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Exhibit 2
STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXXX ASSOCIATES, L.P.
("SELLER")
AND
XXXXXX X. XXXXXX, XX
CYGNET CAPITAL CORPORATION
("BUYER")
JANUARY 9, 2001
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made of as of
January 9, 2001 (the "Agreement Date"), by and among Xxxxxx Associates, L.P.
("Seller") and Xxxxxx X. Xxxxxx XX ("Xxxxxx") and Cygnet Capital Corporation
("Cygnet") (collectively and individually, Xxxxxx and Cygnet shall be referred
to as "Buyer").
RECITALS
A. The Seller serves as investment sub-adviser of The New England Star
Small Cap Fund (the "Fund"). As investment sub-adviser to the Fund, the Seller
has discretionary authority to purchase and sell securities on behalf of the
Fund.
B. Seller owns 120,000 shares of common stock (the "Shares") of Ugly
Duckling Corporation (the "Company").
C. Seller seeks to sell, and Buyer seeks to purchase, the Shares of the
Company held by Seller, all under the terms and conditions of this Agreement.
ARTICLE 1
THE TRANSACTION
1.1 Purchase and Sale of Shares. Seller agrees to sell, and Buyer
agrees to purchase, the Shares. Except as otherwise set forth herein, neither
Seller nor Buyer is allowed or required to sell or purchase less than all of the
Shares.
1.2 Purchase Price. On the Closing Date, as defined herein, Buyer will
pay to the Fund in immediately available funds Five Hundred Thousand Nine
Hundred Sixty Three and 64/100 Dollars ($500,963.64) (the "Purchase Price"). The
Purchase Price is the product of $4.174697 and the number of Shares being
conveyed. The Purchase Price shall not be adjusted as a result of any increase
or decrease in the market price of the Shares after the date hereof and prior to
the Closing Date.
1.3 Deposit. Within three (3) business days after the Agreement Date,
Buyer shall deliver to the Fund or the Fund's agent Eighty Thousand Dollars
($80,000.00) as an xxxxxxx money deposit (the "Deposit"). The Deposit shall be
held by the Fund or the Fund's agent in a federally insured interest bearing
account and all interest on the account shall be added to the Deposit. The
Deposit shall be applied to the Purchase Price on the Closing Date. The Deposit
shall be nonrefundable except in the event of Buyer's termination pursuant to
Section 1.6 or 3.1 of this Agreement. In the event of Buyer's default, the Fund
may retain the Deposit pursuant to Section 3.2 of this Agreement.
1.4 Closing Date. The transfer of the Shares and payment of the
Purchase Price shall be completed within five (5) business days after Buyer
delivers to Seller written notice that Buyer will close the transaction (the
"Closing Date"). If Buyer does not close the transaction by March 5, 2001,
then Buyer shall be in default under this Agreement.
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1.5 Closing Deliveries. On the Closing Date, Seller, on behalf of the
Fund, shall deliver to Buyer all certificates evidencing the Shares, either duly
endorsed for transfer to Buyer or with blank stock powers for assignment, as may
be designated by Buyer. The parties further agree that they will execute and
deliver any further documents and instruments of transfer, and will take any
other action reasonably required, consistent with the terms of this Assignment,
for the transfer of the Shares to Buyer.
1.6 Contingencies. The parties acknowledge that upon transfer of the
Shares to Buyer, together with the transfer of shares of the Company by Seller's
affiliate Oakmark Small Cap Fund, Xxxxxx X. Xxxxxx XX, the sole shareholder and
Director of Buyer ("Xxxxxx") shall beneficially own over 50% of the issued and
outstanding shares of common stock of the Company. Buyer's acquisition of the
Shares may constitute a plan by Xxxxxx to take the Company private and,
therefore, may require disclosure pursuant to Rule 13e-3 of the Securities
Exchange Act of 1934, the expiration of certain time periods and other actions
to comply with applicable securities laws (the "SEC Filings"). The completion of
the SEC Filings is a condition precedent to the obligations of Buyer under this
Agreement. Buyer shall use commercially reasonable efforts to complete the SEC
Filings prior to the Closing Date. If by March 5, 2001, the SEC Filings are
not completed or the transaction is prohibited, enjoined or restrained by any
government authority, then either Seller or Buyer may elect to terminate this
Agreement and upon such termination, the Deposit shall be returned to Buyer;
provided, however, that the Fund shall be entitled to retain the Deposit if
Buyer has not used commercially reasonable efforts to complete the SEC Filings
prior to the Closing Date.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
2.1 Seller. Seller represents and warrants to each Buyer that each of
the representations and warranties contained in EXHIBIT A are true and correct
in all material respects on the date of this Agreement, and will again be true
and correct in all material respects on the Closing Date. Seller shall indemnify
and hold each Buyer harmless from and against any loss, damage, liability and
expense ("Loss") incurred by any Buyer in connection with or alleged to result
from a breach by Seller of any representation or warranty made pursuant to this
Section 2.1 or otherwise in this Agreement or other document or certificate
delivered pursuant to this Agreement or a breach by Seller of any of its other
obligations or covenants contained in this Agreement or other document delivered
in connection with this Agreement.
2.2 Buyer. Buyer represents and warrants to Seller that each of the
representations and warranties contained in EXHIBIT B are true and correct in
all material respects on the date of this Agreement, and will again be true and
correct in all material respects on the Closing Date. Each Buyer agrees to
indemnify and hold Seller harmless from and against any Loss incurred by Seller
in connection with or alleged to result from a breach by that Buyer of any
representation or warranty made pursuant to this Section 2.2 or otherwise in
this Agreement or other document or certificate delivered pursuant to this
Agreement or a breach by that Buyer of any of its obligations or covenants
contained in this Agreement or other document delivered in connection with this
Agreement.
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2.3 Nature and Survival of Representations and Warranties. Each
statement and agreement made by any of the parties in this Agreement or in any
document or other instrument delivered by or on behalf any of the parties
pursuant to this Agreement will survive the Closing Date of this Agreement.
ARTICLE 3
DEFAULT AND REMEDIES
3.1 SELLER. In addition to any other actions constituting a default
hereunder, Seller shall be in default hereunder if on the Closing Date this
Agreement is in full force and effect, Buyer has tendered full performance and
Seller fails to convey the Shares to Buyer in accordance with this Agreement;
except that Seller's failure to convey the Shares shall not constitute a default
hereunder if Seller has sold such Shares, on behalf of the Fund, in order to
maintain the Fund's compliance with Subchapter M of the Internal Revenue Code of
1986, as amended. In the event of a default of Seller on or before the Closing
Date, Buyer may elect as its exclusive remedy to either (a) terminate this
Agreement, in which event the Deposit shall be immediately returned to Buyer; or
(b) continue this Agreement and immediately prosecute a claim for specific
performance of this Agreement. In the event of a default of Seller after the
Closing Date for breach of an obligation under this Agreement that survives and
continues after the Closing Date, the Buyer may prosecute its claims for damage
suffered against Seller but Buyer may not recover any consequential or exemplary
damages.
3.2 BUYER. In addition to any other actions constituting a default
hereunder, each Buyer shall be in default hereunder if on the Closing Date this
Agreement is in full force and effect, Seller has tendered full performance and
any Buyer fails to purchase the Shares in accordance with this Agreement. In the
event of a default of any Buyer on or before the Closing Date, Seller shall be
entitled to terminate this Agreement, retain the Deposit and prosecute its
claims for damages suffered against each Buyer jointly and severally but Seller
may not recover any consequential or exemplary damages. In the event of a
default of any Buyer after the Closing Date for breach of an obligation under
this Agreement that survives and continues after the Closing Date, the Seller
may prosecute its claims for damage suffered against all Buyers but Seller may
not recover any consequential or exemplary damages.
ARTICLE 4
GENERAL MATTERS
4.1 Notices. All notices, and other communications hereunder will be in
writing and deemed to have been given when (i) delivered by hand, (ii) sent by
telecopier (with receipt confirmed), provided that a copy is mailed by
registered mail, postage pre-paid return receipt requested, or (iii) when
actually received by the addressee, in each case to the following:
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If to Seller: Xxxxx X. Xxxxxx, CFA
Investment Analyst
Xxxxxx Associates, L.P.
0 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxx Xxxxxx
__________________________
Xxxxxx Associates, L.P.
0 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Phone: (312) _____________
Fax: (312) _____________
If to Buyer: Cygnet Capital Corporation
Xxxxxx X. Xxxxxx, XX
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
FAX: (000) 000-0000
4.2 Governing Law and Attorneys' Fees. The validity, construction, and
enforceability of this Agreement shall be governed in all respects by the laws
of the State of Arizona, without regard to its conflict of laws rules. If any
legal action or any arbitration or other proceeding is brought in connection
with this Agreement, the prevailing party will be entitled to recover reasonable
attorneys' fees, accounting fees, and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
4.3 Arbitration. Any claim or controversy relating to this Agreement
that is brought by the Buyer against the Seller or relating to the breach hereof
by the Seller shall be settled by arbitration conducted in Phoenix, Arizona in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect. Any claim or controversy relating to this Agreement
that is brought by the Seller against the Buyer or relating to the breach hereof
by the Buyer shall be settled by arbitration conducted in Chicago, Illinois in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect. The award rendered by the arbitrator(s) shall be
final and judgment upon the award rendered by the arbitrator(s) may be entered
upon it in any court having jurisdiction thereof. The arbitrator(s) shall
possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration. The expenses of the arbitration shall be borne
by the losing party unless otherwise allocated by the arbitrator(s). The
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law. During the continuance of any arbitration proceedings, the
parties shall continue to perform their respective obligations under this
Agreement.
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4.4 Assignment. This Agreement will not be assigned by operation of law
or otherwise, except that Buyer may assign all or any portion of its rights
under this Agreement to any wholly owned subsidiary, but no such assignment will
relieve Buyer of its obligations hereunder, and except that this Agreement may
be assigned by operation of law to any corporation or entity with or into which
Buyer may be merged or consolidated or to which Buyer transfers all or
substantially all of its assets, and such corporation or entity assumes this
Agreement and all obligations and undertakings of Buyer hereunder.
4.5 Intent to be Binding. The Exhibits referred to herein are
incorporated herein by reference as if fully set forth in the text of this
Agreement. This Agreement may be executed in any number of counterparts, and
each counterpart constitutes an original instrument, but all such separate
counterparts constitute one and the same agreement. This Agreement may not be
amended except by an instrument in writing approved by Buyer and Seller. If any
term, provision, covenant, or restriction of this Agreement is held by a court
to be invalid or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions of this Agreement will remain in full force and
effect and will in no way be affected or invalidated and the court will modify
this Agreement or, in the absence thereof, the parties agree to negotiate in
good faith to modify this Agreement to preserve each party's anticipated
benefits under this Agreement.
4.6 Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof will, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation, or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
Seller and Buyer have executed this Agreement on the date first written
above. By signing below, each individual represents that he or she is a duly
elected officer of the company and is authorized to sign in that capacity.
SELLER: XXXXXX ASSOCIATES, L.P.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Its: Chief Operating Officer
BUYER: /s/ Xxxxxx X. Xxxxxx XX
Xxxxxx X. Xxxxxx XX
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CYGNET CAPITAL CORPORATION,
an Arizona corporation
By: /s/ Xxxxxx X. Xxxxxx XX
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Name: Xxxxxx X. Xxxxxx XX
Its: President/CEO
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EXHIBIT A
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrant to each Buyer as follows:
1. Organization and Qualification. Seller is a limited partnership duly
organized, validly existing, and in good standing under the laws of the State of
Delaware , and has the requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted. Seller is
duly qualified to do business and is in good standing in each jurisdiction where
the failure to be so qualified would have a material adverse effect on its
business, properties, or ability to conduct the business currently conducted by
it.
2. Authority Relative to this Agreement. Seller has the requisite power
and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement by Seller and the
consummation by Seller of these transactions has been duly authorized by the
general partner of Seller and no other proceedings on the part of Seller are
necessary to authorize this Agreement and such transactions. This Agreement has
been duly executed and delivered by Seller and constitutes a valid and binding
obligation of Seller, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
3. No Conflicts. Seller is not subject to, nor obligated under, any
provision of (a) its Limited Partnership Agreement or other organizational
documents, (b) any material agreement, arrangement, or understanding, (c) any
license, franchise, or permit, or (d) any Applicable Law which would be
materially breached or materially violated, or in respect of which a right of
termination or acceleration would arise, or pursuant to which any encumbrance on
any of its assets would be created, by its execution, delivery, and performance
of this Agreement and the consummation by it of the transactions contemplated
hereby.
4. No Consents. No authorization, consent, or approval of, or filing
with, any public body, court, or authority is necessary on the part of Seller
for the consummation by Seller of the transactions contemplated by this
Agreement.
5. Good Title. The Fund owns the Shares held by it free and clear of
all liens, encumbrances and security interests, and may transfer the Shares to
Buyer without violation of the rights of any person.
6. Knowledge. Seller acknowledges that it has received and reviewed all
public filings of the Company and of Xxxxxx relating to the Company, that it is
aware that Xxxxxx may acquire or attempt to acquire substantially all the common
stock of the Company and that Xxxxxx is the Chairman of the Board of the Company
and largest shareholder of the Company.
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EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF BUYER
Each Buyer represents and warrants to Seller as follows:
1. Organization and Qualification. Xxxxxx is a resident of Arizona, and
Cygnet is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Arizona, and has the requisite corporate power
and authority to own and operate its properties and to carry on its business as
now conducted in every jurisdiction where the failure to do so would have a
material adverse effect on its business, properties, or ability to conduct the
business currently conducted by it.
2. Authority Relative to this Agreement. Buyer has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Buyer and
the consummation by Buyer of the transactions contemplated hereby have been duly
authorized by Buyer, and, to the extent required, by its shareholders and no
other corporate proceedings on the part of Buyer are necessary to authorize this
Agreement and such transactions. This Agreement has been duly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, or other similar laws
relating to the enforcement of creditors' rights generally and by general
principles of equity.
3. No Conflicts. Buyer is not subject to, or obligated under, any
provision of (a) its Certificate of Incorporation or Bylaws, (b) any material
agreement, arrangement, or understanding, (c) any material license, franchise,
or permit, or (d) any law, regulation, order, judgment, or decree, which would
be materially breached or materially violated, or in respect of which a right of
termination or acceleration would arise, or pursuant to which any encumbrance on
any of its or any of its subsidiaries' material assets would be created, by its
execution, delivery, and performance of this Agreement and the consummation by
it of the transactions contemplated hereby.
4. No Consents. Except for the SEC Filings and such filings to be made
pursuant to state securities laws and regulations, all of which have been made
or will be made prior to the Closing Date, no authorization, consent, or
approval of, or filing with, any public body, court, or authority is necessary
on the part of Buyer for the consummation by Buyer of the transactions
contemplated by this Agreement.
5. Buyer's Review of Seller's and Company Information. Buyer
acknowledges that Xxxxxx is the largest shareholder of the Company and the
Chairman of the Board of the Company and, therefore, has been involved in the
day-to-day operations of the Company since the Company's formation. Buyer
acknowledges that, except for the representations set forth on Exhibit A, Seller
makes no representation regarding the Company upon which Buyer has relied, and
Buyer desires no further information pertaining to the Company. Buyer
acknowledges that its investment in the Company involves a significant degree of
risk, and that it is able to bear the risk of loss of this investment.
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