U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 28, 1996
MONACO FINANCE, INC.
(Exact Name of Registrant as Specified in its Charter)
Colorado
(State or Other Jurisdiction
of Incorporation or Organization)
0-18819 84-1088131
(Commission File Number) (I.R.S. Employer Identification No.)
370 Seventeenth Street, Suite 5060
Denver, Colorado
(Address of Principal Executive Offices)
(303) 592-9411
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS
On or about June 28, 1996, the Company and Black Diamond Advisors, Inc.
("Black Diamond") entered into a letter agreement conditionally amending their
rights and obligations with respect to the Purchase Agreement and Indenture
dated January 9, 1996. Subject to shareholder approval, Black Diamond and the
Company agreed as follows:
A. The conversion price of the $5,000,000 in principal amount of
convertible notes (the "Notes") issued on or about January 9, 1996, shall be
fixed at $4.00 per share.
B. The initial conversion price for up to $5,000,000 in principal amount
of any additional convertible notes (the "Additional Notes") which hereafter
may be issued shall be $3.00 per share.
C. The period of time during which Black Diamond may exercise the option
shall be extended to the later of the date which is 24 months after the
Company receives the requisite shareholder approval of the transactions or 24
months after the Company's registration statement relating to its shares of
Class A Common Stock issuable upon conversion of the notes becomes effective.
Presently, the expiration date of the option is January 9, 1998.
If the shareholders do not ratify, confirm and approve the transactions,
then (i) the option to purchase $5,000,000 in principal amount of Additional
Notes by Black Diamond or its designees shall be deemed to have been exercised
on June 28, 1996, and the conversion price shall be $2-7/16 per share, the
closing price of the Class A Common Stock on the preceding trading day, and
(ii) the conversion price of the Notes shall be determined as provided in the
Indenture filed as an exhibit to the Company's Form 8-K as of January 9, 1996.
However, if Black Diamond fails to actually exercise the option to purchase
the Additional Notes within 15 days of the receipt of written notice of the
disapproval by the shareholders, then the exercise of the option as of June
28, 1996, is deemed to have been revoked and the conversion price of any
Additional Notes which may be issued shall be determined as provided in the
Indenture. The Company and Black Diamond agreed to diligently and in good
faith seek shareholder approval of the transactions and to amend the notes,
Purchase Agreement and Indenture to accomplish the intent of the letter
agreement.
As of June 30, 1996, 5,640,379 shares of Class A Common Stock and
1,311,000 shares of Class B Common Stock were issued and outstanding. If the
transactions are approved by shareholders, if the option to purchase the
Additional Notes is exercised in full and if the entire $10,000,000 in
principal amount of the notes is converted into Class A Common Stock, then the
Company will be obligated to issue 2,916,667 shares of Class A Common Stock at
an average exercise price of $3.43. Such shares, if they had been issued as
of June 30, 1996, would have represented approximately 29.6% of the total
number of shares of common stock outstanding and approximately 23.4% of the
voting power of the common stock.
If the transactions are not approved by shareholders, if Black Diamond or
its designees timely exercise the option to purchase the Additional Notes as
of June 28, 1996, and if the entire $10,000,000 in principal amount of notes
is converted into Class A Common Stock, then the Company will be obligated to
issue 3,301,282 shares of Class A Common Stock at an average exercise price of
$3.03. Such shares, if they had been issued as of June 30, 1996, would have
represented approximately 32.2% of the total number of shares of common stock
outstanding and approximately 25.6% of the voting power of the common stock.
Effective April 30, 1996, Howard W. Phillips resigned as a member of the
Company's board of directors. Such resignation was not due to any disagreement
with the Company on any matter relating to the Company's operations, policies
or practices.
Effective July 1, 1996, David M. Ickovic was appointed to fill the
vacancy created on the Company's board of directors by Mr. Phillips'
resignation. Since 1976, Mr. Ickovic has been president of Ickovic &
Associates, P.C., Denver, Colorado, engaged in the business of accounting and
business consultation. From 1969 to 1976, Mr. Ickovic was a supervisor with
Ernst & Young. Mr. Ickovic has over 27 years of professional experience in the
provision of business and tax consulting services, including the tax
structuring of executive employment agreements, merger and acquisition
transactions, and business valuations for purposes of designing buy/sell
agreements, negotiating purchases and sales of businesses, and litigation. Mr.
Ickovic received a bachelor of science degree in accounting from Southern
Illinois University in 1969 and is licensed as a certified public accountant
with the State of Colorado. He has also received a designation as a personal
financial specialist with the American Institute of CPAs and a certified
financial planner with the International Board of Certified Financial
Planners. For his services as a director, the Company has agreed to pay Mr.
Ickovic a fee of $250 per month plus $700 per quarterly Board meeting attended
by him. In addition, he will be eligible to participate in the Company's 1992
Stock Option Plan which provides for the issuance to non-employee directors of
options for the purchase of 5,000 shares of Class A Common Stock per year.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
10.42 Letter Agreement dated June 28, 1996, by and between the
Company and Black Diamond Advisors, Inc.
10.43 Letter Agreement dated July 3, 1996, by and between the Company
and David M. Ickovic re director compensation.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MONACO FINANCE, INC.
Date: July 11, 1996 By: /s/ Morris Ginsburg
-------------------
Morris Ginsburg, President
<PAGE>
Exhibit 10.42
BLACK DIAMOND ADVISORS, INC.
230 Park Avenue
Suite 635
New York, NY 10169
June 28, 1996
Monaco Finance, Inc.
370 17th Street, Suite 5060
Denver, Colorado 80202
Attention: Mr. Morris Ginsburg
and Irwin L. Sandler, Esq.
RE: 12% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2001
This letter agreement is in reference to the purchase agreement
("Purchase Agreement") dated January 9, 1996 between Black Diamond Advisors,
Inc. ("Black Diamond"), certain other purchasers, and Monaco Finance, Inc.
("Monaco"), and the related Indenture dated January 9, 1996 (the "Indenture").
Terms are used herein, unless otherwise defined, as defined in the Indenture.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Black Diamond and Monaco hereby agree as
follows:
1. Notwithstanding anything contained to the contrary in the
Purchase Agreement, the Indenture, the Notes or any related agreements, the
initial Conversion Price for any Notes issued (i) on or prior to January 9,
1996 (the "Existing Notes") shall be $4 per share (without any adjustment
pursuant to Section 10.11 of the Indenture); and (ii) after January 9, 1996
(the "Additional Notes") shall be $3 per share, subject in the case of this
(ii) to the Conversion Price adjustment set out in the proviso to Section
10.01(a)(ii) of the Indenture, except that the price pursuant to sub-section
(B) of said proviso shall be $3 per share. It is understood and agreed that
the preceding provisions of this Section 1 shall not be effective (and the
Conversion Prices provided as of the date hereof in the relevant agreements
shall remain applicable) unless and until Monaco obtains any necessary
shareholder approval therefor to the extent required by NASDAQ in connection
with Monaco's NASDAQ listing agreement. Monaco agrees to immediately provide
written notice to Black Diamond upon the vote by its shareholders on the terms
of this letter agreement. If the shareholders approve such terms, the
provisions of Section 1(i) and (ii) hereof shall be automatically and fully
effective upon such approval. If the shareholders do not approve such terms,
then the execution of this letter agreement shall constitute notice by Black
Diamond of its intent to purchase or have Subsequent Purchasers purchase
Additional Notes and the conversion price for the Additional Notes shall be
the closing price of Monaco's common stock on the day immediately preceding
the date of execution of this letter agreement by Monaco and Black Diamond;
provided that such conversion price shall only be effective if Black Diamond
actually exercises such purchase option within 15 days of the receipt by Black
Diamond of written notice of the disapproval by the shareholders. If Black
Diamond does not exercise such option within such period of time, Black
Diamond's notice to purchase shall be deemed to be revoked and thereafter
Black Diamond shall continue to have the right to exercise its option to
purchase (or to have Subsequent Purchasers purchase) Additional Notes, and the
conversion price for the Additional Notes shall be determined in accordance
with the terms of the Indenture and the related agreements including between
Black Diamond and Monaco.
2. The option period during which Black Diamond may exercise its
rights to require Monaco to issue and sell additional Notes as contemplated by
Section 2.B of the Purchase Agreement and pursuant to any agreements between
Black Diamond and Monaco, shall be extended to the later of the date in (a)
and (b) of this Section 2. Section 2.B of the Purchase Agreement (and any
necessary provisions in any related agreements between Black Diamond and
Monaco) shall as soon as possible be amended to further document such
extension including in the case of such Section 2.B by (i) deleting the date
"January 9, 1998" where it appears in such Section 2.B and replacing it with
"the date which is the later of (a) 24 months after Monaco's S-3
Registration Statement for the Conversion Shares (as defined in the Purchase
Agreement) relating to Notes is declared effective by the Securities and
Exchange Commission, and (b) 24 months after the Company has received
requisite shareholder approval for the issuance of Notes contemplated by
Section 1(ii) above to the extent required in accordance with applicable
NASDAQ requirements."
3. Except to the extent modified by Sections 1 and 2 above, all
terms of the Operative Documents (as defined in the Purchase Agreement) and
the Notes (and any related agreements between Black Diamond and Monaco) remain
in full force and effect.
4. Each of Monaco and Black Diamond agrees to diligently and in
good faith pursue to take such actions as may be necessary to accomplish the
intent of this letter agreement (including the implementation of Section 1(i)
and (ii)). Monaco hereby agrees to take any and all necessary and appropriate
corporate action (including properly presenting to its shareholders for any
required shareholder votes the documentation to effect (i) (X) below) and
other action, and to obtain any necessary consents, to (i) (X) authorize the
issuance of the Notes, if any, as contemplated by Section 2.B of the Purchase
Agreement and this letter agreement as soon as possible, and (Y) cause the
aforesaid S-3 Registration Statement to be declared effective by the
Securities and Exchange Commission, as soon as practicable; all of the
foregoing in this sub-section (i) in accordance with all applicable law,
NASDAQ requirements and agreements; and (ii) subject to the receipt of any
necessary Noteholder approval, to duly amend the Notes and any related
agreements including the Operative Documents and any other agreements between
Black Diamond and Monaco, as soon as practicable and all in a manner and
pursuant to amendment and modification documentation satisfactory to Black
Diamond and Monaco; it being understood, however, that such amendment and
modification shall not become effective until Monaco has received requisite
shareholder approval to the extent required in accordance with applicable
NASDAQ requirements. Monaco hereby agrees to advise Black Diamond in writing
as soon as each of (i)(X) or (Y) or (ii) of this section is achieved, and to
provide Black Diamond with evidence satisfactory to Black Diamond of
compliance herewith (including evidence of execution of any necessary
amendments by all necessary parties including Monaco and the Trustee).
5. Monaco hereby undertakes and agrees as follows with respect
to its management: Monaco shall ensure that its Board of Directors ("Board")
have Board meetings including by having telephonic Board meetings at least
monthly, have Board meetings with actual attendance at least quarterly, and
reasonably prior to each Board meeting, providing the Board members (and Jim
Walker and Steve Deckoff if Black Diamond notifies Monaco that it has
determined to exercise its rights to have any such person act as an observer
at Board meetings) with a monthly Board information package which includes
reasonable information requested by Board members (and Black Diamond if it
determines to exercise the aforesaid observer rights).
6. Each of Black Diamond and Monaco acknowledges and agrees that
by this letter agreement, Black Diamond and Monaco do not waive any of their
respective rights or remedies in connection with the Indenture or the other
Operative Documents, the Notes or otherwise all of which are expressly
reserved. Monaco hereby agrees, without limiting any other rights of Black
Diamond under the Indenture and the other Operative Documents or otherwise, on
demand to pay or reimburse Black Diamond for 50% of all of its counsel fees
and disbursements in connection herewith and any amendments contemplated by
Section 4 hereof.
7. This letter agreement shall be governed by the laws of the
State of New York.
By signing below, Black Diamond hereby represents and warrants that
this letter agreement has been duly authorized by all necessary corporate
action on its part and Monaco hereby represents and warrants that within three
business days of the date of this Agreement, this letter agreement shall have
been duly authorized by all necessary corporate action (including Board
approval) on its part.
Kindly acknowledge Monaco's agreement to the provisions hereof by
having Monaco's duly authorized signatory sign this letter agreement where
indicated below and returning it to the undersigned by not later than June 28,
1996.
Very truly yours,
BLACK DIAMOND ADVISORS, INC.
By /s/ Stephen H. Deckoff
----------------------
Name: Stephen H. Deckoff
Title:President
The above terms of this letter agreement are hereby acknowledged and
agreed to in all respects by Monaco.
MONACO FINANCE, INC
By /s/ Irwin L. Sandler
---------------------
Name: Irwin L. Sandler
Title:Executive Vice President
Date: June 28, 1996
By signing where indicated below, each of Morris Ginsburg and Irwin
L. Sandler agree to vote any and all of their shares or shares which they
control (including Milton Karsh's) of Monaco to approve the actions
contemplated by Section 4(i) of this letter agreement if Morris Ginsburg and
Irwin Sandler believe, at the time of the shareholder vote, that the same is
in the best interests of Monaco.
/S/ MORRIS GINSBURG /S/ IRWIN L. SANDLER
- ------------------- --------------------
MORRIS GINSBURG IRWIN L. SANDLER
<PAGE>
Exhibit 10.43
July 1, 1996
David M. Ickovic
Ickovic & Associates
6025 South Quebec Street, Suite 220
Englewood, Colorado 80222-4550
RE: MONACO FINANCE, INC.
Dear David:
You have been nominated and appointed to serve as a member of the Board
of Directors of Monaco Finance, Inc. In addition, we are requesting that you
serve on the Audit Committee and the Stock Option Committee. Compensation for
serving in these capacities will be as follows:
1. $3,000 per full year served as a Board Member ($250.00 per month);
and
2. $700.00 per Quarterly Board Meeting attended.
Please confirm that the above accurately sets forth our agreement by
executing your signature in the space herein below provided. Please fax me a
copy for our records. In addition, a duplicate original should be sent to me
regular mail. We are looking forward to your joining our Board and
Committees. Your expertise will be a positive addition to our Company.
Best Regards.
Sincerely,
Monaco Finance, Inc.
By /s/ Irwin L. Sandler
---------------------
Irwin L. Sandler
Title:Executive Vice President
Agreed and accepted this 3rd day of July, 1996.
/s/ David M. Ickovic
---------------------
David M. Ickovic
Date: July 3, 1996
