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Exhibit 16(d)-6
STOCK PLEDGE AGREEMENT
DATE: November 28, 2000
PARTIES:
Pledgor: Xxxxxx X. Xxxxxx XX and
Xxxxxxxxx Xxxxxx Xxxxxx
000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Secured Party: Arbco Associates, L.P. (75%) and
Xxxxx Xxxxxxxx Capital Income Partners, L.P. (25%)
0000 Xxxxxx xx xxx Xxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
RECITALS:
A. In connection with that certain Letter Agreement of even date herewith
(the "LETTER AGREEMENT"), among Verde Investments, Inc. and Verde Reinsurance
Company, Ltd. ("SELLER") and Secured Party as Buyer, Secured Party is purchasing
from Seller the FMAC Bonds, as defined in the Letter Agreement, held by Seller
(the "FMAC BONDS").
B. As part of the transfer of the FMAC Bonds, Pledgor guaranteed the
obligations of Seller to Secured Party under the Letter Agreement (the
"GUARANTY").
C. In order to induce Secured Party to purchase the FMAC Bonds from
Seller and accept the Guaranty, Pledgor desires to grant a security interest in,
and pledge to Secured Party, all of Pledgor's right, title and interest in and
to 200,000 shares of common stock (the "DUCK STOCK") of Ugly Duckling
Corporation ("UDC") held by Pledgor.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
1. PLEDGE. Pledgor hereby grants to Secured Party a security interest in
the Duck Shares together with all rights thereof or arising therefrom, all
additions thereto, dividends, options, warrants and payments arising thereunder,
all proceeds from the sale or other disposition thereof, and all substitutions
therefor (collectively the "COLLATERAL"), as security for all of the Pledgor's
obligations to Secured Party under the Guaranty. Upon execution of this
Agreement, Pledgor shall deliver to Secured Party stock power(s) and
assignment(s) separate from certificate for the certificates representing the
Duck Shares endorsed in blank.
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2. Covenants and Representations. Pledgor agrees to take no action which
would adversely affect the value of the Collateral or which would encumber,
dilute or cloud Pledgor's title or interest therein. Pledgor represents and
agrees to the following:
(a) Pledgor is and will continue to be the owner of the Collateral,
free of any liens, security interests or assignments other than the
security interest created by this Agreement;
(b) Pledgor shall deliver to Secured Party and Secured Party shall
retain physical possession of all stock certificates and other instruments
and documents representing or evidencing any of the Collateral, which stock
certificates shall be duly endorsed in blank;
(c) Pledgor will not modify or amend the instruments or documents
constituting the Collateral or make any compromise, adjustment, settlement
or termination in connection therewith;
(d) Pledgor will at all times defend the Collateral against any and
all claims of any person, adverse to the claims of Secured Party;
(e) upon the occurrence of an Event of Default Pledgor will accept no
payments, distributions or dividends on the Collateral and shall remit to
Secured Party any payment or distribution received;
(f) the execution and delivery of this Agreement, and the performance
of its terms, will not result in any violation of or constitute a default
under the terms of any agreement, or other instrument, license, judgment,
order, statute, ordinance or other governmental rule or regulation
applicable to the Pledgor or the Collateral;
(g) upon its execution and delivery, this Agreement shall create an
enforceable and valid lien in the Collateral;
(h) Pledgor has the full power and authority to enter into this
Agreement, and the persons executing this Agreement on behalf of Pledgor
have been duly authorized to act on behalf of Pledgor in the execution
hereof;
(i) other than Pledgor, there are no parties who assert any type of
ownership interest whatsoever in the Duck Shares;
(j) other than this Agreement, there are no agreements which impose
any conditions or restrictions on the Duck Shares;
(k) all of the Duck Shares have been duly authorized, validly issued
and are fully paid and non-assessable;
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(1) the granting by Pledgor to Secured Party or the security interest
in the Collateral as evidenced by this Agreement complies with all
applicable federal and state securities laws or qualifies for an exemption
from such registration;
(m) Pledgor, as stockholder, owner, part owner, or in any other
capacity, shall not vote for, ratify, accept, accede to, or approve any
proposed transaction concerning the Collateral which would have an adverse
effect on the rights of Secured Party hereunder; and
3. Delivery of Instruments; Adjustments. Pledgor has delivered to Secured
Party, all stock certificates and all documents evidencing any ownership of the
Collateral or which are necessary or convenient for Secured Party to exercise
any of Secured Party's rights hereunder. If, during the term of this Agreement,
any stock dividends, reclassification, readjustments or other changes are
declared or made in the capital structure of any corporation represented by the
Collateral, or if any subscription or other options are exercisable with respect
to the Collateral, all such new, substitute or additional shares or other
securities, rights or interests issued shall be delivered to and held by Secured
Party subject to this Agreement in the same manner as the Collateral.
4. Voting. So long as Pledgor is not in default hereunder, any Collateral
may be voted by the Pledgor at all meetings of stockholders, subject to the
restrictions of Paragraph 2(m).
5. Events of Default. Any one or more of the following will constitute an
event of default ("EVENT OF DEFAULT") under this Agreement:
(a) any event occurs which constitutes an Event of Default of Seller
under the Letter Agreement;
(b) if Pledgor fails to pay or perform any of its obligations
contained in this Agreement;
(c) any covenant, condition, agreement, representation or warranty
made by Pledgor to Secured Party in this Agreement proves untrue in any
material respect or is breached;
(d) if Pledgor becomes insolvent or bankrupt or admits in writing
Pledgor's inability to pay Pledgor's debts as they mature, or makes an
assignment for the benefit of creditors, or applies for or consents to the
appointment of a trustee or receiver over a substantial part of Pledgor's
property; or if Pledgor commences any proceeding relating to any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under the law of any jurisdiction.
(e) if any such application or proceeding referred to in the
preceding paragraph (d) is commenced against Pledgor and Pledgor indicates
Pledgor's approval, consent or acquiescence; or if any order is entered
appointing a trustee or receiver over any of Pledgor's
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property or adjudicating Pledgor bankrupt or insolvent, or approving the
petition in any such proceeding, and such order remains in effect for
thirty (30) days.
(f) if any judgment, writ of attachment or any other legal process or
proceeding for the execution upon, seizure of, or imposition of a lien
upon, any of Pledgor's assets is entered or issued against Pledgor or
against any of Pledgor's assets, which process or proceeding remains
undismissed, unvacated, unbonded or unstayed for a period of thirty (30)
days.
6. Remedies on Default. Upon the occurrence and during the continuance
of an Event of Default, Secured Party may exercise any or all of the rights and
remedies provided (a) by this Agreement, and/or (b) by any other applicable
law. Without limiting the generality of the foregoing, upon the occurrence and
continuance of an Event of Default, Secured Party may (i) instruct the
secretary of UDC to pay all dividends to Secured Party, and (ii) sell the
Collateral or any part thereof, without recourse to judicial proceedings, with
the right to bid for and buy, free from any right of redemption, upon ten (10)
days' notice (which notice is agreed to be reasonable notice for the purposes
hereof) to the Pledgor, of the time and place of sale, for cash, upon credit or
for future delivery, at Secured Party's option and in Secured Party's complete
discretion:
(a) at a public sale, including a sale at any broker's board or
exchange;
(b) at private sale in any commercially reasonable manner which will
not require the Collateral, or any part thereof, to be registered in
accordance with the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder, or any other law or regulation. Secured
Party is also hereby authorized, but not obligated, to take such actions,
give such notices, obtain such consents, and do such other things as it may
deem required or appropriate in the event of sale or disposition of any of
the Collateral.
In connection with the sale of any of the Collateral, Secured Party is
authorized, but not obligated, to limit prospective purchasers to the extent
deemed necessary or desirable by Secured Party to render such sale exempt from
the registration requirements of the Securities Act of 1933, as amended, and
any applicable state securities laws, and any sale of the Collateral so made in
good faith by Secured Party shall be deemed to be commercially reasonable. In
connection with any such sale or other disposition in accordance with the
provision hereof, Secured Party shall be authorized to deliver the Shares to or
upon the order of Secured Party.
7. Taxes. Pledgor shall pay promptly, when due, any and all property
taxes, excise taxes (however called) and other taxes, assessments, duties and
other charges, which, if unpaid, might by law or otherwise become a lien or
charge upon the Collateral (including any and all interest, penalties and
related provisional fees) imposed, levied or assessed against the Collateral,
or upon or measured by the use, ownership, possession or operation thereof, or
in respect to this Agreement or the security interest in the Collateral granted
and conveyed herein.
8. Pledgor's Failure to Pay Taxes and Other Items. If Pledgor fails to
make any payment or do any act required of it under this Agreement, then
Secured Party shall have the right,
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but not the obligation, upon three (3) days notice to Pledgor, and without
releasing Pledgor from any obligation under this Agreement, to make or do the
same, and to pay, purchase, contest or compromise any lien which in Secured
Party's judgment places its security interest in the Collateral or Pledgor's
title to the Collateral in jeopardy, and in exercising any such rights, to
expend whatever reasonable amounts of Secured Party in its sole discretion may
deem necessary therefor. Any amounts expended by Secured Party pursuant to this
SECTION 8 shall be a demand obligation owing by Pledgor, which shall bear
interest at the default rate (as defined in the Loan Documents) from the date
Secured Party expends such amount until repaid.
9. Indemnification. Pledgor agrees to indemnify Secured Party for from
and against all losses, claims, demands and liabilities of every kind and nature
arising by reason of the assignment and security interest granted and the
Collateral, excluding any of the same arising from the negligence or willful
misconduct of the Secured Party, and agrees to pay all expenses, including,
without limitation, expert witness fees and attorneys fees, incurred by Secured
Party in the preservation, realization, enforcement or exercise of any of its
rights, powers or remedies hereunder.
10. Irrevocable Proxy. Pledgor does hereby irrevocably constitute and
appoint Secured Party and Secured Party's successors and assigns as its proxy,
with full power, in the same manner, to the same extent, and with the same
effect as if they were to do the same:
(a) to attend any and all meetings of the shareholders of UDC held
from the date hereof, and to vote the Collateral at any such meeting in
such manner as Secured Party shall, in its sole discretion, deem
appropriate;
(b) to consent, in the sole discretion of Secured Party, to any and
all actions by or with respect to Pledgor for which the consent of the
Pledgor is or may be necessary or appropriate;
(c) without limitation, to do all things which Pledgor can or could
do as a shareholder of UDC, giving to Secured Party full power and
substitution and revocation; provided, however, that this proxy shall not
be exercisable by Secured Party, and Pledgor alone shall have the foregoing
powers, so long as there is no Event of Default hereunder pursuant to which
Secured Party has notified Pledgor that Secured Party is exercising its
rights under this section, and provided further that this proxy shall
terminate at such time as this Agreement is terminated. Pledgor hereby
revokes any proxy or proxies heretofore given to any person or persons and
agrees not to give any other proxy in derogation hereof until such time as
this Agreement is terminated. Pledgor and Secured Party hereby specifically
agree that the proxy granted hereunder shall be deemed to be valid and
irrevocable until this Agreement shall be terminated.
11. Attorney-in-Fact. Pledgor hereby appoints Secured Party as Pledgor's
Attorney-in-Fact (without imposing any obligations on Secured Party), to perform
all acts which Secured Party deems appropriate to perfect and continue the
security interest granted hereunder. The Power of
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Attorney granted herein is coupled with an interest and is irrevocable until
this Agreement is terminated.
12. Miscellaneous. This Agreement and the Letter Agreement constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and shall supersede all other prior agreements, written or oral, with
respect thereto.
(a) This Agreement shall be binding on and inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that Pledgor shall not have the right to assign or transfer
respective rights or obligations under this Agreement except with the prior
written consent of Secured Party. Secured Party, at any time, may sell,
assign, grant or otherwise transfer, in whole or in part, the indebtedness
secured hereby and Secured Party's rights, interest and obligations under
this Agreement or the Collateral and in such event, the transferee shall
have the same rights, powers and authority with respect to this Agreement
and the Collateral so transferred as are hereby given to Secured Party.
(b) This Agreement may be amended modified, renewed or extended but
only by a written instrument, executed by all of the parties hereto in the
manner of the execution of this Agreement.
(c) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ARIZONA, AND, TO THE
EXTENT THEY PREEMPT SUCH LAWS, THE LAWS OF THE UNITED STATES.
(d) All parties hereto shall, from time to time, do and perform such
other and further acts and execute and deliver any and all such other and
further instruments as may be required or reasonably requested by any other
party to establish, maintain and protect the respective rights and remedies
of such other party and to carry out and effect the intents and purposes of
this Agreement.
(e) All documents, agreements, certificates and instruments herein
required shall be in form and substance satisfactory in all respects to
Secured Party in its sole discretion and shall be provided at the sole cost
and expense of Pledgor.
(f) The representations and warranties hereunder shall survive the
execution hereof and Secured Party may enforce such representations and
warranties at any time. Pledgor's covenants shall survive the execution
hereof and shall be performed fully and faithfully by Pledgor at all times.
The indemnities of Pledgor shall survive repayment of the indebtedness
secured hereby.
(g) If any term or provision of this Agreement, or the application
thereof to any circumstance, shall be invalid, illegal or unenforceable to
any extent, such term or provision shall not invalidate or render
unenforceable any other term or provision of this Agreement, or the
application of such term or provision to any other circumstance. To the
extent
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permitted by law, the parties hereto hereby waive any provision of
law that renders any term or provision hereof invalid or
unenforceable in any respect.
(h) Time is of the essence of this Agreement.
(i) Any notice, demand or any other instruments authorized by
this Agreement to be served on or given shall be sufficiently
served or given for all purposes on the earlier of: (a) when
personally delivered to any officer of the party to whom it is
addressed; (b) when sent by certified, registered or first class
mail, postage prepaid, addressed to each party at its address set
forth above or at such other address as has been furnished in
writing by a party to the other in the manner provided in this
Section; or (c) by overnight courier.
13. Counterparts. This Agreement may be executed in any number
of counterparts, each of which, when so executed and delivered, shall be deemed
to be an original, but all such counterparts shall together constitute but one
and the same instrument.
14. Headings. The headings of the sections and paragraphs of
this Agreement have been inserted for convenience of reference only and shall
in no way restrict or otherwise modify any of the terms or provisions hereof.
15. Construction. All references to the singular shall include
the plural and vice versa and all references to the masculine shall include the
neuter or feminine and vice versa. This Agreement has been reviewed and
negotiated by counsel for each party and no ambiguity in this Agreement shall
be construed against any party based upon its having prepared the same.
16. Termination. This Agreement shall terminate upon full
satisfaction of the obligations hereby secured, and, upon such termination,
Secured Party shall return to Pledgor any of the Collateral held by Secured
Party pursuant to this Agreement, and the original executed copy of this
Agreement which contains an irrevocable proxy.
17. Acknowledgment. Pledgor acknowledges that Pledgor is the
sole owner of Seller and, therefore, Pledgor has received good and sufficient
consideration for the execution, delivery and performance of this Agreement.
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18. No Duty to Protect. This is a pledge and assignment of Pledgor's rights
and benefits in the Collateral without an assumption by Secured Party of any of
Pledgor's duties or obligations attendant thereto. Except for physical
safeguarding of the stock certificate(s) included in the Collateral delivered to
Secured Party, Secured Party shall have no duty to protect, insure, collect or
realize upon the Collateral or any proceeds therefrom nor shall Secured Party
have any obligations to any third party by virtue of Secured Party's possession
of the Collateral.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PLEDGORS: /s/ Xxxxxx X. Xxxxxx XX
____________________________________________
Xxxxxx X. Xxxxxx XX
/s/ Xxxxxxxxx Xxxxxx Xxxxxx
____________________________________________
Xxxxxxxxx Xxxxxx Xxxxxx
SECURED PARTY: Arbco Associates, L.P.
By: ________________________________________
Its: General Partner
By: ___________________________________
Name: _________________________________
Its: __________________________________
Xxxxx Xxxxxxxx Capital Income Partners, L.P.
By: ________________________________________
Its: General Partner
By: ___________________________________
Name: _________________________________
Its: __________________________________
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