1
Exhibit 10.1
LOAN AGREEMENT
This LOAN AGREEMENT is dated as of July 20, 1998, between CYGNET
FINANCIAL CORPORATION, a Delaware corporation (the "Company"); and each lender
signatory hereto (each a "Lender," and collectively the "Lenders").
WHEREAS, each Lender has agreed to make a loan to the Company in the
amount of its respective 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 1
DEFINITIONS
I.1 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"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.
"Aggregate Commitment" means the amount of Five Million
Dollars ($5,000,000).
"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 8.06(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 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 3.01 are satisfied or waived by all
Lenders, which is anticipated to be on or before July 20, 1998.
1
2
"Code" means the Internal Revenue Code of 1986 and any
regulations promulgated thereunder.
"Commitment" means with respect to each Lender, the amount set
forth opposite its name on the signature pages to this Agreement.
"Company Warrants" means the warrants issued to each of the
Lenders pursuant to the Company Warrant Agreement.
"Company Warrant Agreement" means either the Warrant Agreement
in the form of the Warrant Agreement Form, providing for the issuance
of Company Warrants to the Lenders to acquire 115,000 shares of the
Company's Common Stock on the terms in the Warrant Agreement Form and
the following additional terms:
Warrant Price $ 8.40
Redemption Amount $13.44
"Company Warrant Event" means the occurrence of the Split-Up
prior to December 31, 1998.
"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 (or UDC, if applicable), 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 7.01.
"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.
2
3
"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.
"Lender" and "Lenders" have the meanings specified in the
introductory clause hereto.
"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 each Lender in
the amount of each Lender's respective Commitment pursuant to Article
II.
"Loans" mean all of the term loans by the Lenders to the
Company pursuant to Article II.
"Loan Documents" means this Agreement, the Notes, the UDC
Guaranty, the Company Warrant Agreement (or, in the alternative, if
applicable, the UDC Warrant Agreement), the Company Warrants (or, in
the alternative, if applicable, the UDC Warrants) and all other
documents delivered to any of the Lenders 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 (or UDC prior to the Split-Up) taken as a whole, (b) the
ability of the Company or UDC 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 July 20, 2001.
"Notes" shall mean the promissory notes, dated as of the
Closing Date, substantially in the form of Exhibit A annexed hereto,
issued by the Company to the order of the Lenders evidencing the
obligation of the Company to repay the Loans.
"Obligations" mean all Loans and other Debt, advances, debts,
liabilities, obligations, covenants and duties owing by the Company or
UDC 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.
3
4
"Operating Lease" means, as applied to any Person, any lease
of property which is not a Capital Lease.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture or governmental authority.
"Pro-Rata Basis" means pro-rata as to the Lenders based on the
unpaid principal balance of each Lender's Loan.
"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.
"Split-Up" means (i) the transfer and sale by UDC of the
assets and liabilities constituting its non-dealership operations
(i.e., substantially all third-party servicing, dealer finance and
insurance operations) to the Company (such assets and liabilities
having an anticipated appraised value of approximately $50 million) in
exchange for $40 million of the Company's Series A Preferred Stock and
the balance in cash, which shall be not less than $10 million; and (ii)
the further capitalization of the Company through the consummation of a
rights offering to UDC's shareholders raising not less than
$24,000,000.
"Subordinated Debt" means the 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 (including preferred
stock), additional paid-in capital, and retained earnings), less (i)
the total amount of loans and debts due from Affiliates, excluding
wholly-owned subsidiaries, shareholders, officers, or employees of the
Company, and (ii) the total amount of any intangible assets and
goodwill as determined in accordance with GAAP.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"UDC" means Ugly Duckling Corporation, a Delaware corporation,
provided that any terms herein relevant to UDC shall terminate and be
deleted herefrom upon release of UDC from the UDC Guaranty pursuant to
Section 11 of the UDC Guaranty.
"UDC Guaranty" means the Payment Guaranty executed by UDC in
the form attached hereto as Exhibit B, provided that any terms herein
relevant to the UDC Guaranty shall terminate and be deleted herefrom
upon release of UDC from the UDC Guaranty pursuant to Section 11 of the
UDC Guaranty..
"UDC Market Price" means the average Daily Market Price (as
defined in Section 10(e) of the Warrant Agreement Form) per share of
the Common Stock of UDC for the twenty (20) consecutive trading days
prior to the Warrant Date.
"UDC Warrants" means the warrants issued to each of the
Lenders pursuant to the UDC Warrant Agreement.
4
5
"UDC Warrant Agreement" means the Warrant Agreement in the
form of the Warrant Agreement Form, providing for the issuance of UDC
Warrants to the Lenders to acquire 115,000 shares of UDC's Common Stock
on the terms in the Warrant Agreement Form and the following additional
terms:
Warrant Price 120% of UDC Market Price
Redemption Amount 160% of Warrant Price Computed Above
"UDC Warrant Event" means December 31, 1998, but only if (i)
the Loans have not been paid in full; (ii) the Company Warrant Event
has not occurred; and (iii) the Company Warrants are not issued prior
to December 31, 1998.
"Warrant Agreement Form" means the form of Warrant Agreement
attached hereto as Exhibit C.
"Warrant Date" means the date of the applicable Company
Warrants or the UDC Warrants are issued in a timely manner pursuant to
Section 2.08 hereof.
I.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 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
5
6
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 or UDC, as applicable.
ARTICLE II.
THE LOAN
II.1 Amount and Notes.
Each Lender shall make its respective Loan to the Company in
the amount of its Commitment in a single advance to be disbursed on the Closing
Date. The Company has authorized the issuance of the Notes in the aggregate
principal amount of Five Million Dollars ($5,000,000). On the Closing Date, the
Company shall issue and deliver to each Lender a Note in the principal amount
equal to such Lender's Commitment, payable to the order of such Lender,
substantially in the form of Exhibit A to this Agreement. The Notes will
evidence the principal amount of each Loan together with interest accrued and
unpaid thereon.
II.2 Interest.
(a) Each Loan shall accrue interest on the outstanding
principal amount thereof for the period from and including the date of such Loan
to but excluding the date such Loan shall be paid in full at a rate per annum
equal to 12%.
(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
6
7
interest shall also be paid on the date of any prepayment of the Loans pursuant
to Section 2.03 for the portion of the Loans 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 Loans then unpaid, at a rate per annum equal to 18%.
(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 respective Lender would be contrary to the
provisions of any law applicable to such 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 such Lender interest at the
highest rate permitted by applicable law.
II.3 Optional Prepayments. The Company may, at any time or from
time to time, upon at least ten (10) Business Days' prior written notice to each
of the Lenders, prepay pro rata the Loans 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 Company shall make such
prepayment on a Pro-Rata Basis and each Lender's pro-rata share thereof and 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.
II.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.
II.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 either (i) to
the Lenders at each of the Lender's respective offices as set forth on the
applicable signature pages hereof, or (ii) by wire transfer to each lender
pursuant to the wire instructions set forth on Schedule 2.01(a) or such other
wire instructions provided to the Company in writing, 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.
II.6 Sharing of Payments, Etc. All principal payments shall be
made to the Lenders on a Pro-Rata Basis.
II.7 Priority of Payments; Subordination. Notwithstanding anything
in this Agreement to the contrary, the payment of principal and interest under
this Agreement on the Loans is expressly
7
8
subordinated for all purposes to any Obligations now in existence or later
incurred by the Company other than Subordinated Debt; and each of the Lenders
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 each
of the Lenders and such institution or Person, the tenor of which shall be to
effectuate the terms of this Section.
II.8 Warrants. If the Company Warrant Event occurs prior to the UDC
Warrant Event, then the Company shall, not later than three (3) Business Days
after the Company Warrant Event, but in no event later than the UDC Warrant
Event, execute and deliver the Company Warrant Agreement and issue the Company
Warrants. If the UDC Warrant Event shall occur prior to the issuance of the
Company Warrants, then the Company Warrants shall not be issued and the Company
shall cause UDC to execute and deliver the UDC Warrant Agreement and issue the
UDC Warrants not later than January 5, 1999. The Lenders shall fully cooperate
in the Company's (and UDC's, pursuant to the UDC Guaranty) performance of this
Section 2.08.
ARTICLE III.
CONDITIONS PRECEDENT
III.1 Conditions of Loans to the Company. The obligation of each
Lender to fund its Loan to the Company hereunder is subject to the condition
that the Lenders shall have received on or before the Closing Date, in form and
substance satisfactory to each Lender and their respective counsel and in
sufficient copies for each Lender, all of the following:
(a) Loan Agreement. This Agreement executed by the
Company and each Lender;
(b) Resolutions: Incumbency - Company.
(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 by the Company hereunder, and
authorizing the borrowing of the Loans, 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 by the Company hereunder;
(c) Resolutions: Incumbency - UDC.
(i) Copies of the resolutions of the board of
directors of UDC approving and authorizing the execution, delivery and
performance by UDC of the UDC Guaranty, the UDC Warrant Agreement and
the UDC Warrants, certified as of the Closing Date by the Secretary or
an Assistant Secretary of UDC; and
(ii) A certificate of the Secretary or Assistant
Secretary of UDC certifying the names and true signatures of the
officers of UDC authorized to execute, deliver and perform, as
applicable, the UDC Guaranty, the UDC Warrant Agreement and the UDC
Warrants;
8
9
(d) Articles of Incorporation: Bylaws and Good Standing.
Each of the following documents:
(i) the certificate of incorporation of each of the
Company and UDC as in effect on the Closing Date, certified by the
Secretary of State of the state of Delaware as of a recent date and by
the Secretary or Assistant Secretary of the Company, and UDC
respectively, as of the Closing Date, and the Bylaws of each of the
Company and UDC as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Company, and UDC respectively,
as of the Closing Date, and
(ii) a good standing certificate for each of the
Company and UDC from the Secretary of State of Delaware.
(e) Notes. The Notes, executed by the Company.
(f) UDC Guaranty. The UDC Guaranty, executed by UDC.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Lender as of the date
hereof and as of the Closing Date that:
IV.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.
IV.2 Financial Statements. The Company has provided to the Lenders
copies of the following audited financial statements: a balance sheet of UDC as
of December 31, 1997 and March 31, 1998, and statements of income and cash flows
for the fiscal year ended December 31, 1997 and for the fiscal quarter ending
March 31, 1998. 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 December 31, 1997 or
March 31, 1998, which could reasonably be expected to have a Material Adverse
Effect.
IV.3 Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company or UDC, threatened
against the Company or UDC or any properties or rights of the Company or UDC, by
or before any court, arbitrator or administrative or governmental body which
could reasonably be expected to result in any Material Adverse Effect.
9
10
IV.4 Outstanding Obligations. After giving effect to the transactions
contemplated hereby and Obligations incurred in the ordinary course of business,
neither the Company nor UDC have any Obligations outstanding except Obligations
disclosed in the financial statements provided pursuant to Section 4.02 and
except as disclosed in Schedule 4.04 attached hereto. There exists no default
(or, to the knowledge of the Company or UDC, 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.
IV.5 Taxes. The Company and UDC have filed all Federal, State and other
income tax returns which, to the best knowledge of the officers of the Company
and UDC, 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.
IV.6 Conflicting Agreements and Other Matters. Neither the Company nor
UDC is 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 either the Company
or UDC pursuant to, the Certificate of Incorporation or Bylaws of the Company or
UDC, 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 or UDC is subject. Neither the Company nor UDC
is a party to, or otherwise subject to any provision contained in, any
instrument evidencing indebtedness of the Company or UDC, 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.
IV.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 or
UDC to be incurred with respect to any plan (other than a multiemployer plan) by
the Company or UDC which could reasonably be expected to have a Material Adverse
Effect. Neither the Company nor UDC has incurred or presently expects 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 or
UDC. 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 4.09, 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 UDC or by any trade or business, whether or
not incorporated, which, together with the Company or UDC, 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).
10
11
IV.8 Governmental Consent. Neither the nature of the Company's nor
UDC's business, nor any of their respective properties, nor any relationship
between the Company or UDC and any other Person, nor any circumstance in
connection with the making of the Loans or delivery of the Notes 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.
IV.9 Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to any Lender by or on behalf of the Company
or UDC 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 or UDC 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 any Lender by
or on behalf of the Company or UDC prior to the date hereof in connection with
the transactions contemplated hereby.
IV.10 Possession of Franchises, Licenses, etc. The Company and UDC
possess 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 neither the Company nor UDC are in violation of any thereof in any
material respect.
ARTICLE V.
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, unless the Lenders
waive compliance in writing:
V.1 Financial Statements. The Company shall deliver to each of the
Lenders in form and detail satisfactory to each of the Lenders:
(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 (or UDC) 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 Lenders 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.
V.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 each 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 Lenders) to establish whether the Company (or
UDC, if applicable) is in compliance with the requirements of Sections 6.01; and
11
12
(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.
V.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 each 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.
ARTICLE VI.
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
Lenders waive compliance in writing:
VI.1 Debt to Tangible Net Worth Ratio. Prior to the Split-Up, UDC's
Debt to Tangible Net Worth Ratio shall not exceed 2.1 to 1.0, calculated as of
the end of each quarterly period in each fiscal year. After the Split-Up, the
Company shall not permit the Company's Debt to Tangible Net Worth Ratio to
exceed 3.0 to 1.0, calculated as of the end of each quarterly period in each
fiscal year.
VI.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 Loans to the payment of principal and interest relating to
the Subordinated Debt.
ARTICLE VII.
EVENTS OF DEFAULT
VII.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
12
13
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 Article 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 any 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
(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;
or
(m) Guarantor (i) is unable or admits in writing Guarantor's
inability to pay Guarantor's monetary obligations as they become due, (ii) makes
a general assignment for the benefit of creditors, (iii) applies for, consents
to, or acquiesces in, the appointment of a trustee, receiver or other custodian
for Guarantor or the property of Guarantor or any part thereof, or in the
absence of such application, consent or acquiescence, a trustee, receive or
other custodian is appointed for Guarantor or the property of Guarantor or any
part thereof, and such appointment is not discharged within 60 days, or (iv)
contests the validity or unenforceability of the UDC Guaranty.
13
14
(n) The Occurrence of an Event of Default under the UDC
Guaranty.
then (a) if such event is an Event of Default specified in any of clauses (g)
through (l) of this Section 7.01 with respect to the Company or clauses (m) or
(n) of this Section 7.01 with respect to UDC, all of the Loans at the time
outstanding 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, any Lender may, by notice in writing
to the Company, declare all of such Lender's Loan to be, and all of such
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.
VII.2 Other Remedies. If any Event of Default or Default shall occur
and be continuing, each Lender may proceed to protect and enforce its rights
under this Agreement by exercising such remedies as are available to such 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
Lenders 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 VIII.
MISCELLANEOUS
VIII.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 Lenders and the Company, and then
such waiver shall be effective only in the specific instance and for the
specific purpose for which given.
VIII.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 each of the Lenders, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to each other party, at such other address as shall be designated by
such party in a written notice to the Company and each of the Lenders.
(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.
VIII.3 No Waiver: Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any 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
14
15
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
VIII.4 Costs and Expenses. The Company shall, following consummation
of the transactions contemplated hereby:
(a) pay or reimburse each Lender within ten (10) Business Days
after demand for all reasonable costs and expenses incurred by each 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 any
Lender with respect thereto; and
(b) pay or reimburse each Lender within ten (10) Business Days
after demand for all reasonable costs and expenses incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies (including in connection with any "workout" or restructuring
regarding the Loans, 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 any Lender.
VIII.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 each Lender.
VIII.6 Assignment, Participations, etc.
(a) Any Lender may, with the written consent of the Company
(which consent shall be obtained prior to such Lender's delivery of any
information (including financial information) to any Assignee (as hereinafter
defined) relating to an assignment of such 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 a Lender to a Lender Affiliate of such Lender) (each an
"Assignee") all (but no less than all) of its interest in the Loan and the other
rights and obligations of such Lender hereunder, provided, however, that, the
Company and each other Lender may continue to deal solely and directly with such
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 such Lender and the Assignee.
(b) From and after the date that such 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 such Lender, shall have the
rights and obligations of such Lender under the Loan Documents, and (ii) the
assignor 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 8.06(a) and (b) with respect to any Lenders 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,
15
16
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Loans arising therefrom.
VIII.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 Lenders.
VIII.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.
VIII.9 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company and the Lenders,
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. No Lender shall have any obligation to any Person not a party to this
Agreement or other Loan Documents.
VIII.10 Time. Time is of the essence as to each term or provision of
this Agreement and each of the other Loan Documents.
VIII.11 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF CALIFORNIA; AND (B) 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 CALIFORNIA.
VIII.12 Waiver of Jury Trial.
THE COMPANY AND THE LENDERS 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 LENDERS 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 8.12 MAY
16
17
BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL
BY JURY AND CONSENT TO TRIAL.
VIII.13 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire Agreement and understanding among the Company and
the Lenders 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 Lenders
pursuant to the Loan Documents.
VIII.14 Interpretation. This Agreement is the result of negotiations
between and has been reviewed by counsel to the Lenders, 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]
17
18
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.
CYGNET FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
Address for notices:
Ugly Duckling Corporation
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq., Senior Vice
President and General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Commitment: $1,300,000 ARBCO ASSOCIATES, L.P.
By: KAIM Non-Traditional, L.P.
Its: General Partner
By: Xxxxx Xxxxxxxx Investment Management, Inc.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Title: Vice President
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: ___________________
Telephone: (000) 000-0000
Telecopy : (000) 000-0000
18
19
Commitment: $1,200,000 XXXXX XXXXXXXX NON-TRADITIONAL
INVESTMENTS, L.P.
By: Xxxxx Xxxxxxxx Non-Traditional, L.P.
Its: General Partner
By: Xxxxx Xxxxxxxx Investment Management, Inc.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------------
Title: VP
-----------------------------
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn:
----------------------
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Commitment: $1,200,000 OFFENSE GROUP ASSOCIATES, L.P.
By: Xxxxx Xxxxxxxx Non-Traditional, L.P.
Its: General Partner
By: Xxxxx Xxxxxxxx Investment Management, Inc.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------
Title:
----------------------------
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn:
--------------------
Telephone: (000) 000-0000
Telecopy : (000) 000-0000
19
20
Commitment: $600,000 OPPORTUNITY ASSOCIATES, LIMITED PARTNER-
SHIP
By: Xxxxx Xxxxxxxx Non-Traditional, L.P.
Its: General Partner
By: Xxxxx Xxxxxxxx Investment Management, Inc.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: _____________________
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Commitment: $700,000 NORTH POINTE FINANCIAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------
Name: Xxxx X. Xxxxx
Title: Chief Financial Officer
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: _____________________
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
20
21
EXHIBIT A
FORM OF PROMISSORY NOTE
Original Face Amount: $____________
Maker: CYGNET FINANCIAL CORPORATION, a Delaware corporation
Dated as of: July 20, 1998
(a) PROMISE TO REPAY. FOR VALUE RECEIVED, CYGNET FINANCIAL
CORPORATION, a Delaware corporation ("Maker"), promises to pay to
_____________________ ("Payee"), or order, the principal sum of
_________________ Dollars ($________) or such lesser amount as shall equal the
outstanding amount of the loan (the "Loan") made by Payee to Maker, pursuant to
Section 2.01 of that certain Loan Agreement, dated as of July 20, 1998, entered
into between Maker and each of Payee and the other Lenders named therein (the
"Loan Agreement").
(b) 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 one of the promissory
notes defined in the Loan Agreement as the "Notes" and is subject to, and
entitled to the benefits of, the terms and provisions of the Loan Agreement.
(c) 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 connection with the Loan
Agreement, this Note, the other Loan Documents, or any other documents executed
in connection herewith or therewith.
(d) 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.
(e) APPLICATION OF PAYMENTS. All payments (including
prepayments) made hereunder shall be applied first to accrued and unpaid
interest and then to principal.
(f) TIME AND PLACE OF PAYMENTS. All principal and interest due
hereunder is payable in U.S. Dollars in immediately available funds at either
(i) Payee's office located at 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 (or at such other office as may be
21
22
designated from time to time by Payee), or (ii) by wire transfer pursuant to
Section 2.05(a) of the Loan Agreement, not later than 1:30 p.m., Phoenix,
Arizona time, on the date of payment.
(g) 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.
(h) ACCELERATION AND WAIVER. IT IS EXPRESSLY AGREED THAT, UPON
THE OCCURRENCE OF AN EVENT OF DEFAULT AS SPECIFIED IN SECTIONS 7.01(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 7.01 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 AR HEREBY EXPRESSLY WAIVED BY MAKER.
(i) 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.
(j) AMENDMENTS. This Note may not be changed, modified,
amended, or terminated except by a writing duly executed by Maker and the holder
hereof.
(k) 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.
(l) GOVERNING LAW. EXCEPT AS OTHERWISE PROVIDED IN THE LOAN
AGREEMENT: (a) THIS NOTE SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
CALIFORNIA; 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 CALIFORNIA.
(m) 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
22
23
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 July 20, 1998.
CYGNET FINANCIAL CORPORATION,
a Delaware corporation
By:
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and
General Counsel
23
24
EXHIBIT B
__________________ CORPORATION
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement"), dated as of [INSERT WARRANT
DATE], is between ___________________ CORPORATION, a Delaware corporation (the
"Company"), and each of the Lenders (as defined below).
WHEREAS, [CYGNET FINANCIAL CORPORATION/THE COMPANY] has entered into a
Loan Agreement dated as of July 20, 1998 (the "Loan Agreement"), by and among
[CYGNET FINANCIAL CORPORATION/THE COMPANY] and the lenders named therein (the
"Lenders"), pursuant to which the Lenders will make term loans to [CYGNET
FINANCIAL CORPORATION/THE COMPANY], all 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, under certain circumstances, to issue to
the Lenders 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 Lenders and the Lenders shall accept from the Company, 115,000 Warrants
substantially in the form of Exhibit A hereto. Each Lender shall be issued the
number of Warrants set forth beside such Lender's name on the signature pages
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 adjustments provided for in Section 8 hereof, at
any time until the later of (i) 1:30 p.m., Phoenix, Arizona time, on [INSERT
THIRD ANNIVERSARY OF WARRANT DATE] or (ii) such time as the Notes issued
pursuant to the Loan Agreement have been paid in full, 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 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.
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
24
25
of Common Stock or other securities to which the Warrants represented by such
certificates are at the time entitled hereunder.
(a) Each Warrant not exercised by its expiration date shall become
void, and all rights thereunder and all rights in respect thereof under this
Agreement shall cease on such date.
(b) 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.
(c) 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 [INSERT WARRANT PRICE].
(d) 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 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.
(e) 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 names of the Lenders 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
25
26
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.
(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.
26
27
(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. 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,
27
28
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 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
28
29
the exercise of the Warrant immediately prior to such adjustment, and the
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 or the Split-Up (as defined in the
Loan 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 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
29
30
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 NO RIGHTS AS STOCKHOLDER; 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, 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
30
31
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 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 [INSERT REDEMPTION AMOUNT], 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 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.
31
32
(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 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 FEBRUARY
12, 1998, 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
32
33
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 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
33
34
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 certain registration rights granted to
SunAmerica Life Insurance Company and its assignees pursuant to that certain
Amended and Restated Registration Rights Agreement entered into as of June 21,
1996 between the Company and SunAmerica Life Insurance Company. Specifically,
the Amended and Restated Registration Rights Agreement entered into as of June
21, 1996 provides that the holders of registrable securities under that
agreement shall have the right to have included in any piggyback registration by
the Company any registrable securities requested by them to be so included in
such piggyback registration prior to the inclusion of any securities requested
to be registered by any third parties entitled to any other registration rights,
including the registration rights granted hereunder.
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 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
34
35
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 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):
35
36
________________________________
________________________________
________________________________
Phoenix, Arizona _______________
Attn: _______________________
With a copy to:
Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
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 California 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.
(BALANCE OF PAGE INTENTIONALLY LEFT BLANK)
36
37
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
By:__________________________________
Name:_______________________________
Title:________________________________
29,900 Warrants ARBCO ASSOCIATES, L.P.
By: KAIM Non-Traditional, L.P.
Its: General Partner
By: Xxxxx Xxxxxxxx Investment Management, Inc.
Its: General Partner
By:_________________________________
Title:________________________________
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: _________________________
Telephone: (000) 000-0000
Telecopy : (000) 000-0000
27,600 Warrants XXXXX XXXXXXXX NON-TRADITIONAL
INVESTMENTS, L.P.
By: Xxxxx Xxxxxxxx Non-Traditional, L.P.
Its: General Partner
By: Xxxxx Xxxxxxxx Investment Management, Inc.
Its: General Partner
By:__________________________________
Name:_______________________________
Title:________________________________
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: ___________________________
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
27,600 Warrants OFFENSE GROUP ASSOCIATES, L.P.
37
38
By: Xxxxx Xxxxxxxx Non-Traditional, L.P.
Its: General Partner
By: Xxxxx Xxxxxxxx Investment Management, Inc.
Its: General Partner
By:_________________________________
Name:______________________________
Title:________________________________
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: __________________________
Telephone: (000) 000-0000
Telecopy : (000) 000-0000
13,800 Warrants OPPORTUNITY ASSOCIATES, LIMITED PARTNER-
SHIP
By: Xxxxx Xxxxxxxx Non-Traditional, L.P.
Its: General Partner
By: Xxxxx Xxxxxxxx Investment Management, Inc.
Its: General Partner
By:_____________________________
Name:__________________________
Title:____________________________
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: ______________________
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
38
39
16,100 Warrants NORTH POINTE FINANCIAL SERVICES, INC.
By: ________________________________
Name:______________________________
Title: _______________________________
Address for notices:
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: _________________________
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
39
40
Warrant No. ____
WARRANT TO PURCHASE ________ SHARES OF COMMON STOCK
VOID AFTER 1:30 P.M.,
PHOENIX, ARIZONA TIME, ON [INSERT 3RD ANNIVERSARY OF WARRANT DATE]
OR SUCH LATER DATE SET FORTH HEREIN
____________________ CORPORATION
This certifies that, for value received ________________________, the
registered holder hereof or assigns (the "Holder"), is entitled to purchase from
_________________CORPORATION, a Delaware corporation (the "Company"), at any
time after [INSERT WARRANT DATE], and before the later of (i) 1:30 p.m.,
Phoenix, Arizona time, on [INSERT 3RD ANNIVERSARY OF WARRANT DATE] or (ii) such
time as the Company has repaid in full its Notes issued pursuant to that certain
Loan Agreement dated as of July 20, 1998 between the Company and each of the
Lenders named therein, at the purchase price per share of [INSERT WARRANT PRICE]
(the "Warrant Price"), the number of shares of Common Stock, par value $0.001
per share, of the Company set forth above (the "Shares"). The number of shares
of Common Stock 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 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 [INSERT REDEMPTION PRICE], 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 [INSERT WARRANT DATE] between the Company and the Lenders party thereto,
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.
40
41
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:_______________________________
By:_______________________________
41
42
___________________ CORPORATION
PURCHASE FORM
Mailing Address:
____________________________
____________________________
____________________________
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.
42
43
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, 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.
43
44
SCHEDULE 2.05(a)
WIRE INSTRUCTIONS FOR EACH LENDER
LENDER WIRING INSTRUCTIONS
ARBCO Associates, LP Citibank, NA/Bear Xxxxxxx
00 Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
ABA No.: 000000000
A/C No.: 0925-3186
FBO: ARBCO Associates, LP
A/C No.: 103-01744
Xxxxx Xxxxxxxx Non-Traditional Citibank, NA/Bear Xxxxxxx
Investments, LP 00 Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
ABA No.: 000000000
A/C No.: 0925-3186
FBO: Xxxxx Xxxxxxxx Non-Traditional
Investments, LP
A/C No.: 103-02960
North Pointe Financial Services, Inc. Michigan National Bank
ABA No.: 0000-0000-0
FBO: North Pointe Financial
Services, Inc.
A/C No.: 1572033909
Offense Group Associates Citibank, NA/Bear Xxxxxxx
00 Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
ABA No.: 000000000
A/C No.: 0925-3186
FBO: Offense Group Associates
A/C No.: 103-02954
Opportunity Associates, LP Citibank, NA/Bear Xxxxxxx
00 Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
ABA No.: 000000000
A/C No.: 0925-3186
FBO: Opportunity Associates, LP
A/C No.: 103-02970
44
45
SCHEDULE 4.04
OUTSTANDING OBLIGATIONS
None.
45
