Company, its Affiliates
and subsidiaries, hereby release all options to purchase real estate currently
owned by Lender and leased to the Company, its Affiliates and subsidiaries, as
set forth on Schedule 3.2.
3.3 Option to Purchase Property. The Company, its Affiliates and
subsidiaries, hereby grant Lender and its Affiliates the option to purchase, at
book value, any or all properties
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owned by the Company, its Affiliates and subsidiaries, as set forth on Schedule
3.3, as well as any or all properties acquired by the Company, its affiliates
and subsidiaries prior to the Maturity Date, and Lender agrees that if it
exercises any such option, it will lease such properties back to the Company on
terms similar to the leases set forth on Schedule 3.2.
3.4 Warrants. The Company agrees to enter into the Warrant Agreement with
the Lender and issue Warrants to the Lender in accordance with the terms thereof
in the event the Loan is not repaid on or before July 25, 2001 and any guarantee
from Lender to SunAmerica Life Insurance Company remains outstanding, provided
that: (a) any necessary approval of the Company's shareholders to the issuance
or exercise of the Warrants has been obtained; (b) Company and Lender have
obtained any necessary approvals and made any necessary filings, including, if
required, under Sections 13 and 16 of the Securities Exchange Act of 1934, and
under the Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act of 1976; and (c) if the
Company or its board (or a committee of the board) elects to obtain a fairness
opinion, the Company has received a fairness opinion in form and substance
reasonably satisfactory to it, provided that no such opinion shall be required
if shareholder approval is required and has been obtained. In the event a
fairness opinion cannot be obtained based upon the amount or terms of the
Warrants to be issued hereunder, the parties agree to use commercially
reasonably efforts to modify the amount and/or terms of the Warrant Agreement
such that a fairness opinion can be rendered. Each of the parties shall use
commercially reasonable efforts to satisfy the covenants and agreements set
forth above. If despite the commercially reasonable efforts of the parties, the
Warrants are for any reason not issued on or before July 25, 2001, except for
the inability to obtain a fairness opinion, then at the option of the Lender,
upon notice to the Company, the Loan shall become immediately due and payable in
full.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions of Loans to the Company. The obligation of Lender to fund
its Loan to the Company hereunder is subject to the condition that the Lender
shall have received on or before January 11, 2001, in form and substance
satisfactory to Lender and Lender's counsel and in sufficient copies for Lender,
all of the following:
(a) Loan Agreement. This Agreement executed by the Company and Lender;
(b) Resolutions: Incumbency.
(i) Copies of the resolutions of the board of directors of the
Company approving and authorizing the execution, delivery and
performance by the Company of this Agreement and the other Loan
Documents to be delivered hereunder, and authorizing the borrowing of
the Loan, certified as of the Closing Date by the Secretary or an
Assistant Secretary of the Company; and
(ii) A certificate of the Secretary or Assistant Secretary of the
Company certifying the names and true signatures of the officers of the
Company authorized to execute, deliver and perform, as applicable, this
Agreement, and all other Loan Documents to be delivered hereunder;
4.2 Articles of Incorporation: Bylaws and Good Standing. [Intentionally
omitted.]
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(a) Notes. The Note, executed by the Company.
(b) Warrants. The Warrant Agreement, executed by the Company and the
Lender, together with the Warrant.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to Lender that, except for such
matters as are known to Lender or would not have a Material Adverse Effect:
5.1 Organization. The Company is a corporation duly organized and existing in
good standing under the laws of the State of Delaware, the Company has the
corporate power to own its property and to carry on its business as now being
conducted, and the Company is duly qualified as a foreign corporation to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary.
5.2 Financial Statements. The Company has provided to the Lender copies of
the following audited financial statements: a balance sheet of the Company as of
September 30, 2000, and statements of income and cash flows for the nine months
ended September 30, 2000. Such financial statements (including any related
schedules and/or notes) are true and correct in all material respects, have been
prepared in accordance with GAAP consistently followed throughout the periods
involved and show all liabilities, direct and contingent, of the Company
required to be shown in accordance with GAAP. The balance sheet fairly presents
the condition of the Company as at the date thereof, and the statements of
income and cash flows fairly present the results of the operations of the
Company for the periods indicated. There has been no change in the business,
condition (financial or otherwise) or operations of the Company since September
30, 2000, which could reasonably be expected to have a Material Adverse Effect.
5.3 Actions Pending. There is no action, suit, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any properties or rights of the Company, by or before any court, arbitrator or
administrative or governmental body which could reasonably be expected to result
in any Material Adverse Effect.
5.4 Outstanding Obligations. After giving effect to the transactions
contemplated hereby, the Company does not have any Obligations outstanding
except Obligations disclosed in the financial statements provided pursuant to
Section 5.2. There exists no default (or, to the knowledge of the Company, any
event or condition that, with the passage of time, would constitute a default)
under the provisions of any instrument evidencing such Obligations or of any
agreement relating thereto.
5.5 Taxes. The Company has filed all Federal, State and other income tax
returns which, to the best knowledge of the officers of the Company, are
required to be filed, and has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have become due, except
such taxes as are being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP.
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5.6 Conflicting Agreements and Other Matters. The Company is not a party to
any contract or agreement or subject to any charter or other corporate
restriction which materially and adversely affects its business, property or
assets, or financial condition. Neither the execution nor delivery of this
Agreement or the other Loan Documents, nor fulfillment of nor compliance with
the terms and provisions hereof and of the other Loan Documents will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company
pursuant to, the Certificate of Incorporation or Bylaws of the Company, any
award of any arbitrator or any agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company is subject. The Company is not a party to, or
otherwise subject to any provision contained in, any instrument evidencing
indebtedness of the Company, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of the Company of the
type to be evidenced by this Agreement or the Notes.
5.7 ERISA. No accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any plan (other than a multiemployer plan). No liability to the Pension
Benefit Guaranty Corporation has been or is expected by the Company to be
incurred with respect to any plan (other than a multiemployer plan) by the
Company which could reasonably be expected to have a Material Adverse Effect.
The Company has not incurred or does not presently expect to incur any
withdrawal liability under Title IV of ERISA with respect to any multiemployer
plan which is or would be materially adverse to the Company. The execution and
delivery of this Agreement and the other Loan Documents will not involve any
transaction which is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to section 4975 of the
Code. For the purpose of this Section 5.9, the term "plan" shall mean an
"employee pension benefit plan" (as defined in section 3 of ERISA) which is or
has been established or maintained, or to which contributions are or have been
made, by the Company or by any trade or business, whether or not incorporated,
which, together with the Company, is under common control, as described in
section 414(b) or (c) of the Code; and the term "multiemployer plan" shall mean
any plan which is a "multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA).
5.8 Governmental Consent. Neither the nature of the Company's business, nor
any of its respective properties, nor any relationship between the Company and
any other Person, nor any circumstance in connection with the making of the Loan
or delivery of the Note is such as to require any authorization, consent,
approval, exemption or other action by or notice to or filing with any
Governmental Authority that has not previously been made or taken and to which
all applicable waiting periods have expired.
5.9 Disclosure. Neither this Agreement nor any other document, certificate or
statement furnished to Lender by or on behalf of the Company in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading. There is no fact peculiar to the Company which has had a
Material Adverse Effect or in the future could reasonably be expected to have a
Material Adverse Effect that has not been set forth in this Agreement or
disclosed in the Company's filings with the SEC, or in the other documents,
certificates and statements furnished to Lender by or on behalf of the Company
prior to the date hereof in connection with the transactions contemplated
hereby.
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5.10 Possession of Franchises, Licenses, etc. The Company possesses all
franchises, certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities and all patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
free from burdensome restrictions, that are necessary in any material respect
for the ownership, maintenance and operation of its properties and assets, and
the Company is not in violation of any thereof in any material respect.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, unless the Lender
waives compliance in writing:
6.1 Financial Statements. The Company shall deliver to the Lender in form
and detail satisfactory to the Lender:
(a) promptly upon transmission thereof, copies of all financial
statements, proxy statements, notices and reports as it shall send to its
stockholders and copies of all registration statements (without exhibits) and
all reports which it files with the SEC (or any governmental body or agency
succeeding to the functions of the SEC); and
(b) with reasonable promptness, such other financial data as the
Lender may reasonably request, subject to the Company's right to maintain
confidentiality of any financial information to the extent necessary to comply
with applicable securities laws.
6.2 Certificates; Other Information. Within 60 days after the end of each
quarterly period (other than the fourth quarterly period) in each fiscal year
and within 105 days after the end of each fiscal year, the Company shall deliver
to Lender a certificate of a Responsible Officer setting forth (except to the
extent specifically set forth in any financial statements filed within such
periods with the SEC):
(a) sufficient information (including detailed calculations reasonably
satisfactory to the Lender) to establish whether the Company is in compliance
with the requirements of Sections 6.1; and
(b) a statement that there exists no Event of Default or Default, or,
if any such Event of Default or Default exists, specifying:
(i) the nature thereof;
(ii) the period of existence thereof; and
(iii) what action the Company proposes to take with respect
thereto.
6.3 Default Disclosure. The Company shall forthwith, upon a Responsible
Officer of the Company obtaining knowledge of an Event of Default or Default,
promptly deliver to Lender a Certificate of a Responsible Officer specifying the
nature and period of existence thereof and what action the Company proposes to
take with respect thereto.
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ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, unless the Lender
waives compliance in writing:
7.1 Debt to Tangible Equity Ratio. The Company shall not permit the
Company's Debt to Tangible Equity Ratio to exceed 2.1 to 1, calculated as of the
end of each quarterly period in each fiscal year.
7.2 Terms of Subordinated Debt. The Company shall not enter into any
agreement (oral or written) which could in any way be construed as amending,
modifying, altering, changing or terminating any one or more provisions relating
to the Subordinated Debt to the extent that such amendment, modification,
alteration, change or termination would subordinate the payment of interest on
or principal of the Loan to the payment of principal and interest relating to
the Subordinated Debt.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) The Company defaults in the payment of any principal of the Loan
when the same shall become due, either by the terms thereof or otherwise as
herein provided; or
(b) The Company defaults in the payment of any interest on the Loan
when the same shall become due and such default continues for a period of five
Business Days; or
(c) The Company fails to make any payment when due with respect to any
Obligation of the Company (other than an obligation payable hereunder), or any
breach, default or event of default shall occur, or any other conditions shall
exist under any instrument, agreement or indenture pertaining to such
Obligation, if the holder or holders of such Obligation accelerate the maturity
of any such Obligation or require a redemption or other repurchase of such
Obligation and such failure relates to the acceleration or redemption of an
amount in excess of $10 million and such acceleration continues for a period of
five Business Days; or
(d) Any representation or warranty made by the Company herein or by the
Company or any of its officers in any writing furnished in connection with or
pursuant to this Agreement shall be false in any material respect on the date as
of which made; or
(e) The Company fails to perform or observe any covenant or agreement
contained in Articles III or VI hereof; or
(f) The Company fails to perform or observe any other agreement,
covenant, term or condition contained herein and such failure shall not be
remedied within 30 days after receipt of notice thereof from Lender; or
(g) The Company makes an assignment for the benefit of creditors or is
generally not paying its debts as such debts become due; or
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(h) Any decree or order for relief in respect of the Company is entered
under any bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction;
or
(i) The Company petitions or applies to any tribunal for, or consents
to, the appointment of, or taking possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company, or of any substantial part of the
assets of the Company, or commences a voluntary case under the Bankruptcy Law of
the United States or any proceedings relating to the Company under the
Bankruptcy Law of any other jurisdiction; or
(j) Any such petition or application referenced in clause (i) above is
filed, or any such proceedings referenced in clause (i) above are commenced
against the Company, and the Company by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian, liquidator or similar
official, or approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than 30 days; or
(k) Any order, judgment or decree is entered in any proceedings against
the Company decreeing the dissolution of the Company and such order, judgment or
decree remains unstayed and in effect for more than 60 days; or
(l) Any order, judgment or decree is entered in any proceedings against
the Company decreeing a split-up of the Company which requires the divestiture
of assets representing a substantial part, and such order, judgment or decree
remains unstayed and in effect for more than 60 days.
then (a) if such event is an Event of Default specified in any of clauses (g)
through (l) of this Section 8.1 with respect to the Company, the Loan shall
automatically become immediately due and payable at par together with interest
accrued thereon, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Company, and (b) if such event is any other
Event of Default, Lender may, by notice in writing to the Company, declare all
of Lender's Loan to be, and all of Lender's Loan shall thereupon be and become,
immediately due and payable together with interest accrued thereon without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company.
8.2 Other Remedies. If any Event of Default or Default shall occur and be
continuing, Lender may proceed to protect and enforce its rights under this
Agreement by exercising such remedies as are available to Lender in respect
thereof under applicable law, either by suit in equity or by action at law, or
both, whether for specific performance of any covenant or other agreement
contained in this Agreement or in aid of the exercise of any power granted in
this Agreement. No remedy conferred in this Agreement upon the Lender is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy conferred
herein or now or hereafter existing at law or in equity or by statute or
otherwise.
ARTICLE IX
MISCELLANEOUS
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9.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same shall be
in writing and signed by the Lender and the Company, and then such waiver shall
be effective only in the specific instance and for the specific purpose for
which given.
9.2 Notices.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that, any matter transmitted by
the Company by facsimile (i) shall be immediately confirmed by a telephone call
to the recipient at the number specified on the applicable signature page
hereof, and (ii) shall be followed promptly by a hard copy original thereof) and
mailed, faxed, telecopied or delivered, to the address or facsimile number
specified for notices on the applicable signature page hereof; or, as to the
Company or the Lender, to such other address as shall be designated by such
party in a written notice to the other party, at such other address as shall be
designated by such party in a written notice to the Company and the Lender.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery or faxed, be effective when delivered for
overnight (next day) delivery, transmitted by facsimile machine, respectively,
or if delivered, upon delivery.
9.3 No Waiver: Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of Lender, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.
9.4 Costs and Expenses. The Company shall, following consummation of the
transactions contemplated hereby:
(a) pay or reimburse Lender within 10 Business Days after demand for
all reasonable costs and expenses incurred by Lender in connection with any
amendment, supplement, waiver or modification to this Agreement, any other Loan
Document and any other documents prepared in connection therewith, including the
reasonable Attorney Costs incurred by Lender with respect thereto; and
(b) pay or reimburse Lender within 10 Business Days after demand for
all reasonable costs and expenses incurred by Lender in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
(including in connection with any "workout" or restructuring regarding the Loan,
and including in any Insolvency Proceeding or appellate proceeding) under this
Agreement, any other Loan Document, and any such other documents, including
reasonable Attorney Costs incurred by Lender.
9.5 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of Lender.
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9.6 Assignment, Participations, etc.
(a) Lender may, with the written consent of the Company (which consent
shall be obtained prior to Lender's delivery of any information (including
financial information) to any Assignee (as hereinafter defined) relating to an
assignment of Lender's rights and obligations under the Loan Documents, at all
times other than during the existence of an Event of Default, which consent
shall not be unreasonably withheld, at any time assign and delegate to one or
more person or entity (provided, that, no written consent of the Company shall
be required in connection with any assignment and delegation by Lender to an
Affiliate of Lender) (each an "Assignee") all (but no less than all) of its
interest in the Loan and the other rights and obligations of Lender hereunder,
provided, however, that, the Company may continue to deal solely and directly
with Lender in connection with the interest so assigned to an Assignee until
written notice of such assignment, together with payment instructions, addresses
and related information with respect to the Assignee shall have been given to
the Company by Lender and the Assignee.
(b) From and after the date that Lender notifies the Company of such
assignment and the Company consents to such assignment, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it by Lender, shall have the rights
and obligations of Lender under the Loan Documents, and (ii) the Lender shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such assignment, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Immediately after compliance with the conditions contained in
Sections 9.6(a) and (b) with respect to Lender making an assignment or
delegation to an eligible Assignee, this Agreement shall be deemed to be amended
to the extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Loan arising therefrom.
9.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement in any number of separate counterparts, each of which,
when so executed, shall be deemed an original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument. A
set of the copies of this Agreement signed by all the parties shall be lodged
with the Company and the Lender.
9.8 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
9.9 No Third Parties Benefited. This Agreement is made and entered into for
the sole protection and legal benefit of the Company and the Lender, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
Lender shall not have any obligation to any Person not a party to this Agreement
or other Loan Documents.
9.10 Time. Time is of the essence as to each term or provision of this
Agreement and each of the other Loan Documents.
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9.11 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE DEEMED TO HAVE BEEN MADE IN THE
STATE OF ARIZONA AND THE VALIDITY OF THIS AGREEMENT AND THE NOTES, AND THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, ALL CLAIMS
MADE IN CONNECTION THEREWITH, AND THE RIGHTS OF THE PARTIES THERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ARIZONA.
9.12 Waiver of Jury Trial.
THE COMPANY AND THE LENDER HEREBY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
COMPANY AND THE LENDER HEREBY AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. A COPY OF THIS SECTION 9.12 MAY BE FILED WITH ANY COURT AS WRITTEN
EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND CONSENT TO TRIAL.
9.13 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire Agreement and understanding among the Company and
the Lender and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof and any prior arrangements made with respect to the
payment by the Company (or any indemnification for) any fees, costs or expenses
payable to or incurred (or to be incurred) by or on behalf of the Lender
pursuant to the Loan Documents.
9.14 Interpretation. This Agreement is the result of negotiations between
and has been reviewed by counsel to the Lender, the Company and other parties,
and is the product of all parties hereto. Accordingly, this Agreement and the
other Loan Documents shall not be construed against the Company merely because
of the Company's involvement in the preparation of such documents and
agreements.
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
UGLY DUCKLING CORPORATION
By: /s/ Xxx X. Xxxxxxxx
-----------------------------
Xxx X. Xxxxxxxx
Vice President, General Counsel, and
Secretary
Address for notices:
Ugly Duckling Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxx X. Xxxxxxxx
Vice President, General Counsel and
Secretary
Telephone: 000-000-0000
Telecopy: 000-000-0000
VERDE INVESTMENTS, INC.
By: /s/ Xxxxxx X. Xxxxxx, XX
------------------------------
Name: Xxxxxx X. Xxxxxx, XX
Title: President
Address for notices:
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy : (000) 000-0000
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EXHIBIT A
FORM OF PROMISSORY NOTE
ALL RIGHTS AND INDEBTEDNESS OF PAYEE CREATED UNDER THIS NOTE AND THAT CERTAIN
LOAN AGREEMENT DATED AS OF EVEN DATE HEREWITH BETWEEN PAYEE AND MAKER ARE
SUBORDINATE TO THE INTERESTS OF THE SENIOR LENDERS AS EVIDENCED BY THAT CERTAIN
SUBORDINATION AND STANDSTILL AGREEMENT BY AND AMONG PAYEE, MAKER, UGLY DUCKLING
CAR SALES AND FINANCE CORPORATION AND BNY MIDWEST TRUST COMPANY, DATED JANUARY
11, 2001.
PROMISSORY NOTE
Original Face Amount: $______________
Maker: UGLY DUCKLING CORPORATION, a Delaware corporation
Dated as of: _______________
1. PROMISE TO REPAY. FOR VALUE RECEIVED, UGLY DUCKLING CORPORATION, a
Delaware corporation ("Maker"), promises to pay to VERDE INVESTMENTS, INC., an
Arizona corporation ("Payee"), or order, the principal sum of _______________
Dollars ($_____________) or such lesser amount as shall equal the outstanding
amount of the loan (the "Loan") made by Payee to Maker, pursuant to Section 2.1
of that certain Loan Agreement, dated as of January 11, 2001, entered into
between Maker and Payee (the "Loan Agreement").
2. DEFINED TERMS. Any and all initially capitalized terms used herein
shall have the meaning ascribed thereto in the Loan Agreement, unless
specifically defined herein. The term "or" as used in this Note has, except
where otherwise indicated, the inclusive meaning represented by the phrase
"and/or". This Promissory Note (this "Note") is the promissory note defined in
the Loan Agreement as the "Note" and is subject to, and entitled to the benefits
of, the terms and provisions of the Loan Agreement.
3. PAYMENTS OF PRINCIPAL AND INTEREST.
(a) Maker hereby promises to make payments of principal and interest
with respect to the Loan evidenced hereby at the rates and times, and in the
amounts, and in all other respects in the manner as provided in the Loan
Agreement.
(b) As more fully set forth in the Loan Agreement, Maker shall not
be obligated to pay, and the holder of this Note shall not be obligated to
charge, collect, receive, reserve, or take interest (it being understood that
interest shall be calculated as the aggregate of all charges which constitute
interest under applicable law that are contracted for, charged, reserved,
received, or paid) in excess of the maximum nonusurious interest rate, as in
effect from time to time, which may be charged, contracted for, reserved,
received, or collected by Payee in
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connection with the Loan Agreement, this Note, the other Loan Documents, or any
other documents executed in connection herewith or therewith.
4. PREPAYMENTS. Maker may prepay the principal balance due under this
Note, in whole or in part, without penalty or premium, only in accordance with
the provisions of the Loan Agreement.
5. APPLICATION OF PAYMENTS. All payments (including prepayments) made
hereunder shall be applied first to accrued and unpaid interest and then to
principal.
6. TIME AND PLACE OF PAYMENTS. All principal and interest due hereunder
is payable in U.S. Dollars in immediately available funds at Payee's office
located at 0000 Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (or at such
other office as may be designated from time to time by Payee), not later than
1:30 p.m., Phoenix, Arizona time, on the date of payment.
7. WAIVERS. Maker, for itself and its legal representatives,
successors, and assigns, expressly waives presentment, demand, protest,
notice (except as required by the Loan Agreement), and all other requirements of
any kind, in connection with the enforcement or collection of this Note.
8. ACCELERATION AND WAIVER. IT IS EXPRESSLY AGREED THAT, UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT AS SPECIFIED IN SECTIONS 8.1(g) THROUGH (l) OF
THE LOAN AGREEMENT, THE UNPAID PRINCIPAL BALANCE OF AND ANY ACCRUED AND UNPAID
INTEREST UNDER THIS NOTE SHALL AUTOMATICALLY BECOME IMMEDIATELY DUE AND PAYABLE
PURSUANT TO THE TERMS OF THE LOAN AGREEMENT, AND, UPON THE OCCURRENCE OF ANY
OTHER EVENT OF DEFAULT SPECIFIED IN SECTION 8.1 OF THE LOAN AGREEMENT, THE
UNPAID PRINCIPAL BALANCE OF ANY ACCRUED AND UNPAID INTEREST UNDER THIS NOTE MAY,
BY NOTICE IN WRITING TO MAKER, BE DECLARED TO BE IMMEDIATELY DUE AND PAYABLE
PURSUANT TO THE TERMS OF THE LOAN AGREEMENT, WITHOUT PRESENTMENT, DEMAND,
PROTEST, NOTICE (EXCEPT AS REQUIRED THE LOAN AGREEMENT), OR OTHER REQUIREMENTS
OF ANY KIND, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY MAKER.
9. ATTORNEYS' FEES. In the event it should become necessary to employ
counsel to collect or enforce this Note, Maker agrees to pay the reasonable
attorneys' fees and costs (including those of in-house counsel) of the holder
hereof, irrespective of whether suit is brought, to the extent and as provided
in the Loan Agreement.
10. AMENDMENTS. This Note may not be changed, modified, amended, or
terminated except by a writing duly executed by Maker and the holder hereof.
11. HEADINGS. Section headings used in this Note are solely for
convenience of reference, shall not constitute a part of this Note for any other
purpose, and shall not affect the construction of this Note.
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12. GOVERNING LAW. EXCEPT AS OTHERWISE PROVIDED IN THE LOAN AGREEMENT:
(a) THIS NOTE SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF ARIZONA; AND (b)
THE VALIDITY OF THIS NOTE AND THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT
OF, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUCTED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA.
13. WAIVER OF TRIAL BY JURY. MAKER, TO THE EXTENT IT MAY LEGALLY DO SO,
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS NOTE, OR IN
ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF MAKER,
AND PAYEE, WITH RESPECT TO THIS NOTE, OR THE TRANSACTIONS RELATED HERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT IT MAY LEGALLY DO SO,
MAKER HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR
PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT PAYEE MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF MAKER TO WAIVER OF ITS RIGHT TO TRIAL BY JURY.
Dated as of ___________.
UGLY DUCKLING CORPORATION,
a Delaware corporation
By:___________________________________________
Name: Xxx X. Xxxxxxxx
Title: Vice President, General Counsel and Secretary
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EXHIBIT B
FORM OF WARRANT AGREEMENT
UGLY DUCKLING CORPORATION
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement"), dated as of July 25, 2001, is
between UGLY DUCKLING CORPORATION, a Delaware corporation (the "Company"), and
VERDE INVESTMENTS, INC. (the "Lender").
WHEREAS, the Company has entered into a Loan Agreement dated as of
January 11, 2001 (the "Loan Agreement"), by and among the Company and the
Lender, pursuant to which the Lender will make a term loan to the Company, as
set forth in, and subject to the terms and conditions of, the Loan Agreement;
and
WHEREAS, as a condition precedent to the execution and delivery of the
Loan Agreement, the Company has agreed to execute this Agreement pursuant to
which the Company shall on July 25, 2001, subject to the terms set forth herein,
issue to the Lender warrants (the "Warrants") to purchase shares of common
stock, $.001 par value per share ("Common Stock"), of the Company, subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties agree as follows:
Section 1. ISSUANCE OF WARRANTS AND FORM OF WARRANTS.
(a) Subject to the terms and conditions hereof, the Company shall issue
to the Lender on July 25, 2001 and the Lender shall accept from the Company on
such date, 1,500,000 Warrants substantially in the form of Exhibit A hereto.
(b) Each Warrant shall entitle the registered holder of the certificate
representing such Warrant to purchase upon the exercise thereof one share of
Common Stock, subject to the vesting schedule provided for in Section 2 and the
adjustments provided for in Section 8 hereof, between July 25, 2001 and 1:30
p.m., Phoenix, Arizona time, on July 25, 2011, unless earlier redeemed pursuant
to Section 10 hereof.
(c) The Warrant certificates shall be in registered form only. Each
Warrant certificate shall be dated as of the date of issuance thereof (whether
upon initial issuance or upon transfer or exchange), and shall be executed on
behalf of the Company by the manual signature of its President, Senior Vice
President, or a Vice President, and attested to by the manual signature of its
Secretary or an Assistant Secretary. In case any officer of the Company who
shall have signed any Warrant certificate shall cease to be such officer of the
Company prior to the issuance thereof, such Warrant certificate may nevertheless
be issued and delivered with the same force and effect as though the person who
signed the same had not ceased to be such officer of the Company.
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Section 2. EXERCISE OF WARRANTS, DURATION AND WARRANT PRICE. Subject to
the provisions of this Agreement, each registered holder of one or more Warrant
certificates shall have the right, which may be exercised as provided in such
Warrant certificates, to purchase from the Company (and the Company shall issue
and sell to such registered holder) the number of shares of Common Stock or
other securities to which the Warrants represented by such certificates are at
the time entitled hereunder.
(a) The registered holder shall be entitled to exercise 500,000
Warrants on July 25, 2001, and an additional 250,000 Warrants upon the
expiration of each successive three month period thereafter (i.e., October 25,
2001, January 25, 2002, April 25, 2002, and July 25, 2002) until the registered
holder has the right to exercise all 1,500,000 Warrants; provided, however, that
this Warrant Agreement and the registered holder's right to exercise any of the
Warrants shall terminate immediately if the Note issued pursuant to the Loan
Agreement has been paid in full on or prior to July 25, 2001.
(b) Each Warrant not exercised by the expiration date of July 25, 2011
shall become void, and all rights thereunder and all rights in respect thereof
under this Agreement shall cease on such date.
(c) A Warrant may be exercised by the surrender of the certificate
representing such Warrant to the Company with the subscription form set forth on
the reverse thereof duly executed and properly endorsed with the signatures
properly guaranteed, and upon payment in full to the Company of the Warrant
Price (as hereinafter defined) for the number of shares of Common Stock or other
securities as to which the Warrant is exercised. Such Warrant Price shall be
paid in full in cash, or by certified check or bank draft payable in United
States currency to the order of the Company or by surrender of this Warrant to
the Company together with a notice of cashless exercise, in which event the
Company shall issue to the registered holder the number of shares of Common
Stock determined as follows:
X = Y x (A-B)/A
X = the number of shares of Common Stock to be issued to the
registered holder.
Y = the number of shares of Common Stock with respect
to which the Warrant is being exercised.
A = the Current Market Price determined as of the date of
exercise.
B = the Warrant Price.
(d) Subject to adjustment in accordance with Section 8 hereof, the
price per share of Common Stock at which each Warrant may be exercised (the
"Warrant Price") shall be at a price per share equal to the last sales price of
the Common Stock on the Nasdaq National Market on the date of the closing of the
Loan Agreement.
(e) Subject to the further provisions of this Section 2 and of Section
5 hereof, upon surrender of Warrant certificates and payment of the Warrant
Price, the Company shall issue and
28
cause to be delivered, as promptly as practicable to or upon the written order
of the registered holder of such Warrants and in such name or names as such
registered holder may designate, subject to applicable securities laws, a
certificate or certificates for the number of securities so purchased upon the
exercise of such Warrants, together with cash, as provided in Section 9 of this
Agreement, in respect of any fraction of a share or security otherwise issuable
upon such surrender. All shares of Common Stock or other such securities issued
upon the exercise of a Warrant shall be duly authorized, validly issued, fully
paid and nonassessable and free and clear of all liens and other encumbrances.
(f) Certificates representing such securities shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such securities as of the date of the
surrender of such Warrants and payment of the Warrant Price. The rights of
purchase represented by each Warrant certificate shall be exercisable, at the
election of the registered holder thereof, either as an entirety or from time to
time for part of the number of securities specified therein and, in the event
that any Warrant certificate is exercised in respect of less than all of the
securities specified therein at any time prior to the expiration date of the
Warrant certificate, a new Warrant certificate or certificates will be issued to
such registered holder for the remaining number of securities specified in the
Warrant certificate so surrendered.
Section 3. COUNTERSIGNATURE AND REGISTRATION.
(a) The Company shall maintain books (the "Warrant Register") for the
registration and the registration of transfer of the Warrants. Upon the initial
issuance of the Warrants, the Company shall issue and register the Warrants in
the name of the Lender in accordance with Section 1 hereof.
(b) Prior to due presentment for registration of transfer of any
Warrant certificate, the Company may deem and treat the person in whose name
such Warrant certificate shall be registered upon the Warrant Register (the
"registered holder") as the absolute owner of such Warrant certificate and of
each Warrant represented thereby (notwithstanding any notation of ownership or
other writing on the Warrant certificate made by anyone other than the Company),
for the purpose of any exercise thereof, of any distribution or notice to the
holder thereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
Section 4. TRANSFER AND EXCHANGE OF WARRANTS.
(a) The Company shall register the transfer, from time to time, of any
outstanding Warrant or portion thereof upon the Warrant Register, upon surrender
of the certificate evidencing such Warrant for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant certificate representing an
equal aggregate number of Warrants so transferred shall be issued to the
transferee and the surrendered Warrant certificate shall be canceled by the
Company. In the event that only a portion of a Warrant is transferred at any
time, a new Warrant certificate representing the remaining portion of the
Warrant will also be issued to the transferring holder. Notwithstanding anything
to the contrary herein, no transfer or exchange may be made except in compliance
with applicable securities laws and Section 12 hereof.
29
(b) Warrant certificates may be surrendered to the Company, together
with a written request for exchange, and thereupon the Company shall issue in
exchange therefor one or more new Warrant certificates as requested by the
registered holder of the Warrant certificate or certificates so surrendered,
representing an equal aggregate number of Warrants.
(c) The Company shall not be required to effect any registration of
transfer or exchange which will result in the issuance of a Warrant certificate
for a fraction of a Warrant.
(d) No service charge shall be made for any exchange or registration of
transfer of Warrant certificates.
Section 5. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance or delivery of the shares of Common
Stock or other securities issuable upon the exercise of Warrants; provided,
however, the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer of the Warrants or involved in the issuance
or delivery of any Warrant certificate or certificates for shares of Common
Stock in a name other than registered holder of Warrants in respect of which
such shares are issued, and in such case the Company shall not be required to
issue or deliver any certificate for shares of Common Stock or any Warrant
certificate until the person requesting the same has paid to the Company the
amount of such tax or has established to the Company's satisfaction that such
tax has been paid.
Section 6. MUTILATED OR MISSING WARRANTS. In case any of the Warrant
certificates shall be mutilated, lost, stolen or destroyed, the Company may
issue and deliver in exchange and substitution for and upon cancellation of the
mutilated Warrant certificate, or in lieu of and substitution for the Warrant
certificate lost, stolen or destroyed, a new Warrant certificate representing an
equal aggregate number of Warrants, but only upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction of such Warrant
certificate and reasonable indemnity, if requested, also satisfactory to it.
Applicants for such substitute Warrant certificates shall also comply with such
other reasonable conditions and pay such reasonable charges as the Company may
prescribe.
Section 7. RESERVATION OF COMMON STOCK.
(a) There have been reserved, and the Company shall at all times keep
reserved, out of its authorized and unissued shares of Common Stock, a number of
shares sufficient to provide for the exercise of the rights of purchase
represented by the Warrants then outstanding or issuable upon exercise, and the
transfer agent for the Common Stock and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid are hereby irrevocably authorized and directed at
all times to reserve such number of authorized and unissued shares as shall be
requisite for such purpose. The Company will keep a copy of this Agreement on
file with the transfer agent for the Common Stock and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants.
(b) The Company will supply such transfer agent with duly executed
certificates and will provide or otherwise make available any cash as provided
in Section 9 of this Agreement.
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All Warrant certificates surrendered in the exercise thereby evidenced shall be
canceled by the Company. After the expiration date of the Warrants, no shares of
Common Stock shall be subject to reservation in respect of such Warrants.
Section 8. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON
STOCK. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
8.1 ADJUSTMENTS. The number of shares of Common Stock or other
securities purchasable upon the exercise of each Warrant and the Warrant Price
shall be subject to adjustment as follows:
(a) If the Company (i) pays a dividend in Common Stock or makes a
distribution in Common Stock or shares convertible in Common Stock, (ii)
subdivides its outstanding Common Stock into a greater number of shares, (iii)
combines its outstanding Common Stock into a smaller number of shares, or (iv)
issues, by reclassification of its Common Stock, other securities of the
Company, then the number and kind of shares of Common Stock or other securities
purchasable upon exercise of a Warrant immediately prior thereto will be
adjusted so that the holder of a Warrant will be entitled to receive the kind
and number of shares of Common Stock or other securities of the Company that
such holder would have owned and would have been entitled to receive immediately
after the happening of any of the events described above, had the Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made pursuant to this subsection 8.1(a)
will become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) If the Company issues or sell any shares of Common Stock or any
rights or warrants to purchase shares of Common Stock or securities convertible
into Common Stock at a price per share of Common Stock that is less than 90% of
the Daily Market Price (as defined in Section 10(e) hereof) of the Common Stock
as of the trading day immediately preceding (or the same day if trading has been
completed for such day) of such issuance or sale, the Warrant Price shall be
reduced by multiplying the Warrant Price in effect on the date of issuance of
such shares, warrants, rights or convertible securities by a fraction, the
denominator of which shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding on the date of issuance of such shares,
rights, warrants or convertible securities plus the number of additional shares
of Common Stock offered for subscription or purchase or issuable on conversion,
and the numerator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding on the date of issuance of such
shares, rights, warrants or convertible securities plus the number of shares
which the aggregate offering price of the total number of shares so offered,
issued or issuable, or, with respect to convertible securities, the aggregate
consideration received or to be received by the Company for the convertible
securities, would purchase at such Daily Market Price. Such adjustment shall be
made successively whenever such shares, rights, warrants or convertible
securities are issued and shall become effective immediately after the date of
such issuance. However, upon the expiration of any right or warrant to purchase
Common Stock or conversion right, the issuance of which resulted in an
adjustment in the Warrant Price, if any such right, warrant or conversion right
shall
31
expire and shall not have been exercised, the Warrant Price shall immediately
upon such expiration be recomputed and effective immediately upon such
expiration be increased to the price which it would have been (but reflecting
any other adjustments in the Warrant Price made pursuant to the provisions of
this Section 8.1(b) after the issuance of such rights, warrants or convertible
securities) had the adjustment of the Warrant Price upon the issuance of such
rights, warrants or convertible securities been made on the basis of offering
for subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights or warrants actually exercised or the
conversion of the convertible securities actually converted.
(c) If the Company distributes to all holders of Common Stock
evidences of its indebtedness or assets (excluding cash dividends or cash
distributions paid out of earned surplus and made in the ordinary course of
business) or rights to subscribe for or purchase any security, then in each such
case the Warrant Price shall be determined by multiplying the Warrant Price in
effect prior to the record date fixed for determination of stockholders entitled
to receive such distribution by a fraction, the denominator of which shall be
the Daily Market Price of Common Stock determined as of the record date
mentioned above, and the numerator of which shall be such Daily Market Price of
the Common Stock, less the then fair market value (as determined by the Board of
Directors of the Company in good faith, whose determination shall be conclusive
if made in good faith; provided, however, that in the event of a distribution or
series of related distributions exceeding 10% of the net assets of the Company,
then such fair market value shall be determined by a nationally recognized or
major regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Company) selected in good faith by the
Board of Directors of the Company, and in either case shall be described in a
statement provided to Warrant holders) of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to one share
of Common Stock. Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above. In the event such distribution is not made, the Warrant
Price shall again be adjusted to the number that was in effect immediately prior
to such record date.
(d) No adjustment in the number of shares or securities purchasable
pursuant to the Warrants shall be required unless such adjustment would require
an increase or decrease of at least one percent in the number of shares or
securities then purchasable upon the exercise of the Warrants, provided,
however, that any adjustment which by reason of this subsection 8.1(d) is not
required to be made shall be carried forward and taken into account in any
subsequent adjustments.
(e) The Company may, at its option, at any time during the term of
the Warrant, reduce the then current Warrant Price to any amount, consistent
with applicable law, deemed appropriate by the Board of Directors of the
Company.
(f) Whenever the number of shares or securities purchasable upon
the exercise of the Warrants is adjusted, as herein provided, the Warrant Price
for shares payable upon exercise of the Warrants shall be adjusted by
multiplying such Warrant Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of shares purchasable upon
the exercise of the Warrant immediately prior to such adjustment, and the
32
denominator of which shall be the number of shares so purchasable immediately
thereafter.
(g) Whenever the number of shares or securities purchasable upon
the exercise of the Warrants and/or the Warrant Price is adjusted as herein
provided, the Company shall cause to be promptly mailed to each registered
holder of a Warrant by first class mail, postage prepaid, notice of such
adjustment and a certificate of the chief financial officer of the Company
setting forth the number of shares or securities purchasable upon the exercise
of the Warrants after such adjustment, the Warrant Price as adjusted, a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made.
(h) For the purpose of this subsection 8.1, the term "Common Stock"
shall mean (i) the class of stock designated as the voting Common Stock of the
Company at the date of this Agreement, or (ii) any other class of stock or
securities resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time, as a
result of an adjustment made pursuant to this Section 8, a registered holder
shall become entitled to purchase any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
purchasable upon exercise of the Warrants shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in this Section 8.
8.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in subsection 8.1,
no adjustment in respect of any dividends or distributions shall be made during
the term of the Warrants or upon the exercise of the Warrants.
8.3 NO ADJUSTMENT IN CERTAIN CASES. No adjustments are required to be
made pursuant to Section 8 hereof in connection with the issuance of shares of
Common Stock or the Warrants (or the underlying shares of Common Stock) in the
transactions contemplated by this Agreement.
8.4 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute an agreement with the
registered holders of the Warrants providing such holders with the right
thereafter, upon payment of the Warrant Price in effect immediately prior to
such action, to purchase, upon exercise of each Warrant, the kind and amount of
shares and other securities and property which it would have owned or have been
entitled to receive after the happening of such consolidation, merger, sale or
conveyance had each Warrant been exercised immediately prior to such action. Any
such agreements referred to in this subsection 8.4 shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 8 hereof. The provisions of this subsection
8.4 shall similarly apply to successive consolidations, mergers, sales, or
conveyances.
8.5 PAR VALUE OF SHARES OF COMMON STOCK. Before taking any action that
would cause an adjustment reducing the Warrant Price below the then par value of
the Common Stock
33
issuable upon exercise of the Warrants, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Common Stock
at such adjusted Warrant Price.
8.6 INDEPENDENT PUBLIC ACCOUNTANTS. The Company may but shall not be
required to retain a firm of independent public accountants of recognized
regional or national standing (which may be any such firm regularly employed by
the Company) to make any computation required under this Section 8, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section 8 and the Company shall cause to be
promptly mailed to each registered holder of a Warrant by first class mail,
postage prepaid, a copy of such certificate.
8.7 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any adjustments
in the Warrant Price or the number of securities issuable upon exercise of
Warrants, Warrant certificates theretofore or thereafter issued may continue to
express the same price and number of securities as are stated in the similar
Warrant certificates initially issuable pursuant to this Agreement. However, the
Company may, at any time in its sole discretion (which shall be conclusive),
make any change in the form of Warrant certificate that it may deem appropriate
and that does not affect the substance thereof; and any Warrant certificate
thereafter issued, whether upon registration of, transfer of, or in exchange or
substitution for, an outstanding Warrant certificate, may be in the form so
changed.
8.8 NOTICES TO HOLDERS OF WARRANTS. If, at any time prior to the
expiration of a Warrant and prior to its exercise, any one or more of the
following events shall occur:
(a) any action that would require an adjustment pursuant to
subsection 8.1 or 8.4 hereof; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property, assets
and business as an entirety or substantially as an entirety) shall be proposed;
then the Company must give notice in writing of such event to the registered
holders of the Warrants, as provided in Section 14 hereof, at least 20 days, to
the extent practicable, prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the stockholders entitled to
any relevant dividend, distribution, subscription rights or other rights or for
the determination of stockholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice must specify such record date or the date
of closing the transfer books, as the case may be. Failure to mail or receive
such notice or any defect therein will not affect the validity of any action
taken with respect thereto.
Section 9. FRACTIONAL INTERESTS. The Company is not required to issue
fractional shares of Common Stock on the exercise of a Warrant. If any fraction
of a share of Common Stock would, except for the provisions of this Section 9,
be issuable on the exercise of a Warrant (or specified portion thereof), the
Company will in lieu thereof pay an amount in cash equal to the then Current
Market Price multiplied by such fraction. For purposes of this Agreement, the
term "Current Market Price" means (i) if the Common Stock is listed for
quotation on the Nasdaq National Market or the Nasdaq SmallCap Market or on a
national securities exchange,
34
the average for the 10 consecutive trading days immediately preceding the date
in question of the daily per share closing prices of the Common Stock as quoted
by the Nasdaq National Market or the Nasdaq SmallCap Market or on the principal
stock exchange on which it is listed, as the case may be, whichever is the
higher, or (ii) if the Common Stock is traded in the over-the-counter market and
is not listed for quotation on the Nasdaq National Market or the Nasdaq SmallCap
Market nor on any national securities exchange, the average of the per share
closing bid prices of the Common Stock on the 10 consecutive trading days
immediately preceding the date in question, as reported by Nasdaq or an
equivalent generally accepted reporting service. The closing price referred to
in clause (i) above shall be the last reported sale price or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case as quoted by the Nasdaq National Market or the
Nasdaq SmallCap Market or on the national securities exchange on which the
Common Stock is then listed. For purposes of clause (ii) above, if trading in
the Common Stock is not reported by Nasdaq, the bid price referred to in said
clause shall be the lowest bid price as reported on the OTC Bulletin Board or in
the "pink sheets" published by National Quotation Bureau, Incorporated.
Section 10. REDEMPTION.
(a) The then outstanding Warrants may be redeemed, at the option of the
Company, at $.10 per share of Common Stock purchasable upon exercise of such
Warrants, at any time after [July 25, 2006] if the average Daily Market Price
per share of the Common Stock for a period of at least 20 consecutive trading
days ending not more than fifteen (15) days prior to the date of the notice
given pursuant to Section 10(b) hereof has equaled or exceeded [$12.00], and
prior to expiration of the Warrants. The Daily Market Price of the Common Stock
will be determined by the Company in the manner set forth in Section 10(e) as of
the end of each trading day (or, if no trading in the Common Stock occurred on
such day, as of the end of the immediately preceding trading day in which
trading occurred). All outstanding Warrants must be redeemed if any are
redeemed, and any right to exercise an outstanding Warrant shall terminate at
1:30 p.m. (Phoenix, Arizona time) on the date fixed for redemption. Trading day
means a day in which trading of securities occurred on the Nasdaq National
Market.
(b) The Company may exercise its right to redeem the Warrants only by
giving the notice set forth in the following sentence. If the Company exercises
its right to redeem, it shall give notice to the registered holders of the
outstanding Warrants by mailing to such registered holders a notice of
redemption, first class, postage prepaid, at their addresses as they shall
appear on the records of the Company. Any notice mailed in the manner provided
herein will be conclusively presumed to have been duly given whether or not the
registered holder actually receives such notice.
(c) The notice of redemption must specify the redemption price, the
date fixed for redemption (which must be at least 30 days after the date such
notice is mailed), the place where the Warrant certificates must be delivered
and the redemption price paid, and that the right to exercise the Warrant will
terminate at 1:30 P.M. (Phoenix, Arizona time) on the date fixed for redemption.
(d) Appropriate adjustment shall be made to the redemption price and to
the minimum Daily Market Price prerequisite to redemption set forth in Section
10(a) hereof, in each
35
case on the same basis as provided in Section 8 hereof with respect to
adjustment of the Warrant Price.
(e) For purposes of this Agreement, the term "Daily Market Price" means
(i) if the Common Stock is quoted on the Nasdaq National Market or the Nasdaq
SmallCap Market or on a national securities exchange, the daily per share
closing price of the Common Stock as quoted on the Nasdaq National Market or the
Nasdaq SmallCap Market or on the principal stock exchange on which it is listed
on the trading day in question, as the case may be, whichever is the higher, or
(ii) if the Common Stock is traded in the over-the-counter market and not quoted
on the Nasdaq National Market or the Nasdaq SmallCap Market nor on any national
securities exchange, the closing bid price of the Common Stock on the trading
day in question, as reported by Nasdaq or an equivalent generally accepted
reporting service. The closing price referred to in clause (i) above shall be
the last reported sale price or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked prices, in either
case on the Nasdaq National Market or the Nasdaq SmallCap Market or on the
national securities exchange on which the Common Stock is then listed. For
purposes of clause (ii) above, if trading in the Common Stock is not reported by
Nasdaq, the bid price referred to in said clause shall be the lowest bid price
as quoted on the OTC Bulletin Board or reported in the "pink sheets" published
by National Quotation Bureau, Incorporated.
(f) On the redemption date, each Warrant will be automatically
converted into the right to receive the redemption price and the Company will no
longer honor any purported exercise of a Warrant. On or before the redemption
date, the Company will deposit sufficient funds for the purpose of redeeming all
of the outstanding unexercised Warrants in an interest-bearing, segregated
account for payment to holders of Warrants upon surrender of Warrant
Certificates in exchange for the redemption price therefor. Funds remaining in
such account on the date three years from the redemption date will be returned
to the Company.
Section 11. RIGHTS AS WARRANTHOLDERS. Nothing contained in this
Agreement or in any of the Warrants shall be construed as conferring upon the
holders thereof, as such, any of the rights of stockholders of the Company,
including, without limitation, the right to receive dividends or other
distributions, to exercise any preemptive rights, to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter.
Section 12. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.
(a) Each holder of a Warrant agrees that prior to making any
disposition or transfer of the Warrants or shares issuable upon exercise of the
Warrants ("Shares"), unless a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), is in effect with regard thereto and
the disposition may be effected in accordance therewith and with applicable
state securities laws, the holder shall give written notice to the Company
describing briefly the manner in which any such proposed disposition or transfer
is to be made; and no such disposition shall be made except pursuant to an
exemption from the registration requirements of all applicable federal and state
securities laws.
(b) Each certificate evidencing the Warrants shall bear a legend in
substantially the
36
following form, and each certificate evidencing Shares issuable upon exercise of
the Warrants shall bear such a legend until such time as such Shares have been
sold pursuant to a registration statement contemplated in subsection (c) or (d)
below or unless, in the opinion of legal counsel to the Company, such legend is
not required in order to establish compliance with any provisions of applicable
security laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, EXCHANGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN ANY MANNER EXCEPT IN COMPLIANCE
WITH SECTION 12 OF THE WARRANT AGREEMENT DATED AS OF JULY 25,
2001, AS THE SAME MAY BE AMENDED FROM TIME TO TIME.
(c) Subject to the next sentence below, beginning on the date that the
Warrants are exercised, if the Company proposes to file with the Commission a
registration statement with respect to equity securities of the Company (other
than as to securities issued pursuant to an employee benefit plan or as to a
transaction subject to Rule 145 promulgated under the Securities Act or for
which a Form S-4 Registration Statement could be used), it shall, at least 30
days prior to such filing, give written notice of such proposed filing to the
holders of Warrants and Shares which bear a legend as contemplated in Section
12(b) above and which shall not have previously been included in a registration
statement filed under this Section 12(c) or Section 12(d), at their respective
addresses as they appear on the records of the Company or the Company, and shall
offer to include and shall include, subject to the provisions of this Section
12(c), in such filing any proposed disposition of such Shares upon receipt by
the Company, not less than 10 days prior to the proposed filing date, of a
request therefor setting forth the facts with respect to such proposed
disposition and all other information with respect to the holders of such Shares
requested to be included in such filing as shall be reasonably necessary to be
included in such Registration Statement. Notwithstanding the above, after such
time as the holders shall have been given two opportunities to include their
Shares in a Registration Statement of the Company pursuant to the immediately
preceding sentence, and all securities of holders who shall have requested such
inclusion in accordance herewith and who have not withdrawn such request prior
to the filing of such Registration Statement have been included in such a
Registration Statement which shall have become effective and such securities
shall have been effectively registered under the Securities Act, the Company
will have no further obligation to such holders under this Section 12(c) and the
Shares of such holders that have not been included previously in a Registration
Statement under this Section 12(c) will have no further registration rights
under Section 12(c) of this Agreement. In the event that (i) the managing
underwriter for any such offering advises the Company in writing that the
inclusion of such Shares in the offering would be detrimental to the offering or
(ii) in the event that there is no managing underwriter, if, in the good faith
judgment of the Board of Directors of the Company, inclusion of the Shares in
the registration would be seriously detrimental to the Company, then, such
Shares shall not be included in the Registration Statement, provided that no
other shares of the Company's Common Stock are included in the registration
pursuant to any other piggyback registration rights granted to others. In the
event that Shares requested to be included in an offering are not included in
accordance with the immediately preceding sentence, any notice given to holders
of Warrants
37
and Shares hereunder with respect to such offering shall not be
counted against the limitation provided for in the second sentence of this
Section 12(c).
(d) In addition to any Registration Statement pursuant to Section 12(c)
hereof, after written notice upon exercise (the "Request") by the holders of at
least 50% of the shares of Common Stock which have been (or may be) issued upon
exercise of the Warrants, the Company will, as promptly as practicable (but in
any event within 60 days), prepare and file at its own expense a Registration
Statement with the Commission and appropriate Blue Sky authorities sufficient to
permit the public offering of the shares of Common Stock underlying the
Warrants, and will use reasonable efforts at its own expense through its
officers, directors, auditors and counsel, in all ways necessary or advisable,
to cause such Registration Statement to become effective as quickly as
practicable and to maintain such effectiveness so as to permit resale of the
shares of Common Stock covered by the Request until the earlier of the time that
all such shares of Common Stock has been sold or the expiration of 120 days from
the effective date of the Registration Statement; provided, however, that the
Company shall only be obligated to file one such Registration Statement under
this Section 12(d). The Company shall not be required to effect a registration
pursuant to this Section 12(d) if the Company shall furnish to holders
requesting a registration statement pursuant to this Section 12(d), a
certificate signed by the Chairman of the Board stating that in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration statement
to be effected at such time, in which event the Company shall have the right to
defer such filing for a period of not more than ninety (90) days after receipt
of the request of the initiating holders; provided that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period.
(e) All fees, disbursements, and out-of-pocket expenses incurred in
connection with the filing of any Registration Statement under Section 12(c)
hereof and in complying with applicable securities and Blue Sky laws shall be
borne by the Company, provided, however, that any expenses of the holders of the
Warrants or the Shares, including but not limited to attorneys' fees and
discounts and commissions, shall be borne by such holders. The Company at its
expense will supply the holders of the Shares included in a Registration
Statement with copies of such Registration Statement and the prospectus or
offering circular included therein in such quantities as may be reasonably
requested by such holders.
(f) Each holder of Shares to be included in a Registration Statement
pursuant to this Section 12 agrees to reasonably cooperate with the Company and
to provide the Company on its request with all information concerning such
holder and his Warrants and Shares that may reasonably be requested by the
Company in order for the Company to perform its obligations under this Section
12.
(g) The registration rights provided pursuant to Section 12(c) and
Section 12(d) above are subject to any other registration rights previously
granted by the Company.
Section 13. INDEMNIFICATION.
(a) In the event of the filing of any Registration Statement with
respect to the Shares pursuant to Section 12 above, the Company agrees to
indemnify and hold harmless the holders of
38
such Shares (for purposes of this Section 13, references to any holder of Shares
shall refer only to such holders who have agreed to be bound by this Section
13), and each person who controls such holders within the meaning of the
Securities Act and such holders' officers, directors, managers, members,
partners, and principle equity holders (collectively, "Indemnitees") against all
losses, claims, damages, expenses and liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees and expenses), to
which such Indemnitees may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any such
Registration Statement, or any related preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage, expenses, or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such Registration Statement, preliminary
prospectus, final prospectus, offering circular, notification or amendment or
supplement thereto in reliance upon, and in conformity with, written information
furnished to the Company by any such holder specifically for use in the
preparation thereof and, provided further, that the indemnity agreement provided
in this Section 13(a) with respect to any preliminary prospectus shall not inure
to the benefit of any holder of Warrants or Shares from whom the person
asserting any losses, claims, damages, liabilities or actions based upon any
untrue statement or alleged untrue statement of material fact or omission or
alleged omission to state therein a material fact purchased Warrants or Shares,
if a copy of the prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected had not been sent or
given to such person within the time required by the Securities Act and the
rules and regulations thereunder, unless such failure is the result of
non-compliance by the Company with the last sentence of Section 12(f) hereof.
This indemnity will be in addition to any liability which the Company may
otherwise have.
(b) Each holder of a Warrant and each holder of a Share agrees that he
will indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of the Securities Act in respect of
the Registration Statement, each officer of the Company, and each person who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages or liabilities (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such
director, officer or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any such
Registration Statement, or any related preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such Registration Statement, preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto
39
in reliance upon, and in conformity with, written information furnished to the
Company by such holder specifically for use in the preparation thereof. This
indemnity will be in addition to any liability which the holder may otherwise
have.
(c) Promptly after receipt by an indemnified party under this Section
13 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 13, notify the indemnifying party of the commencement thereof. No
indemnification provided for in this Section 13 shall be available to any party
who shall fail to give the notice to the extent the party to whom such notice
was not given was materially prejudiced by the failure to give the notice, but
the omission so to notify the indemnifying party will not relieve the
indemnifying party or parties from any liability which it may have to any
indemnified party for contribution otherwise than as to the particular item as
to which indemnification is then being sought solely pursuant to this Section
13. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, reasonably assume
the defense thereof, subject to the provisions herein stated and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 13 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation unless the indemnifying
party shall not pursue the action to its final conclusion. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party. No settlement of any
action against an indemnified party shall be made without the consent of the
indemnifying party, which shall not be unreasonably withheld in light of all
factors of importance to such indemnified party.
Section 14. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the holder of any Warrant certificate to or on the Company
shall be sufficiently given or made if sent by registered or certified mail,
addressed as follows (and shall be deemed given upon receipt):
Ugly Duckling Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxxxxx
Vice President, General Counsel and Secretary
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
40
Notices or demands authorized by this Agreement to be given or made by the
Company to the holder of any Warrant certificate shall be sufficiently given or
made if sent by first class mail, postage prepaid, addressed to such holder at
the address of such holder as shown in the Warrant Register.
Section 15. SUPPLEMENTS AND AMENDMENTS. This Agreement may be amended
by the Company and the holder or holders of a majority of the outstanding
Warrants representing a majority of the shares of Common Stock underlying such
Warrants; provided, however, that without the consent of each holder of a
Warrant, there can be no increase of the Warrant Price or reduction of the
exercise period for such holder's Warrants.
Section 16. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the registered holders of the
Warrants will bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 17. GOVERNING LAW. This Agreement will be deemed to be a
contract made under the laws of the State of Arizona and for all purposes will
be construed in accordance with the laws of said State.
Section 18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will
be construed to give to any person or corporation other than the Company and the
registered holders of the Warrants any legal or equitable right, remedy or claim
under this Agreement. This Agreement is for the sole and exclusive benefit of
the Company and the registered holders of the Warrants.
Section 19. COUNTERPARTS. This Agreement may be executed in
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instrument.
Section 20. DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Agreement are inserted for convenience only and do not
control or affect the meaning or construction of any of the provisions hereof.
41
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
UGLY DUCKLING CORPORATION
By:___________________________________________
Name:_________________________________________
Its:__________________________________________
VERDE INVESTMENTS, INC.
By:___________________________________________
Name:
Its:
Address for notices:
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
FAX: (000) 000-0000
42
EXHIBIT A
Warrant No. ____
WARRANT TO PURCHASE 1,500,000 SHARES OF COMMON STOCK
VOID AFTER 1:30 P.M.
PHOENIX, ARIZONA TIME, ON JULY 25, 2011
OR SUCH EARLIER DATE SET FORTH HEREIN
UGLY DUCKLING CORPORATION
This certifies that, for value received, VERDE INVESTMENTS, INC., an
Arizona corporation, the registered holder hereof or its assigns (the "Holder"),
is entitled, pursuant to the vesting schedule detailed below, to purchase from
UGLY DUCKLING CORPORATION, a Delaware corporation (the "Company"), until 1:30
p.m., Phoenix, Arizona time, on July 25, 2011 unless earlier redeemed by the
Company, at the purchase price per share of $_____ (the "Warrant Price"), the
aggregate number of shares of Common Stock, par value $0.001 per share, of the
Company set forth above (the "Shares"). The Holder shall have the right to
purchase 500,000 Shares as of the date hereof, and an additional 250,000 Shares
for each successive three month period thereafter, until the Holder has the
right to purchase all of the Shares. The number of Shares purchasable upon
exercise of the Warrant evidenced hereby and the Warrant Price is subject to
adjustment from time to time as set forth in the Warrant Agreement referred to
below.
This Warrant may be redeemed, at the option of the Company and as more
specifically provided in the Warrant Agreement, at $.10 per share of Common
Stock purchasable upon exercise hereof, at any time after July 25, 2006 if the
average Daily Market Price (as defined in Section 10 of the Warrant Agreement)
per share of the Common Stock for a period of at least twenty (20) consecutive
trading days ending not more than fifteen days prior to the date of the notice
given pursuant to Section 10(b) thereof has equaled or exceeded $12.00, and
prior to expiration of this Warrant. The Holder's right to exercise this Warrant
terminates at 1:30 p.m. (Phoenix, Arizona time) on the date fixed for redemption
in the notice of redemption delivered by the Company in accordance with the
Warrant Agreement.
The Warrants evidenced hereby may be exercised during the period
referred to above, in whole or in part, by presentation of this Warrant
certificate with the Purchase Form attached hereto duly executed and guaranteed
and simultaneous payment of the Warrant Price (as defined in the Warrant
Agreement and subject to adjustment as provided therein) at the principal office
of the Company. Payment of such price may be made at the option of the Holder in
cash or by certified check or bank draft, all as provided in the Warrant
Agreement.
The Warrants evidenced hereby are part of a duly authorized issue of
Warrants and are issued under and in accordance with the Warrant Agreement dated
as of July 25, 2001, between
43
the Company and the Lender, and are subject to the terms and provisions
contained in such Warrant Agreement, which Warrant Agreement is hereby
incorporated by reference herein and made a part hereof and is hereby referred
to for a description of the rights, limitations, duties and indemnities
thereunder of the Company and the Holder of the Warrants, and to all of which
the Holder of this Warrant certificate by acceptance hereof consents. A copy of
the Warrant Agreement may be obtained for inspection by the Holder hereof upon
written request to the Company.
Upon any partial exercise of the Warrants evidenced hereby, there will
be issued to the Holder a new Warrant certificate in respect of the Shares
evidenced hereby that have not been exercised. This Warrant certificate may be
exchanged at the office of the Company by surrender of this Warrant certificate
properly endorsed either separately or in combination with one or more other
Warrants for one or more new Warrants to purchase the same aggregate number of
Shares as evidenced by the Warrant or Warrants exchanged. No fractional Shares
will be issued upon the exercise of rights to purchase hereunder, but the
Company will pay the cash value of any fraction upon the exercise of one or more
Warrants, as provided in the Warrant Agreement.
The Warrant Price and the number of shares of Common Stock issuable
upon exercise of this Warrant is subject to adjustment as provided in Section 8
of the Warrant Agreement. The Warrant Agreement may be amended by the Company
and the holder or holders of a majority of the outstanding Warrants representing
a majority of the shares of Common Stock underlying such Warrants; provided that
without the consent of each holder of a Warrant certain specified changes cannot
be made to such holder's Warrants.
Neither the Warrants nor the shares of Common Stock underlying the
Warrants may be sold, assigned, or otherwise transferred except in accordance
with the provisions of the Warrant Agreement.
The Holder hereof may be treated by the Company and all other persons
dealing with this Warrant certificate as the absolute owner hereof for all
purposes and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding, and until any transfer is entered on
such books, the Company may treat the Holder hereof as the owner for all
purposes. Notices and demands to be given to the Company must be given by
certified or registered mail at the addresses provided in the Warrant Agreement.
All terms used in the Warrant Certificate that are defined in the
Warrant Agreement shall have the respective meanings ascribed to such terms in
the Warrant Agreement.
Dated: July 25, 2001 UGLY DUCKLING CORPORATION
By:___________________________________________
Xxx X. Xxxxxxxx
Vice President, General Counsel and Secretary
44
UGLY DUCKLING CORPORATION
PURCHASE FORM
Mailing Address:
UGLY DUCKLING CORPORATION
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant certificate for, and to purchase
thereunder, _____________Shares of Common Stock provided for therein, and
requests that certificates for such Shares be issued in the name of:
(Please Print or Type Name, Address and Social Security Number)
and that such certificates be delivered to _____________________________________
whose address is _______________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant certificate for the balance of the Shares purchasable under
the within Warrant certificate be registered in the name of the undersigned
Holder or his or her Assignee as below indicated and delivered to the address
stated below.
Dated:_____________________
Name of Holder or Assignee:
(Please Print)
Address:________________________________________________________________________
Signature:
__________________________________
NOTE: The above signature must correspond with the name as it appears upon the
face of the within Warrant certificate in every particular, without alteration
or enlargement or any change whatever, unless these Warrants have been assigned.
Signature Guaranteed:
__________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banks, Stock Brokers, Savings and Loan Association, and Credit Unions) WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO
S.E.C. RULE 17Ad-15.
45
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Name and Address of Assignee Must Be Printed or Typewritten)
______________ Warrants, hereby irrevocably constituting and appointing _______
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises.
Dated:_____________________________
Signature of Registered Holder
Note: The signature on this assignment must correspond
with the name as it appears upon the face of the
within Warrant certificate in every particular
manner, without alteration or enlargement or any
change whatever.
Signature Guaranteed:
__________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banks, Stock Brokers, Savings and Loan Association, and Credit Unions) WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO
S.E.C. RULE 17Ad-15.
46
SCHEDULE 3.2
LEASES
Xxxx Road
0000 X. Xxxx Xx.
Xxxxxxx, XX 00000
00xx Xxxxxx & Van Buren
000 X. 00xx Xx.
Xxxxxxx, XX 00000
Mesa
000 X. Xxxx Xxxxxx Xx.
Xxxx, XX 00000
Glendale
0000 X. Xxxxxxxx Xxx.
Xxxxxxxx, XX 00000
19th Ave.
0000 X. 00xx Xxx.
Xxxxxxx, XX 00000
Gilbert Credit Corp.
0000 X. Xxxxxxxx Xx.
Xxxxxxx, XX 00000
Chandler
000 X. Xxxxxxx Xxx.
Xxxxxxxx, XX 00000
South Central
0000 X. Xxxxxxx Xxx.
Xxxxxxx, XX 00000
Phoenix Recon
0000 X. Xxxxx Xx.
Xxxxxxx, XX 00000
Grant & Oracle
0000 X. Xxxxxx
Xxxxxx, XX 00000
47
Tucson Recon
0000 X. Xxxxxx
Xxxxxx, XX 00000
Tucson
0000 X. Xxxxxxxx
Xxxxxx, XX
Griegos
0000 0xx Xxxxxx XX
Xxxxxxxxxxx, XX 00000
Wyoming
000 Xxxxxxx Xxxx., XX
Xxxxxxxxxxx, XX 00000
Bandera
0000 Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000
XX Xxxxx
000 X. XX Xxxxx Xxxx
Xxx Xxxxxxx, XX 00000
Southside Inspection Center
0000 XX Xxxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
40th & Indian School
0000 X. Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
48
SCHEDULE 3.3
COMPANY PROPERTIES
Garden Grove
00000 Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Garland Road
00000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Xxxxx Xxxxx
00000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Xxxxxxx
0000 X. Xxxxx Xxxxx
Xxxxx, XX 00000
Florida Avenue
00000 X. Xxxxxxx Xxxxxx
Xxxxx, XX 00000
Grand Prairie
0000 X. Xxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Arlington
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Douglasville
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Petersburg
0000 X. Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Orlando Insp. Ctr.
0000 XxXxxxxx Xxxx
Xxxxxxx, XX 00000
